Understanding insurance policies/contracts and how COVID-19 affected businesses and insurance policies – Radio Guesting July 23, 2020

Understanding insurance policies/contracts and how COVID-19 affected businesses and insurance policies – Radio Guesting July 23, 2020

| Blog Insurance Recovery News & Updates

The information and opinions you hear on this radio show are those of our guests and callers and do not necessarily reflect the opinions of KFNX affiliates management or advertisers.

Welcome to networking Arizona with host Carol Blonder. You’ll hear interviews with businesses located throughout the valley. Networking, it makes a difference.

Welcome to the show everyone. I hope we have a little bit of rain out there. We’re inside right now, networking with everybody I told everybody to talk within three feet of you and that’s exactly what we’re doing. With everyone out there about what we do. My first guest has never been on with me before I have with me Troy Froderman and he is one of the principals of FR Law Group, you’re a local law firm that specializes in construction and insurance. Welcome to the show. Tell everybody a little bit about yourself and what you all do.

Thank you, Carol, appreciate the opportunity to meet with you. So I have been practicing law in Arizona and Phoenix, specifically, for the last 31 years. My law partner has also been practicing in Arizona for over 20 years. We come both from large institutional backgrounds and decided a few years ago that we take a shot at forming a small law firm that where we could focus exclusively on helping our corporate clients on insurance claims, as well as helping them with their construction needs.

Well, wouldn’t you be the first time you were supposed to be on, I was I was kind of wondering what that meant, right? How important is it for people to you know, in business to have with your insurance claims to have an attorney, let’s say like you who’s going to represent them? What’s the bottom line with that?

So, you should look at your insurance portfolio as a business owner, as an asset. Often we see that corporations when they buy insurance is because they are required to either through some regulatory scheme, or just as a matter of doing business, but once they have the insurance, they don’t think about the policies anymore until renewals come up. And that’s not the correct way to actually look at your insurance portfolio. And the reason for that is that when you have a claim or a loss, you need to be ready to look at your policy, understand your policy, and already be aware of what the terms and conditions are. If you’re for the first time trying to assess whether you have coverage for a loss at the time of the loss, you’re behind the curve on that the insurance companies – when they Issue policies, the policies themselves are multi pages. But the portions of the policy, they actually provide you with coverage either for, let’s say, on a general liability policy for property damage or bodily injury. The portion of the policy that actually provides coverage is usually two paragraphs, and maybe 15 to 20 page document. In an insurance policy is nothing more, nothing less than a contract. So it has terms and conditions. The vast majority of the policy is the exclusion portion of the policy. So it’s really important to understand when you’re first acquiring the policy, to understand what you’re buying, and make sure that the coverage you want is the coverage that you’re receiving. And it’s also important when you have a loss after having the policy to understand the best way to present that loss to the insurance carrier because there are there are ways to present it that broaden coverage, as opposed to just letting the insurance company dictate the terms of how they’re going to respond to the coverage.

So we’re live on Facebook. So hi to everybody out there like us and follow us. We’re going to share the show in just a minute. I’m so intrigued, right? Because I am a business owner, does it matter how small or how large the company is that you work with?

Not really, what we typically do is we look at the severity of the loss. And so if, if your loss is, you know, nominal to your bottom line, then you probably don’t need FR Law Group. If the loss or the liability is what I’d say a material impact to your business. Then FR Law Group is very important.

A lot of people have had, I’m going off this right now for a second so got a lot of people have had a lot of significant damages, whether it was from– we had the writing a little bit. I don’t know how many people got affected by that. But there were some as well as you know, COVID in general has affected people in their business and this now, I don’t know how far it goes with you. And that’s my question, because a lot of people out there have been at right, now have suffered quite a bit.

Yeah. So in terms of the business segment of COVID-19. FR Law Group and other firms in our position are extraordinarily busy responding to business income interruption, ranging from bars, restaurants, to manufacturing, to colleges, schools, there is no segment of the economy that hasn’t been impacted, as we know from the high unemployment rate, and just the the utter destruction of the economy as a result of COVID-19. So businesses have almost every business that I deal with has a property policy. Usually, if you’re renting the landlord requires it. If you have your own manufacturing facility, whatever, you will have a property policy. And it’s the property business policy that provides protection for business income interruption. And so what happens is I give you a brief example, I represent a very well-known University. And as a result of the governor’s orders, they were required to essentially dismiss their students for the semester,

them and a lot of others.

