Category Archives: Covered or Not Covered?

What do you think? Stories about unusual events or gray areas. Are they covered by insurance or not? I usually let you know how it ends.

Stranger Things Have Possibly Happened

An Australia government employee was injured in a motel room while on a business trip and she wasn’t playing canasta.  While the lower court there ruled that this was not arising out of employment, that decision was overruled by the Australian Federal Court.  Now, if you think that type of claim could never happen here, consider the following:

  • Housekeeper files for benefits under domestic Workers’ Compensation claiming carpal tunnel syndrome from regularly, shall we say, servicing the “master” of the house.  The Workers’ Compensation insurance company paid loss of wages, medical and rehabilitation expenses.  Retraining was apparently not required.  As a side note, this claim was reported by the wife.

On to some other strange and just weird claims:

  • A woman working out of her house, tripped over the family dog, breaking her wrist.  The Appeals Board asserted that since the home was her work environment and she was injured while working, the claim would be covered under the Workers’ Compensation policy.
  • This claim occurred in a monopolistic state.  A number of employees were roughhousing during a mandatory team building event.  A group of them were in a canoe, saw a coworker standing on the riverbank and tried to pull him into the river.  One of the male employees grabbed him, threw him to the ground and caused a neck injury.  The Court of Appeals upheld the lower court’s decision since this was a mandatory business event.  Horseplay doesn’t necessarily remove a claim from the Workers’ Compensation system.
  •  Apparently in at least one state, smoking a little weed doesn’t mean that an injury can’t be covered under Workers’ Compensation.  A man mauled by a wild animal at a tourist park claimed employee status.  The employer argued that he was a volunteer and he had smoked marijuana that day.  The state’s Supreme Court states that he received compensation for his duties and that his habit was not the major cause of his injury and ruled in favor of the employee.
  • A group of employees were sent to a two-day training conference.  At the end of the first day, a group of the employees first attended a company
    dinner, then visited three bars over a four hour period.  After going back to their hotel, three of the employees decided they should climb out of a bathroom window onto the roof of their second-story hotel.  One of them leaned against a rail which gave way and the employee sustained injuries due to the fall.  The appellate court ruled that benefits should be denied stating that the employee’s conduct was unreasonable under the circumstances.
  • A man, working as a maintenance worker at a trailer park was asked to go into a trailer to investigate a very bad smell.  He found the decomposing body of an opossum and suffered a heart attack.  Although he had a pre-existing heart condition, the jury ruled that the injury was work related and, therefore, covered under the Workers’ Compensation policy.
  • Then there was the injury of a 21-year old man who gave a vending machine at his employer’s place of business a push to dislodge a bag of chips for a female coworker.  He suffered a displaced fracture in his neck and was awarded benefits by the state Appellate Court.
  • A co-worker’s perfume was found to have aggravated an employee’s pre-existing COPD.  The Appellate Court found that was a compensable injury as it arose out of employment.
  • An employee was off the job due to an employment-related injury when he was arrested and incarcerated for solicitation of murder (of his wife).  This was deemed to be involuntary removal from employment.  His benefits were to be continued.
  • An employee was injured while working at a fast-food establishment.  Part of the insulation of an electrical wire to a microwave oven had been removed and the employee sustained electrical burns.  The act of removal did not rise to the level of intentional tort liability, although clearly injuries arising out of and in the course of employment.

So, what is the moral of this collection?  Sometimes the employer is held responsible, even when, at first glance, it sounds absurd.  But then, humans can act in absurd and strange ways and cause themselves or others harm in the process.

Although I cannot confirm the veracity of the following, I couldn’t resist including these  claimant statements that I found at (no – everything found on the internet is not true!).  Sometimes, it is all how you phrase it!

  • My head injuries have created a permanent increase in libido which has led to two affairs and has ruined my marriage.
  • I got my right hand first finger in the saw while helping Mike and staying out of his way. My finger bled and it affected my mind.
  • I chipped my tooth on a cookie while visiting a customer.
  • While on duty, I was hit in the face by a hand. My glasses were broke and something hit my eye. No one believes I was hit but it hurt!
  • Hot grease splashed on me and fried my thumb.
  • I was working on my job and got a pain at the end of the week.
  • Accident unnecessarily occurred on account of a misjudgment.
  • I ran down the steps and when I got to the end, my feet wouldn’t stop.
  • I had my hand in the machine while the air was off. Someone turned on switches and folded my hand.
  • I was assaulted and attacked by a vicious employee because he didn’t like me and I know it.
  • The patient was going to fall for me. I could not let this happen. In so preventing this, I caused myself damage to my knee.
  • This is for the cut on my hand, but I took the stitches out myself. However, I am filing on account of the watchdog biting me and on account of a hurt I got in a fall in the paint shop.
  • In performing the job of which I am capable, I didn’t know the machine was on and was showing my new helper what not to do and did.
  • I was proving that I could carry an air compressor and I strained my back.
  • I looked into the hose to see why the water did not come out. It came.
  • I sprained my ankle the same way I sprained my ankle before.
  • I hit my arm against the hopper, and got flea bites.
  • That night I done something I shouldn’t-a done and now my back hurts.
  • A gate hit my foot while my back was turned, closing the other side.
  • Customer thought she needed the brakes adjusted. She drove the car into the station, could not stop the car, came through the door and pinned claimant against the cash register.
  • I was removing a blouse for a customer and which time I injured my back.
  • I inherited this occupational disease.
  • Acting on behalf of my employer, I hit another automobile.
  • In order to avoid a person, Betty lost her balance and fell down. In one hand she had a ketchup bottle which broke on impact, cutting her hand. In the other hand she had her thumb.
  • I over asserted myself and got a hernia.
  • The doctor gave me a disease for my occupation and said I must change jobs.
  • Gears smashed thumb while holding air cleaner, while putting nipple on with right hand, while balancing air cleaner with left hand, while holding end with left hand away from right hand. Gears were not covered.
  • I didn’t know water was where I fell.
  • I fell down in the Fotomat booth while dislocating my knee.
  • Sustained back injury due to car accident which is part of his job.
  • Falling off the truck, I dislocated my pelvis and other male organs.
  • I slipped and fell and hurt everything in me.
  • I dropped my head on my foot when someone pushed their guts across the table without calling out (from a slaughterhouse employee).
  • The fumes were so bad I was taken by them and went to bed with the doctor.
  • The guy I work with went ape s4%t. He hauled off and punched me in the jaw and then tried to rip my throat out.
  • Carrying roll roofing, I caught my toe on a piece of tin that was froze in the ground. The tin flipped against me causing me to trip, letting the roofing fall into the bucket of tar. Tar splashed out, burning my arm, and causing me to jump back into the ladder which fell against me, knocking me into the building, breaking my tooth. Thus I burned, bumped, and broke me.


