If there is one thing that I would like to get across "The application is important". Every question on the application has a purpose or it would not be there.
As I help you fill out the application I am getting to know you and your particular situation. Once I know what your needs are I can hunt down the policy that is going to be the best option for you.
What sometimes happens is a customer will not be completely forthcoming with information for fear that it will cause them problems with their getting insurance, or cost them more money. This is a very dangerous thing to do. Most of the time, this viewpoint that it will affect your premium or that you will be unable to get insurance, is totally unfounded.
Just becasue a question is on the application does not mean that it is going to be a problem if you answer it a certain way.
Most brokers agree this lack of disclosure is becoming more common. They feel it is largely because people have all experienced the fussy company that will not insure anything out of the ordinary. They often can't get quotes over the phone or on line unless everything is just so-so.
Even though one company may be real fussy about something, some are not the least bit concerned. This is one of the advantages of being a broker. Brokers have alternatives.
When your applicaiton is received by your insurer.
Once the insurance company receives your application they will review it and decide if they are willing to insure you, what they will charge you, and what special terms they may apply to your insurance coverage. Your agent does not have the final say.
The "unerwriter" reviews the application and determines if there is anything that is of concern to them. After reading the comments made by your agent the underwriter may want clarification and further information.
Most of the time these concerns have already been approved. As a broker I will contact underwriting to discuss it beforehand and make sure it will not be an issue.
Everything the insurance company knows about you, and what you are insuring, is contained in your application. If the information is not complete, inaccurate or misleading the insurance company will not be aware of it because they relied on the information contained in the application. To often, an error, omission, or misleading statement is discovered only when a claim occurs.
Claim Denied
The insurance company has every right to decline any claim that occurs if they discover that you have misrepresented something on the application. The claim may have nothing to do with the question that was answered in error.
The most common situation that I run into envolves business related activities. An insured may feel his business activities have nothing to do with his home insurance. He may not even want to insure anything related to his business. He may even have a commercial insurance policy for his business.
However, there is a question on the application that asks if there are any business activities. An explanation of what those activies are, will be required. Answer no to this question when there really are business activities at home could create an insurance nightmare for you. Are you really covered for anything?
They will never find out about it.
Will such an error come to light during your claims processs? When the adjustor visits your home he is going to be aware of some of the things contained on the application. It is his job to determine if the policy was issued appropriately. If he sees that your garage is full of business property and permission is not granted for buiness use on the property he has an obligation to report it to the insurance company. The insurance company will then determine if they will deny the claim on that basis. Unforunately, the insurance company now has the upper hand. I simply would not want to this to happen to me.
Did you get a copy of your application? Did you review it and check for errors? Are all the questions answered correctly, and adequate information provided?
In a perfect world, this would happen, but we do not live in a perfect world. If you weren't provided with a copy of your application you can always ask for one. If one is not provided be concerned.
COVERAGE A - Dwelling
We insure:
1. The dwelling and attached structures.
2 Permanently installed outdoor equipment on the premises. This includes fences, but not fences used in connection with business or farming activities.
3. Outdoor swimming pools, outdoor hot tubs and attached equipment on the premises.
4. Materials and supplies located on or adjacent to the premises or while being transported to the premises and which are intended for use in construction, alteration or repair of the dwelling or private structures on the premises, other than private structures to be used in whole or in part for business or farming purposes.
5. Building Fixtures and Fittings pertaining to the dwelling while temporarily removed from the premises for repair or seasonal storage. Permission is granted to make alterations, additions, and repairs to your dwelling.
COVERAGE B - Detached Private Structures. We insure private structures or outbuildings on your premises, separated from the dwelling by a clear space but not insured under Coverage A. If they are connected to the dwelling by a fence, utility line or similar connection only, they are considered to be detached structures. We do not insure private structures or outbuildings used in whole or in part or designed for business or farming purposes whether occupied, unoccupied or vacant. We also insure boathouses, boatlifts, docks, piers, wharves and swimming rafts not on your premises but located elsewhere in the same resort area as the dwelling. You may rent them to someone else, as long as they are not used in whole or in part for any business, residential or farming purpose. Permission is granted to make alterations, additions, and repairs to your detached private structures.
Property not insured (Coverages A and B)
We do not insure:
1. buildings, units or structures used in whole or in part or designed for business or farming purposes unless such use is declared on the Coverage Summary page;
2. any building or structure that has been condemned by any authority;
3. any property lawfully seized or confiscated unless such property is destroyed to prevent the spread of fire;
4. wind turbine systems including all related equipment and structures manufactured for a rated power generation exceeding 1kw.
COVERAGE C - Personal Property
Property not insured
We do not insure:
1. property illegally imported, acquired, used, kept or transported;
2. property away from your premises for the purpose of exhibition or display, or any time your property is being held for sale by others;
3. books of account and evidences of debt or title and documents or other evidence to establish ownership or the right or claim to a benefit or thing;
4. business property including samples or goods held for sale except as provided under Special Limits of Insurance;
5. property lawfully seized or confiscated unless such property is destroyed to prevent the spread of fire;
6. sporting or hobby equipment where the loss or damage is due to its use; ETC
Me: Woodworking is a pretty hazardous. Many companies would not insure you if you did woodworking as a business activity on the premises. The concern would be further enhanced if you were using flammable finish products or did spray painting. If they wouldn't insure you knowing about the woodworking, then they are not likely to be willing to pay any claim, whether it is related to woodworking or any other cause. They simply would not have you as an insured had you provided that information, so they would feel justified in not paying your claim. period.
Individual: Well, my agent knows about it because I did some cabinets for him, so I must be okay.
Me: If you really want to know, all you have to do is look at your policy. If your insurance summary page does not say "Permission is hereby granted for the business of carpentry" somewhere on the declaration page, then it is not likely they are aware of the business activities. Without that permission on the policy no permission is implied nor granted. You can review your application for insurance and see if it there is any mention of it on the application.
Fear of being charged more, or fear of having to move your business activities to another location, or not wanting to be inconvenienced filling out some additional forms should not stop you from making sure that all information is disclosed on the application. You simply can not rely on your insurance if you don't provide full details to the insurance company, especially when it comes to business activities.
Another part of your home insurance policy which requires proper completion is the replacement cost calculator. If this form is not completed accurately it can limit a lot of coverage under your policy and leave you under insured. Please see the post on "Replacement Cost" Only if it's right.
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