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Auto Insurance, Homeowners Insurance

Getting the right insurance for moving

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For a variety of reasons, many people have moved during the pandemic. One in five U.S. adults either changed residence due to the pandemic or know someone who did, according to a Pew Research survey. There are many safety factors to consider if you are moving, and it’s also important to understand how insurance protects your possessions before, during, and after a move.

Loretta Worters, Vice President Media Relations, Triple-I, has put together this comprehensive explanation of how insurance covers you when you move.

What’s Covered/What’s Not

Homeowners and renters policies provide coverage for belongings while they are at a residence, in transit, and in storage facilities — but they will not pay for any damage done to personal property while being handled by movers when packing or moving the items. 

Types of Coverage to Consider When Moving:

  1. Trip transit insurance covers personal property for perils including theft, disappearance, or fire (the same perils covered by homeowners or renters policy) while in transit or storage. Trip transit insurance can be written for the full value of the property or as excess coverage over and above that provided by the moving company. It does not, however, cover breakage or flooding at, say, a storage facility.
  2. Special perils contents coverage will cover breakage of all but fragile items.
  3. A floater will fully protect high-value items, such as jewelry, collectibles, fine art, etc. 
  4. Storage insurance is also important should someone need to temporarily or permanently store items before or after a move.

Coverages Available Through Moving Companies

The type of liability coverage a moving company offers for damage or breakage is not technically insurance and therefore is not governed by state insurance laws. Under federal law, however, all interstate movers must offer two different liability options—full-value protection and released-value protection. Most movers offer both options for intrastate moves, as well.  It’s important to understand the various types and levels of protection available and the charges for each option.

  • Full-value protection is a plan under which the mover is liable for the replacement value of the belongings in a shipment. If personal property is lost, destroyed, or damaged while in the mover’s custody, the company will repair or replace the item or make a cash settlement for the cost of the repair or the current market value. The cost for full-value protection liability coverage varies by mover; different deductibles are available, which will reduce or increase the price. Note that full value liability is more expensive and is the default.
  • Released-value protection is offered at no additional charge beyond the moving fee. However, it provides only a minimal protection—no more than 60 cents per pound per article. So if the mover loses or damages a 10-pound stereo component valued at $1,000, the homeowner would only receive $6.00 in compensation (60 cents x 10 pounds).
  • Separate liability coverage may be offered by a mover to augment released-value protection for an additional fee. If this extra coverage is purchased, the mover remains liable for the amount up to 60 cents per pound per article, but the rest of the loss is recoverable from the insurance company up to the limit of the policy purchased. The mover is required to issue and provide a written record of the policy at the time of purchase.

Check Professional Mover’s Agreement

Homeowners should review the mover’s contract and ability to:

  • Determine exactly what kind and how much coverage the moving company provides for property loss and/or damage.
  • Review the contract carefully for the estimated value of your possessions and match it to the homeowner’s list. An up-to-date home inventory will make this task easier. 
  • Find out the maximum value of the mover’s insurance should goods be damaged.
  • Check that the moving company’s policy includes coverage for damage done to the homeowner’s premises—both the house they are leaving and the one being moved into.
  • Know what the time limits are for filing claims with the mover and decide whether they are reasonable—take time to unpack and check for potential damage.

Moving Yourself
If you choose to move yourself, you won’t have the benefits of a moving company’s coverage if belongings are damaged or broken. To be protected:

  • Consult with an insurance professional and review the trip transit, special perils, and floater options.
  • Buy the optional collision damage waiver coverage from the rental company if renting a truck.  Collision and comprehensive coverage likely will not transfer to a non-owned moving van, only to a private passenger vehicle.


New Home, New Insurance

If moving to a new state, or even from a city to a suburban area, a new home insurance policy will be needed.  That’s because a new home is a different property with different risks, which means different coverages may be required. The cost of the policy also may vary. For example, a larger home in a coastal area will likely be more expensive than a small apartment in an inland city. 

When buying a new home, consider insurance costs.  Rates are based on many factors, including square footage, geographical area (is the home in a flood, earthquake or hurricane-prone area of the country?); the age and construction of a home (is it brick or wood shingle?); roof condition; proximity to a fire station; and credit history.  Notify the insurer about a new address and make sure to inquire about possible savings on home and auto premiums for features like a shorter commute, a gated community, or lower-crime area than previously, alarms, or other security systems. 

