Tag Archive | General Liability Insurance

CA Carbon Monoxide Poisoning Prevention Act (Senate Bill 183)

Pay close attention if you own an apartment building or dwelling.

Effective January 1, 2013 building owners of dwellings will be required to install and maintain carbon monoxide detectors, in addition to smoke detectors.

The law is called the “Carbon Monoxide Poisoning Prevention Act”, California Senate Bill 183. It requires building owners to install and maintain carbon monoxide (“CO”) detectors in all dwelling units before January 1, 2013. Such devices must be designed to detect carbon monoxide and to sound an alarm. They must be installed outside each sleeping area or bedroom and each level of every unit and would require that the devices be operable at the time the tenant takes possession of the unit.

Senate Bill 183 requires a tenant to notify the landlord if the tenant becomes aware that the device is inoperable or deficient and would require the landlord to correct the reported inoperability or deficiency. A landlord is not in violation if he/she has not received the notification from the tenant.

The new law does not eliminate the requirement for smoke detectors; that is, both smoke detection and carbon monoxide detection devices are required.

Information is available on the internet regarding the new law, and you can see the actual law HERE.

If you haven’t already done so, it is suggested that you install carbon monoxide detectors as soon as possible to your building if you own one. These detectors are readily available at many local retail outlets and internet sellers.

-JK

1985 Product Liability Insurance

I’ve been in the insurance industry just short of five years now helping business owners with their insurance needs. If I could turn back the clock 27 years, it would be a dream for me to write product liability insurance for this awesome product, the music vest. Treat your eyes to this gem:

JK

Clean Up Your Mess!

I wrote insurance coverage for a commercial building earlier this year, property and general liability, only to receive a phone call a couple of months later from the carrier telling me that an inspection was done on the building and for lack of a better term, the premises was an absolute mess. It needed a fix quickly, or coverage was going to be cancelled short-term. The call took me by surprise so I decided to visit the property myself. Here’s what I discovered:

This was borderline hoarding. Storage was disorganized, with random articles stacked in solid piles up to the ceiling in some areas. There were no aisles and inadequate means of getting out from the storage area in the event of an emergency. Combustible material was stacked near an electrical switch, box, and panels, etc.

The loss control recommendation from the carrier: housekeeping. “There is excessive storage of combustible inventory and miscellaneous material throughout parts of the warehouse. Such arrangement of material (with 1 small walking path) could impede safe egress from the structure; The volume of closely packed material increases exposure to a rapidly spreading fire. The material also obstructs access to fire extinguishers and is stacked adjacent to electrical boxes and panels; The heavy fire load may not be controlled by the existing sprinkler system.”

The recommended solutions to this mess?

  • The inventory should be rearranged so all electrical boxes/panels have a 3′ radius free of combustible material.
  • The inventory should be rearranged to allow access to fire extinguishers.
  • The inventory density should be reduced to allow better access to storage areas and improved water distribution for the sprinklers.
  • Housekeeping should be improved and then maintained on a regular basis.

This is one of the most extreme examples of a disorderly premises that I have encountered. It doesn’t take an insurance professional to know that this is a severe property and general liability insurance hazard. There is absolutely no way of writing insurance with any carrier if you have a premises in this kind of shape. The risks are just too extreme. I’m not an obsessive compulsive neat freak by any means, but I ask myself if this insured has any bit of concern for protecting their assets? The point here is about risk management and risk reduction, not about making things look pretty at your home or business.

What type of housekeeping do you maintain at your home or business?

JK

Why Am I Being Asked For A “Waiver of Subrogation” On My Insurance?

Ever heard of the term, “waiver of subrogation”? Sounds pretty foreign, doesn’t it? Well it kind of is. If you’re a business owner with liability insurance, you may have had a request from a client or landlord at some point asking for a certificate of insurance with a “waiver of subrogation” for general liability, workers compensation and/or auto liability. I’m actually writing this post because it’s something that I have been working on this week trying to place a new client with an insurance carrier. This client happens to be a self-storage facility.

