What's in a Name?
A Bed and Breakfast Insurance Story - chapter 2
(click here for chapter 1)
Names are an important tool for identification and communication. There are different name classifications – such as a “given” name or a “nick name”. If everyone was named Samantha Right – and “Samantha Right” won a new car – you can imagine the outcome.
Names are equally important in regard to insurance policies. There are different types of names associated with insurance policies - some examples include “named insured”, “additional named insured”, “additional insured”, “mortgagee”, and “loss payee” .
The “first named insured” is the person or entity who has “rights” to the policy. They have the right to change the policy, they have to right to access the policy information, they have the right to cancel the policy. The “fist named insured” will be the first “payee” on any property claim, they will be represented in the event of a liability claim. As a side note “mortgagees and loss payees” are normally listed on the check, when settlement is made for a property claim.
In the previous edition of the newsletter you met Mary & Trent two innkeepers who had not purchased a commercial insurance policy and experienced a “calamity of errors”.
Let’s continue the saga this quarter, and see what kind of trouble Mary and Trent can get into this time!
The continuing saga of the “Empty Nest Bed and Breakfast” located in beautiful Nowheresville, in the great state of “Confusion”. The past year has extremely stressful for Mary and Trent as new innkeepers…now they are ready to put the past behind them, and move forward.
1st on Mary’s agenda is to purchase a COMMERCIAL insurance policy.
At the advise of their attorney, Mary and Trent formed “Empty Nesters, LLC” to run the B&B…but his was several months ago, and Mary’s memory is just not-what-it-used –to-be. Mary filled out the insurance application form – and soon received her new insurance policy in the mail. Mary was so excited to show Trent their new policy because now she had a COMMERCIAL insurance policy, and could forget about all the unpleasantness they experienced last year. She was sure she would have no further problems… right on the policy it says that Mary & Trent Black DBA: Mary’s Empty Nest.
Once again, open for business!!
Their first guests are Cecil and Meredith McGregor. Cecil, 75 years old, is a retired school teacher, and Meredith – his young bride (age 68) has been a freelance writer for 30 years. Meredith is using this “vacation” to work on her next novel.
Check-in goes off without a hitch. Mary no-longer offers freshly brewed tea (after that arsenic tea incident) she offers bottled soda these days! Saturday is a great day, and Sunday is check-out. Mary thinks she has this whole innkeeping thing under control.
Just as Cecil walks out of his room… Mindy – the family poodle – breaks free of Trent’s hold and the leash, and in her excitement scampers down the hall and right under Cecil’s feet – causing him to trip and fall. Cecil proceeds to bump his head on the small marble table nearby – knocking him out cold. While rushing to Cecil’s aid, Mary accidently steps on his brand new glasses – breaking them into tiny bits. Mindy (the poodle) has a nervous bladder anyway, and at this point her bladder chooses to “act-up” all over Mrs. McGregor’s mink coat – which causes Mindy to run in circles (in a panic) scattering Mrs. McGregor’s manuscript to her brand new novel all over the hall way. Some pages end up in the puddle which had accumulated on the mink coat.
Mary, feeling somewhat sick at her stomach, calls an ambulance for Cecil; who is transported to the hospital, where he has to stay for a few weeks due to the broken hip and concussion. Mrs. McGregor had to be put on nerve medication, and now has writer’s block. She also has no idea how to put her manuscript back together, because some pages are missing, and others stained a nasty shade of yellow.
Meredith and Cecil contact an attorney – who promptly files a law suit against “Empty Nester’s, LLC”.
Do you remember the “named insured” on the policy? Was Empty Nester’s, LLC listed as the “named insured”? No…the policy was issued in the name of Mary & Trent Black DBA: Mary’s Empty Nest.
Ummmm…. Where is the defense going to be provided to Empty Nester’s LLC?
Potential Problem here… Empty Nester’s, LLC is not listed on the policy. There may be policy wording – an endorsement that will allow for coverage if Mary & Trent have a formal written agreement with the LLC…but not always.
If the first named insured is Mary & Trent Black…DBA Mary’s Empty Nest, and the LLC (Empty Nester’s, LLC) is listed as an ADDITIONAL insured… is the problem solved? Not really.
The key here is that Mary and Trent Black were not personally named in the lawsuit. Normally for coverage to respond on behalf of an ADDITIONAL insured, the First Named Insured has to be named in the suit. The Named Insured is the “trigger” to set into motion coverage for the additional insured. If only the additional insured is named in a law suit…the policy may not respond.
Ideally, this policy would have been issued to Trent & Mary Black and Empty Nester’s, LLC DBA Mary's Empty Nest.
Call Karmen @ United Insuance Agencies - 765-381-4904 for a free insurance review.
** All names and places in this story have been strictly the product of my imagination. This story is not a reference to any real bed and breakfast or any real person or persons.
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