The same holds true for car insurance. That’s because a new state may have different requirements or factors that result in a different policy cost. Even if moving within the same state, insurance carriers should be notified to ensure policies are up to date.

In-State vs. Out-of-State

An out-of-state move can have big implications, because not all insurance agents or companies are licensed to write policies in every state. Insurance requirements may also vary across state lines Call your agent to see if the current company can write policies in the state they are moving to. If not, consider it an opportunity to shop and compare new policies.

When to Make the Switch

In most cases, the new owner will need to have proof of insurance at closing when buying the new home. An insurance agent should be notified well in advance of closing and providing a timeline for the move so coverage is in place at the appropriate time.  Depending on the insurer, coverage on the former home will generally remain in effect until the sale of the property is complete, as long as premiums are paid, which should be confirmed with the insurance agent.

Vacant Homes

If the homeowner relocates before the existing home is sold and it remains vacant or unoccupied, there may not be coverage under the existing homeowners policy. Insurers typically discontinue coverage on a home if it has been unoccupied for more than 30 days, so prospective homeowners should explore other options with their insurer.

Careers and Employment, Insurance Industry

Insurance Careers Corner: A Few Minutes with Anisha Navendra, Insurance Industry Charitable Foundation (IICF) intern

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By James Ballot, Senior Advisor, Strategic Communications, Triple-I

It’s an understatement to say that the COVID-19 pandemic has affected all areas of our personal and professional lives. Amid widespread disruption, however, people are stepping up with innovative ways to overcome the distance of “social distancing.”

For insurance businesses, summer internships have long provided a vital path for educating students about the industry, and for insurance businesses to evaluate promising recruits. However, with lockdowns and other measures to contain the spread of Coronavirus extending through and beyond the summer months, many businesses were forced re-evaluate internship programs, with some considering suspension of 2020 summer internships. 

Several organizations have stepped in to fill this gap, including insurance businesses, industry trade groups, and in particular, Gamma Iota Sigma (GIS), a student society with 77 chapters serving more than 5,000 members across North America that’s recognized by many as “the insurance industry’s premier collegiate talent pipeline.”  Earlier this year GIS launched their Virtual Internships program. Despite getting a somewhat late start, the program placed more than 65 students on 30 projects at 14 insurance businesses.

As part of the Triple-I Blog’s “Insurance Careers Corner” features series, we spoke with student interns about their experiences during summer 2020 and their insurance career journey so far. We also reached out to internship program directors to get a fuller sense of how their organizations benefit from expanding outreach to students even in the midst of a pandemic.

First up is Anisha Navendra, who is a rising sophomore at University of Texas, Austin. Anisha spent part of the summer of 2020 interning at the Insurance Industry Charitable Foundation’s (IICF) Southeast Division. She’s double majoring in Mathematics with a concentration in Actuarial Science and Finance—and has “a keen interest in the insurance industry.”

Name: Anisha Navendra

Current Status: Rising Sophomore, The University of Texas at Austin

Internship: IICF

Triple-I: Tell us a bit about your experience as an intern. Did you have an internship lined up before schools and offices went into COVID-19 isolation?

Anisha: I was looking into internships earlier this year, but by the time classes went remote many programs were either suspended or cancelled. Gamma Iota Sigma stepped in to find ways to connect students with insurers and insurance businesses. My internship with IICF is an opportunity to learn more about the unique philanthropic side of the insurance industry by allowing me to spend time working closely with industry professionals.

How long is your internship with IICF and what sort of work are you doing there? 

My internship runs through August. I’m assisting with a wide variety of projects, including pulling and researching financial reports for insights into how a charitable foundation works.  

What skills and knowledge are you picking up along the way?

I’m learning more about teamwork, communications, doing due-diligence, time management and research skills, as well as how to use tools of the trade, like Microsoft Office. Also, I’m meeting and networking (virtually) with a lot of insurance professionals from different backgrounds and getting exposure to a wide range of business areas–marketing, finance, operations.

I plan to use these skills and the knowledge gained about insurance and the insurance industry to help me in my future endeavors as an actuary, or financial consultant.

When did you first consider insurance as a career path?

I became more aware of insurance as a member of my high school debate club (the topic was health insurance). Entering college, I discovered how actuarial sciences aligned with my other interests.

