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HA, HA, STEVE THANKS FOR THE TEASE ........ AS I HAVE SAID BASED ON YOUR SCENARIO, POLICIE, ENDORSEMENTS ............. THIS HAS CAUSE FOR DENIAL. UNLESS HOWEVER INVESTIGATION REVEALED EMPLOYEE STOLE THE MONEY IN AN ELABORATE SCHEME, AND THERE WAS SUFFICIENT POL, AND EVEN THEN HIS IS SUBJECT TO COVERAGE LIMIT .....

BOTTOM LINE, ISSUE ROR, INVESTIGATE, AND BASED ON YOUR SCENARIO, THE POLICIES AND ENDORSEMENTS THERTO THIS IS NOT A COVERED LOSS.

STEVE I DONT MEAN TO DENY YOUR CLAIM SIR, BUT THE POLICY IS VERY CLEAR, AND I AM DEVISTATED I MUST DENY YOUR CLAIM SIR, HOWEVER I HAVE A GREAT DEAL OF COMPASSION FOR YOUR LOSS. PLEASE IF YOU FIND OF ANYTHING THAT WOULD CHANGE THE FACTS PROVIDED LET ME KNOW AND WE CAN ALWAYS TAKE A SECOND LOOK! AND THANKS FOR BEING A WONDERFUL LOYAL CUSTOMER!

NOW MAY I PLEASE PURCHASE ME A "HAPPY BURGER" 

BTW GOOD TO BE BACK, SOME OF US HAVE TO WORK FOR A LIVING ...... HEHEHEHEHE

Still no time to deal with this, but that enhanced endorsement makes a huge difference in how a ROR would be put together. Even so, I see serious coverage issues on the claim as outlined so far. One needs to look at where the occurrance took place. Appears to have happened in a vehicle off premise, correct? The enhancement gives money coverage. It also gives theft by Guido, or in concert with Guido coverage. If Guido has no involvement in the theft, does that enhancement endorsement have any bearing on whether theft of $ is covered in general terms? Where did the theft occur? Where (physical location that is) does the policy give coverage to theft? CP 00 10 4-02 A1b has to be looked at closely, and then also under that same form A5a(2) and A5dmust be looked at closely. You also can't forget to review CP 10 30 4-02 F1 in it's entirety needs to be looked at closely if there are any parts of that area that jumps out at you in determing coverage or lack thereof.

There should be a methodology everyone uses to determine if coverage exists or exclusions apply when a fact sceniaro is presented. For CAT claims is is pretty basic most of the times, but it should be followed. Steve's example is an excellent case to where there are a lot of different areas of the policy/endorsements that provide coverage to a degree, only to have it taken away elsewhere. Plaintiff attorneys are very good at picking and choosing the parts of the policy that gives them the coverage they want, while ignoring other parts that limit or take away coverage.

Another thing that came to my mind based on a comment I saw somewhere in a response, in civil cases the burden of proof is a lot lower to show someone did something wrong, then it is in criminal case. (prepondance of the evidence vs beyond a reasonable doubt). An example is it's quite a bit easier to prove someone committed arson to their property in an insurance case and deny the claim vs actually getting a criminal conviction of that same person for the same arson. prime example is OJ Simpson.

Dont do to much reading into the claim, Making assumptions, or Guessing ..... as it is, not a covered loss, and the ROR can be simplified, thats if you chose to use one. Personally knowing the fact of the claim up front, Why use an ROR .......... It is what it is! Just sayin!

Two of the issues Steve B. brought up are important for this loss.  The first is the burden of proof and preponderance of the evidence.  This was stolen by Guido or someone other than Guido.  When in doubt, to whom do you give the benefit of that doubt?  How much proof does it take to sway us to believe it was or wasn't Guido. 

Second is the methodology for determining which part of the policy trumps which other part.  In general an endorsement is designed to change the coverage provided by another policy form, either to expand, limit, eliminate, or negate some provision (usually) in the principal coverage forms.  The terms of an endorsement, therefore, will generally trump the main policy form.  It may not, however, eliminate other exclusions which it does not address. 

One of the issues no one has addressed yet is whether Guido qualifies, as an assistant manager, as an employee under the endorsement.

