rAn excellent description of a claim dispute involving “insured location” provisions contained in property insurance policies for wineries has all the makings of a significant insurance agents’ E&O (errors & omissions) claim. The description is on the Declarations and Exclusions Blog (see here), and an article describing the dispute, with all the perspectives except our industry’s, is in The Napa Valley Register (see here). As noted in the Decs & Excls Blog, a wine industry blogger also comments (see here).
The dispute arises because some insurers have denied coverage for losses wineries incurred from a warehouse fire due to “insured location” provisions. The warehouse was owned by Wines Central and contained wine from many different wineries in Sonoma and Napa Valley. According to the various posts, wineries did not have adequate coverage for inventory stored off premises such as in the Wines Central warehouse.
There are good underwriting reasons for property policies to have insured location provisions, but these provisions make the policies more complex. This shifts the difficulty of properly assessing and communicating coverage needs to the agent, and as complexity increases so does the chance of error.
As with all insurance agent exposures, documentation is the key. Did the agents ask about property off premises, did they adequately communicate the need for this coverage, and, of course, did they do so in writing? Most agents will have some sort of a review or checklist process which will address these questions. And in the end the wineries will probably find that they were asked by their agents, and did not tell their agents that they were storing large amounts of wine in someone else’s warehouse, or how much.
Specialty Insurance Expertise: Tennant Risk Services
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