Any “surprises”; things you did not expect to learn or do?

Working with IICF has shown me a unique and more creative side of the business and how the industry’s charitable activities are helping to redefine the narrative about insurance. I’m also learning how companies are reacting to the pandemic—and that insurance is nimble and responsive.  It’s exciting to be behind the scenes at a non-profit.

How will this experience affect you going forward—both in your studies and in preparation for life after college?

Working with IICF has encouraged me to be more innovative and team oriented. The experience has made me want to learn more about non-profits and has gotten me interested in marketing and brand strategies. I plan take more classes in business law and ethics to round out my knowledge.

Legal Environment

Lawyers’ Group Approves Best Practices to Guide Litigation Funding

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The policymaking arm of the American Bar Association (ABA) recently approved a set of best practices for litigation funding arrangements. 

Litigation funding is an increasingly popular technique in which investors finance lawsuits in which they are not a party against companies – often insurers – in return for a share in the settlement. It contributes to “social inflation” – rising litigation costs that affect insurers’ claim payouts, loss ratios, and, ultimately, how much policyholders pay for coverage. 

The resolution – adopted by the ABA’s House of Delegates by a vote of 366 to 10 – lists the issues lawyers should consider before entering into agreements with outside funders. While it avoids taking a position on the use of such funding, it recommends that lawyers detail all arrangements in writing and advises them to ensure that the client retains control. 

 “The litigation should be managed and controlled by the party and the party’s counsel,” the report says. “Limitations on a third-party funder’s involvement in, or direct or indirect control of or input into (or receipt of notice of), either day-to-day or broader litigation management and on all key issues (such as strategy and settlement) should be addressed in the funding agreement.” 

It also cautions attorneys against giving funders advice about the merits of a case, warning that this could raise concerns about the waiver of attorney-client privilege and expose lawyers to claims that they have an obligation to update this guidance as the litigation develops. 

Opponents of litigation funding have pushed for rules requiring mandatory disclosure of funding arrangements during litigation. The resolution doesn’t take a position on whether disclosures to judges or adversaries should be required, but it urges lawyers to be prepared for the possibility of funding arrangements being scrutinized. 

The launch of a new $200 million fund by Pravati Capital this week brings litigation finance firms over the $1 billion mark for funds raised in 2020, according to Bloomberg Law. 

Additional Reading:

SOCIAL INFLATION AND COVID-19

IRC STUDY: SOCIAL INFLATION IS REAL, AND IT HURTS CONSUMERS, BUSINESSES

FLORIDA’S AOB CRISIS: A SOCIAL-INFLATION MICROCOSM

Disaster Resilience, Flood Insurance, Insurance Industry

Swiss Re: A Katrina-like hurricane could cause up to $200 billion in damage today

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A memorial cross for the victims of Hurricane Katrina stands in the water near the bank of the Mississippi River Gulf Outlet on August 22, 2019 in Shell Beach, Louisiana. According to researchers at the National Oceanic and Atmospheric Administration (NOAA), Louisiana’s combination of rising waters and sinking land give it one of the highest rates of relative sea level rise on the planet. (Photo by Drew Angerer/Getty Images)

Hurricane Katrina, which struck the United States in August 2005, remains the costliest insured North Atlantic hurricane on record and the most expensive natural catastrophe for the global re/insurance industry.  In 2020 dollars, according to a Swiss Re  report released today, total economic damage from Katrina totaled more than $160 billion.

An identical storm today “could easily reach” $200 billion, Swiss Re says.

To evaluate what Hurricane Katrina might look like in 2020 in terms of insured and economic losses, Swiss Re ran Katrina’s 2005 wind and surge footprint on its U.S. market portfolio using its probabilistic tropical-cyclone loss model.

“If Hurricane Katrina were to hit the U.S. in 2020 with the same wind and storm surge as 2005, but with current exposure information and updated flood protection and vulnerability assumptions, the privately insured losses in the U.S. alone could rise to $60 billion,” the report says. “This is true, despite the city (New Orleans) currently only having 80% of the population it did in 2005.”

Private insurance and the federal flood insurance program covered about $86 billion of the total loss, highlighting a protection gap largely driven by uninsured flood losses. Standard residential insurance policies exclude coverage for flood damage resulting from surface water, including storm surge caused by hurricanes; separate flood insurance policies are available through FEMA’s National Flood Insurance Program and private insurers.

