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Intentional Acts and Weapons Liability

There is nothing new about a business owner keeping weapons under the store counter or in the vehicle used to take deposits to the bank. The laws, however, raise questions about liability insurance for weapons-related incidents, so it’s a good time to brush up on coverage issues.
There are at least three ways an insured can injure someone with a weapon:
Accidental discharge of the weapon,
Intentional shooting with an intent to injure the person (shooting a criminal), or
Intentional shooting with accidental consequences (shooting an innocent person standing behind the criminal).

There’s no coverage problem with the accidental discharge. The commercial general liability policy covers the insured’s legal responsibility for bodily injury or property damage to others as the result of an accident. Costs for defense and payment of any subsequent judgment or settlement are provided.

For the other two types of incidents, however, the intentional acts exclusion in the policy presents a problem for the individual or commercial insured seeking defense or indemnity following a shooting incident.
The intentional acts exclusion in the CGL policy reads as follows:

2. Exclusions

This insurance does not apply to:

a. Expected or Intended Injury

“Bodily injury” or “property damage” expected or intended from the standpoint of the insured.

This exclusion does not apply to “bodily injury” resulting from the use of reasonable force by an “insured” to protect persons or property.

Most courts have treated this exclusion narrowly, so that not only must the action which causes the damage be intentional (striking a difficult customer), but the damages must be reasonably expected (broken jaw vs. paralysis). In an auto-related case (Tanner vs. Nationwide), the Texas Supreme Court said a similar exclusion in the personal auto policy is “effect-focused and cause-focused, voiding coverage when the resulting injury was intentional, not merely when the insured’s conduct was intentional.” According to the decision, if the exclusion were to preclude coverage for reckless acts that didn’t result in deliberate injury, insurance coverage would disappear for many accidents.
The exclusion applies to “the insured” who intentionally causes the damage, and not to all insureds who may be sued as a result of the damages. Thus, the named insured business would be protected in a suit brought by a customer who was intentionally injured by a third party or an employee of the insured.

The exception to the exclusion applies to bodily injury only, and permits the use of “reasonable force” by the insured to protect persons or property, such as when a store owner grabs a customer suspected of shoplifting or shoots a burglar or robber, and the customer or criminal later sues the insured as a result.

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The Hyatt Data Breach: What It Means for Employers and Employees

cyberOn November 30th, Hyatt Hotels discovered that hackers “managed to breach its network, access the payment processing system and possibly steal payment-card information belonging to visitors.”
The spokesperson for the hotel chain did not give details about the scope of the attack: how many customers were affected; how many of the company’s 627 hotels were affected; how long the network was infected; and what malware was used to attack the network. The company did state that “the malware was programmed to collect payment information, including card numbers, expiration dates and verification codes.”
Hyatt has assured the public that steps have been taken to strengthen the security of its systems in all of its hotels around the world. The hotel chain has also advised customers to review their payment-card account statements closely and to report all unauthorized charges to their card issuer immediately. Chris Smith, “Hyatt Hotels Chain hit with credit card stealing malware,” bgr.com (Dec. 25, 2015).

The Importance of Disconnecting in a 24/7 World

distracted-driving-720Smartphones and other smart devices have become an extension of who we are. Sixty-four percent of American adults own a smartphone, and 67 percent admit to checking them even when they aren’t ringing or buzzing with messages or call notifications.

We’re always on, and we’re always connected. But what is this constant state of connection costing us in terms of workplace concentration, performance and productivity? Here are a few effects of constant connection:

Sleep Loss — Smartphone screens emit a blue light that suppresses the production of melatonin, the hormone that tells your body when it’s time to sleep. When your sleep cycle gets disrupted, your concentration and memory can suffer.
Lack of Concentration — Researchers at Florida State University found that phone notifications alone were enough to significantly disrupt performance on tasks that required high levels of attention. Subjects were three times more likely to make mistakes while their phones were buzzing or ringing. The level of distraction was comparable to that of answering a phone call or text.
Less Creative Thought — Research has shown that some of our most original thoughts come during times of boredom, when our minds are free to wander and make new subconscious connections. But we’re spending so much time on our mobile devices, we’re not giving our minds any free time to roam.
Motivation Lulls — According to research, intuitive thinkers are more likely to turn to their smartphones when faced with a problem rather than use their own brainpower.
Tips for Disconnecting

