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David G. Sayles Insurance Services Commercial Liability Insurance |
Like so many other businesses, Clean Cleaners holds it customers' possessions to work on. There are two forms of Bailee Insurance to protect those goods against fire, flood, and other perils. With one type, the customer can collect for a loss of goods only if the business is found negligent. Although this may save the business from paying for situations out of its control, it may also lead to dissatisfied customers who want their goods back (or paid for) no matter who was at fault. With the other type of Bailee coverage, the customer is compensated regardless of any
fault on the part of the business. A business often finds that the good will this
insurance engenders is worth its higher cost. Maybe your business involves the receipt of customers' goods. Dry cleaners receive
clothes to clean, jewelers receive rings and watches to repair, upholsterers receive
furniture and so on. Goods left by a customer create a bailment - in other words, a
transfer of possession without a transfer of title. The bailee (person receiving the goods)
has a duty to exercise reasonable care to protect these goods from harm. Businesses that
hold the goods of others may choose from two types of insurance to protect bailed goods
from damage or destruction by fire and other perils. Contracts for bailment can alter
common legal rules about your responsibility for bailed goods, so read each contract!! One
type of policy covers the goods only if the business is legally liable for the loss.
Generally, legal liability cases are based on negligence; if the loss is beyond the
business's control (caused by flooding, for example), this kind of policy would not protect
the client. The second type of bailment coverage reimburses the customer (bailor) for a
loss regardless of its cause. Since most people expect compensation for their goods even
if destroyed by a fire, windstorm, or other peril beyond the bailee's control, the second
type of coverage is popular among bailees. After all, what good is it to be found innocent
of legal liability if it costs you the good will - and the patronage - of your customers? Let's say an employee of yours is prone to angry outbursts. At times, he threatens other employees. You believe that action must be taken to defuse the possibility of workplace violence—but you fear putting yourself in legal jeopardy.
But you have to do something. If you notice signs of an employee's potential violence and do nothing, you can become liable for the harm he inflicts on others. When faced with this situation, seek help from professional specialists who deal with
personnel problems. Employer Practices Liability Insurance (EPLI) is not a bad idea in
this day and age, either. Is someone suing your business, say, for slipping on the floor and falling? The chance
of a trial is slim, since only eight of 100 lawsuits reach a verdict. Another eight are
disposed of by arbitration or mediation, 57 are settled before trial, and three are
settled during trial. The rest receive a summary judgment or dismissal. To save money in
the event of' a lawsuit, place billing limits on the outside law firms you use. The most
common restrictions are placed on secretarial overtime, faxes and travel. (Who wants to
catch their lawyer sipping champagne in first class as they make their way to coach?)
Other restricted billings to consider involve automated legal research, telephone, and
messenger service. Many businesses find e-mail systems to be wonderful, even using public e-mail as an inexpensive means of collecting on delinquent accounts. This is a good use of e-mail, say the experts—as long as it is used as an adjunct to regular mail. E-mail should not replace letters and phone calls, but support them. They also warn about e-mail abuse, which could create legal, ethical, and logistical problems. Indefinite storage of e-mail, as is common, provides a mine of potentially damaging evidence for future lawsuits, so set up a strict purging schedule. But there are firms that specialize in finding purged messages, so it's wisest to refrain from putting any damaging information on e-mail. Here are some considerations for a company policy on e-mail content:
Lead liability may cost more than $3 billion in claim settlements during the next 10
years. Landlords, many of whom do not have insurance coverage, will bear a significant
segment of the cost. The claims resulting in the highest awards tend to be for young
children, in whom lead paint causes brain damage. Expect more pressure on landlords to
remove or contain lead hazards. Good risk management calls for landlords to maintain a
safe environment. It's common decency and it protects against future liability. Few people injured by products sue; however, the number of injured who do sue is rising. The media provides many stories about product liability claims, increasing many of our clients' interest in protection against such claims. A study from RAND, a nonprofit research institute in Santa Monica, CA, reports that fewer than 5% of product-related injuries ultimately result in a claim for compensation. The number of claims is substantially higher for work-related product injuries, for which the worker or the Workers Compensation carrier may sue a product manufacturer. Surprisingly, most people blame themselves, others, or chance for an accident. Just one
in 50 persons hurt by products outside of work will make any claim for compensation. This
belies the concept that everybody sues for everything. The few who do sue file well over
100,000 suits per year in state and federal courts. The increasing frequency of lawsuits
is attributed in part to the strict liability required of product makers and the growth of
class-action suits involving thousands of claimants. Still, although lawsuits are
increasing, plaintiffs are not faring so well. Plaintiffs were successful in 44% of the
product-liability cases that went to jury in 1994, but were more successful (55%) in 1989.
