Insurance Illustrated | May 29, 2020

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for the week of May 29, 2020

Education + Analysis for the Independent Agent

Special Feature - COVID-19

COVID-19: Are There Any Weird Homeowners’ Coverage Exposures?

Does having friends over during a state-mandated stay-at-home order create any insurance issues regarding COVID-19? What about when it’s over? These sound like weird questions. As weird as the questions sounds, the answer may be weirder.

Coronavirus 'Civil Authority' Coverage May Hinge on Science

Many readers may have heard that the first business income/civil authority lawsuit was filed in New Orleans on March 16, 2020. It’s no surprised it was filed; nor was it a surprise how quickly it was filed. Law360’s insurance writer, Jeff Sistrunk, penned a thought-provoking article on the scientific research that may play a part in the coverage debates certain to follow this case.

Coronavirus: Business Income Losses and a Covered Cause of Loss

How is the actual loss of business income deciphered? Both ISO-promulgated business income policies (CP 00 30 and CP 00 32) provide guidance on how the actual loss of business income is calculated.

Commercial Property

LISTEN & LEARN: A Word About Murals

If your client has a mural on the inside or outside of the building, how do you cover it? Is it covered by the property policy? Is there any special wording in the proprietary form that provides coverage? Many agents don’t consider insuring a mural, but it could be a very expensive exposure for your insured. This video session explores the coverage needs of a mural.

Three Ways Your Clients Increase Their Own Property Premiums

Bad decisions cause commercial property clients to pay higher property premiums. Sadly, the insured may not even recognize their poor choices. Worse still, agents can help clients identify their bad decisions with the right information.

I Bet the Named Insured Doesn’t Own the Building! Have You Asked?

Never assume the named insured owns the building. You need to ask what seems like a ridiculous question because ownership of the building may be held by another “person” related to the operation. The president of the corporation may own the building personally, but in his mind there is no difference. Not protecting the actual owner can create a huge gap in coverage.

Business Income

I Lost Income Because of _______; Do I Have Coverage?

Business income coverage responds only when certain conditions are met. Simply losing business income is not enough to trigger coverage. This article explores the conditions that must be met using a water contamination incident in Corpus Christi, TX as the backdrop.

Understanding the Difference Between Insurable and Compensable Business Income

Business income coverage is unique because the factors used in calculating the amount of protection the insured is required to purchase differ from the factors used when calculating the amount of compensation owed/paid following a business-closing loss. Because of the different calculation methods, there is a difference between “insurable” business income and “compensable” business income.

Alternatives to Business Income Coinsurance

Non-BOP business income coverage is written on a coinsurance basis; however, some agents are afraid of coinsurance for a couple reason: 1) they don’t know how to develop the proper coinsurance percentage; and 2) they don’t want to explain the CP 15 15 Business Income Report and Worksheet. Well, there are three alternatives to coinsurance agents can use. One doesn’t save the agent from having to explain the worksheet, and two may not indemnify the insured – but agents do have alternatives. All three are touched on in this article.

Homeowners’ Insurance

Ignore the Bank, Go With Replacement Cost

Everyday agents are asked, well required, by banks to provide Coverage A limits in excess of the developed replacement cost. Why are such requests made? So that Coverage A limits match the loan requirements of course. Mortgagees tend to forget that the loan buys more than just the structure; it includes the land and location, location, location. The buyer/mortgagor is paying for the view and access to the office and shopping in addition to the house. The insurance policy only pays to replace the house.

Home Sharing Hosts and the Loss of Income

Home sharing hosts have exposures not common to many homeowner clients, a business income exposure. When an unexpected loss occurs, the home owner losses a source of revenue. Does the homeowners’ insurance respond to this exposure? Check out this fictionalized interview to get the answer to this question.

Replacement Cost and the 180-Day Limitation Myth

Carriers seem to believe that a property loss must be discovered within 180 days of the event causing the damage for the policy to respond on a replacement cost basis; even some agents believe this. Well, it just isn’t true. Find out why.

Personal Auto Issues

Why You Should Teach Your Client’s Kids About Insurance

Most people, including your clients, are insurance illiterates. Their limited understanding of insurance comes from the commercials they see on TV and the misinformation they “hear on the streets.” Insurance professionals should invest in their client’s kids. Why? Let us count the ways.

Does the PAP Cover Food Delivery?

For the personal auto insurance industry, food delivery is a big exposure. And because so many teenagers and even young adults deliver food as a primary or secondary source of income, agents are regularly asked if the PAP covers food delivery. Does the PAP extend coverage for food delivery? Well, maybe! Like so many other insurance coverage questions, the answer depends on the coverage language of the individual policy and the specifics of the activity.

The “Business Use” Exclusion in the Personal Auto Policy

In practical application, the PAP extends coverage for the business use of a “your covered auto” provided it’s not used to carry people or property for a fee (i.e., Uber or Lyft). Absent material misrepresentation in the application regarding the use of the vehicle, the PAP responds to an incident arising from business use. But some carrier’s apply specific business use exclusions few ever pay attention to, until it’s too late.

Agency Management

11 Requirements for Management Success

Employees are your greatest expense, but they are also your most valuable asset. The loss of great or even just a “good” employee has a tremendous effect on the agency. How do you manage employees according to their style while giving them a sense of place and accomplishment? Follow these rules of management success.

Suddenly, Coverage Became Important!

Insurance carriers spend in excess of $6.7 billion on advertising. Progressive alone spends over $1 billion. Most of this advertising is about price and how much the insured can save. Only a few companies and a few ads ever even mention coverage and the need for protection. Such an incredible marketing effort combined with several other industry failings to create the idea that insurance is all about price. Even some producers think it’s about price. After all, every policy is the same except for price – right!

Apples-to-Apples Agents – Please Don’t Be One

First, you should never “quote” a policy; and second, you should never propose coverage that only matches what the insured had previously. If all you provide is an “apples-to-apples” proposal, you are not providing ANY service to your prospect; in fact, you are doing them a disservice.

Insurance Laws & Statutes / Coverage Resources

Workers' Compensation and Illegal Aliens by State

This chart details workers' compensation and illegal alien statutes by state.

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