Discover exactly what your top five Carrier Partners want to write in 2012

Create a script and interview your top five Carrier partners to discover exactly what they want to write in 2012.

Talk to both your direct underwriter and your marketing representative. All underwriters have favorite classes of business and feel they can be successful competing on that class. If you need help with your script let us know here at the Insurance Community Center and I will help you. www.insurancecommunitycenter.com

The story behind the sales tip. 2011 has been a disastrous year for losses. Profits are down 67% prior to Irene and the East Coast Snow event. Combined Ratios are approximately 110%. Please look at a PowerPoint from Insurance Information Institute http://www.iii.org/assets/docs/pdf/NYIA-111511.pdf this information was created for a speech given by Robert P. Hartwig, Ph.D., CPCU, President & Economist on November 15th 2011.
You can begin to understand why change will be coming and that it will affect you.

Here are my suggestions:
1. Conduct market interviews
2. Find your top five product opportunities for 2012
3. Create you plan for 2012 (ICC free webinar in December will be on Planning for Success 2012 given by David Estrada from Rainmaker Advisory)
4. Plan for contacting your present clients now to build your relationships
5. Enjoy the tumultuous ride because if have planned well 2012 will be your best year in a long time.

~Tom

 

A Thanksgiving Claim

Image via Wikipedia

A Bit of Holiday Cheer.

The holidays are supposed to be all about family fun and, of course, eating and drinking too much. That’s how it all began at our family Thanksgiving dinner at my sister’s house but it ended up as five separate insurance claims in a span of five hours. A claim an hour—not bad!

It all began with the turkey that was undercooked and put back in the oven. The aluminum foil caught on fire and smoke-filled the room. The insurance person I am screamed out “covered, subject to your deductible”.

Next, the turkey was taken out of the oven and put on the kitchen counter right as the light socket in the soffit above started pouring out water on the now overcooked turkey. Apparently one of the guests had used an upstairs bathroom that overflowed causing the water that went on the floor to leak through the ceiling. Again, I screamed out “covered, subject to your deductible”.

We sat down to dinner without further incident and then after dinner went to the living room to play our traditional game of Taboo. As we all stood up after the game one of the guests spilled her glass of red one on my sister’s white carpeting. Again, I screamed out “covered, subject to your deductible” however find out who did that because it’s covered on their liability policy.

Next, as I was passing by the entrance hall table where a flower arrangement with two candles my son brought as a gift was placed, the candles had burnt down and the arrangement was catching on fire. This one we caught in time and immediately put it in the sink. Beware the arrangements you get with candles in them.

I decided to leave the premises to the safety of our hotel. I called my sister to thank her for the evening and she said it was not over yet. After we left, the pipe broke under the sink broke and the kitchen floor was flooded. I again reminded her “covered, subject to her deductible”.

The next day at her house she became the proud owner of a new toilet upstairs and shiny new pipes under her sink. The soot on the walls had been cleaned up and they actually were able to get most of the red wine out of the carpeting. A good ending, I guess but we have decided to do Christmas Eve at our house. I hope your holidays are less eventful!

~Laurie

 

5 Tips for Great Sales Meetings

When it’s time to get the memo out to create the agenda for the upcoming sales meeting, is there a pit in your stomach or do you look forward to the event? Are your sales meetings flat-out boring, filled with the same old speeches, and just a plain waste of time? Or is everyone pumped up, anticipating excitement, new tools, and a boost to help them achieve their goals?

Sales meetings are critically important to a successful sales team if structured and planned well, and if they’re respectful of the valuable time commitment they represent. Done well, they are a fantastic tool. Done poorly, they can diminish the team and the effectiveness of the sales leader. Here are several reasons sales meetings fail:

• Sales leadership is uncommitted to their role and therefore don’t plan.
• Sales team members are uncommitted to the “TEAM”, or to the leadership, and feel a victim of having to attend.
• The meetings are perceived as a waste of time (and many times they are!)
• There is little deliberate structure or value injected into them.

