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									Understanding the Differences




       PLRB Large Loss Conference Nov
                            2-4, 2009   1
PLRB Large Loss Conference Nov
                     2-4, 2009   2
Investigation Relative to
               Coverage
       Including Lender-Placed vs.
                   HO Coverage




           PLRB Large Loss Conference Nov
                                2-4, 2009   3
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                        PLRB Large Loss Conference Nov
                                             2-4, 2009   4
                      Date of
                       Loss




                     Who is
Loan                                          Policy
Docs
                     on the                  Dec Page
                     Deed



                        Who
                        lives
                        here?

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                            PLRB Large Loss Conference Nov
                                                 2-4, 2009   5
   The Named Insured
   Named Insured Spouse
   The Additional Insured
   Estate of the Named Insured
   Legal Representative of the Insured or Estate
   The Mortgage Company
   Lienholder – Can be a Private Citizen
   Banks
   Investors
   Business Partners

                            PLRB Large Loss Conference Nov
                                                 2-4, 2009   6
Photo purchased by Assurant through I-Stock (2009)




                         PLRB Large Loss Conference Nov
                                              2-4, 2009   7
   The Named Insured
   Named Insured Spouse
   The Additional Insured
   Estate of the Named Insured
   Legal Representative of the Insured or Estate
   The Mortgage Company
   Lienholder – Can be a Private Citizen
   Banks
   Investors
   Business Partners

                            PLRB Large Loss Conference Nov
                                                 2-4, 2009   8
                                                     P   Photo purchased by Assurant through I-Stock (2009)
Photo purchased by Assurant through I-Stock (2009)




                                                                                                              Photo purchased by Assurant through I-Stock (2009)




                                                                                   PLRB Large Loss Conference Nov
                                                                                                        2-4, 2009                                                  9
•   Does This Matter?
•   YES if the policy has a vacancy clause.

    • Examples:
      HO – more than 30 consecutive days immediately
       before the loss (Vandalism & Malicious Mischief)
      DP3 – more than 30 consecutive days immediately
       before the loss (Vandalism & Malicious Mischief)




                              PLRB Large Loss Conference Nov
                                                   2-4, 2009   10
•   What does your company consider vacant?

    • Examples:
        Dwelling   with people and contents
        Dwelling   full of contents but no people
        Dwelling   with no people and no contents
        Dwelling   full of debris after a foreclosure
        Dwelling   with vagrants
        Dwelling   with vagrants and scattered contents




                                   PLRB Large Loss Conference Nov
                                                        2-4, 2009   11
   Always check state law for the common law
    definition of “vacant”
   Can the issue of whether the dwelling is
    “vacant” or not be a fact question to be
    ultimately resolved by a jury?
   What claim investigation might be necessary
    to establish “vacancy” as used in the policy
    and as defined by the common law of the
    state in question?



                                                   11A
   Abandonment of property condition
   Neglect Exclusions
   Increase in hazard exclusions
   Duties after loss conditions requiring: (a)
    prompt notice of loss; (b) protecting and
    preserving the property from further damage;
    (c) making reasonable and necessary repairs
    to protect from further damage




                                                   11B
   1. There is definitely a difference.

    ◦ Date of Loss = Occurrence
      Defined in most policies “Occurrence” means an accident,
       including continuous or repeated exposure to substantially the
       same general harmful conditions, which results, during the
       policy period, in:
          a. “Bodily Injury”; or
          b. “Property damage.”
        The date of loss is just that. THE DATE THE LOSS OCCURRED.




                                   PLRB Large Loss Conference Nov
                                                        2-4, 2009       12
   Consider this Scenario:

   A new policy with Company X goes into effect January 1st,
    2009. A total fire is reported with a loss date of May 15th,
    2009 from a company responsible for managing the property.
    The loan on the property is in default so the property
    management company is acting on behalf of the mortgage
    company. During the investigation the adjuster searches for
    the fire report and discovers one does not exist. His instinct
    tells him the fire happened well over a year before it was
    reported. He has worked this area and keeps up on recent
    fires and has no record of a fire in the month of May. What
    should the adjuster do?



