Commercial Insurance Rates Drop

The insurance publication "The Standard" reported in the 1/29/10 issue that commercial insurance rates continue to drop. The article reports on average a 6% drop, about the same as last quarter.



This is certainly what I see in the marketplace. However, if you do not bid your insurance, you may not see further reductions. Competition is the best way to get the best rates and coverage.



If you have not bid your insurance in the past 3 years, do it at your next renewal.

Fire Inept Insurance Agents

The finance director of a rather large nonprofit called me a few weeks ago. She was having trouble with her agent and was unsure as to the quality of their coverage. She described a pattern of unresponsiveness from the agent.



I prescribed a review of the policies and then a plan of action based on the review.



I found several coverage issues as well as the fact that the organization had two D&O policies - one for the main org and one for a subsidiary.



I drafted a letter to be sent to the agent outlining the issues and asking for quotes and clarification. The client and I agreed that we would give the agent a second chance but keep him on a short leash.



A week after the letter was sent my client called the agent. No response. A few days later, same thing. Yesterday he called her and promised an email last night and a call today. He never followed through.



I advised my client to call the commercial lines manager and demand that the account be assigned to another agent.



Insurance agents are paid to serve the insurance buyer. Without the service who needs an agent?



Fire inept agents. They rarely reform. Their lack of service costs you time and money.

Earthquake is Not Covered!

The horrible events in Haiti means that many of my conversations with clients include questions about earthquake.



Here is the short answer... Standard property insurance policies exclude earthquake. Home insurance excludes it and business property insurance excludes it.



The following exclusion is from a commonly used business property insurance policy:



B.1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.



b. Earth Movement



(1) Earthquake, including any earth sinking, rising or shifting related to such event;



(2) Landslide, including any earth sinking, rising or shifting related to such event;



(3) Mine subsidence, meaning subsidence of a man-made mine, whether or not mining activity

has ceased;



(4) Earth sinking (other than sinkhole collapse), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil condi- tions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.



But if Earth Movement, as described in b.(1) through (4) above, results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion.



(5) Volcanic eruption, explosion or effusion. But, if volcanic eruption, explosion or effusion results in fire or Volcanic Action, we will pay for the loss or damage caused by that fire or Volcanic Action.



In most areas the coverage is available at an extra premium - sometimes a great deal of extra premium.

Appeals Court holds that exception to pollution exclusion allows coverage for common law liability, even when such liability overlaps 21E liability

In Clean Harbors Envtl. Servs., Inc. v. Boston Basement Techs., Inc., 75 Mass. App. Ct. 709 (2009), Basement Technologies, while installing a waterproofing system in the home of Silva, broke a heating oil line and caused 150 gallons of oil to leak into Silva's basement. The oil collected in a sump pump, which then pumped the oil into Silva's yard.

Basement Technologies hired Clean Harbors to clean up the oil spill. Clean Harbors billed Basement Technologies $12,638.40 for its services.

The Massachusetts Department of Environmental Protection issued a notice of responsibility to Basement Technologies pursuant to G.L. c. 21E, which identified Basement Technologies as a potentially responsible party, and therefore strictly liable, for the costs of remedial actions at the property.

Basement Technologies sought payment of Clean Harbors' invoice under its commercial general liability policy with Admiral. Admiral denied the claim on the basis of a pollution exclusion.

The pollution exclusion excluded coverage for "(a) Request, demand, order or statutory or regulatory requirement that any insured or others . . . in any way respond to, or assess the effects of, 'pollutants'; or (b) Claim or 'suit' by or on behalf of a governmental authority for damages . . . in any way responding to the effects of 'pollutants.'"

The pollution exclusion had an exception for "damages because of 'property damage' that the insured would have in the absence of such request, demand, order or statutory or regulatory requirement, or such claim or 'suit' by or on behalf of a governmental authority."

The Massachusetts Appeals Court noted that absent the action by the DEP, Basement Technologies would still be liable in negligence to the property owner for damages caused by the oil spill.

Admiral argued that the Clean Harbors expenses were not covered, because those costs were part of the response actions required by the DEP. Basement Technologies argued that damages recoverable against it at common law, including clean up costs, were covered.

The court noted that liability under 21E often exceeds common law liability. It concluded that the exception to the pollution exclusion extends coverage to common law liability which would exist if there was no liability under 21E, even if liability under common law and 21E overlap.

Five Little Known Facts of Life Insurance That Can Have Big Implications for Older Americans

Many older Americans continue to struggle with finances in retirement as a result of the recession. Life insurance in particular can represent a tremendous burden on a retiree's finances, as premiums can rise swiftly and unexpectedly later in life. Senior citizens should educate themselves early about the potential cost of life insurance as they age in order to be properly prepared.

In particular, five specific characteristics of life insurance can significantly increase expenses for those on a fixed income. Senior financial resource Golden Gateway Financial explains these little known facts and possible solutions.

1. Avoid Fast Rising Premiums
Life insurance premiums can rise significantly and suddenly for older Americans, creating challenges for those on a fixed income. Premiums for universal life insurance (also known as flexible premium whole life) rise in cost as the consumer ages because the insurer factors in higher mortality risk. A sample premium table (fig 1.) shows that premium increases usually begin their steep rise around age 70 or 75.

For those on a fixed income this sudden increase can become unaffordable. If the policyholder needs to maintain coverage, one option is to reduce the face amount of the policy. Options for unneeded or unaffordable policies include selling or surrendering the policy.

2. Monitor Term Insurance Increases
Term life insurance has two points at which premiums can take a big jump. The first is at renewal. At the end of most term policies, if the owner cannot or will not convert the policy, then they must either discontinue coverage or undergo a new medical underwriting in order to get a new policy. This will often lead to higher rates.

There are also term policies that begin with level premiums, but then increase dramatically as the insured ages. These sample rates (fig. 2) for a healthy, non-smoking male demonstrate this significant increase.

3. Pursue Payouts from Policies
Most life insurance never pays a death benefit, meaning most policies never realize their original intent. According to the Insurance Studies Institute, this number is as high as 85 percent of all policies. In those cases, policy owners often leave a significant amount of money on the table. For example, in 2005 policy owners stopped paying premiums on 19.8 million policies worth $1.1 trillion (Insurance Information Institute).

