Lawncare to Lipstick: Coverage Concerns for the Self-Employed. PART TWO: Concerns with the Auto

Transcription

1 Lawncare to Lipstick: Coverage Concerns for the Self-Employed PART TWO: Concerns with the Auto

2 Lawncare to Lipstick: Coverage Concerns for the Self- Employed Kevin C. Amrhein, CIC FISCE and the CE Partnership Tallahassee, FL Meet Bruce and Olivia This is a story about Bruce and Olivia; entrepreneurs with different skills and similar ambitions. Bruce hates his desk job and loves the smell of freshly-cut grass. Olivia loves sales but hates giving such a large cut to her boss.

3 Bruce and Olivia, continued They also happen to be two of your personal lines insureds. After a few flyers and likes on facebook, Bruce s Lawncare and Olivia s Cosmetics start converting prospects to paying customers. In the wake of their elation, blissful thoughts turn to something previously unconsidered: risk and insurance. They each leave you a voic asking essentially the same question: do I have coverage for my business? SECTION ONE: CONCERNS WITH THE HOMEOWNERS

4 Issues with the Definition of Business "Business" means: a. A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; or b. Any other activity engaged in for money or other compensation, except the following: (1) One or more activities, not described in (2) through (4) below, for which no "insured" receives more than $2,000 in total compensation for the 12 months before the beginning of the policy period Issues with the Definition of Business, cont. b. Any other activity engaged in for money or other compensation, except the following: (2) Volunteer activities for which no money is received other than payment for expenses incurred to perform the activity; (3) Providing home day care services for which no compensation is received, other than the mutual exchange of such services; or (4) The rendering of home day care services to a relative of an "insured".

5 Issues with Other Structures Issues with Other Structures We do not cover: c. Other structures from which any "business" is conducted; or d. Other structures used to store "business" property. However, we do cover a structure that contains "business" property solely owned by an "insured" or a tenant of the dwelling provided that "business" property does not include gaseous or liquid fuel, other than fuel in a permanently installed fuel tank of a vehicle or craft parked or stored in the structure.

6 Issues with Business Personal Property Special Limits of Liability: $2,500 on property, on the "residence premises", used primarily for "business" purposes. $1,500 on property, away from the "residence premises", used primarily for "business" purposes. Business data not covered. Issues with Rented or Borrowed Equipment- Property SECTION I- Personal Property owned or used must be damaged by a covered peril. If used for business is subject to Special Limits of Liability discussed earlier.

7 Issues with Rented or Borrowed Equipment- Liability Excludes Property damage to property rented to, occupied or used by or in the care of an insured. This exclusion does not apply to property damage caused by fire, smoke or explosion. How about that $1,000 giveback? NOPE: Damage to Property of Others excluded if used in business engaged in by an insured Issues with Contractual Liability Contractual liability excluded but broad giveback for written contracts that assume the liability of others prior to an occurrence unless excluded elsewhere in the policy.

8 Issues with Business Liability Business liability excluded with few exceptions. Notable exception for business of an insured under 21 involved in part-time or occasional, self-employed business with no employees. Issues with Personal Injury Claims Not covered without endorsement. Endorsement offers named perils only.

9 Issues with Common Homeowners Business Endorsements Increased Limits on Business Property (HO 04 12) Increases limit of coverage for business property on residence premises by the scheduled amount in increments of $2500 up to $10,000 Increases coverage for business property away from the residence premises to 60% of the total scheduled amount Increased amount does not cover business property that is in storage or pertaining to a business conducted on the premises. Samples or business property held for sale or for delivery after sale are not covered Issues with Common Homeowners Business Endorsements Permitted Incidental Occupancies Residence Premises (HO 04 42) Business must be permissible with carrier Restricts liability coverage to premises only

10 Issues with Common Homeowners Business Endorsements Business Pursuits (HO 24 71) Does not cover: (a) Business owned or controlled by insured (b) Professional liability (c) Fellow employee of insured (d) Specified types of losses if insured is a teacher Issues with Common Homeowners Business Endorsements Home Business Insurance Coverage (HO 07 01) 14-page endorsement that looks good on the surface but limitations on size, nature and ownership of business make it less appealing/available/effective

11 SECTION TWO: CONCERNS WITH THE AUTO Issues with Eligibility Guidelines Variety of common eligibility rules concerning ownership and use of vehicles may prevent business use vehicles from being eligible for a personal auto policy.

12 Issues with Exclusions Both MA and ISO policies contain language concerning business use. Good news is that exclusion language contain broad giveback for private passenger type autos, pickup or van, or trailer used with them Issues with Exclusions, cont. Both MA and ISO policies have exclusion language applicable to the following: PD to property owned by or being transported by that insured PD to property rented to, used by, in care of that insured BI to employee of that insured during course of employment. Ownership or operation of a vehicle being used as a public or livery conveyance

13 Issues with Exclusions, cont. Both MA and ISO policies have exclusion language applicable to the following: -The so-called garage exclusion ( business of selling, storing, parking, etc.) -Vehicles not considered autos (e.g. designed mainly for use off public roads.) Doesn t apply to trailers -Vehicles owned but not insured and/or furnished or available for regular use Issues with Owned and Non-Owned Trailers Don t forget Furnished or available for regular use exclusion previously discussed! For damage to owned trailer, need to schedule. Damage to non-owned trailer not covered. (some company forms may offer small sub-limit e.g. $1,500.)

14 Issues with Equipment Installation in Auto If equipment reproduces, receives or transmits audio, visual or data signals, must be permanently installed. If permanently installed in the auto in location not used by the auto manufacturer, limited to $1,000. Damage to other customized equipment in pickup or van excluded. Issues with Auto Purchased Through Business Definition of insured under Business Auto Policy and the issue of permission. Employees, partners, members of LLCs not insureds under the BAP if driving personally owned autos

15 Issues with BAP Endorsements MA Drive Other Car Coverage- Broadened Coverage for Named Individuals- Massachusetts ISO CA Drive Other Car Coverage- Broadened Coverage for Named Individuals CA Employees as Insureds (used in MA or ISO) OTHER INSURANCE CONCERNS Excess liability, Professional liability, Worker s Compensation, Employee Dishonestly/Fidelity, Business Income, Supply Chain Interruption, Employment Practices Liability (EPL), Cyber liability, Flood Insurance, Equipment Insurance, Environmental Impairment liability... and many more that we don t have time to discuss in this course. OH DARN!

16 Thank you for attending! MY CONTACT INFO: See you next time! And try to have some fun for cryin out loud!!!!