What a ‘mysterious disappearance’ insurance clause means

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

Insurer and homeowner claims related to “mysterious disappearances” increased 5% on Halloween and 3% on Mischief Night, the night before Halloween, according to Travelers Insurance claims data. from 2011 to 2021.

But the insurer does not provide full protection to the owner against lost or damaged property. Some have clauses that expressly deny payment in such “mysterious disappearance” cases.

“Not all policies have them but some do,” said Don Griffin, vice president of policy, research and international distribution at the American Property Casualty Insurance Association, about these provisions. “If it disappeared under mysterious circumstances, that usually means it wasn’t uncovered.”

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Mysterious disappearance codes help prevent fraud

Typically, these rules come into play when a policyholder files a claim for lost items but can’t fully explain how the item went missing, said Michael DeLong, an insurance expert at of the Consumer Federation of America.

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While “ghosts or the supernatural” are unlikely, people sometimes lose items because they’re careless or leave them somewhere, DeLong said. The insurer does not want to be in financial trouble in these cases, he added.

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

Otherwise, the policyholder can claim that an item is missing and get insurance coverage even though it is still in his possession.

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But there can be gray areas — for example, if a burglar knows how to break into a home or building, steal valuables without leaving visible evidence of the break-in, DeLong said.

Insurance investigators may deny a claim, although they must find a reasonable basis for doing so, said Peter Kochenburger, associate director of the Insurance Law Center at the University of Connecticut School of Law. .

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Filing and having a police report filed can be enough to satisfy the insurer in such cases, Kochenburger said.

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However, you don’t have to be clear because your policy doesn’t explicitly exclude “mysterious disappearances.”

Most policies implicitly exclude these activities, experts say.

When it comes to personal property, insurance generally covers renters and landlords against “specified perils,” Griffin said.

This means that the loss must be caused by an accident — such as fire, theft, explosion, lightning or natural disaster — that is specified in the policy. Items that disappear under mysterious circumstances (that is, the loss cannot be explained by one of these accidents) may not be covered by insurance.

So-called all-risk policies or open-ended vacation policies, in contrast, cover all activities that the policy does not specifically exclude.

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Even if the insurer pays property claims, mysterious disappearances or others, the policyholder is not necessarily covered for the cost of replacing an item.

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Sublimits may apply. For example, your monthly payments may cover you up to $20,000 in total 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 art.

However, policyholders can often choose to cover the cost of valuables at a higher rate.

“You want to make sure you look at your policy,” Kochenburger said. “There are times when you may need additional coverage [for an art collection or jewelry].”

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

Buying additional coverage can be a way to close financial gaps that result from mysterious disappearances, Griffin said.

Designating a specific item for coverage under a separate “schedule” in your existing renter’s or homeowner’s policy (or under a separate policy entirely) generally covers that item. it’s a wider risk – often involving unexplained disappearances, he added.

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

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