July is time to remind ourselves that your clients' freedom means that they can go about their lives without being paralyzed by fear of loss. We should aim to replace uncertainty with certainty, and to replace stress of potential loss with a good night's sleep. In two areas, agents often put in too much effort when the issue may be more easily remedied.
Mobile equipment
Countless hours are invested in determining whether the insured is covered for liability when using vehicles that may fall into the grey area between the policy definitions of "auto" and "mobile equipment." Deep analysis of every vehicle, piece of equipment and nuance of the policy definitions of "auto" and "mobile equipment" is pursued, with great emphasis on the deadly peril faced by the agent and insured if the coverage is improperly arranged.
Freedom? Just the opposite: a major waste of time, effort and increased stress levels, not including the lost opportunity to the insured and agent to create a win-win transaction. Too commonly, coverage is arranged:
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ISO Commercial General Liability (CGL): If the vehicle is defined as "mobile equipment," company A's policy is at a $10 million limit.
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ISO Business Auto Coverage (BAC): If the vehicle is defined as "auto," company B's policy is at a $1 million limit.
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An umbrella: Company C's policy is at a $20 million limit (assume follow form, with underlying based upon "auto" and "mobile equipment" definitions identical to ISO).
Key questions must now be resolved before the insured can, even for a claim all agree is covered somewhere, be given a clue as to whether to breathe a sigh of relief at coverage well done, or retain an attorney to pursue the E&O:
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Which policy appears to apply: CGL? BAC?
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What if the vehicle meets the definition of "auto" but has equipment that may throw the claim to the CGL?
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What if, due to conflicting opinions, the carriers disagree and each keeps throwing the claim back to the other?
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What if Carrier C refuses to participate in any settlement until Carrier A and B resolve their issues, because that decision determines the umbrella's attachment point?
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What if the insured gets frustrated by the hot potato claim games and calls "1-800-sue-the-bleeps"?
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What if no conflict occurs, the vehicle is agreed to be an "auto," and the insured realizes his total liability protection now totals $9 milliion less than if the vehicle had been defined as "mobile equipment"?
Freedom solution: Place both policies with the same carrier at the same limits. You have now reduced complexity and potential conflict into two simple steps: Pay the claim under primary policy up to policy limits; or pay remainder of claim, if any, under umbrella, up to policy limits.
Rental cars while on vacation
Is there a heavier load than the dreaded "to buy the waiver or not to buy" weight on vacationers' shoulders?
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The rental firm acknowledges that the additional coverages are optional—then, if the renter declines, requires multiple initials and signatures to reinforce the potentially horrific consequences.
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His or her credit card company suggests there is no need to buy the waiver because the card offers protection—then buries the coverage in multiple pages of fine print. And although there is supposedly no need for it, the card also offers more comprehensive waiver coverage at an additional charge.
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His or her insurance agent says the rental is covered under the personal auto insurance, then warns of potential limitations in relying on their PAP (see "Rental Dilemma," NU P&C, April 2014).
Freedom solution: Recommend the renters buy the optional coverages, including liability. Why ruin vacation with the dark cloud of looming financial pain and anguish? The insured exchanges pennies of premium for freedom from pounds of fear. This July, don't deny them the option to maximize that exchange.
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