Recently, we received an inquiry on the hazards associated with New Hampshire’s Insurance-to-Value Policy Rules. For those not familiar with value-policy laws, I refer you to a prior article for a refresher on what a valued policy is, and how it affects claims in New Hampshire.
New Hampshire’s Insurance Laws, Chapter 407:11 Policy Value states:
I. If a building insured for a specified amount, whether under a separate policy or under a policy also covering other buildings, is totally destroyed by fire or lightening without criminal fault on the part of the insured or his assignee, the sum for which such building is insured shall be taken to be the value of the insured’s interest therein unless overinsurance thereon was fraudulently obtained.
II. If an insured building is only partially destroyed by fire or lightening, the insured shall be entitled to the actual loss sustained not exceeding the sum insured.
III. Nothing contained in paragraphs I and II of this section shall be construed as prohibiting the use of coinsurance, or agreed amount.
IV. When a building is insured not for a specified amount but under a blanket form with one amount covering 2 or more buildings or one or more buildings and personal property, the provisions of paragraph I of this section shall not apply.
To determine what other hazards may be covered, I next looked at Section 407:7, Forms for Other Insurance.
Appropriate forms of other contracts or endorsements, insuring against one or more of the perils incident to the ownership, use or occupancy of said property, other than fire or lightening, which the insurer is empowered to assume, may be used in connection with the Standard Fire Policy. Such forms of other contracts or endorsements attached or printed thereon may contain provisions and stipulations inconsistent with the Standard Fire Policy if applicable only to such other perils.1
So as always, read the policy to see what coverages are afforded. I believe the reason only fire and lightening are listed for the “value-policy” provision specifically in the policy is explained by the discussion of what constitutes a “total loss,” contained in the article referenced above. It is hard to imagine a burst pipe hazard leading to an actual total loss (where the structure has lost its identity as a building) or even a constructive total loss (whether the building code allows for the repairs). However, wind absolutely could lead to such a result.
