What is the law regarding paying for uninsured losses over policy limits?

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What is the law regarding paying for uninsured losses over policy limits?

Negligence claim against building owner for improperly maintaining a sprinkler system which resulting in losses exceeding limits on injured party’s policy. Want our company to pay and subrogate back to responsible owner’s policy. In AZ.

Asked on February 28, 2011 under Insurance Law, Arizona

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You may want your insurer to pay the exccess losses and seek reimbursement, but they don't have to do so. An insurance policy is a contract; the parties to that contract have to honor its obligations--no more and no less. Therefore an insurer is only required to pay up to the limits of its policy or coverage. You can certainly sue the building only or other responsible party (e.g. a sprinkler company which did improper or negligent installation or maintenance) for losses over the covered amount, but that's something *you* have to do if you deem it worthwhile, given the magnitude of uncovered losses, the cost of the lawsuit (e.g. attorney's and expert witness fees), and the perceived likelihood of winning.


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