Today's society is on the move--a far cry from when people not only remained in the town where they were reared but often spent their entire lives in their childhood home.
COVERAGE CONCERNS
Agents and renters must work together
to assure continuous coverage
By Roy C. McCormick
Insurance professionals can enhance the image of the insurance industry when they make their clients aware of the details in renters policies.
Today's society is on the move--a far cry from when people not only remained in the town where they were reared but often spent their entire lives in their childhood home.
Frequent moves are brought about by: job changes--many people change the type of work they do several times during their careers; transfer of employees of large firms; layoffs--currently widespread because of company downsizing and economic conditions; and opportunities for young people in distant cities.
Those who are about to make a move and who carry renters insurance should contact their insurance agent promptly to be assured of continuous coverage without limitations or gaps.
Personal Property Coverage C in Homeowners Form 4 covers an insured's personal property in a newly acquired principal residence, in the full limit of insurance specified, for 30 days from the beginning of the moving process. Thereafter, coverage drops to 10% of the stated limit unless an address change is made by endorsement or a new policy is issued.
The fairness of the drop down was stressed by the Pennsylvania Superior Court in Pruser v. State Farm Fire and Casualty Company. The insured, a tenant, carried a renters policy in the amount of $15,000 at a residence location described in the policy. He moved his property to a new principal residence--another rental property--without giving notice of the change of address to either his insurance agent or the insurance company.
The insured's personal property was destroyed by fire several months later. When the insurer offered to pay $1,500, the insured filed a suit seeking to recover on the basis of the $15,000 specified amount of insurance. The trial court supported the insurance company's position. On appeal, the judgment of the trial court against the insured and in favor of the insurer was affirmed.
The court said that the insurance company had a "legitimate interest" in limiting coverage elsewhere than on the described premises. "This is the only manner in which an insurer can protect itself from the actions of an insured who relocates personal property. . . . the specified location of the insured property is all important to an insurer in determining not only the rate, but also whether to accept the risk at all."
It is extremely important that agents and brokers fully understand the coverage particulars so that they can emphasize to the insured the importance of giving notice when moving from the described premises--or immediately after the move takes place. Keep in mind the 30-day grace period limit.
Subject to underwriting considerations, a renters policy can usually be endorsed to assure continuous coverage when the insured moves from an apartment (or other rented premises) to another within the same state. A move to another state generally requires cancellation of the existing policy and the issuance of a new one for the new location.
It is easy for people to overlook notification at the time of moving, even though they had been made aware of its importance at the time the coverage was arranged. There can be a lot of stress in making a move, compounded by job problems and considerations. Insurance providers can stand out if they keep in touch with their valued insureds--particularly at renewal time. It's wise to remind renters to give a call when they're about to make a move.
A good running mate for the "notice of moving" reminder is an inquiry about any recent purchases of high-value personal items. They probably will be candidates for scheduling. Needed additional protection may be in order whether or not a move is in the offing.
Another scenario involves company downsizing and adverse economic factors. Individuals and young families who have been renting and who lose their jobs temporarily move in with parents at the old homestead, bringing considerable personal property with them--property that was covered by renters insurance. The policy should be endorsed (or rewritten) to cover at the short-term address to assure continuous sound protection. It must not be assumed that the coverage isn't needed because the parents are insured.
Insurance professionals can enhance the image of the insurance industry when they make their clients aware of the details in renters policies. *
The author
Roy C. McCormick is consulting editor of the Policy, Form & Manual Analysis Service (PF&M) published by Rough Notes.