  • Written by:
  • Marjorie Segale AFIS, CISC, RPLU, CIC, CRIS, ACSR, CISR
    Director of Education, Insurance Community Center
    & President, Segale Consulting Services, LLC

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Insurance Lessons Learned from Hurricane Sandy

Hurricane Sandy is said to be the most damaging hurricane recorded in U. S. history.


Hurricane Katrina in the Gulf of Mexico near i...


There appears, however, to be some dispute as to whether Hurricane Katrina holds that dubious honor.  The loss estimates and concerns are changing daily .The cost of the storm, estimated by private firms including PricewaterhouseCoopers and the PFM group,  points to the fact that Hurricane Sandy destroyed or damaged more units of housing, affected more businesses and caused more customers to lose power. Here is the breakdown provided on November 26, 2012:

                                                        Sandy in New York ALONE        Katrina & Rita in Louisiana
Housing units damaged or destroyed    305,000                                      214,700
Power Outages (peak)                         2,190,000                                   800,000
Businesses Impacted                          265,300                                      18,700

•     Number of deaths is more than 110 from Hurricane Sandy
•    The official death toll from Katrina was 1,723.
•     7.5 million power outages throughout Hurricane Sandy’s two day assault on land
•    Moody’s Analytics estimates the loss in the vicinity of the storm to be $50 billion, of which $30 billion will be directly from damage to property and the remaining $20 billion from economic activity, not all of which is going to come from an insurance policy.
•    60% of the losses in economic activity, or about $12 billion, will come from the New York City metropolitan area.
•    Because of the storm’s intensity and the breadth and scope of the damage, President Obama declared New York and New Jersey federal disaster zones without waiting for any damage estimates.
•     As of 12/3/2012, the Federal government has already issued $180 million in federal contracts related to Sandy.
•    The President has declared several areas as disaster areas, which means that federal funds will now be available to storm victims. (This is not limited to those without flood insurance.) This federal disaster assistance usually takes the form of low-interest loans to help home and business owners rebuild, which you can learn more about on the Disaster Loan page.

The statistics are staggering as are the losses (both covered and not covered) that are emerging from the storm.  We will attempt to discuss some of the unique and troublesome issues that are arising from the storm.
Article Discussion Points:
•    Definition of “Storm” and its impact on insurance
•    Flood or NOT Flood?—that is the question (or the hope)
•    Personal Auto salvage concerns
•    The Lawyers are out to get you

A storm reaches tropical storm status by reaching sustained winds of 39 MPH.  The National Hurricane Center creates annual lists of names from the database of names maintained and updated by the World Meteorological Organization.  If a storm causes significant damage and /or loss of life, the name is retired from the list permanently.  Thus, there will be no Katrina II or Sandy II.

1.    What Does The Definition Of “Storm” Have To Do With Insurance?  There May NOT Be Coverage On The DIC.

Thousands of businesses were affected by Sandy. Many times those larger clients have flood and wind coverage, but written on a large property or DIC (Difference in Conditions) policy.
In those policies there may be restrictions, sub-limits or different deductibles that apply to “Named Storms.” Those policies will define what that is, and should include flood, wind, wind gusts, storm surges, tornadoes, cyclones, hail or rain into this category once the storm has been declared by the National Weather Service to be a hurricane, typhoon, tropical cycle, tropical storm or tropical depression, thus bringing into focus the entire life cycle that a storm may go through.
We have found a number of articles written by law firms that are already taking on the issue of “named storm,” claiming that even though the NWS had named the storm, it was not at hurricane strength when it reached landfall.  A comprehensive definition of “named storms” would be helpful to clarify coverage.  The fact that the meteorologists are discussing the attributes of this storm to be more like a winter storm rather than a tropical storm may end up on the chopping block of justice in a civil court or two and test the insurance policy coverages.

2.    What Is Unique About Hurricane Sandy?

•    Sandy has defied normal storm behavior by moving east to west; it acted both like a hurricane and a cyclone simultaneously.
•     The result of this last odd wind pattern was the root cause of the flood tides and the inundation of the New York subway system.
•    The storm qualified as a hurricane at the time of landfall and its wave “destruction potential” reached a 5.8 on the National Oceanic and Atmospheric Administration’s 0 to 6 scale.

3.    One Storm or Two Storms:

Bad memories of the World Trade Center came immediately to mind when I read about this potential concern relating to Hurricane Sandy.  You might remember there was a significant concern that a second storm, following the initial impact of Sandy,  was going to hit which would have further devastated the area.
Richard Mackowsky, a member of the firm’s global insurance group, said” new damage from a second storm could result in a separate occurrence, potentially requiring a separate set of deductibles.”

“If there is damage caused by a second storm but related to the first storm, issues arise as to whether there were one or two occurrences. A second storm could impact causation as to what is really driving the loss. If the only reason the second storm caused damage was because of damage from Sandy, the question then becomes whether that is a covered cause of loss,’ Mackowsky said. ‘A second storm could trigger a separate limit of liability if it’s a big enough situation,’ he said.

But even one storm can create causation questions. Was the damage from wind or flooding? Not a simple question to answer, litigation stemming from previous storms has shown.”
Saved by the bell on this one—the second storm never hit but the insurance pundits were armed and ready.

This appears, at first glance, to be Insurance 101—most of this damage was either directly or indirectly caused by the condition of flooding.  That is sure what it looked like to me and that is NOT a very popular observation. Why?? Because most people did not have Flood Insurance and if they did, the Flood insurance policy has limited amounts of insurance and significant restrictions such as NO business income coverage.

1.    Dilemma Of The Federal Flood Insurance Program—It’s A Problem:
Even if it is covered on the Flood insurance policy there is real concern about the overall program.  According to Reuters:
“ ‘The federal government’s flood insurance program may not have access to enough funds to cover anticipated claims from Hurricane Sandy victims,’ a top official at the Federal Emergency Management Agency said on Thursday.
Edward Connor, FEMA’s deputy associate administrator for federal insurance, told an insurance advisory panel on Thursday that his agency is projecting a flurry of flood-related claims in the neighborhood of $6 billion to $12 billion.
‘That is well above FEMA’s current borrowing power,’ he said, ‘which is maxed out at $2.9 billion. To extend it would require authorization from Congress, something Connor said he expects the Homeland Security Department will request soon.’ ”

2.    Flood or NOT Flood
Whether talking about homeowner’s insurance (including renters and condominium owners) or commercial property insurance, those forms most often include an exclusion for flood.  So, here is where it gets a little tricky:
a.    Did the property owner sustain damage from storm surge,
b.    Was the loss due to  rising flood waters
c.    Was the loss due to  too much rain that entered into the building because the wind removed the roof, blew out the windows or knocked a part of the building down
“It is an ongoing saga,” says insurance lawyer Frank Darras, who has worked extensively on litigation scenarios following Katrina. “If you are a homeowner, you are going to argue that you have damage caused by wind and wind-driven rain. If you are the carrier, you are going to say the damage was caused by flood, tidal surge or a hurricane, which requires hurricane coverage.”  In a unique twist, New York has a specific website that contains a regularly updated scorecard on insurance company performance.  Here’s the link:  For example, State Farm has had 48,109 claims; 6,363 closed with payment; 5,229 closed without payment.