“With Katrina, and even more recently with Harvey and Sandy and Florence, we’ve seen this profound protection gap where on average only one in six residences in the U.S. have a flood coverage policy,” said Marla Schwartz Pourrabbani, a Swiss Re natural catastrophe specialist and lead author of the report.

Today, a storm like Katrina would cause closer to $175 billion in damage because areas outside New Orleans, especially in other coastal states, have seen both increases in population and increased investments along the coast that add to the financial risk. Rising sea levels also contribute to the potential losses.

Swiss Re says the effects of climate change could drive total costs  higher.

“Considering that sea level in the barrier islands near New Orleans is now rising by over one inch every two years, a six-inch increase in sea level — and an event like this could happen in just over a decade,” the report says.

Business Insurance, Business Risk, Emerging Risks

U.K. Business Interruption Litigation Seems Unlikely to Affect U.S. Insurers

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The Financial Conduct Authority (FCA), which regulates insurers in the United Kingdom, has indicated that it doesn’t believe COVID-19-related losses trigger most business insurance policies because such policies typically require a direct connection between financial loss and physical damage to the insured property.

Think fire, flood, wind, or earthquake damage.

The FCA is now litigating a test case involving policies of eight insurers that don’t require property damage to trigger coverage (Hear a three-minute explainer from the Centers for Better Insurance).

Is this case relevant to U.S. property/casualty insurers? It depends on whom you ask.

The FCA is looking at 17 policy wordings from the eight insurers and asking whether COVID-19 triggers a payout. Based on other policies the regulator has studied, the Financial Times reports, the court’s ruling are “expected to apply to nearly 50 insurers, who sold coverage to 370,000 customers.”

Senior executives from specialist insurance and reinsurance underwriter Hiscox Group warned that the FCA’s eventual findings could drive additional COVID-19 losses to its reinsurance book, Artemis reports.

Tom Baker – an expert in insurance law and policy at the University of Pennsylvania – called the U.K. case a “one-way ratchet” for U.S. insurers.

“If the carriers lose or end up having a lot of coverage, that’s going to be bad for them here” in the United States,  Baker said. “I think if the carriers win, the insurance policies [in the U.K.] are really different. They tend to be named-peril, rather than all-risks policies. I think it will be easy to distinguish them.”

Jason Schupp, founder and managing member of Centers for Better Insurance, disagrees that an adverse ruling for U.K. insurers will have much of an effect on their U.S. counterparts.  

“In Europe, [FCA] authorization to provide miscellaneous financial loss insurance allows an insurance company to write business interruption insurance that does not require evidence of property damage” to pay a claim, Schupp says. Even though the United Kingdom is no longer part of the European Union, Schupp says, “U.K. law itself recognizes the miscellaneous financial loss class of insurance.”

What does this mean for pandemic business interruption coverage in the United States? Not much, according to Schupp.

“The outcome of the U.K. litigation is unlikely to be relevant to the dozens – or perhaps hundreds – of business interruption lawsuits making their way through U.S. courts, where the property damage question is front and center,” Schupp says.

He goes on to say that proposals coming out of Europe or the U.K. for pandemic insurance going forward – such as a Lloyd’s framework – contemplate non-property-damage business interruption insurance solutions…. These proposals do not appear compatible with the current U.S. insurance regulatory system.”

A ruling by the FCA is expected in mid-September. Last week, the regulatory body said that, while the case doesn’t address how any resulting claims payments would be calculated, “We may intervene and take further actions where firms do not appear to be meeting our expectations and treating their customers fairly.”

Insurance Industry, Insurers and the Economy

Recession, Pandemic to Impact P/C Underwriting Results, New Report Shows

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The COVID-19 pandemic and the recession it started will result in no premium growth for 2020 and a deteriorated combined ratio for the property/casualty industry, according to the new report, Insurance Information Institute (Triple-I) / Milliman P/C Underwriting Projections: 2020-2022. 

Sean Kevelighan

Direct and net premium written will be virtually unchanged from 2019, while the industry combined ratio, a measure of underwriting profitability, is projected to rise to 102 at year-end, up from 99 last year, according to the report, a joint venture of the Insurance Information Institute and Milliman, a provider of actuarial and related products and services. The report, to be published quarterly, was unveiled on August 13 at an exclusive members only virtual webinar moderated by Triple-I CEO Sean Kevelighan.

