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2010 Toyota Recall and At-Fault Accident Appeals

In some cases, Toyota drivers may have been involved in accidents caused or influenced by stuck accelerators. In light of the recently announced recall of certain models of Toyota vehicles for unintended acceleration, the Division of Insurance is issuing this consumer alert to drivers who may have received an at-fault determination as a result of the accident.

Expansion of At-Fault Accident Appeals
The Division will expand the appeal process for drivers of recalled Toyotas who have been penalized by an at-fault determination from their insurance company after the incident. Specifically, at-fault determination appeals will be allowed in the following circumstances:

Rehearings Based on Past Appeals
Any driver that has received a Toyota recall notice and who was involved in an accident involving a recalled vehicle that resulted in an at-fault determination and who had a hearing before the Board of Appeals in which the insurer's determination was upheld, may file a request for a re-hearing.

New Appeals
Any driver that has received a Toyota recall notice and who was involved in an accident involving a recalled vehicle that resulted in an at-fault determination, may file for an appeal before the Board of Appeals, if one has not been previously filed.

Appeals Must be Filed Within 60 Days
The request for re-hearing or new appeal must be filed within 60 days from the notice of the recall or from the date of this alert, whichever is later. A copy of the Recall Notice must accompany all requests for appeals and re-hearings. The appeal request must include the appropriate Surcharge Appeal Notice from the driver's insurance company. If the driver no longer has this notice, we urge him to contact his insurance company immediately to obtain a copy. The appeal request also must be accompanied by the requisite $50.00 filing fee if an appeal on this determination has not been previously filed. An additional filing fee is not required if the request is for a re-hearing.

Expanded Hearings Limited to Unintended Acceleration Issue
The driver will be required to demonstrate that the vehicle involved in the accident is one of the models and types recalled by Toyota and that the accident was related to the acceleration problem outlined in the recall notice. All hearing determinations will be made on a case-by-case basis. While the recent recall was issued by Toyota, it covers several Lexus models as well the Pontiac Vibe. Drivers must show that the accident in question involved a vehicle covered by the Toyota recall notice.

 

Copyright of Massachusetts Association of Insurance Agents

The Homeowners Policy and College Students

Question:  "Is a computer provided by my daughter's school for use while she is attending covered for theft out of her locked room while she is out of the room? Toward the end of the school year, someone came through her suite mate's room, through the bathroom, and into my daughter's room and stole the computer she had signed out to her by the school. I just received a letter from the school stating that she had to pay $1,600 before she would be allowed to return to school. Does homeowner's insurance normally pay for such losses? Do you have any idea why my agent would say this was not covered and it was the responsibility of the school?"

Answer:  Clearly this is a covered loss under the "ISO standard" homeowners policy.  Note:  Be aware that insurance companies do not all use the same insurance forms.  That is why it can be foolhardy to purchase insurance over the internet without the professional counsel of a qualified insurance agent who can properly match your exposures with the best policy and available for your individual needs. 

The homeowner's policy covers any personal property "owned OR USED by" an insured if it is damaged or lost due to a covered peril. The student was certainly using the property and theft is a covered peril. The term "insured" includes a resident relative, and courts have determined consistently that a dependent child away at school is still a resident of the named insured's household. And, under the theft peril, the 1991 policy says, "Property of a student who is an 'insured' is covered while at a residence away from home if the student has been there at any time during the 45 days immediately before the loss." In this case, the student was there at the time of loss, so this theft restriction does not apply.

There is, however, one limitation that does apply. For personal property "usually located at" an insured's "residence" other than the residence premises, only 10% of the policy's contents coverage is available for losses. In this case, 10% of the contents limit is more than adequate for the loss of the computer. Of course, there is a deductible to contend with, typically $250. 

In addition, policy conditions require that theft losses be reported to the police. Although "police" is not defined, it is presumable that notice to the campus police would suffice. That being done, this appears to be a clearly covered claim, the only mystery being why the agent would say that it isn't covered.

 Copyright 2000 by the Florida Association of Insurance Agents, Inc. Reprinted with permission.

