Volunteers, Mods and Emergency Response Fees

HO Coverage for Volunteer Board Service
When people are asked to serve in a volunteer capacity as board members on nonprofits, school PTA organizations and booster clubs, church boards and civic organizations, hopefully if sued they’d have coverage under the organization’s D&O policy. However, if there is no coverage in place, would these people have any coverage under their homeowners policies?

One problem is that the ISO HO policy only covers BI and PD, not wrongful acts or decisions. Another potential problem is that the HO policy excludes “business” activities and also has a “professional liability” exclusion. Prior to the 2000 edition, the HO policy excluded all liability for any “business” which was defined as “trade, profession or occupation.” Some might think that volunteering for the Chamber of Commerce arose out of a person’s “trade, occupation or profession,” but most courts didn’t think so.

The HO policy specifically exempts “volunteer activities” from the definition of business, appearing to provide coverage for cases like this. But, it still excludes liability for any “trade, profession or occupation, full or part-time,” making coverage less than crystal clear. The courts haven’t weighed in on the new language yet.

To review complete analysis of the pitfalls of relying on HO coverage, visit the Big “I” Virtual University.

Join the Mod Squad
In all agencies, it’s common practice to review commercial lines account renewals six to eight months in advance, right? Right! (Note: Sarcasm.)

Well, if the account’s workers compensation is experience rated, there are some things that may need attention that far in advance. Such vigilance may save your insured big bucks. The reason is that the stat card that includes audited payroll, class codes and claims experience is submitted months in advance of the renewal; the statistical cut-off date for this information is typically six months prior to renewal.

If errors are found on a stat card, which is common with regard to payroll, they often can be corrected. However, in most instances, statistical information based on judgment cannot be altered after the cut-off date. Examples include class codes and loss reserves. It is not uncommon at all for reserves to be closed within days following the stat card cut-off date at a paid amount far less than the reserve amount.

Therefore, it is imperative that audits and reserves be monitored and open claims closed at least six to eight months in advance of renewal. Otherwise, the insured may be stuck with an excessive experience mod and no recourse to have it lowered. This VU article goes into detail, including real life examples, of what an agent can do to ensure that his insureds receive the lowest experience mod possible.

To read the entire article (and download a handy, free chart that provides a timeline indicating what and when certain actions should be taken to avoid surprises at renewal time), visit the VU.

Insuring Emergency Response Fees
In the past year, the VU has received several questions regarding PAP or BAP coverage for fees charged by municipalities or other governmental entities for emergency response and cleanup costs. Apparently, in an effort to offset rising costs of emergency responses to auto accidents, some jurisdictions have begun to make charges for first aid, fire extinguishment, accident debris clean-up and related services. Do the PAP and BAP cover such emergency response fees?

Auto policies, with minor exceptions (for example, for alternative transportation expenses following a covered loss), cover only direct damage in first-party claims. However, it is customary for these policies to include, for example, towing and labor expenses incurred to get the auto to a repair shop. So, how might the PAP or BAP respond to these types of consequential claims?

The VU faculty tackled three scenarios and reached a general consensus, although there was some disagreement on the specifics, particularly as to whether some of these charges might fall under physical damage or liability coverage.

The complete analysis is posted on the VU.

Bill Wilson (bill.wilson@iiaba.net) is director of the Big “I” Virtual University, an online learning center for agents and brokers. Follow the Virtual University on Twitter at Twitter.com/BigIVU.