Insurance Illustrated | August 14, 2020

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for the week of August 14, 2020

Education + Analysis for the Independent Agent

Categories Included In This Week's Edition

Contractual Risk Transfer / Additional Insured / Certificates of Insurance * Businessowners' Policy * Personal Auto Issues * Trends & Insights * Insurance Laws & Statutes / Coverage Resources * Answering your FAQs

Contractual Risk Transfer / Additional Insureds / Certificates of Insurance

ATTENTION! It's No Longer JUST the COI That Gets You In Trouble

Without hyperbole, thousands of COI are issued every day, and most of them are issued improperly. As if the COI problem wasn't enough, there's a NEW "gotcha" in town - the memoranda of coverage/insurance.

Adding End Users as AIs to Manufacturers’ CGL Policies

Your insured, a manufacturer, sells products that a very large customer buys and uses. The customer wants to be an additional insured on the manufacturer’s policy. The underwriter says that’s not possible. They can add a vendor as an AI, but not an end user. Is this correct?

Does Additional Insured Status Replace the Need for a Waiver of Subrogation

Lower tier contractors seem to be fighting back on some contractual insurance requirements – even to the point of making improper claims. One in particular is that making another party an additional insured negates the need to waive recovery rights against that party (often referred to as a waiver of subrogation). Well, these risk management mechanisms have different outcomes and only slightly overlap.

Commercial Property

Actual Cash Value and the Depreciation of Labor

The concept of actual cash value (ACV) is far more complicated than “replacement cost minus physical depreciation.” In fact, the meaning of replacement cost differs based on the state. To further complicate the “problem” with defining ACV is whether or not labor is depreciable. Again, the answer differs based on the state in which the property is located.

4 Commercial Property Endorsements You’ve Never Heard Of But Should Know How to Use

ISO offers over 200 commercial property endorsements. Some of them are not good for the insured, but many allow the insured to provide coverage and protection not found in the unendorsed property policy. There are four you may have never heard of or seen used, but they are incredibly useful in the right situation.

Building Codes Turn Partial Property Losses into Total Losses

Few commercial structures fully meet the applicable jurisdictional building codes and regulations of the county, city, town, borough, village or township in which they are located. Building codes are routinely reviewed, revised and updated, usually a result of newly developed technology or advances in construction methodologies or materials. Noncompliance has the potential to cost your insured building owner thousands of dollars in out-of-pocket expenses following a "major" property loss. Ordinance or law endorsements are designed to fill coverage gaps existing in the unendorsed commercial property policies and business income forms related to the additional costs and time associated with the enforcement of changes in local building codes.

Personal Auto Issues

Coronavirus and the Auto Exposure

Over the last several days, the VU has fielded several auto insurance related questions as it pertains to food delivery and the Coronavirus. These questions cannot be classed simply as personal auto or business auto questions because the most common question involves both polices.

Adjusters Say the Darnedest Things

I've often said that it's inexcusable when a claim is denied for no other reason than "It's not covered." The insured is owed a reason for a claim denial, by contract or law. However, sometimes when I hear the reason, I think perhaps that it's better I didn't know because, to paraphrase Art Linkletter, "Adjusters sometimes say the darnedest things!"

PAP Coverage for Damage Due to “Freezing”

The temperature got so cold that the vinyl flooring in an insured travel trailer cracked. Is this damage excluded by the “freezing” exclusion in the ISO Personal Auto Policy or does “freezing” only refer to the liquids in the vehicle?

Trends & Insights

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.

Why Ask the Underwriter?

When agents have coverage questions, they sometimes ask the underwriter for a coverage interpretation. Interested and concerned members of the VU faculty want to know why in the world you would ask the underwriter anything about coverage. Underwriters don’t make coverage determinations, adjusters do.

3 Factors Negatively Impacting the Insurance Marketplace

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.”

Insurance Laws & Statutes / Coverage Resources

17 “Tests” to Decide: Employee or Independent Contractor

Constant debate swirls around the difference between independent contractors and employees. It seems that every contractor wants everyone to believe that everyone on the job site is an independent contractor; but we know that’s not true. Use these 17 “tests” to differentiate between a de facto employee and a true independent contractor.

Answering Your FAQs

Are Pets Covered Under a Homeowners' Policy?

An agent asks: Are pets Covered under a homeowners' policy?

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