Unfair Claims Practice – Part 1

Faithfully handling your premium payments creates the expectation that your insurance company will investigate and, if applicable, pay for a loss. Loss payment includes taking care of expenses associated with settling a loss, including handling the defense costs of a lawsuit.

In most instances, disputes with an insurance company are legitimate disagreements. Parties may, justifiably, hold different positions on whether a certain loss is covered or, if covered, the amount of the loss. It is unfortunate, but sometimes an insurance company may have an attitude toward paying claims that fails to meet your expectations. In fact, a company may deal with you unfairly. Your right to fair treatment is, generally, protected under state law. State agencies, typically via a special insurance or commerce division, are responsible for seeing that insurance companies and agents are true to the commitment represented by the insurance policy.

Most states actively enforce the requirement that insurers fairly settle valid claims against their policies. Insurance companies and agents operating within a state are also provided with complete information regarding unacceptable claims practices. A state's rules on settling claims are based on the National Association of Insurance Commissioners (NAIC) Unfair Trade Practices Model Act. The guidelines, developed from the original act and other regulations (which vary by state) are meant to shield you from practices that are misleading, unfair or deceptive.

For more information on such practices, please see part two of this article.


Unfair Claims Practice – Part 2

Part one of this article explained that policyholder have the right to expect their insurers to handle valid claims in a fair manner. We also mentioned that most states have rules that prohibit unfair claim practices. Here are some examples of such practices:

  • Attempting to settle a claim based on an application which the company has changed without the insured's knowledge or permission
  • Delaying a claim investigation by requiring unnecessary reports or documents
  • Failing to act promptly after receiving information concerning an insurance claim
  • Failing to comply with prompt claims investigation standards
  • When applicable, failing to pay a claim quickly, fairly and equitably
  • Failing to promptly settle claims where liability is reasonably clear under one portion of the policy to influence settlement under any other portion of the insurance policy coverage
  • Make it a standard practice to file judicial appeals on trial judgments
  • Failing to promptly and clearly explain the basis in the policy or the law for either denying a claim or offering a compromise settlement
  • Require policyholders to travel unreasonable distances to use specific repair shops (for estimates and/or repairs)
  • Discouraging a policyholder from using arbitration
  • Misrepresenting significant facts or insurance policy provisions
  • Refusing to keep an insured informed of claim developments within a reasonable time after receiving a completed proof of loss statement
  • Denying claims without a reasonable loss investigation
  • Offering very low settlements to encourage policyholder to sue
  • Settling claims for amounts that are lower than a reasonable person would expect

The best way to avoid problems is to deal with reputable agents and companies who are committed to properly serving their customers. Your insurance agent would be happy to discuss your concerns and/or expectations about making an insurance claim. Take advantage of his or her expertise.

For more information on claims practices, please see part one of this article.


Land Surveyors Professional Liability

Land surveyors are highly educated and trained professionals, who develop information, create reports and maps that others rely upon. Their work is used to establish property boundaries, determine where to locate structures and assist in assessing various land features. If the land surveyor’s computations are inaccurate, any subsequent action taken by others because of that inaccurate information may need to be redone which can be very costly and lead to lawsuits. Protection against being sued for such mistakes is available under a form of errors and omissions insurance called land surveyors professional liability.

The coverage pays for damages that a surveyor (or insured surveyor’s employee, partner or his or her firm’s executive officer, director or stockholder) becomes legally obligated to pay due to allegations of loss resulting from errors, omissions or negligent acts. Those acts must be directly related to the performance of land surveyors’ professional services.

Professional liability claims tend to be complex and expensive. Often the insurance company that provides a professional liability policy tries to control its costs by providing legal defense as part of the policy’s coverage limit. However, this can cause a significant issue for a policyholder. Defense expenses could chew up the insurance coverage available for a loss.

Because a lawsuit often alleges an error or mistake made by a land surveyor, such individuals are allowed input how a loss is handled because the result reflects directly on his or her professional reputation. Policies usually contain a “Permission to Settle” provision. If the insured disagrees with an insurer's desire to settle and, later, the claim or suit is settled for an amount greater than what the insurer originally offered the insurer is obligated pay only the amount of the original offer.

