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Life InsuranceCategory Archives: General Liability
Employees routinely use their own vehicles in their jobs or just to run errands for their employer. Does your company have protection in case of an accident and both your worker and your company are sued? If your company has a business auto policy, it should include coverage for ‘non-owned’ automobiles. These are vehicles owned by others (such as an employee) that are used in the business of the company. Generally a business auto policy only protects against losses involving company-owned vehicles, so it is important to add “non-owned” coverage.
Basic business auto insurance only covers employees while operating a company-owned vehicle to perform company business. An employee’s personal automobile policy typically excludes business use; so a coverage gap may exist if an employer’s vehicle policy is not modified to handle non-owned vehicles.
Another important consideration is whether the amount of non-owned coverage is sufficient. Any non-owned auto liability limits should be high enough to protect both the business and the employee. A company has to evaluate its particular coverage need in order to determine the proper level of coverage. Including ‘non-owned’ auto liability coverage on the business policy will provide coverage for the business over any deficiency in limit from the employee’s personal auto policy. This is coverage for the BUSINESS, not the employee.
If the company does not own any automobiles, it is possible to purchase business auto liability coverage for only the danger of loss involving its use of ‘hired and non-owned’ vehicles. The ‘hired’ portion would cover business travel and vehicle rentals; the ‘non-owned’ portion would cover employees using their own auto in the business.
Even if a business rarely uses non-owned autos, it only takes one serious accident to create a significant loss for the business. You should find an opportunity to discuss this coverage with an insurance professional.
If you want to avoid the danger of something negative resulting from pursuing an activity, the safest action is…..don’t pursue the activity. Of course, choosing that option is impractical, unrealistic and boring. The quality of our lives is highly affected by how we choose to spend our time. Any activity involves a chance that a loss could occur:
- A pick-up basketball game could result in a broken ankle when attempting a sweet move on the floor
- A tennis match could include your collision with a partner’s backhand swing
- A hike through a forest path may end with a stumble down an incline and a broken leg
- A twirl on the dance floor could include tripping on a chair and falling, ending up with a back injury
- A game of catch comes to a halt with a ball sailing over a glove and through a neighbor’s window
- A canoe rental could end up with a drowning
The key is to be aware of risks and to take steps to minimize them. One method that tries to decrease the likelihood of being sued involves hold harmless agreements.
Hold harmless agreements are typically in writing and involve a first party agreeing not to take legal action (sue) against another party. In exchange for this promise, the second party agrees to permit the first party to engage in a given activity.
These agreements can come in many forms. They can be separate contracts or, often, they are statements added to other contracts. They are also called different names, such as disclaimers or waivers. Schools use them in permission slips for student trips or activities, including team or individual sports. Youth sports leagues use them, vendors who rent recreational equipment use them, and plenty of businesses make such agreements part of their operations.
There are a number of issues to keep in mind with such agreements including:
- Are they necessary
- Are they enforceable (state laws often control this issue)
- Are they valid (if not worded properly, they may be useless or may have unintended consequences)
- Are they fair (this depends on the level and nature of risk involved)
- Are they part of a business or strictly a non-business transaction
In some cases, it may make a lot of sense to use a valid hold harmless agreement. In others, one may have to make a decision whether a given activity is worth giving up that important right to hold another party responsible for serious injury or substantial damage to property. Be aware that it may not be valid to hold another party harmless on behalf of a child. Some states hold that a child’s right is separate from a parent’s and a parent may not legally waive that right.
Having fun and staying active involves risks and it’s important to be aware of which ones you’re assuming when you pursue those activities. Be careful with the agreements you make.
Insurance fraud makes victims out of insurance companies and their customers. In common terms, insurance fraud is lying to or deceiving an insurer in order to make money or to become insured. Some common fraud schemes include:
- “padding” (inflating the true amount of) a claim
- lying or hiding (concealing) important information when applying for insurance
- lying or hiding (concealing) important information when reporting a loss
- submitting false claims
- “staging” accidents
- Failing to report recovered property
- faking theft claims
- committing (home or vehicular) arson for profit
As a consumer, fraud should concern you since the cost is passed directly on to you in the form of higher insurance rates. You can play an important role in reducing fraud.
