Insurance Illustrated | June 5, 2020

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for the week of June 5, 2020

Education + Analysis for the Independent Agent

Answering Your FAQs

Do the Acts of "Terrorists" Trigger the Terrorism Exclusion?

Protests, civil disobedience, riots, and looting followed the death of George Floyd under the knee of a Minneapolis police officer. Might the terrorism exclusion apply to any damage caused during these protests and ultimate riots? Answering this question is initially more difficult than it appears.

Commercial Property

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.

The Importance of the Most Undersold Property Coverage: Leasehold Interest

I can’t prove that Leasehold Interest is the most undersold property coverage, but I would be willing to place money on it. The difference in cost between a favorable lease and a market-rate lease can thousands even hundreds of thousands of dollars; you wouldn’t underinsure the building by that amount, why are we putting the insured at such great risk in their lease? The coverage is easy to understand, but to make it easier, we put this primer together.

RCP: What Does That Little Code Mean?

Insurance carriers often provide what is referred to as a RCP Code. The code comes from ISO data and provides a lot of information. With this code, agents have a lot of information and can use it to advise their clients. This article details each part of the RCP and provides some insight on how the information can be used.

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.

Business Income – Coverage for Employee Payroll

Is employee payroll covered by the business income policy? One part of the contract seems to state that only the payroll of employees necessary to resume operations is covered. Is this the correct application of this wording?

Business Income Policy Has Two “Loss Periods”

Business Income is the most important property coverage. The problem is, some agents only do half the job when protecting the insured’s income loss exposure. There are two loss periods the business income policy needs to cover.

Homeowners’ Insurance

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.

Property Deductibles: Subtracted from the Limit or the Loss

A concept as common as the application of a “property deductible” is rarely taught or even considered, it is simply “understood.” The problem is we tend towards the belief that everyone “understands” the application of a property deductible the same way. They don’t.

Is There Trouble When Using Yelp (and ALL Other Social Media)?

When your insureds use Yelp, Twitter or even Facebook they open themselves up to charges of libel and defamation of character. Is your personal lines client protected? A Yelper is out $20,000 because of this problem.

Personal Auto Issues

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.

Uh-Oh, I Damaged a Rental Car

“Should I buy the damage waiver?” A question you probably receive from your clients on a regular basis. What do you tell them? Is it worth the money?

Agency Management

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.

The Great Bad Faith Myth

Randy Maniloff, an attorney and insurance expert, discusses what is really required before a carrier can be found guilty of bad faith. The threshold for bad faith is more than simply issuing an improper claim denial.

Keys to Writing Insurance Coverage Letters

Your insureds are not insurance experts, nor should we expect them be. In fact, many don’t like to talk or think about insurance - much less read a “coverage-heavy” letter. However, there are times when agents are required to capture specific coverage facts in writing. When it becomes necessary to pen a coverage letter, remember to apply three key guidelines.

Insurance Laws & Statutes / Coverage Resources

PAP Resource List by State

Download this handy PAP Resource list organized by state for easy reference.

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