Without carefully reading and analyzing all of the terms of all of your policies, you won’t know if a loss is covered until it is too late.
|Will the Insurance Compensate for the Loss?
“On January 13, 1960, at about 7 p.m., an automobile was seen traveling southwardly on U.S. Route No. 15 near Dillsburg in York County. It left the main right-of-way, crossed the berm, crossed over a grass plot in front of a gasoline station, returned to the highway and then after some general weaving veered off into a ditch where it abruptly stopped, its front end pointing downward at an angle of 45 degrees over a concrete culvert, its rear, like the stern of a sinking ship, raised high.” Brenneman v. St. Paul Fire and Marine Insurance Company, 411 Pa. 409 (Supreme Court of Pennsylvania 1963).
Mrs. Sarah G. Brenneman was found dead on the floor of the car. Mr. Brenneman made a claim against the insurance company for payment of $10,000 under the accident policy. The insurance company refused payment saying that Mrs. Brenneman’s death was not the result of an accident.
What is an accident?
The denial of coverage by the insurance company caused the Pennsylvania Supreme Court to muse about the definition of accident:
The insurance company contends that Mrs. Brenneman did not die as the result of an accident. What is an accident? Everyone knows what an accident is until the word comes up in court. Then it becomes a mysterious phenomenon, and, in order to resolve the enigma, witnesses are summoned, experts testify, lawyers argue, treatises are consulted and even when a conclave of twelve world-knowledgeable individuals agree as to whether a certain set of facts made out an accident, the question may not yet be settled and it must be reheard in an appellate court.
The insurance company insisted that the crash and the death could have been caused by dizziness or a blackout occasion by Mrs. Brenneman’s arteriosclerosis and hypertension. The court noted: “There could, of course, be the surmise that the lost control was due to dizziness or a blackout overcoming the driver, but such a surmisal does not lock the door of inquiry and ratiocination.” Sure Mrs. Brenneman had dizzy spells in the past, “But the dizziness of yesterday cannot didactically dictate the decision of today.”
The court noted that the decision as to whether the death was accidental was up to the jury because “whatever evidence it did produce was placed before the jury and the alembic of factual decision and, in the laboratory of their deliberation, the jury decided that no malady caused or contributed to Mrs. Brenneman’s death.”
Even if Mrs. Brenneman was at fault for driving her car with her conditions her death was still a covered accident. The court said people get accident insurance to protect themselves from their own mistakes:
Thoughtlessness, inattention, forgetfulness, miscalculation often are causes of accidents. People, in fact, often take out accident policies, not only to protect themselves from the fault of others, but from their own foibles and imperfections.
Do all of these policies actually cover anything?
As I was reading through literally 162 pages of our Business Owners Liability Coverage Policy with all of its conditions, limitations and exclusions, I decided I did not have enough color coded Post-it® notes to keep track of all of the conditions, limitations and exclusions which erode the overall sense that I have adequately covered the risks of my business. Then I realized that I still had an additional 42 pages of Commercial Umbrella Policy provisions including forms and endorsements.
Then of course there are the General Liability, Automobile Liability, Employment Practices Liability, and Employee Benefit Liability policies. The Workers’ Compensation Policy conditions, limitations and exclusions need to be considered in relationship to all of the other policies and conditions, limitations and exclusions. And, after all that, what is covered or excluded by the Cyber Liability Policy and what losses, such as business interruption, will be covered under it or the other coverages?
Whatever actually goes wrong always seems to have been excluded, limited or conditioned out of coverage!
Years ago one of my clients was concerned about an injury that had occurred to one of its customers in a foreign country. I asked for copies of the applicable insurance policies. Although the client was located in Arizona, all of its business was done in foreign countries. Yet, the insurance policies excluded coverage for anything outside of the United States!
When another client was sued for negligently hiring an employee who was used as an unauthorized referenced by fraudsters, nothing covered it. After all, the allegedly unqualified employee hadn’t personally misled anyone and hadn’t stolen anything.
Nervous about the endless pages of exclusions, limitations and conditions?
There is no substitute for carefully reviewing all of your insurance policies with an experienced and capable insurance broker and your business attorney. Please let me know if you have questions or concerns about your business insurance coverages.