                                  PLRB Large Loss Conference Nov
                                                       2-4, 2009     13
   2. When the date of loss cannot be
    determined:

    a.   Complete the initial investigation
    b.   Request Inspection Reports
    c.   Request BPO (Buyer’s Purchase Option)
    d.   Request closing documents/photos
    e.   Neighborhood Canvas
    f.   Working with the experts



                             PLRB Large Loss Conference Nov
                                                  2-4, 2009   14
   Complete the Scenario:

    ◦ In the course of the investigation the adjuster finds out the
      homeowner is having financial difficulty and had moved out of
      the property. In the neighborhood canvas the adjuster was
      told the fire occurred sometime last year (2008) but could not
      get a specific date or anyone willing to give details. In
      reviewing the inspection reports the property management
      company listed the property in good condition with no
      damages. Photos taken in June 2008 from the street level of
      the property however showed fire damages to the roof. The
      adjuster compared these photos to his own photos and
      determined the damages were the same. The experts were
      brought in and determined the date of loss reported was
      actually the date the fire was discovered. The actual loss
      occurred on May 15, 2008.


                                   PLRB Large Loss Conference Nov
                                                        2-4, 2009      15
   Use of legal counsel to evaluate the sufficiency of
    factual proofs
   Use of legal counsel to gather facts through: (a)
    Examinations under Oath; (b) Requests for Production
    of Documents under the Cooperation Clause
   Application of HO3 Cooperation Clause requirements
    to a mortgagee
   Proof of Loss requirements when the claim is made
    by the mortgagee
   Mortgagee’s obligation to support any claim with
    appropriate loan documentation and property
    damage repair/replacement estimates.


                                                           16A
   Testimony is sworn
   Often resulting insureds “walking away” from
    fraudulent claims
   Locks insured in on facts of claim
   No governing litigation rules
   Limits the role of insured’s counsel
   Assess validity of the claim



                                                   16B
Pro-Rata Coverage Determination




               PLRB Large Loss Conference Nov
                                    2-4, 2009   17
   Consider this Scenario:

   Company A has a standard HO policy in force for Mr. &
    Mrs. Johnson for the dwelling at 1000 Anywhere Lane,
    Everywhere, ST, 1000
   Dwelling $350,000

   Company B has a standard HO policy in force for Mr. &
    Mrs. Johnson for the dwelling at 1000 Anywhere Lane,
    Everywhere, ST, 1000
   Dwelling $350,000

   Determining Pro-Rata Coverage in this case is
    easy 50% each.

                              PLRB Large Loss Conference Nov
                                                   2-4, 2009   18
   Consider this Scenario:

   Company A has a policy in force for Mr. & Mrs. Johnson
    for the dwelling at 1000 Anywhere Lane, Everywhere,
    ST, 1000
   Dwelling $325,000

   Company B has a policy in force for Mr. & Mrs. Johnson
    for the dwelling at 1000 Anywhere Lane, Everywhere,
    ST, 1000
   Dwelling $219,000

   Determining Pro-Rata Coverage in this case
    requires a little more work.

                              PLRB Large Loss Conference Nov
                                                   2-4, 2009   19
   Complete this Scenario:

   Company A                          Company B
   Dwelling $325,000                  Dwelling $219,000

   Total coverage available $544,000
   Total damages $408,000 = 75% of total coverage available
   Company A exposure $325,000 x 75% = $243,750
   Company B exposure $219,000 x 75% = $164,250



                                PLRB Large Loss Conference Nov
                                                     2-4, 2009   20
   Most Lender Placed policies have the
    following wording under the conditions.

    ◦ Other Insurance. If there is any other valid or
      collectible insurance which would attach if the
      insurance under this policy had not been effected,
      this insurance shall apply only as excess and in no
      event as contributing insurance and then only after
      all other insurance has been exhausted.