Remember the purpose of a good sales meeting. The following represents practical outcomes to gain, and therefore reasons to put energy into sales meetings:

• Gather the troops, who are usually out in the world on their own. “Herd the cats”, and let them have some team time together.
• Market Intelligence is delivered and war stories are shared.
• Education, marketing, sales training, or product knowledge is delivered. Be a “constant learning” organization, just like the most successful out there.
• Group accountability for the behaviors that dictate success is more powerful that individual accountability (i.e. KPI’s (Key Performance Indicators)
• Inspiration vs. Motivation. You can NOT motivate. You can only create movement. But everyone wants a breath of fresh air to give them strength to carry on.

Here are the 5 tips to create successful sales meetings. If you concentrate a section of time in every meeting to each of these, you will start to see better results with the goals I mentioned above, and in the enthusiasm of the teammates in attendance:

1. Market Intelligence: Do your homework. In sales, knowledge is king, and the very best sales people are constantly looking for an advantage through learning about the “competitive landscape”.
2. Education: Different from the last tip, this involves skills and tactics. The best sales teams are constantly honing their approach to the market, the tactics that are producing the best results, and sharing what works with the entire team.
3. Accountability: Posting the Key Performance Indicators and results that followed are powerful. Everyone wants the approval of their peers. Sales teams are typically very competitive, and NOBODY wants to underperform in front of their peers.
4. Inspiration: Stories, articles, suggested readings and experiences from teammates having success gives people a chance to see themselves in that successful position. Everyone needs to be reminded of what is possible and attainable. Too often we focus on our shortcomings or performing pressures, and not often enough do we set our minds on what we want. Remember that “what we focus on expands”. Focus on what you DO want, not on what you DON’T want.
5. Rotate the Leadership: This is a powerful motivator when you rotate who is in charge of the meeting. Keep the same format, but have each person on the sales team take a leadership role in running it. The benefits include creating team buy-in, eliminates the “sales vs. sales management” gap that may be in your team, diversifies the “gene pool” and injects more new ideas, topics, and stories. Note that this does NOT eliminate your responsibility for producing a good meeting, just shares the leadership.

Applying elements of each of these 5 areas, particularly rotating the leadership, will transform the results of your meetings, and bring powerful energy to your time together planning the demise of your competition!

Written by:

Phil Beakes, CEO
Peregrine Insight Group, LLC

 

Are you unstoppable?

Are you finding it more and more complex to run your business?
Do you feel like you suffer from the “Lonely Owner” syndrome?
Do you feel that you are just spinning your wheels sometimes?

How many professional athletes get to the top on his or her own, without a coach? Probably very few, if not no one. So why should a business person expect to get to the top of their industry without a coach? After all it is a very competitive environment, just like sports.

“Coaching,” whether for business or personal usage, is becoming more and more popular. The concept is not new, however. For years, people would learn to succeed through the efforts of apprenticeship programs or through mentors. The only difference is that today’s coach or mentor continues on, even after a certain level of success is reached.

A coach can be hired to help kick a stalled career into high gear, take the next big step on the leadership path or stay on top of mounting responsibilities. An effective coach can guide a person when addressing difficult issues and important relationships.

Coaching was once viewed by many only as a tool to help correct underperforming employees. However, today it is becoming much more widely used in supporting the top producers and employees. Coaching has evolved into the mainstream fast. This is because there is a great demand in the workplace for immediate results, and coaching can help provide that edge.

Often, executives and management need an objective, neutral sounding board to discuss challenges, opportunities and to express their perspective. A good coach will allow executives and managers to step away from the actual day-to-day routine and effectively strategize on how they and the business can reach beyond the current situation.

Personal or Life Coaching is the holistic approach to coaching. This type of coaching looks at where the individual currently is with their career, family, health, financial matters and all other facets of life. The individual and coach then work together to pull all theses pieces together into a roadmap for success.

