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Location is Key to Accurate Auto Insurance Rates

Location is Key to Accurate Auto Insurance Rates


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 In some cases, an insurance policy cannot be rescinded, which makes this case particularly interesting in the insurance industry.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.


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."

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

Insuring Against the Cyber World

Insuring Against the Cyber World

In the age of social media, live streaming, the cloud, and smart phones, the internet has become a hot spot for crime. As seen in the movie Hackers, those with a certain skill set can choose to use those skills either for good or for evil. Those using them for evil are finding new and innovative ways to hack into your business systems, your personal smart phones, and even your web-based home security systems. However, those using their skills for good are helping businesses and everyday citizens stop these hackers from the onset, keeping personal data safe and secure. As this industry need to protect your data at every turn rises, the need to have insurance in the event of a problem also rises, making cyber security insurance the newest wave of income for property and casualty insurance suppliers.

The Landscape

Liability coverage for cyber security is a growing area for many insurance providers. As of today, over fifty insurers are carrying lines that protect your cyber risk. However, there is little known, as of yet, about this field of liability and how the courts will react to lawsuits brought about as a result of a hack and loss of data or monies from the victims. Even more important, cyber issues are changing daily. Just as technology, in general, changes faster than most people can keep up with, cyber issues change just as rapidly. The hacks are becoming more and more complex and the losses are becoming steeper. New laws are enacted regularly to attempt to mitigate the issues and the losses, however, when dealing with the internet, US regulations do not necessarily have any effect on our ability to catch or prevent perpetrators from places like Russia and Hong Kong.

Currently, the insurance industry has a tough road ahead if it is to make cyber security insurance a must-have for most businesses.  A 2015 Risk and Insurance Management Society Cyber Study shows that only 51% of its respondents purchased stand-alone cyber policies. Fifty-eight percent of those policies carry less than $20 million of coverage. In addition, the premiums of 49% of those policies exceed $100,000, which is quite high for many small to mid-sized companies. The good news is 74% of those without insurance for a cyber risk plan can purchase a policy right away.

Some Solutions

Information from numerous avenues has made a clear case that cyber risk is the number one emerging and non-traditional insurance risk facing businesses today. As technologies continue to improve and expand, cyber risks will become more invasive and prevalent in business. PwC’s 2014 Global Economic Crime Survey saw 17% of businesses and 39% of the financial sector had been victims of cyber-crimes. In the past two years, these numbers have only continued to climb.

As a result, the federal government has attempted to at least track the problem to help the process of finding a solution. The Federal Cybersecurity Information Sharing Act was created to facilitate companies sharing cyber threat information and their best practice guidelines to prevent the attacks. However, many businesses fear this does not solve the problem, simply because the reports are done only if data is lost and other filings must be completed. Therefore, insurance is still at a standstill when trying to truly determine the risk of cyber security issues.

The Actual Coverage

In this unstable environment of the launching of insurance offerings, not only are businesses trying to understand their risk, but they are trying to understand the new coverage.  Many carriers will cover loss of data and notifications to third party victims, as well as associated fines and issues resulting from the end client’s loss. However, if money is transferred between the first party and the scammer, it is unlikely the insurance policy will pay back that money as it is not easily proven to the insurance company that the monies were given to the fraudster and that proper due diligence was conducted prior to parting with the monies..


Furthermore, since this is a relatively new idea for protection and the insured may have significant coverage gaps, cyber insurance may be too costly for some of the smaller, more at-risk firms to afford. Currently there is no cap on the premium and no true understanding of the risk for most business models. As a result, insurers are mitigating their potential losses by raising premiums based on access, not true risk.

There is still a lot of research and development needed to decipher and mitigate cyber risk insurance.  In the meantime, it may be best to speak with a person who deals almost exclusively in this field of insurance to understand the needs of each client in this field. 

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. 

Four Ways to Take Action and Reduce Loss on Workers’ Compensation Claims

Four Ways to Take Action and Reduce Loss on Workers’ Compensation Claims

In this age of everyone suing everyone, it is essential that companies find ways to protect themselves against workers’ compensation claims. One sector that is at a high risk for claims is the manufacturing industry. The risks come with the small to mid-market companies that cannot find the partners they need to help them target their dangers and find techniques they can use to reduce the costs of the losses for which they are at the greatest risk. These four tips can help manufacturing companies reduce the cost of these claims now and in the future.

1. Evaluate History of Past Claims

To manage your claims in the future, you have to understand what has happened in the past. This means that you have to look at workers’ compensation claims and take corrective action to reduce loss. This evaluation should include:

  • Analyzing the trends of claims that are affecting your company via loss experience and cost.
  • Developing a corrective plan based on your evaluation.
  • Detailing the financial gains that can be achieved by implementing the corrective plan.

