InsurOp-Ed: Horrible Policy Forms and Endorsements To Avoid or Be Wary Of

April 28, 2023….Today, a NY agent sent me an endorsement that is being attached to CGL policies covering habitational properties. He says this type of endorsement is being used by multiple insurers who write this class of business.

The endorsement in question is called “MAINTENANCE WARRANTY ENDORSMENT” <sic> and, yes, they misspelled “endorsement,” a common signal that a form may be problematic for an insured. The endorsement has a number of grammatical and punctuation issues.

The form includes three exclusions, one being an exclusion for failure to maintain a premises in a safe, sanitary, healthy, habitable, and tenantable condition. Needless to say, an exclusion this broad can be stretched to exclude a lot of things. This is not unusual in the E&S marketplace where forms are frequently developed in-house and not always by skilled and experienced policy form drafters. Which brings me to the next issue.

The form number fits the standard ISO format and begins with “CG 90….” The problem is, unless I’m mistaken, ISO still has no CG 90 series for forms. I don’t stay on top of ISO form changes as well as I used to, but there has not been an ISO “CG 90” form series I’m familiar with. ISO leaves certain categories blank so that subscribing insurers can develop their own “CG” forms within those series.

Compounding the problem, the copyright notice at the bottom of the page says, “Copyright, Insurance Service Office” <sic> and, yes, the proper spelling includes the word “Services,” not “Service.” Sometimes ISO subscribing companies will license ISO language for use in their proprietary non-ISO forms. However, when they do, the copyright notice reads differently than that on a pure ISO form. I discuss this in another blog post:

“Is It ISO or Is It Memorex Insurance Company“

In addition, if it’s a pure ISO form, the copyright notice will include a date reference, but if it’s not a pure ISO form, the copyright notice may not include a date reference.

For independent agents in particular, it is difficult (to say the least) to familiarize yourself with several thousand ISO forms, much less thousands more non-ISO forms. When you encounter a new form, particularly in the E&S marketplace, be VERY VERY careful. When placing coverage for a customer, you may request certain products or forms, but invariably the delivered product will include forms you didn’t request. RTFP!

To dig deeper on this subject, including the critical importance of reviewing policy deliverables, search my web site for “deliverables” and a short list of additional articles will come up:

https://insurancecommentary.com/?s=deliverables

I talk about these issues in my book “When Words Collide: Resolving Insurance Coverage and Claims Disputes.” In addition, not long before I retired from the Big “I,” the late John Eubank, CPCU, ARM and I did a webinar and the handout is still available online:

“Horrible Policy Forms and Endorsements To Avoid or Be Wary Of“

We give a number of examples of types of non-ISO forms and even specific ISO forms that should be avoided if possible and a few that are often misunderstood.

Once again…RTFP!

Bill Wilson, CPCU, ARM, AIM, AAM

Founder at InsuranceCommentary.com

One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America.