Janice and I worked a commercial loss last week and submitted it for payment 4 days after assignment, through a vendor with a major carrier. This was a lightning damage claim to a 5 ton outside A/C unit and a neon lettered sign affixed to the front gable end of a large restaurant. It was an ACV policy with adequate limits of insurance. There was no question of it being lightning and not surge. The A/C had heavy arcing a burning of electrical wire and components, as did the sign. They were both on the same circuit in the panel. We figured replacement of the 5 ton unit and repairs to the sign were in excess of $2,000.00, as written by the sign company. We allowed $1,000.00 for repairs to the sign on the estimate with a note that there is only $1,000.00 coverage for damage to signs affixed to the building, any one occurrence.

Three days after submission, we received this from the vendor with a copy of an e-mail sent to him by the examiner:

"The sign is attached to the building; therefore, there is coverage for the sign.  Signs not attached have the $1,000 limit.

Please revise the estimate and forward at you earliest convenience".

Under a CP 00 10 04 02, Limits Of Insurance: "The most we will pay for loss of damage to out-door signs attached to buildings is $1,000.00 per sign in any one occurrence". The examiner may have been  influenced by the agent who called and wanted the sign damage paid for in full. The examiner did not read the policy in full, and other examiners with her company agreed with her. So, now what do you do.

You put on your diplomacy hat, decide how you approach this with utmost diplomacy and make a direct call to the examiner. After thinking about this, the call was made and after reading the policy to her and her finding it in her policy, she agreed and was very happy I had called her to explain why only a $1,000.00 was allowed, under the terms of the policy. We definitely made a friend with this lady. Had the file been reviewed by auditors, the probability that this mistake would be found was high. She asked me is she had a policy question, could she call us and of course I said yes. We are, after all, a family in this industry. The importance of being diplomatic is enormous. Never sound like a smarter than the person you are talking to. Relate your self properly and you can win friends and influence people. Always try to pay an insured what they are entitled to under the policy, but no more.  I don't have all the answers , but I do know where to look or  who to call if I don't.

Knowledge is power. I realize that is an old saying and I use it quite frequently, but it is true. Learn the policies you will be handling while you are not working. You will be glad you did when a storm finally hits. Always, always, be diplomatic in your conversations with company representatives or vendors. 

Very good advice! Thanks for sharing the scenerio.

Perhaps what the examiner was trying to say--and how I would have handled it--was to change your estimate to show the excess loss being absorbed by the deductible.  The policy says the max "payable" for attached signs is $1,000... not the max covered being $1,000.

When examiners are changing hats between HO & Commercial, and property vs. casualty, this often becomes lost in the translation.

Mike, it says Limit of Insurance. Please explain in more detail how this could be an excess payment and how it could be absorbed. Odie, this was a standard ISO policy, no enhancements. That was one of my first questions to the examiner.

Tom, my reasoning was already given.  I've been staff for 3 different large carriers, and then handled similar losses for a multitude of other carriers as an independent.  This type loss was always handled in that manner, and never questioned.

It is not unlike a jewelry loss on an HO3, say with a theft loss of $3000 but the special limit of $1500.  If the policy has a $500 deductible, how much do you pay?  $1500 or $1000?  I was always taught and/or directed that the entire limit is payable, as long as the covered loss exceeds the limit plus the deductible.

Maybe some carriers don't subscribe to that train of thought, but I haven't run across them yet.  

The policy limit is $350,000.00 and the limit of insurance is within that limit of coverage. How can it possibly be absorbed in a CP 00 10. MSB apparently agrees with me, as it did not absorb the difference. Since this came up, I have talked to several of my GA friends and the agree that it cannot be absorbed.

Had the sign been an endorsement, say of $2,000.00 and the loss was $3,000.00, then yes, the deductible would have been absorbed, but in this case, it is not. I always, without fail, try to get the insured as much as possible under their contract, but not in this case.

I think I disagree with all the posters and agree with the company examiner as the neon sign attached to the building does not have a limit. (It becomes a fixture) Its only detached signs that have a limit and only for the 5 perils mentioned for coverage under "Outdoor Property". Rework the loss.