Policy owners should monitor their policies closely and be aware of all the life insurance options available to them so as not to leave their money on the table. These can include adjusting beneficiaries, choosing to receive cash value, or selling their policy in a settlement.

4. Avoid Cash Surrender Fees
Be wary of the cash surrender option with a life insurance policy. In many instances, if you choose to access the cash value in your policy, you'll have to pay a surrender fee. These fees vary by insurer, and can be substantial. Seek other options for generating cash from your policy such as life settlement or -- if your policy allows -- taking dividend payments.

5. Be Aware of Policy Maturity
The majority of life insurance policies are only valid through age 95 or 100. If the insured is still alive at that point, then the policy matures and the carrier will pay out the cash value. However, if the senior had previously relied on the cash value to pay for the policy's increasing premiums, then they could be left with little to no benefit at maturity. One way to address this is to inquire about a life extension rider that can extend the maturity date to 120 years of age.

Another option available to those policy owners facing unexpectedly increasing premiums or those who are considering allowing their insurance to lapse is life settlement. Life insurance was classified as an asset by the Supreme Court in 1911, and as such, can be sold just like a house or car. This is useful for those older policy owners seeking to turn an unneeded or expensive policy into cash.

A recent study found that more than 80 percent of older policy owners did not know they could sell their policy for cash. This means that many policy owners simply allowed their policy to lapse or accepted a cash surrender value instead of seeking a more lucrative life settlement.

5 things about life settlements

1. Your parents may be getting sold on these
In some retirement hot spots, such as South Florida, advertising for "life settlements" is ubiquitous. The pitch? Sell us your permanent (cash-value) life insurance policy and you can have a chunk of the death benefit now. In exchange, the company buying the policy becomes the owner and beneficiary and gets the full payout when you die.


Most settlement firms want policies likely to pay off within 10 years, so the elderly are prime targets. For those who anticipate running out of money, it's an appealing idea.

You'll probably hear this sell more often in the coming years: Wall Street is turning pools of insurance policies into tradable securities (as it did with mortgages), which will increase investor demand.

2. It's hard to know a good deal from a bad one
The life settlement industry is run by small investment firms, and there isn't a central marketplace to solicit bids. So there's no "going rate." A 70-year-old man with high blood pressure and heart disease could get offers from $116,000 to $162,000 for a $1 million policy, reports broker Golden Gateway Financial (compared with about half that if he surrendered it to the insurer). Thus, it pays for anyone considering a settlement to get several bids.

3. Brokers help obscure the process
Since many settlement firms won't deal with consumers directly, shopping around typically means going to one or more brokers. But brokers' fee structures vary widely -- from 1% of the death benefit to 15% of the difference between the offer and the policy's surrender value -- and they're not always transparent. That makes it tricky to compare offers, says Connecticut insurance commissioner Thomas Sullivan. So ask for the offers minus all charges.

4. Your insurer hates them
Insurance companies assume some policyholders will stop paying premiums -- meaning the firms will have to foot only a small surrender value, vs. a big death benefit. Since investors make good on policies that might otherwise lapse, insurers pay more death benefits, which makes them none too happy.
0:00 /3:13Not saving enough to retire

That's led many insurers to sweeten the payout for surrendering. Some even let you partially cash out but keep the policy active at a lesser death benefit. It's worth asking the insurer what it could do for you, and weighing that against settlement offers.

5. There are alternatives
Before taking a settlement, "you have to ask, 'Who will go unprotected if this policy is sold?' " says Steven Weisbart of the Insurance Information Institute. If it's your parents who can't bear the premiums, you may want to help. It'll be worth your investment if you stand to inherit, or if keeping the policy in force means you won't be financially supporting Mom when Dad passes on.

If your folks just need money but still could benefit from the policy, help them consider other options, such as selling their home or taking out a reverse mortgage. To top of page

What Is A Policy Change Clause For Low Cost Life Insurance?

Life insurance can be one of the best financial tools you have even if it is low cost life insurance. It helps ensure you family’s financial future and can also give you some income under certain conditions, or when it reaches a certain term. It all depends on the clauses that are included in the low cost life insurance policy.

When you first purchase a life insurance policy it is important that you read through all the clauses as these will stipulate the amount, how and who receives your life insurance benefits.

When referring to beneficiary, this is the term that defines who receives the life insurance proceeds when you pass away. This can be your children, relatives, or your spouse and this clause can be modified as needed throughout the years. For instance, you may want to change the beneficiary if you first placed your parents as beneficiaries, but they then pass away, or you can also change it if you have placed your spouse as beneficiary and later you divorce. This is why you should take your life insurance policy out once a year and go over it and make sure everything is in order.

Your insurance provider usually places a policy change clause in any low cost life insurance policy. This gives the provider the right to challenge the validity of the policy during the first two years that the policy is in place. This means they can void the policy if they find that you have concealed any pertinent information.

For instance, if you hid the fact that you were a smoker or a drinker, so that you could get a lower premium, and the provider encounters this then they may decide not to pay a claim if the death occurs within the first two years of the policy.

After this initial two year period passes, then the policy will be enforced and there cannot be a challenge to any of the clauses.

Personal Injury

Most business people are familiar with the bodily injury and property damage coverage within their general liability policy.



There is another coverage section that is less understood. Personal injury coverage.



Think of this as coverage for hurt feelings - libel, slander, false arrest, wrongful eviction, advertising injury, and violation of privacy.

Painful Symptoms Alone Insufficient to Claim Non-earner Benefits

Mangallon v. T.T.C. Insurance Company Ltd., FSCO A07-001813, December 18, 2009

A FSCO decision recently confirmed the stringent test for entitlement to non-earner benefits.

Ms. Mangallon was injured on October 27, 2005 when the rear doors of a T.T.C. bus suddenly closed on her as she attempted to board. She applied for a non-earner benefit, which T.T.C. refused to pay. T.T.C. argued that the incident was a minor one and did not result in an impairment that affected the claimant’s ability to function to a degree that would qualify her for a non-earner benefit. T.T.C. took the position that Ms. Mangallon’s post-accident headaches, dizziness, whole body pain and depression pre-dated the accident and were due to long standing and serious heart disease, diabetes and depression, which were not related to the accident.

