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Risk Management

Location is Key to Accurate Auto Insurance Rates

Location is Key to Accurate Auto Insurance Rates

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A recent automobile insurance case in Maine was a victory for fine print. The Dairyland Insurance Company came up against someone who had provided false information on their insurance documents and purchased auto insurance in a different state than the one they were living in. In some cases, an insurance policy cannot be rescinded, which makes this case particularly interesting in the insurance industry.

There are, however, rules regarding falsifying information in order to receive insurance discounts, better rates, and other benefits. As McArthur Sullivan found out, legal fees cost a lot more than just paying a bit extra for your automobile insurance in the first place.

The Case

The case involved a man named McArthur Sullivan, who had purchased multiple personal car insurance policies for his vehicles. He purchased these policies and, on his insurance contract, stated that he lived in Wales, Maine, and kept his cars there as well.

Dairyland Insurance Company, found out that Sullivan had misrepresented himself with the personal information he had given them in order to insure his vehicles. Rather than living and storing his vehicles in Maine, as he had previously stated, evidence was found that he lived in Massachusetts and garaged his vehicles there as well.

The Insurance Company then sought to rescind the insurance policies they had given Sullivan, which resulted in a court case when Sullivan protested the nullification of his existing auto insurance policies.

A federal district court in Maine tried the case and found that an insurance company can pull a policy if the policy was based on false information provided by the person seeking insurance coverage. The application for Sullivan’s insurance policy included a statement that said that any false, incomplete, or misleading information put on the application could lead to consequences that included imprisonment, fines, or a denial of insurance benefits.

Dairyland also provided documentation that stated their right to rescind any insurance policy that was based on misrepresentation or circumstances that affected an applicant’s eligibility of risk (such as where they and their cars reside). This also includes situations where the insurance policy premium is lower than what they would pay if they had provided correct information.

For instance, if Sullivan had purchased auto insurance for his vehicles in Massachusetts, his payments would have been higher than he was paying in Maine.

Maine law also backs up Dairyland’s claims. Maine’s laws state that an insurance carrier can indeed pull an insurance policy that was given as a result of omissions or false information.

The Result

Dairyland won the court case due to the amount of evidence it had that stated a person must provide accurate information about themselves and their vehicles in order for the insurance policy to be considered valid. Maine law and Dairyland’s own insurance contracts provided a foundation for the court case to be heard in a federal court.

Dairyland was able to prove that Sullivan misrepresented himself on purpose and with the intention of gaining benefits from the false information he put in his application. The court found that Dairyland would not have issued an insurance policy to Sullivan based on the actual facts he would have put in his application, had he truthfully represented himself and his situation. The court upheld Dairyland’s decision to rescind Sullivan’s automobile insurance policies.

This case could have further implications not only for the auto insurance industry, but for other insurance policies as well. If someone is issued an insurance policy based on false or withheld information in their profile, an insurance company could be well within their rights to take away that insurance coverage if the person is found to have falsified application information.


THE SKYLINE DIFFERENCE

Other brokerages take a cookie cutter approach to insurance and outfit their customers with generic coverage.  Skyline is different.  We believe insurance should be built on innovation and experience. We appreciate the fact that every engagement is unique and understand proper coverage requires a deep understanding of the underlying business and individual.

"The opportunity to safeguard your concerns is a privilege we never take for granted."
 
 
 

Understanding Liability Under the False Claims Act

Understanding Liability Under the False Claims Act

Over the years, government compliance requirements have grown and grown. They've become more intricate, too – as have the tools needed to enforce them. Using a wide array of enforcement methods, the federal agencies work to control and enforce compliance.

There is one tool the government uses that affect contractors more than others – the False Claims Act. While understanding the False Claims Act can be difficult, it's imperative for contractors and surety professionals. The risks associated with violating the Act are significant.


What is the False Claims Act?

Before we get too far in, let's break down the False Claims Act. While complicated, the Act boils down to this: the law imposes liability on companies and individuals who defraud any government program. The federal government uses the act as the primary litigation device in fighting fraud against the government.

Not Too Difficult?

Contractors are typically aware that defrauding a customer, company, or government is completely prohibited and illegal. The False Claims Act extends beyond full-on fraud. A doctrine known as the "false certification doctrine" states that a contractor who falsely states they have complied with a variety of compliance policies imposed by the government can be held liable under the False Claims Act.

Violating the False Claims Act is far easier than committing traditional fraud. The government doesn't have to prove any damages suffered. They simply have to find a contractor who has submitted a claim that was "known" to be false.

Due to how the Act is enforced and the "false certification doctrine" – it is incredibly simply to violate the False Claims Act. Once you do, the violations can add up. Most contractors find a violation can be exceptionally costly.


Volatile and Expensive

There are two different types of liabilities the government can dish out to violators of the False Claims Act. Both actual damages and statutory penalties can be lobbied against violators.

The penalties can be between $10,781 and $21,563 for each claim submitted by the government. As individual invoices are treated as separate claims, a large penalty can be enforced – even when the government hasn't suffered any actual harm.

Not only are the fines costly, but they can be unpredictable, too. Even subcontractors without a direct relationship to the government can be subjected to liability – just like federal prime contractors.

Due to the whistleblower provisions in the False Claims Act, individuals with knowledge of a company's operations can bring suit on the government's behalf. This clause often catches contractors flat-footed and unaware of the consequences that may be coming.


What Sureties & Their Contractors Should Know

Paying attention to the False Claims Act is mandatory these days. While it seems to be tougher and tougher to stay in compliance with the Act than ever before, the consequences for failing to do so continue to get higher and higher.

As a surety, it's imperative to educate contractors on the perils of the False Claims Act. Contractors can take a number of steps to ensure risks are minimized. For example, a contractor could:

  • Implement a mandatory independent review of every single invoice by a project manager before submitting and completing the project.
  • Continual communication with the federal government through counsel. Details of contractual difficulties that arise and compliance issue may be discussed.
  • Fully implementing a compliance, monitoring, and training program for all employees that covers a majority of significant contractual requirements.

On top of these ideas, a contractor may seek to consult with outside counsel regarding changes to federal regulations and implementation. By doing so, a contractor can limit exposure to liabilities under the Act. 

To learn more about liability under the False Claims Act and how this effects your business contact Skyline Risk Management, Inc. at (718) 267-6600.

