FAA has insurers hovering over the use of drones

Will drones work with insurance claims adjusters to speed payments?

A community often looks like a war zone following a disaster such as a tornado, flood or earthquake. Ironically, military technology looks to be the future of recovery.

Drone_Flying_EyeThe insurance industry is considering using drones to assess damages and speed up the claims process . Rather than waiting for claims adjusters to arrive at a damaged area, drones could be programmed to survey, evaluate and transmit essential information to the adjusters in a matter of hours. That means adjusters will be able to process more claims faster and you’ll be back in business sooner.

The added bonus is that adjusters’ safety won’t be at risk if they aren’t on the scene. Drones can fly over the entire scene documenting damages to the entire property. No need to climb up on roofs, drive through flooded areas, or avoid falling limbs or downed power lines.

Drones already in use

Drones are already used in the U.S. in the areas of public safety, agriculture, and the environment and to monitor weather conditions and disasters, according to the Association of Unmanned Vehicle Systems International. AUVSI wants the FAA to revise regulations, lobbying to have air space designated for unmanned vehicles, which would increase the use of government and commercial drones.

Other countries use drones in law enforcement and monitoring weather and disasters.

The legal issues

Whether or not a company can currently operate drones for business up for debate. FAA approval isn’t required for model aircrafts that fly at altitudes of under 400 feet. However,the counter argument is that model aircraft are being flown for business purposes.

Another concern is privacy. Or is it?.  Some in the insurance industry say the privacy issue was settled by the commercial aircraft industry. Small aircraft and helicopters often fly over neighborhoods. The Supreme Court has upheld rulings that in those instances there is no reasonable expectation of privacy.

Adjusters need not fear for their jobs. It’s not reasonable to think that drones will fly out to every car accident, homeowner claim, or business break-in. But for catastrophic, large-scale claims, the use of drones offers great potential.

Source: Denise Johnson, “The Future of Drones in the Insurance Industry,” Insurance Journal, Mar 07 2014.


Tornado Safety And Small Business Recovery

Tornadoes can strike anywhere and with little warning. Although they are most prevalent in the central United States, no city, big or small, is one hundred percent safe from these violently rotating columns of air.  As a nation, we average 1,000 tornadoes a year, that’s 1,000 chances for you to be caught in the storm. With the tragedy of Moore, Oklahoma still fresh in our minds, we at Sadler Insurance want to help you stay safe in the event of a tornado and help your small business in its recovery.

tornadoWarning Signs

  • Dark greenish skies
  • Large hail
  • Funnel clouds (dark, rotating, low-altitude cloud)
  • Roaring noise akin to a train


Watch or Warning?

Tornado watch – Conditions are favorable for the development of a tornado. Keep an eye on changing weather conditions and stay up-to-date on storm information by listening to your local radio or television stations.

Tornado warning – Danger is imminent. A tornado has been spotted in the area or is indicated on weather radar.

Find Shelter


At home – Underground is safest. If you do not have a storm cellar, the basement will be your most protected area. No basement? Take cover in a central location, preferably a room void of any windows.

School or office building – Find a windowless area in the center of the building on the lowest possible floor, steer clear of any glass windows and crouch down with your arms covering the back of your head.

 In a vehicle – Get out and seek shelter in a sturdy building. If no shelter is available, lay flat, face-down in the nearest ditch. Avoid any nearby vehicles and trees.

Mobile home – GET OUT. Even with tie-downs, you’re safer outside.

After a Tornado

  • Stay in your shelter until the storm has passed completely or emergency personnel have arrived
  • Check for injuries; seek help for the seriously injured
  • Be aware of downed power lines and standing water, which may have wires hidden inside
  • Gas pipes or fuel tanks may be leaking, do not use matches or a lighter

Check in with your Insurance Company

If your business has sustained any tornado damage, notify your insurance company. If damage is sufficient enough for you to vacate the premises, make sure that your insurance representative is equipped with the information of where and how to contact you. For insurance purposes take pictures and videos of the damage done to your businesses building and keep track of any expenses incurred due to the storm.

A Business Owners Policy (BOP) ensures that your small business is covered in the event of wind damage (except for coastal areas which may have wind exclusion). The property portion of the BOP policy may include coverage for the indirect loss of Business Income due to shut down or diminished operations.