Use Your Brain — Remember the good old days when you could easily recall phone numbers, home addresses and directions to a new neighborhood? Try doing things the old-fashioned way to keep your mind sharp.
Create a Schedule — Set aside a specific time to deal with smartphone notifications each day. During that period, you can check messages and return calls and emails. Don’t vary from the schedule unless it’s an absolute emergency.
Enjoy Downtime — Make sure your time off is just that. If possible, turn off the smartphone in the evenings and on weekends so you can concentrate on yourself.
Get Some Rest — Put the smartphone away an hour or two before bedtime so your body can properly adjust and prepare for sleep, and don’t forget to turn off the phone while you’re sleeping!

Insurance Lies Most People Believe

Myth-vs-FactMyths, legends and lies are hard to dispel and correct, especially when doing so appears to financially harm the teller or believer. If the myth is true, the teller/believer does not need to purchase the coverage on which the lie is based; but if the information is false, the insured is forced to make a business decision not previously required.

Belief in and dependence on an insurance lie can financially harm the insured far more than the additional premium necessary to cover the exposure masked by the myth. But be warned, exposing these, or any, insurance lies leads to charges like, “You’re only trying to make more money off me.” Or, “Well that’s not what ‘so-and-so’ told me.”

Remember, “so-and-so” being quoted is not the insurance professional; further, the mere fact that a multitude of people believe in a lie or myth does not change or alter reality.

Beyond the non-insurance “so-and-so’s” spreading these lies, there are also agents perpetuating some insurance myths. When insurance agents or other so-called “financial experts” put their seal on such harmful lies, correcting the problem is that much harder. Lack of knowledge or dependence on what the agent heard someone else say without checking the facts are the two main causes an agent might pass along false information.

Following is a short list of myths, legends and lies told by and believed by insurance clients. Some of these are the result of just plain ignorance (not stupidity, just lack of understanding); some are the result of an “expert’s” faulty advice; and a few are actually promulgated and spread by insurance professionals. The list is far from all-inclusive.

“If I don’t have anything, they (the plaintiff, lawyers and court) can’t get anything; you can’t get blood out of a turnip.”

Want to bet? The belief that an at-fault individual cannot be financially harmed because he doesn’t have much is one of the most insidious lies conceived by its originator. Future wages can be attached; possessions can have liens placed against them, etc. Many states don’t allow the court to take someone’s house in settlement, but the at-fault party will be unable to amass much beyond the house until the debt is satisfied. A lot of what can be done might be subject to state law, but the pound of flesh will somehow be exacted.

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

A slightly smarter version of the above lie. A person’s net worth is the value of all they own minus all they owe; why should it be the magic number, that’s not all the attorney is going to ask the court to award. More than one individual with a net worth of $250,000 (for example) has lost a $1 million (or more) negligence suit. A key rule of risk management is, “don’t risk a lot for a little.” Umbrella and excess policies are very inexpensive, bordering on cheap, compared to the limits that can be purchased – invest the small amount of money in the large amount of protection.

“That’s why I buy insurance.”

The context of this statement indicates whether this is a problem. If the insured has done all he can reasonably do to avoid a loss or injury (to the point of maximum benefit without undue burden), then there is nothing intrinsically wrong with this statement. However, if this statement is made because the insured is unwilling to take any or very few steps necessary to reduce the potential for injury or damage to persons or property, then his attitude has morphed into a moral hazard. While this may not be a limits or coverage myth, it is a statement that should make the agent question whether or not this is an insured with whom she wants to do business. Additionally, claims submitted by such individuals may need to be viewed with an eye towards possible “irregularities.”

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

Courts can and do pierce the corporate veil in small, closely held corporations. Not being able to provide legal advice (which is a disclaimer agents should provide), this is not to be construed as legal advice; but do not let a statement such as this one go by unchallenged. Governance and tax considerations should drive the choice of a legal entity-type, not protection against personal liability. A one- or two-man corporation can very likely expect to see the veil of corporate protection removed if the injury or damage is severe enough. Many insureds use this myth to avoid purchasing an umbrella or excess policy. As stated above, don’t risk a lot for a little; find court cases where the veil has been pierced and the affect on the owners.

“Insurance is all the same.”