    ◦ Lender Placed Insurance = EXCESS


                              PLRB Large Loss Conference Nov
                                                   2-4, 2009   21
   REO = Real Estate Owned

    ◦ These policies generally go into effect when the property
      becomes bank owned after a foreclosure.
    ◦ The homeowner is usually out of the picture.
    ◦ The property transfer to the bank has been completed.
    ◦ Most standard HO insurance policies cancel when a
      property becomes REO.
    ◦ Losses however still could be presented under the
      standard HO insurance policy if the date of loss occurred
      before the property became REO.

    ◦ Lender Placed REO Insurance = Primary


                                PLRB Large Loss Conference Nov
                                                     2-4, 2009    22
Mortgage Clause
 Who Gets Paid?




     PLRB Large Loss Conference Nov
                          2-4, 2009   23
   Under a standard HO Policy the policyholder
    is usually the homeowner.
   The policyholder would not get paid if:

    ◦ Intentional Loss, meaning any loss arising out of
      any act committed;
     1) By or at the direction of an “insured”, and
     2) With the intent to cause a loss.


    Consider the Mortgage Clause


                                PLRB Large Loss Conference Nov
                                                     2-4, 2009   24
Mortgage Clause.
• The word “mortgagee” includes trustee.
• If a mortgage is named in this policy, any loss
  payable under Coverages A or B will be paid to
  the mortgagee and you, as interests appears. If
  more than one mortgagee is named, the order
  of payment will be the same as the order of
  precedence of the mortgages.
• If we deny your claim, that denial will not apply
  to a valid claim of the mortgagee, if the
  mortgagee: (See your policy for the conditions)

                         PLRB Large Loss Conference Nov
                                              2-4, 2009   25
   Remember the TPA is a third party
    administrator representing the insured or the
    additional insured.
   Working with the representative is important.
   Use the TPA to your advantage to obtain
    information needed to investigate and
    conclude the claim. Make them work for you!
   Be courteous and kill them with kindness!


                          PLRB Large Loss Conference Nov
                                               2-4, 2009   26
   The TPA is usually representing the mortgage
    company.
   The PA is usually representing the additional
    insured (homeowner).
   Both will submit estimates for damages.
   Both will argue the adjuster is wrong.
   Both are making money off of the claim
    proceeds and…
   THEY WILL NOT AGREE!

                          PLRB Large Loss Conference Nov
                                               2-4, 2009   27
   Know your mortgage clause:
    ◦ “Open” (or “loss payable”) clause
    ◦ “Standard” (or “union”) clause




                                          28A
             “Open”                               “Standard”
Typicallyprovides that the lender    The  lender’s rights “shall not be
shall be paid as its “interests may   invalidated by any act or neglect
appear”                               of the mortgagor or owner of the
                                      within described property…
Renders the lender a mere            Operates to create a separate
appointee of policy proceeds          contract of insurance between the
                                      insurer and the lender

Insured/borrower’s   acts can        Insured/borrower’s   acts
defeat the lender’s right to          generally have no impact on the
recover under the policy              lender’s right to recover under
                                      the policy




                                                                            28B
   Mortgagee’s Potential Duties
     (“standard” clause)
   Proof of Loss
   Examination under oath
   Notify of changes in ownership, occupancy
    and risk
   Protect and preserve from further loss




                                                28C
   Mortgagee’s Rights (“standard” clause)
   Direct payment of a loss (to the extent of its lien at the
    time of loss) even without the consent of the mortgagor
   Right to payment of a loss even where certain acts or
    neglects of the named insured mortgagor void coverage
    for the mortgagor
   Post-loss right to participate in appraisal proceedings
   The express right to notice of cancellation




                                                                 28D
   The effect of foreclosure




                                28E
   Claims Adjustment
    ◦   Examine the declarations
    ◦   Establish a timeline
    ◦   Obtain copies of all ownership documents
    ◦   Obtain copies of foreclosure documents
    ◦   Examine notifications
    ◦   Assess knowledge of mortgagee
    ◦   Confirm insurable interest




                                                   28F
   Is the PA licensed in the state of the claim?
   Check your state law regarding the legal rights of the PA and
    the limits placed on the PA’s role in the claim (no legal advice
    for example, limitation on PA acting as contractor,
    remediator, etc.)
   Determine who has the contract with the PA
   Check the PA contract against any state requirements to
    determine if those state requirements are met
   Does the PA have a lien on insurance proceeds?
   What if the insured claims to have terminated the PA’s
    services?
   If coverage to the named insured is denied but payment is
    being made to the mortgagee, does the PA have to be
    included on the insurance proceeds check?



