Homeowner’s insurance policies are complicated because they apply to complex and widely varying sets of facts. Imagine the kitchen fire in Baker’s hypothetical. Soot from the fire seeps into the suspended ceiling; can the ceiling be cleaned or must the ceiling tiles be replaced? Water used to extinguish the fire wets drywall is in an adjoining wall. Can the drywall be sanded and painted?
Is spraying with a mold preventative sufficient or must it be replaced? If replaced, can only the new portion be painted, or will the whole wall have to be repainted to match? The whole room? One of the benefits of homeowner’s insurance policy is “any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living” when the residence premises are “uninhabitable”. If the kitchen is out of commission but the rest of the house is undamaged, is the house uninhabitable so that the residence can move out temporarily?
Particularly because the homeowner’s insurance policy is complicated, the policyholder depends on the insurance company to honor its promise to indemnify them and to follow the rules of the road in handling the claim. But the company is also able to use the policy’s complexity to profit at the homeowner’s expense.
Every loss under a homeowner’s insurance policy is likely to involve complicated interpretations of its terms and a unique set of facts. For a homeowner to receive what she is owed under the policy, she must know what is owed. The complexity of the policy and its unfamiliarity to the homeowner means that in many cases the homeowner will only know what the company tells her, especially about some of the more esoteric coverages and interpretations. This is the first responsibility of adjuster, required by law in many states: to disclose all benefits, coverages, and time limits that may apply to the claim and to assist the policyholder with the claim.
Adjusters do not always live up to this responsibility, and no one outside insurance companies knows how much this failure is due to a lack of training, carelessness to delay and deny claims. Some examples: a homeowner telephones the insurance company’s claims call center and reports that his chimney has collapsed. The claims representative on the other end of the phone may simply respond correctly that collapse is not covered, the homeowner accepts the explanation, and that is the end of the story. In fact, “collapse” is excluded but that does not mean the damage to the chimney was.
If the chimney was struck by lightning or a falling tree branch, if wind loosened bricks, or if some other external force had caused the collapse, then the damage would be covered. If the claims representative fails to fulfill the company’s responsibility to advise its policyholder of these coverages, the homeowner would not know and the insurance company would escape payment.