Don’t Rely on Insurance to Cover Bad Work

Construction accidents often result in damaged property. Fires from faulty wiring scorch walls, paint sprays onto cars, and collisions dent earth-moving equipment. When something goes wrong, the contractor will look to his commercial general liability (CGL) policy to pay the costs of repair or replacement. However, while this policy covers many types of property damage claims, it will not cover every situation.

Before the CGL policy will provide any coverage for claims like these, three things must be true. First, the contractor must be “legally obligated” to pay damages. Liability insurance covers the contractor’s tort liability; that is, liability for negligent acts. Is the injured party claiming that the contractor was negligent in performing the work? If the answer is yes, then the CGL policy may provide coverage. If the claim is for failing to complete the work, however, there is no coverage.

Second, the damage must arise out of an occurrence, as the policy defines that term. The standard CGL form defines occurrence as, “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Therefore, for coverage to apply, the damage must be accidental. If the insurance company determines that there was no accident, it will not provide coverage. For example, the company would not cover a component that simply fails to work after installation.

Third, the accident must result in property damage. The policy defines property damage as “physical injury to tangible property, including its loss of use, and the loss of use of tangible property that is not physically injured. Damage to a third party’s building, for example, is property damage. Loss of that party’s computer data is not, however, because the data is not tangible property.

If property damage arose out of an occurrence and the contractor is legally liable, the policy may still not cover the claim if it falls within the category of faulty workmanship. The policy does not cover a contractor’s liability for property damage to “that particular part” of real property on which the contractor or one of his subcontractors is working if the damage resulted from that work. For example, assume a contractor is repairing the wiring to a chandelier in a banquet hall. During the installation, the chandelier falls and damages the hall’s hardwood floor. The policy will not cover the damage to the chandelier because it was “that particular part” of real property on which the contractor was working. However, it will cover the damage to the floor.

The definition of “that particular part” can be unclear. The insurance company may argue that there is no coverage for a roofing contractor who accidentally starts a fire and burns most of the roof. Is the entire roof “that particular part,” or is it just the one section of the roof where operations were taking place? The policy’s language does not resolve the question.

Another policy provision is much clearer. It states that there is no coverage for damage to “that particular part” of any property that must be restored, repaired, or replaced because the contractor performed his work on it incorrectly. This provision applies to both real and personal property. Therefore, the policy will not cover replacement of the chandelier if it does not work after the contractor repairs it.

A contractor should always address questions about insurance coverage with his insurance agent. An inland marine insurance policy can cover some types of property damage losses not covered by liability insurance. Other types of losses will have to be paid out of the contractor’s pocket. Be sure you know what you can expect from your insurance coverage in all situations on the job site.

Don’t Wait Until It’s Too Late to Dust Off Your Homeowner’s Policy

If you’ve never thoroughly reviewed your homeowner’s policy, you could find yourself out of luck at your time of need. When you bought your policy, you assumed it would provide the necessary funds needed to recover from a disaster.  However, if you are unfamiliar with your policy’s terms and conditions, you may not have as much protection as you think.

The standard homeowner’s insurance policy includes four basic types of coverage:

·   Coverage for the structure of your home – If your home is damaged or destroyed by fire, lightning, windstorm, or other peril listed in your policy, your insurer will pay to repair or rebuild your home subject to the terms of your coverage. However, if the damage is caused by a flood, earthquake or mudslide, there would no coverage unless you had purchased a separate policy for these risks.

Most standard policies also cover detached structures such as a garage. Coverage for these structures is automatically provided at 10% of the amount of insurance you have on the structure of your home.  You can purchase additional coverage if necessary.

Do you know if your policy would provide enough coverage to rebuild your home?

·   Coverage for your personal belongings – Furniture, clothes, and other personal items are covered if stolen or destroyed by fire, wind or other insured disaster. Most companies provide personal belongings coverage equal to 50 to 70 percent of the amount of insurance you have on the structure of your home.  

High-ticket items like jewelry are covered, but only at minimal dollar limits if stolen. To insure each of these items for their full value, you would need to add a special personal property endorsement to your basic policy.

Trees, plants and shrubs are also covered under standard homeowner’s insurance for theft, fire, lightning, explosion, vandalism, and riot. They are not covered for damage by wind or disease. Limits are usually $500 per item.

·   Liability protection – This protects you against lawsuits for bodily injury or property damage that you or your family members cause to others. Liability coverage also pays for damage caused by your pets. Your insurer pays the cost of defending you in court and any court awards, up to the policy limit. You are also covered not just in your home, but anywhere in the world.

