Property insurance adjusters, appraisers, and umpires should fully read the valuation clauses in property insurance policies and know the applicable state law regarding valuation. This was a point of emphasis I made last week at the Insurance Appraisal and Umpire Association (IAUA) meeting. Indeed, for restoration contractors, it is a good reason for them to read the policy if they and their policyholder customers are looking towards the insurance policy to finance the restoration work less the deductible.        

After a charitably close two-out-of-three decision over the improving Steve Badger in another debate about appraisal, Warren Wilgus showed me two bulletins from his home state of New Mexico. These New Mexico bulletins exemplify how valuation clauses in property insurance policies have to conform to state statutory laws. They underscore the need for those involved with residential property losses to appreciate that the rules of adjustment vary from state to state.    

Following the 2022 wildfires, the New Mexico Superintendent of Insurance issued a bulletin on June 8, 2022, stating, in part, the following:   

These severe wildfires have destroyed countless homes and have caused significant personal property losses in the affected counties. Insurance policies covering residential property are statutorily required to provide coverage for the cost to repair or replace the damaged or destroyed property without any deduction for depreciation. If the insured party elects to make the repairs themselves, a reasonable overhead expense is required.

While individual company policy forms that provide for coverage in an amount less than full replacement value may have been approved for use in New Mexico, the coverage requirements found in Section 59A-18-17(C), NMSA 1978, control. The Office of Superintendent of Insurance expects all property and casualty insurance companies to act in good faith and use fair claim settlement practices that comply with state law. The Office of Superintendent of Insurance will closely monitor claims settlements and consumer complaints related to the wildfires and may take additional measures as necessary.

As a follow-up this month, the Superintendent issued the following bulletin regarding manufactured homes:

A manufactured home, while in use as residential property, is subject to all of the requirements and benefits that pertain to residential insurance, including all residential coverage protections of the Insurance Code. Without limitation, the following sections of the Insurance Code, as codified in NMSA 1978, apply:

• § 59A-16-20, Unfair claims practices defined and prohibited, including Subsection F, which requires insurers to settle all catastrophic claims within 90 days of the date of a declaration of a catastrophe by the Superintendent;

• § 59A-16-20.1, Homeowner’s casualty insurance; premium rate and policy; protection after natural disaster, including the prohibition against non-cancellation and non-renewal relating to natural disasters; and

• § 59A-18-17, The Insurance Contract, which, at Subsection C, states, ‘Insurance coverage provided in residential property insurance policies shall provide coverage for the cost to repair or replace without deduction for depreciation. If the insured elects to effectuate repairs to the property by the insured’s own self, a reasonable overhead expense shall be allowed.’

I often say I learn more about the practical aspects of property insurance law and what is going on in the adjustment field by listening to the questions and comments from the audience. This blog is a much better resource for everybody when you participate.

So, thank you to all the readers of this blog and audience members who take the time to comment, show me another view, and sometimes correct me. I am better for your insight, and grateful.  

Thought For The Day       

What most people don’t understand is that UFOs are on a cosmic tourist route. That’s why they’re always seen in Arizona, Scotland, and New Mexico. Another thing to consider is that all three of those destinations are good places to play golf. So there’s possibly some connection between aliens and golf.

—Alice Cooper