LIABILITY INSURANCE, RISKS ON THE JOB

Marshall WolffJames E. EgbertMay 14, 2014

What We Hope to Accomplish

• Explore the risks (first party or third party)• How insurance can manage those risks• Tips when looking for the right insurance• Manage the risks that are not covered by

insurance• Protect your ASSets

Explore the Risks• First vs. Third Party• First Party: An event (fire, flood, wind,

mechanical breakdown, loss of power, spoilage) which leads to property damage (actual damage, business interruption) to the facility’s property or business.

• Third Party: A claim made by another for damages allegedly caused by the negligence of the facility. Bodily injury or property damage.

• Today’s focus is Third Party

What can go wrong? Third Party• Physical injury; • Slip and fall, valet damages car, coat

stolen from coat room• False arrest/malicious prosecution• Foodborne illness outbreak• Sexual harassment

Explore the Risks

How can Insurance Manage the Risks?• Pay to investigate claims• Pay defense costs(attorney fees)• Pay expert fees• Bond premiums• Loss of income while testifying• Pay the claim

TIP: NOT ALL POLICIES ARE ALIKE!

Not all policies are alike!• What is an endorsement?• Deductible• Claims made or occurrence

EndorsementsExample: A BOP (business owner’s policy) “We will cover all claims for which and insured is liable…..” : (watch the fine print)Except

• Liquor Liability• Contracts coverage• Business Interruption• Food Contamination• Identity theft• EPLI

EndorsementsInsurance endorsements • Can add to the coverage • Limit the coverage of a policy • Add people and locations • Endorsement can increase, decrease

or not change the insurance policy premium.

DEDUCTIBLE/CLAIMS MADE OH MY!

Not all policies are alike!• Deductible: How much risk am I willing to take?• Claims made or occurrence

Tips for Finding the Right Policy or Policies• Think about what you need not what

someone tells you that you need• What are you required to have by

law or contract• Find an expert: Not all Insurance

companies and sales persons are alike• Broker or Agent• Ask Questions• What is covered• What is excluded (not covered)• Endorsements

• Shop• READ THE POLICY or at least try

Time Spent

Safe

r Fac

ility

Policies &Procedures

Safer = Less Risk

Managing Risks That Are Not Covered

Training

Foodborne Illness Risk Example

• It can happen at any facility at any time, and• May be covered, may not, or may not have

sufficient coverage!

+ =

Chi Chi’s paid out a total of $50 Million in compensation

Good Food Safety Practices to Manage RisksFour Sources of Food Safety and Health Standards

1. Guidance for industry; Guide to Minimize Microbial Food Safety Hazards for Fresh Fruits and Vegetables (“The Guide”)

2. Good agricultural practices (GAPs) and good handling practices

3. Good manufacturing practices (GMPs)

4. Hazard analysis and critical control points (“HACCP”).

“Good Food Safety Practices”

The “Good Food Safety Practices” as a Defense

Prevention is the best defense to a claim or lawsuit

The best way to defend a claim it so SHOW;1. Facility took “reasonable care” when processing , producing, storing, and

selling the product in that it followed:1. “ The Guide”2. GAP3. GMP4. HACCP

2. The facility used state of the art technology3. The facility complied with the laws, regulations, and guidelines designed

to prevent the type of claim made

SHOW = Evidence! If it is not written down and memorialized it may not be admitted into court to prove your defense.

Protect your ASSetsWhen you can’t get insurance or you can’t get enough insurance, think ahead.

Form of ownership• Corporation• LLC• Partnership???

Uniform Fraudulent Transfer Act; in other words, don’t wait until it is too late!

QUESTIONS?