In reviewing policies, I have noticed a scary trend for policyholders: Insurance companies are often making changes to policy language limiting insureds coverage or ability to recover when renewing the policy. If you are like many policyholders when you get your renewal every year and the declarations page shows that your limits went up and the premiums went up you assume you have the same coverage as last year.

Recently in reviewing a policy renewal for an insured, I was surprised to see a six-page “Notice of Policy Changes Texas.” The document claimed to outline the changes in the policy and had a column of notes to provide an explanation of the change. Three changes caught my eye, and the “notes” for the change didn’t help.

  1. The policy changed the definition of “Actual Cash Value” to allow the “deduction for depreciation” … “to apply to materials, labor, sales tax, and overhead and profit…” This was apparently changed to add an explanation of how depreciation is determined. Insurance regulators in other states have specifically said this is improper, and this blog has written about how some states court systems have pointed out how it is basically impossible to depreciate labor or taxes. This change in the policy wasn’t done to provide an explanation but was done to allow the insurance company to withhold more money prior to repairs being completed.
  2. The policy added language to the Suit Against Us clause. Where the old provision allowed two years and one day after the cause of action accrues, the new provision is for the earlier of two years from the date the cause of action accrues or three years from the date of loss. The explanation was what upset me about this change—claiming to extend the time period for which you may bring suit against the insurance company. The problem with this is that the three-year period would only kick in if it was the earlier of the two options to it would only ever serve to shorten the time period you can bring suit. For example, if the insurance company drags its feet and doesn’t deny the claim until fourteen months after the storm then the three years from the date of loss would be earlier than two years from the denial.
  3. The policy added language to exclude unsealed (lifted) roof shingles. This one is the simplest to understand as the policy now adds an endorsement stating that “lifting or unsealing of any type of roofing shingle” is excluded “unless there is damage to the lifted or unsealed shingle consisting or creasing or tearing or ripping.” At least the notes for this endorsement state this was added to clarify that lifted shingles won’t be covered. In reality, this was added because lawyers and juries were making the insurance companies pay for this damage and instead of simply paying what was owed it was easier to re-write the policies.

These are only some of the changes and only from one insurance company. It is extremely important to read your policy and all endorsements or changes. If you have any questions, feel free to give a Merlin Law Group attorney a call.