Understanding Flood Insurance in 2017

Understanding Flood Insurance in 2017

After flying through the House, many believed the Flood Insurance Market Parity and Modernization Act would zip through the Senate, too. The Act was thought to become law sooner than later. However, things didn't go as smoothly as planned in the Senate.

The National Association of Professional Surplus Lines Offices (NAPSLO) and their officials continue to work to get the bill through the Senate. They continue to work to get this Act into law.


Understanding the Act

Why is the Flood Insurance Market Parity and Modernization Act of such importance for NAPSLO? For a variety of reasons, but one seems to stand out: the bill clarifies the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12).

The new Act defines the ability of privately issue flood insurance when meeting a lenders' purchasing requirements. Initially, the Act required lenders to accept private flood insurance for mandatory purchase. Then language was added before the bill was passed that created confusion. Lenders who were evaluating policies for the purpose of complying with mandatory flood insurance requirements became confused.

Now, the Flood Insurance and Market Parity and Modernization Act clearly defines a private flood insurance policy as:

"A policy issued by a company licensed, admitted or otherwise approved by the state."

According to Brady Kelly, the Executive Director of the NAPSLO, the bill strives to clarify a number of items, including the surplus lines market:

"All we're doing in this legislation is clarifying that the Surplus Lines market is, in fact, an eligible market from which to accept a private Flood insurance policy. I say that because Surplus Lines insurers have long written Flood insurance policies — this isn't a new opportunity.

Before BW-12 was signed, our market has always served as a supplement to the NFIP There are a number of homes and commercial properties that don't fit within the terms and conditions of the NFIP policy.

So we've oftentimes served as an excess option, or an option when the NFIP policy doesn't do the trick. From that perspective, the primary goal is to preserve the types of solutions the market was already providing."


No Smooth Sailing

While the bill is hung up at the Senate now, the House was no issue. In April of last year, the Flood Insurance Market Parity and Modernization Act flew through the House with a vote of 419-0.

While the victory seemed like smooth sailing, many have noted the result stemmed from a lot of hard work. The NAPSLO began educating legislators on the bill and the surplus lines marketplace at the start of 2014. These efforts were in preparation for the day the bill reached the House.

According to NAPSLO higher-up Keri Kish, the surplus line marketplace is:

 "It's not something everyone just knows about and understands. Our education really helped them understand how the Surplus Lines market functions as part of the private insurance market — how we developed and why it's important to maintain our ability to provide those options."

Luckily, many believe the failure in the Senate was more due to timing than legitimate concern over surplus lines. The election took a lot of time and energy for those in Washington. Many Senators were in heated state races and didn't have time or concern to hear about flooding.

Once the elections have passed, many surmise the bill will get more focus in the Senate. Not only will the election be over, but increased interest in flood issue will be coming up next year, as the National Flood Insurance Program is being reauthorized.


Optimism in 2017

Many NAPSLO members are excited and optimistic about the idea of the bill passing the Senate in 2017. Kish certainly is:

"I'm confident it will pass this year. There's no reason not to do it now. Ultimately, this is giving consumers choices. I can see no policy concerns in passing it this year."

While optimism is good, we'll have to wait and see if the bill goes through. If issues arise, the potential impact on the surplus line marketplace will certainly be noticed. The bill needs to be passed if the private market is to be a viable alternative to the NFIP.


It Finally Happened! 421-A Gets Extended

It Finally Happened! 421-A Gets Extended

It took months upon months. There was a lot of hand-wringing. Developers threatend to stop a number of multifamily developments if there was no tax abatement in place.

Luckily, that disaster was avoided. Finally, the Real Estate Board of New York and the Building and Construction Trades Council of Greater New York came to an agreement. The extension of the lapsed 421-A program that offers tax exemption has been extended.


What It Means?

So what was all the fuss about? The 421-A extension means that eligible buildings in Manhattan must pay an average hourly wage of at least $60 – including all wages and benefits. Other buildings in Queens and Brooklyn are required to pay at least $45 per hour when all wages and benefits are taken into account.

The 421-A extension obligations only apply to buildings in certain areas that meet specific criteria. Only buildings in Manhattan south of 96th street qualify. In Brooklyn and Queens, only buildings in Community Boards 1 and 2 around one mile from the closest waterfront bulkhead qualify.

As well, only buildings with over 300 rental units are obligated to the pay stipulations. Buildings that have 50% or more of affordable housing units are also excluded from the obligations in 421-A.

If a project began before the effective date of the new 421-A agreement, then the project can choose to opt-in to the program if they want to. Of course, these projects must meet eligibility criteria, too.


Understanding the Benefits of 421-A

While the details are important, the reasoning behind the agreement shouldn't be overlooked. Many important people are thrilled with the agreement, especially regarding benefits for low-income New Yorkers. Governor Andrew Cuomo is one of them:

"The deal reached today between these parties provides more affordability for tenants and fairer wages for workers than under the original proposal. While I would prefer even more affordability in the 421-a program, this agreement marks a major step forward for New Yorkers.

The agreement extends affordability for projects created with 421-a for an additional five years–bringing affordability for these units to 40 years. It also allows lower-income individuals to qualify as it lowers the percentage of area median income needed to apply.

Additionally, this agreement rightly delivers fair wages for working men and women – providing a rate of $60 per hour in Manhattan and $45 for certain projects in Brooklyn and Queens. Most importantly until this agreement is finalized, the State Legislature has refused to release $2 billion in state affordable housing funds. I urge the Legislature to come back to Albany to pass desperately needed affordable housing and to sign the MOU to release these funds. We simply cannot allow the lack of resolution to stall affordable housing production for years to come. There is no excuse not to act."


More Info on 421-A

Governor Andrew Cuomo is excited about 421-A for a number of reasons, including:

1. Traditional Worker Standards: Many applaud the amendment for continuing to give construction workers the rights they deserve in New York City. The standards and benefits provided in 421-A go a long way towards keeping workers taken care of.

2. Affordable Housing: The 421-A amendment allows for the development of affordable housing for low-income individuals. This is critical in a city like New York City, which features some of the most expensive housing costs in the world. The 421-A program allows buildings complying with the regulations to stay in the program for 35 years with a property tax exemption. This incentive should keep units with income limitations in the program.


Finally Done!

