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Actual Sample Homeowners Insurance Case A homeowner returned from a weekend trip to a home that had been extensively damaged by vandals and thieves. His insurance company refused to pay the total cost of new furniture, and said it would pay only sixty-five percent of the cost of reupholstery because the homeowner lacked ownership documentation - even though there was no question of ownership. A company adjuster said it was customary for the company to begin negotiations at a reduced figure, leaving it to the policyholder to argue for more. The insurance company did not pay any amount for four months which created financial difficulties and resulted in the homeowner's divorce. The company interviewed the homeowner's neighbors, and asked questions about his wife's alleged extramarital activities and possible involvement in the burglary. The company finally paid $7,238. The homeowner sued for bad faith and was awarded $401,000 in compensatory damages and $22,500,000 in punitive damages. The punitive award was reduced to $5,000,000 on appeal. Republic Insurance Company vs. Hires, 107 Nev. 317 321, 810 P.2d 790 (1991). TermsHomeowners insurance packages coverages for the house, its contents, additional living expenses, personal liability claims against the insured and other members of the household, and medical payments to others. Typical Homeowners Insurance Protects Against Loss From:
Your policy probably covers loss of use, including increases in living expenses due to fire or other insured loss. Actual Cash Value
The cost of replacing damaged or destroyed property with new property of like kind, minus depreciation and obsolescence.Deductible
The amount of loss that the policyholder is responsible to pay up-front before covered benefits from the insurance company are payable.Endorsement
An addition to the policy that changes the terms by adding or subtracting coverage.Exclusions
A policy provision that denies or limits coverage. For example, normal wear and tear are excluded from coverage.Liability Coverage
Liability coverage protects you for injuries or damages you, a member of your family, or your pet causes someone else. Perils
A type of risk, i.e., fire, windstorm, theft, etc.Personal Property
There are limits for expensive personal property like jewelry, fine arts, firearms, antiques, etc. Extra coverage can be purchased to increase the limits on expensive personal property.Replacement Cost
The amount it will take to replace or rebuild or repair it with materials of similar kind and quality. Depreciation is not deducted in determining replacement cost. Depreciation is the decrease in value of the property due to age, wear and tear, or obsolescence. The total amount the insurance company will pay will not exceed the policy limits.
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