Dic Zonexs

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The Manuscript Form


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Your Instructor Barry Zalma

Barry Zalma, Inc.

4441 Sepulveda Boulevard

CULVER CITY CA 90230-4844

HTTP://members.aol.com/bzalma

[email protected]

310-390-445


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The DIC PolicyThe Manuscript Form

! What Is a DIC Policy?


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The DIC PolicyWhat Is A Manuscript Form?

! A Policy Wording That Is MadeUnique to a Specific Risk.< The DIC Policy is Created in Three Ways:A Mix of Standard Forms and Standard

Endorsements.A Mix of Stand Forms and Specially Written

Endorsements.A Contract Wording Designed Exclusively for a

Specific Risk.


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The DIC PolicyWho Writes the Manuscript Form?

! The Insurers Underwriter.

!

The Insureds Risk Manager.! The Insureds Broker.

!

All of the Above WorkingTogether.


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The DIC PolicyRules of Contract Interpretation

! The Contra Preferendum Rule.< If the terms of a promise are in any respect

ambiguous or uncertain, it must be interpretedin the sense in which the promisor believed atthe time of making it, that the promiseeunderstood it. [California Civil Code 1649]


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The DIC Policy

! If There Is an Ambiguity in theContract of Insurance It Must Be

Interpreted Against the Drafter.


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! When the language of aninsurance contract is reasonably

susceptible to two constructions,it should be construed in favor ofthe Insured. [Hernandz v. FirstFinancial, (1900) 106 P.2d 1278,106 Nev. 900]


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! The Rule Requiring InterpretationAgainst the Drafter Goes in Both

Directions.< If the Insured, or its agent, draws the

insurance contract the ambiguity should be

construed against the Insured!The Rule Deals With Power the Contracting Party

with the Greatest Power has the Contract InterpretedAgainst it.


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The DIC PolicyHow To Read The Contract

! To Understand the Interpretationof Insurance Contracts We Must

First Understand What InsuranceIs All About.


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The DIC PolicyHow To Read The Contract

! To Understand the Interpretationof Insurance Contracts We Must

First Understand What InsuranceIs All About.< To Properly Interpret a DIC Policy We Must

First Understand What Insurance Is About. Insurance is a contract whereby one undertakes to

indemnify another against loss, damage or liabilityarising from a contingent or unknown event.

[California Insurance Code 22]


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The DIC PolicyImportant Terms

! Is it an Open Policy?

! Is it a Valued Policy?

! Is it a First Party Policy?

!

Is it a Third Party Policy?


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The DIC PolicyOur Discussion Will be Limited to First Party Property

Policies.

! An Insurance Policy Is a Contractof Personal Indemnity


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The DIC PolicyHow Do You Read A DIC Policy?

! Get A Complete Copy.

! Review the Declarations Page.< It Identifies the Insured and the Insurer.< It Tells the Location of the Property the Risk of

Loss of Which Is Insured.

< It Identifies the Limits of Liabil ity and theDeductibles


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! Read All The Words of the Policy!


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! The DIC Manuscript Policy WillOften Have More Definitions

Than A Standard ISO Policy.


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! Understand the InsuringAgreement.


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! Remember, First Party PropertyInsurance Does Not Insure

Property!< It Insures People Against Certain Risks of

Loss to Specified Property.

< That is What Is Meant By A Contract ofPersonal Indemnity.


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! Read The Exclusions.< These Tell You What the Insurer Did not Wish

to Insure.

Sometimes, by Making Exceptions from theExclusion, they Provide Coverage.Often Do Not Say What they Mean.

! Read the Conditions.< These tell You What the Insured Must Do to

Obtain Indemnity.Proof of loss, Examination Under Oath, One Year

Suit Limitation.


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A Specific DIC PolicyLloyds DIC Language

< The Perils Insured by this Policy shall be

understood to mean all risks of direct physicalloss or damage from any external causeexcept that this Policy does not insure against

any loss or damage which is: Directly or indirectly caused by or which iscontributed to by Fire, Lightning, Windstorm, Hail,Explosion, Riot, Riot attending a Strike, Civil

Commotion, Aircraft, Vehicles, Smoke, Vandalismand malicious Mischief or Sprinkler Leakage asprovided by the Standard Board Fire InsuranceForms and the approved and standardendorsements thereto in current use at the inceptionof this policy...


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! The Wording Should be ClearThat It is the Intent of the Policy toONLY Insure those Perils Not

Insured by a Standard ISO Policy.< The Method Lloyds attempted is fraught with

ambiguity.

< It Would Have Been More Clear if a NamedPeril Policy.< It Would Have Been More Clear if it Referred to

Specific ISO form Numbers.


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! The Lloyds Form is a trueDifference In Conditions Form

< It Assumes that the Insured Has BasicInsurance Available in the Normal Market. It then fil ls SOME of the gaps not covered by the

standard form.

It attempts to exclude ALL of the Perils Insured bythe Standard Forms.


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! The DIC Does Not Create AComplete All Risk Policy< It Adds Exclusions Such as: Loss caused by moths, vermin, termites or other

insects. Loss caused by backing up of sewers or drains or

seepage below ground level. Loss of use, delay or loss of markets.

Breakdown or derangement of machinery and/orboilers.

Infidelity, or any dishonesty on the part of theAssured.


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! The DIC Does Not Create AComplete All Risk Policy

< It Adds Exclusions Such as: Infidelity of employees of the insured or others to

whom the property may be intrusted, inventoryshortage or unexplained disappearance.

Loss or damage to electrical appliances caused byartificially generated electrical current.

Loss or damage arising directly or indirectly fromnuclear reaction, nuclear radiation or radioactive

contamination.


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< It Adds Exclusions Such as: Loss or damage to the property insured occasioned

directly or indirectly by war, invasion, hosti lit ies,acts of foreign enemies, civil war, rebellion,

insurrection, military or usurped power or martiallaw or confiscation by order of any Government orpublic authority.


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< It Adds Exclusions Such as: Loss or damage to personal property caused by

processing, renovating, repairing or faulty

workmanship thereon. Loss or damage from shrinkage, evaporation, loss

of weight, leakage, breakage of glass, etc. Loss or damage caused by:

Theft or Exposure to weather conditions.


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< It Adds Exclusions Such as: Loss or damage occurring while the building

insured or containing the property insured is to theknowledge of the Assured vacant or unoccupied for

more than thirty consecutive days, or being amanufacturing establishment ceases to be operatedand continues out of operation for more than thirtyconsecutive days.


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< It Adds Exclusions Such as:Aircraft, watercraft, vehicles designed for highway

use, jewellery, precious stones, furs or garmentstrimmed with fur, standing timber, growing crops

and animals.Accounts, bills, currency, notes, securities, deeds,

evidences of debt and valuable papers.Data processing equipment and media.

Property in transit.


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< It Adds Exclusions Such as:Property sold by or under encumbrance to the

Assured after it leaves the custody of the Assured oran employee of the assured.

Neon signs.Buildings or structures in process of construction.Power Transmission and feeder lines not on the

Assureds premises.


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! Conditions Similar to StandardPolicies.


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! Conditions Similar to StandardPolicies.


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! What Things Does it Cover?< Flood.

< Earthquake.< Volcanic Eruption.< Falling Spacecraft.


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A Specific DIC PolicyHow Do You Explain the DIC To a Lay Person?

! In Simple American!

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