Insurance is a critical asset. Maximizing the value of that asset requires businesses to do more than pay their renewal premiums on time. When your company is dealing with a loss or a potential liability, asking and answering the question “are we covered” should be one of your first priorities. Once you determine whether you are dealing with a potentially covered loss or liability, you can take steps to put the appropriate insurer on notice and comply with the terms and conditions in the applicable policy. Here are a few “best practices” when it comes to maximizing the value of your insurance:
Keep track of your insurance policies.
Companies frequently purchase multiple policies or “coverages” to insure against a variety of risks. For example, your company might have:
- A commercial general liability (“CGL”) policy (or policies);
- An auto insurance policy;
- A directors and officers (“D&O”) liability policy;
- An errors and omissions (“E&O”) policy;
- A commercial property policy;
- A commercial crime policy; and/or
Keep an inventory of your insurance policies. The inventory should identify basic information about each policy, including the policy number, the insurer and the insurer’s contact information, the policy period, the policy limits, and a brief description of the policy (e.g., CGL, D&O, etc.). The inventory should include current policies and historical policies. Depending on the type of coverage (e.g., occurrence versus claims-made), liability policies issued decades ago can provide coverage in connection with a claim asserted against your company today.
Read the insurance policy.
Ideally, someone at your company read the policy when you bought the policy. But, if not, make it a priority to read the policy when you have a loss. It is important to understand what the policy covers and what it excludes from coverage. Understanding your coverage will help you communicate effectively with the insurance company, and it will help you identify when your insurer is taking a coverage position that is not consistent with your policy.
Comply with the terms and conditions regarding notice to the insurer.
Conventional wisdom is that you should put insurers on notice as soon as possible. The conventional wisdom is not wrong, but it is always best to read the notice provision in the policy before you decide (i) when to put the insurer on notice; (ii) how to put the insurer on notice; and (iii) what to say in the notice.
For example, some policies require the policyholder to mail notice of a loss or claim to a specific address. Other policies permit notice via email. Some policies include specific notice requirements for certain types of losses and liabilities. For example, some policies that cover pollution-related losses require the policyholder to identify the date on which the discharge of pollutants commenced and the date the discharge became known to the insured.
Know when to get help.
Your insurance company is not the “enemy,” but in many cases you might need to consult insurance coverage counsel to help you navigate the claims process, and, if necessary, help you prepare for insurance coverage litigation. An experienced coverage lawyer can help you understand your policy, including any potential exclusions or limitations that might preclude coverage in connection with your specific loss or liability. A coverage lawyer can also interface with your insurance company’s lawyer or claim representative and advise you regarding your obligation to provide information to the insurer.
About the Author: Allison Parker
Allison Parker is an attorney at Bell, Davis & Pitt. Allison focuses her practice on insurance coverage litigation for corporate policyholders. She also advises policyholders on coverage issues in connection with potential and pending claims, and negotiates with insurers to maximize recovery without litigation.