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From the Editor
"Ask an Expert" Briefs
Avoiding Curses, Biases, and Overconfidence
Three distinct phenomena negatively impact the commercial and, to some extent, personal insurance marketplace: The Winner’s Curse, Submission Bias, and Overconfidence. These phenomena are explained in an international whitepaper titled, “Analyzing the Disconnect Between the Reinsurance Submission and Global Underwriter’s Needs.”
Coding, Rating, and Coverage
Do you know how to code and rate commercial lines accounts? Do you understand the difference between coding, rating, and coverage? If not or you’re not sure, then take a few minutes to read this article and, if warranted, respond to our inquiry at the end of the article.
Need help finding the condominium laws of each state? This reference gives you the condominium law, the horizontal property law, the common ownership law, or whatever it is called of every state. Useful – and needed - whether you insure the association or the unit owner.
Coverage While Loading or Unloading Nonowned Autos
An upscale art and frame shop is insured on a BOP policy. The insured owns no autos, so there is no business auto policy. In addition, there is no hired and nonowned coverage under the BOP. While loading a heavy painting and frame into a customer’s car, the insured’s employee injures the customer and damages the auto. Is there coverage for this under the BOP?
Credit Freezes and Insurance
Were you affected by the Equifax breach? There is a 1 in 2 chance you were. Even if you weren’t, there are certain steps you can take to fight identity theft, including “freezing” your credit. Yes, there are some downsides to this, but saving your good credit may be worth the aggravation.
Danger! Watch Out for Changing Entity Types
You cannot assume the entity type you insured last year is the same entity type that exists this year. When insuring small businesses, you are fighting against several unseen entities – namely accountants and lawyers. These other professionals make changes to the small business without much thought to the problems these changes can cause your client’s insurance program.
Does the ISO BOP Cover Undescribed Structures?
The ISO Commercial Property form, CP 00 10, requires that buildings and structures be described in order for coverage to attach. However, ISO’s Business Owner’s Policy only requires that the premises be described. So, as long as the “building” limit is adequate, that limit applies to all structures on the premises. However, that makes it critical that all structures and their values be considered in determining limits.
Don’t Use That Kind of Language Around Me: Insurance Cuss Words
Recently I’ve noticed insurance practitioners doing a LOT of cussing. No, I don’t mean using the traditional words that got us in trouble as kids; I am referring to insurance cussing. Yes, there are certain words and phrases used by many insurance practitioners that should not be used in polite company, mainly because they are just plain inappropriate and DIRTY.
How Does a ‘Person’ Become Legally Liable
Liability policies, whether the HO, PAP or CGL, respond when the insured is judged to be “legally liable” for the injury or damage. But how is “legal liability” determined? That is the question answered in this short article.
Insurance Applications: Ambiguities and Lies
An insured’s offer to purchase insurance is made in the form of the application, supposedly completed by the insured. Acceptance flows from the insurance carrier in the form of a policy. Logically, then, the insurance negotiation begins with the application.
Insurance History – And Maybe Some Myths and Legend
Insurance (or assurance), as we understand the concept today, is more than 700 years old. But what events shaped our modern world of insurance? Following are some interesting facts, myths, and legends that helped mold the current insurance world in America.
Insured Status is VERY Complicated – Until You Understand It!
If the person or entity causing injury or damage to a third party is NOT an insured in the policy, guess what – there is NO coverage. Who is an insured, and not an insured, in the CGL, BAC and work comp must be understood, because if this is wrong, all the great work in designing coverage is useless!
Is It ISO or Is It Memorex Insurance Company?
Are you ever confused about whether a particular policy form is a pure ISO form, a modified version, or a proprietary insurer form? This article provides a three-test approach for determining whether a form is ISO or not that is effective probably 99% of the time.
Once a policy is in effect and has existed beyond the underwriting period, provisions still exist allowing the carrier to cancel the policy during the policy period. These are often referred to as mid-term cancellation laws. All 50 states statutorily mandate the conditions under which a policy can be cancelled prior to the end of the policy term.
Policy Form Edition Dates and Why They’re Important
One of the most frustrating types of questions received by the VU “Ask an Expert” service usually begins with, “Does ‘a’ homeowners policy cover…” or “Does ‘a’ BOP cover….” The first question is, is it a pure ISO form or not? And, if it IS an ISO form, what is the edition date? What does the edition date matter? Keep reading….
Read the Policy You’re Selling
This may be the most important coverage article you read this year. It may be the most important coverage article you’ve ever read. Please read it. And please have your colleagues read it. If you work in an agency, send a link to the article to your underwriters, marketing reps, and claims people. RTFA…Read The Article!
The Pimping Economy
Ownership, or rather the desire to own, is changing. More and more people see less and less the need to own something they don’t use on a regular basis. As the saying goes, “I don’t need a drill, I just need a hole.” The insurance industry needs to prepare for this shift in attitude and desire.