Coaching will help the individual or team develop focus and take action towards achieving goals. A coach is like Jiminy Cricket, whispering guidance, encouragement and objective advice in the client’s ear. The coach can assist the client to take greater responsibility and accountability for their actions and commitments.

Coaching works best when there is a specific purpose or goal in mind. But simply having a clear purpose won’t guarantee coaching value. The client needs to be open to feedback and willing to move in a new direction in order to create positive change.

Often people are stuck because they cannot see available alternatives. The same thinking that created the stuck situation cannot resolve it. A new perspective is required. A coach can be the outside expert to help you get to the root cause and make fundamental changes.

The key to coaching success is that the coach is not tied to the organization, family or friends. The coach is tied to the client. This way the coach can be objective and support what the client needs and wants and where they want to go. A coach is not personally impacted by the client’s decisions for their career or life.

Working with a skilled facilitator, the client is encouraged to go deeper into what it is that they truly want. The purpose of a goal or vision will clarify if the current situation is on the right path, or if a new approach is needed. Why is the client doing what they are doing? The ultimate objective of coaching is to contribute to increased choice for the client leading to a more fulfilling life.

Firms that offer coaching, such as Oak & Associates, can help those who are seeking personal and professional change, growth, and development. We have noticed that the key is for our clients to understand that a primary requirement for a better, more fulfilling experience of life—personally or professionally—is their own internal change.

Written by:
Bill Schoeffler
Oak & Associates
www.oakandassociates.com

 

Who pays? Hopefully some type of insurance policy.

A sub-contractor employee was severely injured on a jobsite.
The employee has a very long recovery and it is doubtful that he will ever work in construction again.  The employee seeks legal counsel to check on his rights to sue.  The attorney informs the employee that his employer has already satisfied their legal obligations by securing workers’ compensation coverage that has been paying his medical benefits and lost wages all along.  The attorney advises him to seek legal recourse against the general contractor who was in charge of jobsite safety on this project.  The suit was filed and served upon the general contractor.  The general contractor in turn seeks legal advice and tenders the lawsuit to the subcontractor under a cross-complaint.  Now, normally everyone would look to the construction contract to see what the indemnity provision has to say.  However, in this case, that will not help; there was no contract.  The general contractor contends that the injury would have never happened but for the lack of training and lack of safety procedures by the subcontractor.

What policy responds for the subcontractor?
Is it the General Liability policy?  No.  There is an exclusion for bodily injury to an employee.  The exception for action over claims where liability has been assumed in an “insured contract” does not apply in this case.  Even though an indemnity provision does not have to be in writing, an oral contract could suffice to trigger coverage.  However, neither the general contractor nor the insured subcontractor contends that such an indemnity agreement exists.
In fact, it will be the Employer’s Liability section of the Workers’ Compensation policy.  This type of claim is often referred to as an action over, over action or liability over (synonymous terms).  The Employer’s Liability section includes an exclusion for liability assumed under a contract and for this reason, the majority of these types of action over claims often go to the General Liability policy to respond.  In this case, there is no contract, therefore the claim will go to the Workers’ Compensation Part B.  Keep those limits high!

Written by:
Marjorie Segale (AFIS, CISC, RPLM, CIC, CRIS, ACSR, CISR)
Director of Education, Insurance Community Center

 

What Do You Mean – I’m Not Getting Paid?

After all your planning, estimating, bidding and hard work, the General Contractor’s Compliance Department says you are not getting paid.

Why? Your insurance doesn’t match their requirements. You call your insurance agent and they say- what?

How does this happen? Typically it is a breakdown between your contract obligations and the insurance that you purchased.

