Useful facts about your insurance policies (personal and commercial) which are often unknown or misunderstood.

There is a grace period to pay your premium.  No.  Premium is due by the effective date and in some instances, needed to place the order (bind coverage).  Since each state regulates its insurance, there are cancellation regulations that must be followed.  If your carrier issues the requisite cancellation notice, reinstatement of payment received after the date of cancellation is solely up to the insurer.

Insurance policies are transferable when it concerns the buyer of an asset (a company, vehicle, house or boat).  No.  Any change of ownership including title or sale of all of the company’s stock essentially causes the coverage to cease unless the seller seeks the permission of the insurer to transfer the policies to the new ownership.  This occurs more frequently in business situations than personal ones.  Upon notice to the carrier, the seller can recover any unearned premium paid for the current policy period.  This is usually pro-rated since it concerns a sale or other divestiture of the asset.  If the carrier(s) do not give permission, they are often willing to underwrite the coverage for the new owners and issue new policies on similar terms.

Umbrella Liability coverage forms are “catch-alls” for uncovered risks to provide higher limits for exposures that are insured.  No.  Coverage is for third party liability to others (not family or employees).  It is tort liability (arising from negligence that was unintended or unforeseen).  It is created through ownership of property, operations on premises or on vehicles, boats, etc., as well as the sale of services of products.  While there are certain enhancements to the basic Bodily Injury and Property Damage Liability, the Umbrella policy typically affords higher limits over Business General Liability, Personal Liability, Automobile Liability and Employer’s Liability coverages.  Also, it can be utilized in excess of Watercraft Liability as well as certain Recreational vehicles (aircraft not included).  It does not provide “first party” property coverage for assets owned by the named insureds, only injury caused to others arising out of those assets.  (It is usually less expensive to secure higher limits this way than increasing your primary automobile liability limits.)

There is automatic coverage for newly acquired assets or locations.  While some policies provide a short time period to report new acquisitions that fall below the policy threshold, [it can be for as little as 30 days and for a small limit].  Further, if you did not have similar coverage prior to an acquisition, you may likely have no protection if it is not reported in advance.  To be certain you have the proper coverage, it is always recommended that you contact your broker in advance so there is no misunderstanding or problem after a loss.  Remember Murphy’s Law! 
“Anything that can go wrong, will go wrong!”

Package Policies for Homeowners and Businessowners cover ALL contents of the buildings occupied.  While the basic definition of contents refers to personal property of the named insured, there are certain classes of high-valued property, property that is a high risk of theft, dangerous property and property which is subjective in value automatically covered unless reported.  Some policies offer a small sublimit within its terms but in general, cash, precious metals, gems, art, collectibles, alcohol, firearms, goods subject to spoilage and the like, should be reported so they can be insured for the appropriate value (expected) and for the perils to which they are exposed.  Your broker will assist you through this identification process and advise you of your policy’s particular restrictions.

Warranties can void coverage.  Yes.  Examples are: sprinkler protection and burglar alarms.  Please discuss this with your representative to determine if you have any such policy conditions.  Another form can be applications that become part of the policy.  These are most often found in Professional Liability exposures.  The insurer is entitled to rely on the truth of the representations at the time they are made.  Coverage can be denied later if found to be inaccurate or if the policyholder was unaware of their existence.

Claim provisions in the policy can negate coverage.  Yes.  There are requirements for timely reporting which provides the insurer with the opportunity to properly investigate the loss, causes, damages, witnesses, etc.  The insured is not to admit liability regardless of presumed fault.  No settlements or negotiations can take place without the carrier’s permission.  Further, if a lawsuit is served, there are specific rules of court procedure that must be followed.  If not handled in a timely fashion, a default judgment could be entered.  Failure to adhere to these conditions can cause the carrier’s position to be prejudiced resulting in a claim denial.

What to do in the event of a lawsuit.  Contact your insurance broker to determine if you have any coverage that may respond to the loss.  Often, if any of the allegations are covered, the carrier will defend on all counts.  On the other hand, attorneys often assumes the client has already investigated whether their insurance program covers such matters.  It is best to determine the coverage situation at the onset.

 - Submitted by Mary Jo Chesney, Vice President