You see, this self storage facility houses a beer distributor. One of the conditions of writing insurance for this client (the storage facility) with this particular carrier, is to have the tenant (beer distributor) provide a “certificate showing that the insured is named as an additional insured on the General Liability policy with waivers for both the GL and auto. Minimum $1 million limits.”

What does Waiver of Subrogation mean?

The definition of ‘Waiver of Subrogation” is: “The relinquishment by an insurer of the right to collect from another party for damages paid on behalf of the insured. A waiver of subrogation is often referred to as “transfer of rights of recovery.” A waiver prohibits an insurance carrier from recovering the money they paid on a claim from a negligent third-party.

For example, suppose you own a building which burns down due to the negligence of a third-party. Normally you could sue the negligent third-party for causing your building to burn down. If your fire insurance company pays off your claim, however, the insurance company is then “subrogated” to your claim against the negligent third-party. This means your claim against the negligent third-party is treated as having been assigned to the insurance company, which may sue him/her to recover the amount it paid you on account of the fire loss.

Many, but not all, general liability policies allow you to waive your rights of subrogation as long as it is done in writing and prior to a loss. Some contractual agreements, such as some facility rental agreements, require you to waive your right of subrogation (and therefore your insurance company’s rights) against them in the event of a claim.

The good news is that you, the insured, doesn’t have to worry too much about what this terminology means should you get a request from a client or landlord. Simply forward to your insurance agent/broker and be sure to bounce any questions that you may have off them. Our job is to be your insurance partner and deal with these types of insurance requirements or questions you have.

JK

Four Insurance Endorsements You Shouldn’t Go Without

First off, what’s an endorsement you ask? As defined by the Insurance Information Institute, an endorsement is a written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions. When an insurance policy is endorsed, the premium paid for the policy can change. However, not by much considering the additional coverage provided.

The following four endorsements are not typically part of a regular property or general liability insurance policy, but they are a must if they apply to your operations.

  1. Hired & Non-Owned Auto Liability: Hired & Non-owned auto is a small endorsement which can have a huge impact on your general liability insurance coverage. It protects your business from bodily injury and property damage claims caused by a vehicle you rent or borrow; or caused by vehicles owned by others, such as your employees. A simple errand to the store by an employee can put your business at high risk if you don’t have this endorsement on your general liability policy.
  2. Employee Benefits Liability: Liability of an employer for an error or omission in the administration of an employee benefit program. Coverage is intended to extend to the “administration” of these plans, including counseling employees, handling records, enrolling/terminating/cancelling employees in specified plans on a timely basis, etc. This endorsement is usually added to the general liability policy but may also be provided by a fiduciary liability policy.
  3. Earthquake Sprinkler Leakage (For CA & other earthquake regions): Earthquake is an excluded peril on a standard property insurance policy and your fire sprinklers bursting as a result of an earthquake and discharging water all over your property is not covered either. However, by adding an Earthquake Sprinkler Leakage endorsement to your property policy, you would be covered for the water damage caused by bursting sprinklers from an earthquake.  This is never more than a few hundred dollars to add.
  4. Sewer Drain & Backup:  Fall and spring tend to be the wettest seasons of the year, making buildings and homes most susceptible to the backup of sewer or drain lines. These events don’t occur often, but when they do, it can become a small disaster. A standard property insurance policy excludes coverage for such an event. The backup of sewer and drains as well as the failure of a sump pump is also excluded on a standard property policy. The damage you sustain from either of these problems will not be covered and you’ll be responsible to pay for the loss and the clean up. You shouldn’t go without this coverage endorsement.

To reiterate, it’s never more than a few hundred dollars annually to add any of these endorsements to your existing property or general liability insurance policies.  In fact, it’s usually less than $100 in many cases for small businesses. With the amount of coverage provided by adding them, this is pocket change! Be sure to review your policies today to see if you carry these endorsements on your current policies.

JK

What Is A Claims Made Insurance Policy?

Two different methods are used by insurance companies to determine coverage when writing liability insurance:

  1. “claims made” policies
  2. “occurrence” policy

Most often, commercial general liability insurance is written on an occurrence basis while employee benefits liability, professional liability and employment practices liability insurance will be written on a claims-made coverage form.

