Claim Stories: Missing Reports on Reporting Form Policy

Claim Stories: Reporting Form Error

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6 min

What will you be sharing today, Rachele?

So, we're going to be discussing the reporting form policy itself. Some of the coverage conditions, the coverage IDs. We're going to be looking at the responsibility that our agents need to be talking with our insureds about. What are they responsible for when they get a monthly reporting form or an annual reporting form?

Tell us about this claim example.

So, we have a monthly reporting foreign policy that was written. It was a new construction loss. Coverage was triggered because of the fire loss. So, the project was under construction. the insured reported this loss location. That's number one. To trigger coverage, you got to have the loss location reported. So far, we're good.

What went wrong?

The adjuster was able to determine we only received four reports. And we should have received six reports, being a monthly reporting form. The HBIS-4 condition reflects we have to receive all reports that were due at the time of the loss, and we did not. So, what happened is only 66.7% of the loss was paid. And let me explain how it's paid.

They first determine what the total loss is. They take the deductible from that amount. Then they put the penalty on it. So all they got was 66.7% of that final number. So the insured suffered a $4,000 penalty that they did not get paid. You know, that could be the contractor's monthly salary.

How can agents avoid a mistake like this?

First, you need to decide does the insured need to be on monthly or annual. You know, you determine that very easily. Look at the monthly rate. Find out what the length of time their projects take. If a project only takes three months, multiply that rate out and then look at what the annual rate is. If that's smaller than the annual rate, put them on monthly.

Just remember with monthly: you have to report every month on time. Then, if it's annual, put them on an annual. They only report once a year. Then I think what they need to do is go through what's eligible under our reporting form. Are we talking about new construction? Because that's what we report. You can do remodeling, but it only covers renovations only.

You cannot extend coverage to existing structure. Next, you need to understand the exclusion in the policy around pre-existing. Our policy covers new starts. So if you're writing a reporting form policy that maybe he had coverage with another company on a reporting form, now that's considered a pre-existing start. It's excluded. Unless we tell our insured to report it within five days from the policy's effective date of being written.

Put “PE” by it, and then we'll cover it, and we cover it up to 12 months. They will not get a renewal on it. So, we can only do 12 months on it. But that's the only way you're going to trigger coverage for PE. Then you've got model homes. Our policy will pick up model homes. But again you have to put a coverage identifier on when the insured reports it on the actual reporting form as MH.

Our policy will pick up model home contents, which is known as MC. When they put MC, we will do the model home contents. The insured needs to report a scheduled location where those contents are setting. If the insured likes the idea of taking their contents and moving it around from one home to the next on their show homes, then do a blanket model home contents and the insured needs to understand when they get a report from us.

What is Y3? Y3 comes with a higher rating and it means it's the year three. You don't go past three years on this reporting form policy.

Who is a good choice for reporting form?

I think the key question is, will you have a dedicated person to send in the reports? Contractors are busy. You know, it's hard right now for them to gather information for when a claim does occur, let alone send in a report every month. You know, maybe review with that dedicated person off of work criteria and the guidelines to report.

We have the blank reporting form that you need to print any way for them to fill out preexisting. But go ahead and print a blank form for them to understand the columns. Ask what they're filling in on those columns so they know how to do it properly.

Why shouldn't agents manage reports for their insureds?

So our reporting forms and our guidelines that we send out instructs the insured. We expect the insured to fill these reports out and send it direct to us. We notify the agent every week whenever we get one of their reports from their insureds: what report they did, the location address so they can address the certificate that they had issued, because they've got to send those certificates, if they never reported the job.

What should agents do instead of managing the policy?

You know, look for those weekly start reports. Those weekly start reports will tell you all those charts that reported the minute a new start is started. If there is a lead on this with a mortgagee, they're going to be called and they're going to be asked to do a certificate of insurance. You keep that certificate of insurance in front of you.

Because, by the end of the next month, they should have had a report from a weekly start from us to show that it was reported. That's when they know it was. If it's not, they need to contact the insurer to meet and say you need get this reported. Remember, tell your insureds if they failed to report a start, they can still report it.

It's just going to be late. Don't hesitate to call our 800 number. Our service reps, our underwriters are here to assist you. So, give us a call.

This is intended as a general description of certain types of insurance and services available to qualified customers. Any description of policy provisions is meant to give a broad overview of coverages and does not revise or amend a policy. Refer to the policy coverage form for a complete representation of the scope of coverage, terms, conditions, exclusions and more. The policy is the contract that specifically and fully describes your coverage. Some products may not be available in all states and may only be offered on a non-admitted basis. Product availability is subject to change.