How to read an insurance policy: the known loss doctrine, part 2

I am making time to post again at the inspiration of Michael Aylward, a partner at Morrison Mahoney specializing in insurance coverage issues. I met Michael years ago when we represented codefendants in a rather silly copyright violation case. Since then I have relied on his excellent articles on allocation issues; been riveted (no, I'm not kidding) by his talks at seminars on insurance coverage; and imposed upon him for advice both legal and practical which he has always graciously given.


In my last post I discussed the known loss doctrine. One question that frequently comes up with respect to that doctrine is whether there is coverage when the insured knew of the facts that created tort liability before the policy period, but did not subjectively know that such facts could actually lead to liability.


The United States Court of Appeals for the First Circuit explored this issue under Massachusetts law in United States Liab. Ins. Co. v. Selman, 70 F.3d 684 (1995). In that case the insured was a landlord who was informed prior to the policy period that his apartment had lead paint in it and his tenant's child had lead paint poisoning. The court held that the lead paint injury was not a known loss because discovery had shown that the insured had not made a subjective connection between the lead paint in his building and the underlying plaintiff's future medical risks.

In my next post I'll discuss how the known loss doctrine should affect an insured's decision about reporting to its insurer a potential claim.

Certificates of Insurance - Worthless Paper?

A certificate of insurance is, perhaps, the most misunderstood document in the insurance world – even more misunderstood than the insurance policy the certificates are designed to represent!

The certificate of insurance…
…does not prove amounts of coverage available
…does not indicate the coverage in the policy
…does not prove policy conditions
…does not ensure additional insured status
…does not ensure notice of cancellation

A certificate of insurance is proof that an insurance policy was in existence on the day the certificate was issued. While the certificate will indicate that certain coverages are contained in the policies, coverage is solely determined by the insurance policy language – not certificate language.

The preamble to the certificate states:

“This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend, or alter the coverage afforded by the policies below.”

In other words, it does not matter what is on this certificate. The coverage in the policy is the coverage in the policy. If the certificate indicates that there is an additional insured but the policy has not been amended, there is no additional insured.

The header for the coverage description section has a further disclaimer:

“The policies of insurance listed below have been issued to the insured named above for the policy period indicated. Notwithstanding any requirement, term of condition of any contract or other document with respect to which this certificate may be issued or may pertain. The insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of such.”

In fact, the above header language means that it doesn’t matter what other documents exist (leases, purchase and sales agreements, contracts) the insurance in the policy is what is in force.

On the back of the certificate form used by 99% of insurance agents is the following:

"IMPORTANT If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).

"If SUBROGATION IS WAVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s)."

So, saying that a company is an additional insured on the certificate does not make it so. Further, statements about subrogation of claims are also not binding.

The last part of the back page shows the following:

"DISCLAIMER The Certificate of Insurance on the reverse side of this form does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon."

The disclaimer attempts to remove all responsibilities of the issuing insurance agent. The language appears to try to eliminate any perception of authority.

Is the Certificate of insurance really worthless? No. It does show that a policy is in place. Certainly, agents try to be accurate in the descriptions of coverage indicated on certificates. However, you cannot use a certificate to prove coverage if the policy does not support the coverage described.

All that said, I still suggest my clients obtain certificates. In some cases it will save you premium at the time of a payroll audit as insurers accept certificates as proof of subcontractor coverage.

I have prepared a single page document that you can use to inform your vendors and contractors of your certificate requirement. Have your attorney review the document before you use it.

The form can be downloaded here as a .doc file for easy editing.

Whole life insurance: Best protector of life

To provide financial security to the family members, many people in India are taking insurance policies which are very beneficial. At first, these policies were offered only by the LIC (Life Insurance Corporation of India). Later, numerous private companies entered in this field to provide services to the Indians with various types of policies.

