LEARN YOUR LESSONS THROUGH OTHERS ’ MISTAKES
By : Doug Smart
We ’ ve all made mistakes , I know I ’ ve made a few ! Yet , I always find value in learning from mistakes to improve my insurance knowledge and our agency procedures . I think it ’ s time for me to share a few cases that I ’ ve heard and the lessons learned . Hopefully , these might help you avoid making the same mistakes .
The Hay Grinding Operation The first was an account for a custom hay grinding operation . The insured went from farm to farm with a tractor and hay grinder to ground big round bales . The agent wrote the tractor and grinder on an inland marine policy with a standard market . They put the general liability with an excess market . The insured ran a wire into the grinder , which caused a spark and ignited the hay . The result was the loss of the hay in the grinder and several other bales and property nearby that burned . Unbeknownst to the agent , the general liability policy had a " fire damage exclusion " in the fine print of page 5 under exclusions .
Lesson Learned : Read the policy and encourage the policy holder to do the same ! That one only cost around $ 5,000 .
Trailers or Terrors The second was a trucking account that hauled grain . The trailers were written with collision and comprehensive coverages . The agent called the underwriter and asked why they didn ' t just put " specified perils " on the trailers because the " only real difference " between specified perils and comprehensive was the glass coverage , correct ? The underwriter agreed , and they changed the coverage to
specified perils and saved the customer almost $ 5,000 . A few months later , the insured purchased a tanker trailer . They added it to the policy , same coverages . Sure enough , the first week they owned it , the driver emptied a load and forgot to vent the trailer . The result was a collapsed trailer . Collapse is not covered under " specified perils ” and resulted in an $ 18,000 E & O claim .
Lesson Learned : Know your coverages and don ’ t “ assume ” your underwriter will tell you when you have the wrong type of coverages .
Fully-Earned Premium An agent was approached by a bank and large account to cover a considerable Ag business risk . The prior agent had " let them down and failed to place overage ." They needed coverage bound in days ( it was on a Thursday , and coverage was required by Saturday .) The agent found a market ( excess ), got the applications done , and quoted . By late Friday afternoon , both the insured and the banker said , " get it bound ," and they did with an effective date of Saturday morning . The banker verbally assured the agent that they would pay the premium and have a check by the " first of the week ." Tuesday came , still no check from the bank . The insured filed bankruptcy and went to jail . The policy was written on a 100 % annual basis , which meant there was no pro-rated cancellation . Bottom line , the agent owed the premium to the excess carrier to the tune of $ 81,000 .
Lesson Learned : Get it in writing , get your money first , and read the fine print on the binder !
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