Insurance can be an unknown and maybe even somewhat intimidating aspect of mediation if you’re not an insurance lawyer and if you don't know insurance. Yes, it takes years to understand all insurance, but you can learn to read any insurance policy in five steps, because there are at least five basic things that every insurance policy includes. In this episode, Jean Lawler–commercial + insurance mediator and arbitrator–draws from her deep knowledge of the insurance industry, insurance policies and the various risks they insure against to discuss how to read an insurance policy in five steps. Questions answered include:
- What do you find out when you look at the declarations page (“dec page”)?
- What is the insuring agreement?
- What are exclusions?
- What are conditions?
- What are endorsements?
To read the full episode transcript please see the Podcast Website.
About the Host:
Based in Los Angeles, CA, Jean Lawler is an attorney and mediator, focusing on commercial, insurance and civil litigation matters pending at the trial and appellate levels - wherever filed. She regularly mediates a wide variety of insurance, business, and tort matters, as well as federal ADA accessibility lawsuits re architectural barriers and websites. CIPP/US (Certified Information Privacy Professional) certified, Jean also mediates matters involving data breaches, ransomware, and cyber losses. She has mediated hundreds upon hundreds - thousands - of cases over the years with a myriad of issues. For a more detailed sampling of the types of mediations that she has conducted and participated in, both when in practice and as a full-time mediator, please refer to her web page detailing Representative Matters.
Prior to becoming a full-time mediator in 2017, Jean was a Senior Partner in a Los Angeles based litigation firm, representing corporations, professionals, non-profits, individuals, and insurers in a broad range of matters, at trial and on appeal - mediating hundreds upon hundreds of cases over the years. Her legal experience has been diverse and international, and she has a deep knowledge of the insurance industry, insurance policies and the various risks they insure against (primary, excess, reinsurance, program, surplus lines, London Market, and international insurers). She also served as a Managing Partner of her former law firm, at times chairing the firm’s Insurance Law, Cyber & Privacy Law, International Law, and Business & Real Estate Transactions practice groups and, ultimately, served her many clients as counselor and trusted advisor.
As she would tell you if asked: “I absolutely love what I do! I would be honored to serve as your Mediator or Arbitrator.”
To connect with Jean Lawler, follow her on LinkedIn or find her at LawlerADR.com.
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JEAN LAWLER:
Well, hello. It’s so nice to see you here today. I’m Jean Lawler, your host on the ROADS TO Resolution ~Closure and ~Certainty podcast. You know, as we’ve been doing these podcasts and as I’ve been mediating lawsuits, one of the things that keeps coming to my mind is…How insurance seems to be such an unknown and maybe even somewhat frightening aspect of mediations if you’re not an insurance lawyer and if you don't know insurance. Certainly you can try and figure it out, but I wanted today to start a little series here on insurance for mediation.
And the first one…Where do you start? Well you start right at the very beginning, the policy itself. And so I thought I would try and share with you guys how to read any insurance policy in five steps. Right. You think, yeah right. Well, it takes years to understand all insurance and you may not understand that insurance policy you’re reading, but you can learn to read any insurance policy in five steps, because there are at least five basic things that every insurance policy includes. So, we’ll go over them quickly here today, and then we’ll break some of them down in other podcasts.
First of all…Remember that insurance is a contract. An insurance policy is a contract. Okay? So it’s basic contract principles that apply. First and foremost of the contract is the declarations page, also known as the “dec page”. And again, I’m just talking about the policy itself, I’m not talking about the application for insurance or any of that. That can tie in as well to the overall available coverage, but we’re going to keep it simple today. So, the dec page…so what do you find out when you look at the declarations page?
Well you’ll usually be able to answer the questions: who, what, when, where, maybe how and why, even. So the first thing for the “who” question would be…Who’s an insured? Who’s the named insured? Now, these insurance policies are filled with terms, terminology that are defined definitions. A named insured is one of those as well as “insured” and other things, but we’re going to keep it simple. Right?
So looking at that dec sheet, the first thing is who’s an insured and then what’s the nature–if it’s a business policy for example–what’s the nature of the business or the risk that’s insured against?
Is it a business liability policy?