It’s Just a Certificate of Insurance

Insurance is difficult to understand and a high expense factor to your business. Many contractors believe that as long as they have general liability and workers’ compensation coverage that is then put onto a Certificate and sent to the general contractor that they have complied with their contract. That is simply not true. A Certificate is a reflection of the coverage purchased by you. The insurance agent you work with must have specialized knowledge about the insurance needs of contractors. The agent must be able to communicate that to you properly and you must purchase insurance that matches what you are agreeing to in the contract. It doesn’t do any good to demand that specific language appear on the Certificate unless it is supported by the insurance policy. Some insurance agents will put anything on a Certificate to keep their client happy. That works short-term but if a construction defect claim arises, you could lose your business trying to pay the defense costs for the General after the insurance company denies the claim. The Certificate is a summary sheet – the important part is what is attached to the Certificate, such as the Additional Insured endorsement. An endorsement is a change to the insurance policy and without that information, the Certificate is useless.

It Starts With The Contract
Check the bid specification requirements to see if the General Contractor has listed any insurance requirements.   Your submission should show the types of insurance coverage you carry, including the limits of insurance; the additional insured endorsement that you can provide; primary and non-contributory liability insurance; waiver of subrogation on the general liability policy.

After you receive the work order, review the insurance requirements section.  Send a copy of the requirements to your insurance agent and have a discussion.  After you do this a few times, it will get easier, I promise.  Check the insurance documents to verify that they match the contract (NOT just the Certificate).

Liability Insurance Requirements in the Contract

Contractual Liability
This term means that if the GC and/or Owner get sued by an injured party as a result of the job or because the ultimate proper owner claims the property is defective as a result of the work performed, you will pay the attorney fees, court costs and any damages won by the plaintiff get to come out of your pocket.  But you have insurance right?  Well, sort of.  One hundred percent of the time, you are agreeing to pay for every type of situation and you purchase insurance with many exclusions removing coverage.  For example:  a subcontractor brings a fuel tank to the job site.  A worker runs into the tank with their forklift, turning the tank over and allowing fuel to run out.  Even if you are NOT the party that caused this mess, you may very well be called upon to pay the clean up expenses.  This particular claim cost more than $900,000 to clean up and all of the subcontractors shared in the expense on behalf of the GC and Owner.  Your general liability insurance will NOT pay for this claim.  You will.

Additional Insured – General Liability Insurance
Often the construction contract will require a specific endorsement, CG 20 10 11 85.  This November, 1985 edition date is not always available.  You insurance agent will have to place coverage with an insurance company willing to offer this coverage.  That will almost never happen if you are performing residential work, but can happen if you are a commercial work contractor.  Caution:  because this endorsement is not common, it means you have limited access to the insurance marketplace and your insurance premium will go up.

I spoke with an insurance agent earlier this week who was trying to cope with an Additional Insured requirement that stated the following:
“The ownership entities of all projects under contract and their respective assignees, members, partners, shareholders, directors, officers, employees, construction consultants, and agents are additional insured solely in regard to work/services provided by the named insured.”
The insurance company was unwilling to add this language to the subcontractor’s general liability coverage and the GC was holding up a $40,000 payment until they received a Certificate with that wording.  Look at it this way, you are being asked to hand your insurance coverage over to the GC AND whoever is their construction consultants and agents.  This makes no sense.  The first call by the insurance agent to the GC resulted in the agent being told – ‘what’s your problem – we get this wording all the time’ but could not provide a copy of an endorsement where this had actually happened.  The agent then asked for a copy of the construction agreement and upon discovering the requirement was not in the contract, called the GC’s office again and pointed this out; the requirement was removed and the contractor received their payment.
This situation could have been avoided entirely by a review of the insurance requirements by the contractor with their insurance agent both of whom would have known what to do.

Final Points
Hire a knowledgeable insurance agent with expertise in construction.  Have a discussion with the agent about the type of requirements that you are agreeing to in your construction contracts.  Buy insurance that matches those requirements as closely as possible.

