We purchased our agricultural property from my in-laws. My mother-in-law called the insurance company and said put this in the “kids'” insurance they now own the property. Our agent has never called regarding our use of the property. Fast forward–our property was severely damaged by a tornado and now we find out our property was severely underinsured. Our insurance agent has never met with us in person, visited our farm, or explained our policy. I have always had to call the agent to see if our policy covered our livestock and/or equipment. Due to the damage to the property and the insurance agent educating his clients on their coverage what can I do? The total damage to our property is almost $250,000. We don’t have that money to rebuild and we thought we were insured. Thank you for any guidance you can give me!
We are very sorry to hear about your situation. United Policyholders sincerely believes that insurance companies should use their knowledge of current construction costs to help their customers adequately insure their assets. However, the law in most states is that an insurance company only has a general duty to deliver a policy, but not a special duty to have that policy provide coverage that’s tailored to the property owner’s specific needs. That special duty can arise if there were communications or conversations before a loss during which the insurer or its representatives assured the consumer that the policy limits were adequate. If there’s proof of that type of communication, that can cause an insurance company to have to adjust the policy limits retroactively to what they should have been. What matters in your situation is whether there were any conversations between your parents, you, your siblings and the insurance company or agent during which the company or agent assured anyone in your family that your coverage was adequate. It sounds like there weren’t, which makes it tough to force the insurer to pay above the inadequate limits.
We recommend consulting with a policyholder lawyer and get their opinion on whether your specific factual situation warrants an attempt at policy reformation. You can use United Policyholders’ “Find Help” directory as a place to start looking for an attorney: https://uphelp.org/recovery/professional-help-directory/. The UP website also contains general resources on the issue of underinsurance: https://uphelp.org/underinsurance-help-were-you-lulled-into-a-false-sense-of-security-or-did-you-intentionally-underinsure-your-biggest-asset/.
To us, it’s logical that a consumer should be able to rely on the expertise of an insurance company and its sales agents to set appropriate limits. UP and our attorney volunteers have argued exactly that time and time again in courts, legislatures and the media. Hopefully in the future we’ll see positive changes in the law to more accurately reflect reality — which is that most normal consumers in fact rely on insurance companies and agents for figuring out how much insurance is needed.