2020 was one heck of a year. Not only did we have to have to deal with Covid-19, but the Atlantic hurricane season broke records with both the number of storms and the severity of many of them.  If things keep going the way they are going, the predictions from many of the weather experts are that this may be a very active Winter season for storms and severe weather in the northeast. This means an increase of these types of claims. 

While insurance agents and brokers should always be certain that that they are following good practices with regard to their claims handling procedures for such claims, even before a claim strikes, you should be prepared for questions on coverage from concerned customers. These types of inquiries are made even more likely because of news stories suggesting that (in light of the potential for extreme Winter weather) homeowners, tenants and businesses should review their insurance policies and address any questions or concerns that they may have with their insurance agents and brokers before a claim occurs.  

First, as we have cautioned repeatedly over the years, since the insurance company is the one that will ultimately make the determination of whether or not a claim is covered, the question of coverage for a particular type of loss is most appropriately answered by the insurance company and not by the agent or broker.  Second, if you are faced with a customer who is asking about coverage for a particular type of claim, make sure to that you require that the customer put the specific inquiry that they have in writing and that your answer is in writing as well. This applies 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.  The quickest and most efficient way to transmit the written request for information to the insurance company is by e-mail or fax.  As a general rule, do not summarize or editorialize the inquiry that is received from the customer.  While this may be done with all the best intentions, in our experience it can potentially lead to an inaccurate translation of the question or possible confusion. Third, and finally, always be sure to advise the customer that while the policy terms and conditions speak for themselves the insurance carrier will, at the time of a claim submission, make an ultimate determination as to coverage for the claim based upon the particular facts and circumstances involved.    

Keep in mind that the more specific the inquiry provided by the customer is, the more likely it is that an accurate response 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 and definitive response.  

After providing the written inquiry to the insurance company, it is good to then request that the company provide its response to your 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 with the insurance company, and then be sure to save that writing as documentation of what occurred. 

It is also wise to forward the verbatim response that is received from the insurance company back to the person who has asked the coverage question.  Doing so will help avoid any miscommunication or information getting lost in translation.  

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.  That information may be important documentation that is needed in the event an issue arises later.

Careful handling of coverage inquiries can provide good customer service 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 that may exist with their 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 in the process. 

All of the partners, associates and staff at Keidel, Weldon & Cunningham, LLP wish all members of the Big I NY, and the insureds with IAAC, a very happy, healthy and prosperous new year.  We would also like to thank each and every one of you for all of your support of our law firm throughout the years. We look forward to continuing to work with each of you in all aspects of your agency and brokerage operations in the new year and for many years to come.      

Submitted by:

James C. Keidel, Esq.

Howard S. Kronberg, Esq. 

Keidel, Weldon & Cunningham, LLP