"What You Don’t Know About Renters Insurance"

While "expert" sites are proliferating on the net, it pays to get advice from real subject experts. Below is a question and answer provided at a well-known consumer insurance web site. Compare their response to the question to that of some of our faculty.

Here's the question posed on the web site:

"I was a renter in the same residence for nine years, and had an accidental fire which severely damaged one room. Not only did our landlords ask us to leave, but now their insurance company is coming after us for the claim. (We received none of this money, by the way.) We did not have renters insurance, which I am being led to believe would not have covered the dwelling, only the contents or my personal belongings. I have never heard of this, and I haven't recovered from my own losses. What are my rights and what can I do to stop this?"

Now, here's the "answer" posted on the web site:

"You're right in believing that renters insurance only would have covered your personal belongings. Insurance for the structural space you are living in should be covered under your landlord's policy. Even if your landlord has not purchased landlords insurance, this does not mean that liability lies with you. According to [Here the site names an insurance company that shall remain anonymous (despite their indirect connection to Peter Sellers) because we can't believe that someone there actually said this. - Ed.], the fact that you do not own the property means that you are not legally liable for damage done to it. You should ask your landlord's company to give you the rule in writing that allows them to come after you for payment.

Disclaimer: We are consumer journalists, not financial planners or insurance brokers. So, while we try our best to answer your questions, nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice."

IIAAVU Faculty Responses

To quote Perry White of the Daily Planet, "Great Caesar's ghost!!!" Imagine the potential liability of an insurance agent if he/she gave this kind of advice!  They have a disclaimer (see above) that they are only consumer journalists...if so, why not stick to consumer issues as opposed to technical advice? Makes you wonder if some states would prohibit this as an unlicensed activity...either insurance or law. In any case, several of our faculty members couldn't resist writing to the "journalist." Below are their emails (edited so as to violate any community decency standards)...note that the last one reveals a critical renter's policy coverage that's often overlooked.

It's clearly possible that if she had purchased a homeowners (renters) policy on her belongings, the policy would have also responded for the structural damage caused in the fire. If she had been negligent in causing the fire, perhaps by way of allowing an unattended pan of grease to cause the fire, then she would in most cases be deemed to have been negligent and the "renters" policy would respond for the subrogation papers the insurance company has sent her. Clearly, the insurance company covering the building feels there is some negligence on the part of the tenant by way of "coming after her," as the article states. Even if she is not negligent in the fire a renter's policy would DEFEND her in the claim.

Your statement of "You're right in believing that renters insurance only would have covered your personal belongings" is not correct and would lead one to believe that a "renter's policy" ONLY covers personal belongings, which is certainly not the case. Liability and defense coverages are some of the most valuable coverage provided in the typical "renter's insurance" policy, known commonly as an HO-4 Tenants policy.

Your reply indicated that damage to the landlord's building was not covered by a renter's policy. Actually, the industry-standard renter's policy ("HO-4") does have coverage under the Section II Liability provision for property damage to the property of others, if the insured (renter) is legally liable. There is specific coverage for what the insurance industry refers to as "fire legal liability." That is, if the tenant causes fire damage to the landlord's building, the tenant's HO-4 renter's policy will cover the fire damage, up to the Section II limit of liability, usually $100,000.

Even if the landlord had insurance, that does not relieve the tenant of responsibility. After the landlord's insurer pays the claim, the insurer will seek recovery against any party which might have negligently caused the damage (known as "subrogation"). If the tenant's negligence caused the fire, the landlord's insurer will in all likelihood seek recovery from the tenant (whether or not the tenant has insurance). However, if the landlord has waived subrogation against the tenant, his insurer cannot bring an action against the tenant.

It was also stated that a person isn't legally liable for damage to property if they don't own it. That is ridiculous! If someone hits your new car, would you expect that they aren't liable because they don't own it?? On the contrary, you would expect the negligent party to pay for the damage to your car, rather than your own insurance company. That's pretty much how the landlord would feel.

First, a renter's policy (commonly called an "HO-4 Tenant's Form) does, indeed, cover damage to the occupied unit, typically up to $100,000, under the Liability section of the policy. Normally, damage to property in your care, custody or control is not covered, but an exception is made for this and a few other situations.

