Many homeowners never look at their policy until they have an Insurance Loss. At that point, the homeowner will locate their insurance policy and try to make sense out of a large document written in convoluted language that often appears (or is) contradictory. Although insurance policies are supposed to be written in plain language, they seldom are clear. Many lawyers cringe at the thought of reviewing insurance policies. Perhaps Murdock Law is unique in this regard–we enjoy reading the policies as noting the subtle nuances that can make the difference between winning and losing an insurance dispute.
Homeowners Insurance Explained
The purpose of this article is to provide an overview of the structure of homeowner’s insurance policy. Although homeowner policies are not standardized, home insurance policies are similarly structured.
Insured Persons and Property
The first section in a Wisconsin insurance policy identified the named insureds are, the policy number, the policy period, and total premium. You will need to know what your policy number is if you ever need to make a claim. The policy number can be found in this section.
Overview of coverages
This section of the policy gives an overview of what coverages are included in the policy and what the respective limits are for each section.
The next important section in an insurance policy is the definition section. Where the policy uses quoted language, the meaning of the quoted language is found here. If the term in question is not defined then the common and ordinary dictionary meaning will apply. Keep in mind that the property section of the policy will often contain different definitions that the policy’s liability coverage section.
Grant of Coverage
Every homeowner policy contains a grant of coverage. Importantly, the granting clause will either be “all risk” coverage meaning that it covers all risks that are not excluded, such as the provision in the following policy:
Or the policy will covered losses from specified or named perils. In other words, the policy covers damage that is caused by the listed causes: “We insure for direct physical loss … caused by a peril listed below.” The provision below is an example of such a provision.
The exclusion section limits what the policy covers. Often, the biggest insurance disputes are over the applicability of exclusions as many policy owners are shocked to learn that their policy does not cover all the losses they believed should be covered. The insurance company bears the burden to prove that the loss was caused by the excluded risk.
Many exclusions contain an ensuing loss provision (see red underlined text). Coverage is restored by the ensuing loss provision. For example, if an earthquake causes damage the risk is excluded. However, if the earthquake then causes a gas pipe to break and fire results, any damage caused by the fire would be covered.
Duties After An Insurance loss
After an insurance loss, policyholders have certain obligations such as reporting the loss, preventing additional damage, and in some cases, the insured may have to provide an examination under oath.
Insurance Disputes Over the Amount of the Loss
After an insurance loss, Insurance companies may attempt to pay less than the insured believes he or she is owed. One method that an insurance dispute over the amount of the loss can be resolved is through the appraisal process. Every property insurance policy issued in Wisconsin is required by law to permit valuation appraisals. The Appraisal process is reflected in policy language such as the provision below:
Either party can invoke the appraisal provision. When the request is made and accepted, the appraisers select a competent and disinterested umpire; if the two appraisers cannot mutually agree on an umpire, then, on request of the insured or the insurance company, the umpire shall be selected by a judge of a court of record in the county in which the property covered is located.
Appraisal proceedings are typically informal unless the insured and this company mutually agree otherwise. “Informal” means that no formal discovery shall be conducted, including depositions, interrogatories, requests for admission, or other forms of formal civil discovery, no formal rules of evidence shall be applied, and no court reporter shall be used for the proceedings. The appraisers then appraise the loss, stating separately actual cash value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed with the insurance company shall determine the amount of actual cash value and loss. Each appraiser shall be paid by the party selecting him or her and the expenses of appraisal and umpire shall be paid by the parties equally appraisal addresses only the amount of damages but cannot address the existence of coverage or the applicability of an exclusion.
Statute of Limitations for Wisconsin Insurance Claims
Unlike the general six-year statute of limitations for contract disputes, the statute of limitations for insurance disputes are generally limited to 1 year.
Unlike in some states, the statute of limitations for Wisconsin Insurance Claims begins to run from the date the property was damaged regardless of whether or not it was discovered at that time. This can be problematic for policyholders whose property is damaged in locations that are not readily observable (hail damage roof claims) until it is too late. That being said, we have seen insurance policies that provide a broader grant of coverage where there is a latent loss that is ongoing. Thus, it is always important to review the specific policy language and not just rely on rules-of-thumb.