Exclusions and limitations depend completely upon the policy issued by a given insurance company. Generally, regardless the insurer, a land surveyor liability policy does not cover losses caused by the following:

·         The performance of services not customary to a land surveyor

·         Certain activities – such as subsurface ground surveys, major tunnel or bridge projects, product design or manufacture, etc.

·         Bankruptcy

·         Missed Deadlines

·         Contractual Liability

Land Surveyor professional liability coverage is a critical form of protection that supplements the routine, premises and non-professional coverage provided by a general liability policy. An insurance professional is a person to contact to make sure that such protection is secured.


Active Shooter Risk – Part 1

Headlines tragically remind us quite frequently that many aspects of our lives have become unavoidably dangerous. Sadly, this danger is due to the whim of individuals and access to weaponry. The deadly risk is the “active shooter incident.”

An active shooter incident describes a situation in which at least one person is actively killing or attempting to kill persons in a populated area. Naturally, as we are referencing a shooter, such incidents involve firearms.

Active shootings are becoming more common. Studies made by the FBI between 2000 and 2015 indicates annual mass-shooting events rose from 6.4 per year to 20 per year. Studies also show that most shootings take place within a business or school (educational) environment. The frequency of shootings is accompanied by, on average, an increase in the number of persons killed or wounded per event.

As with any other risk that becomes significant, it is very important to find a strategy to deal with active shootings. Insurance is among the tools helpful with both pre- and post-incident planning. However, much uncertainty exists regarding protection for active shooter losses.

First, there is customer expectations. Insurance consumers may be under the impression that damage and injury created by shooters are covered. Second, the insurance market is fragmented over the issue depending upon how incidents are interpreted. Coverage may be sought from existing policies that individuals, commercial or non-profit entities may already carry, including General Liability, the Liability portion of Homeowners, or Workers Compensation. On the other hand, responsibility for harm due to a shooter may need to be covered by a form of professional liability policy as the obligation to protect against shootings may considered as a failure to provide adequate security.

Confusion may also be caused by insurance policies via the silent coverage problem. An insurance form is considered silent when it neither specifically names nor excludes a source of loss, such as shootings. It can be chaotic during the time it takes to clarify coverage gaps.

The insurance sector has a reputation as being slow to react to change. Of course, speed is never at the level that most would wish when new coverage issues arise. However, the insurance market has been stepping up and addressing the serious active shooter exposure. While there is the option of trying to amend standard policies to add protection, other ways that coverage is being addressed are separate policies that supplement insurance protection with a variety of services.

Please see part two for more information on this issue.


Active Shooter Risk – Part 2

As we mentioned in part one of this discussion, a strategy for dealing with this exposure involves a significant amount of pre- and post-incident activity. Active shooter programs commonly involve the following:

Non-Insurance Services


Risk Assessment

Employee Crisis Training

During Event

Crisis Management

Second (Event) Responders (those who supplement initial, emergency action of fire, medical and police [first responders] and handle return services and site clean-up.)


Counseling Services

Psychiatric Care

Public Relations Disaster Team

Investigation Assistance Funds (Rewards)

Expenses for additional, temporary security measures

Insurance Services

Liability Coverage for Lawsuits due to loss created by active shooting incident

Limits vary from $250,000/$500,000 up to multi-million dollar maximum

Business Income and Extra Expense

Limits vary from $1 million up to $100 million

Emergency medical care

Rehabilitation Expenses

Funeral and Burial Expenses

Marketing for the product targets those who are most vulnerable to this exposure such as Educational institutions, Entertainment organizations, Hotels, Healthcare providers, Religious institutions, Retail organizations, Shows (ex. Fairs, Trade Shows and Rodeos.)


Hobby or Business – Part 1

Your hobby may significantly affect your insurance needs. Hobbies often require a large investment in tangible property and may even create some legal responsibility to other persons or their property.

