drm insights: insurance coverage, what you don’t know can ... · what you don’t know can hurt...

DRM INSIGHTS:

Insurance Coverage, What You Don’t Know Can Hurt You.

Of course, once you suffer a loss or are sued, it is too late to reform your insurance policy to cover the risk. Thus, the failure to understand the scope of your coverage in relation to the risks that most concern you can be a very costly oversight. And, not surprisingly, when faced with hundreds of pages of dense insurance policy language that may be inscrutable and seem contradictory, many business people really do not have a handle on the coverage they have purchased. Often, they put their trust in their insurers and brokers only to later learn, when a claim arises, that those folks did not understand the risks that were of greatest concern.

The disconnect between what is covered and what you want to be covered for is not likely the result of any nefarious misdeed by anyone, but rather is more likely the result of poor communication. This stems from a poor explanation of or imprecise thinking around why you want coverage on one hand and the confusing paradigm by which insurance policies are written on the other hand. Clarifying why you want coverage can be resolved. However, the other side of the communication glitch may be harder to conquer.

email: bfawley@drm.comoffice: (802) 258-3070direct: (802) 451-2321mobile: (508) 380-4735fax: (802) 258-4875

In 30+ years of litigating insurance claims against insurance companies, the most common refrain I hear from clients after they suffer a loss or are sued is: “I cannot believe I am not covered for that!” Or, “my broker assured me I was covered.” Or, “if I am not covered, what have I been paying for all these years?”

Insurance coverage and Intellectual Property Litigator - delivering smart solutions to complex legal matters.

R. Bradford (Brad) FawleyDirector

Contact

DRM INSIGHTS: INSURANCE COVERAGE

What keeps you up at night?

Insurance policies are written in a way that seems to cover all risks. They are sold as “All Risk,” or “Comprehensive Coverage General Liability” policies, or “Umbrella Coverage” policies. In reality, the comprehensive coverage excludes many risks, with additional exceptions to the exclusions all blanketed by a healthy dose of cross referenced definitions that contain their own exceptions and exclusions. Against this quagmire of words, understanding what is covered or excluded before the loss is incurred becomes an exercise in imagining an unfathomable range of possible losses and risk that is as wide and deep as one’s imagination. To make matters worse, insurers modify their contracts from year to year to adjust language, usually to reduce the scope of coverage. Further, the policy that applies to your loss may not be the current policy in your portfolio, but may be a policy purchased years ago with a “long tail” or one that you acquired by virtue of merger or acquisition. And, different states’ laws may apply to the interpretation of different policies depending on the facts around how and where the policies were purchased, where the loss is incurred and where any dispute over coverage is litigated.

Against this backdrop, how can one ever understand whether they are covered by their insurance? The first step is to review your coverage with specific reference to the risks that most concern you.

Theft of a computer? Or a hacking in that results in the loss of all the data

in your system?

A sexual harassment suit against one of your managers?

Or a class action lawsuit by thousands of customers for

improper billing?

A slip and fall in the reception area? Or being sued for allegedly using another company’s trade secret.

A fender bender in the company car? Or being sued for environmental clean- up costs at a legacy plant you

once owned or just acquired?

A worker’s compensation claim? Or being sued for

infringing another company’s intellectual property?

DRM INSIGHTS: INSURANCE COVERAGE

If you are interested in learning more about this service, please contact Brad Fawley at your convenience:

bfawley@drm.comor (802) 258-3070

DRM INSIGHTS: INSURANCE COVERAGE

DRM INSIGHTS: INSURANCE COVERAGE

No one can predict or provide against any and all risks that may occur. Despite “umbrella” or “all risk” or “comprehensive” coverage offered by the insurance industry, no policy covers all risks. Far from it. But, by identifying the risks that most concern you, insurance policies can be read with specific risks in mind and the holes or gaps in coverage can be identified. Once those gaps are identified, coverage may be clarified or perhaps purchased to fill the gaps.

If the gaps cannot be filled, other risk mitigation measures may be employed by you to protect against loss – such as changes in internal protocols, modifying business plans or self-insuring against loss.

A natural reaction I have heard when raising these issues with clients is – “I thought that my broker was taking care of all this!” Sometimes this is true. However, the quality of brokers varies widely and they have one thing in common. Primarily they are in the business of selling coverage, not handling claims. While some may try to help you once a claim is made, by then it is too late. The coverage is either there or it is not. Again, it is imperative to understand your risk before you suffer the loss.

We understand the rules of construction of insurance policies and have years of experience untangling the language.

We can help you find the gaps in your insurance so you can proactively manage the associated risk. For a fixed fee, depending on the number of policies and the scope of risks identified, we will meet with your top management to learn about your business and identify the business risks that you currently believe are covered by your current insurance package. Once these risks are identified, we can help you gather copies of your already purchased insurance policies that are most likely to protect against those risks. We would then review your policies[1] and compare them against the identified risks and advise you whether the coverage you thought you had is actually present.

Following this review, you may decide to leave the coverage you have in place. Or, you may wish to negotiate with your insurer or others to fill any gaps or buy an entirely new insurance package. Or, you may wish to manage the risk internally without reliance on insurance.

[1] The policies we may review may include all applicable past and present Primary CGL or All Risk, Umbrella Liability, Excess Liability, Errors and Omissions, Director’s Liability, Specialty Policies, other contractors or joint venture policies where you may be a “Named” or “Other” insured and policies of corporate entities you have purchased or with which you have merged.