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One of my insureds called and said he had some employees who are no longer with them install some flooring on a remodeling project. The floor was installed incorrectly (a gap near the end) and as a result, the floor buckled. It is going to cost over $4K to rip it up and have it redone. The insured called with a casual question asking if this is something he could claim under his GL policy. He is not being sued, he just doesn't have $4K - $5K right now.

Now since the GL policy contains an exclusion for "damage to your work", with the intent of the exclusion to prevent the GL policy functioning as a warranty. So I explained this and he didn't have a problem with that and thought that was how it worked anyway but was just checking.

However, this leads to the following question. It is not my job to determine whether coverage exists under the policy. So I could or should say to the insured, let's submit it to your carrier. Of course, this could lead to an open claim come renewal time which could be a problem or maybe an underwriting issue come renewal. However, where do you draw the line? For example, if I sold a simple personal auto policy, liability only, and someone called and said their car was stolen, I'd say well you didn't purchase comprehensive coverage so there is no coverage, not submit to their liability carrier.

Opinions?

Just my practice...but at the point of sale, I always make sure the contractor understands that the policy will pay for the consequence of bad work, but not the bad work itself. I use as an easy example floor sanding....if the contractor is using a floor sander and it flies out of control and breaks a sliding glass door, that's where the policy comes into play...but if the contractor has never used a floor sander before and produces a job that has uneven work, then he/she is on the hook to fix it.

On your example of verbal claim inquiries I always say that in my opinion, I don't think it will be covered, and then cite the policy language, but cover myself by adding that I'm not refusing to facilitate a claim if that's what the insured wants to do, although I don't encourage claim activity where there's a strong likelihood of a denial of coverage.

I hope that helps.

d's insurance store wrote:Just my practice...but at the point of sale, I always make sure the contractor understands that the policy will pay for the consequence of bad work, but not the bad work itself. I use as an easy example floor sanding....if the contractor is using a floor sander and it flies out of control and breaks a sliding glass door, that's where the policy comes into play...but if the contractor has never used a floor sander before and produces a job that has uneven work, then he/she is on the hook to fix it.

On your example of verbal claim inquiries I always say that in my opinion, I don't think it will be covered, and then cite the policy language, but cover myself by adding that I'm not refusing to facilitate a claim if that's what the insured wants to do, although I don't encourage claim activity where there's a strong likelihood of a denial of coverage.

I hope that helps.

Yes thank you. What you said in your last paragraph is exactly what I said, I just wanted to get some other opinions.

what is YOUR job?

My job as an agent is to sell the policy, it is the claims adjusters job to interprete the policy

yotes fan wrote:what is YOUR job?

My job as an agent is to sell the policy, it is the claims adjusters job to interprete the policy

Yes that is exactly what I said in my last paragraph. However, when an insured calls and asks the question, there are better ways to deal with it rather than to just say to him "Sorry Charlie, my job is to just sell you a policy".

If you are truly an "agent" (in the legal sense) of the insurer, you have a fiduciary duty to report the potential claim to insurer. While it appears that you are concerned with the insured's expense of replacing the floor, there may be some 3rd party liability issues that the insured has not recognized or disclosed to you. "Knowledge to the agent, is knowledge to the company." You could be opening the E & O "can of worms" for yourself and your insurance company.
Leave the investigation and decision making to the insurance company's claims department.

Thank goodness "yotes fan" is not my agent. I view the job of an insurance agent to match coverage to exposure and provide a policy to cover that exposure subject to the clients ability to absorb the premium.

Then at the time of any occurrence or claim it is the agents job to guide the client. In the case of the situation presented, I would say "My opinion is..." but then would make the further statement that the only true way to know would be to submit a claim to the carrier. As part of this process I would repeat what I told them in the sales process regarding the effect of any deductible.

Hopefully there is not a deductible that includes claims expense...I always try to avoid those.

earlybird wrote:If you are truly an "agent" (in the legal sense) of the insurer, you have a fiduciary duty to report the potential claim to insurer. While it appears that you are concerned with the insured's expense of replacing the floor, there may be some 3rd party liability issues that the insured has not recognized or disclosed to you. "Knowledge to the agent, is knowledge to the company." You could be opening the E & O "can of worms" for yourself and your insurance company.
Leave the investigation and decision making to the insurance company's claims department.

Actually, in the legal sense I am acting as a broker.