This week, I ventured down a slightly different path on my podcast. I talked about COVID and insurance, but more about what I believe we need to consider for the future rather than about what is happening today.
Take a listen and then share what YOU think might happen: https://episodes.castos.com/5e6ccb9ab4cf97-55025247/TMoI-Episode-12-MR.mp3
The homeowners policy was designed to insure personal risks, not business risks. For this reason, virtually all coverage for business property and liability is explicitly excluded in the homeowners policy.
Very limited property coverage is included for business personal property. The limit usually ranges between $1,000 and $2,500 if the business property is at your house. The limit is much less for business property anywhere else–like in your car.
Liability coverage for business activities is also severely limited. It only applies to incidents that occur on your property at home, and only for those that arise when:
What all this means is that if a person is working from home, any property used for business–regardless of whether it is owned by the individual or the individual’s employer–has very limited coverage. If the employer has insurance for property it owns, that property should be insured specifically on the employer’s policy with an indication it is located at the employee’s home. In some cases, the employer’s failure to cite the location of the property on its policy, especially if the property is valued at more than $5,000 or $10,000, might result in a lack of adequate coverage in the event of a loss.
Potential problems relating to the lack of business liability coverage under the homeowners policy are more serious. In most cases, clients do not visit employees working from home. But if anyone visits your home for business and gets hurt, your unendorsed homeowners policy does not provide any liability coverage. Similarly, if a FedEx or USPS employee trips and falls while delivering business mail or packages, any claim for injuries would not be covered. Basically, coverage for ANY other type of liability (think cyber liability, products liability, etc.) is NOT covered, either.
Endorsements are available to add limited business property and liability coverage to the homeowners policy but, in most cases, it’s probably not adequate. Some insurers also offer a home business endorsement that does include business, or commercial, coverage. That’s probably a better idea.
Remember, even if you’re working from home and your employer does have coverage for property it owns, and its own liability, your employer gets the broadest coverage under that policy. If you’re covered under it, you can still be held personally liable for property damage and bodily injury resulting from business activities conducted at your home.
Unless you buy and add business endorsements to your homeowners policy, you might find yourself uninsured in the event of a loss when you’re working from home.
For more details, listen to this week’s podcast at Taking the Mystery out of Insurance.
People are talking about lawsuits these days, even more fervently than usual. Why? Because the big question is: What will happen if a person claims he or she contracted COVID-19 at a restaurant, or store, or at work … and then sues the business owner? Will the business’ insurance policy pay the claim?
At the moment, it’s impossible to answer that question with any certainty because we have no precedent to follow. In other words, we’re in uncharted waters.
One of the first things to remember about insurance claims (with or without associated lawsuits being filed) is that liability insurance only pays if the insured was legally liable for causing bodily injury or property damage. And legal liability can only be determined by the courts.
It’s true that many insurance companies settle claims without lawsuits being filed or trials having to be undertaken. And that’s because the facts associated with the claim are so clear cut the insurance company is confident that if the matter went to trial, their policyholder would be deemed negligent and, therefore, legally liable.
Nothing about COVID-19 is especially clear right now. Therefore, how can we determine whether an individual or business exercised due diligence in preventing its spread?
My best guess is that if every business follows federal, state, and local guidelines about social distancing and preventing the spread of coronavirus, proving it was negligent is going to be very difficult. However, many believe some guidelines are not feasible, or reasonable. What then?
Only time will be able to answer these questions. However, I do talk more about this topic on Episode 8 of my podcast, so take a listen here.
Barb Gavitt is Vice President of Product Development and Education at A.D. Banker & Company, one of the leading insurance pre-licensing and continuing education providers in the country. She is also the 2020 president of the Securities & Insurance Licensing Authority.
Barb sat down with me recently to discuss the challenges many have been facing, and continue to face, in light of the COVID-19 pandemic shutdown. Although the insurance and financial services industries have been deemed “essential” during shelter-in-place orders, the licensing test centers were not.
This means that individuals who were already hired to work in the industry could not obtain their licenses, despite having paid significant fees and devoted tremendous amounts of time studying. Similarly, those wanting to be hired or wanting to obtain an additional license or line of authority on an existing license find themselves equally frustrated and stymied.
On Episode 6 of my podcast, Taking the Mystery out of Insurance, Barb explains what’s been happening to date, how the states are opening up now, and what she anticipates in the future.
A video of our chat will appear on the podcast’s YouTube Channel later in the week.
In prepping for the SILA Foundation webinar I presented yesterday, I have two items to share with you since the last time I blogged on the topic of cannabis.
A number of states have decriminalized marijuana. Contrary to what many people infer from the term “decriminalized,” it does NOT mean a person is not guilty of a crime of possessing, growing, or selling marijuana. Unless the state has passed a law that stipulates the medical, or adult recreational, use/possession/sale of marijuana IS legal, it is still a crime.
What the term means is that if a person has a “small amount” of marijuana in his or her possession, law enforcement will not arrest and charge that person with a crime. However, law enforcement may still confiscate the marijuana and the person can be fined for possession. Each state defines “small amount” differently. The most common amount is less than 1/4 of an ounce.
So, what does this mean? Let’s say I’m driving along the road in a state that has not legalized the medical or recreational use of marijuana, but has decriminalized it. A cop pulls me over for speeding and spots the ounce of pot I have sitting in the cup holder in my console. The cop can arrest me for illegal possession, I can be charged and found guilty of a crime, and I can be fined or jailed–however the state punishes that particular crime.
But, if the pot in the cup holder is less than the “small amount” defined by that state’s law, the cop can confiscate my pot (or not) and he can issue a citation that results in a fine (not a crime) for illegal possession ( or not).
Here’s a URL that lists how each of the 50 states and the District of Columbia handle the legalization of marijuana: https://disa.com/map-of-marijuana-legality-by-state
A recent ruling by the Nevada District Court shows that federal courts are handing down different findings with respect the the enforceability of contracts to which cannabis-related businesses are a party.
If you want the full story, click the link above. Here’s the short story:
When a cannabis business sues or is sued over breach of contract, the federal courts seem to be taking one of two positions:
How we insure cannabis risks in this country is ever-evolving and so long as federal and state laws differ with respect to legalization of marijuana, we’re in for a wild and exciting rollercoaster ride. Check back for more updates as they become available.