Written by: 
Marjorie Segale (AFIS, CISC, RPLM, CIC, CRIS, ACSR, CISR) 

 

6 Tips For Sales Goals That Stick

It’s near year-end, and it’s time to meet with your individual sales teammates to set goals and expectations for the new sales year ahead.

I get feedback on this process that ranges from “We don’t set goals at all”, to “We dictate goals and hope for the best,” and everything in between. Many avoid this completely, at their peril.

Unfortunately this process, many times, follows along two typical paths. The first one is where management looks over the cash needs of the company, which get’s divided up into regions and districts, and down to the individual sales person. These “quotas” are handed to the sales person, like it or not, without their buy-in or even their input.

The second difficult scenario is where sales management sits with a sales person and a negotiation ensues to get to a goal everyone “can live with”.  Both parties gear up for the encounter with the manager coming in with twice what th

ey need, and the sales person entering the conversation with half what they can accomplish and they “settle” in the middle somewhere. The entire process is to gain agreement so that accountability and consequences can be brought to bare.  But where is the plan? Where is the discussion and plan around the individual behaviors needed to make this goal happen?  And, is it even the right sales number for the organization in the first place?

Does this ring a bell?  Isn’t it time for a change? Remember, “We manage what we measure”, and “Every journey of 1,000 miles begins with the first step.” The following is a solid system to set sales goals with your teammates that leaves you with a solid goal.  One that is endorsed and supported by your team member, and provides you with behaviors to measure (remembering that we can’t manage numbers in sales…only behaviors that lead to those numbers.)

1. Vision: Re-visit “What’s in it for them?” Why are they in sales? What do they want for themselves and their families?  What income do they need to support this, translated to sales levels needed to provide this. This creates the critically important emotional drive needed to see them through and drive them towards the goal. (Write this number down.)

2. Last Year: Produce their list of clients and the sales or income these represented this year. Notice the large ones, the small ones, the forgotten ones in the middle that are so easy to do business with. (Write this number down.)

3. Evaluate:  Here we need to do two calculations.

A.) What accounts will be going away, either through competition, acquisition, the economy, or other reasons that would result in them not providing you the income they did the prior year.
B.) What is available to expand from the remaining clients, either from new products sold or the clients account grew and will lead to more sales (Add this to #2 above.)

4. New Business:  Evaluate your market.  What accounts you did not get but might this year.  Look at new markets, new approaches and activities. From all of this, add up the opportunities and add the sum total of the new revenue to #2 above.

5. Compare:  Now, compare this total to several areas:

A.) The visionary income needs of the sales person. Is this going surpass it?
B.) Incremental sales contribution to the top line needed by the company. Does this match or exceed what the budget needs are? Is it enough? Is it a fair request?

Once this is done, determine what adjustments need to be made, like support needs or pricing?  Get agreement on the final number be PRODUCED.

6. “Doable Doses”: Break down all aspects of the successful sales goal called KPI’s (Key Performance Indicators), like average transaction size, hit ratio, number of appointments and calls needed to produce that revenue, and you are done!

You now have the annual goal, how it’s made up, and the behaviors you need to manage the sales person who is now a voluntary participant in the process.

If you use this process, or something close to it that conforms to your business process, you are ready to start the new year with a plan of action you can track and manage to the success of the whole team.

Written by:

Phil Beakes, CEO
Peregrine Insight Group, LLC

 

Working with Contractor Clients

When working with contractor clients, an area that is extremely important to review are their payroll and gross

receipt numbers. With many insurance companies providing composite rates based upon sales, double check what the client is telling the insurer on their supplemental application. One recent example of this was when the insured reports that they will have $3,000,000 in gross sales. Come to find out, the “bookkeeper” put down their gross profit. Their actual gross sales were $23,000,000. Needless to say that was one hefty additional premium.

