Part III – Cancellation and Fraud

Part IV – Exclusions

One crucial section in any insurance policy is the definitions. They explain what certain terms mean within the policy itself so it will be easier to understand. Sometimes, terms will be ascribed a meaning that sounds and feels rather obvious. However, the insurer is doing everything it can to avoid ambiguity. A term is legally ambiguous if it is open to more than one reasonable interpretation, as determined by a court of law. When policy language is ambiguous, the insured gets the benefit of the doubt in a claim situation. Because of the uniqueness of this policy, we are discussing the definitions first in order to make later discussions easier to follow.

IV. Definitions 1. "Address" is the address as stated in the Declarations, of the physical location at which the Insured has a Legal Interest and which may be revised via a request submitted through Your account management on the Jumpstart website.

2. "Census Block" is the smallest geographic unit used by the United States Census Bureau for tabulation of census data. The number of blocks in the United States, including Puerto Rico, for the 2020 Census was 11,078,297. The number of census blocks in California for the 2020 census was 710,145.

3. "Coverholder" means the entity listed in the Declarations who is authorized by the Underwriter to enter into contracts of insurance underwritten by the Underwriter and authorized as agent of the Underwriter under a binding authority agreement as if it were the Underwriter. We do not act on Your behalf. This policy is underwritten by certain Underwriters at Lloyd's.

ANALYSIS:

The "address" is important because it specifies the physical location of the property covered by the policy. The insured must have a Legal Interest in the property, which is also a defined term. Legal Interest is the fact that the insured owns and lives in the property, or if a commercial business, the insured owns the property and/or the business at that address, or if a multi-owner building, the insured at least manages it.

The policy is not designed to provide coverage for property an insured is not occupying; the insured must be living in the dwelling, so a secondary home the insured visits occasionally is not eligible. Commercial insureds have similar requirements, they must own the property or the business at an insured address, or, in cases of a building owned by multiple entities, the insured must be the manager of the building in order for the insured to be able to obtain a Jumpstart policy.

The "Census Block" is important in terms of claims because the insurer will only pay for claims that fall within a certain radius of an earthquake. If the Address is outside of the specified radius, there will not be coverage. As defined, the "census block" is the smallest geographic unit used by the Census Bureau for tabulation of census data.

The "Coverholder" is the company listed in the declarations, Jumpstart, who is authorized by the Underwriter at Lloyd's of London to enter into contracts of insurance for Lloyd's. The company is authorized to bind coverage as if it were Lloyd's itself. "Underwriter" is a defined term, and means certain underwriters at Lloyd's providing coverage through the Correspondent listed in the declarations page.

4. "Coverage Limit" means the maximum amount in US Dollars, as listed in the Declarations, that We will pay You after any one Earthquake Event for which you are Eligible to Claim.

5. "Covered Loss" means the Insured's financial losses resulting from an Earthquake Event affecting the Address. These financial losses include, but are not limited to:

(a) if You are an individual: property damage, including damage to common areas within a common interest development; damage to personal possessions; incidental expenses such as increased childcare costs, food spoilage, and transportation expenses; temporary housing costs or other living expenses; (b) if You are a business entity: property damage including damage to property for which You are legally liable; damage to business personal property; incidental costs such as relocation expenses, retention of temporary office space, equipment or employees, increased costs for services or utilities; and loss of business income; (c) for all Insureds: legal and administrative expenses; loss assessments issued by Your landlord, an association of homeowners or other common interest development, or for which You are otherwise legally liable; and deductibles of other insurance policies.

6. "Declarations" means a summary of information You provided in the application for insurance. The Declarations also describes the terms of the Policy, limits of coverage, and displays the premium and Our name. The Declarations is a part of this insurance Policy.

ANALYSIS:

The "Coverage Limit" indicates the maximum amount the carrier will pay to any insured after a claim for an Earthquake Event. The amount is given in U.S. dollars.

The definition for "Covered Loss" describes what types of financial losses resulting from an Earthquake Event are covered. The policy is not designed to make the insured whole, but to provide immediate financial relief in event of an earthquake. Funds are paid immediately once the triggering event has occurred.