Hobbyists: Collectors or Enthusiasts

Hobbies typically involve either collectors or enthusiasts. A collector acquires property that especially attracts him or her. Examples include people who collect stamps, art, coins, autos, antiques, comic books, baskets, dishes, glassware, sports memorabilia, etc. An enthusiast also collects a certain type of property. However, the enthusiast acquires property to pursue a given, physical (particularly sporting or artistic) activity. Examples are hunters, musicians, painters, sculptors, cyclists, and enthusiasts of many types, such as fans of model or radio control planes, helicopters, etc.

With collectors, the focus should be placed on the nature of the property being acquired. With enthusiasts, besides attention to the property exposure, there should be equal emphasis on the liability exposure that is inherent in their activity.

Property Coverage Needs Created By Your Hobby

Your special property should be properly insured. Most homeowner policies provide minimal protection for collectible property. Why? Items such as coins, stamps, antiques, guns, etc., are often fragile. Also, such property is very valuable in relation to its size. The value of collectibles kept in one room may be more valuable than all the rest of your home's contents. Regular homeowner coverage is not designed to handle high-valued property that is easily destroyed, lost or is vulnerable to theft.

Even when collectible property is eligible for a policy's full coverage, this may not be enough. You may want your special property to be covered from more causes of loss than your family room couch. It may be worthwhile to buy an endorsement to add additional coverage for your collectibles to your homeowner policy. Depending upon the type and value of your collectibles, you may even have to consider specialty coverage which typically makes consideration for replacement cost and for property that appreciates in value.

Liability Coverage Needs Created By Your Hobby

If your hobby is more hands-on, then be sure you're protected against any legal liability related to your activity. Ask yourself the following:

  • Are there any dangers associated with the hobby?
  • Does the hobby involve frequent travel to sites or meets?
  • Does the activity attract frequent visitors to your home?
  • Do you publish hobbyist newsletters or give advice to others?
  • Do you actively sell or trade property on or away from your home?
  • Does your activity involve equipment that's inherently dangerous to others?

Get Serious About Protecting Your Hobby

Fortunately, many aspects of a hobby, especially legal liability, are covered by a homeowners policy. However, your activity may need special or even business coverage (see part 2 of this series). The way you spend your leisure time should be a happy diversion. Don't let your enjoyment be interrupted by inadequate protection. Discuss your special interest with an insurance professional who has a special interest in meeting your coverage needs.


Hobby or Business – Part 2

Please also see Hobby or Business – Part One.

It’s likely that you depend on your homeowner or residential insurance policy to handle losses connected to your hobby or activities. A homeowner (HO) policy usually includes a definition of “business.” A given policy may use a definition so broad that nearly any activity qualifies as a business. In such instances, a hobbyist or enthusiast should consider whether business insurance is necessary.

Let’s say you love photography and you take pictures at weddings and other events to finance this passion. While you consider this to be a hobby, your insurer may define your activities as a business. If your camera equipment is stolen or damaged, there may be as little as $250 protection under your HO policy. HO coverage for business property differs depending on whether it is located at or away from your residence.

Imagine the photography situation again. This time, you’re at a wedding job and have just set-up a perfect shot of the bridal party. As you are snapping a few shots, a large boom stand with hot lighting equipment tips over, injuring the maid of honor and the flower girl. A homeowner policy may exclude coverage if the injured women sue you since the injury is part of a business activity.

There are numerous types of sales and service jobs. These include cosmetics, clothing, kitchen supplies, home decorator items, computer repair, web site design, photography, music lessons, auto repair and many contractors. Each job involves some type of business property that is excluded or severely limited under the homeowner policy. Therefore, each situation may need to be covered by business insurance.

Although independent consultants are in business, too often they think their HO policy will provide coverage because they don't have special equipment or leave their home office to run their business. Office furnishings such as laptops, iPads, desks, chairs and file cabinets are subject to HO policy limitations. Without adjustments to the homeowner policy there may be little or no coverage for property used in a business.

The legal form of the business may create a need for business insurance. If a limited liability company, corporation or partnership is formed, the related activity is a business and needs business coverage. Also, most HO policies will not provide coverage for employees or for any professional liability.

What can you do? First, determine if your activities qualify as a business. Then talk to an insurance professional to determine what coverage is provided by the policies you currently have and what options are available to fill-in any gaps in protection.


