Bankruptcy and Settlement for Content Loss

October 1, 2018

We have a client that had a house fire; he filed bankruptcy on a credit card with a balance of $25,000.00. The bankruptcy requires that he pay back the debt in monthly installments. We were able to find $12,000.00 in contents, of purchased items that were for the home from this credit card bankruptcy. The carrier's adjuster wants these items removed from the Content list even though the client is paying it back.

Can the carrier demand removal of these items, from the Content list, that were purchased on this credit card?

Can they deny the claim if they are not removed?

Michigan Subscriber

 

The insured's financial status with a credit card company or other creditors has nothing to do with whether the property existed and was damaged in the loss. If the insured bought the property and it was damaged, he is covered for the loss even if he is still paying on it. Otherwise, no one would receive enough coverage on a house, as most are owned by the bank to some extent. There is no clause in a policy that all property must be wholly owned by the insured.

 

If the items were not damaged in the fire then they cannot be claimed. A claim can be denied if the policy provisions do not cover it, or there is some sort of fraud or misrepresentation on the part of the insured.