Sophisticated corporate policyholders understand that insurance policies proposed by insurance carriers and insurance brokers are only the starting point for improvement. The reason for this is that policy forms, and most off-the-shelf enhancements to coverage, are expertly drafted by insurance industry lawyers with an eye towards decreasing potential coverage afforded under the policies. Policyholders, of course, want the opposite. But, policyholders cannot get to where they need to be without first consulting with policyholder-side insurance counsel, who not only understand the issues and case law addressing those issues, but who also has experience improving and broadening the policy language at issue.

Negotiate Insurance Policy Language For Better Coverage

Policyholders that accept language presented to them by their insurance broker often find that it comes back to bite them later, when a claim for insurance is made. Insurance policy reviews, correctly done, lead to better claims results, and a diminished need for insurance coverage litigation in the future.

Our goal when counseling our corporate policyholder clients on their insurance policies is to move their coverage toward perfection over time. The first step is to review policies on renewal and to propose a handful of improvements to the broker, who then provides those improvements to the insurance carriers. Chances are that the insurance carrier won’t agree to all proposed changes initially. However, if the insurance carrier is willing to accept even half of them into the policy the first year, the improved coverage will be far superior to what it would have been had a review not been undertaken. We then keep track of what changes were not agreed to, and work with the insurance broker to incrementally add improvements over time at each subsequent policy renewal. Using this incremental approach, policy language can be moved towards perfection over time.

Policyholders that follow this approach are rewarded if they are presented with an insurance claim. Better insurance policy language lowers transactional costs in getting that claim paid, and the better the language, the more quickly the claim will be paid. There is simply no substitute for what we call “good paper,” or appropriate policy language.

The relatively small investment corporations make to bolster policy language is always money well spent.

(more…)