Any business that submits products to the public should give careful consideration to its
Products Liability Insurance. Jennifer's new business is growing by leaps and bounds. Jennifer originally refused to get a Commercial Umbrella Policy to round out her business' insurance program, but then she heard of a large judgment against one of her suppliers - and she realized that the judgment exceeded her own liability limits. Now she's adequately insured, with Liability limits in excess of $5 million. A Commercial Umbrella Policy provides millions of dollars of coverage over the limits of the Commercial General Liability, the Business Auto policy, and the employer's section of the Workers Compensation Policy. In other words it provides excess coverage (over the underlying policies). Umbrella Policies by nature are inexpensive since few losses exceed the underlying policy limits. If underlying policies are not in effect at the time of the loss, the Umbrella kicks in only after the required underlying amount has been skipped. That is, if a $500,000 Auto underlying policy is required (but not in effect) and a $1million loss occurs, the insured will be responsible for the first $500,000, and the Umbrella would pay the rest. A Commercial Umbrella Policy may add coverages not offered or limited by the underlying policies, such as Advertising Liability and Liability for the Property of Others in the Insured's Care. When no underlying coverage is required for the additional liability areas, the policyholder will pay a small Self-Insured Retention (SIR), which is like a deductible. An Umbrella picks up where the limits of an underlying policy are exhausted because of an aggregate limit. An aggregate limit could be reached in a situation where an underlying policy pays out only a set amount per year, maybe three times the policy limit. Consider a Commercial Umbrella Policy to complete your insurance program. |
Pushing the ADA Envelope The Equal Employment Opportunity Commission (EEOC) has reported tens of thousands of complaints and lawsuits filed under the Americans With Disabilities Act (ADA). Most of them are legitimate—and some are more controversial:
The EEOC recently expanded the definition of mental disability to include an inability
to perform functions such as thinking, concentrating, and interacting with other people.
These rule-makers— and a lot of us—might now be considered disabled under this
definition. Do you have a business in which children enter on their own to purchase toys, or take lessons? Are you on your church's Sunday School board or active in Little League? Whatever the business or activity, if children are involved, sexual molestation is a reality that must be faced. Preventive measures can reduce the threat of a child being molested physically or mentally. The child's well-being is paramount, of course, but prevention is also needed to protect a business or institution from molestation lawsuits based on charges such as negligent hiring of employees. Prevention begins with pre-employment controls that are universally applied, regardless of the prospective employee's or volunteer's reputation. These include background checks with previous employers, law enforcement agencies, and references. Clear guidelines for conduct and procedures should be provided to all new employees and volunteers; for instance, sexually questionable conduct that goes under the guise of teasing or joking should be firmly prohibited. Robert Krall, a loss control coordinator at Coregis Insurance Co., recommends that molestation-prevention guidelines should be handed out and signed off by each employee and volunteer. He also recommends:
Every situation warrants an investigation by management immediately, not after a formal complaint or lawsuit is filed. The organization's General Liability Insurance might not protect against these lawsuits for religious, public, or private organizations in which adults care for children. Sexual Misconduct Liability insurance is recommended. Complaints deserve careful investigation, tempered with compassion for the involved parties. The investigation must be confidential (privy only to the investigating parties, attorneys, and insurer's representatives) to protect innocent parties. Detailed notes of interviews with concerned parties are very important since they could support the investigator's positions later. Remember that libel, slander, and right of privacy claims can be filed by someone who is falsely accused when care is not exercised by management. Such claims may be covered by the organization's insurance, but no one wants to besmirch and employee's or volunteer's reputation. When the Americans with Disabilities Act (ADA) was signed into law in 1990, many
business owners feared that a wave of litigation would flood the courts and drain
business. But despite a few abuses, litigation has, in fact, been minimal. Most disputes