Overall, the passing of 421-A is set to benefit a number of New Yorkers. The amendment ensures quality wages and benefits for construction workers. It also ensures affordable housing units are created in some of New York's most popular neighborhoods and areas. 

For more information about NYC insurance laws contact Skyline Risk Management, Inc. at (718) 267-6600.

Actual Cash Value (ACV) Vs. Replacement Cost Value (RCV)

Actual Cash Value (ACV) Vs. Replacement Cost Value (RCV)

Buying items is simple. Selling things is a little more difficult, but still fairly straightforward. As long as humans have been around, we’ve been giving value to certain items, whether it be monetarily or otherwise. “How much does it cost?” isn’t that complex of a question – until it is.

So when it pricing complex? Pricing becomes a problem when claims adjusters get involved. Finding a definitive price for an item not on the market, after depreciation, and so forth is an art form. Well, more like a science. So how do claims adjusters find the true or definitive price of an item?


The Basics

Enter actual cash value (ACV) and replacement cost value (RCV). Actual cash value is the cost to replace an item minus depreciation. Replacement cost value is the cost to replace the asset at the full present value.

While these concepts may seem straightforward, things can get complex quickly. Adjusters not only need to decide on the value of an item, but there are also numerous local and state laws that can impact how ACV and RCV are calculated.


Diving Into Differences

Each state tends to handle ACV and RCV a bit differently. For instance, California includes an interesting tidbit in their legislation regarding these issues. In California:

“Actual cash value is the amount it would cost the insured to repair, rebuild, or replace the item lost or injured less a fair and reasonable deduction for physical depreciation based on its condition at the time of the loss.”

While seemingly fair, this leaves pre-loss condition in a tough situation. Many adjusters have found themselves between a rock and a hard place due to this law. Often, it can be difficult to determine what an item actually is – much less its exact condition at the time of the loss.


Unique or Obsolete

Furthering confusing things, an adjuster has to work with obsolete and unique items. Not even item loss will be easily purchased on Amazon.com. No, there will be a variety of items that hold a unique value for the owner. Many of these items will be tough to find pricing for.

This Honus Wagner baseball card sold for 2.1 Million in 2013

This Honus Wagner baseball card sold for 2.1 Million in 2013

As an adjuster, understanding that one man’s trash could equate to another’s treasure is paramount when dealing with these unique cases. When dealing with these cases, communication is key. The adjuster must work to understand the insured and what he or she places value on. You need to understand the insured and the item before placing a value on it.

When dealing with these items, begin by understanding what exactly the item is, how it was used, and if the insured still values it. Many times, an adjuster will need to dig deep and do some research before giving value to a unique or obsolete item.

If an adjuster is struggling to price an item properly, try:

  • Consulting experts in the field. Look for a certified consultant who can help you give value to a unique, obsolete, or high-priced item. Always verify these individuals’ credentials.
  • Use the Internet. While Internet pricing isn’t the most accurate, you’ll often be able to gather a working knowledge of the item and its value by going online.

Overall, the best way to determine value for an obsolete or unique item is to find a similar item already on the market. Finding a similar kind and like item can ensure fair pricing and valuation for both parties.


Understanding Antiques

Antique items open a whole other bag of worms for adjusters. Not every item that is older is considered a valuable antique. Most items are required to be a certain age and origin to qualify. A minimum of 100 years old is required for an item to be “antique” from an insurance perspective. Adjusters should handle antique items in a similar manner to obsolete and unique items.


Actual Cash Value Vs. Replacement Cost Value

Overall, understanding the actual cash value versus the replacement cost value isn’t that complex. Most homeowners will benefit from RCV more than ACV when an adjuster is looking into their claim. How a state handles these cases and individual policies will go a long way in determining how the claim is calculated.

For more information about Actual Cash Value (ACV) vs. Replacement Cast Value (RCV) contact Skyline Risk Management, Inc. at (718) 267-6600

Additional Insured Coverage Confirmed Limited to Contractual Privity in New York

Additional Insured Coverage Confirmed Limited to Contractual Privity in New York

The New York Supreme Court, Appellate Division, First Department decided that additional insured endorsement only provided additional insured coverage to an entity in direct contractual privity with the named insured. The decision reinforces the New York law, which controls policy language entitlement to added insured coverage.


Why the Confirmation?

The New York Supreme Court was forced to confirm this law due to a recent case. Brought to heed on Sept. 15, 2016, the case involved the Dormitory Authority of New York (DASNY), Gilbane Building Co. /TDX Construction Corp (a joint venture, or JV)., and Sampson Construction Company.

The contract between DASNY and the JV stated that all prime contractors retained by DASNY were to name the construction manager as an additional insured under the liability policies. This was a requirement.

Next, DASNY contracted with Sampson to retain its services as a prime contractor in all foundation and excavation labor. In this contract, Sampson agreed to name the construction manager as an additional insured on its commercial general liability policy. The company then purchases a commercial general liability insurance plan from Liberty Insurance.

The policy Sampson procured from Liberty contained the following information about additional insured endorsements:

WHO IS AN INSURED: (Section II) is amended to include as an insured any person or organization with whom you have agreed to add as an additional insured by written contract, but only with respect to liability arising out of your operations or premises owned by or rented to you.

Moving forward – the work Sampson did on the job site allegedly created property damage to the building adjacent. Thus, DASNY filed suit against Sampson and the architect. Then the architect bought a suit against the JV, too. The JV then sought coverage under the Liberty policy that Sampson procured for the DASNY contract as additional insured.

Liberty denied coverage. So the defendants opened a declaratory judgment action against Liberty. Then Liberty made a play for a summary judgment, claiming that additional summary judgment would require some direct contractual privity with the named insured, Sampson.

The court then denied Liberty’s motion on the basis that the policy only required a written contract in which Sampson is a party. This requirement was satisfied when DASNY and Sampson entered a contract. However, this was overturned on appeal based on the additional insured endorsement.

While the Sampson and DASNY contract was evidence that Sampson agreed to provide coverage, the court ruled that this has no impact on the coverage Liberty agreed to provide them. This opened the door for the JV to pursue Sampson on a breach of contract clause, as a third-party beneficiary.