James Lynch

“The pandemic and the recession it induced drove down exposures in personal auto and several commercial lines,” said James Lynch, FCAS, senior vice president and chief actuary with the Insurance Information Institute (Triple-I). “Overall premiums are projected to be flat,” said Lynch, adding, “a hard commercial lines market is driving rates higher, which offsets some of the deterioration in exposure.”

Jason Kurtz

“Though there is tremendous uncertainty as to size, the pandemic creates insurance losses that were not contemplated in either catastrophe or attritional pricing,” said Jason Kurtz, FCAS, a principal and consulting actuary at Milliman. “Not surprisingly, pandemic losses can cause underwriting results to deteriorate.”

The report noted that a number of legislative and regulatory proposals have the potential to affect pandemic exposures and losses.

A major hurricane or cumulatively severe wildfire season could also impact the combined ratio, the report noted. Right now, the report projects a typical year for catastrophe losses, though most hurricane prognosticators predict more storms than average.

Other Areas to Watch

Other areas to consider include the impact of the pandemic on workers compensation, particularly the shift in the burden of proof onto the employer for certain types of claimants (i.e. presumption) and the changing exposure from people working from home.  Workers compensation saw five consecutive years through 2019 where that line of business posted an underwriting gain; that could change with COVID-19. 

Economic trends also play a role. The report assumes that exposures roughly grow and shrink with the economy. If the recovery is slower or faster than projected, premium growth will be affected.

The report is an analysis by Triple-I and Milliman based on an actuarial model that relies on information from a number of publicly available sources as well as input from thought leaders and experts at both organizations. It predicts that premiums will grow 7 percent in 2021 and 6 percent in 2022 as the economy recovers, and the combined ratio will fall to 99 for both years as the industry prices for the effects of the pandemic and the higher rates charged this year earn out.

The complete webinar, available exclusively to Triple-I members, projected underwriting results for several lines of business: personal auto, homeowners, commercial auto, general liability, property, commercial multiperil and workers compensation.


Business Insurance, Business Risk, Legal Environment

Business Interruption vs. Event Cancellation: What’s the Big Difference?

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As I’ve written previously, the question of whether business interruption provisions in commercial property insurance apply to COVID-19-related losses has become a major topic of debate during this pandemic. Suits have been filed seeking to establish that policyholders are entitled to coverage for such losses – even when losses associated with infectious disease are specifically excluded in the policy language.

This debate has been muddied in some circles by people confusing business interruption coverage with event cancellation insurance.

Citing the fact that the National Collegiate Athletic Association (NCAA) had its claim paid when it cancelled its annual men’s basketball tournament, as did the All England Lawn Tennis Association when it canceled its Wimbledon event, some wonder why many other businesses’ claims are being rejected.

While superficially similar, these claims couldn’t be more different from the business interruption cases currently being litigated.

Business Interruption: Physical Damage Required

Property insurance covers physical loss or damage to an insured’s property. The business interruption provisions of commercial property policies typically require a direct relationship between a physical loss or damage and the resulting lost income. The Insurance Services Office (ISO) form for commercial property coverage – the basis of many policies – specifies that any covered loss due to “necessary suspension” of operations must be caused by “direct physical loss of or damage to property at premises which are described in the Declarations.”

This is a critical point, as most business losses related to COVID-19 are due to employees and customers remaining absent, supply chain disruptions, and other factors – not to physical damage.

 “A property policy may, for example, pay to repair the damage caused by a fire and may cover the loss of business during the reconstruction period,” writes Michael Menapace, a professor of insurance law at Quinnipiac University School of Law and a Triple-I Non-Resident Scholar. “But here’s the rub.  Are the business interruptions related to COVID-19 caused by physical damage to property?”

Insurers say no, arguing that “damage to property” requires structural alteration like one would find when, say, a fire destroys the interior of a building or wind damages windows. The virus leaves no visible imprint. Even if remediation is needed – like cleaning mold from metal surfaces – insurers cite cases in which judges have ruled there’s no physical damage from mold if the mold can be cleaned off.

