When Time Falls Back, Keep Coverage Moving Forward: Navigating the Risks of Sunset Clauses

October 23rd, 2024

Daylight savings time ends on November 3rd, which means shorter days and longer nights.  Just as you adjust your clocks, it's also a great reminder to revisit your clients’ Contingent Liability policies—especially those containing a Sunset clause.  The sun might be setting earlier, but their coverage shouldn't.  Today, we're shedding light on this critical topic to help you stay ahead of the game and ensure the sun never sets on your clients' protection.

What is a Sunset Clause?

A Sunset clause is a provision in most Contingent Liability policies that sets a deadline for reporting claims.  It acts like a ticking clock, counting down the time Motor Carriers have to report a claim.  Once this period—usually one to three years—expires, no claims can be made, effectively "sunsetting" the coverage for those claims.

Understanding Sunset Clauses

Understanding and clearly communicating the implications of a Sunset clause to your clients can save them from significant financial losses.  Here are some key benefits:

• Risk Management: Ensure that your clients are fully aware of the time limits on their coverage, reducing the risk of unreported claims.
• Client Trust: Demonstrate your expertise and commitment to protecting your clients' best interests.
• Avoiding E&O Claims: Prevent potential Errors and Omissions (E&O) claims against you for failing to inform clients about critical deadlines.

6 Steps to Manage Sunset Clauses Effectively

Step 1: Identify Policies with a Sunset Clause

Review all Contingent Liability policies to identify which ones include a Sunset clause.  Make a list and ensure these are flagged for additional attention.

Step 2: Educate Your Clients

Host informational sessions or send detailed communications explaining the Sunset clause, its implications, and why it's crucial for them to be aware of these deadlines.

Step 3: Implement a Notification System

Set up an automated notification system to remind both you and your clients of approaching Sunset clause deadlines.  This can be in the form of emails, calendar alerts, or even phone calls.

Step 4: Regular Policy Reviews

Schedule regular reviews of your clients' Contingent Liability policies to help ensure they are aware of any forthcoming Sunset clause deadlines.  This proactive approach can prevent last-minute scrambles and missed deadlines.

Step 5: Encourage Prompt Reporting

Advise your clients to report any potential claims as soon as possible.  Reinforce the importance of timely communication to avoid missing the reporting window set by the Sunset clause.

Step 6: Choose the Right Policy

Choose Contingent Liability policies without Sunset clauses when possible, helping to ensure your clients are protected without the pressure of a ticking clock.

Our Unique Solution

No Sunset Clause

Workforce Insurance Underwriters is unique in the marketplace by offering a Contingent Liability policy that does not contain a Sunset clause.  This policy provides added peace of mind for Motor Carriers and reduces the risk for Insurance Agents.

Key Features:

• Unlimited Reporting Time: No deadline for claims reporting.
• Comprehensive Protection: Helps ensure that your clients are always protected.
• Reduced Risk: Limits the potential for E&O claims against agents.

Don’t Leave Your Clients in the Dark

Daylight savings may be ending, but your commitment to your clients' coverage should remain constant.  By effectively understanding and managing the Sunset clause contained in most Contingent Liability policies, you can prevent the sun from setting on their protection.

Ready to shine a light on your client's insurance needs?  Schedule a call with an industry expert from Workforce today to refine your understanding and offer superior Contingent Liability coverage. 

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