Fla. Regulator Sees Home Policy Language Problem

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By Steve Tuckey

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NU Online News Service, April 5, 1:35 p.m.EDT?Florida's chief insurance regulator, Tom Gallagher,said he has turned over consumer complaints about what he termed"confusing" homeowners' policy language to the Office of InsuranceRegulation.[@@]

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"Storm victims are dealing with a number of pressures?financial,family, work and more. My goal is to alleviate some of the pressureby helping storm victims recover the insurance money due them topay for losses," Mr. Gallagher said.

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One area for confusion, he noted, is the issue of depreciationholdbacks. Florida homeowners' insurance policies contain aprovision that entitles the policyholder to the full replacementcost for their home and contents without any depreciation formaterials used, Mr. Gallagher said.

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However, insurers can impose a holdback provision and initiallypay a fractional or actual cash value amount. But they must explainthe procedure for recovering the remainder of the costs of theloss. Homeowners who have replacement cost coverage will get theamount of money it costs to complete their repairs or to replacedestroyed contents, minus what is referred to as recoverabledepreciation.

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"If a homeowner did not refuse this coverage, in writing, whenthe policy was purchased, then the replacement cost coverage of thestructure is automatically included," Mr. Gallagher said in awritten statement.

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William Stander, regional manager for the Property CasualtyInsurers Association of America, said that replacement costholdbacks are "time-tested policy provisions that play an importantpart in fraud prevention."

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"I think I have a lot of members who are confused about why theyare the subject of such condescension from the regulator after acostly hurricane season in which the industry came through withflying colors," he said.

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