Have you ever had a situation where your client had a loss before the policy was even issued? It happens, and it actually happened to me back in my days as an underwriter. My account (a big printer) had a Mercedes stolen before I even had the policy issued.
What if your client had a loss before the policy was issued and the claim was denied due to some exclusion in the policy? The client could contend that they had no knowledge of what the exclusions were and might go so far as to state that they would not have purchased the coverage had they known all of the exclusions.
Would they have a case? The agency might have somewhat of a defense if they had listed the exclusions on the proposal. Unfortunately, the titles provided to some of those exclusions might not provide enough clarity as to what the exclusion actually excludes.
Listing the exclusions (or at least some of them) is a good idea. However, if you are going to list some exclusions, it might be best to include the following statement: “Exclusions include but are not limited to the following”.
There are a couple of additional approaches.
– Include specimen policies with your proposal. This might be cumbersome to do this for all coverages, but it is especially important on coverages (such as E&O, D&O, Cyber, EPL, etc.) where there can be significant differences among the various carrier forms.
– Include a statement in the proposal that “Specimen policies are available upon request”. This is extremely easy to implement and probably won’t result in many clients actually asking.
As I have noted in probably every E&O class I have ever taught, at the time of a problem, there are two buckets. One bucket for the client which would include all of the issues that favor the client. The other bucket is for the agency and would include those issues favorable to the agency. The goal is for the agency to have as many items in their bucket as possible. Including specimen policies or even the statement that “specimen policies are available upon request” would be an item that would be in the agency’s bucket.