In Property & Casualty Insurance Procurement & Litigation (Ten Recurring Themes Every Lawyer Should Know) insurance expert witness David L. Stegall, CPCU, ARM, ARe, RPA, of Risk Consulting & Expert Services writes on ten recurring themes that often lead to litigation. Attorneys either dealing in insurance procurement litigation issues or with clients who purchase insurance may want to consider these ten themes:
Theme 2 of 10
Premium payment is the basis of which all other obligations follow. Paying premiums to an agent of an insurance company is ordinarily the same as paying the insurance company. Is the person for whom your client is buying the insurance an agent or a broker? This information is usually not on the proposal. An insurance buyer needs to be sure the premium is paid to the insurance company or the company’s authorized representative (i.e., Agent) and not to a broker, who is not an authorized representative of the insurance company. The cases of brokers taking premiums from their clients and not conveying the money to the insurance company is, unfortunately, more common than one might expect and for this reason, payment to the insurance company is preferred.
Lesson #2: Your client (the Insurance buyer) knows they have purchased insurance if they have paid for it – so the buyer needs to make sure the premiums are paid to the insurance company.
Reoccurring Conclusion: Just like poor legal advice, poor understanding of insurance procurement issues can be very expensive for your client!
David Stegall is the Principal Consultant at Risk Consulting & Expert. Mr. Stegall holds a B.A. in Communication from Auburn University and is a Chartered Property and Casualty Underwriter, an Associate in Risk Management and an Associate in Reinsurance, all awarded by The Institutes in Malvern. PA. He is also a Director of the Society of Risk Management Consultants.