There are lots of questions that have surfaced in our courts concerning Allstate indemnity protection and termite damage that have given policyholders some real headaches. There was a case including Allstate Indemnity Coverage and Termite Damage that was filed by a purchaser against a seller a number of years ago.
Essentially what took place, in that case, is that the buyer of the property discovered that there was termite damage at the home. They took legal action against the sellers for not disclosing the problem, at which time the seller attempted to fall back on their Allstate indemnity coverage and termite damage stipulation in the policy.
At that point, the sellers and buyers collaborated in order to submit their own case versus Allstate for breach of conditions in the policy that they thought covered them versus structural damage due to termites. Allstate, naturally, resisted and argued that a house owner’s policy typically does not cover termite damage to a structure. The Allstate indemnity protection and termite damage stipulation did not, they argued, cover pre-existing termite damage, and since no one was physically hurt, the claim ought to be dismissed.
After a lot of legal wrangling, a settlement was reached; however, that particular claim caused many insurance companies to more clearly spell out the specific stipulations to their indemnity protection when it concerns termite damage. The Allstate indemnity coverage and termite damage case made a lot of property owner’s policies change quite a bit and now most indemnity policies don’t provide much coverage at all unless there is physical injury directly caused by termite damage on a home.
Allstate indemnity coverage and termite damage really did property owners a favor by spelling out, specifically, what is covered and what is not. The suit might have been an eye-opener for the insurance coverage market that ended up working out to the advantage of the homeowner instead of the big business of the insurance market.