Ask Tim

When Does a General Liability Policy Not Provide Any Liability Coverage?

An IIABNY member emailed me last week about a quote she had received from a wholesale broker for a Businessowners Policy (BOP). The quote was from a surplus lines carrier that is a member of a large, nationally known insurance group. I will leave the names of the carrier, wholesaler and retail agency anonymous.

The BOP is intended for a transportation company. By definition, the predominant risk for a company like that is in the automobile line of coverage; the property and liability coverages, while still important, tend to be an afterthought. The member had concerns about a prototype endorsement that was included in the quote, and she wanted my thoughts on it.

Rocky Mountain High: Court Confers Cannabis Coverage For Colorado Company

How could I not write a post about this one? Growing, possession, sale, etc. of marijuana, as you may have heard, is illegal under federal law. Conversely, an increasing number of states have made it legal, at least for certain uses. New York is in the midst of implementing a temporary law that made use of medical marijuana legal.

Two states and the District of Columbia have legalized marijuana for its, um, traditional use. In Colorado, you can buy it in stores, not on street corners. This is the sort of use that Congress had in mind when it prohibited marijuana back in the 1930’s. Consequently, the U.S. has a classic federal-vs.-state conflict when it comes to the regulation of this substance.

This comes back to insurance. (Repeat after me: All things come back to insurance.) Property insurance policies do not cover “contraband.” “Contraband” refers to goods prohibited by law. Marijuana certainly seems to fit that definition, at least if one is referring to federal law. Suppose, though, that the insurance and the property are in a state that has taken a more tolerant legal attitude? Does the insurance cover it then?

A federal district court in Colorado decided this question two weeks ago, and it said, “Yes.”

When Can I Place a Client With a Non-Admitted Carrier?

IIABNY members often call the Research Department with this question. Here are the rules:

In general, an excess line broker may not place a risk with a non-admitted carrier unless she has obtained three declinations from admitted carriers. These carriers must be licensed to write the kind of insurance in question. In addition, she must have reason to believe those carriers might consider writing the type of coverage or class of insurance involved. New York Insurance Regulation 41 lists five criteria on which the broker can base her reason to believe that these carriers were markets. For example, recently writing that type of coverage or class of insurance; advertising; articles in the media; and conversations with other insurance producers are all valid reasons.