To learn more about Business Owners Policies for your small business visit our website at FastBusinessInsurance.com

Source – Tornado Safety

Do You Know If Your Homeowner’s Insurance Covers Gun Liability?

gun liability

Many homeowners do not realize they are not covered for Gun Liability under their Homeowner’s insurance. Every company has different exclusions and most standalone gun liability policies offer little coverage because their restrictive exemptions. 

Why Is My Gun Liability Excluded on My Homeowner’s Insurance Policy?

The Insurance Services Office (ISO) is an industry leader in insurance coverage and references the intentional loss exclusion as a common exclusion on a Homeowner’s policy and could result in a claim denial. The intentional loss exclusion reads:

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, real or personal property, than initially expected or intended.

However, this Exclusion E.1. does not apply to “bodily injury” resulting from the use of reasonable force by an “insured” to protect persons or property;

So what does this mean for the gun owner?

If you accidently hurt someone or damage someone else’s property with a gun it may not be covered by your Homeowner’s insurance. Although you did not intentionally intend to injure or damage any property by pulling the trigger on the gun you intended to damage or hurt something. Therefore even if the accidental outcome was not your intended or expected purpose when firing the gun you still meant to cause some sort of damage or injury so any claims of this nature would possibly be excluded under your Homeowner’s policy.

An exception to the intentional injury exclusion occurs from “…the use of reasonable force to protect persons or property.”  But what is “reasonable force”? This is an issue for the jury to decide on a case by case basis so the outcome is never certain. However, legal defense would probably be triggered.

Due to the uncertainties over the definition of “reasonable force”, you can never be certain about the existence of coverage under a Homeowner’s liability policy in a self-defense situation. 

Source: AI Magazine, Gun Liability Coverage Varies for Homeowners

Gun Liability Insurance Violates Insurance Theory

hWhile the debate in Congress rages on about gun control measures, some lawmakers suggest that a potential solution is to require gun owners to carry mandatory liability coverage to pay for damages caused by a shooting spree. However, insurance lobbyists point out that such an idea will not work as it violates a basic premise of insurance. Read the quotes below to get an idea of the exact objections.

“Though well intentioned, such proposals misunderstand a fundamental principle of insurance – that it is designed to cover fortuitous, or accidental events; not intentional conduct.  Property/casualty insurance does not and cannot cover intentional behavior such as criminal acts,” said Willem O. Rijksen, vice president of public affairs for the American Insurance Association.”

“According to Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, gun liability insurance measures would neither deter violence nor help victims.”

“Liability coverage is designed to protect against accidental damages, most of which involving guns would be covered under a homeowner’s insurance policy.  While some policies may provide coverage for liability stemming from the intentional use of a firearm for defensive purposes, no liability insurance product covers intentional acts of malicious violence, whether committed with a gun, a car, or any other instrument that is used as a weapon to deliberately harm people,” said Grande.  “It is inconceivable that any insurer would offer such coverage, either as part of a homeowners or renters policy or on a stand-alone basis.”

I concur with the opinions on this matter provided by insurance industry lobbyists. All General Liability policies include a standard exclusion for intentionally caused bodily injury and property damage with minor exceptions provided for preservation of life and property.

Source: Insurance Journal 04/10/2013

How Security Cameras Can Lower Workers Compensation Cost

Security cameras in the work place are not a new concept, but can installing security cameras in your small business save you money on Workers’ Compensation? We often see surveillance cameras in retail and factory facilities. Now with the price of installing surveillance systems going down, more small businesses and large employers are opting to have cameras in the work place.

How do you save money on your Workers’ Comp by having security cameras? Well, having a camera in the workplace can help employers fend off fraudulent Workers’ Compensation claims. By having video proof of an employee injury (or lack of proof), it is easier to tell who is at fault.

Before you go out and install a new surveillance system, learn the pros and cons of having security cameras in the workplace.

Pros –

* Deters employees from filing false claims.
* Monitors workplace safety.
* Can keep employers Workers’ Compensation costs down.

Cons –

* Video footage can prove the existence of an injury in legitimate workers comp claims.
* Privacy laws and employee rights need to be followed diligently.
* Cameras cannot see everything (example: in employee bathrooms).

