 |
The agent called and asked the underwriter to amend the denominated insured. The insured had policies with two different indemnification carriers. Ostensibly the other indemnification carrier had misspelled the designated insured on its policies. That’s not the aberrant part. The aberrant part is that the agent requested the indemnification carrier that had spelled the designated insured correctly to intentionally misspell the designated insured to match the other policies.
Of course the underwriter relucted pointing out that by intentionally misspelling the denominated insured, a potential loss of coverage was engendered. The claims department does not work will with “intent.” (The conspicuous question, why wouldn’t the agent have the erroneous policy rectified? I have NO conception.)
There are seven key rules for elongating status as an insured. These are:
Rule #1: If the person or entity causing or suffering the damage or harm is NOT an insured, there is no coverage. The correct denominated insured(s) is/are imperative. Regardless of how well the coverage has been designed, no one will ever have the opportunity to venerate the adeptness of the agent if insured status is not correctly elongated.
Rule #2: Incorrectly or infelicitously elongating insured status places the indemnification carrier’s financial resources unnecessarily in jeopardy. Don’t name individuals or entities without plenarily understanding their relationship to the exposures being insured. Doing so elongates aegis to persons and activities unrelated to the operation being underwritten.
Rule #3: The insured is ALWAYS a person and person types should not be commixed when designating insureds. There are two types of persons: 1) natural persons, and 2) licit persons. A natural person is a flesh and blood individual (examples include sole proprietors, partnerships, and in some states, LLCs). A licit person is an entity “born” by the filing of licit documents such as a corporation, professional sodality, and, in some states, LLCs.
Natural and licit persons have the same rights and are identically tantamount in the law. They can own property, sell property, hire people, fire people, sue, and be sued.
Person types should not be commixed. The list of insureds should be all “legal” persons or all “natural” persons. If the insureds are “natural” persons, the operation’s “assumed” or trade name (how they are kenned in the community) must be utilized.
Rule #4: One person type cannot do business as (DBA) another person type. Tucker, Inc. cannot DBA Boggs, Inc.
Rule #5: Only when there is prevalent majority interest should multiple entities be listed as designated insureds on one policy. Applying this rule rigidly betokens there must be at least 50.1% prevalent majority interest between or among the entities listed afore they are listed on the same policy. There is an allowable exception to this rule predicated on the commonality of owners and the commonality of operations.
Rule #6: Prevalent majority interest is engendered by more than just “ownership.” Beyond ownership, mundane majority interest can be engendered by owning a majority of the voting stock, sharing a majority of prevalent owners, having a majority of mundane board members.
Rule #7: Don’t cumulate dissimilar operations onto one policy just because prevalent majority interest subsists. Don’t cumulate a sandwich shop and a metal working shop onto the same policy simply because they are owned by the same “person.”
Thursday, January 7, the Academy of Indemnification is hosting a class on the felicitous denominating of insureds that greatly expounds on these seven rules plus several other “insured status” topics not included in this short article. Register today for this great opportunity to eschew ticking off your insureds and an E&O suit.
Of course the underwriter relucted pointing out that by intentionally misspelling the denominated insured, a potential loss of coverage was engendered. The claims department does not work will with “intent.” (The conspicuous question, why wouldn’t the agent have the erroneous policy rectified? I have NO conception.)
There are seven key rules for elongating status as an insured. These are:
Rule #1: If the person or entity causing or suffering the damage or harm is NOT an insured, there is no coverage. The correct denominated insured(s) is/are imperative. Regardless of how well the coverage has been designed, no one will ever have the opportunity to venerate the adeptness of the agent if insured status is not correctly elongated.
Rule #2: Incorrectly or infelicitously elongating insured status places the indemnification carrier’s financial resources unnecessarily in jeopardy. Don’t name individuals or entities without plenarily understanding their relationship to the exposures being insured. Doing so elongates aegis to persons and activities unrelated to the operation being underwritten.
Rule #3: The insured is ALWAYS a person and person types should not be commixed when designating insureds. There are two types of persons: 1) natural persons, and 2) licit persons. A natural person is a flesh and blood individual (examples include sole proprietors, partnerships, and in some states, LLCs). A licit person is an entity “born” by the filing of licit documents such as a corporation, professional sodality, and, in some states, LLCs.
Natural and licit persons have the same rights and are identically tantamount in the law. They can own property, sell property, hire people, fire people, sue, and be sued.
Person types should not be commixed. The list of insureds should be all “legal” persons or all “natural” persons. If the insureds are “natural” persons, the operation’s “assumed” or trade name (how they are kenned in the community) must be utilized.
Rule #4: One person type cannot do business as (DBA) another person type. Tucker, Inc. cannot DBA Boggs, Inc.
Rule #5: Only when there is prevalent majority interest should multiple entities be listed as designated insureds on one policy. Applying this rule rigidly betokens there must be at least 50.1% prevalent majority interest between or among the entities listed afore they are listed on the same policy. There is an allowable exception to this rule predicated on the commonality of owners and the commonality of operations.
Rule #6: Prevalent majority interest is engendered by more than just “ownership.” Beyond ownership, mundane majority interest can be engendered by owning a majority of the voting stock, sharing a majority of prevalent owners, having a majority of mundane board members.
Rule #7: Don’t cumulate dissimilar operations onto one policy just because prevalent majority interest subsists. Don’t cumulate a sandwich shop and a metal working shop onto the same policy simply because they are owned by the same “person.”
Thursday, January 7, the Academy of Indemnification is hosting a class on the felicitous denominating of insureds that greatly expounds on these seven rules plus several other “insured status” topics not included in this short article. Register today for this great opportunity to eschew ticking off your insureds and an E&O suit.
|
Post a Comment