There are three subcategories of losses; the first two, Individuals and Business Entities, specify losses that are particular to that type of insured. The third subcategory discusses losses that are covered for both individual and business entity insureds. A close look at the covered losses reveals that coverage is beyond the standard property policies that cover damage to a building or personal property, and coverage is provided for food spoilage, transportation, increased childcare costs, temporary housing or office expenses, or business income.

Once an insured responds to the company's text message, funds are disbursed. An insured may, and should have, a separate earthquake policy to provide coverage for damage to buildings and property. This policy is designed to provide immediate funds for immediate needs at the time of a crisis, and is not designed to restore an insured to his pre-loss condition.

The policy can be used both for individuals and businesses.

The declarations page is a summary of the crucial information for the policy and in this policy "declarations" is a defined term, meaning a summary of information provided by the insured. It also provides the policy terms, coverage limits, premium and name of the insurer. The declarations is considered part of the policy.

7. "Earthquake" means the vibration, sometimes severe, of the earth's surface (including the ocean bottom) that follows a sudden displacement (predominantly involving movement along a planar fault).

8. "'Earthquake Event" is an Earthquake with an Earthquake Event Time within the Policy Period for which the U.S.G.S. creates a Shakemap.

The occurrence of an Earthquake Event will be determined solely and entirely by the Insurer, according to the data reported by the U.S.G.S. All Earthquake Events meeting the above criteria and occurring within a period of 168 hours following the Earthquake Event Time shall be considered a single Earthquake Event.

9. "Earthquake Event Time" is the time (UTC) and date of the occurrence of an Earthquake as made available by the U.S.G.S.

ANALYSIS

An "Earthquake" occurs any time the ground shakes as a result of the shifting of the earth along a fault line, whether or not it is severe enough to qualify for coverage under the parametric policy.

An "Earthquake Event" is an "earthquake" that occurs during the policy period and is so severe that the U.S.G.S. creates a Shakemap (defined below). The occurrence of an "earthquake event" is determined by the insurer. The earthquake must meet the specific shakemap requirements and intensity for the carrier to declare an "earthquake event". All earthquakes that occur within 168 hours after the "earthquake event time" will be considered one "earthquake event".

Take note, however. In the section describing what this policy covers, the insurer specifies that the PGV (peak ground velocity) of an earthquake must be 30 cm/s or stronger in order for the insured to be entitled to coverage. There is no hard line for when the U.S.G.S. will create a Shakemap based on the PGV; the general rule is the higher the PGV, the more likely there will be a Shakemap. On the other hand, just because the U.S.G.S. creates a Shakemap for an earthquake does not automatically mean the insured is entitled to coverage. The PGV still must be 30 cm/s or higher. The insurer ultimately determines when an "earthquake event" that triggers coverage occurs.

An insured cannot claim there was an Earthquake Event and demand coverage because he heard on television that an earthquake occurred. Not all earthquakes qualify for coverage.

The "Earthquake Event Time" is the date and time, as determined by the U.S.G.S., that an Earthquake Event occurred. This timing is important because it helps determine when the insurer will start measuring the 168 hours after an Earthquake Event.

10. "Effective Date" is the start date of the Policy Period as stated in the Declarations.

11. "Eligible to Claim" means Your Address is within a Census Block any part of which experienced shaking with a Peak Ground Velocity of at least 30 centimeters per second due to the Earthquake Event, as determined on the basis of U.S.G.S. data reported as of 24 hours after the Earthquake Event Time.

12. "Exclusions" means the conditions or circumstances for which We do not provide coverage or payment and are listed in Section VIII of this Policy.

ANALYSIS

The policy's effective date signifies the day coverage begins. An "Earthquake Event" causing damage that occurs before the policy's effective date won't be covered by the policy.

