As far as I see it this is standard operating procedure for lots of contractors. They either out right lie or dont give the whole scope of their business in order to avoid paying more premiums. They also give certs of insurance but neglected to pay past the first premium therefore making the cert invalid.
The “bottom feeder” bid process strikes again. The cheapest demo contractor does not mean the best. You get what you pay for. The prosecutor should look at the bid process to see how a snake like this obtains work from the city.
My question is why does Berkley need to ask the court to confirm coverage was cancelled? Either it was or it wasn’t. Chances are it was in lapse, but had not ever been officially cancelled. I hate to say it, but they may be on the hook unless they can prove misrepresentation.
Even if was officially cancelled, it is possible that the courts could construe some sort of fault in the cancellation process. After all, deep pockets…….??
It’s not uncommon, particularly after an incident with loss of life and/or large property loss, for an insurance company to request a court to determine status of the insurance policy at the time of the loss. This allows the insurance company to either promptly decline coverage and defense or (if the policy is found to legally be in force) promptly begin adjusting the loss.
I agree with Libby adn Vickie. there may be more to this story than reported. Still, the lowest bid mandate often overlooks the magic words that should always be used in bid specs – the lowest “responsible” bidder. That provides a means of vetting contractors as well as a basis for who should be awarded the contract.
Hopefully the agent has something in the file that they notified the client of the cancellation for non-payment. In large catastrophic claims like this, the courts will side with the plaintiff’s case regarding coverage. Then the E and O claim comes forth regarding notification of the cancellation. Otherwise all things considered there probably is not a legitimate claim for errors and omissions, but there are people dead and the courts generally would like to provide them with some sort of relief, even if it means going to the E and O carrier.
The agency is not responsible for notifying the insured regarding cancellation. A cancellation notice must be sent out BY THE CARRIER with 10 days notice. If that was done and the premium not paid within the 10 days, the policy is cancelled. That’s why I don’t know why the carrier is asking the court to decide this. Something is hinky.
you’re right, Libby. Agents really shouldn’t notify insured’s of NOC’s. They set themselves up for an E&O if they ever fail to do it after doing it once for an insure. It’s awfully tempting to do it but not a good practice.
Deceased’s Attorney: Did you try to get in touch with the insured when you learned there was a cancellation pending.
Agent: No, I did not.
Deceased’s Attorney: Really and why not?
Agent: I usually do not notify the insured if a cancellation is getting ready to happen because I might get in an E&O hassle down the road if I forget to notify some other insured of a pending cancellation.
Deceased’s Attorney: Don’t you feel it is a matter of professional courtesy to contact the insured when a policy is getting ready to terminate.
Agent: Not really.
Deceased’s Attorney: Well it appears you care more about yourself than anyone else.
The agent should simply respond, with counsel guidance, that the insurance contract is between the insurer and insured and the cancellation notice obligation in the contract falls on the carrier, not the agency. The agency should have a written procedure to not follow up on carrier cancellations except for certain prescribed situations.
This situation just keeps going from bad to worse. My opinion at this point is that the demolition contractor made a lot of poor choices and several people paid with their lives. Tighter control of licensing and more rigid underwriting may be needed, although I sure hate to think of the increased paperwork involved.
This situation is the tip of the iceberg. When several trees on our property were felled by a storm, I got quotes from tree removal companies and asked for evidence of insurance. One start-up company had a CGL policy with 42 endorsements. One of them said their coverage was limited to how they were classed and rated, which was “tree pruning.” Anther endorsement said there was no coveage for “ongoing operations or completed operations.” In other words, the CGL policy basically didn’t cover anything they were doing. But they had a certificate of insurance that said they had a CGL policy.
If you think about it, though. What products/completed operations would a tree removal service have? They come get the tree, cut it up, put it in the truck &/or woodchipper (operations) and leave. I probably could have been OK with that one.
Somebody better be headed to prison in this case, and I’m not talking about the insurance people.
