Supplemental claims are becoming more common, especially on large projects where additional loss and damage may be discovered while completing the repairs or replacement. But what happens when the insurance company places conditions or limitations not contained within the policy upon the submission of a supplemental claim for additional or missed damages?
Most homeowners and commercial property insurance policies contain conditions that require the insured to do certain things in the event of loss or damage to covered property. The first requirement is that the insured provide notice of the loss. Additionally, under the Duties in the Event of Loss or Damage portion of the policy, the insured is required to do additional things which include cooperating with the insurance company during the investigation and settlement of the claim. Notably absent from most policies, however, are any stipulations or requirements related to the submission of a supplemental claim. But what happens when the insurance company sends a letter requiring the insured to do certain things in the event of a supplemental claim? Does the insured have an obligation to comply with such requirements outside of the policy?
This is the situation which was presented in Pheasantbrook Home Owners Association v. The Travelers Indemnity Company.1 Pheasantbrook sustained a loss as a result of a windstorm which was a covered cause of loss under the policy issued by Travelers. The claim was adjusted and Travelers paid a portion of Pheasantbrook’s loss. Thereafter, the Travelers adjuster sent a letter requiring that any supplemental costs, or missed damages be submitted to Travelers for review and approval before any additional costs are incurred. The requirements or stipulations placed on the submission of a supplemental claim were not contained within the Policy.
The insured proceeded with repairs to the property and ultimately submitted a supplemental estimate for payment to complete the repairs/replacement. Litigation ensued in which Travelers ultimately sought summary judgment on the basis that the insured had breached the policy by failing to cooperate. Specifically, Travelers asserted that the insured had failed to cooperate in the submissions of the supplemental claim by allegedly not providing notice before the work was completed and/or otherwise complying with the requirements Travelers set forth relative to the submission of a claim.
Whether the insured is required to comply with requirements outside the policy regarding the submission of a supplemental claim will be determined by a trier of fact. In that regard, the court denied Travelers’ motion for summary judgment, concluding that a rational trier of fact could conclude that the insured did not fail to cooperate under the terms of the policy.