In fact, when I have trained agents in the past, I often make the point that the best candidate for a personal umbrella policy is a renter or condo owner who can negligently burn down the building in which they reside, along with the contents of others...not to mention the potential liability for loss of life. It's the liability insurance in a renter's policy that is of the greatest value, not the meager coverage typically provided on personal belongings.

Second, with regard to the statement "According to [anonymous company], the fact that you do not own the property means that you are not legally liable for damage done to it. You should ask your landlord's company to give you the rule in writing that allows them to come after you for payment."...

I can't believe that a [anonymous company] representative made this statement...most likely what he/she said was you usually cannot be held liable for damage to property you OWN, not property you do not own. As far as asking for the "rule" in writing that allows them to come after you, you'll find that "rule" in every freshman law book in the country...it's a fundamental legal principle that you have the right to recover for damages negligently caused to you or your property.

 

So, the landlord's insurance company, under the right (by common law or contract) of subrogation, has every legal recourse against the tortfeasor as does the landlord. Most commercial property policies, though, allow the landlord to waive this subrogation right...so, ultimately, it's up to the landlord as to whether the insurer can pursue this claim. The way this works in most cases is that the landlord's property insurer pays for the damages, then subrogates for recovery from the negligent person's liability insurer.

Copyright 2000 by the Independent Insurance Agents & Brokers of America, Inc. Reprinted with permission.

Massachusetts Auto Insurance: What is an At-Fault Accident?

Massachusetts Auto Insurance:
What is an At-Fault Accident?
mass.gov

If you are found to be more than 50 percent at fault for causing an accident, and if the accident involves a claim payment exceeding $500, you will receive a Surcharge Notice.

The incident will go on your driving record. As a result, your insurance company may impose a surcharge on your premium, depending on the terms of the company's merit rating plan. 

What Is a Surchargeable At-Fault Accident?

An accident is defined as a surchargeable at-fault accident if:

• the involved operator is more than 50 percent at fault as determined by the Standards of Fault
• the vehicle is a private passenger automobile
• the accident involves a claim payment of more than $500, in excess of any deductible
• the claim payment is for Damage To Someone Else's Property, Collision, or Limited Collision coverages for a vehicle subject to the Safe Driver Insurance Plan. For at-fault accidents occurring on or after January 1, 2006, Bodily Injury To Others liability claims may be subject to surcharge.

Your insurance company will notify you and the Merit Rating Board (MRB) if you are determined to be more than 50 percent at fault for causing an accident. The MRB will then add the at-fault accident to your driving record. An increase to your auto insurance premium as a result of the accident is dependent on the terms of your insurer's merit rating plan. A merit rating plan is used by an insurance company to adjust an auto insurance premium based on the operator's driving record. Contact your insurance company or agent to find out about their merit rating plan.

Accidents outside of Massachusetts may be subject to surcharge.

• If your Massachusetts insured private passenger automobile is involved in an accident outside of Massachusetts, it will be subject to surcharge if the accident involves a claim payment of more than $500 under Damage To Someone Else's Property, Collision, Limited Collision, or Bodily Injury To Others, and if you are determined to be more than 50 percent at fault.
• If you were involved in an at-fault accident when you resided outside of Massachusetts, it may be subject to surcharge. Massachusetts auto insurers may report an accident from your out-of-state driving record to theMRB if it can be classified as an at-fault accident as defined in the Massachusetts Safe Driver Insurance Plan.

Standards of Fault:

Massachusetts auto insurers and the Division of Insurance Board of Appeal use these Standards of Fault to determine if an operator is more than 50 percent at fault.

