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    « Essential Viewing: Crisis Management | Main | NY Changes to the Personal Auto Policy (Part 2) »

    October 16, 2012

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    Alonso Parra

    Thank you for your info, regarding auto insurance. Now I have a question in reference to Worker's Compnesation.

    Is a sharehoider of an "S" corporation considered automatically an employee?

    I will appreciate very m uch your answer to this querie

    Alonso Parra

    Ted Pappas

    Will the NY policy pay for an "intangible property" loss to a rental vehicle i.e. loss of rental income and diminution of value?

    Joel R. Appelbaum

    Ted-A New York liability policy that covers property damage will ordinarily pay for direct damage to the property and damages that can be said to reasonably flow from the direct physical damage.
    In your rental car question, if there is damage to the rental car, the rental car company will lose the rental revenue generated by the car while it is out of service and under repair. So the lost rental payments would be considered to reasonably be caused by the direct damage to the vehicle and would be paid under the policy.

    The general measure for damage to an auto is the cost of repair or the difference between the fair market value of the vehicle before the damage and the fair market value of the vehicle after the damage, whichever is less. This has long been the law in NY. The Court of Appeals established this in Gass v.
    Agate Ice Cream. If the vehicle can be repaired to its pre-loss physical and functional state, then that is the measure of damages--however, if the vehicle is a special vehicle, like a vintage Corvette that is appreciating in value, then the owner should be compensated for the loss of the increased value.
    In contrast, a new car dealer whose car is wrecked will not receive any additional money simply because he may have to cut the price when he discloses the car was in an accident.
    Last, this idea is well demonstrated if a NYC bus is hit and is out of service. Even tho' the City has a replacement bus in the garage, the City will still be entitled to "loss of use." Here that would be the reasonable cost of renting a similar vehicle for the period of time that the damaged bus is out of service.
    Joel R. Appelbaum

    Tim Dodge

    Alonso,

    Not automatically. It depends on whether the shareholder is also working in the business. The New York Workers' Compensation Law defines "employee" in part as "a person engaged in one of the occupations enumerated in section three of this article or who is in the service of an employer whose principal business is that of carrying on or conducting a hazardous employment upon the premises or at the plant, or in the course of his or her employment away from the plant of his or her employer..." (paragraph 4 of NYWCL Section 2)

    Therefore, the key test is the nature of the individual's service to the corporation, not whether that person is a shareholder. Please be aware that officers of the corporation are automatically covered as employees. If there are only one or two officers who collectively own all the stock and each person owns at least one share, one or both officers may exclude themselves. If there are more than two officers and/or more than two shareholders, all corporate officers must be covered with no option to exclude themselves.

    Tim Dodge

    Joel,

    Thanks for the thorough answer. The only thing I would add is that the Rental Vehicle Coverage Endorsement -- New York covers the insured's obligations for loss of or damage to a rental vehicle, including its loss of use. In a 2006 advisory legal opinion, the New York Insurance Department said that this endorsement may cover loss from diminution of value. See http://www.dfs.ny.gov/insurance/ogco2006/rg061122.htm.

     cash from structured settlement

    Thank you for sharing this post. I found it very informative and interesting. Do you have any other examples of "intangible property" as I am still a little confused?

    Try It tint your car

    The New York Workers Compensation Law defines employee in part as a person engaged in one of the occupations enumerated in section three of this article or who is in the service of an employer.

    Julia Hyman

    I would like clarification on the loss of services please. A example question: If the insured has 25/50/10 and is at fault in a accident with the following:
    injuries to the driver of the other vehicle total $20,000 and the drivers wife also in the 2nd vehicle sues for loss of services in the total of $10,000, what would the insureds policy pay in total?

    Would they be limited to the per person coverage for the husband and get the full $25,000 or would the husband get $20,000 and the wife get $10,000 for a total of $30,000?

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