Insurance helps businesses in a variety of ways. But some businesses encounter problems such as poor broker guidance and negligence, disputes over business interruption coverage, and breaches of contract. If this has happened to your California business, I can help. I can assist with your insurance claim and litigation if necessary.
Businesses rely on insurance to provide various forms of coverage. Policies can cover unexpected losses, interruptions, and liabilities of the business. However, this area is ripe for disputes between the insured and the insurer. The insurance company may deny a valid claim or a broker could provide poor advice and guidance. The financial consequences of these disputes are potentially significant.
If your business has encountered one of these issues, you may need legal guidance. I assist California businesses with the complex challenges of insurance coverage and help them receive the full benefit of their policies.
Broker Negligence
Businesses turn to insurance brokers and agents for assistance obtaining appropriate insurance coverage. But the broker may engage in negligence that exposes the business to liability or causes the business to incur financial losses. Broker negligence cases involve a number of different issues, including:
- Failing to obtain the requested coverage for the business
- Recommending inadequate or inappropriate coverage, where the broker took on a duty to advise
- Failing to explain important policy terms and conditions
- Allowing the business’s insurance policy to lapse
- Failing to communicate with the business about the insurance policy
Whether a broker is liable usually turns on what was asked and what was promised. California does not impose a general duty on brokers to make sure a business is adequately covered. That changes where the broker held themselves out as advising on the coverage, answered a specific question wrongly, or misrepresented what the policy would do. Those distinctions are where these cases are decided, and they are worth establishing early, while the emails still exist.
If your business has discovered that its insurance policy does not provide the coverage you expected, let me help. I can review the broker’s behavior, including the broker’s communications with you, and assess whether your business has a potential claim against the broker or another responsible party.
Business Interruption
A business interruption can cost a company dearly. Lost income and numerous related expenses are not uncommon. The purpose of business interruption insurance is to help protect businesses against these situations by insuring the business against certain covered interruptions.
Business interruption coverage usually turns on one threshold question before any other: whether there has been direct physical loss of or damage to property. That question is examined first in any interruption claim, and it is where these disputes are usually decided.
Every business interruption policy is different, but a particular one may provide coverage for:
- Lost business income
- Continuing operating expenses
- Additional costs the business must incur to keep operating
- Certain expenses related to restoring full operations
Disputes can arise over such questions as whether the business interruption is covered under the policy, how long the interruption has lasted, how much money the business has lost because of the interruption, and whether specific expenses are eligible for coverage. A detailed review of the policy and the insurer’s decision is often an essential first step in assessing whether the insurance company may have breached the policy.
Business Disputes and Breach of Contract
Insurance obligations are written into commercial contracts all the time, and they are usually the provisions nobody reads until something goes wrong. Leases, vendor agreements, subcontracts, and service contracts routinely require one party to name the other as an additional insured, to procure coverage at specified limits, or to indemnify the other for certain claims. When a loss occurs, those provisions determine who pays.
When a claim is made against your business, the question is often whether someone else owes you a defense. Contractual indemnity and additional insured status are separate routes to the same result, and they operate differently. Additional insured coverage runs through the other party’s policy and is limited by the endorsement’s language, which may cover only liability arising out of that party’s work and may be primary or excess depending on how it is written. Contractual indemnity runs against the party itself. The two frequently produce different answers, and the difference is worth understanding.
A counterparty that promised to obtain coverage and did not has breached the contract. These disputes often surface late, when a tender is rejected and the certificate of insurance turns out not to reflect what was actually issued. If your business is in a dispute over who owes a defense or whether required coverage was ever placed, I can review the contract, the policies, and advise on your position.
A Note on Timing
Insurance and broker disputes carry deadlines that arrive sooner than businesses expect, and they run on different clocks. A claim against an insurer is often governed by the policy’s own suit provision, which is separate from the ordinary statute of limitations and frequently shorter. A claim against a broker runs on its own timeline, and the harder question is usually when it started. A coverage gap is often discovered only when a loss occurs, and the claim is denied, sometimes years after the policy was placed.
Either period can be consumed by an appeal, a supplemental submission, or an extended negotiation without anyone treating the matter as a dispute. If your business is some way into one, it is worth establishing where you stand before going further.
Defense-trained. Policyholder-focused. Reach Out Today!
Has your business run into insurance coverage problems? Or are you unsure whether the insurer is abiding by the policy? Connect with me to learn more about how I can serve the legal needs of your organization. I meet with clients in English, Armenian, and Russian.