by Dizzzdee » Sun Oct 18, 2009 01:49 pm
my parents had a fire and their house burned to the ground. Problem is they had an insurance lapse (payment was made before fire but..... instead of reinstateing policy their broker rewrote a new policy instead of reinstating original one and the value of my parents house went down $ 51,000.00. My question is if they were"supposedly" sent a cancellation notice on Aug 4th that if payment of $55 and change was not made by Aug 22nd the policy would be cancelled. My mom never got that letter and did not make a payment until the agent called her on Sept 18th. An insurance rep told my mom that they reinstate policies up to 30 days from DATE OF CANCELLATION. am I correct in thinking it was only 26 days ?
Posted: Mon Oct 19, 2009 04:21 am Post Subject:
what is the actual period of insurance on the policy - the date at which the policy legally stops providing cover? I suspect it will be 22 august, therefore even if the policy were canceled the same day she should be within the 30 day period.
when they sent the renewal notice is pretty irrelevant here I think, they can send that out any time they like, but it would of course make sense to send it out a few weeks before policy expiry, and this seems to be whats happened here.
also, you may want to check the terms of the policy, house value may not be an issue if the policy provides for reinstatement of the asset rather than indemnity, i.e. the policy may provide for replacing the house rather than just paying a lump of money.
Posted: Mon Oct 19, 2009 04:31 am Post Subject:
opps DP - sorry
Posted: Wed Oct 21, 2009 02:01 am Post Subject:
From your post, it sounds as if the "first" policy on the house had lapsed due to non-pay. The policy period that Heidrek mentioned means nothing in this case. A policy period is nothing more than the length of time the policy will run prior to expiration IF THE PREMIUMS ARE PAID. Homeowner insurance policies normally have 1-year policy periods and will renew if not "nonrenewed" by the carrier.
The cancellation notice sent on August 4 was a "late-payment" reminder. The premium payment was more than likely actually DUE on August 4 and the insurance company was allowing a period of time after the policy premium was due for your parents to pay the premium and keep the policy in force.
Homeowner and auto insurance policies really don't have true "grace periods" like those afforded in life and health insurance. You may be given a period of time to make your premium payment after the original due date, but there's a difference between "grace" and "late payment" periods. A grace period is a period of time in which you can make your premium payment after the original due date and keep your policy in force UNINTERRUPTED. This means that claims incurred in the grace period are covered as long as the premium payment is made within the grace period. Certain states have different rules, but this is the norm.
Late-payment periods are different. These are normally periods of times in which the premium can be paid after the original due date, but in this case, your premium payment will normally REINSTATE the policy, but usually with a lapse in coverage for that short period of time. If you want to reinstate the policy back to the original lapse date, which would indicate NO lapse in coverage, most carriers require their insureds to sign a statement attesting to the fact that there have been no losses during the lapse period. Any losses which occurred will not be covered.
I have a concern that the agent simply rewrote the policy with another carrier as well. Did the agent know of the house fire? Probably did, huh? I don't know of ANY insurer that will accept a new insured immediately after a total loss on the insured's home. NONE. Did the agent or your parents lie on the application when you were asked about any losses in the past 3 (or whatever) years? Hmmmm.
I disagree with Heidrek's thought that the coverage ended on August 22. I think that the coverage actually lapsed on August 4...the original due date.
When was the house fire? What specific date? I also need to know what you mean about the "the value of my parents house went down $51,000.00." Are you referring to the market value or the replacement cost of the home? Market value has nothing to do with insurance. Homeowner coverage is based on the replacement cost of the home in almost every situation.
So...can you address my questions? That would be great!
InsTeacher 8)
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