Nothing Has Changed

The concept that New York courts read closely regarding additional insured endorsements determined whether privity was required is nothing new. The Gilbane Court relied on numerous prior decisions with similar language, including:

AB Green Gansevoort, LLC v. Peter Scalamandre & Sons, Inc., 102 A.D.3d 425, 961 N.Y.S.2d 3 (1st Dep’t 2013) (requiring contractual privity where additional insured endorsement stated that “an organization is added as an additional insured ‘when you and such organization have agreed in writing in a contract or agreement that such organization be added as an additional insured on your policy.’”); Linarello v. City Univ. of New York, 6 A.D.3d 192, 774 N.Y.S.2d 517 (1st Dep’t 2004) (same). See also Zoological Soc. of Buffalo, Inc. v. Carvedrock, LLC, No. 10-CV-35-A, 2014 WL 3748545 (W.D.N.Y. July 29, 2014) (requiring contractual privity where additional insured endorsement afforded coverage to “[a]ny person or organization with whom you have agreed, in a written contract, that such person or organization should be added as an insured on your policy, provided such written contract is fully executed prior to the ‘occurrence’ in which coverage is sought under this policy.”)

The JV and courts attempted to distinguish the language in each policy, but the Gilbane Court clearly stated that privity between named insured and additional insured is required. 

For more information about Additional Insured Coverage, contact Skyline Risk Management, Inc. at (718) 267-6600

Replacing Obamacare Will Be Harder Than Any Republicans Thought

Replacing Obamacare Will Be Harder Than Any Republicans Thought

President-elect Donald Trump has made many promises as he campaigned for the Presidential election. While no one knows which promises he'll keep and if he'll be able to accomplish many of them, repealing the Affordable Care Act will be difficult. Here's why:


The Repeal

It took President Obama several years to create and complete Obamacare. The system is vast and complex. Plus, it took years just to approve the legislation before any implementation could be completed. Repealing the system is not going to happen overnight.

Millions of people utilize Obamacare. And many Republicans agree that instantly repealing the system could cause a shock to the industry – and not in a good way. No matter what happens, most predict change is inevitable.

Trump could sign a repeal of Obamacare in his first days in office. Then ensure it doesn't go into effect for some time. This would allow Republicans to draft complex plans and policy for the replacement of the Affordable Care Act. Everyone in Congress is confident that repealing the act will be much easier than replacing it.

For example, certain provisions will be included in the new health care laws and mandates. Many Republicans, including Trump, like the age provisions that allows young adults to stay on their parent's insurance plan. Other Republicans are found of provisions that offer guaranteed coverage to all.


Health Insurers & ACA

Health insurance companies are essentially playing a waiting game at this point. The Affordable Care Act was a complete and utter shock to the industry. Many insurers struggled to cope with the various regulations and costs. However, now that the act is in place, things seem to be running smoothly.

Repealing and replacing Obamacare will be anything but smooth. Many health insurance companies are crossing their fingers in hopes of a minor disruption. Most people in the industry don't want to see the shock and chaos that implementing Obamacare brought just a few years back – again!


Getting Into the Details

Obamacare, repealing, and new replacement legislation is going to get tricky. For instance, most believe that guaranteeing coverage for pre-existing conditions is an important piece of legislation. However, many argue that the mandate requiring all Americans to have health coverage is unjust.

Alternatives to the mandate have been discussed. However, most agree that the financial penalties found in the mandate ensure more Americans get coverage. Without the financial penalties, there would be many people who wouldn't buy coverage

Many Republicans, like Speaker of the House Paul Ryan, have proposed similar legislation to Obamacare. He'd like certain people to receive tax incentives to help people afford the type of coverage they need. He's also interested in protecting people from rising rates for illness – when they maintain continuous health insurance coverage.


Breaking Records

While Obamacare has taken certain hits here and there, the people of the United States have hit a record low of uninsured. More people have coverage in the United States than nearly ever before. In this way, the Affordable Care Act was a success.

Not every aspect of Obamacare has been successful, though. Major insurance companies like Aetna and UnitedHealth Group both withdrew from the program. Premiums have skyrocketed, too. Plus, many Obamacare plans feature high deductible – ensuring many couldn't afford care if they got ill.  


The Reality of Obamacare

The Affordable Care Act will be repealed. With Trump as the President and a Republican House and Senate, the legislation doesn't stand a chance. The reality of the situation is this:

Once the bill is repealed, Republicans and Democrats will have to work together to replace the parts of Obamacare that everyone agrees on. It will take time, a lot of time – as that's just how things work in Washington. Hopefully, the time and change won't have too negative of an effect on the health insurance industry and the American public. 

For more information about health insurance contact Skyline Risk Management, Inc. - (718) 267-600.

Everything You Need to Know About Condominium Associations and Insurance

Everything You Need to Know About Condominium Associations and Insurance

Condominiums are popping up all over the United States – and the world. From high-rise buildings in urban areas to townhomes in the suburbs – it's hard to miss these new development efforts. Typically, every condominium offers a few distinctive features:

Common Areas: Places that all residents use like stairs, elevators, and hallways are jointly owned by the unit owners. Each owner's interest is proportionate to the value of his or her unit.

Dwelling Units: The housing unit that is individually owned by the person who bought it.

Administrative Framework: Often, a condominium has an association. This is usually made up by a board of managers, who typically own a unit. The organization manages the common areas and assets. They also set the rights and obligations of the unit owners.


What Condo Owners Need to Know

With the basics out of the way, it's time to talk about insuring condominiums associations. Here are a few items potential condo owners must understand before buying a condominium and having to work with an association:

1. Responsible Associations:

The condo association is only responsible for insuring the common areas of the complex. The interior of the individual units is the responsibility of the owners. Nearly every state requires the association to have insurance for all common elements and bare walls. When insuring a condominium, you'll be quoting for mostly, “walls –in” coverage; unless your condo’s association’s Master Insurance Policy says otherwise.


2. Important Documents:

Before gathering coverage for a condominium association, you'll need some important documents. These sets of documents offer the information needed to see the scope and full extent of coverage required.

  • The declaration of the condominium, which is subjected to a condominium act.
  • The condominium property act that is in effect in the association's state. This defines the boundaries of coverage and responsibilities.
  • To further understand the scope of coverage, you'll need bylaws and various instruments that clarify what is permitted under the act.

Once you have these documents, you'll find condo coverage becomes a lot easier. It'll be simple to itemize and identify which areas will be covered. Then you'll be able to add limits and subject items to coverage.


