Agalindo Jul 5, 2024 2:06 PM
Why do Insurance Comapnies want to verify if client has a parent company or subsidiary?
IJA-Nerd Jul 15, 2024 11:35 AM
This is interesting because as an underwriter, I tend to look at this as just a requirement that everyone understands. But let me offer a few thoughts.
1. When it comes to property, the issue is largely insurable interest. I want to see all of the property owners listed on the policy as named insureds because I don’t want any question as to the ownership of the property and the insurable interest at the time of loss. This seems like a bigger deal when you have a parent or child company that owns the real property and the insured is using it. This is a common method for a business owner to spread risk around.
2. When it comes to liability, we have bigger issues because these additional entities change the risk characteristics. The related companies all bring something to the whole understanding of the risks of the business. Each entity could be involved with different business operations and more. Because of that, we like to know how the whole organizational tree plays out to better assess the risks. Practically, this could play out that the other entities might impact the policy rating because of the increased risk. Additionally, the risks associated with the other entities could end up creating a reason for the insurance company to add exclusionary endorsements to the policy, such as designated location exclusion, designated entity exclusion, or a designated operations exclusion.
In any case, the company is going to want to know whether or not those other entities should be listed on policies and how. Are they named insureds? Who should be the first named insured (because that’s important)? Should we list any of them as additional insureds and related to what exposure?
1. When it comes to property, the issue is largely insurable interest. I want to see all of the property owners listed on the policy as named insureds because I don’t want any question as to the ownership of the property and the insurable interest at the time of loss. This seems like a bigger deal when you have a parent or child company that owns the real property and the insured is using it. This is a common method for a business owner to spread risk around.
2. When it comes to liability, we have bigger issues because these additional entities change the risk characteristics. The related companies all bring something to the whole understanding of the risks of the business. Each entity could be involved with different business operations and more. Because of that, we like to know how the whole organizational tree plays out to better assess the risks. Practically, this could play out that the other entities might impact the policy rating because of the increased risk. Additionally, the risks associated with the other entities could end up creating a reason for the insurance company to add exclusionary endorsements to the policy, such as designated location exclusion, designated entity exclusion, or a designated operations exclusion.
In any case, the company is going to want to know whether or not those other entities should be listed on policies and how. Are they named insureds? Who should be the first named insured (because that’s important)? Should we list any of them as additional insureds and related to what exposure?
rb-TrkICs Jul 15, 2024 5:23 PM
I agree with the prior response. GL may bleed over. You want to know how business flows and where claim may be assigned if any inter-company work occurs. Auto, with state or federal filings, may also be an issue if other vehicles operate from another entity but under the Named Insured. In auto, some of that can be controlled by symbol codes. But the question is do we need to expand or limit coverage for any other entities. rb