Fighting Auto Insurance Fraud
Persons attempting to commit insurance fraud often do so by deceiving innocent drivers during actual accidents or by involving innocent drivers in “staged” accidents. Do the following in order to minimize this risk:
- Drive defensively, keeping space between you and surrounding cars.
- When traffic slows, begin braking before the car in front of you does.
- Be careful when turning into a lane that allows two or more autos to turn left at the same time. Victims of insurance fraud are often people who float across the line when turning and then are intentionally sideswiped by a person who is “staging” an accident.
- If you are in an accident, write down license numbers of all cars involved in the accident, get the names and contact information of all persons involved and their insurers. Count the number of passengers in the other cars and get their names, addresses and any other pertinent information.
- Call the police and get a police report even if the damage is minimal. DO NOT let another driver talk you out of calling the police.
- Carry a disposable camera in your glove compartment or make use of a cell phones camera feature and take pictures of the damage to the vehicles and of all drivers and passengers in the cars.
Fighting Homeowners Insurance Fraud
It is far more difficult to involve an innocent party in homeowner fraud. However, a homeowner can help himself and help deter fraudulent claims by properly maintaining their home, and by removing or repairing items that could create tripping hazards to outside parties. Also, if someone is injured in your home, be certain that you get full information and be sure that an injured person gets any needed treatment. Carefully document any incident, including all impressions about likely injury. It may also be prudent to show healthy skepticism over any information on medical bills or claims.
Report suspicious actions such as a friend who asks you to store valuable property and you then find that they reported to his insurer that the property was stolen.
Think of insurance fraud as money out of your pocket-because it is. According to the US Chamber of Commerce, fraud adds 25% to property and casualty insurance rates.
If you are involved in an accident and you are suspicious that fraud may be involved, report it to the authorities and your insurer. Another helpful source for fraud information is the National Insurance Crime Bureau at 1-800-TEL-NICB (at the time of this writing, their Website was located at www.nicb.org).
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A Commercial Umbrella Liability policy is a coverage option that should be seriously considered by businesses of all sizes. Liability claims and court decisions involving millions of dollars are no longer uncommon; any business can be found legally responsible for this type of judgment. A Commercial Umbrella Liability Policy increasingly referred to as an excess policy, can provide an additional layer of insurance protection to handle major losses.
The coverage form is still not standardized. They may vary significantly among companies and some jurisdictions may create unique coverage issues. Punitive damages are an example. Some states only permit responsible parties to pay punitive damages; others allow them to be paid by insurers. Commercial umbrellas can also differ widely on the exclusions they contain.
A business owner may consider an accident that does not involve a fatality to be one that can readily be handled by regular coverage. The reality is that such an accident may result in substantial medical care, lost income and other expenses. Can your business afford a payment that exceeds a million dollars? Think of accidents involving vehicles that, today, are much safer than even five years ago. That means that accidental deaths are less likely while the chance of severe injury has increased. Severe head trauma can send a claim’s cost soaring. It may take up to seven years to determine the ultimate extent of injury. Recovery is often slow and sporadic. These elements combine to make regular insurance coverage insufficient.
A business may have auto liability coverage but insurance limits of more than $500,000 are rare. This is because insurers are reluctant to offer higher coverage without sufficient premium. When the insurance coverage provided by a business auto policy is not enough to meet the amount of a loss, the business is responsible for the difference.
An Umbrella Liability policy could be the difference between bankruptcy and an on-going business. The Umbrella policy would take over where the business auto policy stopped, providing defense coverage and additional limits to pay large judgments.
There are no standard Umbrella Liability policy forms; each company has their own variation. Each form offers different options that can help tailor coverage to specific business needs. One thing to remember is that an Umbrella Liability policy will not cover everything; there are exclusions in this form as in any other contract of insurance. However it still represents an excellent method to help shield a business from catastrophic claims. Contact an insurance agent to discuss securing this valuable form of liability coverage. It could help preserve your business.
[clear]After making the effort to identify what you need to insure, what company you want to handle your protection, and working to understand the various policies that cover you and your possessions, isn’t the importance of telling your agent or insurance company about a loss obvious? Surprisingly, no, it isn’t.
The Notification Obligation
Fulfilling the coverage promise of an insurance policy is all about communication. An insurer makes a promise to protect you against certain types of loss, but it can’t follow-through unless it knows about a loss. Prompt notification is so important that it is a formal policy requirement. Your failing to meet this obligation could result in a claim being denied.