3. Personal Property:

Condo associations do not offer coverage for personal property. Common items that condo associations like to cover include:

  • Outdoor furniture
  • Fire extinguishing items
  • Appliances
  • Floor coverings

…And more!


4. Errors & Omissions:

No one is perfect. The board of directions for a condo association is no different. Condo association insurance does not cover errors and omissions of board members in a standard policy. For this reason, most associations choose to purchase Errors & Omissions Liability Insurance.

Certain states require the coverage, but some do not. Other states limit the liability of errors & omissions, but many do not.


5. Safe Volunteers:

The Volunteer Protection Act of 1997 does not cover volunteers within the condo association, as the act does not defend volunteers against lawsuits. The act protects against tort liability stemming from acts of bodily injury and property damage.

When liability for criminal misconduct, gross negligence, flagrant indifference or safety of others is brought to attention, the act does not cover anything. In these situations, general liability insurance often comes in handy.

It's important to note that certain states have opted out of the Volunteer Protection Act and created provisions concerning these issues within their legislation. Often, a state's legislation will limit the personal liability of volunteers within the condo association.

For more information about insuring a condominium association contact Skyline Risk Management, Inc. at (718) 267-6600

5 Ways to Mitigate Risks During Holiday Parties

5 Ways to Mitigate Risks During Holiday Parties

The holidays are here. Thanksgiving, Christmas, New Years and more are some of the best times of the year. They are also some of the most dangerous from an insurance and risk perspective.

See, millions of Americans host family and friends for days and night of joyous celebration during these times. These parties and events often require days upon days of planning, coordination, and more.

Due to the nature of holiday parties, many risks rear their ugly heads during this beautiful time of the year. Many hosts chose to hire vendors to help with the parties and mitigate these risks. This can open a whole other can of worms when your personal liability exposure is taken into account.


5 Ways to Mitigate Risks During Holiday Parties

While thinking about personal liability isn't how to put one in the holiday spirit, there's hope. Here are five easy ways to mitigate risks during holiday parties and limit your exposure:

1. Focus on the Basics

Hosting a large holiday party will require hiring vendors and coordinating the event. However, every single vendor you hire will bring on added risks. To mitigate these risks, you'll need to focus on one fundamental issue. You must make sure every single vendor you work with is bonded, licensed, and insured.

Once you have confirmed these facts, you'll need to understand the details of their insurance coverage. Find out information like:

  • Their carrier
  • Adequate coverage for you event
  • Policy limits
  • References

While you won't be able to talk about a vendor's insurance coverage with a reference, you may get a glimpse into how the vendor responds to a crisis – especially important around the holidays.


2. Get a Contract

Once you found a great vendor to work with, you'll need a signed contract that clearly states the services and functions your selected vendor will provide at the party.

Make sure the contract clearly details dates of services and exact times. Also, it's vital that a contract has a hold harmless clause include. The provision ensures that hosts are not held responsible for damages related to a vendor-related injury or accident.


3. Be Careful with Booze

Holiday parties and booze go hand in hand. “Many a great story” only happened because a holiday party got out of control after the booze started to flow. Still, you need to take a few precautions if you're serving alcohol at your holiday party.

First and foremost – you should only hire a bartending or catering service that insures its staff against any and all booze-related liabilities. This is of the utmost importance.

Next, you need to understand personal liability. It's imperative that you let the bartenders do what they do best – serve drinks. Do not get involved with the pouring of drinks. Bartenders need to card anyone they suspect to be under a certain age during the event. This is the law and will ensure you're not held liable for any underage drinking issues.


4. Pay Attention to Parking

Parking can play a huge role in your holiday party, especially as an event gets larger and larger. Hiring parking attendants or a professional valet service can ensure smooth sailing on the roads during your event. You'll avoid blocking roads, minimize collisions, and ensure the safety of your guests.

As always, you'll need to work with a properly licensed valet company and get a contract in place. Once this is done, you can begin working on a parking plan with the company.


5. Slip & Fall

Finally, you need to pay attention to the weather during your event. With snow, sleet, and ice common in the winter months, you'll need to have a plan in place that gets guests from parking to the party in safety.

To do so - you'll need to prevent slips and falls. Start by removing all ice and snow from any walkway or staircase. Make sure you have salt or sand on hand during the event.

Next, add some additional lighting on walkways to ensure black ice won't sneak up on anyone. Then you'll want to post signage warning guests to pay attention and watch their steps. 

For more information on how to mitigate risk during the holidays contact Skyline Risk Management, Inc. (718) 267-6600

9 Real Risks When Using Drones

9 Real Risks When Using Drones

Drones have quickly become a huge industry. Nowadays, you will find drones flying over your head often. These unmanned aircraft systems are piloted from the ground using a control station and offer simple solutions for many a dangerous task.

The drone industry is booming, and most predict it will be a multibillion-dollar sector within years. Industries like industrial inspection, border patrol, photography, fire fighting, and more have all adopted the technology with great success.

Drones & Insurance

Even insurance companies have gotten in on the drone craze. Using drones to survey damage after a disaster has become common practice for insurers. As such, insurance companies know exactly how much risk can be associated with using a drone.

Drones are not cheap, either. Thus, all drone owners should understand and evaluate their insurance options. So here are nine real risks every drone user faces:

1. Crash & Collision

If you are piloting a drone and you cannot see another aircraft, there could be a disaster coming. Mid-air collisions can happen when using a drone. Typically, these accidents will occur with:

1.       Other drones

2.       Helicopters

3.       Agricultural aircraft

4.       Commercial aircraft landing or departing


2. Malicious Attacks

Drones can be used for evil, too. There have been reports of drones being used to target infrastructure, and many have concerns about a drone attacking a large crowd at a stadium or concert.

3. Losing Control

No new technology is perfect. It is common to lose control of a drone. This happens if the device flies out of range, if the frequency is interrupted, or a system failure occurs. There have already been numerous reports of such incidents, including major injuries.

4. Spoof Alert

Spoofing occurs when someone attempts to take control of a drone by hacking the signal and commanding the aircraft from a different control station. This is a huge risk. Cyber attacks can result in a drone being stolen out of mid-air.

5. No Regulations

Using a drone still has a bit of the wild, wild west feel. There are very few regulations regarding drone use throughout the world. This could become a real problem, especially when sharing airspace with military operations.