Liability limits start at about $100,000, but you should purchase more coverage. You can also purchase an umbrella or excess liability policy, which provides broader coverage, including claims against you for libel and slander.

Your policy also provides no-fault medical coverage if a friend or neighbor is injured in your home. Your insurer pays the individual’s medical expenses without a liability claim being filed against you. You can generally obtain $1,000 to $5,000 worth of this coverage.

·   Additional living expenses – This pays for any additional costs in the event you are temporarily unable to live in your home because of a fire or other insured disaster.  Many policies provide coverage for about 20% of the insurance carried on the structure of your home.

In addition to reviewing your homeowner’s coverage, you should keep updated records of your property in a safe location that is easily accessible. The Insurance Information Institute offers free software you can download to create a home inventory. Log on to www.knowyourstuff.org.

Finally, try to review your homeowner’s policy with your insurance agent annually. Your agent can help you determine if your coverage is still adequate for your needs.

Minimize Retaliation Claims by Your Employees

Far too many employers these days are facing retaliation complaints from their employees under a variety of federal and state laws. Whether it be the Title VII of the Civil Rights Act, the Family and Medical Leave Act, provisions under some workers’ compensation state legislation, or the Americans with Disabilities Act, lawsuits against employers are definitely on the rise. Clearly, preventative action is called for here.

Let’s examine a number of positive strategies that your company or organization can take to reduce these time consuming and expensive lawsuits.

Sensible Steps to Dissuade Retaliation Complaints

Taking certain basic steps can eliminate many of the causes for retaliation complaints. Consider the following:

  • Develop a comprehensive anti-discriminatory and anti-retaliation policy. This may best be accomplished with the assistance and advice of an employment lawyer. The most proactive approach is to take a zero tolerance stance against any legally defined discrimination. Included in this policy should be a very clearly designed anti-retaliation section. To make this policy work, you also have to create a very specific procedure in how management will deal with both discrimination and complaints of retaliation.
  • Train your supervisors and managers. Supervisors and managers need to be fully trained in how to respond to retaliation complaints and know the process they need to follow. From the attitude they present to a complainant, and in how the complaint is investigated and managed, good training is key. Keeping both neutral and responsive to the complainant is the best way to contain a potentially explosive problem at the outset so it doesn’t blossom into a litigious mess later on.
  • Communicate your anti-retaliation policies to all your employees. The employee grapevine is a powerful and often under-utilized tool. A savvy employer knows how to keep their employees happy simply by keeping them included in the loop. If your workers believe you are a proactive versus a reactive employer, you stand a better chance in successfully resolving the employee’s retaliation complaint before it spirals outward into the legal system.
  • Act immediately. When a retaliation compliant is made to management, the initial person receiving the complaint should automatically advise the complainant of the company’s policy and what steps will be implemented.
  • Document the retaliation complaint and any action taken. Trained and designated management or human resource personnel should be utilized to obtain well documented facts and statements. These should be obtained from the complainant, the individual or department which is the recipient of the complaint, and any parties witness to the complaint. Pertinent information from work logs or diaries, and personnel files should be included. Describe what steps were initiated to address the complaint, what was discussed and any actions taken.
  • Be courteous and respectful to all parties. A defensive, indifferent or hostile approach will clearly undermine the best of any anti-retaliation procedure. All parties need to be treated with respect and courtesy at all times. Alienating or antagonizing either the complainant or the accused will surely be counterproductive in resolving a complaint internally.

Retaliation complaints against employers have doubled in recent years. The law is clear. Knowing how to approach and act towards retaliation complaints can go a long way in keeping you from going to court. Even if it comes down to a legal battle, your documentation and actions can greatly reduce or positively affect what decision might be rendered.

Most RV Owners Fail to Obtain Standalone Coverage

Purchasing an RV has become an increasingly popular way to vacation, especially for families. Models are available to fit most budgets, from folding travel trailers that cost, on average, close to $7,000, to conventional Class-A motor homes with an average price tag of over $140,000.

The one characteristic all RVs share is that they represent a sizeable investment for the purchaser. Despite this fact, according to a 2007 Progressive Insurance survey, most RV owners cover their vehicle under an auto policy, rather than secure standalone insurance coverage.

In the survey of more than 1,000 RV owners, researchers found that just 28 percent bought a standalone insurance policy with specialized RV coverage. Fifty-four percent of the respondents said they added the RV to their auto policy, and 14 percent said they didn’t obtain any coverage for their RV.