As far as I see it this is standard operating procedure for lots of contractors. They either out right lie or dont give the whole scope of their business in order to avoid paying more premiums. They also give certs of insurance but neglected to pay past the first premium therefore making the cert invalid.
Maybe it’s time for a “clue” type database for commercial lines underwriters to use?
The “bottom feeder” bid process strikes again. The cheapest demo contractor does not mean the best. You get what you pay for. The prosecutor should look at the bid process to see how a snake like this obtains work from the city.
My question is why does Berkley need to ask the court to confirm coverage was cancelled? Either it was or it wasn’t. Chances are it was in lapse, but had not ever been officially cancelled. I hate to say it, but they may be on the hook unless they can prove misrepresentation.
Even if was officially cancelled, it is possible that the courts could construe some sort of fault in the cancellation process. After all, deep pockets…….??
It’s not uncommon, particularly after an incident with loss of life and/or large property loss, for an insurance company to request a court to determine status of the insurance policy at the time of the loss. This allows the insurance company to either promptly decline coverage and defense or (if the policy is found to legally be in force) promptly begin adjusting the loss.
I’ve been in this business for 33 years and have never heard of this being done before.
I agree with Libby adn Vickie. there may be more to this story than reported. Still, the lowest bid mandate often overlooks the magic words that should always be used in bid specs – the lowest “responsible” bidder. That provides a means of vetting contractors as well as a basis for who should be awarded the contract.
Three words come to mind in this case: Excellent and Outstanding (E&O)
Hopefully the agent has something in the file that they notified the client of the cancellation for non-payment. In large catastrophic claims like this, the courts will side with the plaintiff’s case regarding coverage. Then the E and O claim comes forth regarding notification of the cancellation. Otherwise all things considered there probably is not a legitimate claim for errors and omissions, but there are people dead and the courts generally would like to provide them with some sort of relief, even if it means going to the E and O carrier.
The agency is not responsible for notifying the insured regarding cancellation. A cancellation notice must be sent out BY THE CARRIER with 10 days notice. If that was done and the premium not paid within the 10 days, the policy is cancelled. That’s why I don’t know why the carrier is asking the court to decide this. Something is hinky.
you’re right, Libby. Agents really shouldn’t notify insured’s of NOC’s. They set themselves up for an E&O if they ever fail to do it after doing it once for an insure. It’s awfully tempting to do it but not a good practice.
I can just picture this! Deposition of the Agent:
Deceased’s Attorney: Did you try to get in touch with the insured when you learned there was a cancellation pending.
Agent: No, I did not.
Deceased’s Attorney: Really and why not?
Agent: I usually do not notify the insured if a cancellation is getting ready to happen because I might get in an E&O hassle down the road if I forget to notify some other insured of a pending cancellation.
Deceased’s Attorney: Don’t you feel it is a matter of professional courtesy to contact the insured when a policy is getting ready to terminate.
Agent: Not really.
Deceased’s Attorney: Well it appears you care more about yourself than anyone else.
The End.
The agent should simply respond, with counsel guidance, that the insurance contract is between the insurer and insured and the cancellation notice obligation in the contract falls on the carrier, not the agency. The agency should have a written procedure to not follow up on carrier cancellations except for certain prescribed situations.
This situation just keeps going from bad to worse. My opinion at this point is that the demolition contractor made a lot of poor choices and several people paid with their lives. Tighter control of licensing and more rigid underwriting may be needed, although I sure hate to think of the increased paperwork involved.
This situation is the tip of the iceberg. When several trees on our property were felled by a storm, I got quotes from tree removal companies and asked for evidence of insurance. One start-up company had a CGL policy with 42 endorsements. One of them said their coverage was limited to how they were classed and rated, which was “tree pruning.” Anther endorsement said there was no coveage for “ongoing operations or completed operations.” In other words, the CGL policy basically didn’t cover anything they were doing. But they had a certificate of insurance that said they had a CGL policy.
If you think about it, though. What products/completed operations would a tree removal service have? They come get the tree, cut it up, put it in the truck &/or woodchipper (operations) and leave. I probably could have been OK with that one.