On past waivers that I worked on, I found out the importance of requesting the exemption of certain coverage requirements pertaining to Commercial General Liability (CGL) or Umbrella coverage. This is an important element that we can use in our request. I will also be providing FM with the client’s loss/claims history. In this way, the adequacy of their current coverage will be emphasized. By providing this information, it will become easier for FM to determine that the previous losses have not exceeded coverage requirements.
In order to account for losses/claims that may exceed coverage limits, it is important to include your client’s net worth and liquidity to the waiver request. This will help demonstrate their financial ability. Some other factors that have always favored the approval of my requested exemptions include existing coverage exceeding requirements, managerial and operational competency, and property performance.
An individual could create an insurance waiver for the following specifications based on the outline given below.
Specifications:
| Waiver Type: | Assumption/Renewal/New Origination |
| Insurance Type: | Liability |
| Insurance Term: | Umbrella/Excess General Liability - Per Location (Blanket) |
Template Outline:
#1 - What information should be included in the opening section of the waiver?
The opening section of the waiver should clearly mention the requestor’s identity and the purpose or type of exemption being requested. Below are examples that can be used for further assistance.
<Organization/Borrower name> is currently requesting the waiver of coverage requirements pertaining to <CGL/Umbrella coverage>. These requirements include <requirement details>.
<Agent name> is currently seeking an exemption for <CGL/Umbrella coverage> coverage requirements on behalf of <Organization/Borrower name>. An exemption/waiver for the <requirement details> is being requested.
#2 - What current coverage details should be provided?
When applying for a waiver, it’s important for the borrower to provide all details of the current insurance coverage they have. Such details may include provider name, coverage name and type, policy structure, and coverage limits. The example provided below can be used for further assistance if required.
<Organization/Borrower name> currently has <Insurance coverage 1> and <Insurance coverage 2> from <Insurance provider name>. As of now, <Insurance coverage 1> has a per occurrence limit of <dollar amount> and policy aggregate of <dollar amount>. In addition, <Insurance coverage 2> provides <coverage type> to all the properties owned by <Organization/Borrower name> and has an aggregate limit of <dollar amount>.
#3 - How to provide loss/claim history details when applying for a waiver?
The organization/borrower should share their previous losses/claims with the concerned department. Providing such details can help demonstrate the adequacy of the current coverage. When writing this section, details such as the total number of open and closed claims, dates/years, highest claim to date, and policy limits should be included. Below is an example that can be of assistance if required.
Since <year>, <Organization/Borrower name> has witnessed <number of claims>. Out of these, <number of claims> are closed, and only <number of claims> remain open. The closed claims amount to <dollar amount>, and open claims are expected to incur payment of up to <dollar amount>. The highest claim paid to date was <dollar amount>. As mentioned, <Insurance coverage 1> has an aggregate of <dollar amount> therefore, these claims do not exceed the coverage requirements.
#4 - How to emphasize current performance and managerial and operation competency?
Borrowers applying for a waiver should also mention the current performance of their properties and how they are managed/operated. Providing such details can help demonstrate a borrower’s financial and managerial ability to sustain losses/claims that may exceed coverage requirements. Provided below is an example that can be of assistance if required.
Properties owned by <Organization/Borrower name> are currently generating an annual income of <dollar amount>. Therefore, the borrower can sustain losses/claims that exceed coverage requirements. In addition, the properties are managed by <Property Management Company name>. The firm has experience of <number of years> in managing similar properties and has managed operations of this property since <year>, entailing that claims which exceed coverage requirements can be efficiently managed.
#5 - How to demonstrate financial stability?
In addition to the factors above, borrowers can also use their guarantor’s net worth and liquidity to demonstrate financial stability. The example provided below can be used for further assistance if required.
<Person 1 name> and <Person 2 name>, guarantors of the loan, have worked in the <industry name> for <number of years>. Both <Person 1 name> and <Person 2 name> have a combined liquidity value of <dollar amount> and a net worth of <dollar amount> entailing that capital required for claims that exceed coverage requirements is available.
#6 - How to justify the request for approval?
Prior to submitting a waiver, a borrower should provide a justification as to why their request should be approved. This justification can be based on the established fact that the current coverage is accurate and the borrower is financially capable of sustaining losses that exceed coverage requirements. The borrower can also provide the losses/claims history to justify that the currency coverage is sufficient. In addition, having paid the insurance premium in full for the current term can also help improve the chance of the waiver being approved.
