A one-page summary vs. a complete policy
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Hurricane Lila damaged many McDonald's restaurants in Louisiana. Each franchisee had a one page executive summary of its coverage but not the actual policy. The summary stated the hurricane deductible was 2%. However, when the wind losses were adjusted, the franchisees were unhappy with the $25,000 minimum deductible. They were also upset when they learned that the 2% applied to the sum of the franchisee's and franchisor's total property values. They argued that their agent had misrepresented the deductible and that the loss adjustment did not agree with the executive summary.
Click here to see how the courts ruled, the award, and the reasons why.
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Casting too wide a net
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Binders, certificates of insurance, executive summaries, and other explanations of policies are not the same as an insurance policy. Courts have repeatedly ruled that the policy must stand on its own and that the insured has a responsibility to read it. However, the producer who modifies a certificate to show coverage that is not part of the policy can be subject to both civil and criminal action.
Click here to review a Rough Notes Magazine article describing how a certificate can and cannot be used.
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Not just a plain deductible
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Most property policies are issued with a single deductible that applies to all losses. However, there is an option that permits different deductibles for different perils or causes of loss. This approach is common in wind areas, but it can also be useful in theft situations and other cases where a more customized approach can produce a more attractive risk for an underwriter or can reduce the premium for the customer.
Click here for a PF&M article that describes the Insurance Services Office (ISO) deductible plan.
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Are you interested? |
It is not always easy to know where to start. However, Coverages Applicable can give you that starting place when a new risk is presented to you. It is organized by category, but you can find the category by selecting one of more than 600 classifications. It presents a list of coverages that are considered applicable to your classification and, with a click, you can obtain a description of that coverage.
Click here for a listing of the Coverages Applicable for an eating or drinking establishment.
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