Can you imagine your 85-year-old grandmother or your uncoordinated friend who has never climbed a ladder going up on a slanted roof and inspecting it for wind or hail damage after a storm? Most insurance company lawyers argue the position that their client’s customers have to do this to satisfy the requirement that a loss must be reported “promptly.”

The Arkansas Insurance Department issued a Bulletin this week which protects policyholders from this precarious and dangerous practice called for by insurance company lawyers. The Bulletin states in part:

It has come to the attention of the Arkansas Insurance Department that Arkansas residents have been denied coverage under their homeowner’s policies for damages caused by the peril of windstorms or hail. Many of these denials are due to the insured’s failure to report damage within the time period required under their policy.

Due to the fact that it is often unreasonable to expect a homeowner to identify wind or hail damage within the time period specified in the policy, it is the position of this Department that a period of 365 days must be allowed from the date the insured discovers or should have discovered the damage from wind or hail.

Language in policies limiting the time frame to 365 days will be interpreted to mean claims will be filed within 365 days of when a reasonable person exercising ordinary due diligence would have discovered the damage.

The Department also recognizes that there should be some final limitation to liability for such claims, and will consider claims made outside a five year time frame to be an unreasonable amount of time for a policyholder to discover damage from windstorms or hail. Five years was determined by the Department to be a reasonable measure based on state law limitations on actions for breach of contract. Ark. Code Ann. § 16-56-111.

Most people do not report hail or windstorm damage until a leak occurs or they see their neighbors getting roofing companies out to fix roofs. Often, a homeowner starts wondering if they need to report a loss when water starts dripping from the ceiling on their head or questioning why everybody else is all of a sudden getting their roofs worked on by contractors. Then, they think to call their insurance agent to report a possible loss—they rarely take the dangerous step of climbing up a roof to find out what happened.

Even if they climbed up onto the roof, does anybody truly believe they know what to look for? HAAG Engineering suggests that insurance company adjusters are not qualified to do so unless they first get a special certification following classroom and field instruction.

The Arkansas Department of Insurance is to be congratulated for this commonsense bulletin. The first rule of insurance is to protect the policyholder and afford coverage rather than allowing more loopholes frustrating payment. Other departments of insurance should make similar bulletins and make insurance companies fairly Pay Up!

Thought For The Day

You cannot push any one up a ladder unless he be willing to climb a little himself.
—Andrew Carnegie