By the way, I did a bit of checking.  ISO does have a property enhancement endorsement.  Many carriers modify it to fit their underwriting needs.  That explains its standardized nature with slight differences (or sometimes major differences) between carriers.

(After the fact edit:  Actually ISO does not seem to have a property enhancement endorsement per se.  But many property enhancement endorsements include ISO language taken from a number of different ISO forms.   SE)

What would the specific portions of the policy be for the denial of coverage? Keep in mind that in your state, if you fail to reserve a particulatr right, you waive that the right to assert it in the future. Let's assume the same holds true for denial of the claim. What are your specific reasons for denying the claim. There is something not mentioned in the above post which may be very germane to the facts as presented. It may be the "one more aspect of this claim" you mention above, but it is something that we know about the case already.

why would you need an ROR, Best to have denial letter to insured stating basis, as described .... Best claim practices on all commercial claim denials, partial denials included.

Coverage decision made, Denial is clear as per policy & endorsements, Issue Claim facts, evidence & details, Document Diary, Stack claim & Submit to carrier, Next claim please!

We don't need the ROR any more, Roy.  We needed it at the beginning of this claim to give us time to investigate.  But why would we start from scratch on the denial when we already have an ROR that quotes the policy coverage defenses we were reserving.  So now we take that back out, edit it to assert our reasons for coverage denial and, voila, a denial letter. 

Meanwhile Steve Beaumont has once again thrown the gauntlet down.  He indicates there is yet one more consideration in the materials we already have.

Actually, there are at least two more pieces to the coverage puzzle in what we already have before us.  One of them may give us coverage due to ambiguous language. 

A bit of a double-edged sword, to borrow a phrase from Ray H.   Everyone has a point, but I think Roy & I might be on the same page if you just go back to the first facts.  It's always easier to reverse field off of a denial, than it is to reverse field off of a ROR.  The lesson here, I think you were putting out & hinted at Steve, is....have all your coverage forms & ducks in a row before making any kind of investigation or comments on coverage.   

Mike,

You might just have figured out why I piece-mealed this one out one spoonful at a time, rather than give all the information all at once.

BTW, the last word is not said yet.  The agent has yet to speak.  Remember that she got a copy of the denial letter, and she is not happy about you denying her biggest account, Happy Burger.

Not so fast, my friend (credit: Lee Corso, afterall it is now CFB season)......I've been hedging my comments all along knowing what a Wile E. Coyote you can sometimes be.  Before the agent begins to chew anyone's rear quarters,  I would hope he/she has verified that all applicable coverage forms were disclosed to the adjuster.

By the way, even though this case doesn't apply to Cat losses, I hope the readers take note because coverage issues do often occur. Particularly, if IA's are working losses without the full coverage forms available to them.  That's where the inside assigner/examiner has to recognize particular coverage forms and inform that field adjuster up front, as well as sending out a ROR if the initial report warrants it.  The ROR is a little bit easier on your storm losses of course vs. the situation you posted.   Sometimes, too, the ROR might not be initiated until after the initial inspection since no details may be available prior to an inspection.

OK, you have sent out your denial letter with a copy to the agent.  You have attempted to close the file, but it is Monday morning and when you arrive you find an email from the agent stating that she believes you have been premature in your denial. She admits that the points you make in your denial letter are correct, but she believes you have overlooked a few things.

1.  The property enhancement endorsement employee dishonesty section says "whether identified or not".  The agent contends that this means that the perpetrator does not have to be identified in order for coverage to apply.

2.  The employee dishonesty clause says, "(3) You may extend this coverage to apply to loss caused by any "employee" while temporarily outside the Coverage Territory for a period not more than 90 days."  The agent points out that this does not say the employee must be the thief, but only that the loss must be "caused by any 'employee".

3.  The agent, after making these two arguments, points out to you that you overlooked another section of the property enhancement endorsement that is more relevant to this loss than the employee dishonesty section.  It appears, despite all your diligent searching you have overlooked the "Money and Securities - Inside and Outside" Section of the Property Enhancement Endorsement.  It reads:

Money and Securities -Inside and Outside

(1) You may extend the insurance that applies to Your Business Personal Property to apply to loss of your "money" and "securities" resulting directly from "theft", disappearance or destruction while:

(a) Inside your premises;

(b) Inside the premises of a banking institution or similar safe depository; or

(c) Outside your premises in the custody of:

(i) A "messenger"; or

(ii) An armored motor vehicle company.

