United States: Ten Insurance Tips for Maximizing The Value Of Insurance Assets

Last Updated: September 9 2013
Article by Mark Garbowski

Originally published by The Metropolitan Corporate Counsel, Inc. Volume 21, No. 6, June 2013

Insurance policies often are acquired and then put in a drawer. Sometimes they are not even maintained anywhere. But these policies are valuable assets and like most assets, they must be managed actively if their value is to be fully realized. Here are ten steps policyholders should take to maximize the value of their insurance coverage.

1. Recognize That Insurance Is An Asset, Not A Certificate Of Achievement

Too often, insurance policies are viewed primarily as a begrudged if necessary expense. Many policyholders view the purchase of an insurance policy as something they are required to do by a regulatory agency, trade group, or business partner. Once they obtain the certificate and demonstrate compliance, their interest in the insurance ends, to be renewed only should they be called again to prove compliance.

When a loss occurs, however, it is important to pursue insurance recovery systematically and aggressively. Doing so requires planning and organization – much of which should take place before any loss occurs.

2. When Your Company Is An Additional Insured On Somebody Else's Policy, Demand A Copy Of The Policy, Not Just The Certificate Of Insurance

When your company is an additional insured under a policy purchased by another company, you should take all reasonable steps to obtain a copy of the policy. A certificate is a weak substitute.

The first thing this does is establish that the policy exists. A certificate is not proof of coverage. While fraudulent certificates are rare, certificates whose terms are incomplete or that do not match the contents of the policy are all too common.

Obtaining the actual policy also allows you to check that your company was properly added as an additional insured. This is always important to review, both for policies in which your company is specifically listed as an additional insured and for those that cover your company by means of a blanket provision adding all parties as additional insureds where it is contractually required.

Finally, obtaining the policy puts you and your company at an advantage when a loss or claim occurs. With the policy in hand, an additional insured will know where and how to give notice, what coverage is available, what exclusions might apply, what other conditions might apply, and how deductibles, retentions, and limits of insurance are allocated and calculated. Not having the policy puts you completely at the mercy of your contractual partner for all of these issues. No matter how strong the relationship, their interests and yours are not identical. Companies therefore should ask for a copy of all relevant policies from their business partners.

3. Know Where All Policies Are Now, And Maintain Insurance Policies Indefinitely UnderA Document Retention Policy

If a company has a document retention policy, it must make certain that insurance documentation is included and that copies of policies are maintained for a long time. If a company decides to dispose of or destroy an old policy, that policy should first be carefully reviewed for the possibility that it could respond to a loss that either occurs in the future or, more likely, reveals itself in the future. If either possibility exists, do not get rid of it.

Even claims-made and reported policies can sometimes be implicated by claims that arise years after their term ends, usually because the new claim is interrelated to one made during the policy period or arises out of circumstances that were reported during the policy period.

The more complex your insurance program, the more organized your policy retention system should be. If you have multiple lines of coverage, for example, a database or at least a spreadsheet listing all policies should be maintained.

4. Review New Policies As Soon As They Arrive

In most circumstances, it is the policyholder's responsibility to review new policies when they arrive. Does the policy match the certificate, or correspondence between you and either the insurance company or your broker? Are there significant changes from last year's policy? If there are any problems, it is best to catch them as soon as you get the policy, when there still might be some opportunity to address any discrepancies. Even if the insurance company refuses to issue a revision, endorsement, or clarification, you will have built a record and shown that you did not waive anything. In some instances there might even be an opportunity to cancel the policy and purchase from an alternative vendor.

If you do not catch the problem until a claim arises that inevitably implicates the unexpected policy provision, you will be left arguing that your broker or insurance company had a duty to advise you of these issues. While such arguments sometimes work, courts often look unfavorably on parties who arguably had an opportunity to discover the problem themselves but failed to take action.

Finally, depending on the applicable state insurance law, an insurance company might be required to highlight certain cov Someerage changes or reductions on renewal or replacement policies. While such disclosures are useful, they should not be relied on to inform policyholders of every relevant change in the policy, and policyholders should not assume that any change not included in the disclosure is insignificant.

5. Develop Insurance Expertise Outside of the Risk Management Department

While a company's risk management department or consultants are obviously an important and central part of its base of insurance knowledge, risk managers should not be the only people with knowledge of insurance. In particular, a policyholder's legal department, including any regularly retained outside counsel, should have a ready, working knowledge of the company's insurance program and should be able to assess both policy provisions prior to purchase and any coverage defenses an insurance company throws up in response to a filed claim.

6. Make Sure The Insurance Team Works Together As Allies

Tensions or rivalries between different departments, or among inside employees and various outside consultants, should not be allowed to get in the way of the pursuit of a company's insurance claim. The person in charge should have responsibility for making certain that these groups work together, as allies, on behalf of their mutual employer or client: the policyholder.

