Monthly Archives: October 2011

Scariest Insurance Claims

Boo! The following are a series of the scariest claims our members have handled over the past.  Their spooky, scary and just downright frightening.  Do you have a scary claim? Share it!


Several years ago I insured a tavern.  One summer evening they left the front door open & a skunk came wandering in.  Rather than scat the skunk out the bartender filled a bowl with beer & put it down for the skunk to drink.  Well, the skunk took a liking to the beer & finished off 2 bowls.  At which time he started attacking several of the patrons, biting one of them.

The bartender panicked, called the police department who responded along with the fire department.  They contained the skunk nearby until the animal officer arrived who caged it and took it away.

The patron that was bit sued the tavern and the claim was paid.  I was thinking maybe the term “drunk as a skunk” came for a similar incident.

-J. Moran

Years ago, I wrote a multi family dwelling policy.  The building owner called me stating that his second floor tenant had something red dripping down from her ceiling on to her floor.  So the building owner went over to investigate & found his third floor tenant killed & had multiple forks (yes forks) & a screw driver stuck in him.

Obviously police were called & we had to find a special company to clean the bodily fluid that was also seasoned in working with the police Department.  As well as temporarily place the other building tenants in other residences.  Well low & behold, the murdered tenant was also an other commercial client of mine that owned a Cleaning company.  He was in the process of moving to Portugal & had originally made an arrangement to leave his business to his girlfriend, but then changed his mind & left it to his brother.  The girlfriend hired her friend to kill him.  The obviously un-skilled murderer realized that stabbing him in the head 4 times with a Phillips screwdriver still did not do the trick so he rummaged through the silverware drawer in the apartment & figured that every fork in the draw would eventually do the trick…  & left his victim with about 10 forks stuck in him all over his neck, head & chest…

A few days later,  before the girlfriend & her hired murderer were arrested, she came into the office seeking life insurance benefit’s that she thought  her now dead boyfriend he had taken out & she could receive .  Obviously nothing was paid out to her….. which didn’t help her legal bills I bet…..

-R. Stone

Insured called to ask if there was any coverage for her guest.  She was washing her glass eye and it fell down the drain.  Needless to say , no coverage on that policy!

Insured was driving away from a farm stand in Florida.  She caused a bad accident when she veered into the other lane of traffic.  The cause: her little round watermelon she just bought fell off the seat and jammed under the pedals causing the car to accelerate.  She tried to grab the watermelon and went into oncoming

Insured was driving in an icy parking lot.  His elderly girlfriend was in the vehicle.  They were talking and all of a sudden she did not respond.  He looked over and the door was open, she had fallen out of the seat and he was dragging her around the parking lot while she was holding onto the door handle.   The man never should have had a license at that point as he had previously backed over three motorcycles at a gasoline pump as he did not want to wait and also, in a separate incident, crossed a yellow line and ran his Cadi thru a group of motorcycle riders causing injury.  The girlfriend precluded the loss of license, finally!!

I have also had insured come home to find blood all over his condo.  Appears a duck got in and panicked, finally breaking its neck and dies on an antique white comforter.

-J. Macomber

I was investigating a third party claim in Marlboro Mass.  I had to visit a home that was located in the woods off rte 3.  After about a 10th of a mile walk, I was able to locate an old broken down house.  I knocked on the door and maybe a window or two.  As I was knocking on a door, I heard something running towards me.  I turned over to see what was coming, it was a 2000lb pig, which the owner of the home used a watchdog/pig.  I immediately jumped off the porch, land on my ass and started to run like Carl Lewis.  I ran so hard, I did a Dukes of Hazard over the front of my hood, landed on my ass again, before entering my vehicle.  I looked over to see where the pig was, he was right at my passenger door, looking right at me.  This is the honest god to truth.  I still laugh and get laughed at.

