I AM NOT WORRIED, I HAVE FULL LIABILITY COVERAGE FOR MY COMPANY……….
I was asked to write a quick article on coverages that the industry thinks they have, limits of insurance that might not be as high as they think and coverages that they think mean one thing and they are not even close.
Since this is the beginning of 2015, it is an excellent time to sit down with your insurance professional to truly go over what your exposures are on a daily basis. I don’t think anyone knows them all. Heck I have been doing this for 20+ years handling thousands of pest claims and we learn something new every day. What about…………………How do you handle an employee that just came back from Africa where Ebola was within the vicinity? Yeah, got about 3 calls on that in one week.
I plan to list just a few of the pitfalls or possible deficiencies regarding certain coverages that I have seen over the last few decades. Many of these have probably cost pest companies thousands having to handle claims or suits on their own after their carrier denied coverage and walked.
This is the one that is probably most common. I have seen a number of policies over the years where the insured thinks they have general liability coverage for say 1M-2M for everything. But low and behold a lost key claim comes and you find out you only have 50,000 or 25,000 in coverage? Really? This one I really don’t get. The vast majority of the claims are nuisance. Re-key 25, 50, 100 or more locks. Maybe get security out for a day or so. The 25K or 50K coverage is usually plenty of coverage to handle these exposures.
How about the employee that does not tell the owner he lost the key until it is too late? Somehow word gets out in the apartment complex and there are multiple thefts. Even worse, what happens to you if the key is lost and someone breaks in and attacks someone that resides there? Without expanding what egregious things might happen, the question is do you think 25K or 50K will settle that claim? Scary thought.
Oh what about state insurance laws? Most states have minimum insurance limits requirements. Some are ridiculously low but a lot are 100K or more. Does that now mean your insurance does not reach the threshold of the state minimums with coverages at 25K to 50K? Are you subject to fines if the regulatory people decide to inspect and pursue if true? Not sure that has happened but do remember about 5 years or so ago Texas really started looking at insurance policies and the limits of coverage. That was fortunately thwarted after the state association and a few others worked with the Texas regulators and have not heard anything since. But is it totally impossible that this could ever happen?
One if not the most confusing coverages to a PMP when you discuss what is and is not covered. I really believe that most think they have coverage for just about any pollution claim that occurs outside an intentional act. Below are just a few pollution exposures I will go over.
- Auto Pollution-You are going down the road and someone runs a stop sign and hits your truck on the side. The truck flips and you have about 20 gallons in the tank. The product spills onto the street, oh better yet-down a drain. State comes out and the clean-up and disposal starts. We have seen costs range from 5-50K. So the questions are:
- Most auto policies that we have seen do not cover pollution claims so does your GL policy cover any pollution exposures?
- If the GL does cover pollution claims, do they cover if originated from the auto? That one is VERY important.
- If they do cover auto pollution claims what are the limits of coverage? Like stated above, you might think you have limits of GL insurance of 1M/2M for everything but you find out later your policy only allows limits of 50K or 100K?
- Again does this 50-100K sublimit fall within state regulatory insurance guidelines?
The reason I bring this one up is we had a situation 10 or more years ago. Truck flipped and about 30-40 gallons go all over this person’s yard. Clean up of the property damage was only like 15K. That wasn’t the issue. It was the 2 attorneys’ letters we received representing around 15 people stating they were sick and claiming damages, etc. We got out of every one of these alleged injury matters but the question is could YOU have done that if you don’t have the proper coverage and had to handle on your own?
What about the person that handles the claim with the carrier that really does not understand the perception of pesticide pollution exposure vs. the reality of exposure to the public? You might have a 50K sublimit, the insurance company decides to pay the 50K just to get out of it and then the attorneys decide to go after company assets? Think that is far-fetched?
Other pollution exposures:
- Wind drift
- Tech accidentally over applies a termiticide in the home (ask the TX PMP about that one)?
- Tech uses the wrong product, again accidentally?
Claims Made (Reporting) Policies and Endorsements
This coverage issue could be an article on its own. Claims made policies that will not cover you if you report claims after a limited time is allowed once your policy expires. Saw a situation where the insured renewed the policy with the same carrier for about 3-5 years. The problem was the carrier issued another (different) policy number each year. So when the claim was reported they stated the claim was reported late and the previous policy expired. The claim was reported after the allotted time and therefore, NO COVERAGE! Even though they were with the same insurance company, the new policy number allowed them to deny coverage on the claim. This one still aggravates me to no end.
Thankfully just about all the GL insurance policies are on an occurrence basis. That was not always the case but for now this is great for the industry. The problem is the “language” in certain Endorsements we have seen over the years that can get you. Some examples are:
- If the house had not been retreated for termites in 7 -10 (something like that) years, you continue to renew the termite contract and they get termites-NO COVERAGE!
- If the carrier could not determine if any damage occurred during their time of the policy even if live termites were found during that time-NO COVERAGE! (This one is very complicated. Saw a very good pest company that was in business for decades having to close after this claim).
- WDIRs-This is pretty common especially in the past which even some of our old polices restricted coverage. If a WDIR was done and a claim was reported 25, 36 or 48 months later-NO COVERAGE! Again thankfully most policies got rid of that “sunset” endorsement but you really need to check. Still might be one or two around.
You really need to remember that a lot of this falls on the person that is handling the claim for the carrier. Some are very good, they know the industry and work hard for their insureds. Then there are others ………………………
It is absolutely amazing the number of claims/suits that have occurred over the years where the insured truly thought they were covered or had more limits of insurance than they thought. Some of these companies had to pay their own way to settle or defend to conclude. We are talking thousands of dollars out of the PMP’s own pocket.
No one policy is perfect and doubt there ever will be. I have had to deny coverage on claims in the past where there was definitely a difference of opinion between the carrier and the insured. Most times I agreed with the insured but the carrier will make the final decision which could be very expensive in the end.
The real and responsibility is yours. It is your job to make sure your agent and the carrier know what you and your employees do out in the field. Talk to your peers and learn from them if they have gone through coverage issues with their insurance carriers. A lot of times it is the PMP that made the coverage issue occur and learn from their experiences.
The more time you take to learn your exposures and what your policy allows or excludes you will be in a better position in the future to state, “I AM NOT WORRIED, I HAVE FULL COVERAGE FOR MY COMPANY.” Good luck.