A business property was considered a total loss after a fire. While both the property owner and its insurer agreed that it was a covered loss, they were at serious odds over the applicable insurance limit. Specifically, the two parties interpreted the declarations’ property descriptions substantially differently.

The property owner held that a stated limit should be applied, in total, to two different parts of a single location. The insurer objected. It offered a settlement that involved only a single application of the total limit.

Click below for more information on the impact that a policy’s declarations can have on protection that is made available to covered property.

There are so many ways where handling an accidental loss can go sideways. Time and again, problematic losses are a result of, essentially, miscommunication and mistakes. Even a key component of providing insurance protection, the policy declarations, can be the source.

The declarations, aptly named, supplies critical information regarding a given policy. It is relied upon to document, among other items, the property that is subject to an applicable policy’s protection. The information is part of the insurance submission and underwriting process. It is, eventually, issued with a new policy and with any policy renewals.

Click here for a brief description of common insurance policy features, including what is found in declarations and the changes condition. Both are important in keeping policy identification updated and relevant. It is from Gordis on PC Insurance found in Advantage Plus.

In the above dispute, the opposing parties argued that the information in the policy declarations supported their view on how much coverage should be paid. The problem was directly due to the activity that occurred with that document. Over the years, a number of changes were made. While the loss involved one location, the policy contained descriptions of more than a dozen locations.

At one point the description was changed from a conventional listing of properties to two tables. Later still, one table was crossed out. Later, some handwritten information was added to the remaining table. Apparently, it was meant to alter/clarify the description of the location that was destroyed.

This confusing situation was made worse as neither the policyholder nor the insurer could produce documentation of how or why the changes were made. So, for practical purposes, the declarations became unusable.

Click here for an article on insurance surveys. This is a tool that can be invaluable in gathering and documenting important information on a commercial operation’s risks, including locations. It is from Emarketing for Agents found in Advantage Plus.

Obviously (we hope) it is best to minimize miscommunications. We just mentioned how helpful it is to maintain regular contact with clients. This is particularly true as these relationships stretch from months to years.

There is a saying that remains accurate, “familiarity breeds contempt.” Don’t focus on the literal meaning. It isn’t hatred that typically arises, rather it is what often occurs with familiarity…taking the relationship for granted.

In many cases, long-term relationships can become stale. They can be accompanied by a presumption that you understand the other party so well, that little effort goes into maintaining its health. Ignoring the possibility of change invites danger.

It is important to maintain the relevance of client relationships. This means making reasonable, regular contact that increases the chances that their needs are properly met, including cleaning up account information.

Click here to see an example of correspondence an agency may use to gather information to assist in getting on the same coverage page with a client. It is from Business Building Letters found in Advantage Plus.