We are continuing our discussion of a study scheduled to be published in January. The researcher, a law school professor, looked at policies from the top 10 insurance groups in six states. (Florida was not one of them.) What he found was that some of the big insurance companies use policy language that is "systematically less generous" than the language used in the once-standard Insurance Services Office policy.
Some of the differences are subtle, and some are less so. In our last post, for example, we talked about per item and aggregate damage limits for a "sudden electrical current." The peril isn't really a high priority, so the difference could easily go unnoticed. The study found, though, that some policies do not include mold or even lead coverage -- items that, depending on the homeowner, might be more noticeable.
In other cases, the language looks the same but has very different results. According to the researcher, the standard ISO policy insures against "risk of direct physical loss to property." He found one policy that substituted "risk of accidental direct physical loss" for the standard term and another that described it as "sudden and accidental direct physical loss."
Again, the change looks minor, but it isn't. Chances are good, for instance, that a tree limb crashing through your front window would be direct, accidental direct, and sudden and accidental direct physical loss.
But what about the baseball that some unknown kid decides to hurl through the same window? The addition of the word "accidental" could mean the difference between a paid claim and a denied claim.
We'll wrap this up in our next post.
Source: Wall Street Journal, "A home-insurance trap?" Leslie Scism, Dec. 3, 2011
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