This myth is the hardest to overcome. GEICO, Progressive, Allstate and others have effectively convinced individuals that insurance is all about price. Even insurance agents have contributed to this lie. My first phone calls as an agent began with, “I’d like to see if I can save you money on your insurance.”

Insurance should be about the protection provided not the cost. That is not to say the cost should not be considered, but you must consider the relationship you are building with your insurance carrier(s).

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

Who gives this advice; lawyers, insurance agents or the guy down the street who feels like he got away with an accident without it affecting his insurance premiums? I myself was a party to one of these situations on my way to visit a client.

Traffic was stop-and-go and the guy in the truck behind me neglected to do the first part – stop – and he rear-ended my vehicle. Pulling off the road into a parking lot to avoid holding traffic up even more, we exited our vehicles to inspect the damage. The driver apologized and admitted he just wasn’t paying attention (first mistake); talking further he asked, “I wonder how much it’ll cost to fix your bumper?” As it happened, we had pulled into the parking lot of an auto body shop, so I said, “Let’s ask.” (This is absolutely true.)

I found a service tech, he made a phone call and said it would cost $565 for parts and labor. The guy who hit me said, “Let me go to the bank, I’ll get you the money.” Now, I had him give me his driver’s license to hold until he returned to assure he would come back (he offered me his son to hold, but I already have two kids and didn’t want to risk adding a third). Fifteen minutes later he returned with cash in hand, I had the body shop order the part and the bumper was expertly replaced and he has nothing on his insurance or driving record. I did advise him to let his agent know, and I’m sure he did so that same day – NOT.

This appeared to work to his benefit; but what if, after thinking about it for a day or two, I decided to make some money off this accident? Is there a chance I could have begun suffering from “non-specific soft tissue injury” and developed some pain that could have only been cured by a large cash settlement?

The answer is, yes. Once he received a letter from my attorney and tried to report the claim to his insurance carrier, could they have denied the claim? Based on personal and commercial auto policy provisions, yes the claim could be denied as prompt notice was not provided to the carrier as per the “Duties…” requirements.

Make sure you notify your agent. From there, it depends on the relationship between your agent and the insurance carrier. Business auto policies state that the insured must notify an “authorized representative.” Personal auto policies simple say “We must be notified.” It is not clear if “we” includes the agent – that question is answered in the agency/company contract.

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

Most states require an employer with one or more employees to purchase workers’ compensation. However, 13 states don’t require workers’ compensation until the number of employees surpasses a certain threshold (usually three, four or five).

Regardless, statute is the minimum requirement in a particular jurisdiction. A contract can place requirements on the parties to a contract more stringent than statute; contracts just cannot relieve parties of statutory duties (allow them to do less than is required by law). Thus, if a contract requires a subcontractor to provide workers’ compensation coverage, then work comp must be provided even if the subcontractor has less than the minimum number of employees required by statute.

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

IRS and insurance rules differ greatly regarding the definition of an “employee.” Paying someone with a 1099 might make the worker an independent contractor for tax purposes (it’s not that simple with the IRS either) but there are far more stringent requirements within workers’ compensation administrative procedures as to whether the person qualifies as an independent contractor or an employee. Anytime a business owner floats this potential lie (or misunderstanding), more questions are needed to ferret out the truth. Examples of questions include, but are not limited to:

Does the employer/contracting party control the worker’s ways and means (i.e. does the employer tell the contractor when to show up, how to do the job and when to leave, or is the contractor free to perform the obligation and come and go as he pleases?);
Are the tools and materials supplied by the employer/contracting party or the worker;
Does the independent contractor work for anyone else or is his sole or major source of income the contracting party; and
Does the “independent contractor” carry his own insurance?
The level of control is the deciding factor when deciding whether a worker is truly an independent contractor or a “de facto” employee (based on the totality of the control). Don’t allow belief that a 1099 is sufficient to avoid accepting responsibility for an injury to the worker.

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

Well-meaning agents may have been the creator and perpetuator of this myth. First Report of Injury laws in some states do not require the state to be notified of an injury unless it surpasses a certain threshold. The labor department in one state, for example, does not have to be notified of an injury unless it exceeds $2,000 in medical costs or results in one or more days of lost work.

