Library of Articles
“IN 2010, I authored an article on the dangers of absolute exclusions.1 That article was prompted by an appellate decision in Florida, James River Ins. Co. v. Ground Down Eng’g, 540 F.3d 1270 (11th Cir. 2008). In that case, an engineering firm that was providing consulting services on whether land had become polluted found that its errors and omissions (E&O) policy, which covered it as an environmental consultant, didn’t cover pollution!”
…the COI does not/should not amend or change the policy in any way, explicitly stating so in the form of a disclaimer. However, the disclaimer is proving not to be bulletproof, at least in Washington.
Montrose v Admiral affected the principle of known loss and caused the insurance industry to react with a variety of “Montrose Exclusion” endorsements and the Insurance Services Office to change the insuring agreement in the CGL policy. Its impact was, and still is, felt beyond California’s borders.
6. The insurance application process now requires more attention. There was a time, in the not too distant past, when most applications for property and casualty insurance did not require the signature of the insurance buyer. Agents routinely completed applications and underwriters readily accepted them without anyone’s signature on the application. This custom and practice is no more. Insurance applications have become more than just tools to gather underwriting information to determine the eligibility of the applicant for coverage and for premium determination purposes. The necessity for thoroughness and precision has greatly increased. It is more than appropriate and appreciated by the underwriter for the applicant to provide supplemental answers and explanations along with the standardized application. These relatively recent changes in the usual and customary practices of making an application for insurance can make the difference between having a claim covered and not having it covered. An ambiguity or misunderstanding can become an allegation of misrepresentation, which can lead to no coverage at all, rather than just a possible increase in premiums. Policy rescission and voiding policies ab initio are on the rise, along with underwriters using application information as “Warrants” thereby making the application a part of the policy (which has always been the case with life insurance policy applications). These developments make providing accurate information to underwriters more than just important. Accurate information becomes the basis for the existence of the contract itself and adds an increased threshold to the concept of “utmost good-¬‐faith” which is the traditional basis of all insurance relationships. However, “utmost good-¬‐faith” is a two-¬‐way street. Insurance companies sometimes attempt to deny coverage based on conditions and exclusions that are not, and never were intended, appropriate to the situation or the claim at hand. Some prohibitions were intended to exclude coverage because the hazard is better transferred by another type of policy, not to be used to exclude an otherwise covered claim. This type of unfair claims settlement practice is rare and usually caused by poor attention to detail in the filing of a claim and/or inexperienced claims adjusters. The insurance buyer needs to be equally diligent and vigilant as to the accuracy of applications of insurance and in the filing of a claim under an insurance policy. Lesson: Insurance applications are more important than they once were. Plan and prepare in a careful, thorough manner before submitting an application for insurance or filing a claim.
MANDY CONNELL: We are dealing with significant brush fires, we’re going to have a really bad fire season, we have that here in Colorado and I thought it would be timely to bring someone on to talk about what a homeowner should do before the possibility of disaster strikes because we’re in a situation if a brush fire pops up near your home when you are at work you may not be able to go home again depending on the severity of the fire and its movements and things of that nature, so what kind of guidance can you give us in terms of preparing for a natural disaster before it happens? DAVID STEGALL: The best thing to do is it go through your mind and imagine that it’s already happening. You want to have a plan before you have to deal with it, and the Colorado authorities, the national forest service and there is a number of things, has all sorts of things on their websites as to the best way to protect your property from a physical standpoint, but the best thing to do from an insurance standpoint is to make sure you’re “insured to value” which means that you have enough insurance on your house to pay for it when it burns down and this is a serious problem, this is where more of acrimony between policyholders and insurance companies happen on any other issue, it’s the value of the dwelling and a lot of people are confused on this issue. They think “oh well the mortgage company told me I have a mortgage of a $180,000 and so that’s what I want the insurance for.
Dad Faith: Breaching the usual and customary practices of, and/or failing to maintain the standards of care required by, the insurance (and Risk Management) industry based on the concept of “Utmost Good-Faith”
It is often said that the police and firemen run towards the danger when others are running away from the danger. Thing is, the danger is generally a known danger, not an unknown one.
