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Valuable Papers Coverage and Recovering Damaged Documents

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Unlike the rest of the restoration industry, the document recovery and reclamation segment lacks standardization. There is no universal system like Exactimate or Institute of Inspection, Cleaning and Restoration (IIRC) certification. The processes for treating damaged documents, and the rates charged for those services vary greatly. However, the best document recovery contractors do follow very specific guidelines and practices.

A standard letter/legal sized box can absorb many gallons of water, reducing the effectiveness of dehumidification. Therefore, damaged documents need to be removed quickly and blast frozen to prevent ink bleeding and microbial growth. The documents must then be dried, usually by vacuum freeze drying or desiccant drying.  Still, documents may need secondary care, such as removing debris, mold or soot from the surface.

Though a client’s Property policy may not include coverage for reproduction or imaging services, a Valuable Papers endorsement can provide the necessary protection.

Source: Rob Schimdt, Insurance Journal-National Region, April 4, 2011.

Even Intermediate Indemnity / Hold Harmless Forms May Be Unenforceable

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Hold Harmless and indemnification provisions are commonly found in contracts involving lease of premises, construction, and the sale of a product. These provisions are attempts to contractually alter the contribution or sharing of liability between two or more tortfeasors under the law of negligence.

The most common types of hold harmless / indemnification provisions are as follows:

Limited — requires each party to be responsible for its own negligence. This is the most equitable form.

Intermediate — requires the first party to be responsible for all the negligence of both parties if the first party is either solely or partially negligent (could be as little as 1%). This is the next most equitable form.

Broad — requires one party to accept responsibility for all negligence even when the other party is solely negligent. This is the least equitable form.

The most controversial issue is whether a party is entitled to be indemnified when it is negligent in whole or in part.

Despite the intentions of the drafter, these provisions may not be enforceable by the courts due to poor drafting, a statute prohibiting their use under certain situations, failure to include specific language as required by statute, or case law.

In the context of construction contracts, courts have taken the following differing positions:

* An agreement to indemnify a party for its own negligence must clearly or unequivocally evidence such intent by both parties

* A party can’t be indemnified if it was partially negligent

* A party can’t be indemnified for its sole negligence

* The entire provision may be stricken if any part of it is unenforceable

* Only the unenforceable provision in the indemnification will be stricken

In the context of commercial lease agreements, courts have taken the following differing positions:

* Explicit language may be required to show that both parties (tenant and landlord) intended for the landlord to be indemnified when the landlord was partially negligent.

* Most states allow for the landlord to be indemnified when partially negligent.

* Some states have statutes that prohibit the landlord being indemnified for its sole negligence.

* The provision “to the fullest extent permitted by law” may serve to save the enforceable parts of such provision but such a result is not guaranteed.

For the purposes of insurance coverage, the type of liability that is triggered by indemnification and hold harmless provisions is know as contractual liability which may be covered under a General Liability policy.

Source: Margaret Suuberg, Speaking The Language Of Indemnity, Risk & Insurance Magazine, April 2011

The Liquor Risk And Not For Profits Under General Liability

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I came across a fabulous blog posting by not for profit risk manager, Leslie White of Croydon Consulting, on the thought process as to whether or not the liquor and alcohol functions of not for profit organizations are covered under both the standard General Liability form and in the presence of Liquor Liability Exclusion CG 21 50.

Source:  Are We Liable? Managing The Risks Of Liquor, April 2007

Business Insurance Premiums Continue To Decrease

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“Seven years and running, the soft market shows few signs of loosening its grip on commercial insurance pricing, according to a new industry study.”

“Abundant capacity coupled with diminished demand keeps downward pressure on rates.  As things now stand, insurance buyers can anticipate another year of favorable insurance prices, although catastrophe claims always are a wild card in the pricing cycle.” 

