If the policy is not clear the company pays. An aggregate limit is there for a purpose. Many courts now favor the insureds due to the complicated language that many insureds do not understand.
Insurers are risk takers and risks are ever changing. Insurers have access to Reimsurance…both treaty or faltative
Hang on – the WTC courtcase is all about Property insurance. Andrew Boris seems to be talking solely about different types of Liab insurance – is this relevant to WTC? Or is he just demonstrating how legal verdicts can differ each time?
You’re 100 percent correct, David. It’s only relevant for any other property policyholders who happen to have similarly ambiguous manuscript contracts such as that screwy WilProp 2000 form containing an “occurence” definition for loss.
That word had no business being in property coverage forms. All it did was cause unnecessary, wasteful litigation. I suspect most such contracts were, or will be, non-renewed after this debacle.
I just loved the last paragraph that sums up courts should take into concideration how much an insurer has to pay out.
Isn’t that what this busiiness is there for? After a loss to make the insured whole neither gaining nor losing? Perhaps he forgot that principle of insurance.
What is fair is fair, if the company is willing to take all the premium then they must be prepared to pay out. After all the only guarentee in life is death & taxes.
Yes, the principal of insurance is to pay claims. But, it is to only pay those claims covered under the policy, according to the terms of the policy.
In all “fairness”, the court should not base its decision on whether a party will be fully indemnified, partially indemnified, or left totally uninsured. It should base its decision on the terms of the policy as they are written.
One of the reasons why the courts are all over the place on this issue, and why the written opinions sometimes contradict themselves, is because judges in many instances are loath to find that only a single policy applies to a series of losses that is significant in size, or that the date of “occurrence” is actually outside of the policy period, altogether, based upon the terms of the policy.
Is it fair that an insurer has to cover a loss that it did not intend to, or for an amount that it did not intend to?
As far as paying claims merely because one collects premiums; just because a premium is paid doesn’t mean that a claim is covered. We all know from INS 21 that one of the “features” of an insurance policy is that it is a “Conditional Contract”.
Another aspect of the Liability senarios suggested, that we should address, is the possibilities of multiple deductibles or SIRs that the insured may find themselves owing, especially in light of the newer language demanding that any deductible or SIR “be paid by you”. Especially in Construction Defect cases where several trade contractors can cause differing causes of loss.
Excellent overview of the never ending controversy and litigation about the meaning and application of occurrence.
In light of conflicting court decisions, insurers and industry organizations, including the ISO and AAIS should address various versions of occurrence wordings to clariy this term and thereby reduce the number of cases when a judge decides what insurers meant by it.
Furthermore, it would be beneficial for insurers and insurance organizations to examine the pros and cons of occurrence wording in first party policies, especially in view of the two World Trade Center trials, which centered around various versions of occurrence wording and resulting in enormous litigation to insured and insurers alike.
I agree that some sort of clarified, standardized wording that addresses the various options and scenarios would be a good start. But, it will never be a silver bullit.
No matter how clear you make it, you will always find an otherwise business savvy insured who can’t accept that he has to pay multiple SIRs/deductibles, or why his coverage is limited to one policy limit instead of several, and will go to court because he has nothing to lose, but everything to gain (including attorneys fees and costs, plus, in some jurisdictions, bad faith damages).
Then the insurer, no matter how carefuly it crafts the policy wording, runs the risk getting a judge and/or jury with the “perspective” of Frank, who feels that since there is insurance, and since insurers themselves are insured thru reinsurance, why not make them pay, even if in reality they clearly don’t owe.
I agree with you comments. That is why I indicated that improved wording of occurrence would “reduce the number of cases when a judge decides what insurers meant by it” rather than solve the problem.
I would be interested about your views relating to the pros and cons of having occurrence workding in first party policies.
I believe that having a clear definition of occurrence is critical, regardless of whether the coverage is first- or third-party. But, maybe that is because a large part of my carrer has involved interpreting and litigating coverage.
The problem, as I see it, is not that there is a definition of occurrence in the policy, but that insureds don’t know that occurrence can be a defined term, and that the definition can be an issue when something happens. This is where the role of the agent/broker needs to be one of educator.
If there is a per-occurrence SIR or deductible on the proposed policy, or if the definition includes language that may make multiple events in the course of the insured’s business just one occurrence, review the language with the client before the policy is purchased. Then, once the policy is issued, don’t just mail the policy to the client; sit down and go over some of the more important provisions with him/her again.
And, by all means, document the sessions, because when the court upholds a decision adverse to the insured, you know who the next target will be…
If the policy is not clear the company pays. An aggregate limit is there for a purpose. Many courts now favor the insureds due to the complicated language that many insureds do not understand.
