Back Prosthetic Owned by Insured

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Market Requests

kris.h Jan 5, 2023 12:47 PM
Looking for a market to insure prosthetics owned by our insured(s). We can't seem to pin down any of our insurance companies as to whether or not a homeowners policy will insure them. We have a young man getting a $70,000 forearm/hand. Any ideas?
IJA-Nerd Jan 27, 2023 11:56 AM
First off, in a significant way, a prosthetic device brings with it an emotional side that other property does not and cannot. However, for the purpose of this discussion, centered only on insurance coverage, we have to consider what a prosthetic is and that is an item of personal property.

So the short answer is yes, this can be covered by a homeowners’ policy. The reason that the insurance companies don’t want to say whether or not it’s covered is pretty simple. It’s expensive and can be exposed to a lot higher probability of loss or damage because of the way it’s used.

Think of it like this. We all know people who appear to be “attached” to their cell phones because it’s always in their hand, or they are normally looking at the thing. In the case of a prosthetic device, it is most literally attached to them most of the time.

Back to the policy. I’m looking at the ISO HO-3 04 91, which is a common form to use. Carriers may use other forms with other terms so reading the policy is a big deal here.

Coverage C – Personal Property
We cover personal property owned or used by an “insured” while it is anywhere in the world.

I’ll leave it to you to determine if the owner of the prosthetic is an insured on the policy. Read the details.

The ISO HO-3 lists nine specific types of property under the property not covered section. Prosthetics, medical devices, or other like property do not fall under that section.

Then I look at the Exclusions section, which also does not list prosthetics, etc. as specifically excluded. You would find certain causes of loss excluded here, so keep that in mind.

It is personal property that appears to be covered, but there are three significant items that the insured will need to consider.

First, personal property is covered for limited perils insured against. Could those perils insured against be sufficient to protect that item? I don’t know. How many excluded perils do you want to have for an item that’s this important and expensive?

The second thing is can the insured get a high enough limit to cover this exposure. Now is the time to review the limit of insurance for Coverage C – Personal Property because the insured may already be underinsured because most people don’t realize how much stuff they have and how much that stuff may cost to replace. Unlike the $70,000 prosthesis, which they are keenly aware of its cost right now.

The last thing to consider is cost. It is likely that the insured could get an inland marine policy (also known as a personal property floater), but I don’t know what that costs. I read an article online where someone was quoted $100 per $1000 in value of the property. In this case, we would be talking about $7,000 annually. That article was 14 years old, and the person writing did not explore other options so that amount may not apply.

The problem is solved if the insurance company will give the insured special causes of loss for personal property (coverage applies for loss or damage unless specifically excluded) and add the limit for the prosthetic to the Coverage C limit.

I know it’s long, but I hope this helps.

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