The arbitrator agreed with T.T.C. Arbitrator Sapin held that the test for entitlement to a non-earner benefit is stringent. An impairment sustained in the accident must be one that continuously prevents the insured from engaging in substantially all of the activities in which she engaged before the accident. Arbitrator Sapin quoted from the Ontario Court of Appeal decision in Heath v. Economical stating that where pain is the primary factor, “the question is not whether the insured can physically do these activities, but whether the degree of pain experienced, either at the time, or subsequent to the activity, is such that the individual is practically prevented from engaging in those activities.” Arbitrator Sapin further held that accident related pain, suffering or disability that interferes with daily living or makes it difficult may not be sufficient to qualify a person for a non-earner benefit. This is the case even though such pain might entitle the person to damages for pain and suffering in a tort action. Arbitrator Sapin was not convinced that Ms. Mangallon met the test for non-earner benefits.

By confirming the stringent test for entitlement for non-earner benefits, this decision may serve to limit the number of claims for non-earner benefits, especially in cases where the claimant has substantial pre-accident history and causation of his or her post-accident symptoms is doubtful.

Actual Cash Value

In the realm of property insurance is the issue of valuation. How much is something worth, and how much will the insurance company pay for a covered loss to that property?



Two primary insurance valuation methods - replacement cost and actual cash value.



Replacement cost is the - wait for it - cost to replace an item new.



Actual cash value is usually defined as replacement cost minus depreciation.



Depreciation in this case is not accounting depreciation. The adjuster will look at the useful life and condition of the property to come up with a depreciation factor. There is no rule or concrete calculation. It is largely a negotiated factor. Some states require that market value be included in the calculation.



All this should be utterly unimportant to most of you reading this as you SHOULD have replacement cost coverage. For most insureds, the desire after a claim would be to replace the item. If so, buy replacement cost insurance and avoid actual cash value.

BMC Appellate Division holds that attorney not authorized to bring PIP subrogation claim on behalf of insurer is not entitled to attorney's fees

In Ulysse v. Safety Ins. Co., 2009 WL 5154970, Ulysse, insured by Safety, was in a car accident with Derek Roy, insured by NE insurance. Ulysse was represented by an attorney in connection with the accident.

Safety paid Ulysse PIP benefits for medical treatment amounting to $3,070.74. Ulysse, with the assistance of his attorney, settled his third-party claim against Roy and his insurer for $13,000. Ulysse executed a release which included a provision that the settlement "includes consideration for any monies which have been paid for or which may be due in the future from any applicable PIP auto insurer." Ulysse's attorney agreed to be responsible to repay Safety any moneys owed in connection with PIP payments made by Safety to Ulysse. (See this post for an explanation of what that agreement refers to.)

Ulysse, through his attorney, sent a letter to Safety proposing to pay Safety $1,954.63, which was the amount Safety paid Ulysse in PIP benefits reduced by attorney's fees and costs. Safety had not authorized Ulysse or Ulysse's attorney to settle the PIP reimbursement claim on its behalf. It disregarded the proposal and received the full PIP reimbursement of $3,070.74 from NE Insurance.

At issue in the case was whether Ulyesse's attorney was entitled to attorney's fees and costs for the collection of the PIP subrogation amount.

The Appellate Division of the Boston Municipal Court held that he was not entitled to attorney's fees, because he was not authorized by Safety to settle its PIP reimbursement claim.

There are a number of things about this case that seem odd to me, including: 1) If NE Insurance thought it was settling the PIP reimbursement claim when it settled the third-party claim, why did it later pay the PIP reimbursement amount directly to Safety? 2) Assuming that, as is usual in such cases, Ulysse's attorney was representing Ulysse pursuant to a contingency fee agreement, he would have received one third of the total settlement amount. Once Safety rejected his proposal to send it PIP reimbursement less attorney's fees, the part of the settlement that represented the PIP reimbursement claim should have gone to Ulysse less the usual one third contingency fee. Having been paid, why did he also seek this amount from Safety?

It is also worth noting that Ulysse appears to have been given a double recovery. He received PIP payments from Safety, and also received PIP reimbursement from NE Insurance. Settlements are, of course, an art not a science, and absent any clear documentation that part of the settlement was for a PIP reimbursement claim a double recovery theory would not go very far.

Mysterious Disappearance

Your watch is missing.



Was it stolen, or did you misplace it?



The distinction could be important when it comes to your insurance coverage. Check your property insurance policies for limitations to coverage for burglary and robbery. Assuming an item was stolen is not the same as knowing it was stolen.



Another great reason to understand the insurance coverage you buy.

Loss of Your Records

Valuable papers insurance will pay to help you recreate your business records lost in a fire. Standard fire insurance will pay for the equivalent blank paper lost (yes, blank copy paper). Valuable papers insurance will pay for clerical help, and the expense of gathering the information lost.



Big deal! You're better off protecting the records you need. Be more specific here. You're better off protecting the records from being lost in a fire in the first place.



First, move your operation to digital copies of records. Scan and store paper documents. Back the information up.



If you must have paper files, plan to protect what you have.



The most vulnerable documents are those you are working on now. What's on your desk is at risk. Put your important papers away. Frankly, standard file cabinets do a pretty fair job protecting records. The best paper storage receptacle, though, is a fire rated file cabinet or vault.

The Ten Commandments of Data Backup

I Thou shalt have a plan to backup your data.



II Thy plan must include laptops.



III Remote-est locations such as home-eth offices and telecommuters must be included in thy plan-eth.



IV Thou shalt test thy backup plan by deleting-eth a file and retrieving it to its proper place from thy backup.



V Your plan is run by mortals and will therefore devolve into chaos without review, testing, and monitoring.



VI Testing should be done without-eth any warning to your IT people -- just to piss-eth them off.



VII Thou shalt store backups off site, as mayhem will occur.



VIII The more complicated-eth your plan is, the more screwups will occur - think automatic-eth.



iX Include-eth hardware in your backup plan - how wilt thou get replacement hardware fast?



X Rince-eth and repeat-eth.

Consumer Protection Laws Are Risky To You

Understand the Consumer Laws That "Protect" Your Customers



Go to your state's website. Search the term, "consumer protection." You may be surprised at the breadth of protections, prohibited practices, anti-trust issues, and the like that are outlined.

- Hide quoted text -



Think of the negative publicity that can come from a local news story outlining your failure to follow what your state considers, "fair trade practices."



