Is there responsibility to inform a non AI entity

[JSJAG]

Is there responsibility to inform a non AI entity. I have a client that is about to be cancelled for non-payment. The policy is in mid term, three different times (e-mail, phone call and in person) I have communicated to my client that his policy will be cancelled if he doesn't pay buy the drop dead date.

When this policy was issued, my clients landlord management company called me requesting an AI status. After communicating to the management company that the new ISO Form in the policy already addresses his concern. The management company was fine with the policy language and didn't continue their request for AI status.

Here's the question:

Because I have had previous communication with the management company:

They initially informed me by e-mail that my client will be in breach of his lease if he doesn't carry insurance.

They have made me aware of their concern of or the lack of an insurance policy.

They didn't continue with their AI request.

They do have a copy of the policy Dec. pages but no cert was issued to them.

If this policy cancels must I contact the management company to make them aware of the lack of coverage? Surely if I do they will start action on breaching the requirements of the lease. That will make my client (previous if it lapses) find himself in the financial situation of having his operation come to a halt.

If and when the policy lapses under laws of agency does my responsibility of agent/client end? Although there is no written contractual agreement with the management company do I then gain some form of responsibility to the management firm?

I have my idea but what say ye?

[LadyBroker]

The new ISO form contains AI wording? I don't remember that happening. If the ISO form doesn't have the AI wording, then an AI endorsement should have been issued. This gives the AI notice of cancellation. I am unsure where in the ISO form you are finding AI wording....could you enlighten me? Thanks!

[WildAngel]

"The new ISO form contains AI wording? I don't remember that happening. If the ISO form doesn't have the AI wording, then an AI endorsement should have been issued. This gives the AI notice of cancellation. I am unsure where in the ISO form you are finding AI wording....could you enlighten me? Thanks!"

I think that JSJAG misspoke. It is not in the ISO form. I double checked myself because it made me doubt. It is probably a company specific BOP form, or something along those lines, that is being referred to. I see included AI wording in just about all of those now.

As far as your responsibility as an agent, I don't know. Ethically I think I would tell the Management Company if the insd. actually cancels. 1. You know too much 2. You spoke with them and understand what they need 3. If it wasn't for you telling them the coverage was already built into the policy forms, they would probably have pursued being physically added onto the policy.

Regardless of what may be on the policy forms, I always add anyone on that is of importance, so that they will get notified by the company. That takes me out of the equation.

Legal - would you be liable if you do not tell the management company? Would you be liable if you told them and the insd found that to be wrong? I don't know. I wouldn't even want to venture a guess. I do what I feel is right & just unless my E&O carrier or Attny. tell me not too. Maybe you should check with them.

Good luck.

[INSANGEL]

When commercial policies cancel in our office for any reason, all certificate holders and additional insured are notified. The client is informed of this action as well. I strongly believe that I have a
responsibilty to inform the holder and or a/i that coverage is no longer in force especially since I was the one to verify insurance coverage in the first place. We try hard to work with all clients, however I firmly believe that they must be "responsible" for their actions.

[mlynmartin]

Where's the language in the policy that gives an additional insured (presuming one were named) a right to receive notice of cancellation? The last time I looked, the insurer is required to provide such notice only to the First Named Insured.

[JSJAG]

Yes you are correct, I did mis-speak and it is a company specific BOP form. That's what I get for posting after only 3 hours sleep!

Initially I went to the Ins company for the AI but received a response that it wasn't needed because of their BOP Form.

On a separate issue I am finding that to get an AI added for contractors is sometimes costing $100 > $150. I push for Broad Form AI (if available) coverage but many contractors like playing the wait and see game. If they have less AI's added in a year compared to the defined cost of the Broad Coverage, they feel they win. I try to stress the coverage of the AI Broad Form but sometimes I do better talking to the walls.

"The new ISO form contains AI wording? I don't remember that happening. If the ISO form doesn't have the AI wording, then an AI endorsement should have been issued. This gives the AI notice of cancellation. I am unsure where in the ISO form you are finding AI wording....could you enlighten me? Thanks!"

I think that JSJAG misspoke. It is not in the ISO form. I double checked myself because it made me doubt. It is probably a company specific BOP form, or something along those lines, that is being referred to. I see included AI wording in just about all of those now.

As far as your responsibility as an agent, I don't know. Ethically I think I would tell the Management Company if the insd. actually cancels. 1. You know too much 2. You spoke with them and understand what they need 3. If it wasn't for you telling them the coverage was already built into the policy forms, they would probably have pursued being physically added onto the policy.

Regardless of what may be on the policy forms, I always add anyone on that is of importance, so that they will get notified by the company. That takes me out of the equation.