Right. And so they suffered a significant loss of revenue as a result of the students not being on campus. You can just imagine, just say, for example, the cafeteria revenue is goes from x to x times zero, so it’s zero at that point. So what we do is we look at the policies and we submit the claim to the insurance carrier for the business interruption loss under the property policy, then there’s a significant back and forth between us and the carrier because remember, the two paragraphs that provide coverage and then the hundreds of other paragraphs that take it away. So it’s very complicated. And the carriers and particularly with COVID-19 they take a very hard stance because if they provide business interruption to policy holder A for COVID-19, then they’re looking at thousands if not hundreds of thousands of additional policy holder claims.

Well, you know, listen up, everyone. You’re a business owner out there. If you’ve been affected, you have every right. You do free consultations with people? We do. Okay and their phone number to call its area code 602-566-7425. You’re located right at Camelback across from Xavier High school. Right, but you work statewide. You told me before?

Well, on the insurance coverage issues, we work around the country,

Just as countrywide so it’s nationwide. Okay.

And so there are, it’s critically, critically important during this pandemic, to understand what your policies provide for. And if you haven’t done an inventory of your insurance policies, you should do it immediately

Dust them off, and bring them off. It’s just like other things in life, you know, and he, first of all, make sure you’re covered number one, that’s number one important and I have to tell you, even me, as a small business owner, I’ve had something happen to me and my and it always takes something to happen before people do stuff, right they before they even have it, but if you do and you have it, dust it off, bring it out and have them look at it to find out if you have been affected. You obviously have to know that you got a case right? Right. Okay, the number to call them again, it’s 602-566-7425. They do free consultations. They’re rated with the Better Business Bureau. They work nationwide. The number to call is, is area code 602-566-7425. It’s frlawgroup.com. We’re going to go to a break, we’re going to come back because I want to know a little bit more about this. There’s a lot of business out there that have been suffering. And I’m sure it just depends on what you’re dealing with what your case is. And obviously you’ve got big businesses out there small businesses, but we’ve all been affected in some way. Check them out on their website, it’s frlawgroup.com their phone number again 602-566-7425. Hang tight. We’ll be back in just a minute.

Welcome back everyone. We’re live on Facebook, so Hi to everybody. I’m gonna be sharing the show right afterwards. We’re talking with Troy Froderman. If I said it correct I wanna make sure and then and we’re talking a little bit about, obviously, people with insurance claims and their businesses, and I was talking to you about my story and then you know at the break, and honestly, it’s all about down to what has happened to you, you really have to, you know, kind of talk to them. You do free consultations with people. A lot of us have been hit business interruption with the COVID is huge. But it’s not everything you said you had a story that you want that you want to talk about.

Yeah, I think this will resonate with a lot of people. So just like you have specialists in the medical field, lawyers have become specialists as well. So the old days of the lawyer doing Family Law, Criminal Law, Civil Law, all at once the same lawyer that those days are history. So for my particular specialty, because I’m in the American College of coverage counsel, which there’s only 1% of all lawyers in the country part of the college yet it’s based on experience and your, your ratings. Because of that, and that’s all I do. I have a close relationship with a lot of insurance agencies and insurance brokers. And one of the things that we do in concern with them is when they are going out and doing renewals for a business’s coverage. We talked to them about, here’s what we’re seeing in terms of claims that might impact that particular client’s industry. And so ironically, one of the things that came up during COVID-19 was one of the nation’s largest insurance companies had included what’s called a infectious disease endorsement. And it provided coverage up to $100,000 if there was some type of contagious or infectious disease that created harm, and who is going to argue that COVID-19 doesn’t fall in.

I was just gonna say, Don’t we have that right. We do.

So, on renewal, this large carrier is taking that endorsement off and not providing it to prospective policy holders. And so I asked the broker I said, Ask the, Ask the underwriter because the underwriter doesn’t get involved in claims. Ask the underwriter if they’re taking that endorsement away, because of COVID-19. And of course, the underwriter said, “Yes, we are”, which then goes completely contrary to what the claims folks at the insurance company has been saying that that endorsement was never intended to provide coverage for a pandemic. Well, obviously, the underwriting department of the same company disagrees with that analysis.

Well, let me tell you what I love about my show the most

So we typically get called frequently with regard to whether it so there are different types of policies. There’s what’s called an occurrence-based policy. So if you get into it, just think of an auto policy, you get into an accident in 2020. Arizona has a two year statute of limitations. You get sued in 2022. Well, it was a policy in 2020. That provides the coverage because that’s when the accident occurred, okay. There’s what’s called claims-made and reported policies. And so you may have a claim that occurs in 2020. But the lawsuit doesn’t follow until 2021. While you’re in a pickle, and here’s why, because a claims made policy only provides coverage for a claim made during the policy period. So since the accident was in 2020, but the lawsuits in 2021, the 2020 policy doesn’t provide coverage for that. And then the carrier for 2021 will say, “Well, this was something that predated our coverage, and that’s excluded”. So, in that realm, you’re left with a gap of insurance. So we get called by businesses because businesses are 99% of the policy holders that have claims made and reported policies, we get calls. I want to say every day with regard to a similar factual pattern that I just laid out there, there are arguments that can be made, that the 2020 policy still applies because it may have a time period, extra endorsement to it. A lot of things again, that you just hearkened back to reading and understanding the policy,

How important is it to have somebody like you, an attorney do that for you? Well,

I’d say it’s critical. And typically what we do with with our with a lot of our clients, they have their own in-house lawyers and a large department of lawyers as well as risk managers. And so they typically are pretty sophisticated. And so what they bring to us are the really difficult and challenging issues that I particularly enjoy.