On an “occurrence” policy, the coverage trigger is the date of the event or accident giving rise to a claim. The policy in force on the date of the event causing the loss must respond with both defense and/or indemnity. Even if a claim arises years after a policy has expired, the date you receive notice of the claim doesn’t matter. Occurrence policies do not provide coverage for prior acts. They do remain available for claims that arise years after a policy term has expired, however. If an accident or event occurs during the term of an occurrence policy, that policy must respond to any future claim.

As for claims-made policies, coverage is triggered by the date you first became aware and notify the insurance carrier of a claim or potential claim. The carrier’s policy in force on the date you became aware and give notice is the insurer who must defend and settle the claim.  A claims-made policy may reach back in time and provide coverage for claims made today from negligent acts, errors or omissions that occurred years before the policy was purchased.

The following conditions must be met before prior acts coverage is granted:

  1. You must receive notification of a claim or potential claim situation during the policy period.
  2. The claim or potential claim situation must be reported to the insurer during the policy period.
  3. The negligent act, error or omission giving rise to the claim must occur after a “prior acts” or “retroactive” date listed in the policy declarations.
  4. You or your firm had no prior knowledge of a mistake, error or controversy on the date coverage was purchased.

The “prior acts” or “retroactive” date is a crucial piece in a claims-made policy. Your policy declarations page will clearly identify a “retroactive” date that determines how far back prior acts coverage extends. Claims resulting from services rendered before the “retroactive” date are not covered.

Think before you decide to cancel or non-renew your claims made liability policy

If you decide to cancel or not renew your claims-made policy, you must consider purchasing an Extended Reporting Period or “TAIL” coverage to insure you for incidents which occurred while the policy was in force but was reported after the policy was cancelled. For example:

If you purchased a claims-made policy with an effective date of January 1, 2010 and chose to cancel or let the policy lapse without TAIL coverage or an Extended Reporting Period — any claims made after December 31, 2010 would not be covered. If you were sued in 2012 for a wrongful act committed in 2010 (during which time you were covered), the insurance company would not be responsible for paying any claim. An Extended Reporting Period Endorsement (TAIL) “extends your right to report a claim” to your prior insurance company after the policy has ended, canceled or lapsed.

As I often note, make sure your insurance agent is knowledgeable and experienced with claims made insurance forms. It gets complicated. Also, note that I am writing this from an insurance perspective; only to be used for informational purposes! My intent isn’t to provide legal advice here. That’s what lawyers are for…

JK

Not So Fun Business Injury Facts

Businesses deal with risk everyday. Whether it be liability risks such as injuries to employees or customers, or property loss risks such as fire or theft, businesses must implement risk control and risk management procedures to protect their operations. Of course, accidents happen and this is why insurance is necessary. Here are six (not so fun) injury facts courtesy of Travelers Insurance:

  1. 25,000 slip and fall accidents occur daily in the U.S., accounting for 15 percent of all workplace accidents. It is also the leading injury to people on company premises.
  2. Back injuries account for more lost work time than any other workplace injury. Often, the source is improper lifting.
  3. Fires in commercial buildings cost more than $2 billion in annual property damage and loss. Lack of, or improper maintenance of sprinkler systems plays a significant role.
  4. Musculoskeletal disorders results in over $45 billion in loss wages and productivity costs. Organized office workstations and poor ergonomic practices are contributors.
  5. Adverse weather is the leading cause of vehicle accidents and fatalities. Many company drivers don’t understand the risk or how to adjust their driving behaviors.
  6. Falls from ladders injure over 20,000 American workers annually. Some injuries result in permanent disabilities and even fatalities. Safety starts before the ladder is even mounted.

