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    Is Your Insurance Only a Sprinkling of Protection?

    Coverage in an insurance policy: is it known and agreed upon by the insured at time of issuance?’

    The premium due on a policy is known and agreed.

    A more important question is whether the coverage in the policy is known and agreed?

    The answer to that question is ‘not always’.

    A case in point involves use of what is known as a ‘protective safeguards’ endorsement. This is form that insurers use when they want to be able to walk away from a loss when the client does not have ‘up and running’, prior to loss, specific safeguards such as automatic sprinkler systems.

    We are involved in a case in which the broker proposed coverage to a client to include a protective safeguards endorsement, applicable to automatic sprinkler systems and fire losses at ALL of the client’s properties in the policy. Unfortunately only A FEW of the properties were sprinklered.  Moreover, both the client and broker were not aware that such a provision was in the policy until we pointed it out.

    Would a loss have been covered if it occurred at one of the unsprinklered properties?  It would likely need to be sorted out between client, broker and insurer in a costly legal battle.

    The only way you know your coverage is to read and understand the language.

    — Bob Allaire, [email protected]

    Mar 28, 2016

    Licata Risk Licata Risk & Insurance Advisors, Inc.
    265 Franklin Street
    Suite 1702
    Boston, MA 02110
    617-451-2140   advice@licatarisk
    501 East Las Olas Boulevard
    Suite 300/200
    Fort Lauderdale, FL 33301
    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.