Why Insurance Companies Need to Be Clear on Policy Exclusions
September 9, 2015
California is experiencing one of its most severe droughts in history, and it is affecting more than just fields. Many insurance companies have become less inclined to extend coverage, or limit it, to those who live in such areas that may be at risk for wildfires.
This is an example of insurers not willing to take the risk of insuring a home that has a much higher likelihood of being severely damaged or destroyed by a particular circumstance – in this case, fire.
It is important for insurance companies to be clear about what they choose to include and exclude from their policies. For example, you may cover fire damage, but not cover completely destroyed homes, or homes that have water damage resulting from attempts to save the home. Having an exclusion specifically for wildfires is also an option.
If a certain event is specifically listed in the insurance policy as as an exclusion, then there is little room for the insured to develop a legal argument to the contrary. Listing such specific exclusions will help you, as an insurer, to avoid legal liability for damage from the excluded circumstance.
Having your insurance policies and communications correctly and clearly worded can save a lot of heartache for your clients, and unnecessary legal challenges for you. We often hear of consumers who are shocked to find that damage resulting from certain incidents are not covered by their insurance.
Determining Insurance Coverage: Insurance Coverage Law
An insurance policy is a contract, and consumers are agreeing to all of the terms of the contract when they sign it, regardless of whether or not they have read all of it. Nonetheless, having all of the terms clearly explained in writing is imperative should litigation arise.
Having your policy documents prepared by an attorney who is well-versed in insurance law should be the goal of every insurer. While the policy itself may need to be long and comprehensive, you can use simple language on the declarations page that clearly explains coverage and exclusions. This will help homeowners to better understand their policy, and they can delve further into the policies terms, conditions, and exclusions should they choose.
Insurance Policy Challenges By Consumers
If a consumer begins a legal challenge on a decision you’ve made to refuse cover under a policy, it is vital that you engage an experienced insurance coverage attorney. A local insurance defense attorney is ideal as they know of any specialized local circumstances, other area attorneys, and the local judges.
Our attorneys at Arata Swingle & Van Egmond are very experienced in insurance law, and we welcome your call today at (209) 522-2211 to discuss drafting of your policy documents, or defending challenges to policy coverage.