Traditionally, a property loss consultant or public insurance adjuster would be retained by an insured as a result of a property or casualty loss with the sole objective of assisting the policyholder in the claims process after the catastrophic event. Often these events devastate a business or the lives of individuals. This is akin to closing the barn doors after the cows are gone since the time for assessment of insurable risk, recoverable loss, and preparation for the proper handling of the claim is before the event.
Many large companies and corporate entities have in-house risk management departments to manage and navigate the complex world of insurance coverage. Whether property, liability, health or worker’s comp, the world of insurance coverage is ever-changing, confusing and can appear to be an endless void. While risk managers and insurance brokers are aware of the products available to the policyholder, they generally do not have the unique perspective of a claims expert to afford the policyholder the full opportunity to minimize risk pre-loss as determined from a claims point of view.
Claims experts can address issues such as how a Difference in Conditions policy works and why a company would need one if it has earthquake and flood coverage as part of its package policy. Other matters that need to be addressed pre-loss concern the correct amount of business interruption or extra expense insurance that should be in place, the appropriate time to increase the Law and Ordinance coverage to complement a company’s decision to increase its self-retention amount, gaps in coverage and possible overlapping coverage from different policies resulting in the insured client paying for duplicate and unnecessary coverage.
In today’s depressed real estate market where an abundance of mortgaged properties are under water, there are a number of additional risk concerns. What are the respective rights of the lender and the borrower under the standard mortgagee provisions of the mortgagor’s policy and the lender’s blanket policy? What happens when the mortgaged property is damaged or destroyed by a catastrophic insured event? How are those rights enforced? From the liability insurance side, if a construction contract requires certificates of insurance from sub-contractors or vendors, are they to be named as additional insureds or additional named insureds? What is the legal significance of either status and have the underlying policies of insurance been properly endorsed to protect the respective interests involved in the transaction?
If a corporation is considering a merger or acquisition, no doubt the respective entities have done due diligence in evaluating liabilities that could affect the value of a target business. However, have they considered the value of existing insurance coverage for limiting those exposures? As to homeowners, does their homeowner’s policy properly protect for domestic or other employees doing work on their property? This is particularly true in today’s insurance marketplace where there is a constant erosion of provided coverage. Concomitantly, companies and individuals often fail to anticipate insurance exposures that can arise after the sale or acquisition of a business when surviving entities share insurance proceeds or the insurance proceeds become one of the assets of the sale.
All businesses, large and small, as well as individuals, would substantially benefit from a comprehensive review of their property and liability insurance coverage before catastrophe strikes. This review should include pre-loss disaster preparedness and pre-claim preparation under the guidance of an experienced insurance law and claims professional. When a claim occurs the insurance company arrives on the scene with its team of professionals. The insured should do the same.
Michael F. Chazkel, Of Counsel for Szaferman, Lakind, Blumstein & Blader, P.C. in Lawrenceville, heads the insurance litigation practice department where he focuses on pre-catastrophic insurance loss preparedness and the handling of complex insurance and commercial litigation matters.