I am taking a quick break from my series on claims handling guidelines to write about an issue that is probably just coming up for many folks in Gatlinburg, Tennessee. The other night I was showing my wife Chip Merlin's blog about the Gatlinburg fires
and then we looked at photos of the devastation there. Because she knows attorneys in our firm travel quite a bit, she asked if I would be going down there to assist with claims.
That question got me thinking about what help could be offered to policyholders in Gatlinburg. As most of the photographs I saw showed total losses, the first thing I looked was for a valued policy law—which Tennessee has. There are three sections of the Tennessee statutes that form the valued policy law. The first, T.C.A. § 56-7-801, gives the carrier 90 days after issuing the policy to inspect the property in order to value it and it also prohibits a fire policy being issued in excess of the fair market value of the insured building. Second, T.C.A. § 56-7-802 requires the carrier to return premiums where the building was overvalued and suffered a total loss. Most important for the people of Gatlinburg, there is T.C.A. § 56-7-803 which states that for loss occurring 90 days after policy inception, the face value of the policy shall be “conclusively presumed to be reasonable, and settlement shall be made on that basis.”
Thus, if a policy has been in force for 90 or more days in Tennessee and the insured structure suffers a total loss, the carrier must pay the full value of the insurance policy. In my next post, I will return to the claims handling guidelines and focus on Tennessee.