Monthly Archives: August 2014

Is firework damage covered under my Homeowners Insurance?

fireworkDear Sherri, Every year my neighbor puts on a fireworks show for the entire block. If a Bottle Rocket should come flying through my window, do I have coverage? Sincerely, Rocket Frazzled in Ridgewood

Dear Rocket Frazzled,
First of all, Ask Sherri in no way condones this behavior! I cringe every year while watching those illegal fireworks! This year, they promise to be bigger and better than last year’s. Can’t wait! I mean, shame on you. In answer to your question, yes, your policy would cover your damages and the insurance company would subrogate against your neighbor, or in other words try to recoup the money from your neighbor. You could even go directly to your neighbor’s carrier and file a claim as he would be negligent. However, you should not depend on your neighbor’s insurance as this is the reason you have homeowner’s insurance.
Sincerely,
Ask Sherri

How Much Directors & Officers Liability Coverage To Buy?

blog-directorsRecently, I was asked to join the Board of Directors of a small LLC and my first question to the owner, a good friend of mine, involved her Directors & Officers Liability insurance. While I understand the need to balance cost, with the need to protect board members, I certainly didn’t want to put my own assets at risk in case of a loss. Nor was I interested in pursuing quotes for personal directors and officers liability. I already knew that my friend had purchased a $1 million policy and I set about to find out if that limit and her coverage was satisfactory.

• Since this Board was a privately held corporation, my benchmark was to look at the experience and types of claims filed against similar privately held companies. My concern, therefore, didn’t include any litigation that might be brought by shareholders, government organizations, or industry regulators. This board had no shareholders except for the members of the family that owned it. It wasn’t listed on the stock exchange and wasn’t highly regulated by the government or any other organization.

• I reviewed whether or not defense costs were included within the limit of liability as opposed to being unlimited. My concern was that I didn’t want the entire $1 million to be used for defense leaving nothing left in case of any award for damages against the LLC and/or against any of the board members. I knew only too well, from prior experience, that sometimes investigating claim facts and defending lawsuits could run into a lot of money. In fact, many businesses purchase this coverage mainly for the defense costs afforded by such a policy.

• I needed to ensure the policy provided protection for the individual directors and officers from claims in which the business was not legally or financially liable to indemnify a third party in case of a claim. In addition, I needed to confirm that the coverage provided for reimbursement to the business should it have to advance monies to compensate and provide legal fees on behalf of directors and officers. With D&O coverage, it is essential that there be coverage for the individual directors and officers as well as for the company, itself, known in D&O Liability jargon as the “entity.”

Actually there seemed to be little data available concerning the limits of liability chosen by companies with assets as limited as those of my friend’s business, but I was able to confer with underwriters and find out what types of losses similar companies had suffered and what the defense costs and the claim awards had been. Since the limit of liability did, in fact, include the defense costs, my friend was gracious enough to indicate that she’d be willing to increase the coverage limit from $1 million to $2 million just to be on the safe side. That decision was sufficient to allow me to say “yes.” However, we also discussed that on the next renewal she would consider a policy in which defense costs were outside the limit of liability and in that way she might consider going back to a $1 million limit.

It is strongly suggested that prior to joining a Board or purchasing this coverage, you speak to your agent about what you need to protect both your board members and your company in case of a loss.

– Karen Skoler, CPCU

What You Don’t Know About Employment Practices Liability Can Cost You and your Business A Lot of Money!

splash-risk-approachApproximately 70% of all businesses today haven’t purchased Employment Practices Liability insurance. So, big deal, you might be saying, I’m in the 70% that got to save money! Yes, that is true, but this can be an extremely costly decision on your part.

Employee law suits are a lot more common than you might think. In addition, they are costly to defend with the average claim currently reaching $70,000.

What is even more distressing is that most business owners believe that they already have this coverage under their existing policies. That is absolutely not true! Most commercial as well as personal policies exclude coverage for claims related to employment practices such as racial or age discrimination, wrongful termination, or sexual harassment to name just a few of the most common allegations brought by employees.
The coverage is easy to obtain and relatively inexpensive, not even requiring an application in most cases. More importantly, some carriers will add the coverage to an existing business owner’s policy for a minimal additional premium.

The most valuable portion of this coverage, in my estimation is the fee legal counsel available to policyholders including loss prevention measures to assist in helping to stave off a lawsuit stemming from wrongful acts defined in employment practice law.

We strongly suggest that you ask your agent how to better protect yourself and your business against the growing number of lawsuits being brought each day. Remember, when times are tough, people who are desperate look for any way to keep going!

By Karen Skoler, CPCU

Additional Insureds vs. Named Additional Insureds

question-template3_05ADDITIONAL INSUREDS: Our clients call frequently asking for certificates of insurance where another party they are doing business withrequest to be named an Additional Insured under their policies. This is usually the case when our named insured agrees to indemnify another party in a contract (for example when leasing office space, renting out space for a function, holding a meeting in a place other than the usual office space rented, etc). The purpose of this endorsement is to specifically name someone we agree to indemnify in case of loss. Doing this actually reinforces the obligation which undoubtedly has already been established by indemnity agreements which provide the additional insured with direct rights under a Businessowners, Package or Liability Policy.

What does this mean?
By naming someone an additional insured, the person to whom the original policy was issued, is now extending their own protection to an additional insured with direct rights under our named insured’s policy.

