Part IV – Exclusions

This article continues the analysis of the parametric policy from Jumpstart Insurance.

Topics Covered:

What this Policy Covers

How Much We Will Pay You

How to Submit a Claim

I. Insuring Agreement

In consideration of Your payment of the correct premium and Your promise to perform all of the responsibilities set forth in this Policy; in reliance upon the information and statements contained in the application; and subject to the terms, conditions, Limit of Liability, Exclusions and all other provisions of this Policy, We agree to provide You with the insurance coverage described herein.

ANALYSIS: This introductory paragraph is fairly standard. In return for the payment of the correct premium and following the procedures given in the policy, the Insurer will provide coverage to the Insured. The insurer states that it relies on information provided by the insured by way of the application; the provisions include policy terms, conditions, exclusions, and limits of liability.

Any terms in this Policy beginning with capital letters are defined in Section V of this Policy.

ANALYSIS: Certain words and phrases have a specific meaning when used in this policy. All of these terms (discussed in a later article) can be found in Section V Definitions. While many policies put defined terms within quotation marks, this policy capitalizes defined terms.

II. What this Policy Covers Subject to all the terms, conditions and limitations of this Policy, We agree to pay You in accordance with the Limit of Liability determined by Section III of this Policy if:

1. There is an Earthquake Event; and 2. The Address is within a Census Block any part of which experienced shaking with a Peak Ground Velocity (PGV) of at least 30 centimeters per second due to the Earthquake Event, as determined on the basis of data from the U.S.G.S. Authoritative Shakemap reported as of 24 hours after the Earthquake Event Time, in which case You are Eligible to Claim; and 3. You have a Legal Interest in the Address at the time of the Earthquake Event. 4. You experience a Covered Loss resulting from the Earthquake Event; and 5. You submit a Loss Report Form to inform Us of Your Covered Loss."

ANALYSIS: The policy contains terms and conditions that must be followed or avoided, as appropriate, before the insurer will pay the insured in the event of a claim. The amount of coverage is determined in Section III. Limit of Liability.

Coverage is based on a particular event triggering coverage; the policy is named perils but for only one specific peril, that of an Earthquake Event.

Event

An Earthquake Event means that there was an earthquake that took place within the policy period of such magnitude that the United States Geological Survey (USGS) created a "Shakemap."

Address

The second requirement identifies where the Earthquake Event must occur in order for coverage to be granted, and the severity of the earthquake required to trigger coverage. The company uses Peak Ground Velocity (PGV) as a trigger instead of magnitude because it indicates the increased shaking intensity in soft-soil areas. The PGV trigger used is one that is strong enough to cause some damage, but low enough to be realistic. The chances of a large earthquake with a high PGV are minimal, whereas earthquakes with a lower PGV that cause some damage are more likely to occur. The importance of recognizing shaking in soft-soil areas is that magnitude decreases in those areas, yet those areas still receive damage. The PGV is a better indicator of damage than magnitude in areas that are farther away from the epicenter of the quake.

Trigger

The trigger varies by state. In California the PGV threshold is 30 cm/s, whereas in Washington and Oregon the PGV threshold is 20 cm/s. The nature of the land, risk of earthquake, and other factors are used to establish an appropriate trigger for coverage. The PGV threshold referred to in this particular policy is 30 cm/s, since this is a California policy.

Insurable Interest

The policy requires legal interest in the property covered. Other requirements are that the insured must own or live in the property if a residence, own the property and/or the business if a commercial building, and manage a multi-owner building if that is the property insured. These are basic insurable interest requirements, except for the management of multi-owner buildings.

Earthquake Event

The fourth requirement is that a Covered Loss must be a result of an Earthquake Event as defined in the policy. A Covered Loss refers to the financial loss experienced as a result of an earthquake. The type of damage covered varies based on whether an insured is an individual or a business entity; certain losses, such as legal and administrative expenses, and loss assessments are covered for both kinds of insureds. Property damage, damage to personal property, and additional living expenses are covered. Other coverages such as childcare, food spoilage and transportation are provided. Traditional business interruption coverages are provided for the business owner including relocation expenses, temporary office space, increased costs for services or utilities and loss of business income.

