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Homeowners Insurance and an ATV: Is There Medical Payments Coverage?

Question from an IIABNY member: Approximately two weeks ago, my client’s 14 year-old granddaughter and friend were on our insured’s ATV with Grandma behind them, delivering invites to a July 4th party to their neighbor. They crossed their property line by approximately 100 feet, at which point the ATV tipped over and the friend was sent to the hospital. He was checked out and is fine, although he had some cuts and initially they feared a broken bone.

The policy language is quite specific as to what is and isn’t covered, but leaves a few loose ends with medical payments adding the words ("immediately adjoining")  that seem to offer to extend the insured’s premises a wee bit.

Under liability the policy does extend coverage for some motor vehicles while on the insured’s property or if being used to service the insured’s property. Delivering invites is a stretch but I am curious what your thoughts are?

Answer: The wording in your client's policy is pretty similar to what’s in the ISO Homeowners policy. With regard to Medical Payments To Others Coverage, the ISO policy says:

As to others, this coverage applies only:

1. To a person on the "insured location" with the permission of an "insured"; or

2. To a person off the "insured location", if the "bodily injury":

a. Arises out of a condition on the "insured location" or the ways immediately adjoining;

b. Is caused by the activities of an "insured";

Based on this, I’d say you have a better case for coverage under the “caused by the activities of an insured” language. The ISO definition of “insured” states:

5. "Insured" means:...

c.     Under Section II:...

(2)     With respect to a “motor vehicle” to which this policy applies:…

(b)     Other persons using the vehicle on an “insured location” with your consent.

Since they had ventured off the insured’s premises, the insurer might argue that the granddaughter was not using the vehicle on an insured location. On the other hand, it sounds like the trip started there, so you could argue the other way, too. This is key, because if the granddaughter was not considered to be on an insured location, then she is not an insured and therefore the medical payments coverage does not apply.

If the accident occurred on the street adjacent to your client’s home ("ways immediately adjoining") and she can show that the accident occurred because of some condition in the street (a pothole or something in the road that the granddaughter had to swerve to avoid,) then she can make an argument for coverage under the first paragraph.

It’ll be interesting to see how the insurer decides this one. It’s not at all clear-cut one way or the other.

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Thanks, But I Don't Want You To Insure My Property

Question from an IIABNY member: I have an Insured that leases medical equipment to others where the property coverage is provided by an inland marine policy with one carrier and the package policy is with a different carrier due to the class of business.
 
The package carrier has a coinsurance clause on their policy and is aware of the inland marine policy.  I asked the package carrier to endorse their policy, as I believe there's an ISO property endorsement where you can list "Property Not Covered" under the package policy, hence avoiding a potential issue with coinsurance. The package carrier said there's no such endorsement but referred to the Building and Personal Property coverage form under its section entitled "Property Not Covered" (to para-phrase: property more specifically described under another policy).
 
Perhaps ISO no longer uses the "Property Not Covered" endorsement that I recall from several years ago.  Let me know if you have any suggestions.

Answer: Sounds like you’re talking about ISO endorsement CP 14 20 11 91, Additional Property Not Covered. However, this endorsement excludes certain types of pre-defined property, such as personal property contained in safes or vaults, contents of crop silos, property of others, stock, contents of vending machines, etc. None of the categories listed on the endorsement appear to include leased medical equipment. 

You have a couple of options here:

• Take the underwriter’s word for it that the insured will not suffer a coinsurance penalty because of the language built into the B&PP coverage form.
• Ask the underwriter for a manuscript endorsement specifically stating that property insured under the IM policy is considered not covered under the package.
• Ask the underwriter to insure the property on the package policy on an agreed value basis, thus suspending the coinsurance clause. In my opinion, this might be the best option of the three.

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Insurance Dept. Opinions: E-Mailed Cancellation Notices, Service Fees, Fire Ins. Fee

The New York Insurance Department’s Office of General Counsel posted 10 new advisory legal opinions on its Web site last week.

