If you’re a new lawyer, or perhaps you’re a not so new lawyer who just hasn’t had any reason to be involved in coverage matters or coverage disputes, this article is for you. The qualification for everyone else is that this is very basic material. What I’m going to talk about is how you go about analyzing insurance policies, and more specifically right now what ‘occurrence’ based policies. Since this is a topic devoted to the relatively unsophisticated reader, one should know that there are many different types of policies and two of the main types are ‘occurrence’ based or’ claims made’.
In this blog we’re just going to talk about ‘occurrence’ based policies. The concept of “occurrence” is something that has given rise to loads and loads of cases, particularly involving commercial policies. I believe that one of the reasons that there is so much litigation over the issue of “occurrence” and many differing opinions, differing outcomes and different analysis is because the people analyzing insurance policies have done so without adherence to the basic rules and best practices for analyzing insurance policies.
The structure of any insurance policy is important to understand. Most policies have a cover page followed by the Declarations which will list all of the coverages and forms. The first step in any review of a policy is to make sure you have all forms and endorsements by comparing what is listed on the declarations with the numbers of the forms that are attached.
Following the declarations you should see the main policy form or coverage part which should in turn be followed by all applicable endorsements.
We had a claims person at my company that trained new claim representatives to approach coverage analysis on a basic level using the acronym DICE which stood for: Declarations, Insuring Agreement, Conditions and Exclusions. There are other important parts of a policy including the Definitions and endorsements which may change the language of the base policy. I will discuss those in later blogs.
For now, we will focus on the basic DICE analysis. DICE is the correct order of analysis and review. Resist the urge to jump to exclusions—you must understand the scope of coverage before you can decipher what is not included within it.
This chapter covers the basic aspects of the ‘D’ in DICE analysis. I will follow up in later blogs with the rest of the sections but keep in mind that for all of these discussions, they are intended to be introductory and not a comprehensive treatise of any of them.
You might think, why do I need to examine the declarations, it’s my client’s policy isn’t it? Is it though? I cannot tell you how many times I reviewed policies involving entities who submitted claims under policies that for one reason or another did not provide them with coverage.
The first step in reviewing the declarations pages is to reconcile the Named Insured designated specifically as the ‘Named Insured” with the exact name of your client, especially if the client is a business.
Any difference between who you represent and who is listed as a named insured is a matter that needs to be investigated. It is also worth noting here that a named insured is just one of the types of insured under any policy of insurance. Persons or organizations insured will be stated in the policy. Other individuals or entities may also qualify as insureds by definition or by endorsement. A carrier’s obligation may not be the same for these types of insureds as the obligations it owes to named insureds.
The address under the named insured is where mail is directed and not necessarily what property is insured. Do not assume that the address is an insured property. Check the locations listed in the declarations.
Note the effective dates of the policy. Make sure it covers the relevant period for your claim and if not- obtain the policy for the correct term and make sure it is the complete policy in effect on the date of any property damage, bodily injury, personal injury or advertising injury for which you are analyzing coverage.
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