Making a Claim

The final requirement, to a certain extent, is self-explanatory: an insured wishing to make a claim must fill out the appropriate form as provided by the carrier. The company will initiate a text message to insureds if the insured location is in an area that experiences the required shaking intensity. If the insured responds that yes, he has experienced an earthquake and sustained damage, then payment is initiated. Insureds can also call the company at 510-891-1753, send an email to: [email protected], log into the insured's account online, send a message via Facebook messenger, or send a letter. The claim form will be made available online after an Earthquake Event has occurred. The company provided Loss Report Form must be completed and provided to the company within 60 days of the Earthquake Event. As always, payments are made to the insured as shown in the declarations.

III. How Much We Will Pay You Our Limit of Liability in an Earthquake Event is as follows:

If You are Eligible to Claim, the Limit of Liability is the Coverage Limit as stated in the Declarations.

If PGV does not reach 30 cm/sec at any point in the Census Block containing Your Address, You are not Eligible to Claim, the Limit of Liability is 0 US Dollars and, accordingly, We will not pay You.

Our Limit of Liability for all Earthquake Events within the Policy Period is two times the Coverage Limit. We will not pay You more than the Limit of Liability during the Policy Period regardless of the number of Earthquake Events.

ANALYSIS: After a claim has been investigated and determined to be a covered loss, the Insurer will pay $10,000. The statement that the Insurer will not pay more than $20,000 in a single policy period means that the Insurer will pay a maximum of two claims for the policy period, no matter how many claims an Insured may make, or how many earthquakes occur during the policy period.

IV. Duties After an Earthquake Event In order to receive payment following an Earthquake Event, You must complete the Loss Report Form, by responding to messages initiated by Jumpstart (or alternatively, by contacting Jumpstart directly). The Loss Report Form will also be also available after a major earthquake via the Jumpstart website, which is currently https://www.jumpstartinsurance.com/.

To receive payment, You must submit a Loss Report Form as soon as reasonably practicable, but in no event later than 60 days from the Earthquake Event Time.

We will issue any payments solely to the Insured as stated in the Declarations.

We will at Our discretion, conduct an audit of a selected number of claims after an Earthquake Event. If Your claim is selected for audit You will be notified by Us within 90 days of the date that Your claim was paid. You will be required to provide sufficient evidence to demonstrate that:

(i) you had a Legal Interest in the Address at Earthquake Event Time, and (ii) You have experienced a Covered Loss resulting from the Earthquake Event, and (iii) Your Covered Loss was equal to or greater than the amount We had paid You.

To support this audit, You should retain any relevant receipts or photographs You need to support Your claim. These must be sent to Us within 60 days of Our request.

If you fail to provide sufficient evidence, We will adjust the claim in accordance with the evidence provided and You will be required to pay Us back any claim amounts already paid by Us in excess of the adjusted amount.

ANALYSIS:

As with any insurance policy, the insured has specific duties following a covered event. This policy requires the insured to either respond to messages received from Jumpstart, or to contact Jumpstart direct. Either Jumpstart will provide the Loss Report Form via message and the insured can complete it from there, or the form will be available on Jumpstart's website. The insured has up to 60 days to complete and submit the Loss Report Form, but the sooner the form is submitted, the sooner the insured will receive payment.

As with any insurance policy, payments will be issued only to the Insured shown in the Declarations.

In light of the fact that there are no reviews of the damaged property or inspections in order to trigger payment, the carrier retains the right to conduct an audit after an event to verify that those who filed claims actually sustained losses. The insured will be notified of an audit within 90 days of payment for the claim.

When a claim is audited, the insured is required to prove that he had a legal interest in the property, that he sustained a covered loss, and that the covered loss was equal or equivalent to the amount paid by the carrier. The insured is required to retain receipts and photographs that will substantiate the insured's claim. The documentation must be sent to the insurer within 60 days of the request for the information.

If the insured fails to provide the necessary documentation, the carrier will adjust the claim in accordance with any evidence provided, and the insured will be required to pay back any funds in excess of the adjusted amount. For example, an insured makes a claim for $10,000. The insured's claim is one of those audited, and the insured provides the carrier with receipts for $4,000 for expenses, but never sends in receipts or photographs that substantiate the remaining $6,000 of the claim. The carrier reviews the documentation received, and determines that only $4,000 of the claimed $10,000 is valid; the carrier then requires the insured to return $6,000 of the original $10,000 that had been paid to the insured.