3.    Problems With The Flood Insurance Solution
FEMA says that less than 15% of homeowner’s nationally carry flood coverage.  Federally backed lenders have been lax in enforcing the obligation to purchase flood insurance (THAT may change due to higher penalties being imposed upon the banks as of July, 2012).
The NFIP program anticipates claims between $6 and $12 billion but has borrowing power at $2.9 billion.  Reauthorization from Congress would be required and Homeland Security is expected to request appropriation soon.  Those current and new policyholders of NFIP coverage will be getting a scheduled rate increase that predates Sandy.
Even if the person or business purchased flood coverage, there are still problems and concerns.
a.    The limits of insurance available through the National Flood Insurance Program are small.
b.     Replacement cost coverage applies only to a dwelling and not to commercial structures.
c.     There may be wind damage to the building that the flood insurer will not pay but are covered in the homeowner’s policy.
d.     The insured will get to pay two deductibles for those two separate policies.
e.     What kind of coverage is there if the first layer of property coverage is the NFIP coverage and the insured purchases excess layers of flood coverage above that policy?
i.    Will it drop down to pick up the replacement cost difference?  No.
ii.    Will it drop down to pick up business income, extra expense coverage?  It should.  Check the policy language.

4.    The Future Of Flood Insurance
The future of the entire program is bleak enough, add to that the impact of Hurricane Sandy on the future purchase of flood insurance.  Homeowners in storm damaged coastal areas who had flood insurance , and many more who did not, still now may be required to carry Flood insurance and will face premium increases for Flood from an estimated 20 to 25 percent per year beginning January.  This is due in part to legislation enacted in July to shore up the debt ridden National Flood Insurance Program and is exacerbated by Hurricane Sandy.
“ ‘Because private insurers rarely provide flood insurance, the program has been run by the federal government, which kept rates artificially low under pressure from the real estate industry and other groups. Flood insurance in higher-risk areas typically costs $1,100 to $3,000 a year, for coverage capped at $250,000; the contents of a home could be insured up to $100,000 for an additional $500 or so a year,’ said Steve Harty, president of National Flood Services, a large claims-processing company.”
Lenders, in addition, will be affected by Hurricane Sandy if they fail to enforce the requirement for their lenders to carry Flood Insurance.  They will face even higher penalties than they have in the past.

5.    Ordinance or Law
a.    Many of those properties damaged by Hurricane Sandy had been built a number of years ago. So here are the questions:
i.    Does the Homeowner’s Policy, Commercial Property Policy or DIC include contingent ordinance or law coverage, demolition coverage and increased cost of construction coverage?
ii.    What about the loss of use for the homeowner as well as the business interruption coverage?
b.    The NFIP policy is out as there is no coverage for the indirect loss.
c.    Many DIC policies do not include ordinance or law automatically and many more do not include ordinance or law – increased period of restoration to cover the additional down time due to code or law enforcement.

6.    Power Loss
Earlier we quoted the statistic of approximately 7.5 million power outages throughout Hurricane Sandy’s two day assault on land.  Many of these outages lasted days and weeks.  There are several issues relating to insurance in terms of the power outages:
d.    Requirement Of An Off Premises Endorsement:
In order for businesses to have coverage for either direct or indirect losses relating to power outage, the insurance would first  have “off premises” or “utility coverage” on the policy.  Typically, losses stemming from off premises situations are excluded on property insurance policies.
e.    Causation Of The Power Outage:
If there was coverage on the property policies for the off premise loss, the situation that occurred off premises would have to be covered.  For example, if the off premises loss were caused by a windstorm, that cause of loss is typically covered on a Commercial Property Policy or personal form.  If the loss were caused by flooding, then that cause of loss is excluded and the off premises endorsement would not apply.
f.    Off Premises Deductible:
Off premises coverage oftentimes has a “time” deductible or waiting period of 72 hours unless endorsed. This waiting period would have eliminated coverage for many of the properties that had their power back in three days or less.
g.    Direct vs. Indirect Loss:
An Off Premises Endorsement would have to cover both direct damage and indirect to pick up a loss for Business Income.
h.    Other Perils such as Equipment Breakdown  (EB):
The cause of off premises loss may be due to a power surge that results from the storming.  If the EB policy has off premises coverage and Business Income coverage then recovery can be sought under that policy.
i.    Some Off Premises Policies Have Distance Limitations:
It must be ascertained if there is any distance indication on the policy to which the off premises is being attached. For example some policies have a 500-foot distance radius which means the source of the off premises loss must be within 500 feet of the insured’s premise.
j.    Spoilage:
It may be that the loss the insured sustained while the power was out was spoilage, such as loss to refrigerated items AND the business income that stems from that loss.  This could be covered on either an Equipment Breakdown Form depending on whether there was a “breakdown” or on a Commercial Property Spoilage Form.  Some Homeowners have limited coverage built in for refrigeration loss but not for the peril of Flood.