Many states have implied warrantee laws that require retailers and manufacturers to repair or replace goods well beyond the manufacturer's warrantee. Unfair trade practices are a web of rules that can trip you up in your dealings with customers, causing you legal expenses and negative press.

Should you do your own will or use an attorney?

While 98% of my practice is serious injuries, accidents, nursing homes, medical malpractice and disability, I have always helped people with wills and the other documents related to that. I warn parents of minors that they need to specify guardians to raise the children to avoid custody battles.

I offer a package that includes: 1) Last Will & Testament; 2) Living Will; 3) Durable Power of Attorney for Healthcare; 4) Durable General Power of Attorney, for each person, that is 8 documents, with copies and notarization, etc. for $595.00 per couple.

That price was many struck years ago when an acquaintance was charged over $600 for simple wills in Memphis, and I said, "Man I would have done all you needed for that at one time." I have just never gone up.

You are free to use internet forms or bought forms, just like you are to do your own deeds in a closing, set up your own financial planning, and diagnose your own illness with internet resources, obtaining pills directly from the web. (Saves you a doc's visit and fees, I guess.)

However, I did a little probate way back as a baby attorney and can tell you if you wind up broke, or all is unusually smooth, then fine, you saved like $350! But, due to your drafting, If there is but one simple question that needs to be researched or discussed in court at all, that $350. you "saved" will be eaten up in fees in probate, along with more (all that money is shunted from your heirs).

Additionally, there is value to a lawyer's counsel and questions being answered. It's not primarily forms attorneys sell. I encourage you to seek an attorney and not do it yourself, wherever you go. "A lawyers time and advice are his stock in trade" ~Abraham Lincoln

Just my two cents worth.

David B. Peel, Attorney at Law

www.PeelLawFirm.com

Per Location Aggregate Spreads the Coverage

Add a “Per Location Aggregate Limit” to Your General Liability Policy



Your general liability insurance provides coverage for bodily injury and property damage. The policy contains an aggregate limit of coverage – the most the policy will pay for all claims.



If you have more than one location (two offices, two bank branches, a warehouse and a store, etc) read on.



Adding an endorsement to the policy that applies the aggregate limit to each location (rather than to all locations) expands your coverage at very little cost. In many cases, your insurer will add the coverage at no additional premium. Talk with your insurance advisor.

Lost Wallet

A friend lost his wallet recently.



Have a list of the credit cards you carry plus the telephone numbers for the credit card companies.  If you lose your wallet you can quickly call to put a stop to further charges.



Obviously store the list someplace you can access - not in your wallet.

Continuing Education

Last month I completed a self-study class and test on flood insurance as part of my state's continuing ed requirements.  A 25 question test - took me 10 minutes to complete - grade of 100% - earned 3 hours of continuing ed.

Sunday I completed a self-study class and test on insurance ethics.  Again, this was part of my state's continuing ed requirements.  A 25 question test - took me 12 minutes to complete - grade of 100% - earned 3 hours of CE.

So, I now have 6 hours of continuing ed credits after having spent 22 minutes on the effort.

I spent over $5,000 a year on books, subscriptions, and other educational materials.  I research and write articles on all manner of insurance issues.  I read policies and review other reviewer's materials.  None of this earns me a single CE credit.  I spend 22 minutes and $20, and I get 6 hours of credit.

What a screwed up system.  CEs do not protect the public. It just lines the pockets of testing companies, creates bureaucracy, and promotes a tremendous sense of mediocrity in the insurance business.  I'm no better an insurance person for taking those tests.  I'm no more ethical because I can figure out what answers they want to hear.

(By the way, about halfway through the ethics test I realized that the multiple choice option that was the longest was almost always the right answer.  After I finished, I went back.  If I had just marked the longest answer - without even reading the choices - I would have gotten 24 out of 25 right.)

I'm considering a master's degree in insurance from Boston College.  None of that work will gain me a minute of continuing ed.  I called the insurance department and was told there was no way they would approve college classes automatically.  The college would have to submit the classes AND FILE THE FEES.  Clearly, the state values continuing education! (sic)

There, I now feel better.

The To-Do List on Steroids

To do or not to do, that is, quite literally, the question.



Few of us have the memory to keep everything in our heads. The To Do list is a time proven key to success. My approach involves four lists that work together to build a system for achievement, time savings, and success.



List One - A Reminder List



Some writers have called this a mind-dump. A place to put everything, big and little, that goes on in your life. This is a tickler/reminder system. It should include business stuff and personal tasks.



Full Article Here - My Insurance Journal Column

U.S. District Court holds that right to cure breach of duty to cooperate is limited in scope

I wrote here about Miles v. Great Northern Ins. Co., 2009 WL 2998529 (D. Mass.), in which on summary judgment the court punted on the question of whether an insured can cure a breach of the duty to cooperate.

After trial the United States District Court held "[o]rdinarily, an insured's failure to cooperate is grounds for denial of coverage only if the insurer makes an affirmative showing of actual prejudice . . However, there is a limited exception to the prejudice requirement in cases of an insured's wilful and unexcused failure to submit to an examination under oath."

The court stated, "an insured's right to cure a breach of the duty of cooperation is limited in scope, particularly in cases of willful failure to submit to an examination under oath." Miles v. Great Northern Ins. Co., __ F.2d __, 2009 WL 4363211 (D. Mass.)

The court held that under the facts of the case before it the insureds' "willful refusal to comply with the terms of their insurance contract resulted in a material dilution of [the insurer's] rights. . . . Accordingly, there is no legal or equitable basis on which to give [the insureds] a second (or third) chance to comply with their contractual obligation."

Disputes Between Insurers – When does the notice period begin to run?

ING Insurance Company of Canada v. State Farm Insurance Company, [2009] 97 O.R. (3d) 291 (S.C.J.)

This case involved a dispute between insurers as to who was responsible for paying the claimant’s accident benefits. The claimant did not have insurance of her own, but her father had a policy with ING to which she would be entitled if she was “principally dependant” on her father at the time of the accident. State Farm was the at fault party’s insurer. ING initially paid some minor expenses prior to receipt of a completed OCF-1. After receiving the completed application for benefits, ING concluded that the claimant was not principally dependant and sent a Notice to Applicant of Dispute Between Insurers to the claimant and to State Farm within 90 days of the receipt of the OCF-1. Regulation 283/95 provides that the Notice must be sent within 90 days of a “completed application” for benefits. The issue in this case was the meaning of “completed application”. State Farm argued the notice period began earlier than the OCF-1 given ING’s decision to pay benefits; ING argued the applicable date was when the OCF-1 was received.