• An insurer may send an electronic notice of cancellation to an insured by means of e-mail if the insured has consented to receiving electronic documents. A reliable, accurate and verifiable electronic record that insurer sent the cancellation notice to the e-mail address for the insured on record with the insurer will suffice as proof of delivery.
• A health services provider may not bill a patient and/or the patient’s health insurer for treatment of injuries arising out of the use of a motor vehicle at the provider’s standard rates when the patient’s no-fault insurer has denied the medical provider’s claim because available coverage for basic economic loss has been exhausted. The provider also may not bill a patient and/or the patient’s health insurer treatment of injuries arising out of the use of a motor vehicle at the provider’s standard rates when the patient’s no-fault insurer has denied the medical provider’s claim because of a policy exclusion, such as driving while intoxicated.
• The life insurance guaranty fund protects a New York resident who resides in Florida each winter, and who purchases a variable annuity contract in Florida, from a New York authorized insurer, that has a death benefit rider not available in New York.
• A university would not commit insurance fraud if it were to waive psychiatric office visit fees of more than twenty dollars for which its students are personally responsible, and notify its students’ insurers of the waivers.
• A service fee agreement that details the service to be provided and at what price, and specifies that the agent will keep any commission earned by the agency on the sale of insurance to the client satisfies the requirements of the Insurance Law.
• After acceptance by all necessary parties of a lump-sum waiver agreement under the New York Workers’ Compensation Law, an insured’s health insurance plan is not obligated to pay future medical expenses arising from the insured’s original injury.
• The method for calculating the fire insurance fee for a businessowners policy that has separate, divisible premiums for the property and liability coverages is to multiply 100 percent of the property premium by 1.25 percent. If the property premium is divisible and there are portions that do not include the peril of fire, then the fire insurance fee is not levied on that portion of the property premium. However, if the property premium is not divisible, then the fire insurance fee is levied on the whole property premium. If inland marine coverage is included in a businessowners policy and the premium is divisible, it is not subject to the fire insurance fee.

The OGC declined to express an opinion on a Medicare question; it also posted opinions pertaining to insurance company investments and the legality of a specific discount medical plan. Visit the department’s Web site to download any opinion issued since 2000.

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Does the Business Auto Policy Cover Unregistered Construction Equipment?

Question from an IIABNY member: I am hoping you can clarify the following issue.  We have several insureds who may incidentally drive a piece of equipment (which is not licensed or registered for road use) along a road.  Since this is so incidental, they are willing to take the chance with the NYS law and not have this equipment licensed. 

I have assumed that as long as the insured has symbol 1 on their policy (form CA 00 01 03 06 applies),  it is ok that this equipment is not specifically listed on the policy.

Answer: Here’s my line of thought: 

• Per the ISO BAP (CA 00 01 03 06), Symbol 1 means any “auto”, as the policy defines that term. 
  
• The policy defines “auto” as:

1. A land motor vehicle, "trailer" or semitrailer designed for travel on public roads; or

2. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged.

However, "auto" does not include "mobile equipment".

• The definition of “mobile equipment” states, “Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered ‘autos’.” (emphasis added) Note that the definition does not say that the vehicle must be registered; it says that the vehicle must be subject to a compulsory liability insurance law, which in this state means that it must be registered with the DMV. When your insured’s vehicles are used on public roads, they automatically become subject to New York’s compulsory financial responsibility law (N.Y. Vehicle and Traffic Law Section 312.) Therefore, the policy considers the vehicles to be “autos” in this situation, and since the dec page shows symbol 1 for Liability Coverage, the policy should afford coverage for the insured’s legal liability for injuries or damages resulting from their use. 

• Lastly, I checked the mandatory endorsement New York Changes in Business Auto, Business Auto Physical Damage, Motor Carrier And Truckers Coverage Forms (CA 01 12 04 09) to see if it changes any of these terms, and it does modify the definition of “mobile equipment.” It tacks on the following changes:

However, the operation of:

a.       (Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting or well servicing equipment); or

b.       Machinery or equipment that is on, attached to, or part of, a land vehicle that would qualify under the definition of “mobile equipment” if it were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged

is considered operation of “mobile equipment” and not operation of an “auto.”

So, when a vehicle is being driven and its attached equipment is not in use, it’s an auto. When it’s stationary or slow-moving and its attached earth loader is in use, then it’s mobile equipment.

To sum up, I think your interpretation is correct, but coverage could switch between the auto and GL policies several times in a given workday. If a claim involving one of these vehicles ever occurs, it might be best (from an E&O loss prevention standpoint) to submit claims under both policies and let the carriers determine which one applies.

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Order in the Court: Late Notice to an Excess Insurer

The IIABNY Research Department frequently gets questions about denials of coverage for late notice. Questions of timely notice are complicated enough when the policy is a primary general liability form. It gets even trickier when the policy is a commercial umbrella or excess policy.