An RV is a hybrid vehicle that serves as both a home and method of transportation. As a result, it requires specialized coverage that combines the protections offered by both auto and homeowner’s policies. Rather than add your RV to your auto policy, consider insuring your RV under its own insurance policy. Without standalone coverage, you’ll have major gaps in your coverage. Consider the following:

·   You may keep personal items in your RV that you would never keep in your car, such as clothing, jewelry, binoculars, VCRs, satellite dishes, laptops, camcorders or outdoor gear.

·   When you park your RV at a campsite, you may be liable for the area around your RV. If someone is injured, you may be responsible.

·   If your RV is damaged while you’re traveling, you’ll need a place to stay and a way to get there.

If you insure your RV under a standard auto policy, none of these scenarios would be covered in the event of a loss, which could cost you a considerable amount of money.

When you insure your RV with its own policy, you can rest assured knowing that you have a broad range of coverage for a wide range of possible incidents.

Five Workplace Trends That Can Lead to Employee Lawsuits

Employers in today’s marketplace face many formidable competitive and legal pressures. In addition to holding onto market share, they must comply with environmental, safety, and trade practice regulations. Increasingly, they must also worry about legal challenges from their own employees. The job security that employers offered for decades has given way to a dynamic and sometimes unsettling work environment. Rising job insecurity has brought with it more frequent lawsuits from employees sensitive to perceived discrimination. Several trends in the workplace indicate that this will continue.

The baby boomer generation is reaching retirement age in rapidly increasing numbers; the youngest boomers are now in their mid-forties. The sheer size of this aging portion of the workforce, coupled with increased corporate downsizing, is producing accelerating numbers of age discrimination claims. The Equal Employment Opportunity Commission reported that the number of age discrimination complaints increased 15 percent in 2007. Employers that focus on hiring and promoting young people to keep themselves innovative may become targets for discrimination lawsuits from older workers.

The U.S. economy lost 1.2 million jobs in the first ten months of 2008, and economists expect the job market to remain weak for the foreseeable future. The end of a recession does not necessarily mean a return to a strong job market; job losses continued for almost two years after the 2001 recession ended. Mass layoffs invariably produce lawsuits from workers who feel they were treated unfairly. A sustained period of falling employment should increase the number of such actions.

Computer technology and Internet applications have had major positive effects on firms’ productivity. They have also created new ways for employees to suffer harassment (sexual and otherwise), privacy invasions, discrimination, and hostile work environments. Uncontrolled Internet access can allow workers to download offensive material that’s then used to harass colleagues. Vulnerable computer networks can permit unauthorized access to private employee information. Modern software and equipment can allow employers to monitor virtually every move employees make. As a result, more workers will take legal action against their employers when they feel their privacy has been invaded or when they believe that technology was used to discriminate against them.

In recent years, gay and lesbian workers have sought increased protections against workplace discrimination. Newly enacted state and federal laws and local ordinances have made it easier for these workers to pursue claims against employers. At least 17 states have statutes or court precedents that prohibit discrimination in private workplaces on the basis of sexual orientation. Continuing success in the legislatures and the courts will encourage more discrimination suits.

In 2007, the EEOC issued guidance on how federal laws apply to workers with caregiving responsibilities. Working parents may be subject to a variety of unfair treatments, including assumptions about pregnant employees; discrimination against working fathers and mothers; and sex-based stereotyping about working mothers. The agency and courts expect employers to make reasonable accommodations for working parents. Perceived failures to do so or perceived discrimination in hiring and promotions may cause affected employees to take legal action.

To reduce the likelihood of employee lawsuits, employers must implement policies and enforced procedures to prevent unfair discrimination. Another essential component is employment practices liability insurance from a financially sound insurance company. Employers face enormous challenges to survival and prosperity in the modern economy. With careful attention to their employment practices and the right insurance, they can make those challenges a little more manageable.

Hiring a Public Claims Adjuster to Handle Your Homeowner’s Insurance Claim

Imagine that your house has just been badly damaged by an earthquake, fire, hurricane, or other disaster. Not only can you not find your policy, but you can’t remember the last time you reviewed your coverage. Not that it matters, since most people don’t understand the terms of their policies because they are written in legalese. The good news is that with home or property damage, consumers can turn to public claims adjusters to interpret their policies and obtain a fair settlement from their insurance company.

You don’t need to hire an adjuster for minor damage, such as negligible smoke damage from a stovetop fire. However, you should hire an adjuster if your lifestyle is significantly disrupted. That is, bring in a public adjuster when you can’t handle finding new living arrangements, filing a large claim, and arranging for a survey of extensive damage to your property.

