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When underwriters think about risk, perilssuch as fire and theft come to mind. One risk that can be overlooked isimproperly underwriting multiple named insureds. This article will discuss theimportance of underwriting named insureds.

A key element on any commercial insurancepolicy is the named insured. A named insured can be defined as “any person,firm, organization, or any of its members specifically designated by name as aninsured(s) in an insurance policy.”[i]The named insureds are listed on a policy’s declarations page. We shouldremember that named insured status provides full coverage under the generalliability policy. Consequently, it is vital that we understand all of theoperations of any named insured listed on a policy.

With just one named insured, this is simple.The underwriter assesses the named insured’s operations and then decides toeither accept or decline the risk. However, with multiple named insureds, thisprocess gets more involved. If you have more than one named insured on apolicy, then we have a first named insured.  The first named insured mustexercise management control over all of the other named insureds on the policy.To justify adding additional named insureds to a policy, the underwriter mustreview the following: First, does the new named insured have an insurableinterest? That is, is there an ownership interest that justifies adding thisnamed insured to the policy? In particular, are we comfortable with the newnamed insured’s operations? Moreover, we need to determine if the namedinsureds are combinable. To be combinable, the entities should have commonmajority ownership. This means one named insured owns more than 50% of theother named insureds. Or more than 50% of each named insured is owned by thesame majority owners. In summary, if there is a valid insurable interest foradding newly named insureds, the named insureds are combinable and the firstnamed insured exercises management control over the other entities, anunderwriter can feel comfortable adding these additional named insureds.

What is the problem if you add a named insuredto a policy that doesn’t meet this criteria? It can create a conflict ofinterest. You could encounter what is known as cross-liability. This means oneinsured suing a party who is also an insured on the same policy! This canhappen under the principle of severability of interests; that is, liabilitycoverage is provided separately to each insured. In short, poorly named insuredunderwriting can lead to a conflict of interest and litigation betweendifferently named insureds. 

Named insured underwriting is a critical task.The underwriter wants to make sure the additional named insureds have aninsurable interest, these entities are combinable, and that the first namedinsured is exercising management control. Failure to do so can lead to aconflict of interest or possible litigation among the entities.  In short,underwriters must always carefully underwrite their named insureds.

Resources:

[i]International Risk Management Institute GlossaryOf Insurance And Risk Management Terms 10th edition 2006Page 162

 Postauthored by Alex Plotkin. Originally published June 20, 2018. View original post at:

https://wp.me/p1Iv7E-2L9

 

Products underwritten by Central MutualInsurance Company and affiliated companies.

Copyright © 2018 Central MutualInsurance Company. All rightsreserved.

Posted by Brock Insurance | Topic: Topic 3  | Category: Commercial Insurance

When discussing and rating homeowner insurance policies, personal liability coverage is often an afterthought.  Insurance companies and insurance agents don’t always take the time to explain what it is and what it covers. Don’t fall into the trap of thinking personal liability coverage isn’t important. It most certainly is!

For starters, let’s look at the types of claims that are potentially covered by this part of the homeowner insurance policy: bodily injury claims and property damage liability claims. It is quite common to see personal injury coverage added to personal liability coverage via endorsement, as well.  For the sake of discussion, we will include personal injury coverage with the other liability coverages we mention.

So, what exactly does this cover? Let’s say you attend a concert or sporting event and as you are leaving your seat you accidentally trip someone. The person suffers injuries resulting from the fall down the stairs. This could result in a bodily injury liability situation.

Or, let’s say you have guests over to your home and your dog becomes spooked and nips at the hand of one of the guests. Provided your homeowner policy doesn’t have a dog bite exclusion on it, this would potentially be a covered bodily injury liability claim too.

Now let’s move on to the property damage component of coverage. This isn’t coverage for your property. Rather, it covers damage to someone else’s property that you or your family members cause. For example, if your child accidentally hits a baseball or golf ball through the neighbor’s window, that would be considered a property damage liability situation.