When a policyholder is "eligible to claim", it means that the insured location, whether a residence, business, or other property suffered damage as a result of an Earthquake event and is located within one Census Block of a location that experienced a PGV of 30 cm/s because of the Earthquake Event. This policy is very specific as to what triggers a loss and when a claim may be filed. Unlike open perils or named perils, this policy addresses one specific peril, and coverage is applied according to specified criteria.

"Exclusions" refer to the circumstances that do not receive coverage under the policy; they are discussed later in the policy, but the term itself is defined. If property damage is caused by an excluded occurrence, then the Insured will not receive payment.

13. "Legal Interest"' means:

(a) If the insured Address is a residence, You own it and/or live in it, or (b) If the insured Address is a commercial business, You own the property and/or You own the business operating at the Address, or (c) If the insured Address is a multi-owner building, including but not limited to a group of condominiums, You manage it.

14. "Limit of Liability" means the maximum amount We will pay You in an Earthquake Event or Events, as determined by Section III of this Policy.

15. "Loss Report Form" means the form on the Jumpstart website or the communication procedure initiated by Jumpstart that You must use to inform Us about any Covered Loss caused by an Earthquake Event.

16. "Nuclear Hazard" means any nuclear reaction, radiation, or radioactive contamination, or any consequence of any of these.

ANALYSIS

An insured must have some legal connection to the insured "address" in order to be eligible to make a claim for damage at that address. The nature of the address affects the level of interest an insured must have in the address. This is reinforcing the basic principle of insurance, that an insured must stand to lose financially from damage to the property in question.

An insured "Address" that is a residence requires that the insured own the house and/or live in it. Tenants may obtain a policy as well as owners of the property.

If the insured "Address" is a business, then the insured must own either the building on the property or the business operating on the property, or both. For example, an individual insured could make a claim after an "Earthquake Event" if that insured owned the building where a business is located. If space is rented out for business use, a claim could also be made under the renter's parametric policy. The "Covered Losses" under this policy include business personal property, which, by industry definition, includes equipment, stock, or sometimes even building improvements.

If the insured "Address" is something like an apartment building, business complex, or condominium, the insured must be the manager of the building or complex. It would be up to the individual unit owners to have their own parametric policy covering their property.

The "Limit of Liability" represents the most money an insured will receive from the insurer during the policy period. Section III states that the "Limit of Liability" for a single claim by an individual is stated in the declarations, and the limit for all Earthquake Events within a policy period is two times the coverage limit. The website indicates that the current maximum for individuals is $10,000 and $20,000 for businesses.

Unlike a standard property policy, the entire limit is paid out at once, regardless of actual damage. The policy is structured so that the triggers are likely to cause more damage than the limit. The intent of the policy is to provide cash for immediate needs at the time of a crisis, jump-starting the insured on the road to recovery (thus the name Jumpstart).

Payment is triggered based on shaking intensity using USGS data available 24 hours after the earthquake occurs. Specifically, locations that are coded on the USGS shakemap as experiencing "severe" shaking–peak ground velocity of 30 centimeters per second or more—are eligible to receive payment.

The "Loss Report Form" is the document an insured must use to begin making a claim after an "Earthquake Event". Sometimes, the insurer will reach out to message the insured after an "Earthquake Event" to begin the claims process. When an earthquake large enough to meet the trigger requirement occurs, the insurer will message or text the insured asking if he expects to experience extra expenses. When the insured responds affirmatively, payment will be initiated. Only through one of those two methods will an insured be able to make a successful claim.

The insured has up to 60 days following the earthquake event to complete the Loss Report Form. The payment is directly deposited in the insured's account within a matter of days. The insured must keep receipts of all eligible expenses, as Jumpstart may initiate an audit. If audited, the insured will be asked to provide receipts, photographs, or other evidence of losses, and the claims will be adjusted based on the information provided. If the payment the insured received exceeds the adjusted amount, Jumpstart may require the insured to provide reimbursement of the excess funds.

The definition of a "Nuclear Hazard" is relatively self-explanatory. If damage is caused by a nuclear reaction, radiation, or some radioactive contamination, then that damage will not be covered under the policy. This means, however, that if an "Earthquake Event" is one of the consequences of a "Nuclear Hazard", then the damages caused by that "Earthquake Event" will not be covered.