Public claims adjusters know the insurance process inside and out, so they can minimize the hassle that comes with collecting documents and evidence, and then negotiating with the insurance company. The adjuster will file all your pertinent paperwork with the insurance company, arrange for the inspections of your damaged property if needed, and haggle with the insurance company if it refuses to pay your full claim.

If you do decide to have a public claims adjuster help you out with your claim, expect to pay them between 5 and 50 percent of your claim settlement. As the settlement amount increases, the adjuster’s cut generally goes down.  Adjusters’ fees also depend on the nature of the claim and your marketplace.

What you should look for when hiring an adjuster:

-Experience is a must

-Check the adjuster’s certifications

-Do a background check

-Ask for a referral from a friend

-Confirm the adjuster is licensed in your state (if applicable)

How do you know if you need an adjuster? Depending on who you talk to, you may or may not need a public adjuster. One piece of advice is to seek a public adjuster’s service as soon as possible. Often it’s nearly impossible for consumers to know what to expect from an insurer in a homeowner’s claim situation, even after they read their policies. In addition, it’s difficult for an adjuster to come in after a claim is already being processed. On the other hand, insurers contend that their claims staffs are professionals who make the claims process easy for their policyholders, and they assert that it’s questionable whether a policyholder comes out ahead when the adjuster’s fee is subtracted.

Responding to Reports of Sexual Harassment

Sexual harassment is a serious issue for all organizations. It demeans and humiliates the targets, lowers workplace morale and reduces productivity as employees spend energy worrying about the latest offense rather than furthering the business. It can also inspire employee lawsuits, bad publicity for the organization, and criminal charges. Even the best of organizations may face incidents of sexual harassment at some point. If it happens, how the organization responds is of the utmost importance.

The organization must take every report of harassment seriously. Brushing off a worker complaint as frivolous could be the basis for future legal action. The person receiving the complaint must judge it by two standards. First, would a reasonable person be offended by the alleged conduct? Second, did the person making the complaint actually take offense at the alleged conduct? If the answer to both questions is yes, the organization should conduct a more in-depth investigation.

Harassment complaints fall into three general categories. In full-fledged complaints, the complainer firmly believes she has been harassed, wants it stopped, and is willing to provide details as to what happened. “For your information” complaints involve employees who don’t necessarily want the employer to do anything, and are unwilling to provide details. Anonymous complaints may provide great detail or none, may be legitimate or complete fiction, and may or may not be from employees. Regardless of the type of complaint, the organization should take it seriously and investigate thoroughly.

Once it has determined that harassment occurred, the nature of the organization’s response depends on the seriousness of the offense. Less serious offenses include jokes, teasing, off-color comments, cartoons and photos, and profanity. The offender may not have intended harm toward anyone. Unless he has habitually done these things despite warnings, a reprimand may be in order. More serious are uninvited and unwelcome physical contacts (hugs, kisses, pats on the butt, etc.), acts directed at a particular person or group of people (repeated comments about a woman’s clothing), and intentionally harmful actions or words (insults about a person’s sexual preference.) Some may require disciplinary action at the first offense (touching a woman’s breast), while others may deserve a reprimand unless repeated (insults).

The most serious offenses involve deliberate physical, mean-spirited and possibly criminal acts. Grabbing, forcible kissing, lewd exposure and attempted rape are all examples of this kind of conduct. These may warrant immediate disciplinary action and may require involvement from law enforcement officials.

The organization should assign the investigator based on the seriousness of the alleged offense. A supervisor may be sufficient for less serious offenses like e-mailed jokes or suggestive calendars. Acts like sexual insults, unwelcome advances and demands for sexual favors call for the involvement of upper management. The most serious offenses may require hiring an outside investigator or attorney; alleged criminal conduct will necessitate getting the police involved. In addition, the worker making the complaint may prefer speaking to someone of the same sex, of a certain age, or who shares the worker’s background. Organizations may want to have a group of people prepared to investigate claims so they can deal with such requests. However, all investigators must remain objective and free from bias toward either party.

A response appropriate to the situation is vital to an organization’s reputation, future employee relations, and vulnerability to lawsuits. The organization’s advance preparation will make this easier and may make it more attractive to insurance companies that provide employment practices liability insurance. Ultimately, the seriousness with which an organization treats the possibility of sexual harassment may discourage it from happening in the first place.