I bet you you do. Now, their phone number to call is 602-566-7425. They do free consultations. Their website is frlawgroup.com. They’re rated with the Better Business Bureau. They’re located right here at 7th Street and Camelback right across the street from Xavier high school but they help people nationwide and the number to call them direct. It’s area code 602-566-7425. Okay.

I bet you you do. Now, their phone number to call is 602-566-7425. They do free consultations. Their website is frlawgroup.com. They’re rated with the Better Business Bureau. They’re located right here at 7th Street and Camelback right across the street from Xavier high school but they help people nationwide and the number to call them direct. It’s area code 602-566-7425. Okay.

What is a way to lower a premium then for a particular policy?

So that I’m glad you asked the question. So there are a myriad of ways to do that. One is to have a higher deductible, the higher your deductible the lower

Sounds like health insurance. Yes,

Exactly. Except this policy actually provides coverage.

Haha, that’s great. That’s good.

Thank you. Also, you could have a retention which is different than a deductible. The retention is you pay your, the legal fees up to a certain amount, and then insurance kicks in. So that’s another way to lower your premium, both of which are pretty commonplace. For certain businesses, say for example, a construction company. It’s commonplace to have what we call captive programs. And so you have a number of similarly situated, say subcontractors in the electrical field. They may all pull their resources together, create a captive program to lower their risk and to lower the premiums. And one thing I did want to just briefly talk about when it comes to premiums, there’s this rumor floating around for the last hundred years, that if you assert a claim under your policy, that that’s going to negatively impact your premium. Right everybody thinks that. That’s not true. It may be true under certain circumstances, like with workers compensation, because there’s a rating that goes into determining the premium because it’s regulatory type of policy. But on a business policy, for the most part, it’s, depends on whether it’s a soft or hard market, but typically, the AIG, the travelers of the world, they’re very aggressive with one another and they want to get take somebody else’s policyholder. So making a claim does not necessarily have a negative impact. Let me

ask you this. I’m going to go right to the end ‘cause we’re almost done here. What recourse does a business have in insurance carriers if the insurance carrier denies the claim?

Yeah, there are many, many ways to respond to that. And maybe we do that on a later program. But so the easiest way to respond to that is not just to take the denial letter and put it in your filing cabinet move on to the next issue. You should speak with your broker First of all, and get their input on it, then go to somebody like me, and have me review it. We often do that at no charge, and then just we’ll tell the client or the prospective client, our assessment of it. I don’t like to chase bad claims. So if I think that the insurance carrier’s right, I will tell the policyholder that. Otherwise, if I think that there was a misdirection on it, then typically what we’ll do is we’ll we’ll respond with what we call hammer letter. And that’s responding back to the insurance company and saying, hey, you’ve missed the point here, and every policy has a duty of good faith and fair dealing. So we’d like you to go and take a fresh eye on this. And that’s always

good to have somebody do that for you a hammer letter. I like that.

But really in all, all honesty, it’s all about the case, just like in anything else. And that’s where you would do a consultation with them, find out where they stand, especially right now, if anyone has been had any kind of business interruption really important that you know talk to them, because they might be able to help you on, on your loss with that, but also for anything else that might have happened in your business. What are your final words for everybody today?

So not all insurance companies are bad, but not all insurance claims are bad. So it’s so important to understand to have somebody on your payroll, looking at your coverage and consult with your broker and make sure that they’re getting the right coverage for you and that you understand your coverage.

You know what, important for everyone to do that dust them off. Get them out and have a look at it because right now, especially if you have been affected, don’t just wait till it happens. Don’t. Be proactive.

Yeah and understand what your risks are because sometimes you may think you have, say a million dollars in limits but then you’ve missed the point where you’ve got $100,000 retention or a $50,000 deductible.

Make sure that you talk to somebody with experience. He’s been doing this for 31 years, the phone number to call him direct is 602-566-7425. They do free consultations. They’re rated with the Better Business Bureau. They’re located right here, but they also work nationwide. They’re frlawgroup.com.