Written by: 
Marjorie Segale (AFIS, CISC, RPLM, CIC, CRIS, ACSR, CISR) 

 

Covered Not Covered? – Haunted Buildings

I couldn’t help myself with Halloween right around the corner to take a moment and

ponder the question of whether buildings that are “haunted” are covered by insurance. As I started to think through the question, a lot of thoughts popped into my mind—many of which were weird but worth exploring. Some of the questions that came to mind were:

1. Is there any coverage for a commercial building that is “haunted” and if so how would the coverage apply to either the owner or the tenant of the “haunted” building?
2. If there is coverage, would there also be coverage activated by the Business Income form for either the tenant or building owner
3. Is there anything in the lease that would allow a tenant out of their lease if the building were haunted and their business was being directly affected by the fact they were losing customers?
4. Is there any coverage on a Homeowners Policy if the home is considered “haunted”?
5. Lastly, there is the question about coverage for “haunted” buildings/houses that are fabricated as an attraction. This could be a yearlong attraction or one that is specifically set up for the Halloween period.

I actually began thinking about this earlier this year when I visited my daughter in Los Gatos. We were on the main street, Santa Cruz Ave, and there was a mansion built in 1891 that was in 1917 was turned into a funeral home. My daughter told me the building was vacant because it was haunted. Three restaurants had opened in the home including the Chart House, Charts and the last one, Trevese; all of which have closed. For the last ten years there have been ghost sightings primarily with a little girl appearing and “one ghost apparently likes to run up a huge bar tab in the middle of the night on the cash register and turn the bottles around”. Curiously enough another restaurant opened up there about 8 months ago named Palacio. Sounds like a fun dining experience to me! (http://knol.google.com/k/will-johnson/haunted-los-gatos-the-funeral-home/4hmquk6fx4gu/346#)

Right after that trip I was having dinner with my friend in Yuma, Arizona and she pointed out the Hotel Lee that was vacant because they had been experiencing “paranormal” activity since 1917. Guests reported hearing strange voices, “someone” entering their locked room during the night and shook them or pulled the linens from the bed; an apparition of a young girl spotted carrying towels in the Lee’s upstairs halls. The hotel had been opened and closed at least three times over the years and opened last in the early 2000’s and closed again in 2007. Apparently the building is now on the national historic registry. (http://www.waymarking.com/waymarks/WM42KW_The_Lee_Hotel_Yuma_Arizona)

Such stories come from all over the world such as the Wai’alae Drive In in Kahala, Hawaii that was closed due to local legend that a ghost of a faceless woman with long hair haunted the ladies’ room. The Wai’alae was located near an old cemetery

So what does this have to do with insurance? All of the buildings are vacant due to “ghosts”.

1. Is there coverage for the building itself due to ghosts being present and forcing it to be closed down?
Answer: No.
The problem with all of these examples is that the ghosts did no “damage” to the buildings. Basically they scared off the customers. Another issue, however, related the buildings is that there needs to be insurance maintained even though they are vacant to protect the interests of the insureds (owners, bank) and the policy has to be written in such a way to respond to losses on long-term vacancy. Vandalism is very common in these types of buildings often by curious people who break in to see if they can spot a ghost or two. Vandalism is typically excluded on vacant buildings. An example was a building, known as the Harlaxton House, where a couple went around the back of the building and forced open a window which caused the double oak window frame to collapse inside the building, causing $6700.00 damage. This would be covered if the building insurance included coverage while vacant.

2. Is there a coverage for the loss of income from the tenant or loss of rents from the owners standpoint due to it having to be closed?
Answer: No.
For the same reason. Most business income policies respond to “damage” to premises that then results in a loss of income or rents. In these cases there was no damage.
Now let’s change this up a bit with more destructive ghosts that are actually linked to damage to the buildings.

1. Some ghosts like to throw things around and if they do damage to the building that is over the policy deductible this should be covered by insurance. (No “ghost” exclusion on a Special Form Policy.

