The most common coverage extension is for debris removal. Virtually every policy allows some additional money for debris removal, once policy limits are exhausted. The amount will either be a stated dollar amount or a percentage of the stated limit of coverage. The two most common errors people make are that they assume debris removal only applies if the building is being demolished, and they calculate the amount solely as a percentage of the building limit.
Regarding the issue of building demolition, the policy language refers to removal of debris. Every insurance repair job has a debris removal component. Under most policies, the entire tear out and disposal of all damaged items falls under “debris removal.”Therefore, in an underinsured claimwhere repairs are being made, it is important to segregate the tear-out and disposal costs from the general estimate, and to claim those costs under debris removal.
Also, most policies are worded loosely enough that debris removal coverage will provide separate monies for building debris and contents debris. Thus, even though an insured may hit limits under the building debris coverage, they can often segregate the cost to remove and dispose of destroyed contents as well.
Another common extension that is generally overlooked is landscaping coverage. Often, trees and shrubs are damaged as a result of the loss or will be damaged during the course of repairs. Once a landscape bid is obtained, a claim can be made immediately for the loss. Most insurance company adjusters tend to assume that these costs must be incurred before payment is made, relying on replacement cost coverage. Yet the extended coverage for landscaping, unlike debris removal, typically does not include “when incurred” language. And since trees and shrubs appreciate with time, the actual cash value and replacement cost value should be the same.
When reviewing the policy, remember that many words have broad meanings that can expand coverage. Since insurance companies usually write the policies, most courts have held that any ambiguity in an insurance policy is to be interpreted in favor of the insured. Therefore, a little creativity can help when underinsured. If you look at things a little differently, you may be able to create a strong argument to increase your recovery.
One typical scenario is where an insured has exceeded limits on the building, but not the business personal property, or vice versa. There are many items that can easily fit into either category. Fixtures and equipment, for instance, are often specifically addressed under both the building and business personal property coverage. Thus, when the claim is prepared, these items may be claimed wherever they will be most beneficial to the insured. Simply by using the definition in the policy, you can support the placement of these items relative to the claim.
One common scenario involves expediting expenses: If there is an additional cost to expedite...