There are 19 standards:

Collision with a Lawfully or Unlawfully Parked Vehicle
Rear End Collision
Out of Lane Collision
Failure to Signal
Failure to Proceed with Due Caution from a Traffic Control Signal or Sign
Collision on Wrong Side of Road
Operating in the Wrong Direction
Collision at an Uncontrolled intersection
Collision While in the Process of Backing Up
Collision While Making a Left Turn or U-Turn Across the Travel Path of a Vehicle Traveling in the Same or Opposite Direction
Leaving or Exiting from a Parked Position, Parking Lot, Alley or Driveway
Opened or Opening Vehicle Door(s)
Single Vehicle Collision
Failure to Obey the Rules and Regulations of Driving
Unattended Vehicle Collision
Collision While Merging onto a Highway, or into a Rotary
Non-Contact Operator Causing Collision
Failure to Yield the Right of Way to Emergency Vehicles when Required by Law
Collision at a "T" Intersection

Take Steps to Prevent Dog Bites

Did you know that dog bites cause about 800,000 injuries requiring immediate medical care in the United States each year? This statistic is based on research conducted by the Centers for Disease Control and Prevention (CDC).  If your dog bites someone, you can be held legally liable. Fortunately, this loss is usually covered by the homeowners policy, with some exceptions. In fact, about one-third of all liability insurance claims paid by homeowners policies are for dog bites! Even if your insurance covers the claim (and possibly the lawsuit), however, imagine the personal grief you and your family would feel for the injured friend, not to mention the time and trouble you would incur in cooperating with your insurer in defending against the claim, following a tragic event involving your pet.

Therefore, preventing such an unfortunate occurrence should be your primary objective, and there are steps you can take to reduce or prevent dog bites. Here are some suggestions from the professionals.

• 1. Carefully consider dog breeds prior to selecting a pet. Some breeds have worse reputations than others, and a veterinarian can help you decide which breeds might best fit your lifestyle.
• 2. Spay or neuter the animal as this often decreases the aggressiveness of dogs.
• 3. Seek a veterinarian's advice quickly if your dog becomes aggressive.
• 4. Socialize your dog from an early age to encourage appropriate behavior.
• 5. Never leave dogs alone with small children.
• 6. Avoid aggressive games with puppies and dogs, such as tug-of-war.
• 7. Do not place your dog in situations where he or she can be teased or feel threatened.
• 8. Train your dog to obey commands.
• 9. If your dog does bite someone, a board-certified plastic surgeon should treat this person to minimize scarring and potential disfigurement.

There is one other loss exposure concerning dogs you should consider. You may face liability claims if your dog gets out into the road and causes or contributes to an auto accident. You can be sued for violation of leash ordinances by allowing your dog to "run at large." Use a well-maintained and sturdy fence or other safeguards to reduce this exposure.

And, if your dog does injure someone despite all your efforts to avoid it, report it to your insurance company immediately to assure your coverage is not jeopardized for late reporting.

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2009
International Risk Management Institute, Inc.

Most Home-Based Businesses Are Not Properly Insured

I.I.I. Offers Insurance Checklist To Owners Of Home-Based Businesses

Whether you're running a home day-care center, preparing clients' tax returns on your kitchen table or writing up wills in your basement office, you need to plan for the unexpected disaster. That's why every home-based business needs to be properly insured, according to the Insurance Information Institute (I.I.I.).

Of the more than 11 million home-based businesses in the U.S., most do not have the proper business coverage.

According to a new survey commissioned by the Independent Insurance Agents & Brokers of America (IIABA) nearly 40 percent of home-based business owners never bought insurance because they thought they were protected by some other type of coverage; 30 percent said their businesses were too small to insure; and nearly 20 percent just couldn't give a reason for not having the coverage.

"Just because the business is located in your home, doesn't mean your home insurance will cover you," said Loretta Worters, vice president of Communications for the I.I.I.

"No matter how industrious you are, one disaster can wipe out all your profits and even destroy your business. The key to making sure that all the effort and money you have invested in a business doesn't disappear when a disaster strikes is to protect it with the appropriate coverage."

According to the I.I.I., a common misconception is that homeowners insurance covers the business, but a typical homeowners policy provides only $2,500 coverage for business equipment which is usually not enough to cover all of the business property. You may also need coverage for liability and lost income.

Insurance companies differ considerably in the types of business coverages they offer. Some may meet the specific needs of your business, while others may not. So it's wise to shop around for coverage options as well as price.

When insuring your business, there are three basic choices, depending on the nature of your business and the insurance company you buy it from. They are:

Homeowners Policy Endorsement

You may be able to add a simple endorsement or rider to your existing homeowners policy to double your standard coverage for business equipment such as computers. For as little as $25 you can raise the policy limits from $2,500 to $5,000. Some insurance companies will allow you to increase your coverage up to $10,000 in increments of $2,500.