Security cameras have helped employers stop fraudulent workers compensation claims.  Just listen to Jeff Strege, the director of risk management at CEC Entertainment Inc., which controls Chuck E. Cheese’s restaurants and has more than 17,000 employees nationwide. Jeff told a reporter, Sheena Harrison during the California Workers’ Compensation & Risk Conference last month, “We’ve made a number of claims literally vanish once we produce the video footage to show that what the claimant says, whether it’s an employee or a guest, is what really happen.

Souce: Worksite Surveillance Cameras Help cut Comp Fraud, Business Insurance, October 12, 2012.

Commercial Insurance Experienced Largest Price Increase in 8 Years

By comparing prices on policies written in the second quarter of 2011 to the policies charged for the same coverage in the second quarter of 2012, the Commercial Lines Insurance Pricing Survey (CLIPS) revealed that the pricing increased by 6% throughout the second quarter of this year.

These price increases were noticed in all sizes of accounts for commercial lines business, however, mid-market and larger accounts showed larger increases than the smaller commercial accounts.

Workers’ Compensation and Commercial Property policies showed the largest price modification with increases in the high single digits, while policies such as Directors and Officers and Employment Practices Liability saw prices increases in the mid-single digits.

Source:  Insurance Journal 2012/09/10

Health & Safety For Temporary Workers: What To Include In The Agreement

When your organization hires a temporary/contract worker from a temp agency, it’s critical to have a strong written agreement in place outlining the responsibilities and expectations both your organization and the temp agency face.  Your organization encounters potential financial risks when hiring a contract worker, including those related to injuries or accidents (such as lawsuits or medical expenses) as well as those expenses related to health and safety (regulatory fines from health & safety administrations, for example).

It’s imperative to address specific health & safety needs and potential risks in the written agreement.  Certain steps and precautions must be taken to prevent accidents and injuries, and these will generally incur an expense.  The agreement should identify which organization will be responsible for providing safety equipment, safety training, safety records & reporting to health administrations, and other related issues.  If the agreement states that the temporary agency will be responsible for some or all training, verify that they maintain and can show you records of training.  This is important in order to verify that the workers you are hiring received adequate training from a qualified source.

Other examples of precautionary measures that can incur expense and should be assigned to either your company or the temporary agency in the agreement include drug testing and medical testing and reporting.

If the temporary worker will be driving a company vehicle or any vehicle for the purpose of completing the services you hired them to do, it’s important to request in the agreement that the temporary agency will provide driving records for the temporary workers you are hiring.

Lastly, the agreement should give your company full discretion and authority to remove a worker from a job that your company believes they are unfit to perform, or that will be unsafe for them to complete.

Taking the time to make sure that these detailed and specific inclusions are in the written agreement between your company and the temporary agency will not only reduce the financial risk your company faces in hiring a temp worker, but will also provide cautionary measures that will enable the worker to have a prepared, safe approach to working for your company; that will give the temporary agency peace of mind knowing they have done their due diligence to protect their worker against accidents; and that will allow both your company and the temporary agency to clearly see when all obligations have been met that were assigned to either party.

3 Important Clauses You Need In A Temp Agency Agreement

To address the financial risks that your company faces when hiring a temporary/contract worker, it’s crucial to have a written agreement with strong and clear indemnity clauses.  This is important, because if a situation occurs (such as injury, lawsuit, regulatory fines, or medical expenses) pertaining to the temp worker, the written agreement will clearly define which party is responsible for various liabilities.

However, it’s also important to investigate other risk factors associated with hiring temporary workers and to address these risks in the written agreement.

First, check to make sure that the temporary agency’s Workers Compensation plan includes an Alternate Employer endorsement.  Should the worker file a claim with Workers Compensation, this endorsement will clearly identify the temporary agency’s Workers Compensation policy as the one that will cover the claim, and your Workers Compensation carrier will not be responsible for claims even though the temp worker was working within your organization.

Next, verify that there is a subrogation clause in the written agreement, preventing the temp agency’s insurance company from asking your organization to reimburse them for funds they have paid on behalf of their client.

Finally, require that the written agreement precludes the temporary agency from utilizing the services of subcontractors for any work related to your company or the job you are hiring temporary workers for.  Subcontractors present additional and different risks to your company, especially when not hired directly by you.

4 Tips For A Strong Indemnity Agreement When Hiring Temporary Workers

When hiring temporary/contract workers from a temp agency, your company faces financial exposure due to incidents that could happen related to the contract worker, including accidents, injuries, lawsuits, medical expenses, and more.

