In one of my last blog posts of 2017, I mentioned that my blogging might be a little sparse into March because I was working on a book targeted for publication late this spring with the tentative title of “When Words Collide…Resolving Insurance Coverage and Claims Disputes.” I’ve completed the first draft of the introductory sections and the opening chapter called “Policy Interpretation Basics.”
In that chapter, I discuss an insured’s duty to read the policy. Even more important is the agent’s (or underwriter’s or adjuster’s) duty to read the policy. I share this story in the book:
Several years ago, I got an inquiry from an insurance agency’s commercial lines manager who also had the Certified Insurance Counselor (CIC) professional designation. She wanted to know if a liquor store needed liquor liability coverage. According to her email [emphasis added], “I was always told that unless you were in the business of selling liquor for consumption on your premises, you did not need to purchase liquor liability.”
Just recently I viewed some agent professional liability statistics and noted a very similar claim that arose from the failure to provide liquor liability coverage for a liquor store. “Knowledge by Folklore” (aka, “I’ve always heard that…”) is not how coverage determinations should be made.
Later in this chapter in the book, I provide my “10 Commandments” of insurance policy interpretation in the form of 10 “doctrines” that govern, or should govern, how coverage is determined or a claim is resolved, including:
Doctrine #10: Folklore is not Fact.
As the liquor liability anecdote I shared earlier in this chapter demonstrates, you don’t make insurance policy coverage determinations on the basis of “I’ve always heard that….” The same goes for making generalizations about coverage and applying “rules of thumb.” Words matter, specifically, the words in the insurance contract. And there are rules of construction and interpretation that must be followed. In the following chapter on “Legal and Contractual Principles,” we’ll explore many of those principles, precepts and practices.
The only antidote to this anecdote is Doctrine #2: RTFP! Read The…Policy!
Thanks to Mike Edwards, CPCU for the connection.
Photo by David Holmes2
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