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Just For "The Record"Look for "Gaps" in Your Insurance Program
by Andrew J. Carson, Insurance Diversified Agency, Inc.
As an additional service to NTMA members, I have been asked to write informative articles on the complicated world of business insurance. Since most businesses do not actually know what their insurance will and will not cover, they only find out that a claim is not covered after the accident or loss has already occurred. This is an unfortunate time to find out your insurance company will not pay for the loss, especially if the thousands of dollars it will cost your business could have been avoided for a few dollars We hope this and future articles will help you better understand how insurance works and encourage you to find out what your insurance policy actually covers.
An insurance policy is the contract between an insured and an insurance company. Within this policy, there is some very tricky and important language. Have you seen some of these policies? They can be up to 100 pages long. Some of this language excludes coverage from your policy. This means the insurance company is not providing coverage. In the insurance business, we call these "gaps" in your insurance program. As an insurance agent, we are here to help you with these contracts. A good agent will at least inform you that you have no coverage, and a great agent will make sure you have coverage whenever possible.
Today, we are going to discuss a huge gap almost all businesses have in their business auto policy. Your business auto policy will not cover bodily injuries to one of your employees by a vehicle, if it is caused by another employee. In the case of Truck Ins. Exchange v. Musick 902 S.W.2d68 (Tex.APP.-l985), a Texas insured and a coworker were at a jobsite. The insured accidentally backed his truck over the coworker, fatally injuring him. Although the employee's family was eligible for workers compensation benefits, the family still sued the business. The Court of Appeals of Texas found that not only did the Insurance Company not have to pay any of the claim, but they did not even have to defend the insured against the lawsuit.
Let me make this a little clearer. If one of your employees, including the owners, injures another employee with a vehicle while they are working, your business auto insurance policy will not provide you any coverage. In fact, the insurance policy will not even pay to defend you.
If you have a business auto policy, you should be concerned about your company having to defend and pay any judgments involving one employee injuring another with a business vehicle. Although not all companies will provide this coverage, many will, if specifically requested. More importantly, you should be extremely concerned if your agent and/or attorney has not advised you and taken care of this gap in your business auto policy. If you were unaware of this gap in coverage, how many more gaps do you have in your current insurance program? All policies have exclusions or gaps. This is just one of many gaps that might be important to your business.
Since insurance programs can look similar but be very different, I would rely on the advice of a skilled agent to protect your business. Remember that the price of the insurance is far less important than what your insurance program will and will not cover. Businesses typically are not interested in their coverages until they find out that a claim is being denied. If you are concerned about the gap discussed today, you may want to call your agent. Would you prefer a policy that has coverage for employee accidents or a policy that does not provide this coverage? Please don't wait until it is too late to have a discussion about possible gaps with an agent. If you need more information, please call me or e-mail my office. Andrew J. Carson is a vice president at Insurance Diversified Agency, Inc. He earned his Certified Insurance Counselor designation, along with his finance degree, from Miami University. He can be reached at Carson33@aol.com or 440 349-5700. |
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