Roy Mura’s Coverage Counsel blog reported a New York appellate court decision handed down two weeks ago that shows just how careful an insured (and, by extension, that insured’s agent) must be when it comes to giving prompt notice. To quote Roy:

When an excess liability insurance policy requires notice of how, when and where an occurrence took place, the names and addresses of injured parties and witnesses, and the nature and location of any injuries or damage, letters, faxes or emails providing anything less will not satisfy the notice requirement.  So says the First Department in this decision.

In this particular case, paid claims had shrunk the primary policy’s $2 million aggregate limit for the 2001-02 policy term to $800,000 with three claims still open in 2006. Foreseeing exhaustion of its limits, the primary insurer notified the excess insurer of the open claims. Almost immediately, the excess insurer denied coverage due to the late notice. When the primary insurer sued, the trial court denied the excess insurer’s motion to have the case dismissed. The New York Supreme Court’s Appellate Division, First Department, reversed the trial court’s decision. The court said that the excess insurer had not received the required information (“how, when and where the occurrence took place; the names and addresses of injured parties and witnesses; and the nature and location of any injury or damage”) in a timely fashion. Therefore, the insurer was within its rights to deny coverage.

In this case, it was an insurance company that lost in court. However, it could very easily be an insured who loses the next one, and it’s not a stretch to imagine the insured seeking recovery from the agent or broker on the account. The lesson: In the event of a loss, notify all insurers whose coverage may become involved and comply with the notice requirements in the policies.

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Accepting Referral Gifts From Auto Repair Shops Will Cost You

New York Insurance Law Section 322 is one of the more clear provisions of the insurance law. It states,

“No licensed insurance agent, licensed insurance broker, licensed adjuster, authorized insurer or representative of such insurer shall directly or indirectly request, procure or accept any payment from a motor vehicle repairer for referring any motor vehicle repair business to such repairer.”

To paraphrase, if you are an agent, broker, adjuster, insurance company or its representative, you cannot accept any payments from auto repair shops in return for referring business to them.

The most recent New York Insurance Department report of disciplinary actions has two lessons with regard to Section 322:

• Don’t accept referral payments from auto repair shops; and

• If you did happen to accept referral payments from auto repair shops, you’d better ‘fess up.

The report shows that three agents wrote hefty checks to the department as payment for learning these lessons. One paid a $770 fine for accepting the payments. The other two apparently accepted the payments and then denied to the department that they had done so. Department investigators do not take kindly to being misled. One agent paid a $4,000 fine; the other paid a whopping $5,000.

If an auto repair shop or an auto glass repair shop offers to pay you for referrals, politely decline. You have better uses for your agency’s assets.

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Oops! Did I Say That? Personal Injury Coverage and Homeowners Insurance

A few weeks ago, we looked at a soured marriage from the perspective of auto insurance. This time, we look at the same subject but from the homeowners insurance side of the coin...

Question from an IIABNY member: Here's the scenerio: Person A sends an e-mail to Person B about Person C. Both Person A and C know Person B as they used to be married. Person B is their son's baseball coach. In the e-mail, Person A basically bashes Person C to Person B and also tells Person B a lot of personal details about Person C's life that B has no reason to know. This embarrases and upsets Person C very much. Does Person C have a case for personal injury for slander and damage to reputation against Person A's homeowners policy? There also have been phone conversations between Persons A and B where A has been badmouthing C as well.

Answer: So, if I understand correctly, A and C are former spouses; B is the baseball coach who is officially sorry he gave out his e-mail address. A (to be non-sexist, I’ll say that A is the ex-husband) writes to B, spilling his ex-wife’s intimate secrets and badmouthing her. In addition, he has called B (who is now looking into changing cell phone numbers) with lots more in the TMI department. 

