Ah, September! The breath of fall first appears in the air, football fans reach for the remote and parents celebrate their “I truly love them, but enough already” children's return to school. Judging from an e-mail containing several agent inquiries I received recently from IIABA Virtual University chief guru and nationally famed coverage wizard Bill Wilson, perhaps a few of the parents should follow along.

As every seminar leader knows, folks often begin a query with, “I know this is probably a stupid question, but …” Normally, of course, the question isn't stupid at all and the asker is just hoping to appear modest. But other times you find yourself thinking, “You're right; that really was a stupid question.” When teaching E&O seminars, I sometimes feel sorry for any carrier representatives in attendance, because I know they're burying their faces in their hands, bemoaning the fact that no state currently allows immediate cancellation of a questioner's professional coverage.
So this is a column about “You're right; that really was a stupid question.” Only none of the askers were hoping to appear modest.
Now, this isn't a case of the stereotypical honor roll genius sneering at a classmate who has to work his tail off to maintain a C average. No, this is about folks who–to use the precise academic term–are “coasting.” Let me define people who are coasting thusly: They wouldn't know a coverage form if it bit them, they may talk to angels but never to underwriters and they think taking a WAG is a perfectly valid method of coverage analysis.
To paraphrase Dave Barry, I wish I were making these up. Edited only for length, each of the following is an actual question submitted to coverage experts by people claiming to be somehow connected to insurance agencies:
“My insured rents a car regularly in Germany. I told him that since he has an umbrella, generally he has worldwide liability coverage. Am I generally correct in my above interpretations?”
My favorite word in this one is “generally.” Since there's no such thing as a standard umbrella, might it not be wise to take a little precaution and actually read the policy? My first thought for a response: “I suppose.”
“I may be going to Ireland in September. What changes/endorsements do you recommend I make to my PAP if I rent a car while I'm there? If memory serves me correctly, liability coverage is worldwide and PD is at the same limits I carry on my vehicle. However, I also remember your saying that you purchase the coverages through the rental car company as well.”
You have to love someone who's not afraid to let senior moments or memory lapses disturb an otherwise comfortable ignorance. No agent should ever let “if memory serves me correctly” replace “Let me be sure I remember the form correctly.”
Let's go to the tape. For many a year the ISO PAP has specifically stated the policy territory to be:
“1. The United States of America, its territories or possessions;
“2. Puerto Rico; or
“3. Canada.
“This policy also applies to loss to, or accidents involving, 'your covered auto' while being transported between their ports.”
Although policy language can admittedly approach Greek at times, I think we can all agree that Ireland didn't make the cut. What's more, this example illustrates another common issue that arises with such questions: Once you wander aimlessly into the swamp, odds are the mud is only going to get deeper. When a person is willing to take a wild guess at something he can easily find out for himself, it's probably not an aberration–it's a pattern. So in the above case, it's perhaps not surprising that our questioner commingled a mistaken memory of worldwide liability with the question of whether or not to purchase a collision damage waiver. Next:
“I was wondering, if an insured has more than $1,000 in loss assessment coverage, will the company only pay up to $1,000 when the assessment is for the association deductible?”
Since standard ISO homeowners forms include only $1,000 of loss assessment coverage, the “more than $1,000″ described here means the HO 04 35 endorsement is attached. Here is the applicable provision from that endorsement:
“3. Special Limit
“We will not pay more than $1,000 of your assessment per unit that results from a deductible in the policy of insurance purchased by a corporation or association of property owners.”
So the answer is …? Anyone? Bueller?
It's not so much the question as the “I was wondering” that raises the red flag. Why settle for wondering when you can just look it up? Save your wondering for the really tough questions, like Gallagher's famous query, “If your knees bent the other way, what would chairs look like?”
What say ye to this one? “If the insured association has a flood loss and they assess every unit owner, will the condo policy loss assessment pay out???”
The three question marks is a definite clue. If one question mark means “I'm asking,” three has got to mean “I'm begging. Help!”
I have heard your plaintive cry! Herewith is the wording in the ISO HO 6 policy that has somehow eluded your eyesight:
“7. Loss Assessment
“a. We will pay up to $1,000 for your share of loss assessment charged during the policy period against you, as owner or tenant of the 'residence premises,' by a corporation or association of property owners. The assessment must be made as a result of direct loss to property, owned by all members collectively, of the type that would be covered by this policy if owned by you, caused by a Peril Insured Against under Coverage A, other than:
“(1) Earthquake; or
“(2) Land shock waves or tremors before, during or after a volcanic eruption.”
I often cringe when industry publications cop an attitude of “Can you believe how some insureds never learn?” when quoting the latest statistics on how many insureds think flood insurance is included in a standard homeowners form. “Don't those dummies read their policies? How did they miss that gold sticker on the front that says, Warning: No flood insurance is provided by this policy. We mean it!”?
Apparently we can include some agents in the dummy count, since variations on the above question are not at all uncommon. Our questioner has surely made one or more of three increasingly depressing errors: (1) He never read the above provision that clearly states that for assessment coverage to apply, the loss must be “caused by a Peril Insured Against under Coverage A”; (2) he doesn't realize flood is not a “Peril Insured Against under Coverage A”; or (3) he doesn't know what “Coverage A” is.
Although I've poked fun at these questions, I present them in all seriousness as the exact errors that create misunderstandings, confusion and even anger among insureds when they find the person they hired to lead them through the insurance thicket has instead led them straight off a cliff. With all the complex issues we face in this great industry, we simply cannot afford “coasters.”
Forcing them to pick it up is going to require real effort, not merely sending more folks to CE class. Bill Wilson has often told me that in his claims classes he hands out something I once wrote:
“In his monthly column in the March 1993 issue of American Agent & Broker, Chris Amrhein, AAI, says, 'Much of the technical knowledge being handed out so freely by agents, claims adjusters and underwriters is just hearsay. Answers to technical questions often are given with little thought as to what the form language actually says.' At the conclusion of the article, he warns, 'The ability to read and understand the basics of commonly used insurance form language is a skill to be practiced, honed and treasured, not just by attorneys or technicians, but by all producers or others who answer consumers' questions. To fail to do so is to place yourself in constant jeopardy of misleading clients and failing to provide adequate advice and coverage, both leading causes of errors and omissions claims.'”
I'd say I couldn't have said it better myself–even if I hadn't originally said it. Too bad 14 years of intervening CE haven't rendered those words moot. But as Steppenwolf put so well, “It's never too late to start all over again.” It's a new school year. Be it resolved: CE is dead. Long live learning!
Chris Amrhein is an insurance educator and speaker with more than 30 years in the industry. He is also chief fun officer of www.insuranceisfun.com, where his newest book of insurance musings, “Yes, Virginia, There Is Insurance,” is now available. Readers may contact Chris at [email protected].