Insured property owners have a duty to cooperate with an insurance company’s investigation of a claim as outlined in their policy. Often referred to as the cooperation clause because it helps property owners understand how they must cooperate with an insurer.

Cooperation clauses are usually first written by state government. A legislature or a department of insurance will write a cooperation clause as part of a standard fire insurance policy. Insurance companies take that language and weave it into policies that cover additional insured risks such as damage from hail, wind and water.

This gist of most cooperation clauses is the insured property owner must show the insurer damaged property and provide documentation to establish its value. Cooperation clauses are often found in sections of the policy entitled “Conditions” or “Your Duties After Loss”. It’s near the requirement of a proof of loss and the appraisal clause. It typically includes 3-6 bullet points stating what requests for information a property owner must honor.

Sometimes insurance companies write cooperation clauses that expect more information than the cooperation clause written by the state. My view is that insurance companies are not entitled to ask for more than what the state allows. Standard fire policies are really a form of consumer protection. State governments write cooperation clauses to limit how much an insurer can demand. That consumer protection should be enforced in a court of law, not a cooperation clause that asks for more.

There are limits to what an insurance company can expect of its customers. Repetitious questions are inappropriate. Questions that have nothing to do with the insured loss are inappropriate. The property owners’ duty to cooperate is not unlimited. The standard is one of reasonableness, with an eye toward allowing an insurance company a fair opportunity to investigate a claim.

Insurance companies take cooperation clauses seriously. An alleged breach of a cooperation clause can be a reason the insurance company denies a claim. Insurance companies will take this alleged breach to trial if needed which is why it’s important to read and understand your cooperation clause and its requirements. If the insurance company demands information sought in its cooperation clause, and that clause is within the boundaries of state law, the property owner should provide the requested information.

I often see insurers request financial records of the insured property owner. Is such a request appropriate? It is appropriate if the request asks for receipts or invoices to document payment of items claimed to be lost. If the request has nothing to do with property claimed to be damage the insurer’s request may reasonable.

Contact us if you have questions about your cooperation clause or any part of the claim process.