What is the consequence if the insured fails to file a Value Reporting Form?

When the insured fails to file a Value Reporting Form, the recovery being limited to 75% of the loss, subject to a maximum reporting limit, is an important feature of many commercial property insurance policies. The Value Reporting Form is utilized by insured entities to report the values they are insuring at regular intervals, which adjusts the coverage and premium accordingly.

If an insured does not file the required form, the insurer is unable to determine the actual value at risk accurately. To mitigate the risk posed by potential under-reporting or non-reporting, the policy often specifies that claims will be reduced to a percentage of the loss. This ensures that the insured does not profit from a situation where they understate their property values and still receive full coverage for losses.

The maximum reporting limit provides a safety net for both the insurer and the insured, protecting the insurer from excessive payouts while offering some level of protection to the insured. In this scenario, the 75% limit serves as a compromise that retains some benefit for the insured despite the lapse in their responsibilities regarding reporting values.

The other options, such as complete denial of recovery or full reported value recovery, do not account for the policy's framework that seeks to ensure fairness and accountability in the reporting process. Therefore,