Some insurance policies contain a “Report Increased Value” condition that reads along these lines:
You must notify us within 90 days of the start of any new building structure costing $5,000 or more; or any additions to or remodeling of building structures which increase their values by $5,000 or more. You must pay any additional premium due for the increased value. We will not pay more than the applicable limit of liability shown in the Declarations, if you fail to notify us of the increased value within 90 days.
My research did not reveal any published decisions involving this particular condition, which could mean, among other things, insurers do not often wield this provision against policyholders or insurers’ application of the “Report Increased Value” condition is relatively straightforward and subject to little debate. Regardless of the reason for the dearth of case law, I urge you to be on the lookout for, and to heed, a “Report Increased Value” condition.
In sum: if your policy contains a “Report Increased Value” condition (or something similar), you do not advise your carrier of applicable improvements, and the improved property suffers a loss, you might be unpleasantly surprised to find insufficient or non-existent coverage for the newly improved (yet now damaged) property. Equipped with this blog post, however, I trust you will not find yourself in such an unenviable position.
To read previous posts in my series on insurance policy conditions, click here.