7. Consider Insurance Coverage After Every Loss, And Give Notice of Every Potential Loss Or Claim As Soon As Possible

When a company suffers a loss or is faced with even a potential claim of any kind, it should immediately begin to determine which insurance policies might provide coverage. In fact, the company should begin thinking of insurance coverage whenever it becomes aware of a potential loss.

Then, it is important to give notice immediately so as not to run afoul of "timely notice" provisions requiring the policyholder to give notice within a fixed time period – sometimes as short as a week – once a potential loss or liability becomes manifest. Do not wait to determine whether the issue will be big enough to warrant a claim. Do not wait to see if a potential liability is ever pursued by a claimant. Do not defer giving notice because of a fear that premiums will increase because of that notice.

A policyholder can always drop a claim if it later determines that the matter is best handled without the insurance company's involvement, but the opposite is not necessarily the case. If a company fails to give notice on a timely basis, it could very well forfeit coverage altogether. There is almost no advantage to delaying notice, and rarely does it outweigh the cost either of losing coverage outright or of fighting the insurance company over the timing of notice. Even if a policyholder is successful, that is a fight that is easily avoided.

8. Think About Insurance During Mergers, Spin-Offs and Acquisitions

In any merger or acquisition, both parties should devote specific attention to insurance issues. This goes back to the idea that insurance is an asset. The general rule is that insurance should go with the covered risk, but this rule is neither universal nor always easily executed.

In some instances, it might be difficult to transfer insurance assets that covered both the division being sold or acquired and other parts of the seller's operations. Sometimes the insurance company will have a right to withhold approval for the transfer. In such cases, alternative risk transfer arrangements should be made, and each transaction must be analyzed and handled on an individual basis.

9. Challenge The Insurance Company's Denial

It is no secret that insurance companies will often test their policyholders' resolve by issuing an initial denial for a claim whenever there is any remotely plausible basis for doing so. When that occurs, a policyholder should undertake an independent evaluation of its coverage claim. The policyholder should use its resources in risk management and legal expertise to review the entire policy, looking for sections that might create coverage despite the provisions relied upon by the insurance company. It should write back, explaining why it is not taking "No" for an answer. Sometimes one, or a few letters, is enough pushback to get the insurance company to reconsider.

10. When Responding To Insurance Company Information Requests, Never Say "No"

Just as a policyholder should never accept "No" from an insurance company, it should, in turn, almost never say "No" when responding to the insurance company's requests for cooperation and information. That does not mean a policyholder has to fulfill every request exactly as it is presented. Look for creative ways to offer the information the insurance company needs while maintaining all necessary confidentiality and minimizing costs. Ask the insurance company to sign confidentiality agreements where appropriate, and be careful of sharing privileged information in circumstances where doing so might constitute a waiver of the privilege. Be sure to check with counsel for the law of the applicable jurisdiction. Refusing to provide privileged information under such circumstances should be justifiable under the cooperation clauses of the policy. In contrast, a simple denial of all or most requests provides the insurance company with a simple basis for denying a claim.

Conclusion

Insurance policies represent an important asset. When companies treat their policies appropriately, those policies are more likely to provide the value that was intended at the outset.

Mark Garbowski is a Senior Shareholder and Member of Anderson Kill & Olick's insurance recovery group, with particular experience in professional liability insurance, directors and officers (D&O) insurance, fidelity and crime-loss policies, internet and high-tech liability insurance issues.

About Anderson Kill & Olick's Insurance Recovery Practice: Anderson Kill's insurance recovery group helps policyholders maximize recovery for losses and liabilities including environmental and toxic tort, class actions, governmental investigations and prosecutions, products liability, data breach and other computerrelated losses and liabilities, professional liability and disability, intellectual property claims, directors' and officers' liability, commercial crime insurance, property losses, business interruption losses and many others. Clients include the nation's largest corporate and industrial policyholders as well as utilities, municipalities, state governments, charities, major religious and not-for-profit organizations, small companies and individuals. Chambers USA has named Anderson Kill one of the nation's top law firms for insurance recovery for seven consecutive years. In 2012, the firm was awarded an Insurance Group of the Year designation by Law360. For more information, please visit www.andersonkill.com.

About Anderson Kill

Anderson Kill practices law in the areas of Insurance Recovery, Commercial Litigation, Environmental Law, Estate, Trusts and Tax Services, Corporate and Securities, Antitrust, Bankruptcy, Real Estate and Construction, Public Law, Government Affairs, Anti-Counterfeiting, Employment and Labor Law, Captives, Intellectual Property, Corporate Tax and Health Reform. Recognized nationwide by Chambers USA for Client Service and Commercial Awareness, and best-known for its work in insurance recovery, the firm represents policyholders only in insurance coverage disputes – with no ties to insurance companies and has no conflicts of interest. Clients include Fortune 1000 companies, small and medium-sized businesses, governmental entities, and nonprofits as well as personal estates. Based in New York City, the firm also has offices in Ventura, CA, Stamford, CT, Washington, DC, Newark, NJ and Philadelphia, PA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Holland & Knight
Anderson Kill
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Holland & Knight
Anderson Kill
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions