My Insurance Policy Covers… What?? .. a detail on the differences from one policy form to another

Standard Insurance Policy contracts have gone from 7 pages to 70 pages in a few decades. The scope of what is and what is not covered has been consistently re-defined over the years.

Primary driver of the insurance companies changing their forms, is due to litigation. Sited here from insurance Journal: ‘Where’s Waldo?’ Why Are Insurance Policies So Long and Complicated? (insurancejournal.com)

“When Hurricane Katrina hit the Gulf Coast in 2005, there was massive flooding in parts of New Orleans. Without flood insurance, most insurers denied claims under property policies because of the flooding exclusion. In the ensuing policyholder litigation, attorneys argued that a concurrent or proximate cause of loss was the failure of levees and not flooding per se. As a result, ISO and insurers revised water damage exclusions to include reference to levees, dams, seawalls, etc.”

ISO – Insurance Services Offices, creates the standard policy language that most insurance companies use. ISO’s forms have been tried and tested in court more than any other policy form(s), and they continue to evolve their forms in the latest editions as required to address rising concerns from litigation, regulation, and insurer’s requests. However, there are many times when insurance companies refuse to use the “industry standard” forms in lieu of their own custom manuscripted policy language.

·????????Even for the insurer’s that use the ISO standard forms for various coverages, the insurance companies do tend to draft their own customized and specific policy exclusions, limitations, or coverage enhancements.

·????????Some of the insurer’s policy language could be ruled ambiguous or misleading by certain courts, leading to concerns on what the insurance company was trying to cover versus what actually may be covered later on.

“ The reality is that there are some poorly drafted and borderline incomprehensible policy forms in the marketplace. I encourage insurers to contract with experts in this field like ISO. However, they always seem to prefer the unknown expense of litigation to the largely known cost of expert drafting. The result is sometimes bizarre forms like Berkely’s “Three” policy or a Lemonade draft of a renter’s policy that covers the insured’s “stuff.”

Below we address a few "Topical areas of concern", however it is highly advised to review your insurance with an insurance advisor who is best suited to address your needs:

1) General Liability - Topical areas of concern:

Are there exclusions/limitations to specific areas your business is involved in? (products liability for a manufacturer/wholesaler, Liquor Liability or Assault and Battery for a restaurant/bar/nightclub, Height Limitations for a contractor, etc..)

Are their contractual concerns & limitations?

Is there a classification limitation?

Are their warranties or contingencies that must be met for coverage to apply?

What is the rating basis, and is your policy auditable or non-auditable?

Are there subcontractor provisions, stipulations, or exclusions?

2) Property - Topical areas of concern:

Is there enough coverage?

Are deductibles differing for different events (i.e. a seperate hurricane, windstorm, hail, earthquake, flood deductible)?

Is there a co-insurance penalty clause that must be adhered to, to avoid co-insurance penalties?

Are there warranties, conditions, or contingencies that must be met for coverage to apply? (i.e. central station reporting burglar alarm for theft or fire spinklers for fire coverage)

3) Professional Liability - Topical areas of concern:

What are the settlement clause provisions? (I.e. if there is an offer to settle a claim, what are you as the insured responsible for)

Contingencies, Warranties, or conditions that must be met for coverage to apply? (i.e. certain language utilized in engagement letters or conctracts, protections over authorized access to certain business ideas/facilities/Intellectual property, etc..)

What are the rating basis used to determine your rates, is the coverage auditable or non-auditable?

For every area of coverage, there are certain clauses/provisions that a knowledgeable insurance advisor can guide your business to make the proper assesment on and secure coverage to address your business' needs. Coverage is generally not "One-Sized Fits All" and should be tailored to your specific needs.

What LG Planning Group Can Do for You:

There are many instances where some of these coverages can be removed or restricted by an insurance carrier. It is important to have a qualified representative review and properly explain the coverage terms and conditions of your policy(S). At LG Planning Group, we help identify the risks associated with your business and custom tailor coverage to fit your specific business.

Contact?Louis Blangiardo?or call?631-589-6960?today for further guidance on how to protect your organization from commercial liability loss exposures.