•Wrongful Designation by Thomas M. Braniff, JD, CPCU and Robert P. Gaddis, JD; •The Essential Bookshelf for Expert Witnesses by Kevin Quinley, CPCU, ARM, AIC; •The 411 on Becoming an Expert Witnesses by Elise M. Farnham, CPCU, ARM, AIM, CPIW; •Working as an Expert Witnesses by Douglas R. Emerick; and •“Be Careful What You DON’T Ask For” By Bill Wilson, CPCU, ARM, AIM, AAM.
In today’s business climate more focus is placed on lean operations. This trend is becoming increasingly more commonplace as corporations are divesting of business lines and returning to core competencies. As decentralization continues to grow and corporations are relying on supply and sales agreements with non-related parties, the impact of a supplier or customer’s loss on a business’ operations increases substantially.
Maintaining client relationships is critical for insurance brokers and agencies, especially given the fact that developing new commercial clients involves a significant time investment to understand the client’s business and risks and to implement solutions for risk transfer. Once insurance coverage is in place and policies are issued, the focus of the agency switches to servicing the account. The agency is happy. The client is happy. But what happens when your client experiences a significant property loss?
Preparing business interruption claims takes thoughtful planning and insightful analysis, clearly communicated to all of the parties involved in the claims process. One of the most important factors is the breadth and depth of analyzing relevant financial information related to interrupted business operations. Although this may seem like an intuitive step, there is often a gap between the internally prepared financial information and the analysis to determine lost profits. Application of due diligence results in a smooth claim process, quicker payment from the insurer and a fair and equitable recovery.
THE CLAIMS JOURNAL interviewed AAIMCo member Kevin Quinley on claim ramifications of the 2018 Keodalah v. Allstate decision, allowing adjusters to be added as individual defendants in bad faith lawsuits.
“To the uninformed, “a claim is a claim is a claim.” To some extent this is true. Any type of liability claim requires proof that the insured owed a duty to another person or entity, that the insured breached this duty, and that the breach was the proximate cause of quantitatively measurable damages suffered by the person or entity to whom the duty was owed. Thereafter, it becomes a matter of determining whether or not there are any defenses such as comparative or contributory negligence on the part of the claimant. Finally, there is the question of coverage—the issue of whether or not the policy will respond to the claim. …. There are significant differences between managing professional liability claims, compared to those arising out of more standardized coverages. …”
“Diminishing limits policies create a host of potential problems for insurance company claim departments. As is well known the insurance industry has long been plagued with “nuisance” claims. While in some instances insurance companies make quick settlements of nuisance claims to avoid defense cost expenditures, in others, insurers will attempt to resist such claims to avoid setting a precedent, thereby sending a message to the plaintiff’s bar that nuisance claims will not be honored. Considering that defense costs are deducted from the policy’s aggregate limits, either course of action places an insurance company in a difficult position. … “
The claims audit is the anathema of day-to-day claim operations. Nothing is more disruptive. Yet, if properly defined, nothing is more informative and helpful in improving a claim management program. This article will examine the need for a regular auditing program and provide a recipe for a three-dimensional approach to the process in order to maximize the accuracy of the audit results. The need to conduct regular claims audits has already been widely discussed. With the magnitude of self-insured claims programs (including self-funded programs) and the millions of dollars spent on claim administration fees, what better way to verify whether the money spent has been justified or wasted? In essence, an audit of closed and open claims should accomplish several things.
Kevin extracts insights from HBO’s popular series and sees implications for how claim professionals approach the challenges in their work.
SHINING A LIGHT ON INSURANCE MARKETING MALPRACTICE ©By Frederick C. “Rick” Berry, Jr., J.D., C.P.C.U., C.L.U. 1951 W. Camelback Rd. #200, Phoenix, AZ 85015; 602-274-5700; Frederick.C.Berry@gmail.com Summary When there is not enough i…
From the Spring 2018 issue of the CPCU CLEW Interest Group newsletter.
