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Is the never pay insurance policy coming back?

“In your policy it says very clearly that no claims you make will be paid. You unfortunately plucked for our policy of never paying, which if you never claim is worth it - but, uh, you had to claim - and voila. "

-Mr. Sneaky to Reverend Morrison over letter from insurance company refusing to pay Reverend's claim for damage to his car which was hit by a truck while standing in a garage. Monty Python and the Flying Circus, circa 1971.

In the last article, I focused on the business and societal issues that can result from insurance companies acting as if they were selling Monty Python's proverbial “Never Pay” policies. I also thought of a utopian carrier that would write clear and easily understandable policies, and actually pay claims instead of paying adjusters to write reservations of rights and denial letters and a legion of lawyers. to fly across the country in dispute with the insurer. customers.

Now, I don't mean that carriers never pay claims. In many cases, they act responsibly. Sadly, it seems some carriers (or some insurance adjusters) are acting like they're selling you a never-pay policy, and that attitude, at least based on observations from my little part of the legal world, seems to be increasing. Likewise, unfortunately, our utopian bearer, at least to my knowledge, does not exist.

This article will begin to explore how the real world works and some tips for navigating the confusing world of insurance. I must start with this caveat, however. There is no way to ensure that future claims will be covered, and there is no way to guarantee that your carrier will be reasonable. I am often truly amazed at the positions taken and the incredibly creative arguments that adjusters use to try to deny claims. There are, however, a few tips that can increase your chances of success. This article will cover some of the basics. The next article will explain when you will likely need to see a coverage lawyer.

1. Find a good broker. Most insurance is purchased through brokers or agents. Find an experienced broker, preferably one with insurance underwriting experience in your industry. The broker should take the time to meet with you and develop an understanding of your business. The broker should know what you are doing and how you are working in great detail. You may have specific risks that cause concern. These risks should be discussed in detail. A good broker will likely bring up other issues that may never have occurred to you. If a broker doesn't want to take the time to understand your business and review the risks, find another broker.

How do you find a good broker? Ask around you. Do some research on the broker. Find out how many people the broker employs. You probably don't need to use a giant like Aon or Marsh, but make sure your broker is well established. It is also useful if the broker has a small size. Why? If a carrier balks about a claim, sometimes a broker can step in and act as your lawyer. It doesn't always work, but sometimes it helps. If the carrier sees the broker as an important business source, they may be more likely to pay the claim.

It may be helpful to tell the broker in writing which risks you want to ensure are covered. This will ensure that the broker is focused on the issues. Have the broker go through any coverage exclusions or endorsements the insurer will need. Endorsements may include additional exclusions. Go over all exclusions and endorsements with the broker and try to make sure they don't create a hole in your business's potential risk coverage. If the broker makes a mistake and improperly advises you about coverage, the broker may be liable to you if the carrier does not cover a claim.

A necessary implication of using a broker is that you will not buy insurance online. Many carriers, especially private carriers (home and auto) sell insurance
3. Don't buy based on price alone. It is tempting, especially in the current economic context, to take the cheapest quote offered. If your choice, however, is between buying a cheap policy from a carrier with a bad reputation and buying a slightly more expensive policy from a carrier with a good reputation, think again. long before taking the "market".

It's also worth noting that you should make every effort to ensure that you are comparing "apples to apples". Make sure your broker describes the substantial differences between the cheapest policy and the more expensive policy. The lower price may be explained in part by higher deductibles or self-insured retentions (the part of the loss you have to pay), lower policy limits, or endorsements that eliminate coverage for particular risks. that can be important to your business.

4. Get copies of your policies and keep them with other important documents. I am often asked to assess insurance coverage issues. Of course, the first thing I need is a copy of the insurance policy. I am amazed at how difficult it is, in many cases, to just get a copy of the policy.

It's also clear to me that many business people don't even clearly understand what an insurance policy is. Often times when I request a copy of the policy, I am provided with a one page copy of what is called the "dec page". This provides almost no help in assessing coverage other than determining the policy limits.

To make the problem clear, an insurance policy usually consists of three parts. First, there is the declarations page mentioned above, or "dec page". This is usually one page (sometimes two) and summarizes the types of coverage and the limits of the policy. The policy limits set the maximum amount the carrier will pay. Limits are usually stated "per event", which means the maximum the carrier will pay for an event. Sometimes the limits are listed as either "per claim" or "per accident", which will establish the maximum amount the carrier will pay for a single claim or accident. There are also “global” limits. Global limits set the total maximum amount that the carrier will pay in a given period (usually one year), regardless of the number of “occurrences” or “claims”.

Note: There are important differences between coverage based on “events” and coverage for claims. These differences are outside the scope of this article and should be discussed with the broker. Most general liability coverages are "event" based. Much of the professional liability coverage (for architects, engineers, lawyers) is written as “claims made” coverage.

The second part of the policy is the “body” or the “policy form”. This is the main part of the policy and includes the insurance contract (what the policy will cover), coverage exclusions (types of events that are not covered), coverage conditions and definitions. Essentially, this is the insurance contract, and this is what a lawyer or insurance professional will need to begin assessing any coverage issue.

The third part of the policy consists of all the endorsements. The endorsements are changes to the policy. Endorsements can be very important and they can significantly change the rights of the insured. Endorsements may include, for example, additional exclusions from coverage. For example, we now often see mentions with exclusions of "mushroom". These exclusions were added by many carriers after numerous claims were reported several years ago for suspected bodily or property damage due to mold.

The policy will usually be delivered after purchase, sometimes long after purchase. The policy should include the statements, the policy form and any approvals. Usually they will be stapled together.

It is a good idea to keep a copy of the policy away from your workplace. Why? If there is a loss (a fire, for example) at your establishment, the police will likely be destroyed. Copies can be kept in a safe, or a copy can also be stored in electronic form where it will be backed up remotely.