RMIN 5100S Chapter Notes - Chapter 10: Earthquake Insurance, Construction, Lightning

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Chapter 10 2/9/2017 3:13:00 AM
Causes of Loss Basic and Broad Form Exclusions
- Concurrent causation doctrine: if 2 or more perils contribute to a loss at the same
time and ONE of the causes is a covered cause of loss, the entire loss is covered by
the policy
Anti-Concurrent Causation Language*
- Some perils insurance companies do not want to pay for at any time, so these 8
perils will not be covered at any time regardless of whether they appear concurrently
with a covered peril
Ordinance of Law***
o Building construction regulations (if a building built before the
regulations is damaged, it often can only be rebuilt if it will conform
with the laws)
o If the law prohibits rebuilding, the insured loses the value of the
undamaged property and incurs expenses to demolish it
Insured can also incur increased construction costs
o Building codes may require building reconstruction to include features
not originally included (fire exits, complying systems, etc.) don’t
require demolition but very costly
o Excludes loss resulting from regulating the construction, and repairs
to comply with the laws AND required tear down of property and
removal of the debris
o Some courts will not recover undamaged property if it is not legal to
rebuild the original building
Other courts will allow insured to collect for a total loss
o Generally if the law permits the rebuilding, insurer does not cover
increased cost due to requirements imposed by laws
o They will pay for $10,000 or 5% of limit (less) ???
Earth Movement
o Including earthquakes and volcanic eruption, explosion, or effusion
because these are difficult to insure
o Hard to accurately forecast earthquake loss frequency/severity (often
losses are catastrophic)
o Excluded regardless of act of nature or otherwise caused
o Specific exclusion wording:
Earthquake (including tremors & aftershocks or shifting)
Landslide (including earth sinking, rising, shifting)
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