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February 2018  |  Volume 30, Number 2

HANDLING WINTER WEATHER RELATED COVERAGE QUESTIONS ​

This winter has been extremely harsh, with heavy snowfall and sub-zero temperatures all across New York State. In addition to the heavy snowfall and frigid temperatures, we also have experienced strong winds with sleet and driving rain. This harsh weather has resulted in significant property damage all across New York. Every day, the news is filled with stories about the havoc that this winter is causing for homeowners, motorists and businesses here in New York State and across the nation. Collapsed roofs, bursting pipes, stranded cars and trucks and even flooding are in the headlines every day. In addition to these types of losses, there has been an increase in the number of fires in houses and apartment buildings that have resulted from the use of space heaters, electric blankets, fireplaces and other efforts by people to keep warm. In this issue of the E&O Report we will review some of the principles we have stressed over the years that insurance agents and brokers should keep in mind when faced with coverage questions, especially those related to winter weather claims.   

For insurance agents and brokers, this severe weather means an increase in the number of claims that are reported by customers. With the large number of claims that are occurring as a result of the extreme winter weather, New York insurance agents and brokers should be certain that they are following good practices with regard to their claims handling procedures. Claims should always be reported to the insurer by the insurance agency or brokerage as soon as it is advised that a claim has occurred. However, even before a claim strikes, concerned customers may be contacting the agency or brokerage with questions related to their coverage. In the past few weeks, we have seen several news stories suggesting that in light of the extreme weather, both personal and commercial lines insureds should review their insurance policies and then raise with their insurance agent or broker any questions they may have concerning their coverage.

 As we have cautioned repeatedly over the years, since the insurance company is the one that will ultimately make the determination as to whether a claim is covered or not, the question of if there is coverage for a particular type of loss is most appropriately answered by the insurance company and not by the insurance agent or broker. Keep in mind that the more specific the inquiry, the more likely it is that an accurate response regarding coverage can be provided by the insurance company. As an example, if the customer asks “what is covered under my policy," it would be almost impossible for an insurance company, or anyone else, to provide a proper response. Similarly, if the question is whether “collapse" is covered, while this is more specific, it may still generate confusion as to what type of collapse or what damage the customer is seeking to cover. On the other hand, if the customer asks more specifically whether they are covered for water damage to their home if their pipes burst as a result of freezing temperatures, they are likely to get a more accurate response from the insurance company.

If you are faced with a customer who is asking about coverage for a particular type of claim, it is a good practice to ask the customer to put the specific inquiry that they have in writing to you. This is true whether the question comes from a customer, a mortgagee or other interested party, or even another broker. Having the request in writing will help avoid any confusion as to what information is being sought and will provide an easier means for transmitting the inquiry to the insurance company to get a coverage determination.

The quickest and most efficient way to transmit the written inquiry to the insurance company is by e-mail or fax. After providing the written inquiry to the insurance company, it is good to then request that the company provide its response to the agency or brokerage back in writing. If a request for a written a response is rejected by the insurance company, this should possibly raise some red flags. Nonetheless, in order to exercise caution, it may be wise to confirm any conversations that may occur regarding the coverage question in writing, and then be sure to save that writing as documentation of what occurred.

As a general rule, an insurance agent or broker should not summarize or editorialize the inquiry that they receive; the inquiry that is received should be passed along to the company in the form that it was received. While an insurance agent or broker may summarize or editorialize a customer inquiry with the best of intentions, in our experience doing so can lead to an inaccurate translation of the question or possible confusion.

As with any communication that concerns issues of coverage, the agency or brokerage should be certain to retain in the customer's file the writing containing the inquiry, along with the transmittal email or telefax and the response from the insurance company. Doing this will help ensure that information is available in the event an issue arises later on^[1].

Careful handling of coverage inquiries can provide good customer service by an agency or brokerage and also help to put customers at ease. In addition, the careful handling of customer coverage questions will better enable customers to understand and address any gaps or issues that may exist with their insurance coverage. Finally, allowing the insurance company to respond to the inquiry will help the insurance agency or brokerage protect itself against possible E&O claims and lawsuits that may arise in connection with the coverage in question. The prudent insurance agency or brokerage that handles coverage questions in this manner will not only help protect its customer, but will also protect itself from a potential E&O claim or lawsuit against it.

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Submitted by:

James C. Keidel, Esq.
Keidel, Weldon & Cunningham, LLP

[1] The Big I NY Big Book of Form Letters & Other E&O Tools contains three letters relating to coverage questions from clients.  Two letters are for communications with insurers and one is for communications with the client related to coverage questions.  NY insurance agents and brokers with questions about the form book should contact the Big I NY for information.