“A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing.”   George Bernard Shaw


Recently one of our carrier partners informed us that due to a clerical error, they would not cover a $100,000 claim. Our agency is financially stable, but a $100,000 hit would hurt. The other option, if we did make an error, is to use our E&O insurance, which we view as last resort. 

My partner and I pride ourselves on our company systems, so the question was, “How did this happen?”

First, a little background on the claim. We had received a call that one of our long-time commercial clients had been involved in an auto accident with a fleet vehicle. The new truck he had been driving had sideswiped another vehicle and both vehicles were totaled.  Also, the driver of the other vehicle was taken to the hospital for bumps and bruises, so there was also some bodily injury.

We followed our process by turning the claim in to our carrier and providing them with the police report and other documentation. The carrier then contacted our client. During their review of the information, it was discovered that the vehicle involved in the accident was never on the vehicle schedule.

We were notified of this missing information and quickly began to research how this happened. Did the client ever inform us of the vehicle? If so, did we follow procedure and add the vehicle to the policy?

Our research showed that the vehicle was added to the policy on March 1 of last year. It was a brand-new truck, had no lien, and the driver was listed as the owner who was involved in the accident. So, step one: We did get the information from the client.

We then checked to see if the vehicle had been added to the policy and yes, it had been added effective March 1. Our system was updated with the change on March 13. 

But where was the vehicle? On April 1, we had moved our client from one carrier to another based upon a favorable quote and approach to loss control. It was a little financial savings for our client, but our focus was on helping them manage their new operations with a greater emphasis on risk management.

When the new policy was reviewed, it was checked against the original vehicle list that was created on Feb. 28 and forwarded to the new carrier. Thus, the vehicle never was added to the “new” policy.

Since the change, we had met with the client three times, each time delivering a fleet vehicle list and asking the client to review it. We have a strong relationship with the client, so this mistake was a major embarrassment.

The carrier called us to say that they had completed their research and determined that there was no coverage for the vehicle. I’ve been in this business for a number of years and understand coverage forms, so I was a little perplexed as to how the carrier could deny this claim.

The carrier asked for any documentation we had that might provide coverage. After a few emails among staff, we collectively produced the background showing our error, but also the new declarations page showing Symbol 1 on the liability coverage and Symbol 2 on the physical damage coverage.

These two symbols, according to our collective thinking, provided coverage for this claim. Symbol 1 means that any vehicle is covered, and Symbol 2 means any owned vehicle is covered. There was no gap, even though the auto was not on the policy. Based upon how we had approach the mechanics of coverage, there was coverage.

In the end, the carrier called to tell us that based upon the information we provided–and by the the involvement of their legal division–the claim would be covered and that they were “sorry for the fire drill.” 

Although there were some tense moments over the couple of days that this unfolded, this was an enlightening experience for us. We ultimately identified a flaw in our system that could occasionally occur but that we didn’t know about. We will correct this process so this type of claim can never occur again.

This incident reinforced how important it is that we all understand the different symbols found on the commercial auto declarations page.  Adversity, sometimes, is our best instructor.