(2) As used in this Extension:

(a) "Messenger" means you, any of your partners or members, or any employee while having care and custody of "money"  or "securities" outside your premises.

(b) "Money" means currency, coins, and bank notes in current use and having a face value

and travelers checks, register checks and money orders held for sale to the public.

(c) "Occurrence" means an:

(i) Act or series of related acts involving one or more persons; or

(ii) Act or event, or a series of related acts or events not involving any person.

(d) "Securities" means negotiable and non-negotiable instruments or contracts representing

either "money" or other property and includes:

(i) Tokens, tickets, revenue and other stamps (whether represented by actual stamps or

unused value in a meter) in current use; and

(ii) Evidences of debt issued in connection with credit or charge cards which cards are

not issued by you;

But does not include "money",

(2) "Theft" means the unlawful taking of "money" or "securities" to the deprivation of the Insured.

(3) The most we will pay for loss in any one "occurrence" under this Extension is $50,000.

So, now you need to consider the three arguments made by the agent.  What do you think of them?

Posted By Steve Ebner on 15 Sep 2008 11:36 AM

OK, you have sent out your denial letter with a copy to the agent.  You have attempted to close the file, but it is Monday morning and when you arrive you find an email from the agent stating that she believes you have been premature in your denial. She admits that the points you make in your denial letter are correct, but she believes you have overlooked a few things.

1.  The property enhancement endorsement employee dishonesty section says "whether identified or not".  The agent contends that this means that the perpetrator does not have to be identified in order for coverage to apply.

2.  The employee dishonesty clause says, "(3) You may extend this coverage to apply to loss caused by any "employee" while temporarily outside the Coverage Territory for a period not more than 90 days."  The agent points out that this does not say the employee must be the thief, but only that the loss must be "caused by any 'employee".

3.  The agent, after making these two arguments, points out to you that you overlooked another section of the property enhancement endorsement that is more relevant to this loss than the employee dishonesty section.  It appears, despite all your diligent searching you have overlooked the "Money and Securities - Inside and Outside" Section of the Property Enhancement Endorsement.  It reads:

 

 

Money and Securities -Inside and Outside

(1) You may extend the insurance that applies to Your Business Personal Property to apply to loss of your "money" and "securities" resulting directly from "theft", disappearance or destruction while:

(a) Inside your premises;

(b) Inside the premises of a banking institution or similar safe depository; or

(c) Outside your premises in the custody of:

(i) A "messenger"; or

(ii) An armored motor vehicle company.

(2) As used in this Extension:

(a) "Messenger" means you, any of your partners or members, or any employee while having care and custody of "money"  or "securities" outside your premises.

(b) "Money" means currency, coins, and bank notes in current use and having a face value

and travelers checks, register checks and money orders held for sale to the public.

(c) "Occurrence" means an:

(i) Act or series of related acts involving one or more persons; or

(ii) Act or event, or a series of related acts or events not involving any person.

(d) "Securities" means negotiable and non-negotiable instruments or contracts representing

either "money" or other property and includes:

(i) Tokens, tickets, revenue and other stamps (whether represented by actual stamps or

unused value in a meter) in current use; and

(ii) Evidences of debt issued in connection with credit or charge cards which cards are

not issued by you;

But does not include "money",

(2) "Theft" means the unlawful taking of "money" or "securities" to the deprivation of the Insured.

(3) The most we will pay for loss in any one "occurrence" under this Extension is $50,000.

 

So, now you need to consider the three arguments made by the agent.  What do you think of them?

Mr. Ebner,

Please first of all, any Adjuster who does not have the Policy in its entirety, which includes all endorsements and enhancements to policy is simply not doing their job, and should not be Adjusting Commercial Claims. Having said that ......

Arguably, Under your scenario it does not include "Money" as defined in section (2) (b). (b) "Money" means currency, coins, and bank notes in current use and having a face value Which is cause for Denial of claim and endorsement as initially Concluded.  

