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Are you sure you know what your insurance covers?

We all know that language changes over time. Sometimes the meaning of a word expands. Sometimes it contracts. The word "dog" is an example. It's a term that applies to any breed of the canine variety. But there was a time when "hound" was the preferred word and "dog" was used in reference to a particularly big, fierce animal.

Those with experience in the law recognize that such shifts can cause a lot of problems. In the area of the property insurance, changing interpretations of a single word might mean that a risk issue that a Minnesota property owner legitimately thought was covered by a policy now is not. Insurance companies look to take advantage of such changes to protect their best interests. To protect individual property owner interests, consulting skilled legal counsel is advised.

The word "collapse" is one that is undergoing some legal refinement. Starting about 60 years ago, a claim for collapse coverage became payable if the damage eroded the structure's character as a building. If an event caused a place to be uninhabitable, that was enough, even if nothing fell down.

That standard still applies for the most part depending on the laws of a given state, but some legal observers point to one decision from Illinois that shows how insurers have successfully worked to narrow the scope of what they have to cover. Here's what happened.

A property owner hired a contractor to do an extensive build out on his home. Due to contractor error, the home's foundation began to crumble. The damage halted the project and left the house uninhabitable, but no part of the building fell.

When the property owner submitted a claim, the insurer denied coverage because of exclusionary language in the policy that read, "A building or any part of the building that is standing is not considered to be in a state of collapse." The court said that language justified the denial, despite the place being unlivable.

What this reinforces is the importance of understanding the legal language of your policy before you sign it so that you can be confident in the coverage you expect it to deliver.

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