Insurers are risk takers and risks are ever changing. Insurers have access to Reimsurance…both treaty or faltative
Hang on – the WTC courtcase is all about Property insurance. Andrew Boris seems to be talking solely about different types of Liab insurance – is this relevant to WTC? Or is he just demonstrating how legal verdicts can differ each time?
You’re 100 percent correct, David. It’s only relevant for any other property policyholders who happen to have similarly ambiguous manuscript contracts such as that screwy WilProp 2000 form containing an “occurence” definition for loss.
That word had no business being in property coverage forms. All it did was cause unnecessary, wasteful litigation. I suspect most such contracts were, or will be, non-renewed after this debacle.
I just loved the last paragraph that sums up courts should take into concideration how much an insurer has to pay out.
Isn’t that what this busiiness is there for? After a loss to make the insured whole neither gaining nor losing? Perhaps he forgot that principle of insurance.
What is fair is fair, if the company is willing to take all the premium then they must be prepared to pay out. After all the only guarentee in life is death & taxes.
Hold on there, Fair Player.
Yes, the principal of insurance is to pay claims. But, it is to only pay those claims covered under the policy, according to the terms of the policy.
In all “fairness”, the court should not base its decision on whether a party will be fully indemnified, partially indemnified, or left totally uninsured. It should base its decision on the terms of the policy as they are written.
One of the reasons why the courts are all over the place on this issue, and why the written opinions sometimes contradict themselves, is because judges in many instances are loath to find that only a single policy applies to a series of losses that is significant in size, or that the date of “occurrence” is actually outside of the policy period, altogether, based upon the terms of the policy.
Is it fair that an insurer has to cover a loss that it did not intend to, or for an amount that it did not intend to?
As far as paying claims merely because one collects premiums; just because a premium is paid doesn’t mean that a claim is covered. We all know from INS 21 that one of the “features” of an insurance policy is that it is a “Conditional Contract”.
What part of the industry are you in?
Another aspect of the Liability senarios suggested, that we should address, is the possibilities of multiple deductibles or SIRs that the insured may find themselves owing, especially in light of the newer language demanding that any deductible or SIR “be paid by you”. Especially in Construction Defect cases where several trade contractors can cause differing causes of loss.
Excellent overview of the never ending controversy and litigation about the meaning and application of occurrence.
In light of conflicting court decisions, insurers and industry organizations, including the ISO and AAIS should address various versions of occurrence wordings to clariy this term and thereby reduce the number of cases when a judge decides what insurers meant by it.
Furthermore, it would be beneficial for insurers and insurance organizations to examine the pros and cons of occurrence wording in first party policies, especially in view of the two World Trade Center trials, which centered around various versions of occurrence wording and resulting in enormous litigation to insured and insurers alike.
I agree that some sort of clarified, standardized wording that addresses the various options and scenarios would be a good start. But, it will never be a silver bullit.
No matter how clear you make it, you will always find an otherwise business savvy insured who can’t accept that he has to pay multiple SIRs/deductibles, or why his coverage is limited to one policy limit instead of several, and will go to court because he has nothing to lose, but everything to gain (including attorneys fees and costs, plus, in some jurisdictions, bad faith damages).
Then the insurer, no matter how carefuly it crafts the policy wording, runs the risk getting a judge and/or jury with the “perspective” of Frank, who feels that since there is insurance, and since insurers themselves are insured thru reinsurance, why not make them pay, even if in reality they clearly don’t owe.
Chris,
I agree with you comments. That is why I indicated that improved wording of occurrence would “reduce the number of cases when a judge decides what insurers meant by it” rather than solve the problem.
I would be interested about your views relating to the pros and cons of having occurrence workding in first party policies.
I believe that having a clear definition of occurrence is critical, regardless of whether the coverage is first- or third-party. But, maybe that is because a large part of my carrer has involved interpreting and litigating coverage.
The problem, as I see it, is not that there is a definition of occurrence in the policy, but that insureds don’t know that occurrence can be a defined term, and that the definition can be an issue when something happens. This is where the role of the agent/broker needs to be one of educator.
If there is a per-occurrence SIR or deductible on the proposed policy, or if the definition includes language that may make multiple events in the course of the insured’s business just one occurrence, review the language with the client before the policy is purchased. Then, once the policy is issued, don’t just mail the policy to the client; sit down and go over some of the more important provisions with him/her again.
And, by all means, document the sessions, because when the court upholds a decision adverse to the insured, you know who the next target will be…