Friday, February 17, 2012


So you think you're covered?


The headline in Pittsburgh Tribune-Review's "TribLive" reads: Penn State sues its liability insurer.

It seems, according to court papers filed by Penn State (PSU) that the university is suing its insurance company, the Pennsylvania Manufacturers' Association Insurance Co. (PMA), to enforce its rights under its policies and is in sharp contrast to PMA's tactical action

PSU went to court in response to a PMA civil suit filed on Jan. 31 seeking to get out of having to pay for costs coming from a civil suit against the university.

Disputes between insurers and insured seem to be becoming more and more commonplace.

The other day a story related how one insurer is delaying payment on a business interruption claim.

The bottom line - and I suppose it's not really a direct risk management practitioner's problem - is that policies must be carefully read before being signed.

Insureds need to know, and understand all the "small print."

In the case of business interruption insurance, know what documentation the insurer will demand before any payment will be made.

Know the limits of the coverage; is supplemental coverage needed, and how much is enough? How much is the business worth? Is there an insurance overlap or gap?

Does the insurance cover everything that may cost the organization money. Beyond court costs and lawyers fees; how about PR damage control? What happens if the plaintiff prevails; can a huge award be paid without the organization going belly up?

Who can you ask?

Start with insurance sales people; talk to several that specialize in the needed coverage. Try and get sample policies.

Talk to independent insurance adjusters. Have them - get at least two opinions - review the proposed plans and discuss with them your perceived needs. These people are insurance Subject Matter Experts (SMEs); listen to them.

Find out who is the insurance company's reinsurer; the company that backs up the insurer in the event claims swamp its financial resources. What is the reputation of the insurer and the reinsurer?

Also check with the state Insurance Commissioner (or equivalent). Are the leading contenders for your insurance business well respected by the agency that regulates them?

I am not an insurance adjuster and I don't play one on tv. I do read insurance related news every weekday thanks to Advisen and I know that when I have an insurance question, I practice what I just preached.

If I wrote it, you may quote it.

Longer articles at

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