Based on those requirements, it sounds reasonable for an agent to tell an employer not to notify the insurance carrier of a small claim (the worker needed a few stitches and was back to work that afternoon). However, the law says only that the STATE does not need to be notified unless the injury surpasses that threshold; nowhere does it relieve the employer of its duty to notify the insurer. In fact, the workers’ compensation policy specifically mandates the employer to notify the insurance carrier of all work related injuries, not just those that must be reported to the state. The reporting requirements before a state  must be notified are those placed on the insurance company (or self-insured entity) not the employer. Employers must report all work related injuries “at once.”

Not only is this belief fallacious because of a misreading of the statute, it is also dangerous should an injury be worse than originally thought. Use the above employee as an example. He just cut his finger and had to get stitches, not problem. But suppose he develops blood poisoning leading to major complications later; the insurance carrier may hold a hard line and deny coverage for failing to comply with the policy provisions found in Part Four of the Policy (“Your Duties If Injury Occurs”). Belief in this lie could be very expensive.

(First Report of Injury requirements for all 50 states can be found in Appendix “E” of “The Insurance Professional’s Practical Guide to Workers’ Compensation.”)

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

Every structure located in an NFIP-participating community is in a “flood zone;” your house or building just may not be in one of the more hazardous zones. This is really trying to say, “I don’t need flood insurance because I’m not in a special flood hazard area (SFHA).” It’s just not the correct terminology, but your agent needs to and must know the correct terms when discussing flood coverage. Further, being located outside a SFHA does not guarantee safety from flood loss. Approximately 30 percent of all flood claims are to properties outside of “high hazard” areas (Special Flood Hazard Areas).

New Year, New Financial Outlook

web-criminal stoles moneyA national survey revealed consumers have an alarming lack of knowledge about their own insurance coverage. As the New Year gets started, Tower Insurance urges consumers to resolve to get their insurance coverage and finances in order.

More than one-third of consumers in the study said they have never conducted their own research prior to purchasing an insurance policy. Almost 40% of consumers in the study say they are not confident or only somewhat confident that they have adequate and appropriate insurance coverage for their needs.

The new survey also found that more than one-third of policyholders have not met with or even talked to their insurance agent within the last year. A new baby, marriage, divorce, death, home renovation or a major purchase could significantly impact your insurance needs and costs. We encourage consumers to stay in contact throughout these life changes, as they can be crucial to your financial security.

Tower Insurance Agency wants our consumers to understand the basics of protecting their family, home, finances, and property. When you review your insurance policies and budget, consider the following:

Know Your Limits

Insurance

One of the most important criteria when selecting an insurance policy is your coverage limit. For an example, Davis Dyer Max can increase the liability limits on a typical homeowners policy from $100,000 to $300,000 a year for as little as about $25 annually. Your coverage limits deserve a closer look.

Budget

Most people set financial goals at the beginning of the year, but by the time March rolls around, the goals have fallen to the wayside. Eric Amado of http://www.wfaa.com says, “Set realistic goals for yourself. Instead of trying to pay off your credit card immediately, allow yourself the year. Set a date and make a plan and you will reach that goal.”

Cheaper Is Not Always Better

Insurance

While price should be a factor in insurance decisions, choosing coverage based on price alone could ultimately be a costly mistake; Insurance policies differ widely, with varying deductibles, coverage limits and exclusions. Review your insurance policy and consider whether saving $50 per year on your premium, is worth the risk of not having thousands of dollars-worth of coverage if you ever need it.

Budget

Buying a more economical car, versus buying a more expensive luxury vehicle is commendable when trying to save money; however, buying cheaper appliances like washing machines and refrigerators can end up being more costly, than beneficial. The lifespan on appliances and other purchases may be so short that you end up having to replace the item anyway. Sometimes it is better to purchase quality from the start.

Don’t Disregard Discounts

Insurance

Many consumers fail to ask about insurance discounts for which they may qualify. Companies often offer some unique, regional, very specific and, at times, quirky discounts. When every dollar counts, some may be able to nickel and dime their way to big savings.

Check with your agent to see if any apply to you. These discounts can make a substantial difference in premium costs:

– Installing a security system
– Living in a gated community
– Updating the roof and/or wiring in a house
– Teen drivers with good grades
– Graduating from certain colleges
– Carpooling
– Budget

Subscribing to www.coupons.com and shopping at wholesale clubs are some of the basic ways to get discounts and get more bang for your buck. Ask your employer about discounts or cash back when opting out of using company insurance. Also, paying bills in a lump sum, instead of monthly, may turn into big discounts and savings.

