Yesterday I was on the road all day and met a number of insurance brokers along the way. One of them shared with me a claim dispute a client of his was dealing with. The client, a clothing retailer, suffered a significant loss from “riots and civil commotion” at one of their stores during the summer of 2020. Their carrier only agreed to cover some of their damaged/lost merchandise since the policy contained a fur exclusion and all their hats (the fur felt type – think Indiana Jones) were made out of fur. The exclusion was not contemplated in that manner when the policy was procured since it was perceived more of an exclusion directed at fur coats or something that is more ostensibly made of animal fur, which the retailer did not sell.
It is always good practice to review policy exclusions with client and discuss their relevancy prior to binding. The policyholder may be able to better predict and foresee the applicability of the exclusions in order to avoid scenarios like the one above. At the very least, they will be aware of the exclusion and even if they did not envision such a consequence, it can potentially protect the insurance professional from accusations of professional negligence as a result of a claim denial due to the exclusion since the policyholder was aware of its presence in the policy.