The court held that the plain language of the Regulation means that the 90 days begin to run when the OCF-1 is received. ING’s decision to pay benefits was the proper thing to do and the purpose of the Regulation is to encourage good claims handling, not penalize insurers.

The interpretation used by the court in this case provides certainty to the 90 day limitation period for serving notice. If the 90 day notice period begins to run at some point prior to the OCF-1 being received, the limitation becomes a more nebulous item and could encourage insurers to avoid making payments until priority disputes are settled. This could disadvantage claimants, contrary to the intentions of the accident benefits scheme. This decision seems to be a sensible way to provide certainty to insurers.

Premium

Your premium is the price of insuring a specific risk over a period of time.

business insurance premiums are determined in a wide variety of ways.

Property insurance premiums are determined by multiplying a rate per $100 times the amount of coverage to be purchased.  A $1,000,000 building with a $.30 rate is $3,000 in premium.

General liability insurance premiums are calculated by multiplying the exposure base (payroll, sales, units, acreage, square footage) times a rate.

Workers' compensation premium is calculated by rate per $100 multiplied by payroll. 

Comparing premiums from one year to another has limited value.  Focus on your rates to tell how aggressive your insurer is being.

creation vs. Evolution Part 3- death and the Haiti earthquake

CREATION vs. EVOLUTION

PART 3 of 12

DEATH – No Second Chances

As I write this, people in Haiti are still struggling to recover from the massive earthquake that toppled most of their homes and buildings. Many tens of thousands are dead, and the actual numbers may never fully be known.

Everyone’s heart goes out to the victims, the orphans, the widows, the amputees and the lost. Heroes of all walks of life and nationalities sacrificed to free survivors from the rubble, render aid to the injured and to reunite the disconnected.

Compassion has prompted millions from all over the world to donate their time and resources. Christian relief agencies are at the forefront of this relief effort, along with secular groups and various military assets.

Every time there is a major disaster, such as an earthquake, tsunami or a flood, people ask an ancient question: “How can a good, all powerful God let evil and suffering happen?”

Interestingly, it is Biblical Creationism that holds the answer.

Death is an intruder. It was never part of the original plan. Our bodies fight to their last breath to live, shutting down blood to the least vital organs first. When a child dies before his parents do, or when a loved one dies in the “prime” of life, it seems wrong deep in our innermost being. When someone, even a stranger, is in peril, we instinctively want to help. Multiplied billions are spent to preserve life and resist death in hospitals and nursing homes. The elderly often spend their wealth to try and reclaim their health. We donate organs to help preserve the lives of those will never even meet. Life itself is at the heart of impassioned debates of capital punishment, euthanasia and abortion. At our core, we recognize the importance and value of life, and resist death at almost any cost. Why?

God created us in perfect world, called Eden. Note that God did not create a world of death, disease, and suffering. The Bible explains in Genesis 1-3 that death came into creation because of sin. Death is the enemy.

Most Evolutionists often will agree that the earthquake was a tragedy. If they argue that death in any scale is somehow evil or “out of place” acknowledges, at a very basic level, that death is the enemy. However, a true and consistent evolutionist would have to agree that death is not only natural, but also fundamentally necessary. You see, unlike creation, the theory of evolution takes a LOT of death to happen! Carl Sagan, a famous evolutionist, explained:

“The secrets of evolution are time and death. Time for the slow accumulations of favorable mutations, and death to make room for new species.”

-Carl Sagan, Cosmos, program entitled “One Voice in the Cosmic Fugue.”

Darwin’s theory requires death and lots of it over long periods of time. Time for evolution to occur and death to remove the weaker forms not able to survive. This allows the “strongest” to survive. Atheistic Evolution can only explain that tragedies like earthquakes should promote the bettering of all of mankind, since death is the means by which “progression” is made. Death, according to evolution, certainly is not all bad.

That does not mean that Evolutionists do not recoil at the scenes of death and suffering. Evolutionists are likely there working right beside others in Haiti helping those injured. Compassion is a human trait that an atheistic worldview does not usually fully remove. I was once a holder of the atheistic evolutionary view and still personally felt moved by suffering and death. The Bible teaches that death is the end of earthly life, and there are no second chances after we breathe our last. In fact, we are all in a second chance here on Earth that God gave the world through His Son.

Atheistic Evolution teaches that all matter and energy merely transforms itself randomly through death, and this life is all there is. But, if there is no Heaven or Hell, no eternity, no God, no final judgment, why does Death seem so…“wrong?”

The Bible teaches that are all one human race in a broken and fallen creation where death has invaded. Evolution teaches that human life is only that of smarter monkeys. God says He sent His only Son to die in our place and to offer Heaven after death. God initially called everything he made “good.” It was not a godless, mechanically random series of death and suffering that gave us the fossils we find. It was the massive flood of Noah’s day that gave us the “second chance” to be here now and laid down the fossil record.

Don’t fall for the claim that Evolution is just science. Don’t believe that it is just some bookish philosophy. It has serious implications. It is incompatible with the clear reading of the Bible. For instance, Carl Sagan implied that death is permanent and necessary.

Ready for some good news? Death, for the Christian, it is but a doorway to Heaven. And, Death is a not even a permanent part of this world. Prior to sin in the Garden, it did not exist. One day in the future, there will again be no death. God will one day “wipe away every tear from our eyes” (Revelation 21:1–8) and restore perfection.

As Brad Paisley wrote in his hit song, “When I Get Where I’m Going”, we will be able to “leave our heart wide open; [we] will love and have no fear.” We will have no fear of loss, no death, no sickness, no famine, no earthquakes, no sin, and no pain. Believers will be those who have used humanity’s second chance to trust Christ. Don’t allow the hollow philosophy of evolution to dilute your faith. Creation provides answers to not only the past, but our present.

Livery and Your Personal Auto Policy

Livery is carrying goods or people for a fee.

There are insurance coverage issues to consider when a business uses a personal vehicle owned by an employee.  Most personal auto policies exclude coverage when the vehicle is used for livery.  The purpose of the exclusion is to remove coverage for a vehicle held out to the public as being for hire - a taxi service or delivery service.

