top ten tips to protect and ensure proper insurance coverage
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Canadian Bar Association – Construction Law MeetingNovember 19, 2007Ariel DeJong(604)[email protected]
Top Ten Tips for Clients to Protect and Ensure Proper Insurance Coverage
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Number One
• Appoint one person in your organization to be responsible for insurance coverage • Their job is to:
• Ensure appropriate coverage• Place coverage• Maintain coverage• Ensure covenants to insure are complied with• Understand the coverage you have• Deal with losses and claims
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Number Two
• Give that person access to professional advice• Lawyers for coverage issues that may
arise, gaps in coverage and denials of coverage
• Brokers for the products that are out there relevant to the risks of your business
• Understand what is available and limitations of what you are buying
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Number Three
• Read and keep all your policies and those others are contractually obliged to place for you• Don’t throw old policies away• Claims can trigger coverage under
occurrence based liability policies that are 50 years old
• Called “long tail” policies for a reason
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Number Four
• Report claims or losses immediately • Critical in claims made policies where not
reporting in time can result in no coverage • Avoid giving insurer reason to deny • Avoid arguments by insurer that
prejudiced by late reporting
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Number Five
• Don’t settle, defend, respond to the claim, put in Proof of Loss or meet with the adjuster until you have a good understanding of what the potential coverage issues may be• Get advice• Don’t fly blind• How can you put your best foot forward if
you don’t know what the pitfalls are
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Number Six
• Comply with your duties as a policyholder• Co-operate with the insurer• Don’t admit liability• Protect insurers subrogation rights• Don’t make voluntary or any payments
without the insurer’s consent• Report potential claims, claims and losses
– review your obligations under the policy
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Number Seven
• Don’t sign non waiver agreements or respond to reservation of rights letters without getting legal advice• Don’t agree to give the insurers rights
which it does not have under the policy• You may have the right to independent
counsel appointed by you and paid for by the insurer
• Invite the insurer to set out the coverage issues it has
• Lock the insurer in
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Number Eight
• Deal with denials of coverage• Don’t take no for an answer unless
absolutely clear• The duty to defend is much broader than
duty to indemnify • It is irrelevant to coverage that the claim
won’t succeed• Respond• Get reasons• Challenge the insurer
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Number Nine
• Don’t agree (except in very rare cases) to an allocation of defence costs up front• Insurer required to pay for all defence costs
except those insurer can prove are “solely and undeniably” referable to an uncovered claim
• Insurer has the onus of setting out the appropriate formula based on undeniable evidence
• If the facts underlying the covered and uncovered claims are inextricably intertwined, no allocation is possible and defence costs are covered
• Where defence costs were incurred both for the benefit of covered and uncovered claims, the defence costs are covered
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Number Ten
• Property losses• Consider retaining experts to assist in putting
claim together• Costs are often covered by policy• Sue and labour – be aware of duty to take
reasonable steps to prevent imminent or further loss or damage to insured property
• Track separate heads of costs – • Soft costs• Delayed opening• Business interruption
• Be creative – same loss can be claimable under both a liability and a property policy depending on the facts
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Summary
• It all comes down to understanding what is covered and what is not prior to any claim or loss
• Make sure there are no surprises and that you are making an informed decision about coverage
• If you don’t understand your coverage you will be surprised and you will not be doing the things you need to do to maximize recovery under the policy if losses and claims arise
