The premise of Ohio insurance coverage law is that your insurance policy is a contract and contracts are interpreted as if you had the chance to: 1) read it before signing it, 2) negotiate the terms, and 3) agree with that you signed. In the context of consumer insurance policies, such as homeowners and automobile policies, these are absurd assumptions. Insurance companies simply do not negotiate the terms of insurance policies. Good luck trying to get a copy of your automobile policy before needing to pay the premium. Finally, Ohio law assumes that after you get an insurance policy, you have read every word, understood its coverages and exclusions, and agree to undertake the reporting obligations the policy places on you.
This article focuses on Ohio law’s assumption that insureds read and comprehend the various policy changes insurers make every year. Insurers change their policies every year to adapt to how Ohio courts have interpreted their policies and to refine what claims are paid. Every year the insurance policy renews, and insureds are sent a stack of double-sided paper with cryptic instructions like “Part I(V)(b)(4) through (8) is replaced with the following indecipherable text…” By paying another premium, Ohio law assumes insureds have read, understood, and agreed to the changes.
Recently, a central Ohio attorney referred clients of his to me who had their insurance claim for roof damage denied by their homeowners insurance company. I was skeptical at first. Generally, insurers only deny roof claims when the damage occurred years ago and the homeowner never made repairs paid for by a prior claim. As it turns out, the clients made a claim to their insurer within days of seeing a spot on their ceiling expand from a little dark mark to something serious. But the insurance company denied the claim for late notice anyway.
Late notice denials are uncommon in Ohio due to the protections that Ohio laws afford insureds. Under Ohio law, insureds simply need to give notice of the loss to their insurer a reasonable time from when they knew or should have known of the loss. An insured’s delay in giving notice of the loss must be unreasonable and the delay must be prejudicial to the insurer in order for the claim to be properly denied. The reason for these protections against “late notice” denials is that it is not always clear to homeowners when their homes or roofs have been damaged.
The vast majority of homeowners have no idea if their roof is damaged or when it needs to be replaced until something dramatic happens, like shingles being scattered all over the yard after a thunderstorm. Other times it takes a different type of damage, such as water infiltrating inside of the home, to manifest itself in order for a homeowner to have any clue that the home is damaged. For wind damage, a severe storm can break the seals of every shingle on a roof without appearing any different to a homeowner. Only roofers (and some insurance adjusters) know how to tell if roofing shingles are damaged. And when do you call a roofer or insurance company to inspect the roof? When you think your roof is damaged – because of interior water damage or shingles being scattered across your lawn.
Upon receiving a copy of the homeowners policy and denial letter, I was shocked at the new exclusion this national insurance company cited in the denial letter. The new exclusion added restrictive language to the policy’s normal “prompt notice” section, stating in full: “Give us prompt notice. With respect to a loss by the peril of windstorm or hail, that notice must occur no later than six months after the date of loss.” This new exclusion only gives Ohio insureds six months to report damage to their home or roof caused by wind or hail – even if they were not aware that any damage had occurred. This new policy language was drafted to intentionally eliminate the protections Ohio law has given homeowners against “late notice” denials.
Under the new exclusion, it does not matter if:
- The insureds did not know any damage had occurred;
- The insureds did not know when or which wind/hail event caused the damage;
- The insurer is not prejudiced in any way by the late reporting of the claim; and
- If it was reasonable for the insured to wait more than six months to report the claim.
Under this new policy language, an Ohio insured’s claim for wind/hail damage is going to be denied if the claim is made six months and one day after the wind/hail damage occurred – no matter what. And that is exactly what happened to my clients. They had a little spot form on their ceiling one day, which is common in older homes, so they checked out the house and decided to simply watch it. Once it got larger a few months later, they called their insurance company. But since it took the spot over six months to grow – claim denied.
I sent a detailed letter to the national insurer on behalf of my clients pointing out how the new exclusion eliminates coverage for insureds who did everything right and deletes decades of Ohio law protecting insureds. I made it clear that I was confident an Ohio judge and jury would refuse to apply their new exclusion. Fortunately, my letter convinced the insurer to rescind the denial letter and pay my clients in full for a new roof and interior repairs, which is no easy feat. But what happened to my clients is a problem, not a victory.
My clients are not the first or only Ohioans to have their claim denied under this new exclusion. But because they had the sophistication and means to hire an attorney who is experienced in insurance coverage disputes to fight their insurance company, they were able to get their claim denial reversed and paid in full. My clients got paid while the national insurer undoubtedly continues to deny claims by citing to this exact exclusion. The only way to get the exclusion eliminated for everyone is for one homeowner whose claim has been denied to sue the national insurer and convince a judge or jury to declare it void. This process takes time and money that my clients rightfully did not want to spend. After all, they needed to use that money to get a new roof and get the inside of their home repaired.
I will end this discussion with some advice and a call to action. First, if you think your insurance claim was wrongly denied, if it just seems unfair, consult with an attorney who is experienced in insurance coverage disputes. Denial letters are not always the final say in an insurance coverage dispute. Second, contact me if you are an attorney and you come across a denial letter citing this exclusion. I will do what I can to help you and your client get the claim denial changed and hopefully ruled to be invalid by an Ohio court.