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Looking for a market for Arizona used car dealer. Many vehicles are purchased from auction or other dealers and have salvage titles. Insured does some minor body/service work and turns them around. He also occasionally does body work on vehicles he does not own. Current carrier is cancelling due to non-compliance with recommendations. Insured says he has taken care of all clean-up and housekeeping issues but is not getting good communication from current carrier. Current policy expires soon and I highly doubt we will have loss runs prior to needing coverage. Thanks!!
Salvaging Clients/Prospects In A Stagnant Economy
Policy Highlights: Colonial General can provide your salvage yard business with the coverage it needs. Our Commercial Garage department has a vast array of coverage solutions as well as an experienced staff that will ensure you have access to the coverages you need! Call us today for a quote! Commercial Garage Coverage available: • $3,000,000 Liability AGG • $5,000 Medical Payments • Broadened Coverage • Dealers Physical Damage • False Pretense Coverage • Fire Legal Liability • Garage Keepers Coverage on a Primary basis with specified causes of loss • Garage Liability Limits up to $1,000,000 for each accident • In-Transit Coverage for Towing Operations • "AS IS" Auto Sales are acceptable • Yard or Impound Lot must be fully fenced and gated • Property Coverage Available
Claims Adjusting In A Hard Market
Agents who’ve experienced a hard market know that claims are often scrutinized much more closely than they are in a soft market. Unfortunately, circumstances sometimes lead to the denial of claims that are covered regardless of market conditions. This document by the Virtual University faculty provides an example of what you might see more of in the months to come. 'Can the expiration of a lease trigger the end of a Business Income (BI) claim? We have a retail client who had a location at the World Trade Center in New York. His lease technically expired on 12/31/01. Even if he wanted to, there is no lease available to sign, and probably won’t be for some time. Prior to 9/11, he had every intention to renew the lease, and also was planning to extend his space. The insurance company has frozen any further claim payments because they have found out about the lease expiration. Additionally, the company has had all inventory taken from this store, but they have not yet paid any salvage because 'they have not yet been paid.’ This also seems ludicrous. What do you think?' You don’t want to know what our faculty members think about this claim as presented. However, below are their comments, edited as a matter of public decency. FACULTY RESPONSE NO. 1 Assuming ISO forms, neither of these situations makes sense. Expiration of a lease has nothing to do with BI recovery. The end of a lease does not end BI recovery absolutely, and salvage is something a company seeks after they make payment as called for in the policy. FACULTY RESPONSE NO. 2 No, there’s nothing in the policy that says the expiration of a lease causes a BI claim to halt. Is the company using Special Exclusion 4(b) in the Special Cause of Loss Form (Leasehold Interest) as their reasoning for the termination of payment? That type of loss doesn’t appear to be at issue here. FACULTY RESPONSE NO. 3 The lease has nothing to do with the BI payment. The 'period of restoration' definition does say... ends when the property at the described premises should be repaired ...' It doesn’t say anything about the lease. FACULTY RESPONSE NO. 4 Let’s deal with the salvage first. The carrier gets the salvage when they pay the claim. The insured should demand payment according to the contract, usually within 60 days. The Causes of Loss form states that if a contract is cancelled, the payment of the BI loss would end at the expiration of the Period of Restoration, and not pay for the cancellation of a contract beyond the period of restoration. The carrier is applying a theory that isn’t stated in the contract, nor supported in the cancellation of contract exclusion. The Period of Restoration is the governing factor that will determine the length of claims payment. The policy and case law are clear that the insured doesn’t have to reopen after a covered loss, and that the carrier’s obligation to pay net profit exists for the Period of Restoration. The same would apply for this lease example. In practice, and also in several of the BI forms, if the insured has a lease with a renewal option, the option is considered activated in the event of a covered loss. This would extend a five-year lease with a five-year option into a ten-year lease. This benefits the insured when calculating the unamortized value of Improvements and Betterments if not replaced or under the Leasehold Interest coverage form. FACULTY RESPONSE NO. 4 On the salvage issue first, this is totally inappropriate. When the insured turned over the inventory, the insured must be compensated up to the applicable limits and terms. The recovery of salvage is a back-end activity. If the company recovers salvage, they apply it first to the insured’s uncovered direct loss, then to the payment by the carrier. The salvage process has no bearing on the initial payment to the insured. About the termination of the lease, the question needs to be explained further. First, do the lease payments continue following destruction of the leased property? If so, the expense for rent is no longer valid in the calculation of the Business Income claim, unless the insured leases or rents at another location. If they rent/lease at another location, the rent component will be based on the rent prior to the loss. If the rent is higher, Leasehold Interest coverage would be needed. Second, if the lease payments were to continue post-destruction, was the lease renewable at the insured’s option or did it have different renewal terms? As long as renewal terms were included and there was no indication of non-renewal, the continued lease payments would be included as a continuing expense. Remember, for an item to be included in Business Income, it must be a continuing expense, not just an expense that existed before the loss.