Still need clarity? Here is an example:
The Local Woman’s Club decides to have a dinner at a local restaurant and they are asked to provide a certificate of insurance naming the restaurant as an additional insured. In order to “seal the deal” and get the contract signed, the Woman’s Club must ask their agent to issue a certificate naming the restaurant. Each lady brings a guest to the affair and a guest trips over a chair leg and breaks her ankle. The Restaurant, as an additional insured, can utilize the policy of the Woman’s Club to indemnify the injured patron as the injury occurred at the Woman’s Club function and as a direct result of their operations.

It is important to note that the certificate, guarantees that the restaurant has been named as an additional insured, as well as that the policy for the Woman’s Club will respond to the injured because of the connection between the activities of the Women’s Club and the dinner held in the restaurant. It also guarantees that the policy will assist in defending the restaurant if the guestdecides to sue the establishment as defense is one of the rights under the insurance policy.

ADDITIONAL NAMED INSURED:

Additional Named Insureds, however, must invariably have a much closer relationship to the policyholder to begin with. The operations of the First Named Insured must be linked closely with those of the Additional Named insured on the policy.

For example:
Many public entities have investors whose operations nearly always involve the first named insured. By adding an entity as an additional named insured, the first named insured is, in essence, extending coverage under its liability policy to all of the operations of the additional named insured entity. It is important to note that additional named insureds; however, aren’t entitled to either the rights or the obligations of the first named insured who is responsible to pay premiums, cancel coverage, and receive a cancellation notice.
To summarize, regardless of whether someone is named an additional insured or an additional named insured, they actually become an entity which is insured under the policy. In so doing, they become entitled to the same right of defense in a suit seeking coverage for damages that the first named insured is entitled to per the terms and conditions of the policy.

The most significant difference, however, will derive from the language in the additional insured endorsement which can limit coverage extended to an additional insured to “liability arising out of the operations performed by or on behalf of the named insured.”

By Karen Skoler, CPCU

Is Workers’ Compensation An Injured Workers Only Remedy In Case of Injury?

wc man under box-resized-600.jpgMost of us know that if we are injured while on the job, Workers’ Compensation is really our only recourse ….Or is it?

There is actually a type of claim known as a “Third Party Over Action” in which an injured employee, who after collecting under his/her employer’s Workers’ Compensation policy, can sue a third party for contributing to the employee’s injury. And then, provided that there is some type of written agreement between the third party and the injured party’s employer, the liability for the accident is passed back to the employer.

The catch is that the written agreement between the two parties must be in place prior to the accident.

Workers’ Compensation coverage was initially designed to be the sole remedy in case of on the job injuries. However, that was before Labor Laws 240 & 241 were reenacted. Labor Law 240 is the New York Scaffold Law and Labor Law 241 is New York Construction Labor Laws. The statutes impose “Strict Liability” on General Contractors and on Building Owners when workers are injured as the result of a fall from a height. Therefore, even if the contractor is only 1% at fault for the employee’s injury and the worker is 99% at fault, the general contractor or building owner becomes entirely liability for the damages incurred by the workers.

There are only two defenses to Labor Law 240 actions and they imply that if the injured worker’s injuries are (1) solely the result of his/her failure to follow basic construction site safety rules and/or (2) failure to use safety equipment. If it could be proven that the injured worker was culpable in either of these areas, he/she would undoubtedly find it very difficult to prevail in a lawsuit.

By Karen Skoler, CPCU

If You Own A Dog, Will Your Homeowners Rate Go Up?

dogmailmanMay 18-24th, 2014 was Dog Bite Prevention Week in the US. Insurance claims involving dog assaults cost the industry over $483 Million last year according to information gathered by the Insurance Information Institute. Maybe this explains why one of the questions on a Homeowners application not only asks if you own a dog, but more specifically what breed of dog you own.

Here are the highlights by state:
• California leads with 449 claims totaling $14.7 million paid
• Illinois with 309 claims and $8.9 million paid
• Ohio with 221 claims and $4.2 million paid
• Texas with 207 claims and $4 million paid
• Pennsylvania with 180 claims and $5.8 million paid
• Michigan with 162 claims and $3.9 million paid
• New York with 149 claims and $6.4 million paid
• Indiana with 146 claims and $3.5 million paid
• Minnesota with 120 claims and $4 million paid
• Georgia with 106 claims and $2.1 million paid
• Arizona with 105 claims and $2.8 million paid
• Florida with 93 claims and $5.5 million paid
• Oregon with 91 claims and $1.4 million paid
• Missouri with 88 claims and $4.3 million paid

In addition, the US Post Person still remains the #1 target with 5,581 claims suffered by postal service workers. Furthermore, the report cited that the cost of the average claim has risen over 45% in the last decade as a direct result of increased medical costs coupled with the increased size of settlements, judgments and jury awards given to plaintiffs.

Being a dog lover myself, I never see a potential danger when I stop to admire a dog, but then I rarely dress up in a postal uniform!
But seriously, we live in a very litigious society and with dog bite claims on the rise, insurance companies are adding animal exclusions to Homeowners or Fire Policies regardless of the breed. If your policy has this exclusion, you will be paying all attorney and settlement fees out of your own pocket. If you own a dog, thinking of getting one or allowing your tenants to have a dog(s), we suggest you call your agent today to be sure your policy does NOT have this exclusion.

By Karen Skoler, CPCU