Legal - would you be liable if you do not tell the management company? Would you be liable if you told them and the insd found that to be wrong? I don't know. I wouldn't even want to venture a guess. I do what I feel is right & just unless my E&O carrier or Attny. tell me not too. Maybe you should check with them.

Good luck.

[JSJAG]

Yes that is true << The last time I looked, the insurer is required to provide such notice only to the First Named Insured>> but as we all know, the cost to defend is where it's happening. If I do nothing someone will be unhappy and I was trying to decide who to make unhappy. I/we can all be correct about the language but it could cost money to prove our correct position.

What my gut tells me is, I will / must e-mail the management company
and cc the client. It just seems the right thing to do.

When I first received the cancellation notice (please pay by this date) I told the client the consequences of a cancellation. He is aware of the problems that will be caused by his own failure to pay.

Where's the language in the policy that gives an additional insured (presuming one were named) a right to receive notice of cancellation? The last time I looked, the insurer is required to provide such notice only to the First Named Insured.

[wlunday]

The way I'd handle it from here on out is to notify the client that you must inform the management company that the client's policy is no longer in force with your agency and carrier.

Then do just that... Notify the Management Company that the client has stopped doing business with you and your carrier, and you do not know if the client has secured coverage elsewhere.

Do not get into why it is no longer in force, you may open yourself up to a libel suit if you say too much, even though you know why... just tell them you no longer handle the client's insurance. If they want they can ask the client for any new policy info.

Swymmer

[JSJAG]

It doesn't matter why they are gone, I never tell why a client is gone. It's one of those things that I solidly remember from E&O seminars.

I also remember that you don't want to get in the habit of hand holding clients that are habitual late payment offer clients. If you are in the habit of reminding the client, you forgot the one time to remind client, client lapses, well if things get sticky client can have a claim against broker. That's a thin line between Saturday night and Sunday morning.

The way I'd handle it from here on out is to notify the client that you must inform the management company that the client's policy is no longer in force with your agency and carrier.

Then do just that... Notify the Management Company that the client has stopped doing business with you and your carrier, and you do not know if the client has secured coverage elsewhere.

Do not get into why it is no longer in force, you may open yourself up to a libel suit if you say too much, even though you know why... just tell them you no longer handle the client's insurance. If they want they can ask the client for any new policy info.

Swymmer

[CATHIEA]

Whenever we have a client that cancels mid term, with certs and A/Is, we reissue the original cert including all the A/I wording - we change the expiration date to the cancellation date, delete all coverages and stamp it cancelled across the center. Usually we get a call from the client wanting to rewrite within a few days of the cancelled certs going out.

[yoyowordup]

I don't think you have the right to share confidential information about your client with anyone. Although it seems like the right thing to do, I would be very careful about sharing this info.

[Rob]

JSJAG's original post said that a certificate of insurance was not issued. Therefore I don't see that they have any right to know anything about the client's policy in terms of it being cancelled and the fact that they didn't request a certificate after JSJAG pointed out the automatic additional insured status within the main policy body is really on them. I could be wrong but that's my opinion.

[LadyBroker]

The potential problem here is that the agent gave incorrect information regarding the Additional insured. Had he correctly requested the endorsement from the carrier, this wouldn't be a question. However, the Agent told the property manager it wasn't required. This is not true. Thus, as the agent directly (and against conventional wisdom) spoke to the property manager, I am going with 'yes, he must advise coverage has been terminated'.

This is a good lesson on two fronts:

1. Know your policy forms
2. Don't ever give policy information to anyone other than the Insured.

[Rob]

I agree however some policies (many BOP's for example) have the additional insured wording built into the policy for certain situations. In the event an insurance certificate is needed naming a particular entity as additional insured on a Hartford BOP for example, they just issue the certificate showing a/i status without the necessity to endorse the policy. In fact, I've asked for an actual endorsement before and they would not do one because they said it was already in the policy. I'm pretty sure that is what the original poster is referring to.

[JSJAG]

I did request it from UW.

Then maybe you'd like to speak to The Hartford underwriter and set him straight. I'm sure the UW department would appreciate it. I can't exactly get the UW to do something they won't do or can I? Here was the final e-mail: "Per the attached GL form, additional insured's are automatically covered in Hartford's form."

The potential problem here is that the agent gave incorrect information regarding the Additional insured. Had he correctly requested the endorsement from the carrier, this wouldn't be a question. However, the Agent told the property manager it wasn't required. This is not true. Thus, as the agent directly (and against conventional wisdom) spoke to the property manager, I am going with 'yes, he must advise coverage has been terminated'.

This is a good lesson on two fronts:

1. Know your policy forms
2. Don't ever give policy information to anyone other than the Insured.