Home Business What does the “mysterious disappearance” insurance clause mean.

What does the “mysterious disappearance” insurance clause mean.


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If history is any guide, insurance claims for unexplained disappearances will skyrocket this Halloween.

Renters’ and homeowners’ insurance claims related to “mysterious disappearances” increased 5% on Halloween and 3% on Prank Night, the night before Halloween, according to Travelers Insurance data from 2011 to 2021.

But insurers do not offer blanket protection to policyholders for lost or damaged property. Some have clauses that expressly deny payment in the event of such a “mysterious disappearance”.

“Not all policies have them, but some do,” said Don Griffin, vice president of policy, research and international affairs for the Property & Casualty Insurance Association of America. “If it’s gone under mysterious circumstances, that often means it’s not insured.”

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Mysterious disappearance provisions help prevent fraud

Generally, those rules come into play when an insured files a claim for a lost item of value but can’t reasonably explain how the item disappeared, said Michael DeLong, an insurance expert at the Consumer Federation of America.

While “ghosts or supernatural things” are unlikely to be the culprit, people sometimes lose items carelessly or forget them in certain places, DeLong said. Insurers don’t want to be on the hook financially in such cases, he added.

The clauses are also a way to prevent insurance fraud, experts say.

Otherwise, the policyholder can claim the loss of the goods and receive insurance payments, even if it is still in their possession.

But there can be gray areas — like when a skilled thief breaks into a home or apartment, steals a piece of valuable property, but leaves no visible evidence of the break-in, DeLong said.

An insurance investigator can deny a claim, although he would have to find a reasonable basis to do so, said Peter Koehenburger, associate director of the Insurance Law Center at the University of Connecticut School of Law.

Filing and filing a police report may be enough to satisfy an insurer in such cases, Kochenburger said.

Why ‘named risks’ matter in insurance coverage

However, you are not necessarily in the clear just because your policy does not cover “mysterious disappearance”.

Most policies implicitly exclude these events, experts say.

When it comes to personal property, insurance typically only covers renters and homeowners for “named perils,” Griffin said.

This means that the loss must be attributable to a peril – such as fire, theft, explosion, lightning or a natural disaster – that is specified in the policy. Items that disappear under mysterious circumstances (for example, the loss cannot be explained by one of these perils) are probably not covered by insurance.

So-called all-risks or open-perils policies, on the other hand, cover any event that the policy does not specifically exclude.

Why your valuables may not be fully covered

Even if insurers pay for property claims, mysterious disappearance or otherwise, insurers do not necessarily cover the full cost of replacing the item.

Sublimits may apply. For example, your monthly premium can insure up to $20,000 of your personal property. But your policy may limit reimbursement for certain categories, such as a maximum of $2,000 for jewelry, $2,500 for furs, $3,000 for electronics, or $5,000 for artwork.

However, insurers can often cover the full value of valuable items for a higher premium.

“You want to make sure you check your policy,” Kochenburger said. “There is a good chance you will need additional coverage [for an art collection or jewelry].”

“It’s a common mistake, and it’s also easy to avoid,” he added.

“Purchasing additional insurance can also be a way to close any financial gaps left by a mysterious disappearance,” Griffin said.

Setting aside a specific item for coverage in a separate “schedule” in an existing renter’s or homeowner’s policy (or through a separate policy altogether) typically covers that item for a much wider range of risks — often including unexplained disappearance, he added.

“These things are pretty rare, but they do happen,” Griffin said.

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