What is the best way to insure two or more entities or locations under common ownership? Is it better to put them all under one, theoretically, more manageable CGL policy, or should each have its own policy?

One advantage of a single policy is easier management for the agent, carrier and insured. There are only one set of policy forms and endorsements to contend with, one renewal date and so forth. When the number of entities grows, it becomes an increasingly important consideration.

An obvious downside to the one-policy-fits-all approach is adequacy of limits and the possibility that the aggregate may be quickly depleted. Where a single policy is indicated, it is essential to purchase high limits and to make arrangements, from a coverage and premium standpoint, for reinstating aggregate limits. If an umbrella is used, a drop-down provision is advisable.

Another problem may arise when the entities are significantly different in exposures and operations. One may require special endorsements the other doesn’t, which could result in overpayment of premium unless endorsed designated premises limitations restrict coverage and premium promulgation to the entity that needs the coverage.

It may be increasingly difficult to allocate insurance and claims costs between entities to make sure that they pay their fair share. It’s important that the entity with a claims problem focuses on loss control rather than using the other entity’s experience as a crutch.

For more information, click here.

Insurance vs. Legal Advice

There can be insurance ramifications for some actions insureds might be advised to take by an attorney, CPA, estate planner or other non-insurance professional. Such economic advice can frequently create a potentially catastrophic coverage gap that is penny wise but pound foolish.

This issue recently raised its head in a response to a lawyer’s post on an online insurance message board. One poster was amazed at how many times attorneys had advised a client to put a 17-yearold son on his own auto policy and, if possible, title the vehicle in his name, given that this is usually a bad idea from an insurance-coverage standpoint. An attorney responded with an explanation of why it is a brilliant idea. Do you agree?

To read a response to the lawyer’s opinion, click here.

Insuring High-Value Lawn Equipment

The Virtual University received the following question from a Virginia agent: "Our insured has a 1991 HO-3 with the HO 23 14 (4/91) special personal property endorsement. The insured has a lawn tractor valued at $25,000. The manufacturer, as lien holder, ‘requires’ that the customer have ‘collision and upset’ coverage for physical damage on the tractor.

"Under the HO 23 14 endorsement, under 3-d, collision is excluded, except for collision with a land vehicle. That means that collision with a rock, tree or a hole is not covered. Correct so far?

"But how about for ‘upset’? Say the owner is on a steep grade and the tractor tips over and does physical damage to the tractor. Is there coverage under this policy for this scenario?"

The HO 23 14 took the place of the HO-15 form in Virginia when the HO-91 program was introduced, so it is an ISO form, but a state-specific one. After reviewing a copy, the VU faculty found the referenced exclusion—and the solution to the problem: It isn’t a problem. Here is the full exclusion:

"d. Collision, other than collision with a land vehicle, sinking, swamping or stranding of watercraft, including their trailers, furnishings, equipment and outboard engines or motors."

This exclusion is the same as the one in the countrywide HO 00 15. The good news is that this exclusion only applies to watercraft. It excludes collision, sinking, swamping or stranding of watercraft except that collision with a land vehicle is covered, along with collision with other objects.

Since the personal property in question is not watercraft, the exclusion doesn’t apply. This illustrates why it is important to carefully read (and sometimes re-read) policy provisions.

For additional discussion on insuring this type of exposure, click here.

Bill Wilson (bill.wilson@iiaba.net) is Big "I" director of the Virtual University, an online learning center for agents and brokers.