-JK

General Liability Insurance – Medical Expenses Coverage

As it has been established, general liability coverage is for situations where a third-party claims you or your business was negligent for bodily injury or property damage and sues for those damages. General liability protects your business against incidents that may occur on your premises or at other covered locations where you normally conduct business. When you look at the declarations pages on your commercial general liability policy, it looks like this:

BUSINESS LIABILITY LIMITS OF INSURANCE
LIABILITY AND MEDICAL EXPENSES $1,000,000
MEDICAL EXPENSES – ANY ONE PERSON $10,000
PERSONAL AND ADVERTISING INJURY $1,000,000
DAMAGES TO PREMISES RENTED TO YOU $300,000
PRODUCTS-COMPLETED OPERATIONS AGGREGATE $2,000,000
GENERAL AGGREGATE $2,000,000

Business owners often wonder what the medical expenses coverage entails. They sometimes ask why this limit is so low in comparison to the other limits listed? “Medical expenses are costly, why only $10,000 limits here?” The answer to this question is, where liability coverage is for situations where a third-party claims your negligence for bodily injury or property damage, the medical payments coverage is an exception, as it pays medical expenses for bodily injury to third parties as a result of your operations regardless of fault.

People are less likely to sue you if they receive prompt medical payments to cover the costs of any injuries they have sustained for which they could claim your business or organization is liable. Medical Payments coverage gets the payments to them without their having to file a lawsuit or go to court and engage in a lengthy claims process. This coverage also allows your insurer to pay small nuisance claims without the need for costly legal expenses.

If there is a liability claim and medical expenses are paid, but a lawsuit still arises, general liability will still protect for a covered claim. The purpose of medical expense coverage, however, is to prevent this from happening.

-JK

Commercial Umbrella Insurance Defined

Commercial umbrella insurance, also referred to as excess liability, provides coverage when a liability claim goes above the aggregate limit of liability and the basic policy limits are exhausted. By purchasing a commercial umbrella, you can protect your business from being liable for this excess liability in a judgement. For instance, if you have $1 million in general liability coverage and a covered claim is settled for $1.5 million, your small business’s umbrella liability insurance policy would pick up the additional amount.

Commercial automobile, commercial general liability, workers compensation, or any other liability policies can be covered by a commercial umbrella.

Not only does an umbrella cover underlying insurance policies, but they may also provide coverage if a basic liability policy is not in force or when there are gaps in coverage under basic liability policies. When a commercial umbrella needs to step up and provide coverage for basic liability loss, it does not pay the loss from the first dollar. It’s common to have a Self-Insured Retention (SIR) amount of at least $10,000. SIR is the equivalent to a deductible. That means if there is a liability claim or loss and no corresponding underlying policy in force, you must pay the first $10,000 of the loss before the umbrella policy responds.

Commercial umbrella policies are typically purchased in $1M increments. The premiums vary depending on your business classification and underlying policies. Policies are often inexpensive considering the added coverage a business gains. For everyday businesses with average risk exposures, umbrella premiums are usually in the ballpark of $400-$600 annually for each $1M purchased.

You can never go wrong purchasing a commercial umbrella policy for your small business. A single umbrella provides broadened protection over all your small business liability exposures. Having the added protection of a liability umbrella policy is coverage no small business should go without.

-JK

General Liability Insurance: What Does “Additional Insured” Mean?

As a business owner, it’s likely you’ve been asked at some point or another to add a client, landlord, or similar entity onto your general liability insurance policy as an “additional insured.” You might ask, why do I need to put them on my business insurance policy?? What about their insurance policy? Well, here’s a little background on what it means and why it is requested so often in doing business.

Adding another entity as an additional insured on your general liability insurance policy serves to protect that additional party in the event of negligence on your part as the primary policyholder, or “named insured.” It is not the intent of your policy to pick up the liability of another party when you had nothing to do with a claim or occurrence.

Here are some loss examples to give you a better understanding:

• You are a sub-contractor and have added a general contractor on your policy as an additional insured by request. An individual walking the grounds of your job site sustains a serious injury from a fall caused by a pothole in a parking lot. The parking lot is being built by you. This individual brings a suit against the general contractor who is covered as an additional insured on your policy.

• You are a tenant of a commercial building and have added the landlord of your building as an additional insured per the terms of your lease. A customer visits your premises and slips on a wet spot on the vinyl floor. The customer cracks their head open and brings a suit against the landlord who is covered under your policy.

Typically, a larger and more powerful business will require that smaller entities (desiring to do business) have the larger business named as an additional insured. This reduces the loss exposure of the additional insured and keep its premiums manageable.

-JK

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