In my experience dealing with such cases, I found out that each case sought the waiver of coinsurance requirements pertaining to either business interruptions, business income, or property damage. In order to demonstrate sufficiency, the waiver cases primarily used details pertaining to their current coverage. In my opinion, these are very important elements that we need to consider when sending out our request.
Interestingly, another thing which we can include are the details about our failures to obtain compliant quotes due to a lack of availability in the market or from the current provider. This will help us further strengthen our waiver case. Plus, we can provide information about the increase in premiums that would occur if we were to comply with the co-insurance requirements.
An individual could create an insurance waiver for the following specifications based on the outline given below.
Specifications:
| Waiver Type: | Renewal/New Origination |
| Insurance Type: | Liability |
| Insurance Term: | Business Income/Rental Value - Coinsurance |
Template Outline:
#1 - How to structure the introductory section of the waiver?
The introductory section of the waiver should clearly provide the requestor’s identity and the purpose/type of waiver they are applying for. Below is an example that can be of further assistance.
<Organization/Borrower name> is applying for the waiver of coinsurance requirements pertaining to the <coverage type> for the <property name> located on <property address>.
<Agent name> is requested by the concerned department to waive the coinsurance requirement for <coverage type> on behalf of the <Organization/Client name> for the <property name> located on <property address>.
#2 - How to provide current insurance coverage details?
When applying for a waiver, it’s important to provide all the details pertaining to the borrower’s current coverage. Providing such details can help demonstrate that the current coverage is sufficient to account for loss or damages that may occur.
In addition, it also helps showcase a certain extent of compliance with coverage requirements. The example provided below can be used for further assistance if required.
<Organization/Borrower name> currently has an insurance policy that provides a replacement cost coverage of <dollar amount> and has business income coverage of <dollar amount> with a coinsurance of <coinsurance percentage>.
#3 - How to provide the reasons for non-compliance?
In addition to providing all the current details about the current coverage, the borrower should also elaborate on why they are currently non-compliant. Such reasons may include the unwillingness of the provider to remove the coinsurance clause or the compliant coverage not being provided by the borrower.
Non-compliance can also be caused by the lack of availability of compliant coverage in the market. Borrowers can also mention the increased cost that will incur due to adding or switching to compliant coverages mid-term. Provided below is an example that can be used for further assistance.
<Organization/Borrower name> is currently unable to find compliant coverage from the current provider, and changing providers mid-term would result in an additional cost of <dollar amount>.
#4 - How to demonstrate financial stability?
Borrowers must demonstrate financial stability when applying for a waiver as it justifies their ability to sustain loss or damages that exceed current coverage requirements. Provided below is an example of how this section can be structured.
<Organization name> currently has an effective gross income of <dollar amount>. The owners/guarantors/sponsors for the <property name> have a net worth of <dollar amount> and a liquidity value of <dollar amount>.
#5 - How to justify the request for approval?
Prior to submitting the application, borrowers should include a section where they emphasize why their request should be approved. When providing this justification, it’s important to ensure that both financial stability and sufficiency of the current coverage are highlighted, as it can improve the chances of the waiver getting approved.
