Desiree closed her restaurant and allowed the insurance on it to lapse. Her mortgage company informed her that she had to provide coverage so she purchased a six month Lloyd’s policy with a limit of $92,000. Her application stated that the restaurant was closed for the season. The description on the policy’s declarations was vacant restaurant.

Desiree reopened the restaurant and a total limits fire occurred shortly afterwards. Lloyd’s denied coverage because Desiree did not notify it that the building changed from a vacant to an active restaurant. Desiree argued that she did not know that she had to notify Lloyd’s before reopening.

Click here to learn how the court ruled.

Policy conditions are extremely important. However, they can easily be overlooked because they are in three different forms. IL 00 17–Common Policy Conditions apply to all commercial coverage forms. CP 00 90–Commercial Property Conditions apply to all commercial property coverage forms on the policy. Each coverage form has its own loss and additional conditions. Desiree’s coverage was denied because Lloyds’s believed she had misrepresented her risk. CP 00 90–Commercial Property Conditions contains this condition.

Click here to review the analyses of the conditions that apply to a building that an ISO commercial property coverage form insures.

Conditions are the contractual means that insurance companies use to convey their expectations. They explain what the company does and what it expects its insured to do. Many of them require that each party act in an honorable, responsible, and trustworthy way. It is in the interest of all parties, insured, insurance company and agent, to view the relationship as one of mutual trust and respect.

Click here to review an emarketing article about trust that you can post on your website or include in your newsletter.

Clients look to you to recommend coverages. They ignore or postpone many of them because of the cost. Do you document these discussions? Desiree’s agent may have explained the coverage limitations but she forgot them while dealing with many other issues involved with reopening her restaurant. Her agent could have been involved in the court case if he did not document their discussion.

Click here for an excellent tool you can use when you make coverage recommendations. This one is for a restaurant but there are such agreements available for every commercial risk in Producer Online. A personal lines version is also available.