A policy typically requires you to do the following:
Contact the agent or insurer as quickly as practical – the practical requirement replaced the previous use of “possible,” since some companies unreasonably denied coverage because notification was not instantaneous. The difference between words may seem minor, but it gives you some flexibility for dealing with circumstances that could affect how quickly you contact your agent or insurer about a loss.
Identify Yourself – Perhaps one day your insurer will be able to recognize your voice over the phone and immediately pull up your file. Until then, be prepared to at least tell your insurer your full name (or, if different, the name the insurance policy is under) and the policy number.
Give adequate details – What, When Where, Why and How. It is important that the insurer has enough information to take proper action. This information allows an insurer to open a claim file, assign the loss to a claims person and begin investigation of your loss.
Give the insurer copies of any communications regarding a loss or possible loss (such as a threat of a lawsuit) – You should not guess about whether a legal notice or request to be paid for damages is important, even when an actual lawsuit has yet to be filed. Send a copy of the information to your insurer and let them decide.
Prompt Notification helps Everyone
Complete and quick communication about losses gives you the best chance to get needed coverage and gives your insurer an opportunity to handle a possible claim efficiently. It also allows the insurer to control issues that could let lawsuits get out of control, such as the ability to offer payment for medical expenses or to contact and question witnesses.
Don’t hesitate! Contact your agent or insurer and get your loss handled.
What Is An Attractive Nuisance?
This is a term originated by a judge to describe property that attracts youngsters and, because of their dangerous nature, creates a special obligation to property owners. Examples are:
- swimming pools
- trampolines
- empty buildings
- appliances kept outside
- excavations
- construction materials
All of these can lure children onto property and they all have the potential to cause serious injury. Why Do Attractive Nuisances Create A Special Obligation?
A special obligation exists because of such property’s child endangering nature. Children do not have the reasoning ability of adults. When an opportunity to have fun pops up, it’s a rare child who thinks about the chance of being injured. A property owner with an attractive nuisance on his property cannot escape liability because of a trespassing child. When an attractive nuisance is involved, adults have to make a special effort to protect children from their blind sense of adventure or face the consequences. How Do You Handle Attractive Nuisances?
The answer is…do whatever it takes to prevent a child’s access to the nuisance. Therefore, in order of their effectiveness:
1. Eliminate the nuisance:
Examples:
- have old appliances hauled to a junk yard
- tow old, non-running vehicles away
- get rid of construction materials immediately after a building project is complete
2. Secure the nuisance
Examples:
- take off doors or covers from large appliances awaiting garbage pickup
- keep sharp tools, especially power tools and equipment, locked away
- store construction materials in a garage or shed
3. Reduce the chance for injury from a nuisance
Examples:
- install a pool cover and have a locked fence to prevent access to pool
- do not allow younger children to use equipment such as trampolines
- make sure there’s adult supervision of children using play equipment
If you’re not certain about whether you have an attractive nuisance situation, discuss the situation with an insurance professional.
Courtesy of Insurance Publishing Plus
Business transactions frequently require insurance coverage. A Certificate of Insurance is a document that is often requested as proof that adequate insurance exists. A certificate is not the same as a policy and certificates do not affect the coverage provided by a particular insurance policy. Therefore, requests to “endorse the certificate of insurance” are inappropriate and misleading. A certificate is a separate document used to comply with a common contract requirement to verify certain types and amounts of insurance.
Certificate holders, the entity or party requiring the certificate, often demand that they appear as “additional insureds.” This requires an endorsement (change) to the policy and it gives them coverage for injury or damage resulting from the contract.
Example: Tenant A leases a building from Property Owner B. Property Owner B demands that the tenant changes its insurance policy to also show the property owner as an additional insured. If a tenant’s customer is injured on the premises and sues both the property owner and the tenant, the tenant’s liability policy would provide coverage for both parties.
Construction contracts require certain forms of insurance, certain insurance limits, a hold harmless agreement and additional insured requirements. A “hold harmless” agreement is a contract provision that states how much responsibility each party accepts for damages arising out of the agreement.
A Certificate of Insurance can confirm that the appropriate policies were issued and that the other requirements were also met. It is important to have a system for monitoring receipt of the Certificates of Insurance BEFORE any sub-contractors are allowed to begin work. If Certificates are not obtained or kept up-to-date, when the contractor’s Workers Compensation and General Liability policies are audited, the payroll for the sub-contractors without Certificates will be included with the contractor’s resulting in an additional premium charge.