7.    Business Income:  Now we are talking about one of the bigger claims that will result from Hurricane Sandy and much of it will NOT be covered.  Here are some of the pressure points of this coverage:
a.    Cause of Loss—back to that one. Flood is excluded on the Commercial Property form so there will be no response for Business Income.
b.    The Flood insurance policy does not cover business income.
c.    If the cause of loss is determined to be “windstorm” and the insured has Business Income insurance then the policy should respond from the causation point of view assuming they had direct damage.
d.    The insured will have to prove that their income loss is directly attributable to Hurricane Sandy.
e.    The policy has a waiting period for coverage typically 72 hours unless endorsed.
f.    The policy would have to be endorsed with Off Premise coverage for the Business Income stemming from loss of power to apply.
g.    There is NO building ordinance for the business income—it would have to be endorsed.
h.    Civil Authority:  Many of the businesses did not sustain direct damage but where closed by civil authority.
i.    There is limited coverage on the BI form
ii.    There may be distance limitations
i.    Ingress/Egress:  A bigger problem is the ingress/egress issue which basically means “because of the condition, itself, access to an area is affected or unavailable.”  For example, if a road is flooded out so that there is no access to a grocery store, the grocery store will be able to demonstrate they are losing customers.  However, if the store was not directly affected by the physical loss, there will be no trigger on their business income form.  Civil Authority did not close down the area—it was closed to natural events in this case.
Traditional Business Income Policies require that there be direct damage to the premises by a peril insured against for there to be any business income insurance response.  However, there is talk, in the aftermath of Hurricane Sandy of what is referred to as Non-Damage Business Interruption or Non Physical Business Interruption Insurance. It is referred to as NDBI.  While articles are referring to these coverages, as if they are readily available, I believe they are truly exceptional in availability and accessibility.  Sometimes these forms are part of a “supply line coverage” for very large businesses that often have an international component.  There is also the TDI or CDI coverage—Trade Disruption which could come into play; however, that coverage has a very limited market.  Bottom line, the average business that sustained damage as a result of Hurricane Sandy had neither one of these types of coverage.  Here is a link to Liberty International that apparently has a program.

8.    Automobile Losses from Hurricane Sandy
Autos are the easiest part of this equation:  whether wind, flood or a combination, all are covered under the “Other Than Collision” coverage.  The salvaging of these autos is where it gets interesting.  Canadian officials are now bewailing the fact that thousands of autos, some estimates are as high as 250,000, are likely making their way to Canada.  Those storm damaged vehicle are classified in Canada as “non-repairable” and are illegal to sell.  But, in the aftermath of Katrina, Canadian citizens were buying these vehicles in the thousands and they expect the same thing to happen again.  What I wonder is, who is selling those vehicles?  The original owner?  The salvage company the insurer uses?

Errors and Omissions Litigation
Well, as if all the foregoing isn’t depressing enough, we cannot end this article without a little nudge to the insurance agent and broker.
If you are relying upon “conversations” with your client along the lines of “Do you want flood insurance?  No.  OK, then,” you are going to be sadly mistaken that your client is not going to enjoin you in litigation over your standard of care.  Your client is going to claim an increased standard of care, yes including New York residents, and that you had a duty to advise and quote coverage for them or at the very least, tell them in writing of the limitations of coverage in the policies they purchased and that they relied upon you for your expertise.  Many agents simply renew, year after year, their direct bill homeowner’s and small business clients without ANY documentation of coverage offers.  Even those handling larger accounts somehow rely upon the client’s memory and good will not to sue you.  So, again, for the millionth time already, please, please DOCUMENT your file, in writing, to the insured, with a rejection signature every year or, for larger accounts, an authorization to bind affirmation from the insured.
As we were all glued to the TV, watching reporters being blown around reporting the devastation, my insurance brain immediately went to “flood exclusions.” I saw the wind ravaging the houses, the uprooted trees blocking the roads, but also saw the rising waters in the streets; along the shores; in the housing areas.  The question will come down to that simple reality—was the damage due to flooding or not.  The attorneys are out in force, fighting for first page on the Google search engine so you get to them first.  A quotation from the Stephenfoster law site got my attention:
“There are reports that hurricane Sandy insurance claims are not being promptly or fully paid. Hurricane Sandy has caused billions of dollars of property damage. Fighting an insurance company’s hurricane Sandy appraisal is possible and, sadly, frequently necessary. Hurricane Sandy claims are handled similarly to other storm damage claims but there are some unique differences.
One common tactic that is employed by insurance companies or their adjusters is stating that damage is “flood damage”. Flood damage is typically not covered by standard homeowner’s policies or business interruption policies. It is important that people that have suffered losses realize that just because they are told it is “flood” damage doesn’t necessarily mean that the loss is not covered.
Hurricane Sandy insurance claims are expected to be huge. Stephen Foster is handling hurricane claims against insurance companies for claim denial, claim delay, loss of use of home, property damage, roof damage, loss of use of business, water damage, water damage caused by wind and bad faith claim handling. If an insurance company does not fulfill honor their promises to pay for damage caused by Hurricane Sandy then an insured should consult with an experienced hurricane insurance claim attorney.”
I love that last paragraph.  It reminds me of an old Gun Smoke movie—ready, aim, fire.  Barrels are being loaded against the insurance companies.
There is no easy way to end this article, although I am sure all of you who reached the very end are hopeful that I will.  The storm was one of the biggest ever and the insurance story will not end soon.  There is so much more we could say but best end this with a heads up to watch and see how these claims unravel; and, for those of you who did not insure any of these damaged properties, I say a toast of champagne is in order.


Written By:
Laurie Infantino AFIS, CISC, CIC, CRIS, ACSR, CISR
President, Insurance Community Center, Insight Insurance Consulting
Director of Education, Insurance Community Center & President, Segale Consulting Services, LLC




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Girl in costume at Halloween party shot after being mistaken for skunk

English: Striped Skunks (Mephitis mephitis)


Girl in costume at Halloween party shot after being mistaken for skunk 10/21/2012 Associated Press

Talk about taking all the fun out of Halloween, this story takes the cake.  The shooting occurred in Freedom, Pa.   “Police say a costumed 9-year-old girl was accidentally shot outside a western Pennsylvania home during a Halloween party by a relative who thought she was a skunk. New Sewickley Township police say the girl was over a hillside and wearing a black costume and a black hat with a white tassel. Chief Ronald Leindecker says a male relative mistook her for a skunk and fired a shotgun, hitting her in the shoulder Saturday night. Leindecker tells the Beaver County Times that the girl was alert and talking when she was flown to a hospital in Pittsburgh, about 30 miles away. Her condition was unavailable. Leindecker says the man hadn’t been drinking and he doesn’t know whether charges will be filed.

When I first read this article, I had a lot of questions that came to mind.  
1.    How could anyone mistake a nine-year old girl for a skunk and NOT be drunk.  Unless they grow giant skunks in Pennsylvania, this makes no sense at all.
2.    Is it legal to kill a skunk in Pennsylvania which would then not make this some sort of criminal offense.  I goggled that exact question.  I am apparently not the only one who has researched that question as page after page of specific skunk killing questions and blogs appeared.  Summarizing the information, it appears that it is legal to kill skunks in some areas of PA; however, some species of skunks are protected by law.
3.    So,



now to the BIG question.  Is accidentally shooting a 9-year-old girl dressed in a skunk outfit covered on the Homeowners Policy when the homeowner is sued for all the medical bills and potential legal expenses. I would certainly expect that parents of the injured child will do exactly that.  

