What Does Your Insurance Coverage Cover?

insurance coverage

You have probably seen the television commercials for the insurance company that claims it has seen almost everything, so it knows how to handle almost anything. The commercials are interesting and get lots of views on YouTube. Insurance coverage issues themselves are a lot less amusing, but still deserve serious attention. The fact is that insurance companies “handle” things for which the person or company they are insuring has obtained coverage. So, in terms of the commercials that talk about the insurance company handling damage done by a grizzly bear swimming in a backyard pool or lightning striking a riding lawnmower, those claims were handled by the insurance company because they were covered by the insurance policies purchased by the people seeking to make the insurance claims. That principle applies not only to bears and landscaping equipment, but to all aspects of general liability and homeowners’ insurance. If the loss is not covered, the insurance company does not have to pay. The time to investigate, understand and confirm coverage is before a loss occurs. Once a loss occurs, it is too late and there could be serious financial consequences. It pays to invest the time to understand your coverage and your coverage options because if you don’t, your insurance company may not pay when you need it to.

As a business owner or homeowner, you need to evaluate what your risks are, what coverage you need, what coverage you have and what the monetary limits of that coverage should be. You should not assume that the coverage you purchased covers all likely losses you may incur.

Rosenbaum & Taylor recently conducted an insurance coverage review for a client whose company performs work on the outside of high-rise buildings. Our review revealed that the primary insurance policy the company had purchased does not cover work being done from elevated platforms or scaffolding. Since all of the company’s work involves that very type of equipment, functionally, the insurance policy does not cover anything relevant to our client’s work. Although our client thought it was covered for foreseeable, relevant and likely risks normally associated with its business, it was, in fact, not covered. And, as you can imagine, if a lawsuit arose out of an employee who fell from a scaffold at a significant height, the client could have been subject to huge financial risks for which it was unknowingly not covered by insurance. Fortunately, we were able to advise our client before it was faced with such a claim for which it did not have insurance coverage. In that way, our client had the opportunity to purchase the correct insurance that covered it for the risks inherent in its business.

As another example, a recent insurance coverage review for one of our clients revealed that the client’s general liability policy has what is known as an “employee exclusion,” which means that there is no coverage for claims made by, or on behalf of, employees of our client for personal injury or wrongful death. Since, in our client’s line of work, personal injury and wrongful death are the losses it is most at risk of suffering, the employee exclusion effectively eliminates coverage for any claim the client might expect to have. Although, in New York, an employer generally can not be sued for injuries suffered by its employees, there are cases where employers can be sued and brought into lawsuits when an employee has suffered death or a “grave injury.” In those instances, if there is an employee exclusion in the general liability insurance policy, the employer may find itself in a lawsuit for which it does not have insurance coverage. This surprise, which can be financially devastating for a business, can be avoided if the appropriate insurance is in place. Again, in the case of our client, it was able to obtain the correct insurance before it got sued in a lawsuit involving a deceased or badly injured employee.

Rosenbaum & Taylor also recently performed an insurance coverage review for a client in the construction industry and discovered that the company’s insurance policy had been written such that our client only had insurance coverage for accidents that occured at the company’s own office. Therefore, if an accident occurred at a construction site where our client was performing work and our client got sued, in all likelihood the general liability insurance company would have refused to provide an attorney or cover any damages resulting from the lawsuit. Since our client performs work throughout New York City and New York State and had purchased its general liability insurance through an insurance broker, it understandably, and mistakenly, thought that it had secured insurance coverage that would pay out on claims made in connection with the construction work it was doing on those jobsites. Fortunately, we were able to discover the issue before our client faced a potentially financially disastrous lawsuit and our client was able to secure the proper insurance coverage, covering it for potential losses occurring wherever our client was working.

We also had a client that performed both interior and exterior construction work. Unbeknownst to our client, it had general liability insurance coverage, but only for accidents that occurred inside. Unfortunately, a construction worker for another trade got injured, allegedly due to the work done by our client. Our client got sued and immediately contacted his insurance company. The insurance company investigated the accident and reviewed the insurance policy it had with our client. As a result of the provision in the contract that limited the insurance coverage to indoor accidents, the insurance company denied coverage to our client. Unfortunately, because of how the insurance policy was written, the client had no rights against the insurance company and it was forced to hire, and pay, its own lawyer and sweat out the results of the lawsuit. Had our client asked us to review its general liability insurance policy before the accident, and before it got sued, we could have advised it accordingly so that it could have purchased the correct insurance to protect it from instances such as the one now facing it.

Likewise, we had a construction subcontractor client that frequently entered into contracts that required it to take out general liability insurance that not only protected it, but also protected the building owners and/or general contractors that hired it. However, in fact, the insurance policy our client had did not provide the necessary coverage so that, after an accident in which a building owner was sued, our client was exposed to a breach of contract claim, as well as a claim for indemnification and attorneys’ fees. Had our client asked us to review his general liability insurance policy before he started the job, we would have been able to advise him and, subsequently, he would have been able to procure and maintain the necessary insurance to have protected him in the lawsuit he was now dealing with.

Let us help you review your insurance coverage and make sure that you have coverage for the risks relevant to your particular business or industry. We can likely save you the headaches and expenses inherent in finding out too late that a loss you expected to have covered by insurance is not.

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