                                                                       29A
   Does your state have such a law?
   Has the municipality in which the property is
    located adopted an ordinance under the state
    law?
   Does the ordinance apply to a payment made
    solely to the mortgagee?




                                                    29B
•   Is insurance taken out by the lender to
    protect their interest in damages to the
    property.

    • Lender Placed Insurance
     • WHY - The standard insurance has either been
       cancelled or the homeowner has not submitted proof
       that there is valid insurance in place.
     • HOW - Paid out of a forced escrow account and
       charged back to the homeowner.
     • The homeowner still has an interest in the property.


                                PLRB Large Loss Conference Nov
                                                     2-4, 2009   30
• 1. Real Estate Owned (REO)
 • Valued Policy Laws: apply to natural persons – a bank
   is not a natural person. Check the laws in the loss
   state.
 • Default Mortgage:
   • If the loan is in default or in the foreclosure process, the
     lender has a right to request to be paid in lieu of the
     homeowner (for the account of). Remember the lender is
     the policyholder on the Lender Placed Coverage. There
     are some states that exclude this such as NY and VA.
     Check the laws in the loss state.




                               PLRB Large Loss Conference Nov
                                                    2-4, 2009       31
•   2. Does the borrower still have an interest?

    • YES if the property is still in their name. Even if the
      foreclosure process has started.
    • YES if the loss state has an extended redemption
      period following foreclosure.
    • YES if the loss state says the homeowner is the
      policyholder regardless of the policy type.




                               PLRB Large Loss Conference Nov
                                                    2-4, 2009   32
•   2. Does the borrower still have an interest?

    • NO if the foreclosure process has been completed
      and the property is listed as being owned by the
      bank.
    • NO if the homeowner has participated in the cash
      for keys program.




                             PLRB Large Loss Conference Nov
                                                  2-4, 2009   33
   1. Protecting the interest correctly on the check
    (Make sure you follow your company guidelines):

    ◦ HO = Named Insured, Additional Insured, Mortgage
      Company(s)
    ◦ DP3 = Named Insured, Additional Insured, Mortgage
      Company(s)
    ◦ Lender Placed = Mortgage Company, Additional Insured
      (Homeowner/Borrower), TPA and/or PA if applicable
    ◦ REO = Mortgage Company
   Attorney should be listed on the check if representing any of the
    above.


                                   PLRB Large Loss Conference Nov
                                                        2-4, 2009       34
   2. Mailing the Payment:

    ◦ HO = Named Insured unless otherwise requested
    ◦ DP3 = Named Insured unless otherwise requested
    ◦ Lender Placed = Mortgage Company unless
      otherwise requested
    ◦ REO = Mortgage Company unless otherwise
      requested
   A request could be made to mail payments to TPA, PA,
    Attorney, Court or Estate Trustee. Notate the file accordingly
    to justify your actions.



                                  PLRB Large Loss Conference Nov
                                                       2-4, 2009     35
   3. Explaining the claim payments to all
    parties involved:

    ◦ It might not be the easiest thing to do but pick up
      the phone and call and explain your payments to all
      parties.
    ◦ Follow up with written correspondence and the backup
      estimate to all parties for review.
    ◦ Explain the procedures set forth by the company you
      represent.




                                PLRB Large Loss Conference Nov
                                                     2-4, 2009   36
Possible Subrogation
  Against the Borrower/Homeowner




            PLRB Large Loss Conference Nov
                                 2-4, 2009   37
1.   Arson
2.   Exit Theft
3.   Neglect and the Obvious Loss




                        PLRB Large Loss Conference Nov
                                             2-4, 2009   38
•   Arson Definition / Punishment
•   Fire/Arson Statistics
•   Fire Classifications
•   Arson for Profit / Motives
•   Recognizing Arson
•   Red Flags
•   Impact
•   Investigating Arson
•   Mortgage Mess
•   Prevention


                            PLRB Large Loss Conference Nov
                                                 2-4, 2009   39
   Any person who willful and unlawfully, or
    while in the commission of any felony, by fire
    or explosion, damages or causes to be
    damaged.
   NFPA 921; The crime of maliciously and
    intentionally, or recklessly, starting a fire or
    causing an explosion.
   The two highest causes of civilians deaths are
    arson at 28% and smoking at 18%. Arson
    leading by far in property
     losses.