Source:  Insurance Journal, May 3, 2010

Rental Car Insurance Full Of Loopholes

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Insurance agents often advise their commercial clients that it is safest to purchase the collision damage waiver from rental car companies instead of relying on agent provided Hired Auto Physical Damage. The reason is that Hired Auto Physical Damage (which typically costs $250 per year) will only pay the cost to repair the car or the actual cash value in the event that the car is totaled. However, the rental car contracts also make the lessee responsible for the difference between replacement cost and actual cash value in the event the car is totaled, diminution of value in the event the car is repaired, and loss of profits while the damaged vehicle is out of the fleet. None of these additional charges are covered by Hired Auto Physical Damage. Thus, the common recommendation it is safest to buy the collision damage waiver from the rental company at a cost ranging from $12 to $28 per day.

 However, this may not always be the best advice upon closer examination of the terms of the collision damage waiver coverage. To follow are common loopholes in these contracts:

 * Authorized Drivers — Coverage is only extended to the authorized driver who signed the rental agreement. Other drivers must be added for an additional charge per day that can significantly drive up the cost of the coverage. If an unauthorized driver is involved in an accident, the collision damage waiver typically will be voided.

 * Under The Influence — Coverage can be voided if he driver was “under the influence of intoxicants, drugs or any other substance known to impair driving ability”. This wording is much more severe than being above the legal blood alcohol levels for DUI. “Under the influence” could mean one beer or drink or the use of certain sinus headache medicines.

 * Violation Of Any Traffic Law — Coverage could be voided if any traffic law was violated during the accident.

 * Driving On Unpaved Roads

* Leaving Keys In The Car And Resulting Theft

 Based on these potential problems, it would seem that the safest course of action would be to purchase Non Owned And Hired Auto Liability and Hired Auto Physical Damage from your own insurance agent plus the collision damage waiver from the rental car company.

Source: CIC Resources, Winter 2009; Car Rental Contracts And Conundrums; Bernie Neff

Mythology, Legends, and Lies In Insurance (Part Two)

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Follow the link below for another great article that addresses many of the common and dangerous myths that policyholders believe.  Listed below are some more myths:

 “It’s better to pay small liability claims out-of-pocket rather than report them to the insurance carrier.”

 “Statute does not require me to have workers’ compensation, thus you (a higher tier contractor) can’t require it either.”

 “I pay him with a 1099.  He’s an independent contractor, not an employee.”

 “If a workers’ compensation injury is less than a certain amount, I do not have to report it to the insurance company.”

 “Flood insurance is only for those in ‘flood zones.’”

  More Insurance Lies Clients Believe 

 Source: Chris Boggs, Insurance Journal, August 2009

Mythology, Legends, and Lies In Insurance (Part One)

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Follow the link below for a great article that addresses many of the common and dangerous myths that are believed and passed on by policyholders, “experts” and even insurance professionals.  Here are a few of those myths:

 “If I don’t have anything, they can’t get blood out of a turnip.”

 “There is no need to purchase liability limits higher than my net worth.”

 “That’s why I buy insurance (no need to implement risk management or loss controls).”

 “Corporate status will protect me from liability, I’ll just declare bankruptcy and shut down.”

 “Insurance is all the same.”

Insurance Lies Clients Believe And Pass On To Others

Source: Chris Boggs, Insurance Journal, August 2009

Employee Termination – 7 Common Mistakes To Avoid

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I found this list on the Internet the other day and I thought it had some good “nuggets of awareness” in it. It was provided by the Employer Advisors Network and gives 7 reasons why employers lose in court when sued by employees (current or former).   This is consistent with the risk management advice provided by insurance carriers that offer Employment Practices Liability insurance. 
 
Employers lose the majority of the cases that go to trial.  Here are some of the main reasons why this is the case:
 
   1. The jury pool – Very few jurors have ever held an executive or managerial position.  As result, the jury box generally consists of people who will judge your company from the perspective of the employee, not the employer. Like many employees, they have an “all bosses are villains and all employees are victims” mentality.
 
