While a “rose by any other name would smell as sweet,” it may not be covered under your insurance policy. One of the easiest and cheapest ways to be sure you have proper coverage is to make certain the name on your insurance policy is correct. Don’t assume that the insurance company will pay a loss for an affiliated company even though the ownership may be the same.
One of the best examples that I see repeatedly of incorrect insured names is the practice of naming only the Bank on the policy, and not including the holding company as well. If the named insured is Anywhere Bank and the parent company is Anywhere Bancorp, then Anywhere Bancorp is not covered. If a lawsuit is filed against Anywhere Bancorp, Anywhere Bank’s insurance policy may not respond. The solution: just name them both as insureds, i.e. “Anywhere Bancorp and Anywhere Bank.” Simple right? You’d be amazed at how often I find incorrect names listed as insured on insurance policies that I audit. Just for fun, you might want to check your own policy!
Check All Policies
Be sure to check ALL your insurance policies. Just because one policy is correct, doesn’t mean they all are. This is especially true if you have several policies written through several different insurance companies and insurance agencies.
Many insurance policies include all wholly owned subsidiaries of the named insured. While the intent is to readily include all subsidiaries, the result is not always what was intended. What is a wholly owned subsidiary? It’s a corporation or sole proprietorship whose stock and /or assets are 100% owned by another. Thus, a subsidiary that is only 75% owned by the primary named insured at the inception of the policy period would be treated differently than a “wholly owned” subsidiary. If at the time of the loss, the subsidiary is no longer owned, it is doubtful that any coverage would exist. In Property and Casualty insurance policies an “insurable interest” must exist at the time of the loss for coverage to apply. An insurable interest is a financial interest of some sort. This can get complicated in Liability Policies.
Say you had a subsidiary mortgage loan company 5 years ago. Said mortgage loan company is sued for an action that occurred before you absorbed this subsidiary into the bank corporation. Is there coverage? You certainly have a financial interest, but will your insurance company respond to such loss? Probably, but to be safe, keep the subsidiary on your list of insureds. There is no extra charge for adding an additional insured unless the additional insured increases your exposure.
Remember, sometimes it’s the little things that count. You could have the broadest most competitively written insurance policy available, but if you’re not “named” correctly, it could be for naught. Instead of “a rose: by any other name . . . ,“ remember, “A Rose is a Rose”, and name it as such.