The Colorado Division of Insurance (DORA) has requested comments 1 on a proposed bulletin on policies that insurance companies impose on policyholders to complete repairs and replace damaged property. Here is the proposed bulletin:
Why should insurance companies have any deadlines for policyholders to replace or repair damaged property that affect the amount owed by an insurer, unless the insurer is damaged? Consider this Arizona Administrative Code rule discussed in the Proof of Loss and the "Prejudice" rule – Arizona Coverage Series :
No insurer shall, except when there is a time limit specified in the policy, make statements, in writing or otherwise, which require an applicant to notify in writing a loss or proof of loss within a certain time limit and who seek to release the company from its obligations if such a time limit is not complied with if the time limit is not complied with damages the insurer's rights. 2
These time limits are placed unilaterally in the insurance and make no sense unless the insurance company is in any way prejudiced. And then the only discount should be the amount of prejudice, for example if a building code changes and makes the repair more expensive, or inflation makes the repair or exchange higher, the insurer can reduce the payment or repair amount.
Why else would we let insurers get rid of their deadlines for repair or replacement? Insurers are already making money by sticking to the "float," which was discussed in Playing the Float and the Wisdom of Warren Buffett .
Thought For The Day
I love deadlines. I like the enchanting sound they make as they fly by.
2 AAC R20-6-801 (“Unfair Claims ”) Subsection D.4.