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Insurance company claims
adjusters have pointed to the broader
economic impact of large-scale events
such as Sandy or 9/11 and theorized
that certain losses would have been
incurred even if a business did not
take a direct hit.
This came as a shock to businesses
that thought their policy covered all
BI losses stemming from Sandy.
And, in fact, this theory — put
forth by insurers and insurance
adjusters — often has no basis in the
policy wording, Dempsey said.
To minimize surprises going
forward, Dempsey generally
recommends that his clients have
a role in selecting the independent
adjuster and other insurance
company experts working on their
“That may sound unusual,” he
said. “But so much of the claims
process comes down to personal
relationships,” he said.
“Knowing the adjuster and the
other experts, and being able to come
to a meeting of the minds in terms
of objectives and working through
problems will pay huge dividends,”
Here are some
tips for dealing
that can frustrate
risk managers is claims-made liability
coverage, which requires policyholders
to give notice of circumstances that
may give rise to a claim in the future,
said attorney Mark Garbowski, a
shareholder at Anderson Kill.
“That’s caused disagreements as to
whether a new claim related back to
an earlier claim or circumstance, and
as to which tower of policies it went
into,” said Garbowski, whose practice
concentrates on insurance recovery
on behalf of policyholders, with
particular emphasis on professional
He advises insureds with claims-made coverage to expand their
notification to insurers about
“You might have a claim that comes
in today and that relates back to a
notice of circumstances two years ago.
In that case, I suggest you give notice
to policies in effect today as well as
those in force two years ago,” he said.
• Know state law.
Frequently, when liability cases
emerge, the third-party plaintiff will
demand to see all communications
between the insured and its
underwriters. It is of paramount
importance to know the law in your
state, said Childress.
“Policyholders need to be wary of
whether or not their communications
with their insurers may be revealed
to the underlying plaintiff,” he said.
The answer may depend upon
whether the insurer is a primary or
• Review coverage extensions and
“When meeting with underwriters
— something that should take place
once a year at least — risk managers
should discuss coverage extensions
or exclusions that may be or should
be on the policy and that could be of
particular concern,” said Andrews of
“A lot of the time, litigation arises
because the risk manager thinks
there’s coverage and the claims
person says no, there’s this or that
exclusion,” he said. “You want to
know [in advance] what conditions
might be imposed on the policy.”
• Understand your cyber liability
As cyber liability becomes
a growing area of concern, risk
managers need to be increasingly
careful about what they’re buying.
“In the case of data breach, you’ve
got to notify every single person
that’s been affected,” Andrews said,
and the costs can be monumental.
If you want indemnification for
such expenses, make sure whatever
program you choose includes breach
JANET ASCHKENASY is a freelance
financial writer based in New York. She can
be reached at email@example.com.
“One good rule of
thumb is to anticipate
that litigation will arise
under most policies.”
— ROGER ANDREWS, DIRECTOR
OF RISK MANAGEMENT, E.D.