7 Things You'll Say That Could Blow Up Your Insurance Coverage
Posted by John Moccia on Fri, May 21, 2010
Under most Errors and Omissions, Directors and Officers and other liability policies there are certain terms that you must comply with in order for the policy to respond to a claim. The issue that seems to be causing problems for insureds recently is the timeliness of claim reporting. All policies require that the insurer is notified in a certain way, in a specified time frame. And because most people don’t read the “fine print” of their policy, and most brokers do a poor job educating their clients, people tend to sit on potential claims – sometimes until it’s too late. The insurer can deny your claim simply because it was reported too late.
Click Below to see the 7 Common Reasons Why Claims are Not Reported on Time (And As a Result are NOT Covered)
1. “It wouldn’t be covered anyway”
Let the insurance company decide. Another similar statement we often hear is “I didn’t think it would be covered, and didn’t want the insurer to raise my rates if I reported it”. There is no cost to reporting a claim that is not covered. Better safe than sorry.
2. “I referenced the claim on the application”
Under terms of policy indicating on the application isn’t notice
3. “I told my General Liability carrier”
Notice to one insurer is not notice to all insurers
4. “I didn’t have a law suit”
Review your policy’s definition of “claim” (not always a suit)
5. ”We were going to work out the problem”
That means that you knew about the potential claim or should have – and reported it. You can’t decide after your own negotiations fell apart to then hand off the carnage to the insurer
6. ”People are always asking for their money back”
This is often first sign of an unhappy customer and a resulting claim. Check your policy’s definition of “claim”
7. “I protected the insurance company’s interests, too, by engaging my current lawyer who knows my business best”
Don’t assign your own counsel to a claim. Insurers don’t like that! I can’t tell you how many times we get calls from insureds and their lawyers who are months or even years into a claim that we were not aware of – and only decide to look into insurance when they realize how much it is going to cost
Proper notice is critical for coverage to be applicable. All too often policy holders take their coverage for granted and in doing so fail to comply with the terms of their contract – jeopardizing or ruling out coverage. Some simple practices, including open communication with your broker, can help preserve your rights to be afforded coverage under your insurance policy.
- Do not make assumptions
- Talk to your broker
- Remember that a demand for service or money could trigger a notice requirement
- They should know the difference between claims made and claims made and reported
- Look at your policy’s definitions of Claim, Wrongful Act and requirements related to notice of claims or circumstances
- NEVER assign counsel, or try to settle a claim on your own without talking with your carrier
Note: Assist from Chubb presentation at 2010 TechAssure national conference