Policies usually specifically allow share-the-ride arrangements and car-pooling.

The question often comes up when a personal auto policy covers a vehicle used for pizza delivery and the like.  In many cases there has been coverage allowed as the vehicle is not for the use of the general public.

The healthcare field also presents issues when a nursing home employee is asked to transport a resident to a store or appointment.  Again, the livery exclusion may not apply (even if a fee is being paid to the employee to cover expenses) as the vehicle is not put out there for the general public.

The safest way for an insurance buyer to handle the situation is to call their agent - preferably before a claim - to find out if there is coverage should an injury occur.

An auto policy may provide coverage.  However, there may be an issue of premium and underwriting.  

Many insurance companies will shy away from the exposure of a pizza delivery vehicle or an insured who regularly trasports elderly people to doctor's appointments.  The insurer may want to charge commercial rates.

Read your policy.  Talk with your agent.  Get good advice.

Insurance issues in Haiti

Here's an interesting article about insurance in Haiti: Haiti Quake Loss Has Little Insurance Cover, Modeler Says.

Are You Indispensable?

I'm about half way through Seth Godin's new book, Linchpin (available Jan 26 - but I'm a friend).

It's very good. Different from his other books, which I consider must reads (Purple Cow, Tribes, The Dip). 

He talks about the need for each of us to be indispensable. 

If you are indispensable you go beyond the normal, the standard, the mundane, the average, the dull, the boring. 

We built a house 6 years ago. After it was done I told my builder that I wouldn't build a doghouse without having him involved.

That's indispensable. 

Build yourself a place in the mind of your clients, your boss, your employees, your partner where they can not imagine being without you.

In other posts here I have touted the need to be remarkable - worthy of remark. That comes from Seth's book, Purple Cow. 

The aphorism is now, "Be remarkable and indispensable."

U.S District Court holds that letter informing insurer of potential claim does not trigger policy endorsement

In Panagora Asset Mgt., Inc. v. St. Paul Mercury Ins., __ F.2d __, 2009 WL 4827478 (D. Mass.), Panagora, an asset management firm, sought insurance coverage for an error it made in an asset portfolio which caused its client to suffer a $2 million loss. Panagora notified its insurer, Travelers, of the error and loss within days of discovering it, before its client had taken any action. It requested coverage under a claims-made policy issued to it by Travelers.

Travelers argued that the notification brought the claim within an "Extension Endorsement" under which Travelers agreed to reimburse Panagora for costs Panagora incurred to mitigate or correct direct monetary damages to a customer. Travelers made this argument because claims within the endorsement were subject to a significantly higher self-insured retention than claims that did not come within the endorsement.

The court held that the letter from Panagora to Travelers did not bring the claim within the endorsement. At the time that Panagora sent the letter it had not received a claim from its own customer and was not seeking reimbursement from Travelers for costs it had incurred in repaying the loss.

C'mon people, liability insurance is good

I found out this morning that my mechanic doesn't have liability insurance. That means I will be finding a new mechanic.

Why? Because anyone can have an off day. Sometimes an off day can lead to a tragic accident. If a member of my family is in a tragic accident because my mechanic is having an off day, life will be a whole lot worse for everyone if there's no insurance.

Years ago I was involved in a case where a garage emptied the oil from an engine and forgot to put more in. Insanely stupid--yes. The sort of thing that one can easily imagine happening? Absolutely. The engine seized up after the car was driven for a mile or two. Nobody was hurt and the claim was only for property damage.

But imagine that the garage had been near a highway entrance and the engine seized up on 128. The car sputters and slows, gets rear-ended by the car behind it, and someone ends up paralyzed. It's a horrible enough scenario with sufficient insurance. Without insurance, unless the injured person is independently very, very wealthy, they are likely looking at a life of poverty. They are unable to work and unable to afford to pay caretakers. A million dollars in an insurance settlement (which conservatively invested may provide $50,000 a year to live on) can be the difference between tragedy and hell.

If I were the owner of the garage I would grit my teeth every time I wrote my insurance premium check. But I would do it, not only to protect my business but to protect my customers

How to Help in HAITI EARTHQUAKE!

World Vision is rushing emergency supplies to thousands left homeless by the 7.0 magnitude earthquake that struck Haiti. World Vision has worked in Haiti for 30 years and has some 370 staff members on the ground. We are distributing emergency survival kits — including food, water, blankets and tents to provide immediate aid to affected children and families.

Also, You can text "Haiti" to 90999. It will donate $10 to Red Cross by adding it to your cell phone.

World Vision:

http://news.worldvision.org/12bbdc251layfousibe52fsaaaaaabkswx37b3oczp4yaaaaa

Who Should Be Named Insured?

One of the most common mistakes I find in my review of insurance programs involves named insureds.



MyNewMarkets.com (a part of the Insurance Journal family) just pointed readers to a checklist the produced a few years ago.



Here are the questions they suggest:



-Are all current legal entities listed/scheduled on the policy (including LLC’s and Joint Ventures)?



-Is the entity listed as the First Named Insured the entity you want to receive all notices and billings?



-Any past partnerships or LLC’s as predecessor organizations?



-Any past subsidiary partnerships or LLC’s?



-Joint Ventures: Any current joint ventures? Any past Joint Ventures?



-Is the insured planning to acquire or form any new entities over the next 12 months? What will the legal structure be?



-Insured planning to take part in any joint venture in the next 12 months?



-Do employees drive their personal vehicles to conduct company business?



-Do employees ever hire or rent vehicles in their own name to conduct company business?



-Are there any contractual relationships requiring any outside entity be named as an Additional Insured (lease agreements, construction contracts, venders, suppliers, members, etc)?



You can download the survey form HERE.

Summary Judgment Not Available in Small Claims Court

Caprio v. Caprio, [2009] 97 O.R. (3d) 312 (S.C.J.)

This Small Claims action involved a dispute between family members over whether a grandmother who gave money to her grandson before she died was giving the money as a loan or a gift. The grandson brought a summary judgment motion and sought to have the action dismissed based on affidavit evidence. Deputy Justice Bale refused to grant summary judgment, holding that summary judgment is not available in Small Claims Court. Bale D. J. refused to follow prior decisions where summary judgment had been permitted using section 1.03(2) of the Small Claims Court Rules, which allows a court to refer to the Rules of Civil Procedure where matters are not provided for in the Small Claims rules. The court held that reference to the Rules of Civil Procedure is for minor matters and cannot be used to create a new and substantial procedure in Small Claims, such as summary judgment.

