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Includes copyrighted material of Insurance Services Office, Inc., with its permission.

 August, 2010

Section V of the Garage Form

Summary: The conditions of the garage coverage form are contained in section V of the policy. This section of the policy consists of loss conditions and general conditions that affect coverage. Violation of the conditions by the insured could lead to the insurer’s claiming a violation of the insurance contract and, thus, no coverage for a claim. Note the disclaimer below in the duties of the insured clause as to coverage being dependent upon “full compliance” with the listed duties.

Topics covered:

Loss conditions

General conditions

Loss Conditions

1. Appraisal for Physical Damage Loss

If you and we disagree on the amount of “loss,” either may demand an appraisal of the “”loss”. In this event, each party will select a competent appraiser. The two appraisers will select a competent and impartial umpire.

The appraisers will state separately the actual cash value and amount of “loss”. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

a.     Pay its chosen appraiser; and

b.     Bear the other expenses of the appraisal and umpire equally.

If we submit to an appraisal, we will still retain our right to deny the claim.

2. Duties in the Event of Accident, Claim, Suit, or Loss

We have no duty to provide coverage under this policy unless there has been full compliance with the following duties:

a.     In the event of “accident,” claim, “suit” or “loss,” you must give us or our authorized representative prompt notice of the accident or “loss”. Include:

(1)     How, when and where the “accident” or “loss” occurred;

(2)     The “insured’s” name and address; and

(3)     To the extent possible, the names and addresses of any injured persons and witnesses.

b.     Additionally, you and any other involved “insured” must:

(1)     Assume no obligation, make no payment or incur no expense without our consent, except at the “insured’s” own cost.

(2)     Immediately send us copies of any request, demand, order, notice, summons or legal paper received concerning the claim or “suit”.

(3)     Cooperate with us in the investigation or settlement of the claim or defense against the “suit”.

(4)     Authorize us to obtain medical records or other pertinent information.

(5)     Submit to examination at our expense, by physicians of our choice, as often as we reasonably require.

c.     If there is “loss” to a covered “auto” or its equipment you must also do the following:

(1)     Promptly notify the police if the covered “auto” or any of its equipment is stolen.

(2)     Take all reasonable steps to protect the covered “auto” from further damage. Also keep a record of your expenses for consideration in the settlement of the claim.

(3)     Permit us to inspect the covered “auto” and records proving the “loss” before its repair or disposition.

(4)     Agree to examinations under oath at our request and give us a signed statement of your answers.

Analysis

The appraisal clause sets out rules for both insured and insurance company when they are unable to agree on the amount of physical damage loss. Either party may demand an appraisal. Each party then hires an appraiser and the two appraisers select an umpire. In case the appraisers are unable to agree on figures for the actual cash value of the property and the amount of loss, the matter is thrown to the umpire, whose decision is binding.

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