GL - Terrorism - Coverage Limits

As per my experience with past cases, each waiver seeks some sort of exception. It is either through the inclusion of certain terrorism coverage requirements on the General Liability (GL) or Umbrella policies or a gap in GL coverage requirements. Also, you should keep in mind that your liquidity value or net worth is one of the deciding factors in the success of your waiver request. It is because these factors demonstrate your financial stability to FM. 

I observed that the approval of each waiver request was highly influenced by the sufficiency of the existing coverage. Another contributing factor that may influence our request are the additional costs that you might have to incur due to switching providers or making modifications to existing coverage. Lastly, the approval of the waiver request is also influenced by the geographical proximity of your location to the high-risk areas. 

Specifications: 

Template Outline: 

#1 - How to structure the introductory section of the waiver?  

The opening section of the waiver should clearly state the identity of the requestor and the purpose or type of waiver being requested. The examples provided below can be used to structure this section.  

<Organization name> is currently seeking the waiver of <requirement name/details> for the property <property name> located on <property address>. 

<Agent name> is seeking the waiver of <requirement name/details> for <property name> located on <property address> on behalf of <Organization name/Client name>. 

#2 - How to demonstrate financial stability?  

When requesting an exception from certain insurance requirements, it is important to provide the financial details of the borrower or guarantor. Providing these details can demonstrate the monetary capability of coverage claims that exceed current coverage limits. Provide below is an example that can be of further assistance.  

<Borrower name/Guarantor name> currently has a net worth of <dollar amount> and liquidity value of <dollar amount> and is, therefore, able to account for monetary claims that exceed current insurance coverage limits.  

#3 - How to provide information about existing coverage?  

Providing information about existing insurance coverage can demonstrate a certain extent of compliance with insurance coverage requirements. Such details can be provided similarly to the example below.  

<Organization name/Borrower name> current owns <number of properties>. These properties are covered under a <policy name> and have a separate <policy name> coverage in place.  

#4 - How to emphasize per occurrence, aggregate, or claims made coverage?  

Each type of coverage varies from the other, therefore, borrowers using multiple types of insurance coverage should provide the monetary limits and applicability of each. Providing such information can help emphasize the sufficient of the current coverage or coverages the borrower has in place. Examples provided below can be used to structure this section.  

<Property name> has <number of units> located on <location details> and has a per occurrence coverage limit of <dollar amount> and an aggregate of <dollar amount> that is applicable on a per location basis.  

The current coverage <coverage names and details> are blanket covering <number of properties> with a per occurrence limit of <dollar amount> and an aggregate of <dollar amount> applicable on a per location basis.  

<Organization/Borrower name> currently has a stand alone insurance policy for <requirement details> for <number of properties> located on <location details>. The coverage provides <dollar amount> per occurrence and <dollar amount> aggregate on a claims-made basis.  

#5 - How to mention lack of availability, associated costs of additional coverage, and sufficiency of current coverage? 

In some cases, borrowers are unable to meet coverage requirements due to the lack of availability of compliant coverage from their provider or due to high costs associated with modifying or switching coverage. Providing such details can help strengthen the exception request. The example provided below can be used for further assistance.  

As per recently obtained quotes, the addition of <coverage requirements> to the existing policy would incur expenses of <dollar amount>. The existing coverage has a per occurrence/claims-made limit of <dollar amount> per location, which is <dollar amount> greater than required.  

#6 - How to emphasize proximity to high-risk or low-risk locations?  

Providing details pertaining to the geographical proximity to high-risk or low-risk locations can serve as a measure of determining the possible impacts of unfortunate events on the property. The examples provided below can be used for further assistance.  

<Property name(s)> located on <location details> is <number of miles> away from high-risk locations that include <high-risk locations> and therefore is unlikely to be impacted by the unfortunate event of an attack on those locations.  

Although the <property name(s)> is located on <location details>, which is <number of miles> close <major location>, the location is unlikely to undergo the unfortunate experience of an attack, and therefore, the chance of the <property name> being impacted by such unfortunate events are low.   

#7 - How to justify the request for exception from certain coverage requirements?  

It’s highly important for borrowers to justify their request for approval. The justification can be provided using all the factors mentioned above. However, when providing the justification, the borrower should understand that it is paramount to emphasize the geographical proximity of the location to high or low-risk locations. 

In addition, they emphasize that their current coverage is sufficient to account for monetary claims that may arise from unfortunate events such as an attack on a high or low-risk location. Moreover, they should also demonstrate financial stability for meeting claims that could exceed their current insurance coverage.