-R. Plante

In general, the scariest claims are those where the client calls in to report it and you realize they don’t have coverage (aikes!).  That being said, I do have one that comes to mind:

The scariest claim I am familiar with involves a funeral home/procession.  The church service was over.  The casket was placed in the hearse.  The procession heads down the road to the cemetery.  As the line of cars heads up a hill, the unsecured back door of the hearse comes open, the casket slides out and the vehicle the family was riding in hits the casket.  Probably the most horrifying claim the funeral home, the family of the deceased, or I have ever heard of.

G. Tapely

Last year my insured and his family went to a church Halloween Party. His teenage son was dressed as the Allstate Mayhem guy. While at the party their house was broken into, vandalized and computers and electronic games were stolen.

– P. Arnsparger

Many years ago a client called to delete /remove their daughter from the auto policy since she was away at college.  We discussed with her and told her not a good idea.  She left the daughter on the policy. A few weeks later.  The daughter was a passenger in a friend’s car at college.   The friend was driving too fast so the daughter told him to slow down.  He did not.  The daughter grabbed the steering wheel to try to take control of the car.

An accident happened serious bodily injury.  The daughter of our client was held responsible.   If our client had removed her/excluded her there would not have been any coverage.  So even though she was not driving the car she was at fault for grabbing the steering wheel.    Things happen and you most want to have the insurance in place.

-C. Schneider


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Scariest Insurance Claims Cont’d

My scariest claim was when I had an insured that could not speak English. Bedford County Tennessee is home

I'm Not Going Back Outside Till November!

to lots of Somalian Refugees.  This particular insured was in an auto accident and called me the agent instead of 911 and while they were on the phone the only thing I could really understand from him was “car bang” and “lady bleeds in the head”.  So once I could finally get his name out of him I asked the phone number to reach and him and to give me the location, which was in itself another scary thing…he was somewhere of course where he had no idea and but he did give me the Hwy number and that was it, finally someone showed up on the scene as they had called 911 and was able to speak to me after I asked to hand the phone to someone who could explain to me what was really going on.  Needless to say be careful when you give an id card to an insured at the sale of the policy by saying be sure to call me if there is an accident, needless to say some people be sure you include to call 911 first though.

-A. Vaughn

While working as a company adjuster in Southern California, one of our insured’s pulled away from a stop sign, directly into a path of a woman who was transporting eggs commercially in her station wagon. The impact was severe, & caused her to sustain multiple chest bruises, which required medical treatment.  When she was examined, the doctor’s found that she had stage II breast cancer, and was scheduled for surgery within the week.  Her station wagon was a total loss, both she & the station wagon were covered with broken eggs, but in the end the accident was more of a “treat” than a “trick”, as she made a full recovery from her breast cancer.

-K. Moldrem

While working as an agency claims manager  in Northern California, one of our clients, who was a manufacturer of over the counter nutritional supplements, discovered that they had mistakenly substituted niacin for niacinamide in several batches of one of their products.  They did some checking, & decided that most adverse reactions would be minimal, & consist of a “niacin flush”, which, although upsetting, would probably not be life-threatening.  They elected not to recall the defective product, but wait to hear from their vendors.  Less that six complaints were received, and only one customer required a brief hospitalization. Those claims were reported & handled under products liability coverage.

-K. Maldrem

My scariest claim would have to be the one where my phone rang and it was someone calling me from the job site where the person on the other end of the line said a dump truck had just slid down a hill because it got stuck in the wet mud…he watched a co-worker see the truck coming right to him…had no time to get out of the way…so he lied down and luckily the truck rolled right past him and he went uninjured.  Whew! That was a close, but scary one…

K. Silva

One of our insureds, a Funeral Director, had a body in the chapel for a wake/viewing, and one morning when he arrived back at the Funeral Parlour to get ready for the family, he opened the casket and the head of the deceased was gone.  During the night someone came into the funeral home, removed the body from the casket, removed and took the head and placed the body back in the casket.

