This is the first in a series of three columns about exclusionary or limiting policy endorsements to be wary of. In this column, we’ll talk about several commercial liability forms to avoid or be wary of, followed in the next two months by examples of commercial property and auto forms, respectively.
In my April 2019 column, I wrote about how to prevent your customers’ uncovered losses and, as a result, minimize your E&O exposure. This was the first in a series of a dozen articles based on my book “When Words Collide: Resolving Insurance Coverage and Claims Disputes.”
Prevention involves three phases.
First is identifying and quantifying exposures to loss. This is impossible when insuring with a carrier that says the insuring process takes only 15 minutes (or less).
Second is insuring or risk managing these known exposures. This involves working closely with underwriters (and sometimes the claims department) to match exposures with the proper insurance forms.
Third involves quality-controlling policy deliverables, which is the subject of this and my next two columns.
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When reviewing policy deliverables, you certainly want to make sure that all of the coverages ordered or agreed upon are included, but it is important to examine ALL
of the forms attached to the policy because it is likely that a number of them will be exclusionary or limiting in some way. You’ve heard of the phrase, “Be careful what you ask for,” but a more cautionary phrase in this case is, “Be careful what you DON’T ask for.”
In many cases, these forms are attached because their inclusion is called for in the carrier’s regulatorily filed policy form rules. However, there are often options for removing these forms or replacing them with less restrictive forms, sometimes with a premium surcharge but not always.
In 2017, I created a webinar with the late, great John Eubank, CPCU, ARM, titled “Raiders of the Lost Coverage: Insurance Jones and the Temple of Exclusions.” In this program, we identified over a dozen classes of non-ISO forms and endorsements to be wary of such as forms limiting coverage to clas
s codes or excluding certain class codes, “Special Condition” or “Contractor Warranty” endorsements, non-ISO additional insured endorsements, etc. But in this series, I’ll focus on ISO forms that are commonly used that you might encounter frequently across a spectrum of customers.
In that webinar, John and I specifically addressed about 40 ISO Commercial General Liability forms. Needless to say, in an article like this, all I can do is provide as
many examples as space allows. But there is a general rule for ISO forms, as I explained in my March 2024 column and more specifically in a blog post I made in 2018.