READERS' FEEDBACK

"Doing it right" not easy when it comes to Named Insured wording

I agree with Barry Klein's perspective in his "Named Insured Wording: Doing it right" article in the March 2003 issue. Digging for the proper named insured is important both from a coverage and a marketing standpoint.

My understanding, and practice until now, has been to include only entities that truly hold assets, have operations or are filed with the secretary of state's office as a legal entity. Barry's points about names associated with marketing, packaging, and signage are excellent.

My question to Barry is: Suppose in the example in the article that Johnson Machine Works, Inc., simply stamps their packaging with "SureFit Fittings" but SureFit Fittings has no legal status or assets, but is simply a marketing slogan or trade name. If someone sues just "SureFit Fittings" I believe it is true that the policy would not be obliged to respond. By the same token the plaintiff will receive no damages from SureFit Fittings as there is nothing there to render them. My thinking is to let the plaintiff waste their money on a dry well and not waste the carrier's defense dollars by insuring the same.

If the suit later evolves to include the entity(s) with assets, the policy will respond so long as the entity is properly included in the named insured. Does that seem reasonable?

--Pat Crimans, Crimans Insurance Agency, Elwood, Indiana

I enjoyed Barry Klein's article "Named Insured Wording: Doing it right."

I had a question relative to d/b/a. Barry recommends compiling complete information in order to create a well-written Named Insured endorsement. That includes listing all the d/b/a's that the insured uses. Is that legally necessary, or is it just icing on the cake? While an attorney can sue a d/b/a name, the attorney ultimately has to sue the actual entity, correct?

--Mr. Ivey Jackson, Sevier, Fowlkes & Jackson Insurance, Birmingham, Alabama

While I've usually followed the game plan that Barry Klein suggests in his "Named Insured Wording: Doing it right" article (include every entity, d/b/a, etc., that exists) and like to emphasize "predecessor entities," the issue of naming individuals and spouses gets tricky.

Arguments have been made against "advertising" the corporate owners' identities, in some cases. And with non-shareholding corporate officers, there could be the risk of reducing the length of the "arm" in certain arm's length transactions ... or turning a situation into a coverage-precluding "insured vs. insured" situation (the separation of insured condition, not withstanding). One example involved joint owners who transitioned into the roles of buyer vs. seller and "slander" allegations ensued. I wonder if the potential for being paid would have diminished if all the individuals had been specifically shown as named insureds.

Barry suggests using a blanket "as their interests may appear" categorization at the end of the long list which seems anathema to some insurers. But that's a minor point.

Are there any legal write-ups on the "individuals issue"?

--Jeff Dunn, Lamb, Little & Co., Rolling Meadows, Illinois

Barry Klein responds.

More than anything else, there are two main, related reasons for using such a broad Named Insured wording. The first is that you make sure that there's no way that an insurance company can find a way to get out of a claim that it might not want to be on. Now, you and I know that an insurance company isn't going to really be able to wriggle out on a minor technicality, but you know that there's always that grain of suspicion in the insured's mind.

Second, and probably more important if you're in a sales situation, it puts the holding broker in the position of having to either defend his incomplete work (it's very obvious to an insured) or else agreeing that he can use the same wording, at no charge, which means he's just admitted doing an inferior job.

As to any legal write-ups on the Individuals issue, I'm not aware of any, but I haven't been watching for that, though.

And finally, in all fairness, the last time I was an agent, back in the late 1800s (OK, it only feels like that long ago--it was really the early '80s), it was a soft market, and today it's a very hard market. I suspect that underwriters today are not as flexible as they were in the "good old days." *