For the answer to the question, we must revisit an exclusion that has been the topic of many articles written by the Insurance Community Center—the Expected or Intended Injury Exclusion under the Section II Liability Coverage.  This exclusion has taken a major change in the most recent edition date of the Homeowners Policy and in the 04/91 edition date and prior was called the Intentional Loss Exclusion.  If we look at the two exclusions, we might answer differently as to whether the shooting would be covered.  In the 04/91 edition date the exclusion reads:
h.   Intentional Loss, meaning any loss arising out of any act committed:
(1)  By or at the direction of an “insured”, and
(2) With the intent to cause a loss
As we look at the older language, the second paragraph (which is connected by the word “and”) would imply that the insured would have had to intend to cause a loss in order for it to be excluded.  In this case, the homeowner intended to cause a loss to a skunk but had no intention of injuring a nine-year old girl.
The new “intentional act” exclusion is far more reaching and will effectively exclude many more situations, including that of the “skunk” shooting. The edition dates after 04/91 including the recent 05/11 reads as follows:
1.     Expected or Intended Injury
“Bodily injury” or “property damage” which is expected or intended by an “insured”, even if the resulting “bodily injury” or “property damage”:
(a)     Is of a different kind, quality or degree than initially expected or intended; or
(b)    Is sustained by a different person, entity or property than initially expected or intended.
However, this Exclusions E.I. does not apply to “bodily injury” or “property damage” resulting from the use of reasonable force by an “insured” to protect persons or property.

Clearly this is a much broader exclusion.  Notice that the two paragraphs are connected by an “or” rather than an “and” which means either paragraph (a) or (b) could apply for the exclusion to apply.  In this case, while the homeowner intended to kill a skunk but inadvertently shoot a nine-year old girl—there would be no coverage. Clearly the intent of these later edition dates was to exclude situations exactly like the one reported in PA.

As we look at these forms we always have to be various state laws and case-law in different states.  We all know that attorneys have a very different view on how these forms can be interpreted.  Once Florida law firm boosts on their site that they were able to recover damages from the Homeowners Policy for a gun owner who accidentally shot a woman that he testified he was merely trying to scare by waving a gun around her.  The contention here, must have been, that the homeowner was “intending” to scare and not “intending” to shot.  The newer edition date would be a much more difficult form language to contend with on this allegation.

The lessons learned in this case is that the intentional act exclusion is very broad-based; the injuries to the nine-year old girl will probably not be covered on the Homeowners Policy AND do not dress up as a skunk next Halloween.


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Posted by on November 27, 2012 in Covered or Not Covered?


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Of Mice & Men




We are not talking here about the book “Of Mice and Men” written by John Steinbeck but; rather the recent incident In Yosemite National Park involving Deer Mice infecting visitors to Curry Village with Hantavirus Pulmonary Syndrome (HPS).  The incident was reported in early September, 2012 after a ninth person had contracted the disease that had already killed three people.  The latest guest that contracted the disease had stayed in the hotel in July and had recovered from the disease. Deer mice are the carriers of this virus and spread it to humans by their waste products left behind, in this case, in the cabins and inhaled by the guests when the virus mixed with the dust and air in the poorly ventilated cabins.  There is no cure for HPS which kills more than 1/3 of the individuals it infects.  Early detection is the key to preventing serious illness.

There are a lot of issues in play on this loss as relates the responsibilities and potential insurance exposures and solutions for Curry Village AND Yosemite National Park as a whole.  I might as well warn you now that many of the potential insurance losses may not be covered.

Notifying the Public about the infestation and disease:
This comes with a price tag and a long-term affect.  Yosemite had originally notified 30,000 visitors who slept in two specific locations in the park and then had to expand their warning by notifying 230,000 more who stayed in the general areas in the park as a precaution.  This notification goes well beyond just emails.  Representatives must make statements in the press and make every effort to manage the crisis.  Following a “crisis” it is vital that an organization communicate to the public about what occurred in order to save their reputation and limit public anxiety. This key public awareness effort and costs associated with the campaign can be covered under specialty coverage known as Crisis Management or Crisis Communication Coverage.  Coverage can be purchased as a stand-alone policy, by endorsement to the CGL or Umbrella and some companies are including limited coverage in a “bucket” of coverages they add to their policy.  Liberty Mutual, for example launched a crisis management insurance endorsement to their umbrella policy with a standard limit of $50,000 with additional coverage up to $250,000 available.

See the entire Business Insurance article at:

Some insurance companies, such as Philadelphia Insurance Company, includes Crisis Management coverage in their package policies.  The coverage language will vary slightly and a number of specifically described coverage responses are included within this “bucket” limit.

Another crucial component to reacting to a crisis of this type is to be pro-active in having a Crisis Risk Management Plan in effect. This goes way beyond the issue of mitigating the loss when it happens to. What is important to address is the “long –term “effect of such an incident that stays in the minds of potential customers long after the problem has been remedied.

Taking all necessary measures to make sure they have eradicated the problem with safeguards put into effect that it will not occur again.

The outbreak of HPS has been linked to a higher rodent population in the national park.  The National Park Service currently has assigned two epidemiologists to work in the park trapping rodents for testing. Additional studies are being done to determine if the Yosemite rodent population is higher than normal after a record snowpack in 2011 provided ample water for the grass seeds mice favor.

“Rodents and mice are native to the park, but we are looking at the populations and working with our wildlife biologists to determine if the population is too high,” Gediman said. “There are rodents here, and we could never trap them all so that’s not going to mitigate it.” Since the first illness was reported earlier this month, employees of Delaware North disinfected all 408 canvas-sided and wood-sided cabins in Curry Village. Workers are in the midst of shoring up the cabins in an attempt to keep mice from have easy access.

It is clear from this report that the park is taking significant measures to identify the problem; contain the problem but, admittedly, cannot eradicate the cause of the problem which is indigenous to the area.

On September 26, 2012, California public health officials and researchers announce that a groundbreaking series of studies of this rare disease have been launched and they will essentially be using the 1,200 square mile park as its natural laboratory to gain insights into this disease and its transmittal to humans.  Public health officials are also developing a voluntary medical screening of the parks’ 2,500 plus employees.

And all of this comes at a cost to the park which, for all practical purposes, is not a cost that would be covered by insurance.  Perhaps you are thinking Extra Expense would pay for these extra costs—but, look more closely at what caused this loss!