6. Problems with Privacy

Many are concerned with the ability of drones to spy and invade privacy. Drones can be used to invade privacy, trespass, and more. Soon, the Federal Aviation Administration will provide drone owners with a set of guidelines dedicated to privacy.

7. Skill of Operator

Many drone owners are novice hobbyists looking to have fun and mess around with new technology. These pilots are rarely skilled and can provide a large risk to public safety when playing with their unmanned aircraft.

8. Crazy Growth

Any industry that is predicted to see such growth as drones are will have some risks. Drone use is expected to triple by 2020. This will lead to a lot more bad pilots out there and more problems.

9. Insuring Drones

Ultimately, insuring drones will be a difficult endeavor. Many hobbyists will not want to insure their drones. Many businesses will require full coverage. An underwriter will have to look at the aviation risks of an unmanned aircraft in a different manner to manned aviation.  

The Truth About Fire Safety

The Truth About Fire Safety

The second week in October was Fire Prevention Week. This year, the National Fire Protection Association chose to promote smoke alarm replacement, urging people to replace all their smoke alarms once every ten years, at least. Unfortunately, prior to this campaign, only a very small percentage of people even knew that smoke alarms needed to ever be replaced, let alone how often. The truth is, smoke alarms have been proven life savers time and again. As a matter of fact, statistics show that three of every five fire-related deaths occur in homes without working smoke detectors. And, like most electronics, parts start to wear out after a certain amount of time. Sensors in smoke alarms have a ten year shelf life. After that point, they will no longer work.

Preventable Deaths

The numbers are humbling when you truly take a look. The National Fire Protection Association estimates that seven people die in US home fires EVERY DAY. Three main issues tend to be the cause of most of these fires. First, cooking equipment is the leading cause of fires, such as stoves, hot plates, and even microwaves. After cooking equipment, smoking is the number two cause of house fires. Finally, heating equipment is listed as the number three cause of house fires. This can relate to radiators or even electric blankets and space heaters. Many of these causes can be prevented and, of course with the help of a working fire alarm, can at least result in no or fewer deaths.

Fire Damage

Fires are not all easily preventable, nor do they all occur in the home. For instance, in 2015 alone, there were 501,500 structure fires in the US. That is one fire every 63 seconds. These fires resulted in estimated property damage totaling $10.3 billion. Structure fires can be caused by numerous, undetected issues, such as faulty wiring, lightning, or some other random act, such as an act of nature or even arson. People may be severely injured, or even killed, due to the lack of time to escape or lack of knowledge that the event is occurring.

Another source of fire accidents can occur on the highway. In 2015, there were 174,000 highway vehicle fires. In 2014, the number was 3.9% less. These fires caused a total of $1.2 billion in property damage. Causes may include accidents, faulty mechanics, or even smoking, as a cigarette can ignite the gas line if not disposed of properly. Many times, these fires are not preventable once the incident leading to its cause has occurred, such as the initial accident.

Safety Tips

The good news is we have gotten smarter about fire safety. Since 1980, home fires and deaths have actually decreased by 50%. In 1980, there were an estimated 734,000 home fires, which had dropped to 365,500 in 2015. Deaths from these incidents also dropped, from 5,200 in 1980 to 2,560 in 2015. Much of this decrease is due to increased awareness and working safety equipment in the home.

For instance, one great idea that is being used in many homes is for each bedroom to have its own working smoke detector. In addition, people are checking the detectors once a month to ensure they are working properly and do not need new batteries or total replacement. Each home should have an ionization smoke alarm, which warns about flames, and a photoelectric alarm which warns about smoldering fires. And, those who are deaf or hard of hearing can also be warned by alarms specifically made for these groups. Finally, check the age of the alarm by looking on its back or side to find the date of manufacture. Remember, if that date is longer than ten years ago, replace the alarm immediately.

Some other useful tips that can save your life and your family members’ lives include teaching your children how to recognize the sound of a smoke alarm. Those not yet in school may not be used to the sound and may not know what to do should the alarm go off. Also, make sure you plan an escape route in case of a fire. It is easy to freeze in that situation, but time is of the essence. Have a plan, rehearse the plan, and use the plan. Finally, be smart. Keep open flames safe and secure as well as anything that can start a fire, like matches or a lighter. And if you smoke, make sure your ashtray is also secure and that your cigarettes are completely out.

Unjust Enrichment Claim Upheld by Past New York Law

Unjust Enrichment Claim Upheld by Past New York Law

In the case of MCM Products USA, Inc. v. Aliusta Design, the court addressed the issue of whether a subcontractor could make an unjust enrichment claim against a property owner when the contract is between the general contractor (GC) and the subcontractors. This case occurred due to the GC’s insolvency and the resulting situation in which subcontractors were not paid for work that they did on the project. This led them to try to get paid through the owners of the property instead, who had paid the GC rather than the subcontractors.

How Did This Case Start?

It all started when MCM leased a space for their luggage and accessories store in Manhattan. They hired a general contractor and signed a $1.4 million contract to renovate the leased property in June 2014. This GC hired subcontractors to do the construction, but there was not a contractual relationship between MCM and any of the subcontractors that actually did the majority of the work.

On March 2015, the GC filed a mechanic’s lien against the property and some subcontractors did as well. The lease that MCM had signed with the landlord required that MCM discharge any mechanic’s liens against the property promptly. MCM filed a lawsuit in May 2015 seeking a judgment, declaring that they did not owe the subcontractors any money. Counterclaims for unjust enrichment were filed against MCM by several subcontractors, saying that the leased property unjustly benefitted from the work done for which payment was not made, and that MCM should be responsible for payment. MCM moved for dismissal of the counterclaims.

A Decision Came Down

When the court came to a decision, they dismissed the unjust enrichment counterclaims made by the subcontractors. The court followed previous case law to hold that a claim of unjust enrichment is not able to be supported simply because a company benefited from the work done by the subcontractor. If there is an express contract between a GC and subcontractor, the law is very clear that the owner is not liable, unless the owner has agreed to pay the subcontractor themselves. The consent of the owner to allow the subcontractor to work on the property is not enough. The owner has to take action that would show clear indication that they were going to pay the subcontractor themselves, rather than the GC doing so. The court did not address the validity of the mechanic’s liens in this decision at all.