2. Ghosts also like to start fires and that is a “good” thing when it comes to an insurance policy paying a claim.

Most claims I have become aware of in this area relate to Homes where we could find coverage under the Homeowners Policy or a Dwelling Form. Fire is the most basic of perils and again there is no “ghost” exclusion. A case in point:

The claim occurred in October, 1988 as reported in the Chicago Tribune. The home was vacant since April 12, 1981 when the owners moved out on the advice of local police and fire officials. In all there were 26 separate incidents, 11 of which were witnessed by either police or fire investigators. There had been three fires in the home that month. Arson investigators ruled out any wrongdoing and in a period of 7 ½ months investigated arson, pranks, natural gas, methane gas, sewer gas and faulty electrical system and concluded there was no logical answer to the recurrent fires. The only “explanation” was paranormal activity or ghosts. Reason or no, Travelers Insurance Co. agreed it would pay off on the property if the house was torn down. The insurance settlement did not cover the cost of the house but the owners were left with no alternative but to bulldoze their home. http://articles.chicagotribune.com/1988-10-16/news/8802070618_1_gas-leak-third-fire-mysterious-fires

3. Some ghosts like to “hurt” customers which would be covered on the CGL
Accounts of people being physically injured by entities aren’t common, but they do exist — the entity usually manifests a furious energy that blasts people off their feet, causing them to bounce off walls. Injuries can also occur reacting to an entity; a trip and fall or taking a tumble down a flight of stairs may be accidental, but the trigger was the paranormal event. Entities have been known to trip or push people. When these attacks occur, serious injury is sometimes only narrowly avoided. There are reports too numerous to list of people being struck by flying objects that were propelled through the air by unseen hands. http://www.netplaces.com/ghost-hunting/spirit-help-and-psychic-shields/protection-from-physical-attack.htm

The answers to this point as to whether there was “direct” coverage hinges on damage and the exclusion of any causation that would otherwise have been excluded. From a liability perspective, the CGL has a very broad response to bodily injury that occurs on the insured’s premises.
Now to our next brief discussion on how would a lease respond to allowing a tenant to cancel their lease if they were unable to operate due to “ghosts”. Needless to say, every lease is different. In general terms if we were looking at a lease on an apartment or house we would look at the “Habitability Clause”. For a commercial risk, such as a restaurant, we would look for a comparable clause and to language providing that the premises “have to be fit for the intended purpose” or the insured can vacate the lease. So, clearly in the cause of “ghosts” disrupting a business there are escape mechanisms that can be explored in the lease.
The last discussion in this article has to do with a much more basic and perhaps “real” insurance question relating to haunted houses that are created as attractions. They could be attractions that are open all year round or ones specifically created for the holiday season perhaps at a park, church, school or put on by a group to raise funds. The confusion comes because very few insurance agents sell special-event coverage. If your church or civic organization plans to run a haunted house for the next Halloween, the terror should come from the witches and axe murderers lurking inside — not from potential liability to your organization. http://www.castlerockagency.com/haunted-house-insurance.html There are companies that specialize in these types of special event policies. There are underwriting considerations for such events that companies would like to have avoided such as: stunts that create increased hazard, pyrotechnics, open Flames, live animals, trap doors, etc.

Some of the coverages that are included in these special event programs include:
• General Liability
• Liquor Liability
• Automobile Liability and Physical Damage
• Third Party Property Damage
• Rented/Owned Equipment, Property, Props, Sets and Wardrobe
• Participants & Spectators Medical

As all of you in the community read this article you have already celebrated your 2011 Halloween and we hope it was a safe and fun event. Look to our upcoming newsletters for more articles on the “weird and curious” aspects of insurance.

~Laurie
http://www.insurancecommunitycenter.com

 

Product Liability

Who Is Responsible?

The world of product liability in the United States is interesting, convoluted and just plain difficult to understand.  We are going to tackle some of the basic issues that are involved in providing insurance for products liability.

