I’m going to be assisting (pro bono of course) some folks on a couple of research projects.

One has to do with how pervasive underinsurance is, especially in homeowners insurance. I’m interested in statistics and also anecdotal stories of underinsured claims. I’d also be interested if anyone has examples of overinsurance. Several years ago, I was approached by several agents in Illinois alleging that, because rate relief wasn’t available to HO insurers, some where overvaluing and overinsuring homes for the additional premium. Do you have any information, including anecdotes, about underinsurance or overinsurance or can you refer to me sources of such information?

The other deals with ACV roof valuations. Many insurers now want to attach endorsements that limit roof damage valuation to ACV rather than RC. I’m interested in any endorsements you may have to review the variations in contract language (e.g., does ACV apply only to roof SURFACING or the entire assembly?). I’m also interested in what anyone knows about carrier depreciation schedules (actual examples would be great), whether they are proprietary or are there industry models. Do you have copies of ACV roof valuation endorsements or policy language and what can you tell me about depreciation schedules for roofs?

Bonus inquiry! 😃 ….

If you have the time, take a look at this blog post:


My sources tell me this bill is going nowhere and is unlikely to even be reviewed by committee, much less make it out of the committee. Aside from the political issues, the bill is poorly written by someone who is clueless about insurance. For example, it just refers to “leaks,” not water leaks, not plumbing leaks, not leaks that cause property damage, etc. It just requires insurers to cover “leaks.” I’d at least add the language below and probably rewrite the entire bill:

“An insurer may not deny AN OTHERWISE COVERED WATER DAMAGE claim arising from a [PLUMBING LANGUAGE] leak on the basis of the leak occurring over an extended period of time unless the insured had actual knowledge of the leak and failed to undertake actions to repair or replace the source of the leak.”

The language needs to identify the type of leak and clarify that it applies to water damaged property. Otherwise, it would require coverage for any type of leak (non-plumbing or non-water) and, without mentioning that the law applies to otherwise covered losses, it could be interpreted to cover normal plumbing bills like a leaky toilet tank. We all know that insurance isn’t intended to cover maintenance types of claims.

A better wording might be to prohibit “repeated seepage and leakage” claims. A better law might be a requirement that insurers offer a buy-back to these exclusions. In other words, rather than mandate coverage for these types of claims, if you’re going to mandate anything, mandate an OPTION for coverage at an actuarially based premium.

You can legislate the coverage, but you’re going to drive premiums up, possibly substantially. Homeowners who invest time and money in maintaining their homes are going to be subsidizing people who don’t. Anyone who has a paid leak claim is likely going to be nonrenewed and, with this information in their CLUE report, they may find it very difficult to obtain coverage, at least affordable coverage.

What is your opinion on mandating coverage?

What is your opinion on mandating minimum coverage provisions similar to laws that mandate minimum coverage limits?

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information