Loss of Income and Extra Expense
This is the easiest insurance answer of them all—no coverage.  It is true that the park is suffering extra expenses; it is true that the park can demonstrate that they lost income directly as a result of the illnesses caused by the rodents; it is true that the park will suffer a long-term effect of this loss to the public perception of this loss and fear to re-visit the area. The Insurance Journal Article of August 29, 2012:   “People with reservations in the affected cabins are not being notified before arrival, but they are being warned during check-in to report any sightings of mouse feces. Rangers are handing out information brochures at the park entrance warning people to avoid mice in general and mouse droppings in particular.”

This statement comes as somewhat of a surprise to me that the park would not be notifying people who have reservations about the outbreak and potential danger.  It is reported that many visitors have cancelled their reservations that have become aware of the situation in the park.

However, this loss does not meet the required elements of a covered loss under Business Income or Extra Expense coverage.  Specifically there is no direct damage AND there is a specific exclusion in the Special Cause of Loss form for:  “Nesting or infestation, or discharge or release of waste products or secretions, by insects, birds, rodents or other animals.” CP 10 30 10 00.

The loss of income, in this cause arises from the “bodily injury” (illness and death) as a result of rodent waste products.  Neither Business Income nor Extra Expense will come to pay in this loss.

Financial Loss to the Individual due to cancellation of their registration
The internet is taking advantage of showcasing this incident as to why an individual would need Travel Insurance. As a result of the outbreak Delaware North Cos Parks & Resort’s spokeswoman Lisa Cesaro said : “for us, we’ve had unprecedented cancellations.  There was a 20% cancellation rate on Labor Day weekend that should have been sold out. There is travel insurance and travel cancellation insurance available by many insurance providers.  Needless to say, we have to check the provisions of these policies carefully to make sure that this type of incident would be covered and reimburse the traveler for any costs they incur for cancelling their travel.

Liability Concerns
Now we look to what is going to become a focus in this loss.  Specifically if there is any liability on the part of the park and the specific living quarters that where the infections were contracted. It is reported that the tent cabins were “questionable” mentioning they  were built in 2009, meaning that up until this year people had stayed in them following harsh winters. This was the first season in which people stayed in them after a mild winter.

Jim Patton, curator and professor emeritus of integrative biology for the Museum of Vertebrate Zoology at UC Berkeley, believes the tent cabin conditions at Curry Village had more to do with the spread of the virus than the mouse population or the amount of pathogen circulating among rodents.

Eight of the nine people who contracted the disease in Yosemite slept in the higher-end “signature” tent cabins, on the east side of Curry Village between early June and mid-July. The other victim hiked and camped around the same time in Tuolumne Meadows and the high sierra camps about 15 miles away.

Read more:

So, that leads us to a number of issues regarding liability insurance.  The first is whether or not the Park is vulnerable to any lawsuits for injury or wrongful death.  More and more information is coming to light, but here is what is known at this time:
Approximately 10,000 tourists visited Yosemite National Park this summer and 12,000 in campsites in the surrounding area.  An unknown number of those may have been exposed to the Hantavirus.  It appears that Park employees+ and private concession camp employees may have been aware of the infestation going back to 2010.  Visitors were not notified until the recent deaths made notification a requirement.

Lawyers are still deliberating whether or not there is adequate evidence of negligence to form a class-action lawsuit, but are clearly looking at individual litigation in the known cases of injury and death.

Legal liability?  If it is shown that Park staff knew and did not disclose, absolutely the attorneys are going to argue for negligence.

As a personal aside:  Fear of disclosure and cover up has caused irreparable harm over the years.  The thought that this could be the situation in my beloved Yosemite is personally very disturbing.  I spent every summer while growing up with my family there and believe that there is not a more beautiful place on this earth.

Well, let’s move on to the issue of “occurrence”.  The general liability policy defines this as “an accident, including repeated exposure to substantially the same general harmful conditions.”  So, it is possible that all of the injuries and wrongful death claims will be treated as a single occurrence, thus triggering the typical $1,000,000 limit of liability on the CGL.  If there is a sizeable deductible or self-insured retention on that CGL, the adjusters may argue that each even is its own occurrence (even if the inhalation of the virus took place over days or weeks).  Now is the time that you would like to see to things in the coverage structure:  (1)  If there is a deductible or retention, a policy aggregate to stop the loss to the insured  (2)  An Umbrella policy with really high limits of liability.  At this point, there is no way to determine the number of injured parties, some of whom may not even yet be aware that they have been injured.

That leads us to the next issue, which is the statute of limitations.  In California the statute does not begin until the date of discovery.  That means another two full years, at least, until the suit must be filed to stop the statute from applying.  Since many of the visitors are families, for the children, the statute is tolled until the child reaches its age of majority (18) and then a full two years after that.

Now, the last item is not a good one and that is the Fungus or Bacteria exclusion endorsement.  This liability exclusion doesn’t just confine itself to these two items, regardless of its name.  Now, I am not a scientist, researcher or physician, but I believe that bacteria is not a virus and thus this exclusion does not remove coverage.  But I am not going to bet against claims adjusters taking a really hard-line on this one.  Since the researchers and health officials are quick to point out that not a lot is known about this disease, Note also that some insurers do not use the standard ISO exclusion endorsement, but rather strike out on their own and remove all coverage for any microorganism or known or unknown pathogen.

The last area of discussion are the employees.  We might as well conclude this article on another easy insurance note:  If the employees are infected are they covered?  You bet.  Remember, AOE –COE (Arising out of and in the course of employment).  I think it is of interest that they will all be used as “voluntary” medical screening.  Hopefully, the Park will develop a really thorough disclaimer and release before the volunteers line up.



Written by:
Laurie Infantino AFIS, CISC, CIC, CRIS, ACSR, CISR
President, Insurance Community Center
Director of Education, Insurance Community Center



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My Dog Ate My Homework – That’s the excuse people used to use!

You know that old excuse—“my dog ate my homework”. 

Cross section of a metal-core catalytic converter


Well, try this one—someone stole the catalytic converter from my car. I first heard this excuse when my sister, who is a psychologist, called during her work day and told me her patent had just cancelled their appointment. She said it was the second time that month that her patients used the excuse that their catalytic converter had been stolen and they had to get their car to the shop. I decided to look into this phenomenon to see if it was a trend or my sister had just lost her popularity. I was surprised to find out the facts.

Covered Not Covered: Stealing Catalytic Converters from Cars

It appears this crime is not a new one but has become more popular with the rising cost of platinum. The New York Times reported as far back as 3/29/2008 in an article titled: “Thieves Leave Cars, but Take Catalytic Converters” just how prevalent this type of theft was becoming. In the article they wrote: “The catalytic converter is made with trace amounts of platinum, palladium and rhodium, which speed chemical reactions and help clean emissions at very high temperatures. Selling stolen converters to scrap yards or recyclers, a thief can net a couple of hundred dollars apiece. Exactly how much depends on the size of the car and its converter. But even a little bit is worth a lot. Converter thefts are the quickie crime du jour, not only in Chicago, where workers in auto body shops and other experts say it is increasingly a nuisance, but anywhere cars are, which is to say basically everywhere.

