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Don't Get Hit: Offer Assault and Battery to Avoid an E&O Claim

Any business where the threat of physical harm could occur on or near the premises has an assault and battery exposure. It is not limited to liquor stores, restaurants and bars.
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don't get hit: offer assault and battery to avoid an e&o claim

Imagine reading this headline in your local newspaper: “No coverage for $2 million judgment against apartment owner for shooting death." The story goes on to say that the insurance agent “probably could not have gotten coverage for assault and battery."

What would you think if you lived in that neighborhood? Or if you were a juror in the case filed by the owner versus his insurance agent? We know from experience that the reaction ranges from skeptical to angry.

Assault is defined as “the wrongful act of causing someone to reasonably fear imminent harm" by the Cornell Law School Legal Information Institute. This means that the fear must be something a reasonable person would foresee as threatening. This fear of harm can also apply to witnesses. Battery refers to “the actual wrongful act of physically harming someone."

Any business where the threat of physical harm could occur on or near the premises has an assault and battery exposure. It is not limited to liquor stores, restaurants and bars. These types of claims can be made against many other types of entities, such as apartment complex owners, property management companies, assisted living facilities, mobile home parks, security services, transportation services, hotels, retail stores, strip malls, shopping centers, schools, sports leagues, clubs, camps and churches.

Although the sale or furnishing of alcohol increases the likelihood of such claims, alcohol does not have to be involved in an assault and battery claim. An entity located in a high-crime area will arguably be more likely to have this type of claim. However, not all assault and battery claims are in high-crime areas.

There is probably never going to be any coverage for an insured who directly causes any type of assault. However, if the assault occurs on your client's premises and your client did not personally participate in or ratify that assault, your client could face a claim for inadequate security or lighting, negligent hiring or negligent supervision, among others.

Also, the incident does not have to be within a client's building. It can occur when leaving the establishment or in the parking lot. The people involved in these claims most often do not even need to be customers or tenants to pursue a claim that your client is somehow responsible.

So, why should an insurance agency offer this coverage or make sure assault and battery is not excluded? When the carrier denies the underlying loss due to an assault and battery exclusion, the insured will often make a claim against the agency. They will argue that the agent knew what type of business their client was in, knew where the client's business was located, knew what the area was like and knew or should have known that their client needed assault and battery coverage. 

Many fights at bars are a known consequence of protracted drinking. But there are also fights at sporting events, including children's sports leagues. There could also be claims against public entities or hotels that they are held responsible for sexual assault or sex trafficking. The details of assault and battery claims can be sensational and have the potential for high exposure. 

With many liquor liability policies, you need to specifically request the addition of assault and battery coverage, otherwise there is an automatic exclusion. Although most standard commercial general liability policies do not have this exclusion, it may be added by the carrier depending on the type of client and the location.

You should also be aware that there could be coverage for assault and battery under a policy, and yet, there could be a separate firearms or weapons exclusion which could still exclude coverage for a shooting type of claim.

But what if there is a sublimit that applies to the available assault and battery coverage or the agency can't place the coverage? And what about the excess or umbrella carrier? Ideally, there should be something in writing that details the sublimit with the client's written acknowledgment.

Claims have been made against agencies on the basis that the agency failed to point out that the excess carrier's policy would not drop down if there was an assault and battery claim subject to a sublimit and the case had a value higher than the sublimit. Even if there is assault and battery coverage in the primary policy, there might be an exclusion in the excess policy that your client should be made aware of.

In cases where there are sublimits, claims have been made that the agency failed to obtain greater assault and battery coverage or assault and battery coverage equal to the CGL or liquor liability limits. However, if a client has had prior assault and battery claims, it will be more difficult to get a carrier to provide this coverage.

If an agency does not have a market for coverage, the agency needs to advise its client that the coverage quoted is the best that they can do—but that the client is free to go to another agency that may have greater access to such coverage. Plaintiffs will likely be able to find someone to say—after a claim—that the coverage could have been purchased. Oftentimes, they don't need to provide actual proof of that in litigation. Even if coverage was available, it doesn't matter if the coverage would have been cost-prohibitive. In hindsight, paying a higher premium is always a better deal than an uncovered lawsuit.

Claimants will also assert that their contract, lease or property management agreement required the insured to have CGL limits of a certain amount, such as $1 million, and that the sublimited assault and battery coverage does not comply with that agreement. This, too, will be the fault of the agency.

If there is a sublimit or exclusion for assault and battery coverage, this should be explained to the client in writing every year the policy is renewed. Any offer of assault and battery coverage should be provided in a written proposal, and if rejected, a written rejection should be obtained.

Assault and battery coverage is important for many different types of clients, not just bars. It is critical that this coverage is offered when available and, if unavailable or subject to a sublimit, that those limitations are made clear. Otherwise, an insurance agency could be pulled into that bar fight and get hit with a high-exposure claim.

Caryn Mahoney is an assistant vice president, claims specialist with Swiss Re Corporate Solutions and works out of the office in Chicago. Insurance products underwritten by Swiss Re Corporate Solutions America Insurance Corporation, Kansas City, Missouri, a member of Swiss Re Corporate Solutions. 

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re") and/or its subsidiaries and/or management and/or shareholders.

Wednesday, July 12, 2023
E&O Loss Control
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