Final Thoughts

To reach their decision, the court used existing New York law to bar the unjust enrichment case, simply because there was no evidence that the owner (MCM) had indicated any intention to pay the subcontractors. In some cases, however, a subcontractor could have a valid unjust enrichment claim if they can show that an owner had direct dealings with the subcontractor, even if there was not a contractual relationship. Included in this are situations in which the owner pays the subcontractor director or indicates that they will pay the subcontractor. This backed up existing law in New York. 

5 Simple Ways to Improve Return-to-Work Incentives & Reduce Workers' Comp Costs

5 Simple Ways to Improve Return-to-Work Incentives & Reduce Workers' Comp Costs

Workers' compensation can be confusing. However, the system is built on one thing: mutual accountability. As an employee, you put trust in your employer and insurer to promptly pay out your benefits. As an employer, you expect your employees to return to work as soon as possible. Everyone expects honesty.

While there are expectations, the workers' compensation system offers disincentives to employees who come back early. Many small businesses have workers' compensation systems that encourage employees to stay out of work as long as possible.


What You Need to Do

As a small business owner, you need to find a way to get your employees back to work as soon as possible. The quicker your employee gets back, the less money your workers' compensation program will cost you.

Here is how to reduce workers' comp costs and incentivize employees to come back quickly:

  • Remove All Disincentives

If your employees have no reason to come back to work quickly, they won't. Look into your workers' compensation program and see where you can encourage employees to come back promptly by removing the benefits of staying out of work.

  • Get Proactive

Look throughout your company and see how you can make improvements to the workers' compensation system without infringing on your employees’ rights. Many companies find the benefits employees receive when injured to be excessive upon further examination. Once you identify excessive benefits, it's easy to take proactive action and cut them out.

  • Be Detailed

Employees will find a way to take advantage of any system – that is just human nature. Thus, you need to clearly communicate all policies regarding work injuries and set firm expectations. Give every employee written procedures and policies the day they are hired. Create guidelines to report an injury.

  • Communicate Through the Process

It is imperative that small business owners communicate with the employee throughout the injury, recovery, and return. Find out how your employee is recovering and healing. Get updates. While you should never put pressure on an employee, you need to maintain contact and show support. Then, once the employee comes back, make sure you communicate what they can do through the healing process and what their transitional duties will be.

  • Contest Claims If Need Be

If you believe one of your employees is abusing the system, do not be afraid to contest the claims that come in. This is especially true if the employee is non-compliant or seems to be extending the disability too much. Small business owners should also contest claims where new conditions develop after the injury. Just understand that contesting a claim will often require investigations, documentation, and medical examinations. These things will often require your resources as the business owner.


Encourage Your Employees to Work

The best way to manage your workers' compensation costs is through encouraging employees to get back to work. If you remove the incentive to stay away from work, you'll find employees come back faster than ever before. If you keep offering excessive incentives to employees who don't come back to work, your costs will continue to rise.

Have an employee or two abusing their right to workers compensation? Contact Skyline Risk Management, Inc. at (718) 267-6600 to voice your concerns. 

Protecting Payment Data

Protecting Payment Data

The theft of financial information can be just as damaging as identity theft. Are you protected?

There have been many stories in the news recently regarding information breaches and data hacks into various retailers, companies, and even against individuals. In an increasingly digital world, protecting information is difficult, and the transfer of so much data around the clock often leaves this information vulnerable to attack. Data breaches, information hacks, and online security are incredibly important to keep track of in order to make sure your information is safe, and how you can best protect yourself and your information.

Technology can be a double-edged sword. On the one hand, we have the ability to transmit a very large amount of data instantly; we can wire money around the world, talk to someone we’ve never met, and conduct nearly every aspect of business on our computers. All this technological availability leaves us vulnerable, though, and with data breaches and hacks on the rise, keeping your information safe is of the utmost priority.


Payment protection plans

A common information breach is identity theft. This is when someone has acquired identifying information about another person, information that they can use for their advantage. This information can include names, Social Security information, or banking information.

Another common data breach is that of a credit or debit card. In cases like this, a person’s name may not have been compromised, but the identifying information from their debit or credit card has been accessed by an outside party. With another person’s payment information a thief could drain a bank account, open a new credit card, or ruin that person’s financial life.

When a credit or debit card has been hacked, the owner may not know about it until the damage has already been done. Charges can accrue very quickly and unless a person is checking their account regularly, they may not even know that their information has been stolen. This is also a problem for retailers, who may be stuck “between a rock and a hard place” when a bank reverses charges because of a payment hack.

Banks have safeguards in place to flag suspicious card activity, and can offer a certain amount of protection for their customers whose cards are tampered with. Each bank has different methods of obtaining this protection, and each retailer that accepts that card must also have protections in place to keep their payment systems safe and secure.


Insuring payment protection

Retailers need insurance in order to protect themselves financially from data hacks, just as individuals should take steps to protect their financial information to the best of their ability. When a person’s payment information has been hacked, retailers have to make sure that the hack didn’t originate with their system.

Working with banks, retailers, and insurance companies to keep things like identity theft and payment information theft to a minimum is a complicated but worthy task. Keeping payment information in the hands of those to whom credit and debit cards actually belong protects the financial relationships between people, banks, and commerce that keep our world going.

To learn more about how you can protect your payment data contact Skyline Risk Management, Inc. at (718) 267-6600 to voice your concerns. 

What is a Certificate of Insurance?

What is a Certificate of Insurance?

If you have ever purchased a home or vehicle, you may have been asked to obtain a certificate of insurance. A Certificate of Insurance, or COI, is a document that shows that your insurance policy covers the vehicle or the property in question, without having to produce a copy of the entire policy contract. It lists essential policy details, such as the vehicle/property insured, the coverages, and any third party interests that the insurance policy names.


What makes a COI unique

A Certificate of Insurance differs from an ID card in that an ID card is typically used only for vehicle policies and is far less detailed than a COI. Certificates of Insurance are also different from a copy of your policy in that the policy is much more thorough than a COI. Certificates of Insurance are typically a more convenient size than your insurance policy, the size of a single page or smaller, and can be more easily produced. Certificates of Insurance are a happy medium between the ID cards and a copy of the policy in regard to the amount of information provided, but another significant difference is that most of the time they do not come directly from your insurance carrier. Insurance agents are authorized to issue COIs on behalf of the insurance carrier manually, and are often required to do so.


