Jane Dotson
A manuscript form or policy is a type of insurance policy that is custom-designed to meet a particular need. It is typically used for larger organisations and catastrophe-exposed placements, and often involves structuring sophisticated programs on a layered basis with multiple carriers. Manuscript forms are usually reserved for unique risks or specialised property that require coverage beyond what a standard policy can offer. For example, a commercial insured may negotiate a manuscript policy for product liability coverage to achieve the exact level of coverage needed for a specific product. The process of creating a manuscript policy involves drafting unique provisions and terminology to meet the specific needs of the insured, which can be challenging due to the risk of ambiguity and the need for expertise in multiple disciplines.
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What You'll Learn
Custom-designed for specific needs
A manuscript form or policy is a type of insurance policy that is custom-designed for a particular need. It is created to meet the specific requirements of the insured, addressing any unique risks or specialised property that may not be covered by a standard policy.
The process of creating a manuscript policy involves drafting insurance provisions from scratch, using unique language and intent to tailor the policy to the individual needs of the insured. This customisation allows for a broader coverage basis, providing the exact coverage required by the insured. For example, a commercial insured can negotiate a manuscript policy for product liability coverage, ensuring that the policy meets its specific coverage needs for a particular product.
Manuscript policies are typically reserved for larger organisations or catastrophe-exposed placements. They are often used when sophisticated programs are structured on a layered basis involving multiple carriers. The challenge in such layered programs is to ensure coverage consistency among all participants, with the goal of having one exact policy for each participant.
One of the key benefits of a manuscript policy is its ability to provide tailored coverage. By using non-standard terminology, the policy can be crafted to address specific risks and exposures that may not be adequately covered by a standard policy. However, this non-standard terminology can also be a drawback, as it may introduce ambiguity and increase the risk of expensive litigation.
Due to the custom nature of manuscript policies, it is crucial to seek expert advice before finalising the policy. An independent insurance agent or attorney can review the manuscript policy to ensure it accurately reflects the specific needs of the insured and to mitigate any potential risks associated with non-standard contract provisions.
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Special risk exposure
A manuscript form or policy is an insurance policy that is custom-designed for a particular insured. It is created to meet the specific needs of the insured and is not subject to the same regulations as standard policies.
A manuscript policy can be negotiated to include specific coverage for special risk exposure. For instance, a builder's risk endorsement can provide property insurance for builders while they are constructing a new building. This type of endorsement covers any damage or loss incurred during the construction process, protecting the builder from financial loss.
Another example is the accounts receivable endorsement, which provides coverage for all money owed to a business, including interest and collection expenses. This type of endorsement protects businesses from financial loss in the event of a direct loss or damage to their accounts receivable records.
It is important to note that manuscript policies may not use industry-standard terminology, which can create ambiguity and lead to expensive litigation. Therefore, it is crucial to have an independent insurance agent or attorney review the manuscript policy before signing to ensure it meets the specific needs of the insured and does not contain any ambiguous provisions.
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Overbroad standard policy
A manuscript form or policy is an insurance policy custom-designed for a particular need. Unusual risks or specialised property may require a manuscript policy. Overbroad standard policies are a common reason for opting for a custom-made policy.
An insured or insurer may decide that the terminology used in a standard policy is too broad for the insured's needs. For example, a commercial insured can negotiate a manuscript policy for product liability coverage. Standard terms might have a particular level of liability coverage, property damage, personal injury, or reimbursement for personal property. The company may negotiate a policy that meets its coverage needs for a particular product.
A non-profit organisation, for instance, may negotiate liability insurance for an event to provide coverage that a standard policy would not cover. A custom-made policy might help achieve the exact coverage required. However, there are risks associated with a manuscript insurance policy. Some manuscript policies don't use industry-standard terminology, which is time-tested. The manuscript may contain ambiguous provisions without court precedent on certain coverage issues or terminology. This ambiguity could lead to expensive litigation.
Additionally, insurance laws require insurers to act in good faith, protecting the consumer from unfair insurance practices. If a claim has been denied or bad faith is suspected, an experienced local insurance attorney can review a manuscript policy before purchasing the coverage. They can also help explain and defend insurance rights.
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Non-standard terminology
The use of non-standard terminology in manuscript policies can lead to a lack of clarity and potential disputes over interpretation of certain provisions. Courts may not have established precedents for interpreting specific terms or coverage issues, resulting in ambiguity. This ambiguity could be costly for all parties involved if it leads to litigation.
In addition, the use of non-standard terminology can complicate the understanding of coverage, exclusions, and restrictions. Manuscript forms often serve as the foundation for coverage consistency among multiple carriers and participants in a layered program. However, the use of unique language can make it challenging to ensure consistent coverage across all participants.
To mitigate these risks, it is crucial to involve experts who can ensure the precise and consistent use of terminology throughout the manuscript policy. An independent insurance agent or attorney should review the manuscript before it is signed to address any potential issues related to non-standard terminology.
It is worth noting that the meaning of "manuscripting" has evolved over time, and it is no longer necessary to create insurance provisions entirely from scratch. Today, manuscripting involves borrowing and adapting existing provisions to create a tailored document that meets the specific needs of the insured.
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Less regulated than standard policies
A manuscript policy is a custom-designed insurance policy created to meet a particular need. They are often used when the standard policy terminology is too broad or limited for the insured's needs. For example, a commercial insured can negotiate a manuscript policy for product liability coverage.
Manuscript policies are not as heavily regulated as standard policies. This is because some states don't require manuscript policies to be filed with the state if they are issued to only one insured. Other states cap the number at three insureds. This means that manuscript policies are not subject to the same level of scrutiny and approval by state insurance commissioners as standard policies.
The lack of regulation can be a concern as manuscript policies may contain non-standard terminology that is not time-tested and could be ambiguous. This ambiguity could lead to expensive litigation if there is a dispute over the interpretation of the policy. It is, therefore, critical to have an independent insurance agent or attorney review a manuscript policy before it is signed to ensure that the insured's interests are protected.
In addition, manuscript policies may not have the same level of consumer protections as standard policies. Insurance laws require insurers to act in good faith and protect consumers from unfair practices. However, with manuscript policies, there may be a greater risk of the insured being subjected to unfair practices or having their claims denied. Again, having an attorney review the policy can help to enforce the insured's rights and ensure they understand their coverage.
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Frequently asked questions
A manuscript form or policy is an insurance policy that is custom-designed for a particular need. It is often used to accommodate a client with special needs, for competitive reasons, or to overcome dissatisfaction with existing policy language.
A standard insurance policy may use terminology that is too broad or too limited for the insured's needs. A manuscript policy can be tailored to provide broader coverage for the insured and a competitive edge for the broker.
Manuscript policies are not as heavily regulated as standard policies. They may contain ambiguous provisions without court precedent, which could lead to expensive litigation. It is recommended to have an independent insurance agent or attorney review a manuscript policy before signing.
Manuscript policies are typically created by an insurance broker or agent in collaboration with the insured. They work together to tailor the policy to the specific needs of the insured, ensuring consistency in coverage among multiple carriers or layers of coverage.
