The time to review your policies and understand your company’s risk and potential liability is not during a crisis. Preparing for potential loss that may affect your company from top to bottom starts with a policy review.
During the review, our attorneys will explain and suggest improvements to coverage provisions, including definitions, exclusions, endorsements, and policy conditions, based upon historic and current liabilities and potential exposures, business needs and overall corporate strategy.
An in-depth review can help make sure your company is properly protected and prevent future coverage disputes. These audits identify the strengths and weaknesses in policyholders’ insurance portfolios. They provide companies with the information needed to negotiate broader coverage and eliminate exclusions and gaps at renewal, potentially saving companies millions of dollars in uncovered claims or litigation costs.
Does My Policy Respond To Historical, Current, and Expected Liabilities and Exposures?
The goal of an insurance audit is to evaluate the current insurance program, determine whether the program meets a given company’s needs and identify any potential gaps in coverage. Every year insurance policies and standard forms change, new exclusions are added to existing policies, and new insurance products are introduced. Knowing what coverage your business has and what is available is critical. Perkins Coie Insurance Recovery attorneys guide companies through specific steps that result in a successful insurance audit.
Interviews With Key Members of Your Company
Before analyzing policies, a meeting with in-house counsel, members of risk management, and key executives should be held to discuss historic and current liabilities and potential exposures, business needs and overall corporate strategy. At a minimum, the conversation should include:
- Any current or potential liability for ongoing and anticipated projects;
- Any anticipated corporate transactions and potential corporate and D&O liability exposures;
- An assessment of current privacy policies and an understanding of the collection, storage, and use of any confidential information;
- A review of all professional services offered by the company, subsidiaries, affiliates, and portfolio companies; and
- The extent to which the company provides additional insured status to other entities and the extent to which the company requires other entities to list the company as an additional insured and the scope of any related agreements.
Policy Analysis and How Other Policies Work Together
Next, all lines of insurance are reviewed, including but not limited to liability policies, first-party property policies, business interruption policies, directors and officers policies, errors and omissions policies, cyber risk policies, employment practices policies, and any specialty policies. With a critical eye, our Insurance Recovery attorneys review the following:
- Coverage provisions, including definitions, exclusions, and endorsements;
- Choice of law and dispute resolution provisions;
- Deductibles, self-insured retentions, and retrospective premium provisions in light of the company’s business needs, overall objectives, and strategy;
- Trigger and discovery provisions and the company’s procedures for providing notice to insurers;
- Underwriting requirements and disclosures provided to insurers regarding anticipated acquisitions and other corporate transactions; and
- How the primary, umbrella, and excess policies fit together as a whole.
Gaps To Discuss with Your Broker
Finally, we compile a list of all gaps in coverage and policy revisions that should be addressed at the next renewal or earlier if the gaps are significant. Clients often request a memorandum that can be shared with the board so that the board can assess and understand the current coverage protecting the company and determine the need for any additional coverage. We also create a checklist of items for your broker to use with underwriters and insurer representatives at renewal meetings.