I've posted a few times about ridesharing services (you can relive the glory here and here.) Ridesharing is just starting to creep up as an issue in New York, but I think it will grow bigger in the future. If you're not familiar with services like Uber and Lyft, I recommend you watch this 14-minute documentary. Chances are that some of your clients are either already doing this or are thinking about it. They might not have the insurance coverage they think they have.
(This post previously appeared in the Aug. 14, 2014 issue of IIABNY Insider.)
“I suppose I could collect my books and get on back to school.” – Roderick David Stewart, “Maggie May”
It’s already mid-August. The New York Jets have finished up their training camp in Cortland and are headed down I-81 toward East Rutherford (the Giants, of course, have forsaken Albany and stayed home.) The New York State Fair opens next week. The stores are alive with back-to-school sales. That weeping and moaning you hear is coming from … teachers.
Yes, faster than you can say “dining hall food,” it will be time for the younger set to head back to schools and colleges. And that means it’s time to think about insurance. Why? Because it’s always time to think about insurance. Here are some insurance issues to discuss now with your personal lines clients who are parents of college students:
Question from an IIABNY member: I have attached pages 1 and 2 of the ISO Building and Personal Property coverage form (CP 00 10 06 95). Our question pertains to “Property Not Covered”, specifically item A.2.o. on page 2. This clause states that vehicles and self-propelled machines that are licensed for public road use, or operated principally away from described premises, are not covered property. Our question is whether or not non-motorized kayaks are considered “vehicles”, and therefore are not “covered property”.
Our insured had three kayaks stolen. They were not in the water when stolen. They were temporarily away from the insured premises, on dry land. Insurer is denying coverage under A.2.o, claiming that the kayaks are vehicles principally operated away from the described premises, and therefore are not “covered property”.
I turned 53 last weekend. (Insert jokes about old age here.) A few weeks before I turned 25, way back during the Ronald Reagan years, the New York State Legislature passed and Gov. Mario M. Cuomo signed a bill into law. It slapped new requirements on insurers that wanted to cancel or non-renew commercial insurance policies or make major changes to them. No longer could insurers double a business’s premium or exclude important coverage with no advance notice, or non-renew a policy with a month’s notice.
I was an underwriting assistant with a large national insurer group at the time, and I remember what a big deal this change was. The underwriters in my office knew that this would take some getting used to. When I became an underwriter, I also had to work within its confines. It wasn’t always easy, but it was the law. The rules may cause underwriters some additional work they don’t want, but they’re not all that difficult to understand.
A convenient follow-up to yesterday's post showed up in my inbox this morning. InsuranceJournal.tv has a five-minute interview with Chris Christian from US Risk Brokers that is well worth your time. I would especially direct the attention of insurance producers to her comments at the end about whether producers have an obligation to find the right policy for the client when all the client asks for is invasion of privacy coverage. Her point: You may not have a legal obligation, but you have an ethical one. To which I give a hearty, "Amen!"
Unless you’ve been paying very close attention to policies issued since May 1, you might not have noticed a subtle but potentially significant change in commercial general liability insurance policies based on ISO forms. Starting on that date, a new endorsement must be attached to all ISO CGL policies – CG 21 06 05 14, titled Exclusion – Access Or Disclosure Of Confidential Or Personal Information And Data-Related Liability – With Limited Bodily Injury Exception.
The unendorsed CGL coverage form states that the insurance does not apply to damages arising out of “The loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data.” If a business gets sued because of alleged damage to someone else’s data, the policy will not provide coverage. This new endorsement tacks on an additional paragraph to this exclusion. It now says that the insurance does not apply to damages arising out of, “Any access to or disclosure of any person's or organization's confidential or personal information, including patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information or any other type of nonpublic information.”
Hardly a week goes by that I don’t get a question from an IIABNY member regarding the classification of a person working for someone else. The “someone else” is attempting to classify that person as an independent contractor, rather than an employee. Why? Because if that person is not an employee, the person who hires him does not have to provide Workers’ Compensation benefits, Unemployment Insurance, matching Social Security and Medicare taxes, and so on. This fluidity of classification is so common that alarm bells go off in my head whenever I hear the number 1099 (the IRS form used to report miscellaneous income paid to a contractor.)
Sometimes, insurance companies get into disputes with other insurers about whether someone is an independent contractor. Such was the case in a decision handed down by the New York State Supreme Court’s Appellate Division in Rochester earlier this month.
Mere days after I published a blog post on insurance implications for those who drive for Uber, Lyft, SideCar and similar ridesharing services, Lyft has announced a partnership with MetLife to help close the coverage gap. Clearly, my blog has reached unprecedented influence in the executive suites of corporate America.
All right, I suppose it's possible that this deal was under discussion long before I set pixel to computer screen this week. I just want to be able to put "Media Heavyweight" on my business card.
Seriously, Lyft's announcement on its blog is short on details about the arrangement, possibly because they don't know yet what those details will be. The most it says is, "In the coming months, we will work together with MetLife Auto & Home to develop insurance solutions that further protect Lyft’s drivers and passengers when utilizing this new sharing economy platform." Sounds like a work in progress.
ISO overhauled its Commercial General Liability insurance program last year, including some new endorsements and revisions to many existing ones. Some of the most significant changes came to the additional insured endorsements. In this episode of the Ask Tim podcast, I discuss changes regarding:
Coverage permitted by state law
Coverage required under a contract
Limits required under a contract
The New York State Department of Financial Services has approved all of these endorsements, so they are available for use on policies right now. Take four minutes to get the scoop.