Having adjusted hundreds of BI, Inland marine, Commercial Property, And Business Liability claims with their endorsements and in my career, I have yet to see an "PROPERTY ENHANCEMENT ENDORSEMENT" that is not accompanied by a Limit of liability schedule and an separate deductible amount. And is typical subject to master policy exclusions. I would like to see this endorsement, as it is written.

Lastly, having said all of that I would absolutely ask Agent to please provide this endorsement (In an unchallenged manner), As I am sure agent is reading into the Endorsement, or adding wording to it. I would review it in the best interest of customer service.

I am SURE, As it is written above, this would still be a Denial By Definition as a result of (2)(b) ............... Bottom Line CLAIM DENIED!  

NOW Any more Wrenches you desire to throw into this BRAIN TEASE ...... Hehehehe

Steve

• The Loss of the Money is heresay, and I didnt see anywhere where there was POL, Anyone, at anytime can say anything and even file official reports as such (Fraud But happens)
• Further any contest of this Denial, I would certainly turn Claim over to SIU for investigation. The insured has the Burden of proving loss, and I dont see any proof other than heresay.

Enhancement endorsement's involving monitory instruments have very low Limits Of Liability and HIGH Deductible amounts and accompanied by a schedule.

Posted By Steve Ebner on 18 Sep 2008 12:22 AM
You will get no argument from me that we need to have all the forms and endorsements before considering coverage. In fact that has been my point, here. Many claim reps try to go from memory about what is covered or not covered. The wisest adjusters read the policy when investigating each claim, even if it is the thousandth time they are reading it. This is especially true on commercial claims. It is barely possible to memorize an auto policy or even a homeowners policy, but a commercial policy has too many possible variations.

The definition of "money" as it is used in the endorsement is exactly why it does provide coverage. This section of the endorsement is an extension of coverage, not an exclusion.

I never said the adjuster did not have all the forms and endorsements from the start. I simply asked us to consider the forms in the order that I would normally consider them. I always start with the basic forms, then move on to the endorsements. The agent is not changing or adding any wording. I am quoting it word for word.

As far as the agent's three arguments, here is my analysis:

1. The "known or unknown" clause does not change the fact that the "known or unknown" person must still be an employee and there would need to be a preponderance of the evidence that would show an employee is the thief. This argument does not hold water.

2. There is an intervening cause if the employee did not steal the money himself. Without the preponderance of the evidence pointing to the employee actually being the thief, the proximate cause is whoever actually took the money. If this cannot be tied to the employee, he cannot be said to be "the cause" of the loss.

3. The "Money and Securities - Inside and Outside" section definitely provides coverage for this loss, whether it is a theft or a mysterious disappearance, whether it was commited by an employee or someone else. The limit of coverage is $50,000.

I disagree with you, Roy. Claim accepted. Pay it quickly with a letter explaining that you have reconsidered the denial based on considerations brought to your attention by the agent. The agent gets some well deserved credit. You show that you are reasonable and likely avoid bad faith by showing that you made an honest mistake and are willing to correct it quickly. The insured thinks he or she has a good agent and a reasonable insurer.

And the moral of this exercise is "Don't stop checking the policy until you've checked the whole policy." I've seen it many times. A claim rep finds one clause of a policy that either denies or affirms coverage -- and there they stop. It's usually the supervisor who considers the bigger picture and often overturns the initial decision of a line rep. The truly impressive adjuster will be able to walk the supervisor through the policy and support their position with all the applicable policy provisions.

The Agent has brought forth considerable credits, I am happy you agree with me regarding readin the policy and endorsements in that order, Your policy Interpretation is correct, so I stand corrected regarding the (2) (b) wording in Endorsement.

However Steve I need you to consider the POL, After all it was my basis (not including my correction noted)  ........ As you have written it is heresay and anyone or a combination can say anything, You have an arguable point, But I Feel so Do I? For arguments sake, Please allow me the Proof as You have presented the claim, As I have read and re read and feel as though I am correct before I issue settelemnt and an correction letter. This I must be satisfied as per policy conditions.