17. "Peak Ground Velocity" or "PGV" is a measurement of shaking intensity, specifically, the maximum speed (rate of movement) reached by the earth's surface ("ground"), caused by the Earthquake. PGV will be determined solely and entirely by the Insurer, according to the data reported by the U.S.G.S. The U.S.G.S. publishes publicly-available measurements of PGV and other earthquake intensity measures, for each significant Earthquake Event based on data from accelerometers and the study of geological structures and soil composition throughout the world.

18. "Policy" means the entire written contract of insurance between You and Us and includes this printed form, the application, the Declarations, and any endorsement(s) that may be issued.

19. "Policy Period" means the period of time indicated in the Declarations during which this Policy is in effect.

ANALYSIS

The Peak Ground Velocity (PGV), as discussed in Part I of this policy analysis, is a measurement of how hard the ground shakes during an Earthquake Event. According to the insurer's website (jumpstartinsurance.com/faq), they measure claim eligibility by PGV because this measure allows them to include "soft-soil areas" far from an Earthquake Event's epicenter that suffer damage from the Earthquake Event. Setting claim eligibility by the Richter scale alone would dramatically decrease, if not eliminate, coverage in such areas. As an example, they cite a 6.9 magnitude earthquake in California that occurred in the late 1980s, where some areas with the most severe damage were located 56 miles from the earthquake's epicenter.

As mentioned above, the insurer's control of deciding the PGV of an Earthquake helps the insurer's claim process run smoother than it would if insureds were able to make a claim for any measurable earthquake. The insurer gives the source of the data they will use to determine the PGV: the U.S.G.S. The policy notes that the information from the U.S.G.S. is publicly available, therefore, insureds are free to access and examine it themselves.

"Policy" is a defined term in this policy, and includes the declarations, the application, the policy form itself, and any endorsements that may be issued. It includes the entire written contract between the insured and the company.

The "Policy Period" is defined as the length of time the Policy will be in effect. Common policy periods are one, two, or three years. For example, a one-year Policy Period that became effective on July 1 would be effective through June 30 the next year.

20. "Shakemap" or "Authoritative Shakemap" refers to a data product of the U.S.G.S. that provides near-real-time maps of ground motion and shaking intensity following significant Earthquakes. As of the date this Policy was issued to You, these maps are available from the U.S.G.S. at: https://earthquake.usgs.gov/data/shakemap/.

21. "U.S.G.S." means the United States Geological Survey, a scientific agency of the United States government.

ANALYSIS

A Shakemap displays different earthquake statistics based on data collected by seismic instruments from the U.S.G.S. These maps are color-coded based on an Earthquake's intensity, PGV, and other seismic measurements. A quick examination of these maps shows that, as discussed above, magnitude and intensity alone are not always indicative of how hard the ground shakes during an Earthquake. Even the existence of a Shakemap for an Earthquake is not necessarily an indicator for whether or not an Earthquake rises to the level of an Earthquake Event.

The U.S.G.S. is a government organization dedicated to geology and studying geological events in the United States.

22. "We,'" "Our," "Us," "Underwriters," and "Insurer" mean certain Underwriters at Lloyd's, London whose syndicate numbers and the proportions underwritten by them can be ascertained from the Coverholder, who are effecting this insurance with You under a binding authority agreement with unique market reference (UMR) B1820WLS21C461.

23. "You," "Your," and "Insured" refers to the insured person, entity, or organization listed in the Declarations for this Policy and any agent designated thereof.

ANALYSIS

All of the first-person pronouns denote the "voice" of the insurer. Any time the insured sees these terms, he or she should treat it as though the insurer was speaking directly to that insured.

The second-person pronouns refer to the insured himself or anyone designated as an agent of the insured. An insured, whether an individual or a business, should pay close attention to phrases and sentences that use "you" or "your" because the sentence or phrase may well contain instructions or imperatives for an insured.