Special circumstances insurance: protection beyond normal policy coverage.

• Author: Barbour, Tracy
• Position: INSURANCE

"There's not enough of it done on a national level to let you put the spread of the risk inside a box. Because it's not a common industry, it's very difficult for companies to actuarially plan for the type of risks and losses around those exposures."

--Josh Korver

Owner and President, The insurance Center

Businesses purchase various types of commercial insurance to protect themselves against potential losses from unforeseen circumstances. Beyond government-mandated workers' compensation insurance, companies typically opt for liability coverage (for their premises and operations) and property coverage (for structures and the contents).

But there are often potential perils that fall outside the norm and require "special circumstance" insurance to protect a company's interests. What constitutes special circumstances varies from business to business, according to Lori Wing-Heier, CIC, CRM, director of the Alaska Division of Insurance. "What would be considered special would be a highly unusual activity or something that a normal policy would not provide," she explains.

A prime example of this would be earthquake insurance, which is a popular option in Alaska. Special policies are also used to cover certain contingencies. For instance, a company that is totally dependent on receiving its product through the trans-Alaska oil pipeline might buy coverage that is dependent upon the pipeline going down. Likewise, a 5th Avenue Mall retailer could buy contingency insurance in case something happened to the shopping center's major stores.

Alaska companies that frequently charter aircraft may have what's known as aviation exposure. To cover this special circumstance, they can purchase non-owned aviation insurance that would be an umbrella on the owner's insurance. In the event of a claim, the policy would pay in excess of the owner's coverage.

Or a small paint store could purchase environmental insurance to cover potential risks associated with handling paint products, cleaning solvents, and other chemicals.

A situation doesn't have to be overly bizarre to warrant special coverage, according to Josh Korver, owner and president of The Insurance Center in Anchorage. For Korver, special circumstance insurance denotes coverage that is simply out of the ordinary. For example, a special policy might be required for a new contractor without an established track record. As a managing general agency, Korver's firm finds carriers or companies that are willing to...