In light of the recent wildfires in Halifax, we want to take a moment to explain some aspects of insurance law that often come into play during such times. It's important for everyone to first ensure they are safe, and next, to understand their rights and obligations when dealing with insurance companies.
Fire insurance in Nova Scotia is regulated by Part VII of the Insurance Act, RSNS 1989, c 231, as well as a set of statutory conditions which are required by the Act to appear in every fire insurance contract.
Proof of Loss
When a fire occurs and results in a loss, the policyholder is required to submit notice to the insurer, often known as a Proof of Loss or Proof of Claim form.
This document outlines the items damaged or lost and their estimated replacement costs.
At first glance, this may seem simple, but there are timelines in place for the insured to notify the insurer, and after a life-altering event where most of your belongings may have been destroyed, a detailed inventory can be hard to get together
Actual cash value vs replacement cost
Different insurance policies have different methods of calculating the value of the items that you, as the insured party, are entitled to after suffering the loss that you were insured against.
With respect to Actual Cash Value, it is typically calculated as the Replacement Value of an item minus depreciation. In other words, it's the amount it would cost to replace an item at the current market price, less the amount by which the value of the item has decreased over time due to usage and aging. This means if you have a 5-year-old television that gets destroyed in a fire, the insurance company would look at the cost of a comparable new television and then subtract an amount for the five years of use you got out of the original television.
With respect to Replacement Value, it is the cost to replace the lost or damaged item with a new one of like kind and quality, without any deduction for depreciation. Using the same example, if your policy provides for Replacement Value, the insurance company would pay out the full cost of buying a new comparable television, without deducting for the fact that the original television was five years old.
It is extremely important to know this aspect of your policy, and especially if you are covered by a policy for Actual Cash Value, to pay close attention to the value that your insurance company assigns to your lost item. It may not also be correct, and is an area that the Mike Murphy Law Group often litigate.
Damaged property of others in your home
The responsibility for claiming loss of items stored at another person's house typically falls on the owner of the items.
Statutory Condition 2 provides that...
Unless otherwise specifically stated in the contract, the insurer is not liable for loss or damage to property owned by any person other than the insured, unless the interest of the insured therein is stated in the contract.
In some fire insurance contracts, there will be coverage for the items of others, but it is important to take a look at your specific policy, and notify the owner of these items in case they have their own homeowners' insurance policy. This policy will likely cover the item, even if it was not contained in their own home.
If you need help...
During this difficult, if you need any assistance dealing with your insurance company, please contact our Halifax office.