On July 21, 2023, Wheeler, DiUlio & Barnabei hosted the second part of their new lunch & learn webinar series entitled, Words Matter. The Words Matter series explores homeowner policies, interpretations, and examples to help viewers understand what they cover and don’t cover.
In Part 2, Additional Coverages: Everything You Didn’t Know You Were Missing, Partner Anthony DiUlio explained how additional coverages work with the rest of the policy and how to use additional coverages to your advantage.
While he discussed additional coverages in-depth, he noted that it is important to remember that every policy is different. It is essential that you read each policy for the most accurate information and guidelines.
Additional Coverage & Exclusions
A frequent question related to this topic is whether or not other policy provisions, like exclusions, apply to additional coverage. Exclusions do not always apply to every part of the policy. Therefore, exclusions may not always apply to additional coverages.
Some carriers have been very specific and intentional about what they write in their additional coverages and within their exclusions sections. It is common for the additional coverages to be a completely independent portion of the policy.
Examples of Additional Coverages
State Farm has a clear and concise additional coverage statement. For example, Section 1 – Additional Coverages says, “The following Additional Coverages are subject to all the terms, provisions, exclusions, and conditions of this policy.” State Farm uses all-inclusive language. The insured then understands that the exclusions in the policy do apply to additional coverage.
On the other hand, Allstate’s policy does not detail exclusions in the same way. For instance, Allstate’s additional coverages policy is broken down into two sections that work in tandem:
- Losses We Do Not Cover Under Coverages A and B – This first section is the exclusion part of the policy, not additional coverages.
- Section 1 Additional Protection – This second section lists the additional coverages.
Conflicts in Coverage Policy Language
As evident from the examples above, not every policy is clear and consistent. So, who wins when there is a conflict in the policy language? What happens when there is coverage in one part of the policy, but it is excluded or not covered in the other?
Generally speaking, conflicts in coverage policy language will lead to coverage the majority of the time. Conflicts create ambiguity in the policy that must be read in favor of the insured. Ultimately, the decisions come down to the actual cause of loss and the details of the issues at hand.
Example of Working with Conflict
State Farm’s policy has a preamble to its exclusionary language called concurrent causation. Concurrent causation means that if any of these excluded reasons happen before, during, or after your loss, as part of this loss, you’re not covered for it.
This is in conflict with other coverages listed in the policy, specifically for ensuing loss. For example, see State Farm’s ambiguous language for collapse coverage below:
Collapse Coverage
Collapse. We will pay for accidental direct physical loss to covered property involving abrupt, entire collapse of a building structure or any part of a building structure. The collapse must be directly and immediately caused by one or more of the following: (2) decay or deterioration of, or damage from animals, birds, or insects…
Section 1 – Losses Not Insured
We will not pay for any loss to the property described in Coverage A that consists of, or is directly and immediately caused by, one or more of the perils listed in items a through m below, regardless of whether the loss occurs abruptly or gradually, involves isolated or widespread damages, arises from natural or external forces, or occurs as a result of the combination of any of these:
- a. Collapse, except as specifically provided in SECTION 1 – ADDITIONAL COVERAGES, Collapse;
- g. wear, tear, decay, marring, scratching, deterioration, inherent vice, latent defect, or mechanical breakdown
Note that there is no language in this provision that says “except as provided in other portions of the policy”. For example, the collapse language.
Arguably a carrier could come back and say your loss was caused by wear, tear, and decay and you could say no, it is under collapse provisions. How would this play out? It would play out toward coverage. It creates a facial ambiguity in the policy that must be read in favor of the insured.
More Notable Coverages
Here are a few common types of additional coverage that may be included in your own policy:
- Debris removal
- Fuel oil release
- Temporary repairs
- Power interruption
- Property removed
- Civil, governmental, and military authorities
Have more questions about additional coverages or want to learn more about specific policy examples? Contact our experts today at Wheeler, DiUlio & Barnabei Legal to learn more.