   2. Employers focus on justifying rather than taking responsibility. When we make a mistake we should admit it. (My input?  It’s funny that this is advice from lawyers!) There is no justifying the fact an employee hired on to bring value to your company is now suing you.
 
   3. Failure to document – As every employment attorney tells their client: document, document, and document.  Judges and juries expect to see proof of poor employee performance – in writing. 
 
   4. The company has disciplined inconsistently - Whether the company is big or small, the lack of consistent treatment is guaranteed to generate juror mistrust. 
 
   5. Somebody gets caught lying – Employers will often ignore, bury, or deny conduct they consider potentially damaging.  Disclosure of this conduct by a plaintiff’s counsel will prove devastating.  Catch someone lying just once and you can instruct a jury that everything they say lacks credibility. 
 
   6. They never received or signed the agreement – The employment contract, the confidentiality agreement, the employee handbook, and the mediation and arbitration agreement are nowhere to be found in the employee’s file – if they exist at all.
 
   7. An overly aggressive approach – Whether on the leaning toward the plaintiff or defense, jurors dislike an overly aggressive presentation of the case.  They are particularly sensitive to an attack on non-party witnesses. 
 
The fact is, there are many more ways to lose at trial and employers are doing it all the time.  Even if you “win” one of these cases you lose huge amounts of time and defense costs.  And when you lose a case, you can lose real big.  The best defenses against these claims are strategies and tools designed to prevent the filing of claims in the first place!   And of course, Employment Practices Liability insurance. 
 
I hope the list above helps you make the right moves to stay out of court.

Electrical Power Strips Pose Fire Hazard

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Electrical power strips, we all use them, but are we using them correctly?  We often learn from the mistakes and accidents of others which gives us insight on how to help prevent possible losses of our own. 
 
John Sadler comments: we insured a dry cleaner client that had a large fire loss in 2004 in excess of $200,000 to building and contents as a result of daisy chaining office equipment. As a result, we are fully aware of the attention that each client needs to pay to this important area of loss prevention.
 
Click on these links for more information on preventative measures:

Do You Know The Legalities of Terminating Employees?

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Terminating employees is one of the toughest parts of any business owner, HR manager or supervisor’s job. No matter how proficient you become at handling the business of firing employees, it is still a difficult task to complete.
 
An even more difficult task in the process of terminating employees is knowing the legalities behind firing people. The most important of these legalities includes legal restrictions that might keep you from firing an employee.
 
Consider whether your employee falls under any of these categories before you determine whether they can be terminated:
 
Contract Employees – Of course contract employees can be terminated, but it is a bit trickier to fire a contract employee, unless the action you feel warrants dismissal is specifically stated in the guidelines of the contract.
 
Union Employees – More often than not, union employee contracts are fairly binding and will require negotiation between the union officials and the company in order to terminate an employee. The reasons for being able to terminate a union employee should be listed on their contract.
 
Company Restrictions and Regulations – Your employee manual can be considered a legally binding document, especially if you have employees sign that they have received and understand the company policies. With this in mind, it is possible for employees to claim the reason you fired them is not listed in the employee manual. Be sure to list all possible reasons an employee might be terminated before handing out manuals to employees.
 
Labor Laws – These laws are set in place to protect employees that may otherwise be fired because of age, race, religion, ethnicity, or sex. Of course, firing an employee that is breaking company policies is legal even if they fall under one of these categories, but firing an employee just because they fall under one of these categories is against the law. If you will be firing an employee that might be able to claim discrimination under labor laws, be sure to have your evidence in check.
 
Whistleblower Employees – If you have an employee that has stepped up and blown the whistle on the company for breaking health codes, sexual harassments laws, or any other codes that might be in play for the company, firing them is out of the question. This is unless they are trying to slander the company. If their whistleblowing is warranted, they cannot be fired under state and federal law.
 
Understanding the legal restrictions regarding termination is essential to keeping your business running smoothly! For more information on Federal law pertaining to firing employees, visit the United States Department of Labor or Canadian Labor Code.
 
 I hope this information helps in making those difficult decisions.