Add to this the fact that most policies exclude coverage for losses related to infectious diseases and it’s hard to imagine U.S. courts finding in favor of the plaintiffs – particularly when pandemic insurance existed well before COVID-19 and was largely ignored by business owners and risk managers.

Event Cancellation Insurance

COVID-19 has led to the cancellation of events from weddings to business conferences to the Tokyo Summer Olympics. Individuals and businesses buy event cancellation insurance against losses resulting from a cancellation due to circumstances beyond their control, including:

  • Weather or other natural events like hurricanes, tornadoes, and earthquakes, and
  • Human-caused events such as labor strikes and acts of terrorism.

If a policy is an “all-cause” or otherwise unlimited policy, it could cover cancellations due to COVID-19, particularly if purchased before 2020.

Wimbledon’s organizers were among the few who bought event cancellation insurance that specifically included coverage for losses related to “communicable disease” after the 2003 SARS outbreak. They paid about £25.5 million (US$33 million) in premiums since then and are set to receive around £114 million (US$142 million) for this year’s cancelled tournament, according to GlobalData.

GlobalData said the event still faces a net loss. The total Wimbledon revenue loss is estimated at around £250 million (US$328 million).

The NCAA had a policy for its “March Madness” tournament that had to be cancelled.  Its event cancellation policy covered just $270 million, even though the tournament generates more than $800 million a year. The organization reportedly was better prepared for a cancellation several years ago, when it built up savings of nearly $500 million to help mitigate the financial impact of a lost tournament.

“Then, in 2015, new leadership decided to spend more than $400 million of those savings without increasing the NCAA’s insurance coverage by following a questionable theory about the risk of saving that much money,” the Washington Post reports, citing former NCAA employees.

The availability of such coverage without exclusions for infectious disease may be limited or even more expensive in the wake of the current pandemic.

Insurance Industry

Hurricane Isaias follow-up: 8/11/2020

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PSE&G workers work on power lines after Tropical Storm Isaias passed through on August 4, 2020 in Bogota, New Jersey. (Photo by Eduardo Munoz Alvarez/Getty Images)

Thousands of East Coast residents were still without power a week after Tropical Storm Isaias barreled through more than 12 eastern states, including New York and New Jersey, on August 4.

Isaias made landfall in North Carolina on August 3 as a Category 1 hurricane, with maximum sustained winds of 85 miles per hour before weakening to a tropical storm. Damage to Caribbean islands and along the U.S. Atlantic coast stemmed from flooding, power outages, downed trees, and tornadoes.

Isaias was the fifth named storm of the “extremely active” 2020 hurricane season.  Preliminary insured loss estimates from Isaias range from over $1 billion (Aon) to $4 billion (Karen Clark & Co.) Damage is still being tallied, and these estimates are likely to change.

Like every disaster, Isaias will give rise to criminal activity. The National Insurance Crime Bureau (NICB) reminds us that crooks posing as contractors may press homeowners into paying out their insurance claim before repairs are completed. Once they collect the payment, they disappear without completing the promised work. To keep from becoming a victim of these contractor scams, follow these tips from the NICB. The tips include getting more than one estimate and getting everything in writing.

Another post-disaster scam is the sale of flooded vehicles. Dishonest dealers can buy flooded vehicles, clean them up and sell them to unsuspecting buyers. If you are shopping for a used vehicle, NICB recommends checking a few items, such as water stains and mildew that could indicate whether the vehicle is a flood recovery vehicle or not.

NICB also provides a free tool called VINCheck that allows consumers to check a vehicle for a “red flag,” such as theft, accident damage, or salvage titles.

Business Insurance, Business Risk

Additional Insureds: How Policy Language Can Create Dramatic Consequences

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By John Novaria, Managing Director, Amplify

Underwriters routinely receive requests to add additional insureds to policies. But failure to add insureds correctly can open up insurers to potentially huge losses.

Companies typically need to add additional insureds to allow them to fulfill their obligations with their contractual partners. The requests are commonly associated with coverage for the marine and energy business, but construction and other industries often need to add insureds as well. Those requests can involve commercial general liability, excess and umbrella and other liability policies.

Maritime legal expert Harold “Hal” K. Watson recently conducted an interactive educational webinar on the proper addition of insureds for the American Institute of Marine Underwriters (AIMU). Watson, a partner at Chaffe McCall LLP in Houston, is a former president of the Maritime Law Association of the U.S. and an internationally renowned authority in marine and energy insurance.

