PAGE 26
LOUISIANAAGENT
INCLUDING A 'DBA' IN THE NAMED INSURED MIGHT LIMIT COVERAGE By: Chris Boggs Without belaboring the historical details, let's cut to the basic point – using an assumed name (a DBA) as part of the named insured may be detrimental to the insured. Although only a few states have specifically addressed the possibility that a DBA may limit coverage to activities specific to the DBA name, agents must still consider the ramifications when naming insureds and deciding whether to include a DBA. Historical Perspective on Named Insureds and Status as “Persons" Insurance is a contract between “legally acknowledged" parties, the insurance carrier and the named insured(s). More specifically, it is an agreement between “persons." In the legal sense, there are two types of legally acknowledged “persons": 1. Natural persons: Flesh and blood individuals or humans; and 2. Legal persons: Formed by the filing of specific documents such as Articles of Incorporation or Articles of Organization. Natural persons and legal persons are granted essentially equal rights and responsibilities under the law. Both can own property, sell property, hire and fire, and most importantly sue and be sued. To properly extend insurance protection, the correct “person(s)" must be named. Further, the only name REQUIRED for insurance coverage to be extended is that of the “legally acknowledged" person(s). Why? Because this is the only “person" who or that legally or factually exists. Further, only a “person" can suffer or cause injury or damage.
Takeaway: When naming insureds, the only “person" or “persons" that must be named is or are those acknowledged in law - natural persons or legal persons. Fictitious Entities or Non-Persons – AKA “Assumed Names" (DBAs or T/As) An “Assumed Name" is how the business is known in the neighborhood. Often the Legal Person is created to conduct business, sign contracts, etc., but the business is known in the community under its assumed name. For example, McDonald's might be the most common assumed name. The actual owner of a specific store creates a legal person to run what everyone knows and refers to as the neighborhood McDonald's. The legal person may actually be “Restaurant Enterprises 1, Inc.," but none of the customers know this, they only know it as McDonald's. McDonald's is the assumed name. Likewise, the legal name of the insured might be Tinkers, Evers & Chance, Inc., but the business may be known in the community as “1A Plumbing" (top listing in yellow pages, if they still exist). When someone calls for service, the phone is answered, “1A Plumbing." The community does not know the business as or by its legal name, only by the assumed name. Assumed names or entities are fictitious and don't exist as persons. A fictitious entity cannot suffer or cause injury or damage. Takeaway: Fictitious persons do not exist and are generally not extended the rights and responsibilities placed on natural or legal persons.