Lastly, let’s take a look at personal injury, which is easy to confuse with bodily injury since the “personal injury” attorneys you see on TV or hear on the radio are soliciting bodily injury cases. In insurance terminology, “personal injury” most often refers to one of the following:

  • Libel;
  • Slander; or
  • An oral or written publication that violates another person’s right of privacy.

In today’s world of social media, this particular insurance coverage can quickly come into play. Too often, people post their thoughts and feelings on social media without giving much thought to potential repercussions. A simple review or complaint about the products, goods, or services from a business could turn into a lawsuit if the business alleges unwarranted reputational harm and/or loss of business as a result of the online post.

One more important idea to consider: A simple way to enhance your bodily injury, property damage, and personal injury liability coverages is to purchase a personal umbrella policy.  “Umbrella” policies supplement your underlying auto and homeowners liability coverage limits with additional protection of $1 million or more.  And that additional peace of mind comes at a very reasonable monthly cost.

 

In summary, make sure that you are comfortable with your personal liability limits of insurance. Don’t treat that important protection as an afterthought when you are obtaining a new homeowner insurance quote or reviewing the program you currently have in place. Liability limits and coverages can be added easily, and they often come with a nominal price tag.  For good measure, add an umbrella policy for an extra layer of liability protection that is in excess of your homeowner policy personal liability limit!

Post authored by Marc McNulty. Originally published April 23, 2018. View original post at:

https://wp.me/p1Iv7E-2Hf

 

Products underwritten by Central Mutual Insurance Company and affiliated companies.

Copyright © 2018 Central Mutual Insurance Company. All rights reserved.

Posted by Brock Insurance | Topic: Topic 3  | Category: Personal

Bridging the Gap: Company Car Coverage and Personal Use

Many employees drive company cars for their work-related duties. But what if the company car were your only car? Even as an employee of the company, it's likely you are not listed on the company’s business auto policy.

So what happens when you borrow your neighbor's car to run some errands on the weekend? This type of situation can leave you with serious gaps in coverage. Under a business auto policy, individuals using a borrowed auto for personal use are not covered, even if the policy covers hired or borrowed autos. The individual must be listed as an insured on the company’s business auto policy to have coverage.

Eliminating these coverage gaps can be complicated. While there's no simple solution, you do have a few options.

First, check with your employer to ensure you are allowed to use your company car for personal use. If you are not permitted to use the vehicle for personal use, then you need to ensure that you have a personal auto policy; and, obviously, don't use the company car for personal use.

Even if your company gives you permission to use your company car for personal use you probably won’t be covered for vehicles that you borrow or lease. Here are two options for this type of situation:

  • Purchase a Named Non-Owner Auto Policy. These policies are for those who do not own any automobiles but desire coverage for autos that they borrow or rent in their name. Coverage may be limited and some coverage exclusions may apply, so be sure to ask questions of your agent with regard to this policy.
  • Have your company add you to its business auto policy with a Drive Other Car endorsement. It adds the person(s) named in the endorsement and their spouse while using a covered auto for personal use. Again, coverage may be limited and exclusions may apply.

There are a few other options available depending on your personal situation. Wherever possible your best bet is to purchase a personal auto policy. It is difficult to match the insurance coverages included in a personal auto policy when it comes to the situations listed above. Another advantage of purchasing a personal auto policy is that in recent times, the homeowner insurance market has seen a rapid rise in premiums. Purchasing a personal auto policy can save you money on your homeowners insurance as most companies provide multi-policy discounts.

Insurance coverage for you and your company car can be complicated.  The options I've noted here are just a few that are available. Be sure to review your situation with us to be sure you are protected.

The coverages described above are in the most general terms and are subject to the actual policy conditions and exclusions. For actual coverage wording, conditions, and exclusions, refer to the policy or contact your independent agent. 

Post authored by David Clay. Originally published April 17, 2013. View original post at: http://wp.me/p1Iv7E-LZ

 

Products underwritten by Central Mutual Insurance Company and affiliated companies.

Copyright © 2016 Central Mutual Insurance Company. All rights reserved.

 

 

 

Posted by Brock Insurance | Topic: Topic2  | Category: Auto Insurance