Margin Clauses Making Agreed Value Options Extinct!

ADJUSTING TODAY

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Donald S. Malecki, CPCU

Mr. Malecki is a principal of Malecki Deimling Nielander & Associates, LLC, an insurance and risk management firm. He began his career over 50 years ago and has held the titles of insurance underwriter, broker, insurance company claims consultant, archivist, historian and teacher.

...those insurers will use a similar endorsement or simply insert a statement as to the margin clause percentage is open to question.

Here to Stay

Chances are very good, however, that with the possible exception of highly protected risks (HPR), many insurers will be incorporating the margin clause into their commercial property policies. This means that the agreed value provision is likely to go the way of carbon typing paper and telephone pay booths.

It took a long time for insurance buyers to learn how to capitalize on their insurance coverage through the use of the blanket, agreed amount approach, even though it has been more expensive to purchase than scheduled insurance on a specific value basis. It is probably safe to say that it will also take time for them to undo what they have learned.

Time, however, appears to be of the essence, since insurers are not wasting it in applying this policy feature.

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