Using detailed examples from actual cases — including the Deepwater Horizon disaster — Watson illustrated how policy language surrounding additional insureds can cause claims to go wrong. He offered the audience of underwriters, brokers and claims adjusters practical suggestions for writing policy language in specific ways to prevent problems.

Watson explained how arguably ambiguous policy language became a significant factor in Deepwater Horizon, the offshore drilling rig that in April 2010 blew out, resulting in an explosion that killed 11 crew members and caused billions of dollars in pollution and environmental damage in the Gulf of Mexico. Transocean owned the drilling rig, but it was under contract to BP. Watson noted that the contract between the two companies required Transocean to name BP as an additional insured for some purposes. But there was uncertainty whether or not the insurance policy incorporated the limitations of the drilling contract.

The U.S. Court of Appeals for the Fifth Circuit initially held that the insurance policy did not incorporate the limitations in the contract, but then certified the case to the Texas Supreme Court since Texas law applied. The Texas Supreme Court finally ruled that the insurance policy did incorporate the limitations, but if the Fifth Circuit’s original ruling had stood, BP would have been entitled to all of Transocean’s insurance coverage limits.

Watson explained how wording can be used to avoid situations that essentially give away an insured’s coverage. He also discussed other areas involving risks and exposures including:

  • The distinction and nuances between indemnity clauses and insurance policies.
  • The need for caution when providing broad coverage for additional insureds.
  • How additional insureds come into play in umbrella and excess liability policies, including specialized maritime policies.
  • The effect of anti-indemnity statutes pertaining to oil and gas wells in Texas and Louisiana

AIMU has seen growing interest in its educational offerings as it pivots from live to virtual events. According to AIMU President John Miklus, there were nearly 100 attendees at the “Additional Insureds” webinar and a similar number at another recent webinar on yacht insurance fundamentals.

AIMU’s primary focus is on education of its members and the insurance community at large and continues to deliver its programs using innovative methods. Click here for more information on upcoming classes.

Catastrophes, Coastal Property, Disaster Preparedness, Disaster Resilience

I.I.I. Media Tour: What You Need to Know and Do as Hurricane Season Peaks

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The Insurance Information Institute (Triple-I), along with Colorado State University’s atmospheric research scientist Dr. Phil Klotzbach, will be conducting a satellite media tour on Tuesday, August 11, to talk about what may lie ahead for the remainder of the hurricane season.

Dr. Phil Klotzbach, Colorado State University

We will be talking with news organizations throughout the U.S. about the steps individuals and businesses in hurricane-prone states need to take to protect their property and possessions with the right type—and amount—of insurance.

The following subject-matter experts will be available for interviews:

  • Sean Kevelighan, CEO, Insurance Information Institute (Triple-I)
  • Dr. Phil Klotzbach, Research Scientist, Colorado State University and a Triple-I Non-Resident Scholar
  • Laura L. Favinger, Chief Administrative Officer, Triple-I
  • Mark Friedlander, Director, Corporate Communications, Triple-I

Damage caused by tropical storms and hurricanes can upend lives for months, and sometimes years. Even in the country’s most vulnerable coastal states, individuals and businesses may underestimate their risk or have insufficient insurance coverage, operating without either an evacuation or a business continuity plan.

As the peak of 2020’s already busy Atlantic hurricane season approaches, it’s time to make sure you’re ready.

Nearly 20 media outlets have signed up to participate, and the following stations will be broadcasting live interviews (times are Eastern Standard):

08-11-2020 08:35 am – 08:45 am ET: WRAZ-FOX TV Raleigh-Durham (27) “WRAL’s 8am News on Fox50” Live
08-11-2020 09:20 am – 09:30 am ET: WPBF-ABC TV West Palm Beach-Ft. Pierce (36) “WPBF 9AM NEWS” Live
08-11-2020 09:40 am – 09:50 am ET: WBRC-FOX TV Birmingham (Ann and Tusc) (44) “Good Day Alabama” Live
08-11-2020 10:20 am – 10:30 am ET: WTKR-CBS TV Norfolk-Portsmth-Newpt Nws (42) “Coast Live ” Live

If you’d like to arrange an interview with our experts, please contact MultiVu Media Relations, 800.653.5313 x3

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