This process of evaluation can reduce insurance premiums by as much as 15% within the first year, which is a substantial cost savings.

2. Reduce Time to Close Claims

One of the easiest ways to reduce the cost of claims is to close claims quickly. To do this, your company needs to conduct claims reviews personally, on a regular timetable, with your insurance claim adjusters, to decide whether:

  • Open claims need to be closed due to the circumstances of the claims
  • Claim reserves that are at a high level should be adjusted downward

These two decisions have been shown to be very effective in reducing the number of open claims, and this lowers the cost of premiums, simply due to the reduced time spent on claims. By having quarterly claims review with your insurance adjuster you can reduce claims by as much as 20%.

3. Control Workers’ Compensation Premiums

Analyzing the workers’ compensation experience modification ratings (EMR) can allow you to regain some control over the premiums. Even though they are very complex, you need to routinely evaluate the modifier to determine if it is still accurate and to see how it is going to impact future premiums. This is a big part of keeping premiums at a stable level.

4. New Hire Screening

One of the best ways to prevent workers’ compensation claims is to evaluate the hiring process. Employment screening can ensure that a candidate’s physical ability is considered, based on their detailed job description, to ensure that they can do the job you are considering for them. New workers are more apt to be injured and file a worker’s compensation claim than experienced ones. Pre-hiring screening can help to decrease the likelihood of someone being injured on the job and, thus, decrease loss.

Smart risk management strategies that flow from evaluating the past, to screening new hires, to controlling premiums, to reducing the amount of time to close claims all work together to help decrease the loss costs. These workers’ compensation tips are a start to help you on your journey to decrease the effect of workers’ compensation claims and help you to become more profitable in your industry. 

Form more information about reducing your workers compensation claims and costs contact a Skyline Risk Management, Inc. professional at (718) 267-6600 to voice your concerns.

Unexpected Costs and Coverages for Business Losses

Unexpected Costs and Coverages for Business Losses

When most people think about insuring their business, the first thought that comes to mind is making sure their insurance policy covers their building and inventory. This is understandable—if a fire wipes out your entire shop, you want to make sure that you’re going to have a place to set up shop again. However, many do not think about the indirect losses that happen as the result of having to shut the business down temporarily. Covering lost income and paying for the operating expenses that continue to exist while you close or relocate the business is just as important as covering the building and contents. Business interruption coverage is a coverage specifically designed to cover a business for those indirect losses that hit you when you are forced to close up shop, whether for a short time or permanently.

Business Interruption Coverage

The biggest benefit of business interruption coverage is the provision for lost income while your business is closed. Having lost income covered is especially beneficial for small businesses for which missing out on even a couple of months’ worth of income can make or break them. Also, there are continuous expenses, such as utility bills, that don’t stop coming just because you aren’t able to open your doors to customers. Those bills cause additional costs even when there may be no revenue coming in. Depending on the specifics of your policy, business interruption coverage can step in and cover you for these losses.

Beyond lost income and operating expenses, there are additional indirect losses that can occur. Business interruption coverage is meant to cover costs that come up while attempting to keep your company running. You may have additional expenses for things such as: relocating to a new space, overtime pay for the extra hours that are needed, and other costs that come up as you work through alternate methods of doing business while your insurance company works to restore your building and business property.

Cyber Insurance

In addition to business interruption coverage, another incredibly important coverage to consider is cyber insurance. Insurance has adapted in this age of technology and cyber losses, introducing a whole new level of risk and loss that you may never even have considered. Hacking and digital information theft is rampant. It seems as though there is story after story on the news of hackers getting access to customers’ financial information through businesses' computer systems. The theft of your and your clients' information not only puts your company in a tight financial spot, but also causes a loss of reputation. Customers are less likely to put their trust in a company that treated their information without the proper security. Cyber insurance can cover you for those losses and help restore your customers’ faith in your stability.                                                                                                          

Running a business is no easy feat, no matter what the size. Insurance may seem like just another thing to check off a to-do list, but by protecting your business, you are protecting your investment and your future. If your business does suffer a loss and you need to make a claim, ensure that you have all the coverage needed to get on your feet again and to restore you to the same financial place you were before. If you are concerned that your business may not have the right coverage to protect against those types of losses, make sure to contact your agent to review your policy.  

For more information about potential unexpected costs and coverages for your business, contact Skyline Risk Management, Inc. (718) 267-6600 to voice your concerns.