I’ll assume Mr. A has the equivalent of an ISO HO-3 policy. Coverage E — Personal Liability covers the insured for his liability for bodily injury or property damage; since C has suffered emotional distress but no apparent bodily injury, there’s no coverage in the unendorsed policy. The countrywide ISO endorsement for personal injury liability is HO 24 82, but New York has a state-specific version, HO 24 86 10 02, Personal Injury – New York. It provides indemnity and defense if a claim is made or suit brought against an insured for damages resulting from an offense defined under “personal injury.” That definition has five parts; parts 4 and 5 are relevant: 

“Personal injury” means injury arising out of one or more of the following offenses, but only if the offense was committed during the policy period:… 

4. Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; or

5. Oral or written publication of material that violates a person’s right of privacy.

Mr. A’s actions appear to meet both of these definitions – his oral and written statements allegedly slandered and libeled his ex-wife and violated her privacy. However, the exclusions take away coverage:

a. If he knew that his statements would violate her rights and inflict personal injury 
b. If he knew what he was saying was false 
c. If he made the statements before the policy took effect

These exclusions go to his state of mind: Did he make this stuff up entirely or just distort something that was true? Did he intend to air her dirty laundry and get under her skin, or did he think he was blowing off steam to someone who would not relay it back to her? I expect that, if he has this endorsement, his insurer will provide him with at least an initial defense until they can conclusively prove that one or more of the exclusions apply.

Interestingly, according to the IRMI Personal Risk Management and Insurance manual, most personal umbrellas automatically include coverage for personal injury, so even if he doesn’t have the endorsement on his Homeowners policy, he might be covered (after application of the deductible) if he has an umbrella. You probably have no way of knowing whether or not he has the coverage unless he shows her his policies (seems unlikely given their high regard for each other) or she sues him. Since they are no longer married, she has no legal right to this information from his insurance agent. New York Insurance Regulation 169 requires the agent to share his information with unaffiliated third parties only in compliance with the agent’s privacy policy; I doubt that the policy says the agency will share information with estranged spouses.

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Online Defensive Driving Courses Now Approved in New York

Almost four years after the New York State Legislature authorized defensive driving courses taken over the Internet, the Department of Motor Vehicles has approved four providers’ courses. IIABNY members have reported contacts from course providers since the DMV’s May 18 announcement of the courses’ availability.

According to the DMV’s Web site, the department has approved the following course providers:

• National Point and Insurance Reduction Course, Inc.
• I DRIVE SAFELY
• USA Training Company, Inc.
• American Safety Council, Inc.

The New York Insurance Department issued a circular on June 5, informing insurers of the change and instructing them to include the names of the providers in their policyholder notices. New York Insurance Law requires insurers to give premium discounts to insureds who take approved accident prevention courses.

The DMV’s action follows the Legislature’s 2005 enactment of Article 12-C of the Vehicle and Traffic Law, establishing an accident prevention course internet technology pilot program. The law requires the DMV to report to the governor and Legislature on the program’s results and make recommendations as to its future.

What do you folks think about this? Is it a good idea to let people earn insurance discounts and license point reductions in front of their computers? Is it a sensible nod toward 21st century technology or an easy way for people to lower their premiums without actually learning anything? Sound off in the comments.

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Insurance Dept. Opinions: Rebating, Referral Fees, and the Life Guaranty Fund

The New York Insurance Department’s Office of General Counsel issued seven opinions during the second half of April:

• Insurers are not required to maintain paper underwriting and claim files in their New York offices for policies written in the New York Free Trade Zone, after they have converted the files into electronic format and stored them on servers located outside of New York.
• A licensed insurance agent or broker may not offer its employer clients free access to a third-party online vendor that provides certain services, as this access would violate the rebating laws.
• A broker may pay referral fees to an unlicensed employee of a federal credit union and may make the payment contingent upon the broker being able to provide the prospective insured with a quote. While the broker may not make the fee contingent on the sale of the policy, he may pay the referral fee based upon the number of employees of the employer referred. 
• Insurance regulations permit a health insurance policy to exclude benefits provided under a workers’ compensation policy.
• The life insurance guaranty fund provides coverage up to $500,000 to a New York resident insured under an individual long-term care policy purchased in New York, should the issuing insurer become insolvent.

The other two opinions pertained to prompt payment requirements for accident and health insurance and payment obligations of the Insurance Department to the City of Albany. Visit the department’s Web site to find any opinion issued since 2000.

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Anti-Social Media: Part Four — Mainstream Mistakes and Conclusion

This is the final part of Tee Morris's presentation on anti-social media. You'll get a lot out of this even if you haven't watched the first three parts, but I strongly encourage you to watch the whole thing. As I write this, Tee is giving this presentation to groups in New Zealand.

I'm curious as to your reactions. Does Tee's message make sense to you? Have a contrary opinion? Questions about how all this works? Chime in on the comments!

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