Allstate Indemnity Coverage and Termite Damage

There are many questions that have arisen in our courts regarding Allstate indemnity coverage and termite damage that have caused policy holders some real headaches.  Basically, an indemnity policy is a protection again future loss for a property owner that may be filed by another person.   Most of the time, a problem comes into play during a real estate transaction in the case of termite damage.  In fact, there was a case involving Allstate Indemnity Coverage and Termite Damage that was filed by a buyer against a seller several years ago.

Essentially what happened in that case is that the buyer of a piece of property found out that there was termite damage to a home.  They sued the sellers for not disclosing the problem at which time, the seller tried to fall back on their Allstate indemnity coverage and termite damage clause in the policy.  Allstate denied the claim thus making the seller responsible for fixing the damage and compensating the buyers.  The buyers also had Allstate insurance and tried to file again their own homeowner’s policy which was also subsequently denied.

At that point, the buyers and sellers teams up to file their own suit against Allstate for breach of conditions in the policy that they believed covered them against structural damage due to termites.  Allstate, of course fought back and argued that a homeowner’s policy generally doesn’t cover termite damage to a structure and will pay only if another party is harmed.  The Allstate indemnity coverage and termite damage clause did not, they argued, cover pre-existing termite damage and no one was physically injured so the lawsuit should be dismissed.

After a lot of legal wrangling, a settlement was reached, but that lawsuit caused a lot of insurance companies to more specifically spell out the exact terms of their indemnity coverage when it comes to termite damage.  The Allstate indemnity coverage and termite damage case made a lot of home owner’s policies change quite a bit and now most indemnity policies don’t offer much coverage at all unless there is physical injury directly caused by termite damage on a property.

Allstate indemnity coverage and termite damage actually did many homeowners a favor by spelling out specifically what is covered and what is not.  The lawsuit may have been an eye-opener for the insurance industry that ended up working out to the advantage of the home owner as opposed to the big business of the insurance industry.