The term product liability refers to the liability of any or all parties along the chain of manufacture of any product for damage caused by that product.  This includes the manufacturer of component parts, an assembling manufacturer, the wholesaler, warehouseman and the retail store.  A product containing inherent defects that cause harm to a consumer of the product, or someone to whom the product was loaned, given, etc. are the subjects of products liability suits.

A Little History

Since 1963, after the Greenman case (Greenman v. Yuba Power Products, Inc. , 59 Cal.2d 57, 27 Cal. Rptr. 697, 377 P.2d 897(1963)), the courts imposition of legal liability upon manufacturers and sellers of products in the US expanded from negligence to strict liability.  What does this mean to your client?  Their exposure to suits increased significantly.

Imposition of liability due to negligence requires that a duty is owed, the duty is breached and that action is the proximate cause of loss or injury.  Strict liability uses very different standards.  A manufacturer is strictly liable when an article manufactured and provided to consumers, knowing that it is to be used without inspection for defects, proves to have a defect that causes injury or damage.  Strict liability was developed as a means of social policy and focused on the protection of the public.  There are three main areas of defects: design, manufacture and warnings or instructions.

Design Defect

A manufacturer is required to take reasonable care to ensure that a product is designed to perform in a safe manner.  Failure to do so can impose negligence as well as strict liability upon the manufacturer.  A manufacturer must make sure that the product is safe to be used, even if being used by consumers in an unintended, but foreseeable, manner.  The consumer must be given warnings of inherent danger.

Manufacturing Defect

The manufacturer is required to make the product according to its design.  If it fails to meet the design specifications due to a flaw in manufacturing the manufacturer can be held liable for injuries caused by that defect.

Defective Warnings / Instructions

A manufacturer is required to provide adequate warnings of danger and instructions of use.  Failure to do so can impose liability upon the manufacturer.  Inherently dangerous items need not have a warning applied, such as a sharp knife, but warnings must be provided for situations that could be considered abnormal use of the product, such as using an electrical appliance around water.

Many states have individual product safety statutes regarding pre-sale and post-sale duties regarding product safety.

While a defense cannot be based upon degree of carefulness by defendant, defense of a product liability suit can include abnormal use by plaintiff, modification of product by plaintiff or other party, notice of breach of warranty provided to plaintiff and strict compliance with regulations.

Insurance Issues

Your manufacturing clients, wholesalers (particularly those that sell goods imported from China or Taiwan) as well as the retail clients are all exposed to these serious suits involving the products that they make and/or sell.  These suits can easily become class action suits when brought to the attention of legal counsel.

Timing is Everything

Courts have taken a variety of positions regarding the appropriate policy or policies that are triggered due to the timing of injury or damage that may take place over several policy periods.  Some of the courts have reasoned through the policy language to arrive at a continuous injury trigger, meaning that all policies in effect from the time of the first exposure through the time that legal liability has been imposed upon the responsible party while other courts have decided along the manifestation trigger (when the injury or damage first becomes known) or injury-in-fact that triggers coverage from first exposure through manifestation.  The majority of courts in the US arise during a covered policy period.

Therefore, it is largely irrelevant which policy was in effect when the product was made or sold, but rather a critical issue when the injury or damage actually happens, whether during one policy period or more.  If your insured sells their business or closes their doors, you must offer discontinued products liability coverage or help your client negotiate with the buyer to have the selling party included in the ongoing liability insurance policy.  Since most sellers are selling the customer list, brand name, product line, equipment, etc. and most courts look at the buying party as a continuation of the original business and because of those facts, many courts will impose liability upon the buyer, whether or not the buyer has assumed liabilities as well as the assets.

Providing proper insurance can be very challenging but also rewarding.

Written by:
Marjorie Segale (AFIS, CISC, RPLM, CIC, CRIS, ACSR, CISR)

http://www.insurancecommunitycenter.com