“What we’ve got here is … failure to communicate.” The iconic line of the prison captain to Luke in “Cool Hand Luke” resonates with me every time I am involved in a case between a farm or ranch operator and his/her insurance agent. These types of cases come about when a disaster strikes and the insurance company denies a claim on the premise that the insurance policy did not cover the loss.
The subsequent scene unfolds the same way:
Operator to insurance agent: “Why didn’t my insurance cover this loss?”
Insurance agent to operator: “You never requested that type of insurance.”
Operator to insurance agent: “You knew my operation included “X”, so why didn’t you obtain coverage for “X”?”
Insurance agent to operator: “You never never told me you wanted “X” covered.”
The fallout can result in a lawsuit pitting the operator against the agent, which is costly to both sides despite the outcome. With few exceptions, an agent is only required to obtain the insurance that is requested. The following 5 tips can help the operator ensure that the appropriate insurance is requested and obtained.
1) Education: While the agent is the “expert” on insurance, the first step to ensuring you have proper and adequate insurance is knowing what you need.
2) Preparation: Prior to meeting with the agent, make a checklist of the property and activities which need to be covered and the extent of coverage for each item.
3) Be thorough: A lot of errors occur during the application process. Take your time and go through each section of the application to ensure that everything you want covered is being requested.
4) Read the policy: Make sure you have read and understand all the provisions and how they may apply to your operation, especially the exclusions.
5) Follow-up: Big problems occur when an operation adds property or changes activities. Do not assume that your agent knows of these changes or will automatically add any changes to your current policy.
Insurance is not cheap so you better make sure the investment you make will pay off come some unexpected event.