-B. Cesar

Claimant was in the public showers when snakes came out of the drain. Claimant jumped up to avoid the snakes hit his head on the shower head, knocking himself out. Sued for mental distress and loss of consortium.

-D. Cotton

Back in 1995, I had a client that owned a motel. They took cash for a room let out to a young couple. After the guest’s departure, the housekeeper came out of the room crying and eyes watering like crazy from the fumes in the room. Evidently, the “guest” tried to manufacture drugs (meth) and poured the chemicals down the bathtub drain melting the fiberglass/plastic tub surround and smoldered for hours. Haz Mat was called in and our insured had a $100,000 + pollution cleanup claim and no pollution liability coverage plus several employees that went to ER for inhalation injuries. The ENTIRE section of the building had to be demo’d and rebuilt!

– E. Corrigan

Two scary experiences stand out in my career and they both traumatized me because I could relate them to my own children.  When my son was four years old and I worked a fatality claim involving a child his age. The little boy’s grandmother was watching him and stopped at a store for an item. She forgot that he was with her and followed her back to the car. She got into her car and put it into reverse. She heard a ‘crunch’ and got out to see what she hit. She found her little grandson’s head smashed by the tire of her own vehicle. All I wanted to do was to run home and hug my own little boy. My next scary experience happened when both of my boys were of driving age. I was involved in an investigation of an overturned jeep involving a DUI charge. The driver was ejected but the passenger was wearing her seat belt. She was hanging upside down in her seatbelt and her face was cut from above her ear, around the frontal scalp line to the other ear. The skin was peeled off of her forehead, nose and cheeks and was just hanging there. It was the most gruesome, heart wrenching fatality claim I’ve ever been involved in. Again, I was petrified at the thought of my children behind the wheel.

-J. Schutz

My husband worked at an insurance agency that had weekly producer meetings.  One Halloween, he dressed as an accident victim, complete with dripping “blood” from his face.  He sat in a chair in the coffee-room in the dark and waited.  One of the producers came in, flipped on the light and began making the coffee for the meeting, not seeing him.  He moaned to get her attention.  She turned, saw him, and ran out screaming “there’s a deranged man in the coffee-room”.  As she was running down the hall, she grabbed another female employee who was coming in for the meeting and literally dragged her down the hall screaming.  As they were getting ready to call the cops, a male employee who knew of my husband’s antics, said “don’t call the cops, it’s only Harvey”.  The woman who was dragged down the hall filed a work comp claim – she had some slight injuries because of the dragging – but her main claim was that she suffered emotional distress (mind you, she never saw my husband).  She had nightmares and, among other things,  refused to go into the basement in her home to do the laundry.  Her husband came up to my husband @ the company Christmas party that year, and said “If I would have been in the building, you wouldn’t have needed the costume!”

-R. Zook


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When speaking with a manufacturing insured about their stock and inventory values


Don’t forget to discuss how much of their product is sold.

Many times prior to the start of the manufacturing of that product. The Commercial Property coverage values sold stock at selling price, less any manufacturing or shipping expenses not incurred at the time of the loss. This means that the profit margin must be included in the limit of insurance for Business Personal Property. Too many times, this is a forgotten step and could help you gain a new account.

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Errors & Omissions Claims Management

It Doesn’t Get Easier.

The producer gets a call from a new prospect.  What they want is simple enough:  General Liability coverage with $1,000,000 per occurrence and $2,000,000 Aggregate and Workers’ Compensation on a minimum premium basis.  Since this is a local account, the producer makes an appointment to go out to meet with the prospect.  Turns out the prospect is a small artisan contractor that performs some fabricating in their work shop that is separate from their residence.

The producer discusses the following:
Where is the shop insured?  Answer:  Through my (direct writer) homeowner’s policy and no, I don’t want a quote.

Do you want coverage on your shop equipment and tools that you might use on the job site?  Answer:  Sure, give me a quote and depending on the price, I might take that coverage.

