Lawyers who handle commercial insurance claims can tell you that the most common type of commercial property insurance is the Building & Personal Property Coverage Form.
The Building & Personal Property (BPP) coverage form is the most commonly used policy to insure commercial buildings and contents. Covered perils for the BPP are listed in separate cause-of-loss forms.
The BPP generally covers:
What is the difference between replacement cost and actual cash value. Knows the difference can mean many thousands of dollars on a claim.
Pursuant to the 1998, Austin Court of Appeals opinion styled, Great Texas County Mutual Insurance Co. v. Lewis, “replacement cost” is when the insurer pays the insured the “amount necessary to repair or replace” the damaged property with another “of like kind and quality.” The insurer is agreeing to restore the property to a condition substantially the same as that existing before the damage was sustained.
In Great Texas, the court said that replacement cost is a measure of loss that does not allow for depreciation. As an example, the Great Texas case involved damage to a car engine. The insurer calculated the cost of repair to be $3,608.27. From this amount the insurer subtracted a deductible of $527.00 and $2,031.72 for betterment or depreciation, leaving $1,049.55, which the insurer offered the insured to discharge its obligation under the property damage section of the policy. The court stated that, because the car was a functioning or operating automobile before the damage, the insurer was required to pay an amount necessary for the repair or replacement of an automobile of that character. If the insurer were allowed to to discharge its obligation by paying the insured $1,049.55, the insured would not have a sum sufficient to restore his engine and automobile to a functioning or operating state. Therefore, the insurer was required to pay the cost of a remanufactured engine without deducting for betterment or depreciation.
Insurance lawyers may know the difference between the two above types of policies but most people do not know the difference.
Property insurance may be issued on either:
An “all risk” basis, meaning that all risks of physical loss are covered except for excluded perils.
People will speak of “sticker shock” in reference to buying automobiles. The term is also used when seeing hospital bills. But the biggest shocker of all can be the bill for an air ambulance.
The Claims Journal published an article in February of 2018. The article is titled, Appellate Court Rules Insurers Not On The Hook For Air Ambulance Reimbursement Rates. It discusses a case from the Austin Court of Appeals. Here is what it tells us.
The Austin Court of Appeals issued a decision in a case involving the high prices that air ambulances charge Texas workers’ compensation insurers.
Attorneys handling auto insurance problems will see situations where a person has their insurance raised after a claim. This is sometimes done in violation of Texas laws. The Washington Post published an article in February 2018, that deals with auto insurance rates. It is titled, Auto Insurance Rates Have Skyrocketed – And In Ways That Are Wildly Unfair. Here is what the article tells us.
Auto insurance rates have increased at more than twice the rate of inflation recently. Nationally, the rates are $1,427. Catastrophic weather caused some of the increase in 2017. Ineffective state regulators also contribute by not holding auto insurance companies in check.
Consumer advocates say insurers have become adept at using Big Data to set rates for drivers using formulas that are complex and sometimes hidden from view. In the crazy, mixed-up world of car insurance, credit ratings and college diplomas can have a bigger bearing on car insurance premiums than someone’s driving record. The people most often hurt are low-income drivers who can least afford to buy state-mandated insurance, they say.
An “insurable interest” exists when the insured derives a pecuniary benefit or advantage by the preservation and continued existence of the property or would sustain a pecuniary loss from its destruction, according to the 1993, Dallas Court of Appeals opinion, Jones v. Texas Pacific Indemnity Co.
In the 1986, Tyler Court of Appeals opinion, Thompson v. Trinity Universal Insurance Co., the sole owner of a corporation that was a holding company for business interests who suffered a pecuniary loss from the destruction of a building owned by the corporation has an insurable interest in the building.
In the 1985, San Antonio Court of Appeals opinion, St. Paul Fire & Marine Insurance Co. v. Daughtry, the owner of a house offered the house to a house mover, as long as he could remove it by December 31, 1982. The owner also gave the insured a letter permitting him to move it after January 1, 1983, if the mover failed to exercise his option. Before the mover’s option expired, the insured applied for a “builder’s risk” policy on the house, and the insured’s agent issued a binder on the policy. A fire destroyed the house on December 21, 1982. The court held that the insured did not have an insurable interest in the property, as he suffered no pecuniary loss as a result of the destruction of the property.
Insurance lawyers will tell you that a person must have an insurable interest in the insured property to recover under an insurance policy. This is also stated in the 1993, Dallas Court of Appeals opinion, Jones v. Texas Pacific Indemnity Co.
The purpose of the requirement of an insurable interest is to discourage the use of insurance for illegitimate purposes as discussed in the 1999, Austin Court of Appeals opinion, Valdez v. Colonial County Mutual Insurance Co.
The 1998, Fort Worth Court of Appeals opinion, Foust v. Old American County Mutual Fire Insurance Co., tells us an insurable interest exists when the insured derives a pecuniary benefit or advantage by the preservation and continued existence of the property or would sustain pecuniary loss from its destruction.
Commercial property insurance includes all forms of insurance covering property loss exposures of both business and non-profit organizations. The most common commercial property coverages are provided under standard forms developed by Insurance Services Office, Inc. (ISO) or the American Association of Insurance Services (AAIS). In many instances, an organization’s property is provided through “package policy.” A package policy ordinarily provides different types of coverage (e.g., property insurance and liability insurance). A monoline policy, in contrast, provides only one distinct type of coverage. The most common form of commercial property insurance is the Commercial Package Policy printed by ISO since 1986. Commercial property insurance can consist of:
One of the primary duties of an insured under his insurance policy is to cooperate with the insurer’s investigation of a claim. As an example –
The Texas Auto Policy provides:
A person seeking coverage must (1) cooperate with us in the investigation, settlement, or defense of any claim or suit; and (2) properly send us copies of any notices or legal papers received in connection with the accident or loss.
Here is some general property insurance information and personal property insurance information.
Property insurance involves the indemnification of the insured by the insurer for the oss of, or damage to, identifiable property described either specifically or by general language in the policy. That is what was stated in the 1973, Dallas Court of Appeals opinion, Cumis Insurance Society v. Republic National Bank of Dallas.
As stated in the 1989, Corpus Christi Court of Appeals opinion, Warrilow v. Norrell, coverage evaluations in the context of property insurance examine the relationship between perils covered under the policy and perils excluded under the policy.
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