                            PLRB Large Loss Conference Nov
                                                 2-4, 2009   40
   If Convicted of Arson
     May result in Prison for Life or no less than
    30 years and Hefty Fine




                           PLRB Large Loss Conference Nov
                                                2-4, 2009   41
   A structure Fire occurs every 31 minutes
   Every 55 seconds in Florida
   323,900 Intentionally set fires
   490 Civilians fire deaths
   3 Fire Fighters Died (on duty)
   1,500 Civilians fire injuries
   7,600 Firefighters on duty injuries
    (intentionally set fire)
   $1.102 Billion indirect property damage


                          PLRB Large Loss Conference Nov
                                               2-4, 2009   42
   Accidental Fire - caused by malfunction of an
    appliance or equipment and or human
    carelessness

   Arson – Setting fires or explosion maliciously

   Undetermined – that which cannot be proven

   Natural – without human intervention


                          PLRB Large Loss Conference Nov
                                               2-4, 2009   43
Photo purchased by Assurant through I-Stock (2009)




                        PLRB Large Loss Conference Nov
                                             2-4, 2009   44
   Collect On Insurance Policy
   Liquidate Property
   Clear Parcel
   Dissolve Businesses
   Reduce Competition
   Concealed loss
   Excitement
   Extremist



                          PLRB Large Loss Conference Nov
                                               2-4, 2009   45
Photo purchased by Assurant through I-Stock (2009)




                         PLRB Large Loss Conference Nov
                                              2-4, 2009   46
Photo purchased by Assurant through I-Stock (2009)




                              PLRB Large Loss Conference Nov
                                                   2-4, 2009   47
Photo purchased by Assurant through I-Stock (2009)




                       PLRB Large Loss Conference Nov
                                            2-4, 2009   48
Photo purchased by Assurant through I-Stock (2009)




                   PLRB Large Loss Conference Nov
                                        2-4, 2009    49
                 Photo property of Assurant (2009)




PLRB Large Loss Conference Nov
                     2-4, 2009                       50
   The first hurdle in combating arson is
    learning to recognize a potential case of
    arson in a fire loss claim immediately.
   Investigation must be undertaken
    immediately to determine whether the
    insured is in fact, responsible for the fire loss.
   If the investigation is not, undertaken
    immediately physical evidence establishing
    the corpus delecti of arson will rapidly
    dissipate.

                            PLRB Large Loss Conference Nov
                                                 2-4, 2009   51
 Don’t always rely on the responding fire
  department to identify arson. They are not
  simply trained to do so.
 Claims representative must take the initiative
  in ordering an investigation of fires of
  undetermined origin when appropriate, under
  the circumstances.
 Circumstance that warrant an investigation
  are the traditional
  “RED FLAGS”

                        PLRB Large Loss Conference Nov
                                             2-4, 2009   52
Red Flags




      PLRB Large Loss Conference Nov
                           2-4, 2009   53
•   Did the fire occur during renovation?
•   New coverage or coverage about to lapse?
•   Recently increase or additional coverage?
•   Did the fire start late at night?
•   Duplicate insurance?
•   Property offered for sale at time of fire?
•   Vacant or abandoned property?
•   Property recently sold or purchased?
•   Was the insured recently divorced or
    separated?

                          PLRB Large Loss Conference Nov
                                               2-4, 2009   54
•   Did the fire start immediately following a family
    argument?
•   Was the entry for firefighters blocked by vehicles
    or contents pushed up against
    entry doors?
•   Was there a short period of time between exit of
    occupant and fire?
•   Is this the second fire in same structure?
•   Does the contents list include items of high value
    purchased recently?
•   Is the insured unusually calm?


