If a catastrophe occurs during the term of your homeowners insurance policy which causes damage that you are immediately aware exist, you can file a claim with your insurance carrier to cover the cost of rebuilding or repairing your home and the personal property inside the home. While this situation may seem relatively straightforward because both the peril and loss indisputably happen during the effective period of the policy, many claims are not so clear cut. The insured might be aware of damage when the policy is purchased. Alternatively, the peril causing the loss might have commenced prior to the policy period. The “known loss doctrine” and the “loss in progress doctrine” are common defenses used by insurance companies trying to evade liability for property damage claims.
When a policyholder purchases coverage with knowledge that damage has already occurred, the decision to file a claim for the pre-existing loss may result in more than just denial of the claim. The act of filing a claim under these circumstances might well lead to allegations of insurance fraud by the insurance carrier. Concealment of a pre-existing loss can result in both civil and criminal liability when a claim is pursued based on coverage obtained after a known loss.
Although most policyholders are not surprised to learn about the “known loss doctrine,” the issue of a loss which occurs both prior to and during the coverage period can be more confusing. Under the “loss in progress doctrine,” the issue is how to treat a loss that commences prior to the policy period but continues during the time that the policy is in effect.
The New Mexico case of Leafland Group II v. Insurance Co. of North America provides an example of this defense which is often asserted by insurance companies. The policyholders bought an apartment building in 1983, which had been constructed during the 1970s. The policyholder obtained a comprehensive all-risk policy. A number of years after the insured purchased the building and coverage, a hazardous substance survey revealed the presence of asbestos within the apartment complex. After discovery of the asbestos, the property owner determined that the value of the property had substantially decreased because of the known presence of the carcinogen. The policyholder filed a claim based on the diminished value of the property that was denied.
The insured contended that the claim was covered because the all-risk policy did not expressly exclude coverage for diminution in property value or the underlying cause of the loss. However, the court rejected this claim based on the observation that the insured could point to no incident that occurred while the policy was in effect which caused a direct loss. According to the court, all-risk policies do not apply to losses that are guaranteed to occur. The court reasoned that insurance is a protection against the risk of loss, and this principle is consistent with a loss that is certain to occur during the policy period. While the law may vary based on the jurisdiction, this kind of issue demonstrates complex issues that might justify talking to a Miami insurance claims lawyer.
If your insurance company unfairly denies, delay or underpays your claim, my law firm might be able to help. An experienced Miami insurance claims attorney can help you counter such denials. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.