Policy Checking

I recently ran across a situation that maybe borders on ethical issues and definitely makes policy checking a living nightmare. Here is the situation:

A carrier issued a personal lines policy. One of the endorsements, an important endorsement, was the shotgun marriage of two different forms. They took page 1 of one form and page 2 of a different form and called it good. Different form numbers, different dates, and so forth. Think about all the issues this creates. I do not know how the carrier can track this. But how can a person catch these situations when policy checking? The differences were not minor.

Furthermore, the carrier claimed ISO copyright but they changed the wording. In other words, this was not a standard form. It was a proprietary form hiding behind a fake copyright. (For a great article regarding how to catch fake copyrights of ISO policies when policy checking, go here: https://www.irmi.com/articles/expert-commentary/nonstandard-policies-similar-to-standard.)

I have several suggestions for agencies that come across these situations:

1. You are facing a situation of carrier incompetence or carrier malfeasance. I suppose it is somewhat better to think of the carrier as being staffed by good but incompetent people versus evil people, but either way, the agency is going to spend more time, more money checking policies and still will have an increased E&O exposure and possibly an unhappy client at claim time. Is the solution to just do business with higher caliber carriers?

2. Depending on the situation, report the problem to the insurance department. I understand the need to avoid sticking your neck out. Maybe get a high quality carrier to submit it for you or maybe you can do it anonymously or maybe you can get your state association to assist. But these incompetent companies are taking advantage of the good agents and good carriers.

3. If the issue is an ISO copyright, call ISO. I doubt they appreciate companies claiming an ISO copyright when they are not actually using ISO copyrighted forms.

4. This is an opportunity. One of the great advantages a high quality independent agent provides is actually policy checking. An insured going direct or buying insurance from an agent that no longer policy checks is getting a raw deal. This is one of the most important services an agency can provide.

5. This is also an opportunity to advertise that you know your coverages and your companies are not doing sloppy cutting and pasting of documents.

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NOTE: The information provided herein is intended for educational and informational purposes only and it represents only the views of the authors. It is not a recommendation that a particular course of action be followed. Burand Insurance Education, Burand & Associates, LLC and Chris Burand assume, and will have, no responsibility for liability or damage which may result from the use of any of this information.