…Am I Covered?

Being down the street from Universal, Disney Corporation and Warner Brothers means that we have a lot of customers with great imaginations and real concerns.  For our clients in Studio City, Sherman Oaks and Encino (Los Angeles and anywhere else), we have the answers you need.

YES!  An asteroid is fairly classified as a falling object and as long as it first crushes your roof or walls when it hits, you are covered for both the structure and all of your contents.  That is not just the actual asteroid, the impact shockwave will also count {doctrine of “proximate cause”}.  So, your backyard BBQ and patio furniture are not going to be covered, but everything within your home is.  Just in case you think that falling objects never happen – they do, all the time.   We had a brand new BMW cut in half recently when a wheel dropped off of a 747 at LAX.  Other things happen all the time.

Trees are falling on homes repeatedly.  This is why insurance companies often demand cut backs on overhanging trees or get off the risk.

And, a personal favorite shot, more airplane parts with a turbine engine taking the plunge:

I have always wondered what happened to that plane.  One of the more bizarre falling object stories was a falling man.  Apparently stowed away in the wheel well of a 747 flying an international route, his body fell out on landing approach when the pilot dropped the wheels.  At forty-five below zero and a 38,000 foot cruising flight altitude the man was almost certainly dead from both exposure and oxygen starvation.  In the meantime he fell onto a shop and until the police figured out what happened this was treated as a very strange murder.  There have been a number of other cases where bodies have fallen from the sky.

So, there we have it.  Our policies will provide a lot of coverage, and tailored correctly we can look after you and your family.  We look forward to helping you with a Zombie Apocalypse, or your next escrow or policy review.

Hopefully without being hit by an Asteroid.

And Property Coverage:

As is well known, Zombies are particularly single minded in the ravenous desire to eat healthy humans, particularly brain tissue.  In pursuit of that activity they congregate in large groups and forcefully attack fences, doors, objects or property in the way of their nefarious feeding.  That is the classic definition of Riot or Civil commotion.

Unfortunately, for a Riot to exist, it is required for the civilian authorities to actually read the “Riot Act”.   While the reading of the Riot Act has normally been directed at living humans, we note that there are no provisions limiting the act to living humans.  We can reasonably conclude therefore that there is no basis for the exclusion of the reanimated dead.   This would likely extend to the special category often referred to as “rage zombies”.  They are not technically dead, or “zombified”, but do carry the virulent contagion Zombie Bacillus Virus and are medically best described as similar to Vampires with Bacillus Vampiris.

Notwithstanding the above, the probability of our politicians staying in place and battling the Zombies would, however, be statistically almost zero.  This is true particularly in California where the Democrats would likely champion Zombie rights as the next logical step in expanding sexual preference to include Necrophiliac Cannibalism.  Therefore we conclude that damage resulting from Zombie riot would be impossible to claim and no coverage would be found in this section of the policy.

Are we out of coverage?  No, we are not.  The Vandalism and Malicious Mischief section of coverage does also directly address this apocalyptic exposure.  Vandalism is any action involving deliberate destruction of or damage to public or private property and there are no condition precedents.  The Zombie population has exhibited consistent contempt for the rule of law and voraciously destroys any property between themselves and living persons.  We therefore conclude that we do indeed have full coverage in place for a Zombie Apocalypse.   The only caveat is that the damage cannot be done by an insured, so if a family member were to become a Zombie and attack the family residence that could result in loss of coverage from that moment on.  So, keep your family close, and if we survive this together we will get this claim paid.

The last thing that we need to watch out for is a declaration of war.  Under that circumstance, the State or Federal government declaring war on the Zombies, the War exclusion might govern and in that case we would find ourselves again without coverage.

So, barring California legislation and a declaration of war, coverage for your property will indeed be covered by the Insurance Services Office policy forms.  This is of course subject to your deductibles and family members remaining alive; and a functioning society remaining at the end of the contagion.  Good luck!

Attorneys’ license location does make a big difference!

When completing your applications for Lawyers’ Errors and Omissions Insurance pay close attention to the location of the licenses.  If, for example, you are in California and you have firm whose members are licensed in New York and Arizona, and not in California, this can dramatically impact your pricing.  If your work is based in San Francisco and Los Angeles, your Attorneys are not “Attorneys” necessarily in California and may be considered as highly trained paralegal staff depending on what they are doing for you.