There are cases going both ways dealing with the issue of whether summary judgment is available in Small Claims Court. Given the new increased monetary jurisdiction of Small Claims Court of $25,000.00, this decision has particular importance. There could now be cases that are within the Small Claims Court jurisdiction that were formally within the Simplified Procedure. Cases that would have been in Simplified Rules would have been susceptible to a summary judgment motion; however, if summary judgment is not available in Small Claims Court, the case must now proceed through to trial. There is no mechanism for an earlier resolution of the claim. It may be that the Civil Rules committee should consider whether to clear up this issue by explicitly providing for the existence of summary judgment or prohibiting its use in Small Claims.

Caps on General Damages Upheld

Two recent decisions have upheld the cap on general damages in Alberta and Nova Scotia. In Hartling v. Nova Scotia, the Nova Scotia Court of Appeal upheld Nova Scotia’s $2,500.00 cap on “minor injuries”. In Morrow v. Zhang, the Supreme Court of Canada dismissed a leave application from the Alberta Court of Appeal’s decision which upheld Alberta’s Minor Injury Regulation which imposes a $4,000.00 cap on non-pecuniary damages for minor injuries. The Alberta legislation defines minor injuries as sprains, strains and WAD I or II injuries. In both cases, the cap was challenged as violating the Canadian Charter of Rights and Freedoms, alleging discrimination under s. 15 on the basis of physical disability, mental disability and gender. The Courts held that the caps were not discriminatory.

Although these decisions will likely be applauded by those defending claims, they raise interesting questions. Since the caps only apply to non-pecuniary general damages, will courts increase other heads of damages in order to compensate? For example, in Morrow, the trial judge would have assessed the plaintiff’s general damages at $20,000.00 and $15,000.00. The cap would reduce those to $4,000.00, but in another circumstance, would a court increase the amount of pecuniary damages to compensate? One also has to wonder whether physicians treating patients injured in automobile accidents who are aware of the cap on minor injuries might tend to describe them in different ways so as to avoid being caught by the definition. Both the Alberta and Nova Scotia courts discussed the history of the caps and the fact that they were attempts by the legislatures to control escalating automobile insurance costs. The courts seem to be sending a message that they will give effect to the legislature’s intentions with these decisions.

Questions of law versus questions of fact in determining coverage

One of the most confusing issues in cases involving coverage under insurance policies is what is a question of law and what is a question of fact.

Insurance coverage attorneys can easily cite dozens of cases that state that the interpretation of an insurance contract is a question of law and that whether there is coverage based on the application of facts to policy language is a question of law. We can cite as many cases that discuss burdens of proving coverage or lack of coverage under different parts of a policy. While a burden of proof makes sense where facts are disputed--the burden thus being to prove a fact which would show or negate coverage--many decisions cite burdens of proof where facts are undisputed--and therefore coverage should be a question of law.

The confusion tends to result from sloppy drafting--or thinking--by judges, but it is repeated so often that clear analysis has become virtually impossible.

The issue was brought to my mind by a recent Superior Court decision by Judge Fremont Smith. Cambridge Mut. Fire Ins. Co. v. Kiely, 2009 WL 4894491 (Mass. Super.) went to trial over whether the son-in-law of owners of a homeowners policy was a resident of their household, and therefore covered by the policy.

Judge Fremont-Smith declined to decide the issue as a matter of law, because the Supreme Judicial Court has held that whether a person is a "member of a household" of an insured is "a complex decision requiring a case-by-case analysis and a balancing of all relevant factors."

Judge Fremont-Smith concluded, based on the credible evidence at trial, that the son-in-law was a member of the insureds' household. It may be that, although the decision does not make it clear, the evidence was disputed. For example, Judge Fremont-Smith cited the financial arrangements between the son-in-law and the insureds, including that the son-in-law paid rent to the insureds. If the insurer offered contrary evidence that no rent was paid, then the question of payment of rent was a question of fact. But if the evidence with respect to payment of rent was undisputed, and all the insurer offered was different undisputed facts that it believed would tend to dictate against the son-in-law being a member of the household, then Judge Fremont-Smith should have decided the case as a question of law.

Finishing up on Whittaker:

Finishing off my discussion of Whittaker Corp. v. Am. Nuclear Insurers, in which historic owners of property sought insurance coverage for costs associated with the property being declared a superfund site:

Having found that Endorsement 112 could not be considered, the court returned to the question of whether ANI had a duty to defend under the Facility Form. The court addressed three issues, all of which are so well-established under Massachusetts jurisprudence that there is no need to tarry over them.

First, the court held that the demand from the EPA that the plaintiffs investigate the contamination, and its accompanying warning of potential liability for response costs, gave rise to a duty to defend.

Second, the court then turned to Exclusion (f),the owned property exclusion, which barred coverage for "property damage to any property at the location." It held that the exclusion does not exclude coverage for costs incurred to remediate or prevent migration of contaminants off-site.

Third, the court held that the EPA notice, which demanded investigation and remediation of contamination "that exists at or near the Site," but did not directly allege any off-site migration, gave rise to a duty to defend because it raised the possibility that the owned property exclusion did not apply.

FIduciary vs ERISA Fidelity

The question came up yesterday when I was discussing the need for fiduciary liability coverage, "Do we need that plus the fidelity bond?"



ERISA is the federal law that governs employee benefit and welfare plans.  I makes administrators of plans personally liable for mistakes.  That's what fiduciary covers - think of it as errors and ommissions for employee benefit plans.



The ERISA bond is fidelity insurance.  It is coverage required by ERISA for theft or loss of the funds in a pension or other welfare plan.  Most often an employee dishonesty policy is used with an endorcement broadening out the coverage to meet ERISA.

TRIBUTE to my DAD 1943-2009

A Tribute to My Dad,

Dr. Wi lliam C. Peel, Jr.

MARCH 18, 1943 - DECEMBER 16, 2009

BIOGRAPHY

My Dad, Dr. William “Bill” Peel, Jr., 66 of El Dorado passed away in his sleep Wednesday, December 16, 2009 at his El Dorado, Arkansas residence as the result of multiple pulmonary embolisms. While his passing was completely unexpected, it was peaceful.