From then, the insurance field has been developing rapidly. In India, there are different types of insurance policies are available like vehicle, death, accident, life, health, house and business etc. Among these policies, Whole life insurance is the one which helps the family members to balance the financial situations after the death of policy holder. We can also say it as a permanent coverage for whole life of a particular person, who takes this policy.
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This is a contract between the insurance company and the policy owner regarding the benefits and particular amount of money offers by the company after the death of policy holder. The owner can take policy in his own name or on the life of a person but he needs to have some financial interest in the life to be insured. This means that owner and insured can be same entities as well as different entities. Up on the insured's death or up to completion of the contract time, the owner has to pay money in the form of instalment basis which is known as insurance premiums. Most of the companies are offering 3, 6, 9 and 12 moths premium policies. The owner can select the best one depending on his financial position. Some of the insurance companies are offering interest rates on the premium amounts to the whole life insurance policy holders.


The owner, who has taken the whole life insurance policy can enjoy with many of its benefits. To solve temporary financial needs, the policy holder (read owner) can apply for a loan from any bank and money lenders in India as long as the policy is active. He can cash by surrendering the policy. One of the main advantages of this policy is it helps the users to get exemptions in their tax payments. The family members can get insured amount in an easy way after the death of insurer just by claiming to the insurance company. The insurance plan for whole life acts like an investment as the policy holders can get the insured amount with other benefits after completing the policy time.

If you decide to take a whole life insurance policy, you should take right steps before going to take a policy. Some of the insurance agents will try to mislead you by giving wrong information. So, it is highly advisable to you not to trust anyone. The first thing to do is comparing life insurance plans that are offered by the different insurance companies.

There are many ways to compare life insurance plans of all the companies. One is you can take the advice of your friends, family members, colleagues and relatives. The second one is to get information from books and newspapers. One more way is Just to visit all the India insurance companies websites over the Internet to find out the best one which is beneficial for you. This is the right place to compare life insurance plans of India.

Without going for different types of policies, you go for one policy which is really helpful to your family members after any accidental happening. Before taking the whole life plan, you should clear all your debts to pay the premiums in right time. Select the best insurance company which offers more benefits and interest rates on taking policies. To make a clear way to get insurance amount for a particular person after your death, mention his/her name clearly on the contract. You should have a clear idea of your policy time and premiums.

Just by taking some precautions, you can take whole life insurance policy with more benefits from a good company.

Life Insurance Myths and Facts

by MyFOXColorado.com
DENVER - You can probably save money if you make sure that you are well-informed about your life insurance policies.

You'll find some common myths about life insurance below, courtesy of Allstate insurance. Insurance expert Steve Cocker appeared on Good Day Colorado with anchor Shaul Turner.

· Myth: I am single. Most single people don’t have a pressing need for life insurance because no one depends on them financially. However, there are exceptions -- for instance, if you’re providing financial support for aging parents or siblings.

· Myth: I don’t work. Stay-at-home parents often make significant financial contributions to a family’s budget by providing such things as childcare, transportation and housekeeping services that could add up to $40,000 a year according to The Life and Health Insurance Foundation for Education (LIFE). Could a single surviving spouse afford to pay for these services on his or her own?

· Myth: Group life provides all the coverage I need. Group life insurance is a great component of a life insurance program. However, the coverage offered is not always enough to take care of your beneficiaries and usually offers limited coverage options. Group policies are generally non-transferable once you leave your current job.

· Myth: A permanent policy is better than a term policy. The kind of coverage that’s right for you depends on your unique circumstances and financial goals. A term policy generally offers the greatest coverage for the lowest initial premium and is a great solution for people with temporary needs. A permanent policy may work best if you anticipate a need for long-term protection.

· Myth: I have a term policy but can’t convert to a permanent policy. Not all term policies are the same. Some may have certain provisions as standard features, including convertibility. This feature allows you to convert your term policy to a permanent policy without submitting evidence of insurability. The amount of time that you have to convert varies. The key is to check on your provisions and make the move to permanent coverage when you can if that’s what you need.