                            PLRB Large Loss Conference Nov
                                                 2-4, 2009   55
•   Are there large, outstanding utility bills or
    property taxes?
•   Where contents such as major appliances
    removed prior to the fire?
•   Was valuable or sentimental property recently
    moved to a safe place?
•   Were pets absent from the home at the time
    of the fire?
•   Are the insured’s movements unaccounted
    for at the time of the fire?

                          PLRB Large Loss Conference Nov
                                               2-4, 2009   56
•   Were personal items or important papers
    absent?
•   Is the property over insured?
•   Is the insured under economic duress or will
    he/she gain some economic advantage from
    the fire?
•   Do the alleged contents of the structure seem
    improbable (such as a Picasso Oil Painting in
    a low income apartment)?


                         PLRB Large Loss Conference Nov
                                              2-4, 2009   57
   Arson continues to be one of the most
    substantial problem facing the insurance
    industry and most difficult to prove. The
    intentionally destruction of property for
    insurance gain has plague the field of
    insurance since the first fire policy was
    written. Although, arson can never be
    eliminated it can be resisted and payment
    avoided when an insurer makes commitments
    to develop a strategy against arson.

                       PLRB Large Loss Conference Nov
                                            2-4, 2009   58
   Motive
   Opportunity
   Incendiary




                  PLRB Large Loss Conference Nov
                                       2-4, 2009   59
   Inspect Loss Site
   Interview Witnesses/Statements
   Check Company and Industry Sources
   Work with Local Authorities
   Statutory Consideration
   Consider Examination Under Oath




                        PLRB Large Loss Conference Nov
                                             2-4, 2009   60
   What is Exit Theft?
   Items that normally would stay with the home
    when it is sold are taken when the property is
    being vacated.
    ◦ Examples:
        Kitchen Cabinets
        Built in Appliances
        Doors/Windows
        Heating/AC systems

    REMEMBER THE MOVIE THE MONEY PIT!

                               PLRB Large Loss Conference Nov
                                                    2-4, 2009   61
   Why does Exit Theft occur?

   The home is in the process of being foreclosed
    because the loan has gone into default.
    ◦ Given the current market you can expect to see more of
      this under the standard HO policies.
   The homeowner is losing everything they have
    worked for and told to vacate the property in a
    matter of days.
   They look around and take things that would
    normally stay with the home.

                               PLRB Large Loss Conference Nov
                                                    2-4, 2009   62
   Failure to maintain heat to the property!
    ◦ Result – Freeze claims and extensive water damage.
   Failure to keep the property secure!
    ◦ Result – Theft/vandalism claims from property
      being open to vagrants and opportunists.
   Failure to maintain property!
    ◦ Wear and tear damages resulting in ensuing
      damages that would have not normally occurred.
    ◦ Liability claims from innocent parties/potential
      buyers visiting the property.


                             PLRB Large Loss Conference Nov
                                                  2-4, 2009   63
   Nothing wrong with continuing to investigate
    information gathered during the claim.
   So long as the information is valid to the loss
    presented.

    ◦ Don’t go digging to find something simply because
      you don’t care for the policyholder. Your
      investigation has to be justified!




                             PLRB Large Loss Conference Nov
                                                  2-4, 2009   64
a)       Against the borrower/policyholder
          If the policyholder is found responsible for the
           damages even after the payment is made seek
           restitution.
b)       Against the Property Management
         Company/TPA?
     •     If the property management company is found
           responsible for the damages by not fulfilling the
           duties set forth in their contract restitution may be
           possible.




                                    PLRB Large Loss Conference Nov
                                                         2-4, 2009   65
   Here is where your experts become key
    players in the outcome of the bottom line to
    your company.
    ◦ If the party responsible for the damages are known
      seek assistance to begin the
      subrogation/restitution process.
      Legal
      Special Investigation Units
      Outside Partners – Collection Agencies




                               PLRB Large Loss Conference Nov
                                                    2-4, 2009   66
PLRB Large Loss Conference Nov
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   Actions against the named insured if the loss
    was caused deliberately by the insured –
    arson, deliberate destruction of property or
    theft/removal of property.
   Assignment of the mortgage upon payment
    to the mortgagee.