Purpose of a COI

Most often, a third party who wants to ensure that you have the coverage that you say you do will request a Certificate of Insurance. If you have a lienholder or additional insured on the policy, the document will list their names as well as yours. For those third parties with an interest in your property or vehicle, it is a way for them to quickly verify that your policy aligns with their requirements. A Certificate of Insurance may seem like a better alternative than relying on the numerous pages of your insurance policy to show your coverage. However, there is a caveat to its convenience.


COI Cautions

A Certificate of Insurance is meant to be informational only. It is not a legally binding document and does not guarantee what an insurance policy will or will not cover. Another downside to Certificates of Insurance is that individuals can easily fabricate them. Human error also plays a factor since the COIs are often manually created by an agent.

While a Certificate of Insurance is a fantastic tool when it comes to providing proof of your coverage, you should never rely on them as the sole method by which you review the specifics of your insurance policy. Instead, if you want to ensure that your coverage matches your needs, review your insurance policy first. If you have a good understanding of insurance, you should be able to find the information you are looking for just by reading your copy of the policy. If you can't locate the answer you're looking for, or don't understand the answer that you find, contact your Agent. They are licensed in insurance for that very reason and can clarify any questions you have about your policy. Don't let a lack of understanding keep you from the coverage that you need.

Not sure if you have a COI? Don't know how where your COI is? Call Skyline Risk Management, Inc. at (718) 267-6600 for help obtaining your COI. 

When Bad Things Happen: Product Liability & Foodborne Illness

When Bad Things Happen: Product Liability & Foodborne Illness

Could you image how much work and dedication goes into owning a successful restaurant?

If you're a restaurant owner then you know what it is like to work day after day, year after year, growing your business. For those of you in the midst of growing our business, imagine a day where you reached a point of fulfillment. Picture your restaurant flourishing beyond your wildest dreams. You've hired the right professionals to operate your restaurant and now you've retired. 

Everything is going great and then one day you get a phone call... 55 people are sick with food-borne illnesses, which they got from eating at your restaurant. 

Turns out while you where on vacation in Bali the people you hired to run your business decided to purchase spinach from a new vendor and now you're facing 55 different lawsuits. The media is jumping down your throat and people are very sick. Worse of all, you could have prevented this from happening. Yup, you blew it because you decided to decline insurance coverage, which protected from this exact situation.

Don't think this could happen to you? Ask the owners of Chiptole Mexican Grill what they think about insurance coverage for food-borne illness.


Chipotle

Chipotle's firestorm was about more than one risk. It was about product safety and workplace safety coming together to ignite a chain of sick customers up and down their chain of restaurants. The reports were about norovirus and E. coli making customers sick and the eventual spread that followed.

When employees come to work sick and then touch food and food preparation areas, it really doesn't matter if the food products are all that safe. In fact, the Centers for Disease Control and Prevention (CDC) reports that one in six Americans become ill every year from contaminated food or beverages.

Whether the contamination started in the food supply chain isn't all that important if your employees are ill when they walk in the kitchen door. Loyal employees are gold, but sick loyal employees are like explosives waiting for detonation. Whether you are a Mom and Pop shop or a franchise, you must mitigate the risk.


Trade Name Restoration Coverage

The best answer to the significant financial loss of your  business ill be a Business Interruption/Trade Name Restoration (TNR) policy. The coverages provided in this stand-alone policy go further than your general liability coverage when it comes to saving your client's business from financial devastation.

  • Business Interruption
  • Loss of profits
  • Trade Name Restoration
  • Crisis Management

Contact your insurance professionals at Skyline Risk Management, (718) 267-6600 for information about Business Interruption/Trade Name Restoration (TNR) polices. 

9 Emergency Storm Preparation Tips

9 Emergency Storm Preparation Tips

You may have to worry about tornados in the Midwest. If you live in Louisiana, then floods are always on your mind. Earthquakes are no strangers to Californians. Florida sees its fair share of hurricanes. No matter where you run your business from, there's a chance disaster could strike.

If a disaster does occur and you're face-to-face with a catastrophic event, you need to be prepared. You need to have a plan in place. You need to be able to get your business back up and going as quickly as possible.


Always Be Prepared

The easiest way to assess how fast your business could react is to pay attention to your exposures. When doing so, ask yourself these questions:

1. What needs to happen? After a catastrophic event, there will be certain parts of your business that need to be up and running as soon as possible. Other areas of your business aren't as important. Decide what must happen immediately after a disaster and come up with a plan to get essential activities going again quickly.


2. Can you continue to provide value? If a catastrophe were to strike tomorrow, would your company be able to continue to provide value and service to your customers? If not, you need to look into how you operate and find ways to continue to be there for your customers no matter what.


3. Whose help would you need to get back on your feet? Many times, companies need help from insurance agencies, contractors, and more to get them back to work. Think about which individuals you would need help from to restart operations.


4. How can you help your customers? Even if you could not provide the full scope of services and value to your clients right away, you need to think of ways you could continue offering some of your services. A little effort goes a long way, especially when dealing with a disaster and your loyal customers.


5. Do you know your community? You should be aware of all of your local emergency resources and be able to communicate with them immediately if a catastrophe were to occur. Don't forget about your local connections!


6. Do you have other protections in place? Have you fully insured your company in every possible way? Did you pay extra for some preventative measures when building your organization? Focus on finding and cultivating ways to protect your business if something terrible were to happen.


7. Did you protect your vital documents? Did you guard your legal documents—files, tax returns, and such—properly? This is absolutely vital before a disaster strikes. You need to back up everything.


8. Would you still have access to your vital records? Did you backup everything? You want to make sure all of your documents are readily available as you try to recover your business after a storm.


9. Did you do it all? After going through these tips, take a second to step back and consider if you did everything you could. Often, business owners will take numerous preventative measures, but forget to cover some of the basics. With a little introspection, you should be able to avoid any such fate.


SKYLINE

You cannot predict when that storm will hit, but you can always be prepared for it. With a little foresight, you'll have your company back up and churning in dollars before you know it. Use these tips and questions to ensure you're always ready. 

Concerned about how your business or home would hold up against a storm? Contact Skyline Risk Management, Inc. (718) 267-6600 to voice your concerns.