Adding an endorsement to your homeowners policy is the least expensive option, but it might not be sufficient if you have a lot of expensive business equipment. It also doesn't provide business liability or product/completed operations coverage. Nor does it offer business income coverage (coverage for the loss of business income you sustain due to the necessary suspension of your operations).

You can buy a homeowners liability endorsement which will protect you in case clients or delivery people get hurt on your premises and sue. The homeowners liability endorsement is typically available only to businesses that have few business-related visitors, such as writers. But some insurers will provide this kind of endorsement to piano teachers, for example, depending on the number of students. These endorsements are available in most states.

In-Home Business Policy/Program

An in-home business policy provides more comprehensive coverage for business equipment and liability than a homeowners policy endorsement. Many insurance companies offer comprehensive insurance policies specifically tailored to the small business. The average home-business insurance policy can run about $250- $400 for approximately $10,000 worth of coverage. Cost depends on the type of business you operate, the kinds of safety features that are in place, and the amount of coverage you decide upon.

In addition to protection for your business property, most policies reimburse you for the loss of important papers and records, accounts receivable and off-site business property. Some will pay for the income you lose (business interruption) in the event your home is so badly damaged by a fire or other disaster that it can't be used for a while. They'll also pay for the extra expense of operating out of a temporary location.

Some in-home business policies allow a certain number of full-time employees, generally up to three.

In-home business policies generally include broader liability insurance for higher amounts of coverage. They may offer protection against lawsuits for injuries caused by the products or services you offer, for example.

In-home business policies are available from homeowners insurance companies and specialty insurers that sell stand-alone in-home business policies. This means that you don't have to purchase your homeowners insurance from them.

Business owners Policy (BOP)

The Business owners Policy, known in the insurance industry as a BOP, for short, is one of a number of package policies designed to meet the insurance needs of various kinds of businesses. The key to whether a business owner is eligible for a BOP is the size of the premises, the limits of liability required, the type of commercial operation it is and the extent of its off-premises servicing and processing activities.

A BOP, like the in-home business policy, covers business property and equipment, loss of income, extra expense and liability. However, these coverages are on a much broader scale than the in-home business policy.

As with any insurance policy, a safer work environment will result in lower property premiums. Make sure you have fire detectors and a security alarm system. Also have a computer-data backup procedure - and store the data backup away from your home. If you have an effective system, it may not be necessary to pay an increased premium for loss of business data.

"Making a go of a business takes a lot of hard work," said Worters. "An experienced insurance professional can help make the right choices to protect that business."

The I.I.I. has compiled an easy-to-follow insurance checklist for consumers who are starting or expanding their home-based business. The checklist provides tips to help small business owners with such issues as business interruption insurance, commercial auto, liability insurance, life insurance and workers compensation. There is also information regarding how to properly insure a business. The checklist is available on the I.I.I.'s website at www.iii.org.

To download the I.I.I. Business Owners Insurance Checklist, click here.

Are the limits of insurance for your home accurate?

Is the amount of property insurance on your home correct? What is the appropriate amount of coverage for your home? To begin with, it should be insured for at least 80% of its replacement cost when covered under a standard homeowners policy. Replacement cost refers to the amount necessary to repair or replace damaged building parts with items of like kind and quality. Some insurance companies even require 90% or higher figures when the guaranteed replacement cost option is offered. With this option, the policy pays the full cost of replacing your home, without any depreciation and often without a maximum reconstruction payment. (This gives you added protection if there is a sudden jump in construction costs due to a major shortage of certain building materials. Construction costs often "surge" following large catastrophes, such as hurricanes.) Note that guaranteed replacement cost coverage approaches can vary by state and is not even available in every state.

Many homes are either underinsured or overinsured. For example, some homes insured for long periods of time with one insurance company may have inadequate limits of insurance due to increased building costs. In many cases, homes have been remodeled and improved, and this information has not been conveyed to the insurance agent or company, resulting in severe underinsured home values. If your home is underinsured, you not only have inadequate protection for total losses, but you may also lack full protection for smaller losses.

