Uninsurable risk refers to a condition or potential loss that insurance companies cannot or will not cover, regardless of premium offered, due to the event’s high likelihood, unpredictability, excessive magnitude, or because coverage would be against the law. Understanding Uninsurable Risk Uninsurable risk represents a significant gap in the protective shield that insurance typically provides … Read more
A lapse in business insurance coverage occurs when a business insurance policy terminates or expires without being renewed, creating a period during which the business has no active insurance protection against risks and potential liabilities. Understanding Lapses in Coverage A lapse in business insurance happens when there’s a break or disruption in your insurance coverage. … Read more
The Common Fund Doctrine is a legal principle that entitles a party who recovers a common fund for the benefit of others to reasonable attorney’s fees from the fund as a whole, preventing those who benefit from legal services from being unjustly enriched at the successful litigant’s expense. The Common Fund Doctrine serves as an … Read more
The Made Whole Doctrine is an equitable defense to the subrogation or reimbursement rights of an insurance carrier, requiring that an insured must be fully compensated for all damages before the insurer can recover any payments made on a claim. The Made Whole Doctrine functions as a protective legal principle that prioritizes the financial recovery … Read more
Subrogation is a legal right held by insurance companies to pursue a third party responsible for causing an insurance loss to the insured, allowing the insurer to recover the amount paid for the claim. Subrogation refers to the act of one party standing in the place of another party. In the context of business insurance, … Read more
In business insurance, a severability of interests clause (also called separation of insureds) is a provision that treats each insured party as having separate coverage under the policy. This means the actions or knowledge of one insured generally won’t affect the coverage of other insureds. This differs from contractual severability clauses, which allow parts of … Read more
Adverse selection occurs when one party in an insurance transaction has more information about risks than the other, creating an imbalance that typically leads to higher-risk individuals or businesses being more likely to seek insurance coverage. Adverse selection represents a fundamental challenge in the insurance industry, stemming from information asymmetry between insurance providers and policyholders. … Read more
Salvage and subrogation recoveries represent the funds an insurance company reclaims after paying a claim, either through selling damaged property (salvage) or by pursuing compensation from at-fault third parties (subrogation). Salvage recoveries occur when an insurance company sells damaged property for which it has paid a total loss claim and obtained ownership. For example, when … Read more
A Risk Retention Group (RRG) is a member-owned liability insurance company formed under federal law that allows businesses with similar risk exposures to create their own insurance entity to provide liability coverage. A Risk Retention Group is an alternative risk transfer mechanism established under the federal Liability Risk Retention Act (LRRA) of 1986. Unlike traditional … Read more
A waiver of subrogation is a contractual provision whereby an insured party waives the right of their insurance carrier to seek compensation for losses from a negligent third party after a claim has been paid. When an insurance company pays a claim to their insured, they typically gain the right to “step into the shoes” … Read more