If your shop burns down, could you lose income and have to pay extra expenses to keep going?  Answer:  Well, I don’t see that happening so don’t give me a quote.  I just want the liability, workers’ compensation that my contracts require and I might take the tool coverage.

The producer goes back to the office, prepares a quote, provides it in writing and it is accepted.  The producer has the insured fill out the application, sign and date it.  A policy is requested, received and sent to the customer along with a coverage summary.  The policy is cancelled three months later for non-payment of premium.  The customer contacts the producer and requests a reinstatement.  The insurance company was unwilling to do so and a second carrier was contacted, a quote provided and the whole process is performed again in exactly the same manner.  This time the payments are made on time.  Six months later, the shop burns to the ground.

Result:  The direct writer denied the claim for the shop due to business use and an exclusion in the homeowner’s policy.  The customer claimed that he had requested that coverage, but nothing in writing.  The customer then filed an E & O claim against the commercial coverage agency, claiming that he thought his coverage included business income and extra expense coverage, even though nothing in the proposal or coverage summary indicated that coverage had been purchased nor anything to indicate the coverage request on either of the two applications the insured completed.

Did the agent do anything wrong?  No.  Could the agent have taken the step of advising the customer of the lack of coverage for the building and or business income coverage?  Yes.  However, in no way had the producer indicated any special knowledge or established any special circumstances that would indicate a higher degree of care other than the ordinary duty of an insurance agent required to place what had been requested.

This case is still in litigation, thus the final result is not yet known.  However, as you might imagine, this case has taken time from other agency business and has thus impacted the overall earnings of the agency.  This really is one of those cases that the reason for E & O coverage exists.

No matter how hard you try – sometimes it is just not enough.  It can get discouraging, but don’t give up.  You really can reduce your exposure and still keep a viable business moving forward.


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Errors and Omissions Coverage for Insurance Agents and Brokers

Errors & Omissions coverage for insurance agents and brokers up until recently, has been readily available with flexible terms and conditions.  This coverage is beginning to trend the other way.  Why?  Part of this trend is natural market forces at work.  The deeper part of this trend is due to increased frequency of losses.

Causes of the losses:
• The economy in general; individuals and businesses that cannot afford uncovered losses attempt to place the economic results onto their insurance agent or broker
• Insurance companies are becoming less resistive to looking at their own agent as a source of recovery for bad faith litigation expenses
• Agencies are becoming more focused on transaction and data management, using less staff to perform more of those functions and less emphasis on consultative, knowledge based performance by their producers and support staff.  In addition to this, is the increased use of data transfer by receiving information from clients over the web; transferring that information by data links and receiving new policies and renewals by data upload.

Agency Risk Exposures
The current economic downturn has dramatically affected a significant number of an agency’s customer base.  Most agencies have lost revenue in the past few years as many of their customers have either closed their doors or experienced reduced sales and/or payroll.  In turn, the typical agency has been forced to reduce their own expenses and staff layoffs have happened all over the country.  Often those layoffs have affected some of the more experienced (and thus higher priced) personnel, resulting in less knowledgeable staff now being fully responsible for the account.  So where does that leave the agency?  Let’s take a look at the different areas of exposures.

• Documentation


E & O Insurance Coverage

This is the key area that must be addressed within the agency.  Do NOT assume that this is happening.  As Ronald Reagan so famously said, “trust but verify”.  In order to defend yourself against an E & O claim, you must be able to show proof of the following:

1. The coverages requested by the customer.  This means that you must have a signed bind order or coverage proposal in file.  No excuses.

2. The application for coverage must match the customer’s coverage request and signed by the customer.

3. The coverages must be reviewed within the agency before sending to the client.  This means a little more than just checking off the forms and endorsements.  For certain, it means that you must have a complete copy of the policy in the system.  Many carriers are now uploading renewals into the agency management system, but do not include the forms and endorsements.  You must have a procedure in place to obtain these forms and endorsements for review.