To minimize the financial exposure your company faces and to clarify the issues and actions that need to be addressed to prevent additional financial burden, take the initial time before hiring a contract worker to establish a written agreement between your company and the temporary employment agency.

In addition to terms that outline the procedure for hiring a temporary worker and a clause that allows you the freedom to hire from other temp agencies (non-exclusivity), the written agreement should have very clear and specific indemnity clauses to protect your company.

An indemnity provision specifies the exact types of situations where the temp agency assumes liability for accidents, injuries, and damages.  While most temporary agencies may include some sort of indemnity in their standard terms & conditions of service, it’s important to know and avoid the most common pitfalls in establishing a relationship with a temporary agency:

1. The temporary agency should be financially solvent enough to be able to pay any claims or expenses as covered by the indemnity clauses in the agreement.  Regardless of the temp agency’s financial status, they should have insurance policies in place – identified clearly in the agreement – to guarantee that indemnity will be provided.

2. Avoid finalizing an agreement to hire a temporary worker online.  Generally, to finalize the hire you will need to agree to the online terms & conditions.  This becomes the terms you agree to, preventing you from requiring that the protection clauses and terms you need are included in the agreement.  A written agreement is the best form of protection, and allows you to request modifications and adjust indemnity provisions as needed for your risk requirements.  The agreement should also state that it supersedes any terms & conditions listed online or in any other documentation.

3. Carefully review the indemnity terms, and require that limits are removed or are high enough to offer adequate protection.  Some indemnity clauses limit the amount of indemnity to a certain dollar amount, and others limit the indemnity to the dollar amount that you pay to their company for services provided.  You do not want to be facing a large settlement or judgment after a lawsuit only to discover that an indemnity clause limits the amount the temporary agency must pay!

4. Add specific terms to ensure that the indemnity portion of the agreement will be in full effect even after the service agreement is completed.  In other words, if a temporary worker files a lawsuit against your company some time after the period they spent working for you, the indemnity agreement for that work period needs to be in effect.

By following the suggestions above, you will be eliminating the most common pitfalls companies fall into as a result of a poor indemnity agreement, and you will be protecting your financial interests with clear and specific legal terms.

How Much Liability Insurance Is Enough?

This is a commonly asked question that unfortunately has no good answer. This topic was recently discussed by the Big I Virtual University faculty with varying answers.

Clients often want to know if they need limits of $300,000, $500,000, $1,000,000, $2,000,000, $5,000,000 or more under both their personal (ex: Personal Auto Policy, Homeowners Liability, Personal Umbrella) or commercial (ex: General Liability, Auto Liability, Umbrella / Excess Liability) insurance programs. Some believe that they need limits high enough to: cover their assets, cover the average claim, or cover the largest possible claim. Others don’t want to carry high limits because they don’t want to get the attention of hungry plaintiffs’ attorneys looking for the next big payday.

The Big I faculty refuted the theories about carrying enough to cover the assets at risk or the average claim. My favorite faculty answer was to “carry a dollar more than you’ll be sued for”. Of course, there is no way to get a crystal ball to answer this question. Clients typically don’t want to carry higher limits due to the expenses; however, they are quick to sue insurance agents for negligence if they were not offered higher limits. For this reason, insurance agents are advised by their errors & omissions liability carriers to not make a specific recommendation but to instead be able to prove that they offered higher limits to their clients.

My advice is to purchase limits as high as you can afford to cover the largest reasonably foreseeable loss which is much, much higher than the average loss. The largest reasonably foreseeable losses usually involve situations where multiple persons are seriously injured or killed in once accident. Examples include auto accidents, fires, and structural failures. Of course, such accidents are rare, but they could happen and if they do happen liability can easily exceed $5,000,000.  Additional $1,000,000 limits of Personal Umbrella coverage are typically cheap whereas additional $1,000,000 limits for commercial coverages are a bit more expensive due to Umbrella / Excess Liability minimum premiums. The per $1,000,000 minimum premium for commercial Umbrella / Excess policies is often in the $1,000 to $2,500 range for medium to higher risk businesses. It really does come back to how much can you afford, how much do you have to lose, and what type of accident is reasonably foreseeable?

Source:  Big I Virtual University, What Limits Do I Need?, September, 2012