Sometimes homes are mistakenly insured for their market value. However, market value is normally not indicative of the home's replacement cost. For example, market value also reflects the cost of the foundation and the nondestructible land value, both of which normally survive intact if the house burns to the ground and has to be rebuilt.

In addition, some homes may be insured improperly to meet mortgage company requirements. Some mortgage companies require the amount of insurance be at least equal to the mortgage balance on the house. The mortgage balance is also not reflective of the home's replacement cost, which is often considerably more but can also be less. Insurance companies and agents often struggle in properly educating mortgage companies about these distinctions, but there is nothing to prevent you from insuring to actual replacement cost if that is indeed greater than the mortgage balance. The problem occurs when the mortgage balance is greater than the replacement cost, which will result in the purchase of a higher limit than needed.

The bottom line is that you should work with your insurance agent to determine the correct replacement cost and resulting insurance limit for your home. Most agents use sophisticated replacement cost estimating packages that can fairly accurately determine the replacement cost value of your home. Factors that these programs use to determine this figure include the following.

• Square footage of the home, including its configuration
• Construction costs for your community
• Exterior wall construction type, including frame, stucco, brick, or brick veneer
• Style of home
• Number of bathrooms and bedrooms
• Roof type
• Attached garages, fireplaces, built-in cabinets, and other special features, such as hardwood floors

The more advanced replacement cost estimating programs require detailed information to improve the valuation estimate. For example, a rectangular-shaped home with 1,800 square feet will have a much lower replacement cost than a similar-sized home with an "L" shape. In other words, the better cost estimating programs require information about the number of corners in the home. The more detailed information your agent asks about your home, the more confidence you can place in his or her recommended limit of insurance.

As a final note, you should request an annual review of your homeowners policy to keep up with increasing building supply and labor costs. Also ask your agent about the advisability of adding an "inflation guard" endorsement to your policy or about the availability of guaranteed replacement cost coverage to help assure that your home is properly protected.

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2008, International Risk Management Institute, Inc.

ZipCars, Massachusetts Auto Insurance and College Students

What is a ZipCar?  According to it's website, Zipcar is the world's largest car sharing and car club service.  It is an alternative to traditional car rental and car ownership.  Zipcars are available in many major cities as well as on campuses at universities across North America.

ZipCars are popping up at campuses all over the country and they make a lot of sense for many college students, but if you are under 21 years of age, be sure to address the insurance gap. Whereas ZipCars' insurance coverage for drivers 21 years of age and older provides a $300,000 combined limit for property damage and bodily injury, it provides only the state mandated limits for members 18-20 years of age.  In Massachusetts, this is $5,000 of property damage and bodily injury coverage of $20,000 per person and $40,000 per accident. These limits are too low and present more risk than most people can afford to take.

Many people think that their own coverage will back them up, however the Massachusetts Auto Insurance Policy excludes coverage for bodily injury and property damage for regular use or a non-owned car. Because regular use is not clearly defined, efforts to close this gap should be taken. One way is to add a "Use of other Autos - Vehicles Furnished or Available for Regular use" endorsement to the parents' policy.  Most carriers will agree to add this endorsement and the cost is usually in the range of $100 - $150 per year. The downside is that the college student must remain as an insured driver on the parents' policy and you do not have the option of removing the student as a driver and saving money while they are away at school.

Another option, which is difficult for a college student to obtain in Massachusetts, is a non-owner auto insurance policy.  This would be the only answer for a college student who is not listed on their parents' policy and it could be a good solution for those who are listed because the cost can be less expensive than insuring the student on the family's auto policy for a full 12 months when they are only home 2-3 months per year. Again this can be difficult to obtain in Massachusetts, but it is more readily available in some other states and it can cost as little as $200-$300 per year (Tennessee).

If you have any questions regarding this article or any other insurance issue, don't hesitate to contact our customer service specialists at 1-800-922-8381.  At Gaudette Insurance Agency, we are licensed professionals who care about your insurance needs.