4. Change orders must be confirmed to the customer in writing or a written request received from the customer.

5. Customer claims must be documented and transmitted promptly to the insurer.  If it is a liability claim, have a procedure of notification to the appropriate primary policy and tender of notice only to the excess carrier(s).

Keep in mind the following truism when setting up an internal agency audit process:  The file must speak for itself.  If it is not in the client’s file, it doesn’t exist.  You cannot win a case without supporting evidence and just saying that you discussed the issue with the client on a particular date will not prevent a lawsuit, nor will it have weight with the court.

If your agency or producers have created a customer relationship that is more than just placing the coverage requested by the customer or have held yourself out to have a special program or special knowledge, then you must go beyond just documenting what the client asked for.  You must review their exposures and offer coverage solutions or other risk handling mechanisms.

• Customer Review
Train your producers and agency managers on the type of customers that are desired as well as the type of customers that must be avoided.  All of us at one point or another have had a suspicion that all is not right about a particular customer.  For example:  a customer that all of a sudden asks for a particular insurance coverage when in the past has wanted only the bare insurance basics or the customer that is constantly late in their payments.  You really don’t have to write every customer that approaches your company.  It pays to be a little selective.  Have a procedure in place to deal with these issues and it should not be based upon the size of the customer or the amount of commission received.

• Security of Information
With the advent of technology comes growing risk of privacy suits due to the loss of private information.  Agency owners need to review with their IT person or department exactly how much encryption is being used and how secure are the transmissions.  Many applications are being completed online and there is no means to obtain the customer’s signature.  Fix that problem as soon as possible.  Digital signatures are, for the most part, legally acceptable, but without that signature, many carriers will not rescind coverage in the event of misrepresentation and will turn to the agency to compensate them for the bad faith claim.  Check your website for encryption of information as well as the customer portal for accessing their policy information.

• Certificates of Liability Insurance
This continues to be a litigious area for agencies and a growing area of claims are those arising from the recipient of the Certificate and not from just the agency customer.

Ways to manage this risk:
Have a master Certificate created by a knowledgeable insurance person in the agency.  The person responsible for actual issuance must then use only the master Certificate.
Never, ever put anything on the Certificate that is not supported by policy language.
Use the most current version of the ACORD Certificate.
Do NOT change the notice of cancellation on the Certificate. The newer editions by ACORD no longer have a place for that improper action, but we have seen Certificates where the incorrect cancellation information is being placed in the blank “operations” box.

• Remarketing of Coverage
Agencies today are remarketing everything as it renews.  Without a thorough understanding of their current coverage, it is impossible to be aware of reduction of coverage in a different policy through a new carrier.  Should a claim arise that would have been covered in the prior policy but is not covered in the new carrier’s form, the agency will have a hard time defending themselves if they have failed to point out (in writing with a customer acknowledgement signature) that reduction of coverage to the customer.

Professional Insurance agents work hard to understand their clients’ risks and exposures to provide a comprehensive insurance program to transfer those risks.  Some insurance agents identify means and methods of loss control and risk reduction.  Those same principles must be applied to their own business.

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Create a Newsletter


Write a Newsletter!

There are four critical steps you must take in order to set yourself apart as an expert for the industry that you have chosen to target market.  One of those steps is to create a newsletter.  This does not have to be a Pulitzer Prize winning publication.  It can be a one or two page newsletter that you will send out quarterly.  It should include articles of interest specific to that industry.  These can include, the state of the workers’ compensation in you state, claims prevention, or explanations of coverage and suggestions of new coverage.

Let me illustrate the importance of writing newsletters: I went on a new business appointment and found that the owner had one of my newsletters dealing with independent contractor status pasted to the wall next to her desk.  I told her that I didn’t realize that I had insured her before.  She said “you haven’t, I got this from another floor covering dealer and I’ve been operating by your rules ever since.”  This gave me instant credibility and I easily wrote the account.  In the coming months I will write about the three other items that you must do in order to prove that you are an expert in insuring an industry.

