Boardroom guide HOPE June12_FinanceSept 19/06/2012 15:11 Page 1
BUSINESS AVIATION AND THE BOARDROOM
‘PUNC’: Your Checklist For Insurance Coverage ‘PUNC’ (Pilots, Use, Named Insured and Contracts) is an acronym capturing the four most important areas of aviation insurance that result in the largest percentage of claims denials, asserts Stuart Hope. This month, we consider the Named Insured clause. Stuart Hope is a co-owner of Hope Aviation Insurance. His career as an aviation insurance broker began in 1979, and today he is a frequent speaker/author on insurance & risk management topics. He also serves on the NBAA Tax, Insurance and Risk Management Committee. Mr. Hope can be contacted at shope@hopeaviation.com
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friend who is CEO of a small medical services firm recently shared with me one of those “horrible insurance company” stories that we all seem to fear. A financial audit discovered that the firm’s CFO had embezzled close to $3 million dollars from the company over a five year period. My friend submitted the claim to his insurance broker who in turn forwarded it to the insurance company for action. The carrier reported back there was no coverage for embezzlement since the medical firm had not purchased an employee dishonesty liability policy. Fortunately for my friend, however, 50% of his firm was owned by a much larger company that did have employee dishonesty coverage. Their broker had taken the time to properly structure the Named Insured clause to cover not only the parent company, but subsidiary companies as well. Coverage was subsequently granted under the parent company’s insurance policy.
SPECIFY THE NAMED INSURED Let’s look at what you can do to attack this weakness in the insurance defense system. The first thing you need to do is specify the Named Insured. There always seems to be confusion over the difference between a Named Insured and an Additional Insured. Without going into a great amount of detail, in layman’s terms the Named Insured is the owner of the policy, and as such is entitled to all coverage as well as the right to cancel, add or change coverage. The policy owner also has the right - and responsibility to coordinate with the insurer on any claim as well as receive claim checks, return-premium checks and cancellation notices.
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WORLD AIRCRAFT SALES MAGAZINE – July 2012
www.AvBuyer.com
An Additional Insured, on the other hand, simply shares certain parts of your liability coverage, and does not have any other rights under the policy. Many owners make the mistake of simply listing the registered owner (often a sole-asset LLC) as the only "Named Insured" and possibly listing the true operating company or principal owner as additional insureds. U
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