Ask your insurance agent to help determine if you should be obtaining Certificates of Insurance from your business relationships. In addition, when you’re required to provide a Certificate, send your agent a copy of the contract. The contract allows the agent to assist you in determining what liabilities you are accepting and what can be done to modify your insurance program to best protect your financial well-being.
Courtesy of Insurance Publishing Plus
On January 7, 20 II, the South Carolina Supreme Court issued its opinIon in
Crossmann Communities of North Carolina v. Harleysville Mutual Ins. Co., Opinion No.
26909 (S.c. Sup. Ct. filed January 7, 20 II). The Crossman Communities case alters
prior jurisprudence concerning standard commercial general liability (CGL) policies.
The Court’s decision significantly restricts the covered damages under the typical CGL
policy.
Discussion
Harleysville Mutual issued a standard CGL Policy to Crossmann Communities
and certain other parties (“Respondents”). The policy covered several condominium
projects in Myrtle Beach, South Carolina. After discovering damage caused by water
intrusion, the condominium owners sued the Respondents for negligence, breach of
express warranties, breach of implied warranties; unfair trade practices; and breach of
fiduciary duty. The condominium owners alleged that the Respondent defectively
constructed their units, causing substantial decay and deterioration.
The Respondents settled the condominium owners’ claims for approximately
$16.8 million and then sought coverage under the applicable CGL policies. Harleysville
Mutual denied the claim, and the Respondents filed a declaratory judgment action
seeking coverage. The Respondents prevailed in the trial court. However, the South
Carolina Supreme Court reversed the decision based on its new, more restrictive
definition of “occurrence.”
Standard CGL policies generally provide coverage for “property damage” which
is caused by an “occurrence.” Those policies also contain an exclusion for property
damage to the contractor’s work (the “your work” exclusion). However, that exclusion is
modified by an exception for property damage to the contractor’s work that is caused by
the work performed by a subcontractor.
Prior to the Crossman Communities decision, the Court held that faulty work was
not in and of itself an occurrence. Auto Owners Ins. Co., Inc. v. Newman, 285 S.c. 187,
684 S.E.2d 541 (2009). However, faulty work performed by a subcontractor that caused
consequential damage to other work (in this case, improperly applied stucco that caused
water intrusion) was considered an occurrence and did not fall within the “your work”
exclusion. & Therefore, under prior South Carolina jurisprudence, the standard CGL
policy arguably provided coverage for an array of potential claims, including water
intrusion, cracks caused by foundation issues, drywall damage caused by framing
problems, and others.
The Crossman Communities decision makes significant changes to the prior law
on CGL policies. The Court does so by providing that in order to be considered an
“occurrence” the claimant’s property damage must result from “fortuitous event” or
“chance.” Stated differently, where property damage is a natural and probable
consequence of faulty work, there is no “occurrence.”
The Court provided little guidance into the practical application of the new rule.
It did deny the Respondents’ claim for coverage of water intrusion damages caused by
defective siding. In our opinion, it is safe to assume that most of the typical damages
asserted in construction defect cases will no longer be covered under the standard CGL
policy. This is particularly true considering the two highly unlikely examples that the
Court used as examples of claims that may be covered under the new rule:
Assume the insured is a general contractor that built an apartment building
using various subcontractors to complete the work. Also assume a
subcontractor installed all wiring in the apartment building. After the
building is complete and put to its intended use, a defect in the building’s
wiring causes the building to sustain substantial tire damage … In such an
instance, an occurrence would exist, the insurer could point to the “your
work” exclusion, but then the “subcontractor exception” would provide an
exception to the exclusion.
Assume that a subcontractor failed to properly construct the foundation of
a new home. After the home is complete. the new homeowner moves into
the home. The new homeowner then hires a landscaping company to plant
shrubs near the house. During the landscaping project, while using a
Bobcat machine to dig a hole for a shrub, the landscaper bumps the
foundation of the home with the machine. Due to the poorly constructed
foundation, after the landscaper hit the home with the machine, a collapse
of all or some portion of the home occurs.
If your organization is involved in development, construction, financing or real
estate, this legal development is likely to affect you. Please contact us if you have any
questions concerning this case and its impact going forward.