Given that most carriers rate by the number of Attorneys and modify by practice areas, litigation intensity, nature of exposure, number of general support staff and systems & process, this can make a very meaningful difference in premium charges.  Most firms are very happy to take a premium reduction where justified by the facts.

Where you have a situation similar to this please do discuss this with us in detail as we may be able to make some real pricing adjustments while negotiating with underwriters.  Each case is different, but this is always worth a look.

Claims Made Insurance Policies

When it comes to higher hazard insurance in both Commercial General Liability and Professional Errors & Omissions liability, the Insurance Companies have learned their lessons.  From both the costs of General Liability defense of tobacco companies and asbestos companies, the “long tail” of exposure has broken and bankrupted major corporations.  It has also seriously depleted insurance companies’ coffers and led to decades of expensive and predatory litigation.  This was the legacy of the “occurrence” form of coverage.  Whatever happened during the policy and became apparent, even many decades afterwards, was covered by those policies.

The result of that compound coverage exposure?  “Claims Made” coverage forms.  These polices do not offer occurrence coverage without limit.  They offer coverage only during the policy term and up to 30 days past expiry date.  You either lose coverage for that policy year if you do not renew, or you have to buy an extended reporting provision for your policy.

Most extended policy reporting provisions will only provide you with one, two or three years of “tail” coverage at 100%, 250% or 350% of the annual premium.  That figure will vary by insurance company but is ballpark accurate.  The “extended reporting provision” does not continue coverage, or increase coverage with “stacked” annual limits.  The reporting provision simply extends the period of time that a claim may be reported under the original policies coverage limit, terms and conditions.

That claims made policy may provide coverage for only that single policy year, or, in the case of a policy that was in force for multiple years may extend back to the beginning of the original policy which would be defined by its “retroactive date”.  The “retroactive date” is typically the date on which the first professional policy was issued, and is normally referenced directly on the declarations pages of a policy.  Sometimes referred to as a “prior acts date” the retroactive date limits any claims being reported prior to that stated date.  Even if the claim is reported during a current policy period if the acts which lead to the allegation of negligence or error & omissions occurred prior that date it is fully excluded from all coverage or defense under the policy.

Just to make things a little more complicated, Insurance Companies also refer to a term known as the “knowledge date”.  This phrase can eliminate coverage under a professional liability policy for any claim or situation that could lead to a claim under a new policy even if the claim is within a current period and the retroactive date.  The purpose of “knowledge date” wordings is to prevent a new insurance company under your existing program from inheriting a claim that should have been reported to the prior carrier on your program.  That would also have affected your eligibility for the new coverage that you may have secured.

If you had knowledge of a pending claim or incident prior to switching to a new carrier this could nullify your coverage.  This is why caution needs to exercised when switching carriers to make sure that there is nothing that needs to be addressed under the existing coverage.

While this may seem confusing, we can walk you through this and all the other issues of professional liability insurance.

For our California Employers, effective January 1, 2017 California Assembly Bill 2883 goes into effect, which changes California’s workers’ compensation law regarding exemptions from the law by corporate officers and directors, partners, and limited liability company (“LLC”) members.

In keeping with both the past practices and current developments Owners, Officers, and Managing Members getting both dividend and wage compensation will be required to make an election to be covered, or be excluded under workers compensation policies.

Specifically, officers and directors of quasi-public and private corporations who provide actual services to the corporation for pay are considered an “employee” of the corporation unless they elect to be excluded from coverage. See Cal. Lab. Code § 3351(c) (Eff. Jan. 1, 2017). However, now the officer or director can only elect to be excluded from coverage “if he or she owns at least 15 percent of the issued and outstanding stock of the corporation and executes a written waiver of his or her rights under this chapter stating under penalty of perjury that the person is a qualifying officer or director.” Cal. Lab. Code § 3352(p) (Eff. Jan. 1, 2017).

Also, working partners and LLC members who receive wages irrespective of profits are now considered employees, unless they exempt themselves from coverage. Cal. Lab. Code § 3351(f).

General partners and LLC managing members may, under penalty of perjury, execute a written waiver of their rights under the California workers’ compensation laws. Cal. Lab. Code § 3352(q).

Please note that if any of our clients have any officers, directors, LLC managing members or general partners who were exempt from California workers’ compensation coverage prior to the January 1, 2017 law change, they must submit a new signed exclusion / waiver form to the carrier in order to continue that exemption, provided that they meet the qualifying requirements. This applies to in-force policies and renewals.

So, there you are, more of the same and additional paperwork.