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INSURANCE BROKER, WHAT WERE YOU THINKING

Coverage cases make fascinating reading.  We keep a close eye on them to know what clients might face. This one [1]  shocked us, not because of the court decision, which  we agree with, but with the insurance sales process which led to the result – how could anyone sell coverage like this?

The insured operates a tire company, it sells and installs tires on customers’ cars.  The first step when we work with a client is risk identification.  In that process we ask “what do you imagine going wrong?”  The client always knows their business better than we do.  So, what could go wrong in a tire business?  Consider for 3 seconds  — I bet you came up with “A tire could fail causing an accident where people are killed”.  Sadly, in this case, that is exactly what happened, a tire failed, an accident happened, two people died.

You’ve probably heard the term “product liability.”  The appropriate insurance is Products – Completed Operations insurance.  However, in this case, the insured had purchased a general liability policy, with a Products – Completed Operations exclusion; the standard coverage had been removed from the policy.

Did the insured know they were buying coverage which would not apply in the most likely claim?  Where was the broker in this thought process?

Maybe there will be another case against the broker, in the meantime, we have an uncovered suit going through the courts.

We’ll work with you on risk identification — and the next quite important step: negotiating insurance to cover the exposures identified.

[1] Atlantic Cas. Ins. Co. v. LTA Distributor, LLC, No. 14–22788–CV (S.D. Fla. June 1, 2015).

Jul 07, 2015

Licata Risk Licata Risk & Insurance Advisors, Inc.
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Boston, MA 02111-2848
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LicataRisk Advisors is an independent risk management and insurance consulting firm. We are not brokers and we do not sell insurance. We are not connected to any insurance company or product in any way and do not receive commissions. This is an important difference as you will have an expert on your side who is only committed to you.

Licata Risk is not a law firm and does not practice law. General advice and contract input by the consultants, including those who are attorneys, is to provide insight into the risk and insurance aspects. Your attorney should be the final authority on any legal matter.