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Why does insurance NOT cover things that actually happen?

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A general contractor client asked me this very question. He did ask in jest as we discussed his insurance renewal. However, his point is a valid one. The current standard ISO Commercial General Liability (CGL) policy was put into use in 1986 and was a 9 page form. This current form is on its eighth revision as of April 2013 and now contains 16 pages. The first page lays out the coverage provided for Bodily Injury and Property Damage (Coverage A). The next six pages describe what is excluded. The remaining pages describe the other coverage (Coverage B & C) provided and the conditions, additional exclusions, definitions, etc. My point is that it only takes one page to describe what is covered, but takes many more pages to describe what is excluded.
In addition to that, most carriers pile on multiple coverage and/or exclusion endorsements that can enhance and/or further restrict the coverage provided by the policy. I will quote the words of a highly recognized insurance instructor – "The policy Giveth and the policy Taketh Away". I spend a lot of time researching policy language to gather a better understanding of this and apply that to our customer's coverage needs. Are you aware of the coverage your General Liability policy "Giveth" and what it "Taketh" away?

Chuck Thompson, CRIS – Agency Manager/Partner, Thompson & Smith, LLC is an independent insurance agent and risk management professional specializing in the insurance and bonding needs of contractors. Contact: cthompson@thompsonandsmith.com.