“These are definitely occurring more than they have in recent memory, and why that is, is definitely tied to the price of precious metals within converters,” said Frank Scafidi, spokesman for the National Insurance Crime Bureau. Replacement converters usually start around $450. When you start getting into the larger S.U.V.’s, it’s $1,000-plus, said Don Tommasone, owner of Village Automotive, a car care center just outside the city. The larger the catalytic, the more platinum. That’s the ones they’re stealing. It’s also easier to crawl underneath them. They don’t need to jack up the vehicle, they just saw it right off.”

This is not just a crime that affects the individual owner of a vehicle but is also prevalent at used car lots, especially those that have poor security. The thieves can make a big hit by stealing the converters from all the cars for one big score. In a youtube video, the story is told of a car lot in Camp Washington where all 47 vehicles on the lot had the converters stolen for an estimated loss of $20,000. The owner of the lot estimates it takes less than three minutes to steal the converter and done by simply cutting off the unit. Other articles report of these theft occurring at auto repair shops and new car lots.

Now for the Covered Not Covered question, starting first with the individual’s Personal Auto Policy. Clearly the theft of the Catalytic Converter is covered under the Comprehensive or Other Than Collision Coverage on a Personal Auto Policy. It is, of course, subject to the deductible. What we know is that in today’s economy our personal lines clients are trying to save money on their insurance and it is not uncommon for them to be carrying higher deductibles in the $500 and $1000 range or more. Which means the loss would fall below their deductible.
As for the 47 vehicles stolen off the used car lot, we would look to the Dealers Open Lot Coverage. Most of these forms will have a deductible per vehicle, for example $1,000 or $2,500. Some policies will be written with deductible based on “car limit”, for example a 5 car maximum limit deductible. Policies can be issued with a maximum deductible during a 12 month period, for example $150,000. This entirely depends on the policy being issued. In the example of the 47 vehicles and a loss of $20,000 would work out to be only an average of $425.00/vehicle which might fall below their deductible. An auto repair shop would have the same issue on their Garage Keepers Physical Damage coverage with the deductible per auto or loss with an annual aggregate deductible.

The only silver lining in this story is that I have been reassured that my sister has not lost her touch and her patients were telling the truth. The bad news is that this loss is happening everywhere and could happen to you.

Written by: 
Laurie Infantino AFIS, CISC, CIC, CRIS, ACSR, CISR
President, Insurance Community Center


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Cyberbullying: A Growing Social Phenomenon

English: Es...

What is cyberbullying?

“Cyberbullying” is a tactic used against children by use of technology to embarrass, threat, harass, humiliate or target them.  This can take place on the Internet, using such forums as Facebook or YouTube or mobile phones.  This term is used when it is an attacking minor against a target minor child.  When an adult becomes involved in the attack, it is referred to as cyberstalking or cyberharassment.

While bullying has been common problem for centuries, the use of technology has allowed the attacks to remain anonymous, at least for a time, and as a result, provide a forum for children that might not otherwise participate to do so.  Some recent studies:

• Ipsos, Published 1-2012 found 12% parents (worldwide) say their child has experienced cyberbullying
• Consumer Reports 2011 (US) found 1,000,000 children were harassed, threatened or experienced cyberbullying  on Facebook in the past year
• Cyberbullying Reasearch Center found 20% of students experience cyberbullying

On-line social sites and instant messaging seem to be the most common delivery method.

When schools try to get involved by disciplining the student for cyberbullying actions that took place off-campus and outside of school hours, they are often sued for exceeding their authority and violating the student’s free speech right. They also, often lose.

The results of this type of harassment for the victim range from embarrassment, humiliation, stress, anger, and in a some cases, suicide of the injured party.

That brings us to insurance:
Homeowner’s or Personal Umbrella policies:
Currently, there is no standardized approach to this type of liability claim.  However, last year, AAIS filed an exclusion that specifically removes coverage for “electronic aggression” in their Umbrella form.  Electronic aggression is defined by AAIS as “including but not limited to harassment or bullying committed by means of an electronic forum, including but not limited to a blog, an electronic bulletin board, an electronic chat room, a gripe site, a social networking site, a website, or a weblog; or by other electronic means, including but not limited to email, instant messaging, or text messaging.”

There is an exclusion that may apply in the standard ISO for expected or intended injury.  The exclusion has been expanded in the past few years to remove coverage whether or not the resultant injury or damage was what was expected or intended by the insured.

ISO has also created an option endorsement to specifically provide coverage for this type of loss.  Check with your insurance companies for availability.  The endorsement would “generally provide personal injury coverage to an insured with respect to personal injury arising from specified offenses including oral or written publication, in any manner, of material that slanders or libels a person, disparages a person’s goods, products or services, or violates a person’s right of privacy,” says ISO spokeswoman Katie McFadzean.

The lawsuit may include defamation, invasion of privacy, disclosure of privation information, intentional infliction of emotion distress.  An additional allegation may be directed toward the parent:  negligent supervision.  While the intentional act may be excluded, negligent supervision may still be covered.  One of the questions that this brings up, can a parent be held liable as well as insured for the actions of their children.  The answer is, maybe.  Various jurisdictions in the US have differed in their approach.  Some courts have found that in the absence of a specific exclusion for negligent supervision in the policy, that act is independent of the intentional act language and have allowed coverage.  Other courts have found that the broadened intentional act exclusion applies to both the act and the causation of negligent supervision.

So, with more insurance companies paying attention to this growing area of risk, you need to discuss ways to mitigate, not only possible harm to the insured’s own child, but the possible uncovered lawsuit if the insured’s own child gets caught up in cyberbullying another.

Check for signs:
• Look for changes in behavior, such as nervousness or social withdrawal, suddenly hiding the computer screen or closing cell phone abruptly
• Trouble sleeping
• Drop in academic performance

Reduce the risks of cyberbullying:
• Put the computer in the public area of the house – not in the child’s own room
• Check their social networking sites.  They must “friend” the parents.
• Check their email and text messages
• Educate the child about cyberbullying; reassure them that telling the parents will not make the situation worse, but will be corrected immediately

This change in social behavior is not abating but is, in fact, getting worse.  The child may object that the parent is “invading their privacy”.  It is important that the parent stand firm that it is their job to protect them until grown.