A uniform law proposed by the National Association of Insurance Commissioners (NAIC) is currently working its way through state legislatures. The Corporate Governance Annual Disclosure Model Act[i] would require American insurers to disclose a wide range of information relating to their governance, performance evaluation systems, compensation and incentive plans, Enterprise Risk Management (“ERM”) plans and codes of ethics and conduct. This article will highlight some of the important features of the NAIC’s model act and illuminate how they are designed to cloak insurer disclosures in secrecy, but at the same time provide compelling evidence of information whose existence insurers have long denied. Discarding the secrecy mandated by the model act and allowing access to the disclosed information will help discourage insurer misconduct long hidden from the insuring public. [i] http://www.naic.org/store/free/MDL-305.pdf.
Whether defending or litigating, success with Insurance Agent E&O cases can hinge on the discovery process and avoiding the paper blizzard that often comes with generic production requests. Produce too many documents and it is a waste of your valuable time. Produce too little and you might not find what you need. Since most insurance agents no longer utilize paper files, knowing exactly what to extract out of a computer system could make or break your case.
I do not truly understand the rationale in suing the company adjuster in a lawsuit against the Insurance Company, since he has no independent duties apart from those of the Insurance Company. However, Directors and Officers of corporations owe fiduciary duties to corporate stockholders and to the Corporate business entity itself.
I was often amazed at what I could only discern as an argument by a Plaintiff’s attorney concerning an insurance claim where he had never bothered to read the policy or have a true of understanding of insurance.
Corporate Counsel is not properly the attorney to specifically respond for the Insurance Company to a suit against the Insurance Company.
Insurance Companies need to strive for competent officers and directors.
If learning is not part of the process, and all that an insurance company is interested in is a decision, any decision, no matter how subjective, then insurers need to have an intercompany coin toss agreement.
This article explores the nuances of the special relationship and provides a template for the producer, the policyholder and their respective attorneys to follow by illustrating the circumstances that give rise to the special relationship between the producer and the policyholder/insured.
As of April 2013 Attorneys, NOT INSURANCE AGENTS, will determine what protection their clients receive as an “Additional Insured”. In short, they will receive NO protection unless the contract or agreement containing the additional insured requirement qualifies and quantifies the request. This is a major change.
It appears that the recent change in The State of Michigan workers compensation act extends Michigan’s jurisdiction to all Michigan Residents no matter where in the US (or the World) the resident is hired, works or is injured.
For plaintiff lawyers, discovering what reinsurance has been purchased will not get you directly into the pocket of the reinsurer, but it will give you insights into what the insurance company was thinking as it handled your client’s claim.
The special relationship doctrine can create an overwhelming burden for the unsuspecting insurance agent or broker by imposing a duty to provide advice to a policyholder concerning all possible coverages and in some instances a responsibility to give advice as to what limits to purchase and whether such limits are “adequate.” This article explores the nuances of the special relationship and provides a template for the producer, the policyholder and their respective attorneys to follow by illustrating the circumstances that give rise to the special relationship between the producer and the policyholder/insured.
For many small to mid-sized companies there is the overriding element of misplaced trust in the broker and a gross misunderstanding of their own duties.
INSURANCE INDEMNIFICATION AND HOLD HARMLESS AGREEMENTS – The Purchase Order Agreement addresses the importance of using a purchase order agreement and provides a sample document attorneys can modify to meet the needs of their client. Indemnification and insurance language has been carefully selected in order to maximize any available insurance. The purchase order agreement is a business to business contract that is seldom thought of as a rsik management tool. In fact, with the advent of the internet it is rarely used. When purchase orders printed on paper were used the purchase order was on the front of the document and the purchase order agreement (contract) printed on the back. Attorneys should urge their clients to return to the use of purchase order agreements. In our ever increasing litigious society when something goes wrong, someone gets sued. While a purchase order agreement can’t stop litigation, it can create the rules of the game. Relying on Tort alone is not advisable in any situation – especially the business to business transaction.
When insurance is intended to be the primary assurance that indemnification agreements are properly funded, it is critical that contract language is written in such a way that insurance policies are able to respond. Crafting insurance and indemnification agreements is an art that involves understanding the nature of risks transferred, the nature of risks assumed and how to best protect a client from the legal and financial implications of those risks. It also requires an understanding of insurance policies and the type of coverage they can or cannot provide. This article explores the issues and problems related to drafting insurance, indemnification and hold harmless agreements.