A lot of our clients purchase insurance at very low rates. The way it works is an insurance broker will find our clients the least expensive option. Usually, the least expensive option in cheap insurance means certain things are not covered.
|In the case of our client, he obtained fire insurance. The insurance contained an endorsement which required fire sprinklers. The endorsement is similar to a good drivers’ discount, where if you have certain things like fire sprinklers which minimize losses from fires, then fire insurance is less expensive.|
|The problem is, our client did not have fire sprinklers in his building. When his business burned down, his insurance company refused to cover his loss, which was over $1 million, because our client said he had fire sprinklers when he did not.|
|The lesson learned is do not buy cheap insurance. If you want to insure your loss, make sure you buy appropriate coverage. Otherwise, what is the point of buying insurance to begin with?|
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— Michael Avanesian, Esq.
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