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big trouble here. if you are dishonest in your dealings, bad ju ju will ensue.
Wow, this company should be let off if that’s true. Otherwise roofers are the same as cabinet installers.
There is a part of the form that asks the insured to list the kind of work they do. If this is what they wrote, and I’m sure it is or the company would not even try to say it was, the insured has no coverage.
Hopefully this will teach other small business to stop lying on their quotes. This happens more frequently than people realize. A small business owner will misrepresent what his business does to save an extra $2,500 per year. In this instance, the owner will have no choice but to file bankruptcy and will surely end up in a court of law.
Agree. Plus I would have been skeptical of a New York contractor that stated they only worked 2 stories or less. Are there any buildings in NY under 2 stories?
One problem with some small businesses, in their desire to work in a difficult ecomomy, is they accept jobs they didn’t plan on taking. They may not have experience or be adequately covered for their new venture.
Who filed out the application? Was it the purported insured?
It’s fine that the application stated working two stories or less, but did the underwriter actually check into this? The internet is a powerful tool and I can guarantee that a simple search prior to the writing of the policy would have showed Joy Contractors as more than just a run of the mill two story or less contractor, especially in NYC.
Ocean Marine policies apply an “utmost good faith” understanding and you assume that no similar concept is applicable here in that the carrier has to spend time verifying that the applicant has complied with his obligation to be honest for fear of being stuck on the claim?
Hi Brian – and everyone else posting. Everyone has great points. I am going to change the direction of these posts as I have a serious concern.
Do we as agents/brokers have a responsibility to field underwrite the risk, or are we just suppose to blindly trust a prospect? Do we have any responsibility to try and get to the truth? And, does anyone have a method of trying to get the whole truth?
We absolutely do have an obligation and i do my best but the point is, an insurance company should be able to decline coverage based on material misrepresentation. The consequence has to be on the liar, and unfortunately also on the public (because there may be no source for compensation) until all people are again afraid of not being honest and it’s consequences.
Brian – I agree fully. The carrier should not have to pay the claim on this loss. I do my best also to drill down to the “real” truth. It’s funny I just had lunch with my wife, an agent, who really knows her stuff and yet another new client, yesterday, lied on an application. My concern as Ellie says – E&O even when we do our very best to get to the truth!
As an agent, you absolutley have a responsibility to field underwrite any risk. I would never risk my license and just blindly believe what anyone says. That is a huge E&O waiting to happen. You have to keep asking questions if something sounds not right to you. Then if they are still misrepresenting themselves it will be back on the client.
Just a quick clarification – I went out and found the actual court decision. The application did not say they do no work above the 2nd story. It said they do no EXTERIOR work above the 2nd story, only interior drywall work.
This is exactly why I do not fill out any part of any professional liability (using that term broadly) application. And when I have the client sign a GL application, I give them the full copy to review before they sign, and urge them, in writing, to make sure every question is answered properly. The responsibility is rightly on the client, not on me, the agent, to make sure the answers fully represent their operation.
What’s better is excess, with Admiral, has residential exclusion. Either we have insured or agent misrepresentation. In both cases, Joy goes out of business and GC and Owner/Builder are left holding the bag. How would the broker issue a certificate for this job without discussing scope of job, and notifying of residential exclusion?