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7 Questions to Ask Your Insurance Carrier at Renewal

What changes have been made to the policy this year?
Insurers are constantly making changes to their policies for a variety of reasons – maybe there is some vague verbiage that needs to be clarified, perhaps an unexpected, bizarre claim arose that was not what the carrier anticipated the policy covering.  But sometimes the carrier will quietly add an exclusion that significantly limits expected core coverage, and does not list it in the renewal "highlights" document. You may want to require the carrier to provide you with a comprehensive list of all changes, or better yet a redline of the old/ new policies, to ensure you don't miss anything.

Does the Directors and Officers Liability Coverage Exclude or Include Employment Related Matters?  The D&O policy is typically a high coverage/ high premium policy, and is often represented by the carrier's sales team as a "comprehensive" product.  But is it?  Some D&O polices contain an important exclusion that could eliminate (or reduce) coverage in the event that an individual director or officer is named as a defendant in a suit by a former employee.  

Does the policy cover plaintiff's attorneys fees in class action cases?
Let's be real here … insurance companies (even more than their insureds) live in fear of the class action suit.  They hope to limit their exposure to just defense costs, and try to trim that exposure back where they can, via deductibles and exclusions.  Some polices provide limited coverage for plaintiffs attorneys fees and some do not.  Knowing what your policy covers before the lawsuit hits important.

Can we select our own attorney to defend a case?
This is a much more important issue than one might expect.  Insurance companies often have their "panel" attorneys that regularly receive cases from the same insurer and may have agreed to work at reduced rates.  Many of these panel attorneys are fine litigators, but naturally, the panel attorneys want to keep the carrier happy and get more work; that may or may not negatively affect your case.  Our experience is that cases are resolved faster, cheaper and with better results when the insured controls selection of the defense attorney.

How will the liability coverages apply to marijuana related business services?
If your institution is considering offering services to MRBs, this is a "must know" item.  Virtually all liability policies have an "intentional acts" exclusion, that applies to any intentional violation of the law.  Because cannabis remains illegal under federal law, how will this exclusion be applied, if the CU were to file a claim related to MRB services?

How does the Prior Dishonest Acts exclusion in the Bond work?
Every fidelity bond has one, but how it reads and how it is interpreted is the key.  Say for example that a teller with an excellent work record shoplifts a small dollar item at a local store, and his manager knows about it; later the teller steals from your institution, and you file a claim.  Can the Prior Dishonest Acts (PDA) exclusion be invoked by the carrier to deny the claim?  Maybe.  If the exclusion is not limited by time, scope (non- work related) or dollars (some minimal $ threshold), the carrier's denial may be supportable by the policy.  Some policies even extend the PDA exclusion to policy violations and vendor actions.

How does Third Party Vendor Theft bond coverage affect other bond coverages?
Some carriers offer this relatively new coverage and at first glance it looks like a good thing.  But it may actually be subtraction by addition.  Most polices that contain this coverage: (1) carry a low coverage limit and high deductible for it, and (2) more importantly, add an exclusion to the employee dishonesty bond whereby ANY loss involving a vendor and employee (e.g., vendor and employee conspire to steal from the insured) will ONLY be covered under the very limited Third Party Vendor Theft coverage.