are settled long before reaching a court. The ADA's triumph is that hundreds of thousands
of people with legitimate disabilities have been granted the access that most Americans
take for granted. People who once suffered discrimination are now bringing home paychecks
(and paying taxes!). Assistive Listening Devices (ALDs) are enabling more people to enjoy
movies, the theater, and lectures. Ramps and widened aisles have enabled the physically
challenged to swell the ranks of American consumers. Telephone devices for the deaf (TDDs)
are allowing disabled travelers to call from airports, hotels, etc. The ADA's greatest
benefit to our culture may well be that it is bringing in new people to share their talent
and perspectives. This is a benefit for the rest of us—who are, perhaps, only
temporarily able-bodied. It's unlikely that old, expired insurance policies will ever have any use, but they might just come in handy. This is particularly true with Liability policies, since claims sometimes arise years after they expire. Noise induced hearing loss claims are becoming a major source of liability claims. Such claims are covered by Workers Compensation, of course, but a new trend is to sue the manufacturer of the equipment for causing the hearing loss. Philadelphia firefighters recently brought a brought suit against the manufacturer of the sirens installed in their fire engines. They charged that the sirens produced excessive noise, which caused hearing loss; in other words, the siren was a defective product. (Other noisy products that affect workers' lives include jackhammers, woodchoppers, saws, riveters, and so on.) When the damage is done over a period of years, is it covered by old Liability policies or just the current one? The Comprehensive General Liability Policy, which was renamed the Commercial General Liability (CGL) policy in 1986, is the common Liability Policy for businesses. Its history is decades old, and it is the policy that responds to these claims. Specifically, the CGL's "Products - Complete Work" section addresses this situation. (This coverage is seldom excluded from a policy.) Insurance company records often do not go as far back as the start of a hearing injury, and without proof of coverage, business would be unable to prove what coverage existed at a given time. Think of the Philadelphia firefighters: their hearing loss may have commenced 20 or 25 years ago. In asbestosis cases (in which the injuries began decades earlier), $1,000 rewards were advertised in some insurance policy forms in effect at a certain date. Liability policies may be claims made (covering only the claims made during the policy period) or occurrence (covering occurrences during the policy period.) Since old Liability Policies are likely to be the occurrence type, they would cover injuries that developed while they were still in effect. If the injury develops over a period of years, it's possible that a number of policies could cover it. The more policies, the more policy dollars available to compensate the injured. Insureds who keep their policies increase their chances that claims will be covered by past policies. In mass tort cases, such as the Philadelphia suit, more dollars can be crucial to the Insured (here, the siren manufacturer). Aggregate limits are provisions that specify the maximum amount the policy will pay out in liability over one year. The limit might be $100,000 per occurrence to a maximum of $500,000 per year. Most of the time, aggregate limits do not affect the Insured; however, a high aggregate liability figure is a comfort to Insureds who may suffer more than one loss in one year- or who face mass tort situations. Optical scanning and other new storage methods are reducing the potential for lost
documentation, but hanging on to expired Liability Policies is still sound. Superfund - the nickname of the Comprehensive Environmental Response, Compensation, and Liability Act - has been expanded by the courts. It used to be that the creator of an environmental mess was solely responsible for cleaning it up, even if the property had subsequently been bought by someone else. Now buyers of property may be held liable. The courts look to see if the buyer has engaged in willful blindness with respect to the seller's potential liability or has purchased assets and continued the enterprise substantially unchanged. They normally investigate the latter to head off any attempts to avoid liability by dissolving a corporation and selling only the assets. To be safe, a purchaser of land (or assets including land) should be diligent to avoid liability. Check corporate records, and talk to former employees before purchasing property. Consider hiring a professional to perform an environmental evaluation. Our agency can show business owners how Environmental Liability Insurance fits into the Superfund picture. |
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