Property provisions

The clauses and conditions that govern how a property claim is handled. These show up across property forms and are frequently tested. All STABLE.

Parties with an interest

• Mortgagee clause — protects the lender (mortgagee) named on the policy. The mortgagee can receive loss payments, gets separate notice of cancellation, and may retain rights even if the insured’s own claim is denied (e.g., for the insured’s arson).
• Loss payee — a party (often a lender on personal property) entitled to share in loss payments, but with fewer protections than a mortgagee.
• Additional insured — added by endorsement; gains certain coverage under the policy.

“Other insurance” provisions

When more than one policy covers the same loss:

• Pro rata — each insurer pays its proportional share of the loss (its limit ÷ total limits).
• Primary and excess — one policy pays first; the other pays only after the first is exhausted.

These prevent the insured from collecting more than the loss (the indemnity principle — see 00 Property principles).

Subrogation

After paying a claim, the insurer “steps into the shoes” of the insured to recover from a responsible third party. This: STABLE

• prevents the insured from collecting twice (from insurer and the wrongdoer), and
• shifts the cost to the at-fault party.

The insured must not impair the insurer’s subrogation rights (e.g., by waiving a claim against the wrongdoer after a loss). Subrogation also appears in casualty and health.

Duties after a loss

Conditions the insured must satisfy to be paid:

• Prompt notice of the loss.
• Protect the property from further damage (mitigate).
• Proof of loss — a sworn statement of the amount/details, usually within a set time.
• Cooperate with the investigation; submit to examination if required.

The appraisal clause

If the insurer and insured agree coverage applies but dispute the amount, the appraisal clause lets each side hire an appraiser; the two pick an umpire, and agreement of any two binds the amount. It resolves value disputes without litigation (it does not decide coverage).

Other recurring provisions

• Vacancy — coverage may be reduced/suspended if a building is vacant beyond a set period (vacant buildings are higher risk).
• Pair or set clause — for a damaged item that’s part of a set, the insurer pays the loss in value to the set, not the cost of a whole new set.
• Salvage and abandonment — the insured generally can’t abandon damaged property to the insurer; the insurer may take salvage after paying.

Why it matters

These provisions are the claims-handling mechanics — the same domain as unfair claims settlement practices (see 12 Ethics & trade practices) and the TPA / claims-attribution stream (see 07 TPA & claims attribution).

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