He was a Clinical Psychologist and Executive Director of South Arkansas Regional Health Center in El Dorado. Dr. Peel spent his life helping others both professionally and personally.

Dad was born March 18, 1943 in Arlington, TN to William “Chaffee” Peel, Sr. and Martha Marie Britton Peel. He attended Bolton High School where he was the captain of the basketball team and married the Homecoming Queen, Brenda Jo Griffin. I was born to them in 1969.

Dad spent his young life helping sharecrop behind the old Bond Motor Company in Arlington. The first in the family to go to college, he earned multiple degrees, including his Ph.D. in psychology in 1970 from Memphis State University. He served others in Georgia, Missouri, and Kentucky before moving his family to El Dorado, Arkansas in 1974, where he served as clinical coordinator of the South Arkansas Regional Health Center until 1983. From 1983 until his passing, he served as Executive Director of the center he loved. He died as he wanted, in that he had appointments with patients still on the calendar for that day. In fact, he is the only known Executive Director of such a large center to continue to see a full load of patients.

He has served as president of the Arkansas Board Examiners in Psychology, Arkansas Behavior Therapy Association, Arkansas Council of Community Mental Health Centers, MHCA Enterprises and served on the Board of Directors of Mental Health Corporations of America. His professional achievements are overshadowed by his dedication to a life of serving others most in need of help and least able to help themselves due to mental illness or developmental issues.

Patients from all over the area attended services and said they owed the success they now enjoyed in their lives to Dr. Peel. Mental Health professional and board members from all over Arkansas came to honor him. Some said they owed their whole career to his mentoring.

He loved the outdoors and raised me to do the same. 
Untold hours were spent on the local lakes bass fishing, or in the deer woods hunting. At Memorial services Saturday in El Dorado, and at the funeral here Monday, I was able to muddle through stories of hunting and fishing adventures that showed Dad’s great sense of humor.

His mother, (my grandmother) Marie Peel is the most giving person I have ever known, and she passed that along to Dad. Her sister Millie, and Grandmother still live in Arlington. His wonderful brother, Bobby Peel and his wife, Barbara reside in Cordova.

My wife Trish and I are raising his three grandchildren, Joshua Britton Peel, Collin David Peel, Megan Elise Peel here in Arlington, with the help of my Mom, Jo Peel. 
My Dad was buried next to his father and grandfather at Arlington Cemetery in Arlington, Tennessee. 



If you wish, Memorials may be made to South Arkansas Regional Health Center, 715 North College, El Dorado, AR 71730 to help continue to my Dad’s life’s work in Southern Arkansas.

Thank you Dad. You let me know you were proud of the man and father I became. I will carry that all my days until I am laid there near you myself.

Transition Issues with the new Rules

Thanks to a reader of our blog, Ted Key, for bringing this case to our attention: Onex Corporation et al. v. American Home Assurance et al., 2009 CanLII 72052 (Ont. S.C.J.).

This is the first decision we are aware of that addresses the inevitable transition issues that will arise from the new Rules of Civil Procedure that came into effect on January 1, 2010.

The plaintiffs, in an excess insurance case, filed a motion for summary judgment. The defendants then filed for directions to clarify and confirm that the current rules will apply when the summary judgment motion is argued.

The question decided is this: If a motion for summary judgment under rule 20 is filed in 2009 but heard in 2010, after the rule changes take effect, should the matter be heard under the old rule or the new rule?

The judge concluded that the motion should be heard under the new rule.

I'll leave you to read the decision for the details but it includes a helpful analysis of the current rule and lack of transition provisions.

Paragraph 8 of the Endorsement indicates: "In my view, if the legislature had intended that the old rule 20 would continue to apply to summary judgment motions filed before 2010 or that a general “transitional provision” was required, it could have said so. It chose not to do this. It follows, therefore, that the new summary judgment procedure is intended to take immediate effect as of January 1, 2010 and apply to all rule 20 matters before the court, whenever the motion was filed."

U.S. District Court holds endorsement eliminating coverage ineffective for failure to comply with statutory notice requirements

I have been discussing Whitaker Corp. v. Am. Nuclear Insurers, 2009 WL 4342512 (D. Mass.), a case involving insurance coverage for property owners of a superfund site.

In my last post I discussed Endorsement 112. The court held that its language excluded coverage for environmental cleanup costs.

The court went on to note that Endorsement 112 was therefore an elimination of coverage, since the policy otherwise covered environmental cleanup costs.

The court cited Mass. Gen. Laws ch. 175, § 111A, which requires that when a liability insurer eliminates coverage it attach to each policy a printed notice setting forth what coverages have been eliminated, and states that if the insurer does not do so then the coverage shall remain in full force and effect.

It was undisputed that no printed notice accompanied the Endorsement 112.

ANI argued that no notice was required because Endorsement 112 was a "new" policy rather than an amendment of an existing policy. The court disagreed, noting that the endorsement was entitled "Amendatory Endorsement" and is numbered "Endorsement 112" to "Policy No. NF-44."

The court held, "the Endorsement by any name is an amendment to the existing policy and it is incredulous for ANI to insist otherwise."

New Tag Line

I have struggled for ten years with a tag-line for my business.



Past interations:

Insurance Consulting Services

Unbiased Insurance Consulting

Unbiased Insurance Assurance



I really liked "Insurance Assurance" but the trademark office in Washington turned it down as too close to "Assurance Insurance" held by a broker.



Here is the latest:



Consulting In, But Never Selling, Insurance.



Comments welcome.

More on Whitaker

In my last posts, here, and here, I have been discussing Whitaker Corp. v. Am. Nuclear Insurers, 2009 WL 4342512 (D. Mass.), a case involving insurance coverage for property owners of a superfund site.

In my last post I discussed the facility form, under which the court held that coverage was initially triggered.

The facility form contained "Endorsement 112," which provided that the insurer, ANI, would pay "all sums which the insured shall become legally obligated to pay because of bodily injury or property damage, or as covered environmental cleanup costs because of environmental damages."

Covered damages were defined as "damages because of bodily injury or property damage to which this policy applies; but covered damages do not included environmental cleanup costs or on-site cleanup costs."

The court discussed defined terms in the last phrase and held that it excluded coverage for the environmental clean up costs.

This is not the end of it, however. Stay tuned . . .