Commercial Insurance - General Liability
Bailee Insurance
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. With the first 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 this form, while more expensive, tends to make the customer happier.
Liability Issues
Confronting Violence
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 either.
Cut Down Your Legal Costs
Liability issues resulting from workplace hazards, while common, rarely make it to trial. Only 8 of 100 lawsuits ever reach a verdict. Another 8 are disposed of by arbitration or mediation. 57 are settled before trial, and 3 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.
Hey, Landlord!
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 that cost. Good risk management calls for landlords to maintain a safe environment. It's common decency and it protects against future liability.
Product Liability Coverage
Despite the fact that few people injured by an owned product sue; factors such as the media provide many stories about product liability claims increasing many of our clients' interest in protection against such hazards. 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. On the contrary, although lawsuits are increasing, plaintiffs were only successful in 44% of the product-liability cases that went to jury in 1994, down from 55% in 1989. Regardless of these figure, any business should carefully weigh their options when purchasing Product Liability Coverage.
Commercial Umbrella Policies
While many believe Commercial General Liability the be all and end all of coverages, there are certain limitations which carry the potential to cost businesses substantially large sums of money. A Commercial Umbrella Policy helps cover alleviate those limitations by providing 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.
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. For example: if a $500,000 Auto underlying policy is required (but not in effect), and a $1 million loss occurs, the insured will be responsible for the first $500,000, and the Umbrella would pay the rest. A Commercial Umbrella Policy may also 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 similar to a deductible.
Pushing the Disability 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:
- A Madison, WI telephone operator sued her employer after they refused to provide reasonable accommodation for her narcolepsy. The woman sought permission to continue arriving late to work because of her disability. Numerous "chronic lateness syndrome" disability complaints have been filed across the country.
- A motorist who was ticketed by a Topeka, KS police officer for not wearing a seat belt claimed that he could not wear the belt because of his claustrophobia and sued the city for violating the ADA.
- A guidance counselor at Stafford High School in Hartford, CT sued under the ADA when he was fired after an arrest for cocaine possession. The counselor's lawyer posited that since his client's cocaine dependence was a disability, the insurance_school discriminated against him.
- The city of Bellevue, WA threatened to levy a $4,500 fine on a strip club because it did not attach a wheelchair lift to the stage for performers.
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. This broader definition may result in a much wider set of individuals to be considered disabled. Make sure you are ready for any and all of these risks!
Sexual Molestation: Set up Controls
Regardless of the business you are in, if children are involved, sexual molestation must be confronted. Preventive measures can reduce the threat of a child being molested physically or mentally. The child's well-being is paramount, and prevention is 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.
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:
- Management should make unscheduled tours of the facility to observe normal operations.
- The responsibility of staff for self-monitoring and reporting any unusual situations should be firmly established.
- An easy procedure should be established to help employees report questionable situations at any time or place.
- All contract personnel (such as doctors and nurses) in physical contact with minors should have background checks as if they were employees to head off allegations of negligent referral.
- The organization's attorneys should establish and and review any disciplinary actions.
Every situation warrants an investigation by management immediately. 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.
Expired Policies Still Have Their Uses!
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, but a new trend is to sue the manufacturer of the equipment for causing the hearing loss. Philadelphia firefighters recently brought suit against the manufacturer of the sirens installed in their fire engines. They claimed that the sirens produced excessive noise, which caused hearing loss; in other words, the siren was a defective product.
The Comprehensive General Liability Policy's "Products and Complete Work" section addresses this situation. 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. Conside the Philadelphia firefighters: their hearing loss may have commenced 20 or 25 years ago. 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.
Additionally, if the injuries develop over a period of years, a number of policies could cover it. The more in force policies, the greater the available limit to compensate the injured. Insureds who keep their policies increase their chances that claims will be covered by past policies.
Superfund - Not Super Fun
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.
