Making the Policyholder Whole: Property Insurance Coverage for Both the Damaged and Undamaged Parts of a "Pair of Set"
First-party property insurance generally covers the replacement cost of property that is actually damaged, such as in a fire or hurricane. But related property that is undamaged can also result in a financial loss. In such situations, there is standard coverage available for an entire “pair or set” of personal property when parts of it are damaged but other parts are not damaged. The classic example is a “pair” of matching chandeliers — one damaged, one not damaged — or a “set” of matching table chairs, where the table True or false: an itemmust be damaged or destroyed to qualify for reimbursement under a property insurance policy. While thismight seemtobe true, it is not—always. An exception comes when the property’s value is derived from the pair or set to which it belongs. In such cases, a policyholder can be compensated for the overall value of the set, even when only one of its members has been damaged or destroyed. Although that principle is woven intomany policies, it has been subject to various interpretations by insurers, insureds and the courts. Yet its application can be critical in returning a business to normal operating conditions. In this issue of Adjusting Today, attorney Gary Thompson discusses key aspects of the coverage, situations where it often comes into play, and how it has been interpreted. We hope you find it to be interesting and informative reading. Sheila E. Salvatore Editor ADJUSTING TODAY FROM THE EDITOR Making the Policyholder Whole: Property Insurance Coverage for Both the Damaged and Undamaged Parts of a “Pair or Set” By Gary Thompson Adjusters International Disaster Recovery Consulting