Things to Know About Insurance When You Volunteer

Does Volunteering Your Time Mean Volunteering Your Insurance?
Millions of Americans donate time-their most valuable asset-to serve as a volunteer board member on non-profits, booster clubs, churches, PTAs and civic organizations, just to name a few. The decisions these folks make can have a dramatic impact on their respective organization-and not always for the better. If a volunteer endeavor goes bad, would a volunteer board member have coverage against a lawsuit under his or her homeowner's policy?

Homeowners' Insurance
The last thing volunteers want to consider is what would happen if their favored organization file suit against them as a result of their efforts. But it happens, and not infrequently. This does happen, especially when volunteers make decisions that directly influence the finances of an organization. Often, the only insurance these volunteers have to back their efforts is a homeowner's policy. Unfortunately, this policy may be of little assistance.

The reason homeowners' policies do not usually cover liability stemming from actions as a volunteer is the nature of the claim. The policy is designed to cover claims of "bodily injury," such as someone slipping on cracked pavement in your driveway; and/or "property damage," such as accidentally setting your neighbor's house ablaze when burning some brush on a windy day.

Claims against board members do not usually involve bodily injury or property damage. Rather, they involve bad decision making that results in financial loss to the organization, such as the decision to invest in an IT system that turns out to be a debacle, costing the organization tremendous time and money.

There is another problem. Homeowners policies do not cover "professional services." This is important to note, because board members are often asked to serve in a capacity consistent with their profession. For example, a church member who is a CPA may be asked to serve on the church's board as finance chairman. Even though he is not paid for his services, the "professional services" exclusion under his homeowner's policy would still apply.

In addition to the above, homeowners policies do not cover claims of personal injury unless this coverage is specifically added. Personal injury insurance is added to the homeowner's policy to cover claims such as libel, slander, wrongful eviction, and false advertising.

What to Do
Events causing claims are unpredictable. While the reasons shown above prove it's unlikely, not all claims against volunteer board members are excluded by a homeowners policy. Decisions to purchase personal injury coverage and a personal umbrella policy will increase your ability to find coverage for a suit against you. 

The best method for insuring the actions of board members is for the organization to purchase a directors and officers (D&O) liability policy. These policies are relatively inexpensive for most non-profits. Before volunteering, request information on the organization's D&O policy. The absence of this insurance leaves you at risk of having no personal insurance to defend a suit brought against you by the organization and should influence your decision to serve.    

Gaudette Insurance Agency, Inc. is a local Trusted Choice^® agency that represents multiple insurance companies, so we offer you a variety of personal and business coverage choices and can customize an insurance plan to meet your specialized needs. You can visit Gaudette Insurance Agency, Inc. online at http://www.gaudette-insurance.com/  or call us at 1-800-922-8381.

 

Personal Insurance: MySpace, Facebook, etc.

MySpace, Facebook, Blogging, Emails, Texting ...
The Internet Exposure and Personal Lines Clients
By Irene Morrill, CPCU, CIC, ARM, CRM, CRIS, LIA, CPIW
Vice President of Technical Affairs, MAIA

First ...
If you enjoy MySpace and Facebook ... all power to you. But ... if you see my name listed don't waste your time adding me as a friend ... because I won't go back. A few months ago I was looking for someone ... and the only way to search those two sites is to "join" ... I did, but didn't find the person I wanted ... and have NO intention of going back to these websites!

What you "say" on the Internet ...
Some people put some awful stupid statements in writing. YES ... All of that IS in "writing". Libel ... the things you write ... are easier to prove against you than the foolish things that you say (slander).

People are suing ...
People don't think about these things ... until they get sued ... and even then ... I bet they think that they are covered under their HO policy. Whoops ... guess again!

Did you know ...
In Hermitage Pennsylvania a high school co-principal is suing four former students for creating a "parody profile" on MySpace.com where this principal "admitted to" smoking pot, having sex with students and keeping a keg of beer behind his desk.

Oh, by the way ... this is a FEDERAL lawsuit ...
Could this happen to some of YOUR insured's kids ... to the parents of these kids for "negligent supervision????" And ... if it does ... and your insureds are sued ... will their HO policy respond with defense and coverage?

