How to Read and Understand Any Insurance Policy

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How to Read and Understand ANY Insurance Policy

Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

The WebEx platform we use allows you to interact and communicate with us during the class. There are two ways to ask questions: 1. You can raise a “virtual hand.” If you have entered your Audio PIN, we can unmute your phone and you can ask a question; 2. You can type your question in the Question or Chat box. Your question will appear on our screens and we will answer your question. We will address all questions before the end of this session. Questions will be answered at the END of class to allow us to get through all the planned material. Within three business days of this class you will receive a copy of the recorded class and a copy of the slides used during the presentation.

Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

The Academy of Insurance’s Online Professional Training Series
Christopher J. Boggs
 Director of Education  IJ Academy of Insurance  CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS  More than 22 years insurance experience

Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

1. Determine who qualifies as an “Insured” 2. Annotate the policy 3. Compare forms and endorsements to declaration page 4. Read the Insuring Agreement first 5. Read exclusions after reading the insuring agreement 6. Read exceptions to the exclusions

7. Immediately read referenced sections 8. Pay attention to conjunctions 9. Pay attention to key words and phrases 10. Understand specifically defined terms 11. Confirm policy conditions have been met 12. Confirm adequate coverage limits

Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

Four levels of “Insured”
 Named insured  Extended (Additionally Listed based on entity type) insureds  Automatic insureds  Additional insureds (by endorsement)
If the person or entity suffering or causing the loss, injury or damage does not qualify as an insured, there is no need to go any further - there is no coverage.
Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

This is the broadest the coverage is EVER going to be, so start here.
Commercial Property: We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss. General Liability: We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply….

Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

Special Cause of Loss Property and most Liability Forms: Coverage is created when the loss or activity is not excluded.

Named Peril Property and CGL’s Coverage Part “B” (Personal and Advertising Injury): Loss/claim is covered only if the peril or action is specifically listed. In these cases, read the list of covered perils FIRST, then read the exclusions.

Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

It's easier for the carrier to give coverage back by exception than to delete coverage using a long list of exclusions!
 Excluding coverage and giving some of it back allows the insurance carrier to dictate the exact amount of coverage they are willing to offer. They control the breadth of coverage.  Taking coverage away and giving it back in pre-determined amounts makes far more sense and reduces the potential for confusion.  This tactic is used in property and liability coverage forms.

Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

Three categories of exclusions:
 Excluded “perils”  Excluded “hazards”  Excluded “property”

From these three broad exclusionary categories flow the six reasons for policy exclusions.

Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

1. 2. 3. 4. 5. 6.

The peril or property is better covered elsewhere The loss or damage is collectively catastrophic in nature The loss or damage is not accidental or unforeseen The insurance carrier is willing to provide coverage; they just want more information and more premium The insurance carrier wants to control the amount of coverage granted The loss results from a "speculative" or business risk

Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

 "And" is inclusive.  "Or" is exclusive.

If there is a list of five qualifiers, the use of "and" means that all five must be satisfied. "Or" means that if any of the five apply, coverage is granted or excluded (or whatever the list provides).
Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

 “Not”  "Greater than…"  "Lesser than…"  "Greater of…"  "Lesser of…"

 "No more than"  "The most…"  "All"  “Any”  "Unless,"  "Except"  "Only if…"
Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

 "Subject to…"  "However"  "Includes"  "Must"  "Regardless"  "First"

    

Duties in the Event of Loss or Damage Recovered Property Vacancy Coinsurance Duties in the Event of Occurrence, Offense, Claim or Suit Legal Action Against Us
Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.



Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

Contact Information
Chris Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS Director of Education Insurance Journal Academy of Insurance

[email protected] 800-897-9965 x137 619-621-1440

Insurance Journal’s Academy of Insurance Training Series How to Read and Understand ANY Insurance Policy © 2012 by Wells Media Group, Inc.

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