Written by:
Director of Education, Insurance Community Center & President, Segale Consulting Services, LLC


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Popcorn and the Movies – Popcorn Lung Disease

It is that season again—the Golden Globes; Academy Awards and all the fashion and anticipation.  I

List of U.S. state foods

know people who attend two and three movies a day just in anticipation of the big night so they can make “educated” guesses to who the winners will be.

As for me, I go to the movies for one main reason—I love the popcorn AND the butter that I put all over it and go into the dark room and eat every piece one by one.  At least that is what I used to do until I started reading one too many articles on the chemicals in the popcorn—more specifically the flavoring and coloring that is used.  The first article I remember reading was published in USA Today on September 5, 2007 titled:  “Popcorn Makers Work to Remove Chemical”.  The article reported that:

“…The nation’s largest microwave popcorn maker, Con Agra Foods Inc. will change the recipe for its Orville Redenbacher and Act II brands over the next year to remove a flavoring chemical linked to a lung ailment in popcorn plant workers.  Four of the nation’s biggest microwave popcorn makers are working to remove a flavoring chemical after a leading lung research hospital warned that consumers also could be in danger from the buttery flavoring Diacetyl. The chemical Diacetyl has been linked to cases of Bronchiolitis Obliterans, a rare life-threatening disease often called Popcorn Lung…”

Now that’s a disease that was not on my list of neuroses—Popcorn Lung Disease! As I read the article not only was I convinced I had the disease but my insurance brain kicked in gear and I saw all sorts of insurance issues including the obvious Workers Compensation; Products Liability and the potential for Mass Tort Litigation (MTL); the issue of the long term occurrence and which carrier(s) would tender notice and which would tender defense.

Clearly the story did not end there– in fact that was just the beginning.  In an article published on on 10/25/11 titled,  “Diacetyl Popcorn Worker Lawsuit Filed over Health Problems”, details are provided on a lawsuit filed by workers in an Illinois popcorn manufacturer facility for injuries caused by Diacetyl.  The lawsuits are referred to as the Popcorn Lung Lawsuits alleging that the workers were repeatedly exposed to the chemical on their job. The plaintiffs allege they have suffered lung cancer, pulmonary fibrosis, chronic obstructive pulmonary disease (COPD) and other respiratory and pulmonary ailments as a result of Diacetyl exposure. They accuse the manufacturers of failing to warn workers about the risks associated with exposure to the chemical, and of failing to provide for the safety of workers who might be exposed to the chemical.

The list of defendants in the lawsuit is long and far reaching including:  Berje, Centrome, Chemtura Corporation, Consumers Flavoring Extract Co., DSM Food Specialties, Flavor Concepts, Fona International, Frutarom USA, Givaudan Flavor Corporation, International Flavors and Frangrances, Kerry, O’Laughlin Industries, Penta Manufacturing, Phoenix Essantial Oils and Aromas, Sethness-Greenleaf, Sigma-Aldrich Corporation, Virginia Dare Extract and Wild Flavors.

More than 300 popcorn lung disease lawsuits have been filed nationwide, with most of those coming from employees of popcorn manufacturers. However, a growing number of popcorn consumers have been diagnosed with the disease and have filed lawsuits against companies that manufactured or used the flavoring.  One of the largest awards to date was awarded to a man who worked at a Flavorchem Corp. plant in the Chicago area for $30 million in a Popcorn Lung lawsuit. According to a report in the Joplin Globe, the verdict is the largest rendered to date in a lawsuit involving the chemical Diacetyl, an ingredient in butter flavoring. The verdict in the case was awarded to Gerardo Solis, 45, who worked at the Flavorchem plant between1998 and 2006 when he was diagnosed with Popcorn Lung. The lawsuit named BASF Corp., a supplier of diacetyl and the world’s largest chemical company, as a defendant.

While some of the larger microwave popcorn manufacturers have stopped using Diacetyl, the chemical is still used in thousands of products, including microwave popcorn, frozen foods, cake mixes and butter flavored cooling oils. Unfortunately, it is not often listed on ingredient labels, so there is no way for consumers to protect themselves from exposure. When the chemical is heated, say in a microwave, it is released into the air in vapor form.

In June of 2007, the Food & Drug Administration (FDA) was informed of a patient who had developed Bronchiolitis Obliterans despite never having worked in the popcorn or flavorings industry. Reportedly, the man had been eating at least two bags of butter-flavored microwave popcorn every day for 15 years prior to his diagnosis. The FDA is now investigating to see if his disease is linked to the consumption of Diacetyl in microwave popcorn. Watson’s doctor theorized that the inhalation of Diacetyl fumes from bags of microwave popcorn caused his illness.

As we look at the various lawsuits and insurance response the issues of occurrence; application of deductible; and SIR are at the heart of the arguments.  In the case of International Flavors & Fragrances, Inc. v. Royal Ins. Co. of America (Appellate Division, First Department; 10/30/07) the specific issues of Toxic Popcorn Long as relates occurrence, deductibles and SIRs were discussed.  In the case, a number of employees of a manufacturing plant claimed toxic exposure to substance found in butter flavoring. The battle, not uncommon in claims of this nature, was between the insurer and the insured over the number of occurrences as each was subject to its own deductible for products liability claims.

International Flavors & Fragrances, Inc. (IFF) entered a declaratory judgment action against its insurers, including AIG seeking a declaration of coverage under eight general liability insurance policies in connection with a class action lawsuit filed against plaintiffs in Missouri by 30 current and former employees of nonparty Gilster. The underlying plaintiffs alleged that IFF manufactured and sold butter flavoring to Gilster used in microwave popcorn packaged in its Missouri facility. The butter flavoring contains diacetyl was alleged to cause lung impairment and other respiratory system injuries. IFF admitted that at least 18 separate shipments of butter flavoring were sent to the Missouri plant from 1992 through 1996. In dispute is the application of deductibles or “self-insured retentions” (SIRs) in the amount of $100,000 or $50,000 for each “occurrence,” which is uniformly defined in all of the policies as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”

AIG claimed each personal injury claim was a separate occurrence which applied a separate deductible. IFF claimed that the exposure was a single occurrence with one deductible. After a long and fairly well-reasoned discussion, the court determined that under the language of the policy, there was no occurrence without injury and there was no injury until there was exposure and illness. Accordingly, the court found that each individual plaintiff suffered an accident upon being injured by the exposure so there were 30 accidents, and not one.

And the cases continue to be filed across the country.  So not as to ruin your next experience at a movie theatre or at home while watching the awards show I suggest you consider vodka instead of popcorn.  At least that is what I am doing this year!


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