A first party policy?
A homeowner’s? An auto?
A specialty type of insurance policy?
That will usually depend on the type of business that is being insured against, but the dec page will tell you that business and it will tell you the risk.
What risk is it that is being insured against? That’s on the dec page.
Then it’ll tell you the effective dates of the policy. It would apply to losses, to which the policy’s coverage would apply. Generally it would fall within the effective dates of the policy. You know, January 1 of year one to January 1 of year two, maybe. And again there’s always a little caveat. A claims-made policy is different than an occurrence policy. So let’s just talk general liability policies for the most part, occurrence policies.
We can talk about claims-made another time.
What are the risks that are insured against?
What is the effective date of the policy?
And then, the location that’s insured against, and how much?
What are the limits of the liability insurance for each particular type of risk that’s insured against?
So, you see that.
And then the next step, then after you’ve got that knowledge is to go to the insuring agreement. The insuring agreement is the grant of coverage. That is where the insurance company will tell you what type of coverage they are providing. And if we’re talking about a liability policy–for example, general liability–it would include, generally, bodily injury and property damage that is caused by an occurrence; property damage and bodily injury needs to occur during the policy period–those are the effective dates again, etcetera. You look at the insuring agreement, and in a general liability policy for business, they’ll have coverage A and coverage B and maybe they’ll have more.
Just leave it at that for the moment…
The third thing then once you find out what the policy applies to, what the insuring agreement says, then you get to the exclusions. The exclusions and they sometimes have exceptions, but the exclusions take away from the grant of coverage. So maybe the insuring agreement says, we’re going to insure Jean for A, B, C, and then there’s an exclusion that says, but we don’t insure under this policy for C if it is because of X, Y, and Z, maybe. So there are limitations, that’s where you find limitations in exclusions from coverage. And when I talk about coverage, I really mean indemnity, although liability policies have both a defense and an indemnity obligation. That also is for another podcast.
So you look at the exclusions, you look to see whether or not there are exceptions to the exclusions. Exclusions are the burden of the insurance company to show that they apply. An exception to an exclusion is essentially another grant of coverage. It takes the exclusion out, if you will.
Ok, so now you've looked at that, well you better also then go next to the conditions. That would be step four. Conditions are things like timely notice, all kinds of things. In cyber policies for example, it may be that there are conditions that tie back to the application for insurance, and the representations that were made in that application. Maye you said, oh yeah, we back up computers all the time, or we use two-factor authentication, or whatever, but if you don’t and haven’t been doing it, or maybe you did do it that day, but you’re not doing it at the time of the loss, then maybe that would be a basis for there to be no coverage if a condition hasn’t been satisfied.
If timely notice hasn’t been given, then maybe under the laws of a particular state, there would be prejudice, and there would be no coverage. So again, every policy is unique and every claim is unique.
And then you get to step five, the last step, and that’s the endorsements. The endorsements change the coverage in another way–what was in the policy. They may add coverage, they may take away coverage. They may modify what was in the policy. So it's really like a jig-saw puzzle in a lot of ways. I always equated it to diagramming a sentence like when you were in grade school and doing that for English class. So the endorsements are very very important.
And then ultimately overall, the overarching thing are the definitions. They’re not really a step in and of themselves because there are highlighted words all throughout the policy, throughout the entire policy and so as you’re reading you'll have to go lookup what that word means. It's a defined term, and that creates its own. But you know it can take hours to figure this out or to decide if there’s coverage or not, but the bottom line…If you’re coming in to a mediation and you have an insurance policy that might be at issue or you’re going to claim under, or the other party does and you want to argue it, at the very least these are the five steps, the five easy steps, for you to be able to look at a policy quickly or even just peripherally, to superficially, to then know what further it is that you need to look at.
So that said. That’s how to read any insurance policy in five easy steps no matter what the coverage is. So thank you so much for joining me today on ROADS TO Resolution ~Closure and ~Certainty. It’s my pleasure and I would love to have you follow me on LinkedIn, on YouTube, on the podcast. Subscribe and feel free to reach out to me. My email is jlawler@lawleradr.com. Thanks so much. We’ll see you next time. Bye bye.
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