Keep Track of What You Own with a Home Inventory

If you suddenly experienced a catastrophic incident where all of your possessions were destroyed, would you be able to remember everything you’ve accumulated over the years? Like most people, your answer is probably “no.” That’s why having an up-to-date home inventory is so important. It can help you settle your insurance claim faster, because it represents an accurate and immediate accounting of what you lost. A home inventory can also be used to determine if you have enough insurance to replace the items you own, as well as verify losses for your income tax return.

To help you create an accurate home inventory, the Ohio Insurance Institute offers the following guidelines:

·   Use your wedding registries to document new possessions if you have just been married.

·   Update your inventory regularly, adding new items when you buy them. Be sure to keep receipts and take photos.

·   Take close-up shots of expensive items such as jewelry, fine art, stamp collections, china, furs, antiques and silver. Items, like artwork, antiques and collectibles may increase in value over time. They may require appraisals for authentication and value.

·   Don’t forget to inventory the contents of closets, drawers, the basement, the garage and outbuildings.

·   Include toys and CDs in your inventory.

·   Copy the inventory onto a disk/CD and store it off-premises in a safety deposit box or at a friend or relative’s house.

·   Be sure to delete items from your inventory when they are no longer in your possession.

·   Update your inventory every few years, when you move, or when you make a major home improvement.

Home inventory software is available that allows you to add digital photographs of your items. If you only own a film camera, you can scan print photographs or have the film developer save the images to a disk. The software also allows you to scan in copies of your receipts.

Another way to create an inventory is with a video camera. Walk through your house or apartment videotaping the contents and describing the items as you go, including information like the make and model of home electronics and appliances, or the type of upholstery fabric used for expensive furniture. You can do the same task using a tape recorder; however, be sure to have detailed photographs that serve as a backup to the verbal descriptions.

A third way to create a home inventory is to use a personal finance software package. These often include a homeowners room-by-room inventory program.

Does Contractual Liability Coverage = Additional Insured Coverage?

Construction contracts usually include many provisions aimed toward transferring legal liability from one party to another. In an agreement between a general contractor and a subcontractor, the sub assumes the general’s liability. The contract does this by inserting an indemnity agreement (also known as a hold harmless agreement) into the contract’s terms. The contract may also require the sub to have the general named as an additional insured on its general liability insurance policy. Though not all contracts do this, it is a mistake for either contractor to assume that the insurance company will provide the same protection to the general without an additional insured endorsement to the policy.

The standard Insurance Services Office Commercial General Liability Coverage Form specifically excludes coverage for liability the insured assumes in a contract. However, it adds coverage back if the contract is an “insured contract,” as the policy defines the term. The policy’s definition includes hold harmless agreements where the insured assumes another’s tort liability. That would appear to take care of the sub’s obligations under the contract, but it is not the whole story. The coverage may still contain a potentially large gap for the general.

It is important to keep in mind that, in any liability insurance claim scenario, the parties fall into three categories: Insurance company; insured; and claimant. A claim may involve multiple insureds, multiple claimants, and even multiple insurance companies, but all parties will fall into one of the three categories. If a party is not an insurance company and is not an insured by virtue of an additional insured endorsement, then it must be a claimant. Therefore, a general contractor in this situation becomes a claimant along with all other claimants seeking damages.

While the general may receive the same recovery for damages that it might have received as an additional insured, it might not fare as well regarding the cost of its legal defense. The CGL policy pays for defense costs incurred by anyone who is an insured under the policy, and coverage for those costs is in addition to the policy limits. If the policy has a limit of $1,000,000 per occurrence and an insured is found liable for $1,000,000 and runs up $500,000 in defense costs, the policy pays for both in full. As a claimant, however, the general can recover defense costs only if the hold harmless agreement with the sub required the sub to indemnify it for defense costs.

Also, it is likely that coverage for those costs will not be in addition to the policy limits. The ISO CGL policy provides defense in addition to the limits for the general only if all of the following conditions are met:

  • The sub assumed the general’s liability in an insured contract;
  • The policy covers the loss;
  • The sub assumed the general’s defense costs in the contract;
  • There is no conflict of interest between the general and the sub;
  • Both parties ask the company to control and conduct the defense and both agree to the same counsel for defense; and
  • The general agrees in writing to cooperate with the insurance company in the settlement of the claim.

If any one of these conditions is not met, the company will pay the general’s defense costs only until the claim exhausts the insurance limits.

Coverage for defense costs is one of the most important benefits of being named as an additional insured on another entity’s liability insurance. An entity that needs this coverage should require the other contractor to provide the additional insured endorsement. Relying on the contractor’s contractual liability coverage is a major financial gamble.