The Underwriting Period
Every state and the District of Columbia grants insurance carriers an “underwriting period.” Insurance carriers are granted broad authority to cancel a newly-written policy during this statutorily-limited period.
Does the BOP Cover Filling Station Gas "Theft"?
This article was referenced in our VUpoint newsletter, Vol. 1, No. 14, September 18, 2000 and is based on a question submitted to our 'Ask an Expert' service. Newsletter readers were given the opportunity to be the expert in 'solving' this case. Below is the question, followed by the submitting agent's opinion.
How to Value Leased Property Claims
Below is a recent 'Ask an Expert' question we received involving a BusinessOwners Policy. While we attempted to address the valuation issues raised from the standpoint of the BOP, it became very clear that this particularly exposure was probably not suited for a BOP. While BOP's can be ideally suited for many mainstream businesses, it isn't for everyone. For a similar problem, check out our 'If the BOP Don't Fit...' article.
If the BOP Fits, DON'T Wear It!
Below is a recent 'Ask an Expert' question we received involving a BusinessOwners Policy. While we attempted to address the coverage issues raised from the standpoint of the BOP, it became very clear that this risk was not suited for a BOP, regardless of whether or not the insurer was willing to issue one. While BOP's can be ideally suited for many mainstream businesses, it isn't for everyone.
Installation Floaters vs. Riggers Liability
At last count, we've had 15 questions concerning the difference, if any, between coverage afforded by inland marine installation floaters and riggers liability forms. For example: 'I am working on a crane company prospect and am not the current agent. The current agent is using an installation floater to cover items being lifted and I think that riggers liability coverage should be used and the insured may have some coverage issues. What are your thoughts?'
Liability: Not All Countries Are Created Equal
Increasingly U.S. businesses find themselves in a global marketplace. This no longer applies to just huge, multi-national corporations. Your 'mom and pop' insureds may very well fulfill orders from their web site or sell products on eBay, Amazon or other marketplace web sites. You may have hundreds of insured with international liability exposures that have limited coverage under their CGL policies and a complete lack of understanding of liability exposures in these international markets.
Misidentification of Named Insureds on Insurance Policies
A significant source of uncovered claims (many that result in E&O claims against insurers and agents) involves the failure to (properly) identify named insureds on an insurance policy. For many businesses (and even personal lines accounts), the entities that need coverage can be complex and due diligence is the order of the day.
Perception is Reality
An increase in rates/premiums has been predicted for a while, though not yet widespread. But, there is evidence that the time is coming. Don't let your insureds be blindsided. In particularly if your carriers are among the first to increase rates, here are some tips to make you and your clients better prepared for the inevitable.
Reporting Underlying Claims to the Umbrella Carrier
An agent writes, 'We seem to have some major disagreement within the office here as to whether a GL loss should be reported to the excess carrier. A few people feel that we should assess the claim and determine if we think it might come close to the GL limit – if we think it might, we should report it. If we don’t think that it will come close then we shouldn’t report it. What do you think?'
Risk Retention Groups
Question: 'I have a residential general contractor that is being offered coverage by a Risk Retention Group. I know that Risk Retention Groups are insurance companies that are formed and owned by the policyholders, that they are not regulated by state governments, and often do not use standard ISO forms. I'm sure there are pros and cons to this type of arrangement but do not know enough to advise my client. Can you help? Is there somewhere on your web site (or others) that I can read anything about these groups.'
The Adventures of Semi-Colon Man
A long, long time ago in a galaxy far, far away, I used to review insurance policies for ISO. My 15+ years at ISO made me what I am today...an insurance geek :-). In this article, I'll use a B&M claim to illustrate how critical policy language and syntax are to coverage (or lack thereof). You'll also learn how the Legend of the Semi-Colon man began.
Three Myths About War and Terrorism Risks
“War and terrorism risks” are among the most severe issues facing organizations doing business outside the United States and, with an increasingly global economy and internet sales, more and more companies are doing business internationally. But coverage for war and terrorism is shrouded in mystique. Three myths have sprung up around it: It’s unavailable, it’s unaffordable, and (ironically) it only covers war and terrorism.
Top 5 International Insurance Exposures
Agents who have insureds with international exposures must be aware that local laws, business customs, economic conditions, political climate, and government regulation all affect the insurance risks that the organization faces. This article examines five common risk areas that these organizations face.
Traditional vs. eCommerce Insurance
Managing e-business calls for a comprehensive risk management approach and a thorough understanding of the multifaceted nature of the exposures. It is imperative to incorporate an ingrained awareness of e-business exposures in a business' employees and to provide them with the necessary tools to analyze, quantify, and manage those exposures. In this article, I'll take a look at why traditional insurance products aren't up to the task.
Warranties and Protective Safeguards Endorsements
The inland marine form on a tree surgeon's stump grinder included a 'Fire Extinguisher and Brush Burning Warranty' endorsement. Vandals destroyed the grinder by burning it. The insurer has denied the claim because the fire extinguisher had been removed for servicing at the time of loss. Is the claim denial valid?
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