Question...
Policy has a definition of house which includes;
1. recreational features (swimming pool, tennis courts etc)
2. Patios, paths and paving of permanent construction
The policy sub-limit for recreational features is $40,000. There is no sub-limit for patios, paths and paving of permanent construction.There is an option to set a higher limit for recreational features which hasn©t been taken.The insurer is stating that the client©s swimming pool is insured for $31,500 only. It is unclear if the client ever listed a value for the swimming pool in conversations with the insurer.
As the policy sub-limit is $40,000, we suggest that the limit payable for the pool should be the automatic allowance, regardless of if a lower value was ever declared in a verbal agreement between client and insurer. The recreational feature cover is an automatic allowance for which there is no specified premium charged.
I am interested to know if you agree that the policy automatic sub-limit for recreational features is the minimum level of cover, or if in fact the insurer can limit their offer to a lower amount based on an alleged verbal agreement?
If the answer is yes they can (and as a second note) could it be debated that any concrete area surrounding the pool is in fact paving of permanent construction and therefore covered in addition to the policy allowance for recreational features?
REPLY... Crossley Gates
The sub-limit is a maximum for the items that fall within the definition of “recreational features”.
Assuming there is no other clause in the policy setting an individual maximum figure for the insured's swimming pool, the only other constraint on the $40,000 figure is the principle of indemnity (on a new for old basis presumably). In other words, if the actual repair/replacement cost is $31,500, that is all the insured is entitled to obviously.
You refer to a possible verbal conversation between the insured and the insurer. It is possible that this varied the standard wording by imposing a specific limit on the swimming pool. However, such variations are usually recorded in writing to avoid arguments (as may be happening here) as to who agreed to what. The absence of one in writing would make it difficult for the party asserting the variation to the standard wording (presumably the insurer) to prove it.