Contact Tower Insurance Agency and let them be a guide to helping you the reach your 2016 Insurance and Financial goals. Happy New Year!

Home Buying Tips for the Single Guy or Gal

selling-your-homeWho says you need to be married to purchase a home? According to Bloomberg.com, single Americans make up more than half of the adult population—and many of them want to create their own version of the American Dream. Contacting your insurance agent can be the key to success for single folks who are in the market to purchase a home, but here are some things to consider in the meantime.

The Lone Ranger

Whether you’re single or married, purchasing a home has its challenges. It’s important to be fully armed with information in order to cultivate a plan that works for you.

To start, make a list of your current monthly expenses, take a gander at your savings account and evaluate your personal and professional goals. When you list your monthly expenses, be sure to consider pending expenses. If you’re fresh out of college, you probably haven’t felt the sting of paying student loans every month and going to work every day. If you have only saved enough for a down payment, think again—moving expenses like rental trucks and purchasing new household items can add up quickly.

Finally, don’t forget about life goals outside purchasing a home—if you plan to start a business or retire in three to five years, owning a home should probably be a dream deferred.

Lending a Helping Hand

The majority of homeowners obtain financing through a bank loan. When a married couple applies for a home loan, the bank can depend on two incomes to pay the loan back. But a single person must qualify and handle making the same payments alone. According to Time.com, “Banks are not allowed to discriminate based on marital status, but tighter lending standards can potentially pose a challenge to single buyers because they only have their own income to qualify for a loan.”

Before applying for a bank loan, be sure to tighten up your credit, pay off as many debts as possible and save a nice nest egg in order to show the bank that you don’t need another person to help you repay your loan.

Protect Yourself

You will likely need to obtain homeowners insurance in order to secure financing from the bank, but don’t wait until you apply for a loan to get insurance. Your insurance agent can be a valuable resource right from the start by giving you tips and connecting you with lenders, realtors and home inspectors—they work with these people on a regular basis.

Being single doesn’t mean you’re alone. Your insurance agent is the best partner you can have when you’re ready to buy your dream home.

Take a Home Inventory During the Holidays

home inventoryThe holidays are a time for celebration and family. Most people have a few extra days of vacation to relax, and some use this time to play catch-up or finish projects that have been looming for the past year.

You can utilize this time to complete (what should be) an annual home inventory. We don’t want to discourage you from doing inventory on your different-colored tube socks, but this home inventory is geared toward helping you maintain an accurate record of your valuables for insurance purposes. A home inventory is a list and visual record of all your personal belongings, which will help you find replacement items if you ever need to do so.

Use this as a quick guide, and then you can get back to your sock count!

Start from the purchase. Keep all receipts from large purchases like electronics, expensive artwork and jewelry. If you don’t have the receipts, use old credit card statements for proof of purchase.
Take photos. You should take photographs of all of your possessions for your records, and keep them with your inventory list.
Make note of serial numbers. Record serial numbers of items where applicable—you can provide these for police if your belongings are ever stolen.
Keep copies of records. Maintain your records in a safe place, preferably a fire-proof safe alongside other important information. In addition, keep electronic records by either emailing the information to your personal email or uploading it to a secure place.
Not sure what goes on the list? Think about this:

Buying a new teapot does not warrant a spot on the inventory. But if you just gave your kitchen a facelift that includes everything from new cabinets to appliances, definitely add those items and the labor to your home inventory.

Back to the socks!

Once you’re finished with the “official” inventory, go ahead and count those socks. Use this time to do the following:

Stock up for the winter by preparing all your essentials in case the weather gets bad: shovels, sidewalk salt, candles, firewood, canned goods and frozen meats.
Check all appliances—including your stove, water heater and thermostat—to make sure they are in good working condition before the weather gets too cold.
Get organized. Sort through the photos on your computer, upload CDs to your iTunes account and get rid of the Tupperware with no matching lids. You will thank yourself once the New Year is here!
Go through your clothes. Good rule of thumb: If you haven’t worn it in the last two years, get rid of it. Donate clothing to a shelter or go online to sell the items. You can use the extra space to make room for new Christmas gifts
If your home inventory reflects items that are not covered under your current policy, talk to Davis Dyer Max for additional information about coverage you may need. Enjoy the holidays!