Insurance Expert Witness On Recurring Insurance Litigation Themes Part 10

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 10 of 10 Business Interruption, Income, Extra Expense and other time element coverages are unique to business entities and are seldom purchased correctly. These coverages are extremely important in that they are practically the only insurance coverages that will cover the future earnings of a business. Businesses that fail to purchase the coverage seldom fully recover after a major loss occurs. However, the process of purchasing the coverage is wrought with misunderstanding due to the use of what appears to be accounting terms, but are actually insurance terms. This causes confusion on the part of both insurance professionals and accounting personnel normally asked to complete the application forms. There are very few agents, brokers, or underwriters who can accurately assist in the application process, yet the actual process of buying coverage (not necessarily the correct coverage) is easy and often handled in a very cavalier manner. Very few insurance professionals within the industry have enough experience with business interruption and time-element coverage claims to understand the claims adjusting process. This makes misunderstandings common between buyers and insurance companies, which can lead to litigation.

Lesson #10: Have your client’s accountant work directly with the underwriter on this coverage procurement, if at all possible. The accuracy of the application for this coverage is paramount. Again, ask questions, make sure you understand how the coverage will respond in a loss scenario, follow-up in writing, and document answers.

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 Services. 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 Consultant