by Thomas Casella, JD, MBA, SCLA
Senior Risk Management Specialist, Utica National Insurance Group
As has been addressed in past articles regarding the COVID-19 pandemic, the task of making coverage determinations
must be left to the carrier, as it is the carrier’s responsibility to determine whether the facts of a given claim trigger
coverage under the policy it issued. Put another way, the insurance policy is a contract between the insurance carrier
and the policyholder; the agent is not a party to the contract and does not have a duty to interpret coverage under
the contract.
If you have been reading the trade journals and national news periodicals, you would note that there has been much
reporting on carrier denials of COVID-19-related claims, specifically centering around business interruption claims.
Litigation has also started in several states regarding the economic impact to businesses, alleging that Business
Income coverage should respond to claims arising out of government shutdown.
From this, it appears that there is a new trend forming where agency customers will call their agent requesting that
the agent speak with the agency customer’s legal counsel to discuss various coverages. While it may be a natural
instinct to want to assist your customer and show your customer’s legal counsel your knowledge on the topic of
insurance products and how they respond, you should avoid this at all costs. At best, you will be providing a road
map for your customer’s legal counsel to attack the carrier that you have a contracted with to sell insurance; at worst,
you will be helping the customer’s legal counsel build a case against your agency. It is a no-win proposition.
If your customer contacts your agency requesting an agent or producer speak with the agency customer’s legal
counsel to discuss insurance coverage, you should kindly decline and refer them to the carrier in question, since,
as indicated above, it is the carrier who makes the determination on how they will interpret the insurance contract
in relation to the customer’s claim.
Further, if you receive inquiries from your customers regarding general questions on how coverages work, it is
acceptable to respond in general terms. However, you should always encourage your customer to tender a claim,
if they feel they have one, and allow the carrier to determine whether there is, or is not, coverage. Do not answer
hypothetical questions about coverage, because there are many variables that could alter a coverage determination.
Always document these communications to avoid “he said, she said” scenarios where the message you provided is
misinterpreted. Documenting back the question along with your response will provide a record of that communication,
should one be required at a later date.
Some other issues to consider as your clients’ exposures change, states begin to reopen, and workforces return to
the workplace include:
increase in claim activity or shift in agency workflow.
5-R-1330 Ed. 6-20
policy due to the stay-at-home order in their state, follow up with those customers to remind them that the vehicles
need to be put back on the policy before those customers start driving them again.
for changes in customers’ usage, such as personal vehicles used for food delivery, determine when those
extensions are set to expire and advise your customers accordingly.
such as a Viral Pandemic Exclusion, or limitations to coverage that were not on the expiring policy. Be sure to
document to your customer, either through a coverage checklist or a coverage letter/email, policies that contain
virus, bacteria, communicable disease, and/or civil authority shutdown exclusions or other restrictive language.
subject to the same notice requirements as admitted carriers, and can make changes the day before a renewal;
reach out to your E&S brokers early to start the renewal process and review those proposals carefully.
provide timely non-payment cancellation requests to your carriers.
advisable to send a notice to your commercial account customers suggesting that they verify the states that their
employees are working from, and confirm that they are listed properly on the WC policy declaration page or not
excluded on the declaration page. If a change in coverage is required on their policy, your customer should advise
you as soon as possible. Additionally, we have noted a trend in E&O claims arising out of the categorizing of
employees on the workers compensation application, particularly 3c. Other States. This is applicable to contractors
who travel to out-of-state job sites, sales representatives in multiple states, and employees working remotely during
COVID-19 shutdowns, among others. Do not overlook this exposure.
As always, ensure that you are documenting all communications from customers and use your agency management
system to track progress on all new policies, binds, renewals, change requests, etc. If you are approached by legal
counsel who wants to have a discussion or make a recorded statement, kindly decline, direct them to the carrier in
question, and notify your E&O carrier. Accurately and in a timely manner report all claims to carriers that are submitted
by your customers, especially claims-made basis and claims-made and reported coverages. Stay on top of guidance
from your state’s insurance commissioner, as well as the state governor, and state and local health departments. By
staying informed, communicating with customers and carriers, documenting all communications and transactions,
avoiding making comments about the coverage of claims and maintaining adequate staffing levels, you should be
well positioned to manage most, if not all, of the challenges presented by this pandemic.