Boatowners Coverage

The insurance approach for covering boats and boating property is quite like what is used to protect cars and homes. Essentially insurance is offered on a package basis, meaning that there is coverage for physical property as well as protection against the legal and financial consequences of injuring others or damaging property that belongs to others.

Property Coverage - Typically a boatowners policy covers:

  • Boats - Refers to property designed to travel on water and includes sails, its permanent equipment, spars and fittings.
  • Boating Equipment - Includes a wide variety of property that is used in conjunction with boats and it includes accessories. Items considered as equipment are property used for communication (radios), navigation, sonar, radar, outboard motors, dinghies, skis and sports equipment (recreational flotation devices) that are towed by boats and similar property. As a rule of thumb, the more related an item is to the ownership and use of a boat, the greater the justification to classify it as boating equipment.
  • Boat Trailers - Trailers used (and designed) for transporting boats (as defined by the policy).

This property must be owned by the person who is named as the policyholder. There are limited instances when such property that is temporarily in the policyholder’s possession also qualifies for coverage.

Items and situations that aren’t covered include boating property that is used in business activity, losses that involve races or competitions (an exception is made for sailboats) and boats that are used, full-time, as residences.

Liability Coverage - Besides protecting boating property, a boatowners policy also responds to claims or lawsuits caused when another person is injured, and /or when another person’s property is damaged or destroyed. An example would be a collision where the owner of a large speedboat collides with a person on a jet ski, seriously injuring the rider and demolishing the jet ski. The policy would handle both portions of such a loss. The liability portion would also provide a legal defense against lawsuits.

Another important coverage under the liability section is medical payments. This provides reimbursement for, typically, emergency or immediate medical treatment expense. Consider a person who slips on a boat deck and needs transportation to an emergency for treatment of a broken bone or concussion. Such costs would qualify under medical payments.

As is the case with property coverage, there are liability situations that are NOT covered by a boatowners policy, including losses that involve business activity, transmission of communicable disease, unauthorized operation of boating property, intentional acts, and criminal activity.

Boating property is a substantial investment and boatowners coverage is an efficient, affordable way to guard against accidental losses.


Assigning Benefits May Be Assigning Trouble

Homeowners (HO) Insurance policies are contracts between the owner of an insured home (named insured) and the insurance carrier. When a covered loss occurs to a home, the owner gets the policy’s benefit in the form of a loss payment.

There has been a development with HO claims in Florida, a location that often affects national trends.  The development has been the use of assignment of benefits on a post-loss basis. The typical situation involves water losses. Initially, a homeowner may suffer a loss involving a failure of part of a home’s plumbing system. A plumber is called in to address the failure; however, there will also be significant damage to the property and contents that will need cleaning and restoration service. This is the point of concern.

Increasingly, the vendor handling the clean-up process may require the homeowner to sign a service agreement. Included in the agreement is a provision where the homeowner assigns the payment benefit for the clean-up and restoration to the vendor. Once the vendor completes its service, it presents a bill to the insurance company. It is, typically, at that point where the insurer first becomes aware of the completed work and the benefit assignment. This is an unwanted development since, not being aware of nor having granted approval of the agreement, the insurer has lost its chance to investigate a claim as well as to have any control over the costs associated with handling the claim.

It is unclear whether an insurer can claim a distinct right that it has a chance to approve such assignments. Standard policy wording includes a provision that a policy may not be assigned without the insurer’s approval, but there’s no specific mention of benefits. There is a difference since assigning a policy means that the total interests and policy rights have been transferred to a different party. The benefits assignment involves rights of payment for a given loss being transferred. So far, courts have not been consistent in interpreting and resolving the issue.

Homeowners suffering losses who are presented with service contracts should review them carefully and immediately contact their carrier before agreeing to any form of assignment. The action will allow the insurer to evaluate the loss situation in a manner that preserves its options and rights. It will also mitigate the chances of a denial or of a coverage dispute between the insurance company and a policyholder.



Insurance And Public Policy – Part 1

You are likely aware that insurance policies are contracts. They’re agreements between policyholders (First Party) and insurance companies (second party). When an insurance policy’s coverage goes beyond protecting property to include liability protection, you have third parties. Then, insurance contracts may involve claims they make against a policyholder, alleging that the first party has caused them harm (injury or damage to their property).