Written by:
Jerry Nisker
Target Marketing Training


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10 Rules to a Successful Family Business

Family businesses can be a blessing or a disaster.

The Labovsky Family inside Labovsky Grocery, M...

The root of a well-run family business is grounded in treating it like a business, not as an extension of the family. Here are ten guidelines that successful family businesses practice.

1. Have the family member work somewhere else first. It is not absolutely necessary that it be in an insurance company or agency, although this would be helpful. They must prove to themselves, to you, and to the other employees that they can succeed on their own. It is also far healthier for the business to have them come in with some fresh ideas and training.

2. Do not expect more or less of them than you would have any other employees. Family members might try harder or they might not try at all. They need motivation from the boss, just like any other employee. Apply all agency rules to family members and adhere strictly to performance evaluations and salary administration. Give family members responsibility and authority as they become ready for it. Give them enough rope to prove themselves and don’t second-guess their decisions within the parameters of authority that you have granted. This is difficult to do with any employee and much more troublesome with family members, especially children. Avoid the two extremes – either cutting them too much slack or riding them harder than other employees.

3. Do not create a job for a family member. Either you have an opening for which they qualify, or you do not. If there is no suitable opening, wait until you need to hire someone and/or they have the appropriate qualifications.

4. Keep family and business issues separate. Never discuss family matters in front of other people in the agency. Use the family members name and try not to call each other “Dad”, “Mom”, or “Junior” during business hours. Do everything that you can to de-emphasize the family relationship when around other employees. Don’t discuss business at family gatherings, since this can put a strain on personal relationships.

5. Keep open lines of communication. Let family members know your perpetuation plans so that they know what you expect from them long before they are old enough to come into the agency. Don’t expect them to read your mind. Pay attention to any child that might resent all the time in the past that was spent with the agency instead of them. Passive aggressive behavior by a jilted child can be very destructive to the business. Also, rivalries between siblings can also wreak havoc on an otherwise successful business. If necessary, heal old wounds with the help of professional counseling.

6. Never leave the agency to two people (family members or not) on the basis of 50/50 ownership. The buck always has to stop some place. And two siblings can already have some built-in differences of opinion that make decisions more difficult to handle effectively. It can work in some cases, but these are the exceptions. As a minimum, put one outside person on the board of directors as a deciding vote.

7. If possible, develop an organizational chart that has family members reporting to people other than you or other family employees. Make sure that the other employees understand their relation to the family members and to whom they are responsible. Just because someone has the same last name of the owner does not mean that they have the same level of authority and everyone needs to know this. Unclear relationships can cause confusion and dissension and can cost the agency good employees.

8. Create a board of directors that includes non-family members. When you need advice on dealing with sticky issues, its important to have someone involved without familial emotional attachments. Use outside professionals, such as CPAs, attorneys, or consultants. Also consider joining a mastermind group of other business owners.

9. Make family members pay for ownership, even if it is at a discount.Most people do not appreciate something they got for free, compared to something they had to earn to obtain. The concept is that if they pay for it (or have to sacrifice something for it), they will value it more and do a better job of running the agency. In a similar fashion, Children who are not associated with the agency should not be owners, since they might not appreciate what it takes to run the business. Also, keep the IRS in mind. You must properly value the ownership that you turn over to family members either through gifts or cash transactions.

10. Make sure all participating family members agree to these guidelines. There is no sense in having guidelines or rules if no one agrees to them or if the rules are sporadically implemented. All family members must buy-in to these “rules” for the family business or they cannot be a part of it. This is where tough love comes in to play. Children do best when the rules are clearly spelled out and consistently followed. The new motto for the business needs to be “it’s nothing personal, it’s just business.”

 Bill Schoeffler
Oak & Associates

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