Here’s a question our 'Ask an Expert' service received recently:
'Our insured’s car was stolen and destroyed. The carrier denied the claim because his keys were in the car and there was no sign of forced entry. According to the adjuster, the policy doesn’t cover theft without evidence of forcible entry.'
Anytime an adjuster denies a claim, they must show where in the contract it states that the loss isn’t covered. The insured and the agent should read the policy to determine whether coverage exists.
Under the current ISO policy, there’s no requirement for evidence of forced entry to substantiate a theft claim. 'Theft' is simply the unlawful taking of someone else’s property. Likewise, there’s no exclusion when a vehicle is stolen as a result of someone leaving their keys in the car.
According to several of our faculty members who have reviewed many Auto policies, it’s very unusual to include policy language that excludes theft under these circumstances.
However, the policy in question is not an ISO form. According to this proprietary company form:
'This policy does not apply under Part IV to loss due to theft under Coverage D of Part IV if evidence exists that forcible entry was not required to gain access to the automobile and violation of the steering column and/or the ignition system is not present.
'Forcible entry means felonious entry by actual force and violence evidenced by visible marks on the exterior of the automobile and the destruction of the lockable steering column; or evidence of actual force to gain entrance to the premises on which the automobile is garaged at the point of entry.'
Based on this, it seems clear that the claim isn’t covered and that the insured has no recourse under the contract. This points out a valuable lesson: All Auto policies are not equal. Anyone choosing coverage based solely on price might get exactly what they pay for.
I looked at the insurer’s Web site and the slogan says, 'An Insurance Program with a Difference.' That certainly appears to be the case. The Personal Auto insurance section indicates that they insure nonstandard exposures and that their policy forms are 'nontraditional.' So, the insured was warned.
I’m not criticizing this insurer. They have the right to offer a contract that fits their underwriting standards and clientele and to price it accordingly. This example illustrates that price alone is no basis for comparison between products or companies. It’s incumbent on the agent in particular, and the industry in general, to educate consumers about what their premium dollar actually pays for.
Also, it’s essential that agents be well versed in the coverage variations among policies — even a 'deluxe' policy can include language that’s more restrictive than a 'standard' ISO form. In one HO Condo claim, water from a broken water pipe in an upstairs unit caused extensive damage to the subject unit. The 'deluxe' condo policy excluded water damage that originated outside the 'residence premises,' defined as the unit itself. The ISO condo form, on the other hand, excluded water damage that originated outside the building, so it would have covered the loss.
It pays to read those policies!