Insurance policies serve us properly when they operate lawfully. Like other contracts, insurance provides private and public benefits. They reimburse or stand in the financial place of persons facing financial harm or who may owe financial obligations to others because of their acts. Insurance is a method of recovery from accidental losses that could be financially crippling.

Insurance, in restoring the financial positions of individuals and businesses, helps the general public which would suffer if that form of protection were unavailable. Therefore, insurance aids public policy.

Public policy refers to the actions, laws and regulations used by government entities, locally, regionally, state-wide, etc., to achieve economic, political and social objectives. All these areas directly affect the daily lives of citizens. Public policy is usually based upon foundation blocks, but is also dynamic and evolving. It should be consistent, achieving a positive impact on how we interact with each other and various, myriad areas.

Actions that are counter to positive, desirable outcomes, which lack fairness, equitable treatment, etc., may be deemed to be against public policy. A recent example involves one state condemning insurance contracts that provided coverage for firearm liability. In this instance, state regulators ruled that covering losses which did not strictly involve incidents of self-defense were against public policy.

Please see part two of this discussion for specific contract elements that are not desired and which should be avoided, including aspects of insurance.

COPYRIGHT: Insurance Publishing Plus, Inc., 2018

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.



Insurance And Public Policy – Part 2

Part one was about the concept of public policy. As mentioned, it involved desired actions which contribute to the benefit of all, in balance. Naturally, to guide actions and promote such outcomes, we depend on the application of regulations and laws. In this case, what are contract issues that, regarding public policy, are deemed to be detrimental?

The following are agreements which are not acceptable and are routinely prohibited. IMPORTANT: these are generalizations which may only be finally judged via the courts. However, you should find the following situations to be ones to avoid in informal or formal arrangements as they are, typically, deemed to be against public policy.

  • Agreement to Commit a Crime
  • Agreements Restricting Personal Liberty
  • Agreements in Restraint of Marriage
  • Agreement in Restraint of Trade
  • Champerty Agreements – arrangements to shares spoils from lawsuits
  • Creating Interest Against Duty
  • Defrauding Creditors
  • Interference with Marital Duties
  • Maintenance agreements – preserving litigation by a party that holds no legal interest in the dispute
  • Marriage Brokerage Agreements – marriages entered because of financial inducement
  • Restraint of Legal Proceedings – such as improperly affecting enforcing rights or limitations
  • Restraint of Parental Rights
  • Stifling Prosecution
  • Tending to Create Monopolies
  • Trading with Enemies
  • Traffic (corrupt influence) in Public Offices

Be aware that, insurance policies which, somehow, involve elements such as or similar to the above would be considered moot and not enforceable. You’ll find that some of the items mentioned above appear as policy exclusions, reflecting their negative status.

COPYRIGHT: Insurance Publishing Plus, Inc., 2018

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


Electric Scooters – Part 1

One hot “new thing” is becoming a tricky source of loss, electric scooters. E-Scooters are a natural outgrowth of ride-sharing/ride-hailing and a concern to find more eco-friendly transportation. Several companies such as Spin, Lime, Scoot and Bird, have targeted locales with dense populations and traffic issues including Denver, San Francisco, Washington D.C., St. Louis, Santa Monica, Seattle and Indianapolis.

Some cities have fought against the disruption caused by E-scooters. E-Scooter Rental companies have usually taken a strategy used by more mature, sharing and gig economy players such as Airbnb. Rather than adhere to traditional business entry practices, such as undergoing licensing or permit protocols, E-Scooter companies often show up in an area overnight, without advance notice. The hope is that the service will be used immediately and, once becoming popular with citizens, the companies bank on receiving approval-after-the-fact.

The strategy is bold, but it has repeatedly worked, even, eventually defeating resistance by local authorities. While some locations have brought legal action or have banned their use, this sort of transportation is likely to expand for various reasons, including the following:

  • Scooters are easy to operate and are efficient for use in business districts.
  • The public appears to be very receptive to scooter use as statistics on their use showing rapid acceptance
  • Renting scooters are facilitated by easy-to-use smart phone apps
  • Scooters are very inexpensive to use

Another driver that will boost the E-Scooter market is that companies such as Lyft and Uber have begun their own efforts in making scooters available. In light of these developments, both businesses and the general public should become more aware of the various risks related to scooters.


