News : Risk Management

Why does it matter how my business policy is “Classed”??

The excerpt below is from the ISO BusinessOwners Common Policy Conditions. This is included in pretty much every BOP (BusinessOwners Policy) as well as most Commercial Packages.

“C. Concealment, Misrepresentation Or Fraud
This policy is void in any case of fraud by you as it relates to this policy at any time. It is also void if you or any other insured, at any time, intentionally conceal or misrepresent a material fact concerning:
1. This policy;
2. The Covered Property;
3. Your interest in the Covered Property; or
4. A claim under this policy.”

Why, then, is it important for you as an insured to know how your policies are classed?

Each insurance policy is “classed” based on the exposures that exist within your operation. The insurance industry has come up with a set of codes that we use to attach to your specific business operations based on what you do. Each class has a “scope” that includes a set spectrum of operations and activities that would fall into each classification.

Some insurance agents will attempt to improperly classify a risk in order to reduce price or fit it into a specialty program with competitive pricing. This sometimes goes beyond “thinking outside the box” and enters into a situation that might fall into the above condition, potentially resulting in a “voided” policy.

Additionally, applications for insurance are a very important part of classifying a risk. The statements you make on the application directly impact how an insurance company classifies your operations. As a result, it is imperative to be truthful and complete in your answers on the insurance application. In many cases, courts have decided that misrepresentation or providing false information on an insurance application is sufficient reason to deny payment of a claim.

We sometimes run into cases where a prospect’s current policies are classed in a way we feel does not accurately reflecting the real exposures of the operation. In that case, we cannot in good conscience offer coverage under those old classifications. At times, this may put us at a pricing disadvantage but we believe that the long term benefits of properly advising our clients far outweigh the short term benefits improperly classing a risk.

We take our job seriously and we take protecting our client’s business seriously. The more you know about your exposures and coverage, the more successful and protected your business will be.

By: Patrick F. Baggett
Vice President Commercial Lines





Comments Off on Why does it matter how my business policy is “Classed”??

Law firms face more professional liability claims: Survey

This article is from Business Insurance Magazine and can be found here 

Posted On: Jul. 06, 2011 2:32 PM CENTRAL

By: Judy Greenwald

Law firms face a rising number of professional liability claims, largely because of the effects of the recession and the ongoing real estate market slump, according to a survey released Wednesday.

The insurer survey by McLean, Va.-based broker Ames & Gough, which was conducted in the spring, included six insurers that represent almost 75% of midsize to large law firms in the United States.

More likely to seek redress

“As law firms’ clients continue to encounter financial difficulties, and the impact on their business becomes more pronounced, they are more inclined to seek redress from their advisers,” according to the survey. “In this regard, if the lawyers representing a client are not careful during the initial representation, they might well

buy viagra online without prescription

become targets for a malpractice claim as the client’s financial situation worsens.”

Other trends that the survey found include:

• The largest number of claims occur in three practice areas: real estate, corporate and securities, and trusts and estates.

• Large claims with a reserve of more than $500,000 are increasing, with half of survey participants stating that there has been an 11% to 20% increase in claims with such reserves.

• Most insurers are seeing claims payouts of $50 million or more.

• Conflict of interest was the largest cause of malpractice claims.

• Four of the six insurers included in the survey have developed a panel of qualified attorneys around the country to handle claims.

Insurers who participated in the survey were units of Pembroke, Bermuda-based AXIS Capital Holdings Ltd.; London-based Beazley Group P.L.C.; Chicago-based CNA Financial Corp.; Connecticut-based Hartford Financial Services Group Inc.; Lexington Insurance Co., a unit of New York-based Chartis Inc.; and Chicago-based Berkley Select, a unit of W.R. Berkley Corp.

The survey, “Lawyers’ Professional Liability Claims Trends: 2011,” can be obtained for free by emailing a request to Those requesting the survey should include their name, title, affiliation, phone number and put “LPL Claims Survey” in the subject line.

Comments Off on Law firms face more professional liability claims: Survey