The Wear and Tear Issue

The nasty claim. It turns out it’s not always the huge fire or the bad car accident. The worse is the wear and tear claim. Mostly because the people who submit these are either desperate for help, obstinate, or they don’t understand insurance. Either way, its heart breaking.

Car that needs repair

For instance, I found an online complaint regarding one of the top-rated carriers. The insured had a vehicle engine failure in a used four-year-old car that had no warranty. And, was arguing policy terminology.

You know the engine is ‘permanently installed’ therefore it’s covered. What the policy says actually – pulled from ISO – generally: ‘we will not pay for (2) a Wear and Tear; b Freezing; c Mechanical or electrical breakdown or failure; or d Road damage to tires.‘

The part they are referring to in the policy falls way down the page under Exclusions (4) Loss of any electronic equipment that reproduces, receives or transmits audio, visual or data signals … This exclusion (“4”) does not apply to electronic equipment that is permanently installed in your covered auto or any non-owned auto.’

The majority of vehicles today have onboard computers, microprocessors, cameras, sensors and automated features. When one thing breaks down that may mean the entire onboard computer system (three to five different computers) has to be replaced.

It’s important that the insured understands that the auto policy doesn’t cover wear and tear and electrical or mechanical breakdown. Encourage them to discuss the warranty and with their dealership. You can find most of the manufacturer warranty information on their respective websites.

One of the agencies I worked at previously kept a brochure from one of the local independent garages in the area. We wrote an entire garaging policy package for the business and sent them insured’s for repairs.

In fact, if the customer showed them their id card and it was from that agency – they would give a discount on regular maintenance and inspections. In states where there is a photo inspection required, it’s good to know who in the county a customer can go to and feel safe.

Under homeowner’s insurance, this type of exclusion falls under ‘Section I – Exclusions (5) Neglect … means to save and preserve property at and after the time of a loss’ or ‘B (2) acts or decision including failure to act or decide, or any person, group, organization or government body.’

The worst claim I ever had was from an insured who had a considerable loss to their roof due to ice damming. Instead of repairing the damage, they let it go.

Six years later they presented the claim which was denied. It leaves a bad taste in your mouth, seeing client be denied. The agency had spoken to them on several retentions calls about submitting a claim which made the denial stick. There was no ‘I didn’t know I could submit a claim for that.’ The carrier then demanded the damage be fixed which they had to do in order to maintain coverage.

It’s good to see how the insured is living when you write the policy. It should not be a reason to walk away, but maybe a reason for a deductible and/or extra attention.

Leave a comment or share an experience.

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