Scott is a telecommuter who works in his home office and uses his personal computer to perform his work and correspond with his employer. In an unusually violent thunderstorm, lightening struck the power pole with the wires leading to his house. The electric panel was badly damaged, and no power was available in the house. Fortunately, the lightening strike did not start a fire. 

Scott contacted his insurance agent who immediately forwarded a claim to MOA insurance. The company immediately sent an automatic acknowledgement of the claim to the agent. They also informed the agent that the claim had been assigned to Josh, a claim representative. Josh determined that Scott had purchased an HO-3 policy that covers damage caused by lightening strikes. 

What are the six steps for settling a claim? Which ones were already completed?

 

Josh then contacted Scott. He asked about what was damaged. He learned about the electric panel. Since the power was off, damage to appliances and equipment could not be assessed at this time. Josh asked if the home was inhabitable. He let Scott know that the policy included extra living expenses if he needed to stay in a hotel while the damages were repaired. He made arrangements for a field adjuster to get access to the home in order to begin the investigation. And, finally, he suggested that Scott unplug all of his electronic equipment to prevent further damage from a power surge when power was restored.

Scott said he needed to go to a place where he could get online with his computer. So, he told Josh he would check into a hotel and bring his computer so he would not lose any more work time. 

Josh has initiated the investigation process. Does this mean that the company has committed to paying the claim? What should he do to in order to avoid the possibility of a bad faith claims handling suit in the event that there are damages that are not covered?

 

Scott checked in to the hotel with his computer. He discovered that the computer was dead. He called Josh, who informed him that his policy had a sublimit of $2,500 that applied to the computer.

He was able to purchase a replacement computer for $1,500. But, for $2,500, he could get a much more powerful computer. He also found out that he may be able to recover his work data from the disk drive in the dead computer. This service costs $2,000. Since it is mostly his work data that was lost, it is important that he get access to it if possible. He also realized that he has lost 3 days of work because of the lightening strike. That's $1,500 of lost income. 

Will the policy pay for the upgraded computer? Discuss how the indemnity principle applies to this situation. 

Does Scott have an insurable interest in his employer's data? Suppose his employer feels that he is liable for the loss of data because he failed to make a safe backup copy. Can he file a claim under the personal liability portion of his homeowners policy?

Given the above data, and the fact that the policy has a $1,000 deductible, what should Josh offer to settle the computer portion of this claim?

Answer rating: 100% (QA)

The detailed answer for the above question is provided below What are the six steps for settling a claim Which ones were already completed The six steps for settling a claim are Acknowledge the claim ... View the full answer