COVERAGE CORNER

I DON’T WANT TO HEAR FROM YOU THIS SUMMER: DEBRIS REMOVAL HEADACHES

By Kevin C. Amrhein, CIC

It’s July in America. While most are planning for fireworks and vacays, yours truly is prepping for my own annual summer tradition: responding to inquiries regarding inadequate coverage for debris removal expense resulting from a storm.

In my years as a consultant, I can think of no property coverage issue that has confused agents/ insureds at claim time more often than debris removal expense. If cover is sufficient, the claimant is none the wiser. If not, the claimant will demand answers. The purpose of this article is to help you dodge the latter and to ensure you’re not among those who will contact me for assistance after it’s too late.

This article focuses on the ISO HO-3 policy.

DEBRIS THAT IS NOT A TREE

Roof tile, siding, lumber, wallboard, furniture, and other storm-soaked stuff is everywhere. If your insured is lucky, whatever debris there is will be hand-draggable to the curb and picked up by local authorities for free. If your insured is unlucky (like mine always were), he’ll have to find a service. From an expense standpoint, labor + grapple truck + multiple loads + dump fees = “holy %^&*!” It’s impossible to determine the expense ahead of time, and it absolutely will be higher than your insured expects. Always.

The unendorsed policy will respond to the removal expense via Additional Coverage 1. Debris Removal (a.) based on the following triggers:

1. The debris is covered property, and

2. Is created by a Peril Insured Against.

If triggered, the policy provides coverage for the cost to remove debris from the premises up to the limit of insurance applicable to that damaged property (example – damaged dwelling stuff subject to Coverage A limit, personal property stuff subject to Coverage C limit, etc.). If the combination of the cost to cover the direct damage to the property and the cost to remove debris exceeds the applicable limit of insurance, an additional 5% of that limit is available to cover the cost of debris removal.

A few red flags for the agent:

▲ The insured has stuff considered by the policy as Property Not Covered

▲ The insured has another structure on the premises which is held for rent as a residence or used for “business” purposes (other structures used for such purposes are not covered property)

▲ The insured has limited Perils Insured Against

▲ The limit of liability applicable to the damaged property has been significantly reduced due to the severity of the loss

DEBRIS THAT IS A TREE

The unendorsed policy will respond to the removal expense of fallen trees via Additional Coverage 1. Debris Removal(b.) based on the following triggers:

1. If the tree is the insured’s, it must be felled by one of the few specifically listed perils. If the tree is a neighbor’s, it must be felled by a Peril Insured Against under Coverage C – Personal Property.

2. The tree must damage a covered structure. If it doesn’t, it must either block a driveway (to the point an auto cannot enter or leave the “residence premises”) or block a ramp/fixture designed to assist a handicapped person to enter or leave the dwelling building.

If triggered, the policy provides coverage for the cost to remove debris from the premises up to $1,000 per loss. This policy further limits this already-dreadfully-low amount by capping coverage at $500 per tree.

A few red flags for the agent:

▲ The insured’s dwelling and/ or other structures are within striking distance of a tree(s) on the insured’s premises or a neighboring premises.

▲ The limited perils required to trigger coverage for an insured’s tree. For example, the tree may not be pushed over by the storm’s wind (one of the listed perils) but fall days later due to ground saturation from rain (not one of the listed perils).

▲ An insured not realizing that coverage is contingent on a tree damaging a covered structure (especially if the insured has structures that have been specifically removed from coverage by endorsement such as a fence or shed) or blocking access. In other words, the insured likely thinks the cost to remove the fallen tree is covered whether or not it actually hits or blocks something.

▲ The very low limit available.

CONCLUSION

Summer storms will continue their annual earthly tradition of pooping the party. Agents aware of the limitations reviewed in this article are in a good position to prepare insureds and inquire with carriers about endorsements or other solutions to broaden coverage.

That’s all for now. Until the next round … cheers!

Kevin C Amrhein, CIC, is IA&B's education consultant. He works with our CISR and CIC programs, as well as our special topic seminars and live webinars. Catch him at one of our upcoming professional training offerings: IABforME.com