14 Sep Producers – Have You Read the Policies You’re Selling?
Over the last several years, it certainly appears that there is not the same degree of consistency across various industry policies. The inconsistency could be attributable to carriers looking to differentiate themselves from their competition, typically filing their own forms instead of using an ISO form. Thus, coverage as basic as a general liability (GL) policy with one carrier may vary from a GL form with another. The same goes for umbrellas, property policies, personal lines, etc. While this is especially true when comparing a policy in the standard market with one in the E&S market, there can still be differences for policies in the standard market. While umbrellas are often thought of as “follow form” over the underlying, this is certainly not always the case.
Some of the differences can be coverage grants that make the coverage more expansive. However, it is common for limitations and exclusions to find their way into these policies, and some of these limitations/exclusions can be extremely significant.
For producers and internal staff involved with working with producers, how confident are you that you know what coverage the policies you are selling/proposing are really providing? Hopefully, the carrier proposal outlined any “additional” limitations/exclusions, but there is certainly the possibility that the proposal did not. This is one reason why it is SOOO important for producers to read/review the policies you are selling to note the coverage provided/excluded.
When I started in the business (back in the dinosaur age) on the agency side (S-Z for PL, CL, and claims), we were expected to read the policies to know what was included and especially what was excluded. This expectation is how I “grew up” in the business.
Say you sell a policy to a construction account, and the producer notices the customer using a drone to monitor construction sites. If there was no drone coverage in place and a loss occurs, this is when the customer would no doubt find out there is no coverage. There is a good chance that the client would allege that the producer saw those uncovered activities being performed and did not say anything. How that would wind up is anyone’s guess.
I have heard of several situations where an agency landed an account by bringing an exclusion in their current coverage to a prospect’s attention dealing with a significant part of the prospect’s business. They created the “pain” by identifying a gap the prospect was not aware of.
Producers are encouraged to understand the coverage they are selling — at a minimum, at least the exclusions. Knowing policy language is an important part of the selling “equation.”