What is a Waiver Of Inventory Clause
A waiver of inventory clause in an insurance policy says that the insurance company will not require the policyholder to provide a written list of any damaged property during an insured event. The waiver of inventory clause typically apples to certain types of claims, such as those for less than a specified amount. Waivers of inventory clauses also are found in trusts and other legal contracts.
BREAKING DOWN Waiver Of Inventory Clause
A waiver is a legally binding agreement in which the grantor voluntarily gives up a right. For example, a town might have a zoning ordinance that prohibits the establishment of a liquor store within 100 feet of a school. Let’s say a business hoping to open a liquor store includes a parking lot with one edge that is 98 feet from a school. Given how close the business comes to meeting the restriction, and the fact that it is the parking lot and not the actual building within 98 feet of the school, the town might grant the business a waiver to the zoning law, allowing it to open. The town is under no obligation to do so as the ordinance plainly states a distance of 100 feet is required, but once granted the waiver becomes binding. A waiver of inventory clause likewise means that an entity with the right to demand an inventory of property agrees to forfeit that right.
An insurance company might grant a waiver of its right to demand an inventory of damaged property if processing the inventory is deemed to be more time consuming and thus expensive for the insurer than simply making the payment. Typically in a homeowner’s insurance policy, the insurer will waive the right to an inventory if the claim is under $10,000 and less than 5 percent of the total insured amount.
Waiver of Inventory Clause Saves Time and Hassle
A waiver of inventory clause often provides a significant benefit for the policyholder since preparing a detailed inventory usually is tedious. It is possible for policyholders to appeal for a waiver of inventory after a major loss, such as when an entire home burns to the ground. In this case the homeowner might point out to the insurance company that literally everything they own is gone, from the smallest items in a kitchen drawer to major furnishings, and the emotional stress combined with the difficulty of accounting for every item suggests the insurer should simply pay out at the maximum allowed by the policy.
Sometimes a waiver of inventory clause appears in personal trusts, such as when a person grants his property, upon death, to a beneficiary. The trustee, who is charged with administering the trust after the trustor’s death, may not want to be burdened with compiling a detailed inventory of the property; they want to simply pass along to the inheritor whatever property remains, without a lot of paperwork.