Insurance Conditions within Policies

All insurance policies have conditions within the contracts. The condition statements are throughout the entire insurance policy. The conditions can be precedent or they can be subsequent conditions. It is important that you know what the conditions are as even though you have paid the insurance policy premium. If you do not meet the conditional requirements you may not have any claims paid for failure to comply with the stated conditions.

An example of a condition precedent would be a safety or warranty condition that the insured has a sprinkler system throughout the building. If the insured has a fire down the road and there is no sprinkler system or the sprinkler system is not working or has not been maintained properly you might have voided any coverage. The carrier would not have to pay the claim because the condition precedent has not been fulfilled by the insured.

A typical condition subsequent usually occurs after a claim happens. Every insurance contract has conditions whereby the insured must cooperate, report the claim as soon as practical, protect property from further damage, etc… So while you may have a legitimate claim that should be paid if you do not comply with the condition subsequent provisions you may find out that your claim will be denied.

Usually not reporting the claim within the appropriate timeframe creates problems for the insurance company. Late reporting of a claim can severely prejudice the insurance carrier’s ability to investigate and adjust the claim properly. Similar to what we see on TV with crime scene investigations, claims scene investigations need to be quickly investigated and evidence determined and verified. As time passes witnesses forget what they saw and evidence become stale and can be little or no use if litigation should ensue with regards to this claim.

Since these insurance documents are legal binding contracts it is extremely prudent for you as the insured to know what conditions are built into your contract. If you do not abide by the conditions you could find yourself with no coverage within a policy that you have paid a lot of premium for because of your lack of fulfillment of the conditions that you agreed to contractually. Usually the conditions subsequent are very common sense type of conditions. As we mentioned earlier cooperating with the insurance carrier, protecting your property from further damage and loss, or just commonsense items that happened to be delineated as a condition subsequent clause.

The problematic conditions are usually the condition precedent that tends to cause problems for the insurance company. If you have conditions precedent that state that there is a working burglar alarm, fire alarm, sprinkler system, the appropriate Ansul fire suppression system in a restaurant, they are all examples of condition precedents that are required in order for a claim to be paid. Basically most of the condition precedents are underwriting considerations that entice the underwriter to insure your risk by having the proper safeguards in place. Many times the conditions precedent will be required before you will receive their pricing that the underwriter promulgates for your risk. Knowing and understanding the conditions within your policy can be beneficial to you and your insurance portfolio.

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