                                                    67A
Amount of Recovery
    RCV/ACV Coverage vs.
         Lender Insurable Interest




        PLRB Large Loss Conference Nov
                             2-4, 2009   68
   The borrower/homeowner disappears
    ◦ You can always make additional attempts to locate
      depending on the need. See advice from counsel to
      insure your efforts are warranted.




                            PLRB Large Loss Conference Nov
                                                 2-4, 2009   69
   Determining the depreciation
    ◦ Make sure the depreciation taken in applicable
      states is based on the condition of the property.
      Too much depreciation or too little depreciation can
      put you in a position of not being able to back up
      your work.
    ◦ Know your company guidelines and follow them
      every time.




                              PLRB Large Loss Conference Nov
                                                   2-4, 2009   70
   Most policies are based on ACV.
   This means your payment should reflect the
    following:
    ◦   Replacement Cost Value
    ◦   Less the Recoverable Depreciation
    ◦   Less the Non-Recoverable Depreciation
    ◦   Less the Deductible
    ◦   Equals the Actual Cash Value
   If your documentation backs up the payment
    made in accordance with the policy
    provisions you will be fine!

                              PLRB Large Loss Conference Nov
                                                   2-4, 2009   71
   Determining the Loan Balance is easy – Simply
    request the payoff up to the date of loss.
    ◦ Make sure the loan balance you receive is for the
      property covered under the policy.
    ◦ Look at property description to ensure the loan is
      not for multiple properties.




                              PLRB Large Loss Conference Nov
                                                   2-4, 2009   72
   1. Current Loan Balance v. Loan Balance on
    DOL
   Understand your policy provisions:
    ◦ HO/DP3
      Could be the total balance that includes principle,
       earned interest, unearned interest, fees and penalties.
    ◦ Lender Placed
      Principle + Earned Interest through the DOL
   Know what your company expects you to do!


                                PLRB Large Loss Conference Nov
                                                     2-4, 2009   73
   2. Fees included in Loan Balance

    ◦ Banks want to receive as much money as possible when
      there is a loss.
    ◦ There is a strong possibility any balance remaining could
      be written off.
    ◦ When the bank knows insurance is involved they can and
      will try to collect everything.
    ◦ Everything includes:
        Late Fees
        Early Payoff Fees
        Change of Ownership Fees
        Etc.



                                    PLRB Large Loss Conference Nov
                                                         2-4, 2009   74
   Measure of damages in property loss cases will likely
    be different under the insurance contact as compared
    to tort based claims in subrogation
   Check your state law on rules of recovery tort for
    property damage
   General rule – an award of damages to property
    generally limited to the restoration/repair cost or
    diminution in fair market value before and after loss,
    whichever is less
   Loss of fair market value must be established by
    competent and substantial evidence using a
    “qualified” expert witness
   Unique structures – potentially an exception in some
    states to the diminution in fair market value rule



                                                             75A
Tying it All Together
   Legal Perspective




       PLRB Large Loss Conference Nov
                            2-4, 2009   76
   Know the language of your insurance contract
   Always conduct a complete and timely investigation into a loss
    1.   Cause and Origin
    2.   EUO
    3.   Document Requests
    4.   SIU, if necessary
   Be careful to avoid unnecessary delays in the claim investigation
    and conveying a coverage determination to the insured.
   Maintain constant communication with your insured and document
    everything.
   Be cognizant of your state’s Unfair Claim Practices Act and Lien
    Laws pertaining to Municipal Liens and Public Adjuster’s liens.
   Verify that the policy language is in tune with the recovery of all
    insureds, including the Named Insured, Additional Insureds, and the
    Mortgagee(s), if applicable.
    1. Cooperation Clause
    2. Policy Conditions and “Duties After Loss”
    3. Proof of Loss requirement



                                                                          77A
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                     2-4, 2009   78
PLRB Large Loss Conference Nov
                     2-4, 2009   79

								
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