Insurance Risk Management: The Framework – The Insurance Policy Part Three

If you didn’t get a chance to read the earlier portions of this series, you can read part one here and part two here. This is the final installment of the series. 

Another point to remember: Binders are extremely important. They evidence coverage in lieu of a policy. It’s very important to review binders in detail at the C-Level prior to receiving your policy.

Here’s why: What’s printed on the binder relative to aspects of coverage is your coverage prior to receiving a copy of the full policy.

In addition: If the fully-formed policy appears to differ from what you understood was contained on the binder, then you have the binder to help clarify the coverage issue in question.

A $3.7 billion dollar difference. Most readers of the Guide will be familiar with the headline-making example of the Silverstein Real Estate Group’s involvement with the World Trade Center property. Coverage was in dispute because the terms and conditions of the binders in question were not clearly spelled out regarding the definition of an occurrence.

Lesson learned: If your policy is not written correctly from the start, then you are not making the most effective use of your firm’s time or money because it will not do what it was intended to do.

Always obtain a full and complete binder of insurance with coverage details outlined. Detail, Detail, Detail. It’s the details of coverage that are important!