And ... in another part of the country ... San Antonio, Texas ...
An assistant high school principal filed suit against two former students AND their parents for alleged defamatory statements made on their MySpace.com web page. She is suing for "defamation, negligence and gross negligence" for the "lewd, defamatory and obscene comments, pictures and graphics." She is also suffering because a multitude of miscreants who have viewed"her" page ... and contacted her.

The allegation against the parents contains the following language as "allowing access to the Internet, unsupervised and without restraint poses an obvious risk and unreasonable danger that such children would utilize the Internet for illicit purposes."

For those of you who think ... "kids will be kids" ... this is a tad different than writing nasty things on the bathroom stall doors.

Internet-related Defamation lawsuits increasing ...
106 civil lawsuits against bloggers and others in social networks and online forums were reported in statistics by Citizen Media Law Project at the Berkman Center for Internet & Society at Harvard University. This is up from just 12 in 2003.

What will the unendorsed Homeowners policy do?
The ISO unendorsed homeowners policy covers Bodily Injury and Property Damage liability.

"Bodily injury" means bodily harm, sickness or disease, including required care, loss of services and death that results.

"Property damage" means physical injury to, destruction of, or loss of use of tangible property.

One's reputation is not "tangible property." One who suffers mental anguish and emotional trauma over items "written" on the Internet about them does not suffer "bodily injury" ... at least not in Massachusetts.

So ... if either the named insured or other resident relative writes a defamatory remark about someone else or deliberately writes incorrect information about someone else resulting in a lawsuit ... what will the HO policy do?

NOT MUCH ...

SECTION II - LIABILITY COVERAGES

A. Coverage E - Personal Liability
If a claim is made or a suit is brought against an "insured" for damages because of "bodily injury" or "property damage" caused by an "occurrence" to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages for which an "insured" is legally liable. Damages include prejudgment interest awarded against an "insured"; and
2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when our limit of liability for the"occurrence" has been exhausted by payment of a judgment or settlement.

If the suit or claim is not BI or PD ... then the Section II coverage will NOT apply ... and therefore there will be no payment of damages or defense coverage.

What if the insured is NOT "guilty"?
Well ... I guess that's great ... but how does that get proven? If your insured is sued then there will be a court case. Who will pay for the lawyer? If they have a normal unendorsed HO policy ... not the HO carrier!

In today's world of suit-happy individuals the Internet just provides one more mechanism from which potential problems and lawsuits can arise. And now ... so many people have Internet capabilities on their cell phones.

Is there a way to provide coverage for libel/slander situations?

Yup! Actually there are two potential ways.

1. HO 24 82 (04 02 edition) Personal Injury endorsement

SECTION II - LIABILITY COVERAGES

A. Coverage E - Personal Liability

The following is added to Coverage E - Personal Liability:

Personal Injury Coverage
If a claim is made or suit is brought against an "insured" for damages resulting from an
offense, defined under "personal injury", to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages for which an "insured" is legally liable. Damages include prejudgment interest awarded against an "insured"; and
2. Pay up to our limit of liability for the damages for which an "insured" is legally liable. Damages include prejudgment interest awarded against an "insured"; and

DEFINITIONS

The following definitions are added:

"Personal injury" means injury arising out of one or more of the following offenses, but only if the offense was committed during the policy period:

1. False arrest, detention or imprisonment;
2. Malicious prosecution;
3. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;
4. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or
5. Oral or written publication of material that violates a person's right of privacy.

2. Personal Umbrella policy ... might provide such coverage as a broadening applicable over the "deductible"/Self insured retention

In today's world this is a very REAL exposure, and your insureds SHOULD have this endorsement on their homeowners' policy. It is inexpensive and one that I certainly want ... and have ... on MY policy.

Bet you can't believe that the article is so short! Short ... but important.

Have a super day ...

* * * * *

As usual, if I can be of service to you, please call me, Irene Morrill, Vice President of Technical Affairs at 800.870.7091 or ... BETTER YET ... email me at imorrill@massagent.com. You can fax me at 508.634.2929 (but if you fax me, PLEASE email or call me to TELL me that you have faxed me - I am NOT in the office every day).

This article has been developed expressly for the members of MAIA. Reprint by other than members without the express permission of the author is not permitted.