One of our policyholders recently submitted a claim for stolen silverware. The homeowner has purchased an HO3 10 00 with the H0 04 90 10 00, and has scheduled several pieces of silverware on the HO 04 61 10 00. The total amount of coverage for the class labeled "silverware" on the H0 04 61 is $11,000. The last page of the HO 04 61 states that there are "Assorted Buceletti Empire Pieces as on file at the Company." In the insured's policy file we have each piece of silver listed with an assigned dollar amount for that piece. The list we have on file came from the insured via her agent. The claim is for 8 of the 5 piece place settings of silverware and a couple or serving pieces. The insured value listed on the H0 04 61 for the stolen silverware is $6000.
To replace the stolen items it would cost $12,000. We processed our payment for $6000. The insured is arguing that we should have paid her the full $11,000 coverage limit for her stolen silver. The insured is arguing that since the HO 04 61 doesn't specifically refer to a list or schedule for the silver items like it does for jewelry and furs and some of the other classes of scheduled items, that she should have the benefit of the full amount of coverage for the silver. We believe coverage should be limited to the amount of coverage listed per stolen item. We think the HO 04 90 makes it clear that we are paying for the replacement cost of each item and the HO 04 61′s loss settlement provision makes it clear that we won't pay more than the amount of insurance. The question is, the amount of insurance listed for silverware blanket coverage or does it limit coverage per item? We look forward to your interpretation of the HO 04 61 form in relation to the classes of scheduled personal property that do not reference a list or schedule.
Massachusetts Subscriber
While the HO 04 61 doesn't require a listing of the scheduled property, it does require that a limit be scheduled. In event of a loss, silver will fall into the Other Property category for loss settlement, which clearly states coverage is not on an agreed value basis, and that the policy pays the least of: Actual cash value, cost to repair, cost to replace with substantially identical property, or the limit of insurance.
Now, the actual cash value portion of that loss settlement provision does not apply if the replacement cost loss settlement applies, so then we go to the HO 04 90.
The HO 40 90 loss settlement provision pays the least of:
Replacement cost at the time of loss,
Full cost of repair at the time of loss,
Limit that applies to Coverage C,
Any applicable special limits of liability stated in this policy.
For anything listed in item 2 a.-f. which includes silverware, the limit of liability that applies to the item.
That last line sends us back to the HO 04 61 scheduled coverage. The ISO manual states that when both endorsements are on the policy, that silverware, if scheduled, will also be subject to repair or replacement cost loss settlement up to the scheduled limit of liability. The manual also states that "Since the loss settlement condition in Endorsement HO 04 61 will pay the insured the least of the: a. Actual cash value of the property sustaining loss; b. The amount for which the property could be repaired or replaced; or c. The amount of insurance of the property sustaining loss; the limit of liability that applies to each scheduled item should be carefully evaluated to ensure that the limit selected by the insured represents the cost to replace the item if lost or damaged."
Therefore, since the silverware was scheduled at $6,000, and that is the least of the scheduled limit or cost to replace or repair, you have paid the claim correctly.