Real-life claim examples are a great training tool for agents. That’s why our risk management website includes a section titled “Lessons Learned” that lists many examples of claims we’ve handled over the years. Each includes a summary of the claim details, plus a lesson to be taken from the incident, such as in this example:
CLAIM DETAILS
The agency moved a policy covering their client’s bottling operations from one carrier to another. The replacement policy contained a Designated Premises Endorsement limiting General Liability exposure to the insured premises – this endorsement was not on the previous policy.
During an outing sponsored by the client, an employee was severely injured by another employee on a jet ski. The new carrier denied the claim based on the Designated Premises Endorsement. The injured employee then sued the agency’s client, securing a verdict of $622,000. The client then sued the agent for the amount of the judgment, plus interest and defense costs, claiming they were not informed of the change in coverage.
The agent admitted he did not inform his client of the change. In the defense of the insured, counsel argued that a statutory Stop-Gap Employer’s Liability Endorsement would have applied to the loss and provided coverage. After the trial court disagreed, the matter was appealed to the State Court of Appeals. The Court of Appeals affirmed the lower court's decision, stating that the Designated Premises Endorsement also applied to the Stop-Gap Endorsement, meaning there was no coverage available for the loss.
The matter was settled for $1,000,000 against the agent.
LESSON
When switching coverage from one carrier to another, evaluate the differences and bring these differences to the attention of the client. Ask them to acknowledge, in writing, that the differences were explained.
Reminder: The risk management website can be accessed by affiliates through @your.service and by policyholders through our online Customer Care Center.