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March 2019
With the complexity of insurance policies and coverages available today, combined with your many daily tasks, the age-old advice to "read your policy" seems inadequate and, in many instances, daunting due to the intricacies and length of most policies.
However, in many cases coverage disputes between you and your insurance company can be avoided. Before problems arise, it helps to understand your coverage, your needs, and any obligations your policies impose on you. Consider discussing the following topics with your insurance agent to make sure you are getting the coverage and policies that are right for you and your business:
THE APPLICATION FOR INSURANCE
Make sure all information in your application is accurate and complete. Did your insurance agent fill out the application for you while he or she was in a rush? Are you certain that questions on the application were answered accurately? Your insurer could cancel your policy, refuse to renew it, or deny coverage of a claim if it believes you misrepresented material information on the application you signed, even if your insurance agent took responsibility for filling the application out.
YOUR PROPERTY AND ACTIVITIES
Your insurance needs are directly impacted by the nature of your property, business, and activities. A basic farm insurance policy, for example, might not protect you for such things as business pursuits, injuries to your employees, or damage to someone else’s property kept in your care, custody, or control. Your agent can discuss with you whether you need to buy additional insurance coverages or policies to fill in these gaps based on your specific needs and activities.
ENDORSEMENTS THAT EXPAND OR REDUCE COVERAGE
Know and understand what endorsements are in your policy, and how they effect your coverage. "Endorsements" are clauses added to your policy that, in some way, alter your coverage, usually by adding coverage or restricting coverage. For example, an endorsement may allow you to name "additional insureds" under your policy (such as a co-owner, lessor, or subcontractor). If you are entering into contracts or agreements that require you to name other persons or entities as an "additional insured," make sure your policy permits you to do so. On the other hand, some endorsements add exclusions, restrict or cut coverage for certain losses. Make sure that you understand any endorsements that restrict your coverage, and talk to your agent if any restriction poses a concern in light of your business activities and property.
CHANGES IN YOUR BUSINESS ACTIVITIES
If your business activities change, contact your agent as soon as possible. For example, maybe you are considering opening a segment of your crop farm to the public for "agri-tourism" (e.g., pick-your-own, corn mazes, petting farms, hayrides), or maybe you plan to sell produce on-site directly to the public. If so, your existing policy might not protect you for any claims, injuries, or damages arising out of these activities. Contact your agent to learn whether you need additional coverage before you start your new venture, particularly if it involves inviting the public onto your property.
OBLIGATIONS IN THE EVENT OF A CLAIM
Your policy explains what you must do if a claim is possible or if a claim has already been brought against you. This includes how and when to provide notice to your insurer, and an obligation to cooperate with the insurer related to the potential claim. Fulfill these and other obligations in a timely and careful manner. Failure to satisfy your obligations could, in some cases, lead to disputes with your insurer related to coverage.
Legal disputes involving insurance can be time-consuming and costly. Taking the time now to make sure you understand your policies and have the right coverages in place for your family and your business, may save you time and money down the road and, at the very least, will give you peace of mind.
We hope you found this article interesting and informative. If you have questions regarding your insurance or how policy changes may affect your business, please contact Allison Collins at 517.371.8124 or at acollins@fosterswift.com. Representing clients at all phases of litigation, Allison handles a wide range of complex environmental, commercial, and insurance litigation matters on behalf of municipalities, schools, businesses, and individuals.
This article has since been updated with new information from its original publication in the July 2011 Foster Swift Agricultural Law Update.