Please see part two of this discussion for more information.

COPYRIGHT: Insurance Publishing Plus, Inc. 2018

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


Electric Scooter?s – Part 2

Part one of this discussion was about the emergence of the use of E-Scooters. This part discusses their use and risks in more detail.

E-scooters are quite representative of newer business models that are called disruptive. They depend upon the imagination of potential customers who, reliably, create unanticipated uses. E-scooters are made accessible via smart-phone applications that allow users to unlock, operate and terminate their use, including mobile payment. Uses are both recreational and commercial, creating both personal and commercial exposures.

Scooters are very attractive for persons in congested areas for various uses such as use for trips where taxis or public transportation would be too expensive or impractical. They may be used to add fun in experiencing downtown parks or cutting down travel time to get to dining spots, concert venues, theaters or sports events. They would also be a simple, natural way to supplement personal vehicle use or public transportation as a method of “last-leg” or “first-leg” transportation.

E-scooters are just as amicable to use by persons during their workday. They may be used to traveling to nearby meetings, going to lunch, make simple deliveries or run other business errands.

Personal and business users must become aware of the dangers that scooter use create for others. Pedestrian collisions typically only create embarrassment and apologies. E-Scooters are motorized vehicles that may reach speeds up to 15 mph. Certainly, along with the added mass of users, they may be capable of causing serious pedestrian collisions. Since many cities prohibit motorized vehicle use on sidewalks, they may also trigger roadway accidents.

Personal liability for injury or damage during personal E-scooter use may have to be sought under the liability portions of residential insurance policies. The liability connected to business use can be more complicated. Commercial coverage tends to be more specific regarding what may be covered. Businesses that don’t have normal vehicle coverage may not have protection that it may extend to accidents caused by their employees. Even when coverage is, technically, available, loss circumstances may not be eligible. For instance, consider a company having company rules that forbid its workers to use scooters for business purposes. Another problem could be an accident due to an employee using a scooter on sidewalks when local law requires them to be used only on roadways.

E-scooters create significant liability concerns. Their use should be accompanied with the assurance that the users are aware of how they are protected in the event of a loss. Workers considering their use should also be aware of any employer rules that may apply.

COPYRIGHT: Insurance Publishing Plus, Inc. 2018

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


Every Day I’m Shoveling?

If you live in the desert or tropical climates, this article is not for you. However, if you own either a business or residential property in an area that experiences frigid, winter weather, this season adds a burden that needs your attention…..snow removal.

Both residential and commercial property owners know the familiar drill after a significant snow fall. It involves either picking up a shovel, starting up the snow blower, or hiring a snowplow service to clear out the driveway or the employee and customer parking lots. In many instances, the removal effort ends there…and that may represent a shirked responsibility.

Once driveways and lots are clear, many property and business owners forget about sidewalks and other paths used by pedestrians. Besides being a poor neighbor, failure to clear walkways may cause other problems. Snow that hasn’t been removed makes it very difficult for pedestrians to make their way, whether it is to school, work or to go shopping. It also creates extra danger.

Sidewalks are often close to streets and snow that is cleared for vehicles is usually piled along walkways. Pedestrians often have to deal with snowfall amounts that are supplemented by added snow from plows. Pedestrians may be forced to enter the edges of streets to walk, going through road slush and ice while dangerously close to vehicular traffic. It is very important for property owners to clear their adjacent, snow-covered walkways.

Snow removal isn’t just about being a good residential or business neighbor. It is typically a legal requirement. Many cities and towns have active ordinances requiring that walkways be cleared for use. Failure to do so may result in warnings and fines. The latter can easily become substantial since they could be levied on a daily basis.

Another, more critical, concern is to practice risk management. A pedestrian injured while trying to navigate an obstructed walkway can easily lead to a lawsuit. Why would any reasonable property or business owner want to voluntarily face such a preventable source of loss?

COPYRIGHT: Insurance Publishing Plus, Inc. 2019

All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.


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