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    Thursday
    Nov152018

    Additional Insureds: What Coverage Do They Really Have?

    Most construction contracts require one party to name the other party as an additional insured under the first party's general liability insurance policy. For example, a contract between a project owner and the general contractor will require the GC to cover the owner as additional insured. A contract between a GC and a subcontractor will have a similar requirement in favor of the GC. By making this requirement, the owner or GC is attempting to transfer the liability insurance responsibility from itself to the other party. However, what the GC is trying to achieve and what it actually gets may not be the same.

    Many owners and subcontractors, when they require additional insured coverage, are seeking coverage that an obsolete insurance form used to provide. This form covered the person or organization listed on it for liability arising out of the policyholder's work for the person or organization. The industry has revised this form several times over the years. The current version covers the named person or organization for liability arising at least partly out of the policyholder’s acts or omissions or those of subcontractors working for the policyholder. It covers liability for the policyholder’s ongoing operations for the additional insured. Coverage ends when all work on the project is completed or the part the policyholder was working on is put to its intended use.

    The modern version has some significant differences from the old one. Courts interpreted the old version as covering the additional insured even when the accident was 100 percent its own fault. The new version requires the policyholder to be at least partly responsible. The old version covered liability arising out of the policyholder’s work, whenever it occurred. The new version covers liability arising out of the policyholder’s work only while it is in progress. It does not provide any coverage for liability arising out of the work once it is complete.

    Contractors who need or want coverage for additional insureds arising out of their completed operations must request a separate coverage form from the insurance company. Willingness to provide this coverage varies from one insurance company to another.

    Another option is to cover all additional insureds automatically. Many insurance companies offer this, but the form ordinarily applies only when a written contract requires the policyholder to add the additional insured. Also, it usually does not provide completed operations coverage for the additional insureds, and it may provide only the amount of coverage the contract requires even if the policy actually provides more. The contractor must request to add completed operations coverage separately for each additional insured.

    It is important to note that none of these forms promise to provide the additional insured with advance notice if the company decides to cancel the policy. Owners and GCs often require advance notice in the contract. If this is the case, the contractor should discuss it with his insurance agent and ask to have this provision added to the policy separately. Insurance companies’ willingness to do this varies.

    An owner or GC that requires its contractor to add it as an additional insured may expect or demand coverage for all operations, both ongoing and completed. They may also require advance notice of cancellation. It is crucial for contractors to be aware of what their policies do and do not provide. The contractor should discuss any coverage deficiencies with his agent as soon as he discovers them. If the insurance company is unwilling to remedy them, he may have to negotiate with the other party. The worst possible outcome is for the other party to be surprised by lack of coverage when an accident happens.

    Tuesday
    Nov132018

    Age and Gender May Be Factors in the Severity of Car Accidents

    A new study conducted at Purdue University demonstrates there are statistical differences in traffic-accident injuries depending on the gender and age of drivers. The Purdue researchers found significant differences in the severity of injuries suffered in accidents involving men and women drivers and drivers within three age groups: young drivers, 16-24; middle-aged drivers, 25-64; and older drivers, 65 and above. The researchers' findings corroborated national statistics, which indicated that fatalities rose by 7 percent for drivers 75 and older from 1981 to 2000, remained steady for drivers from 65-74, but dropped for younger drivers.

    The study also included the following findings:

    ·   Accidents involving an overturned vehicle increased the likelihood of a fatality by 220 percent for older men, but only 154 percent for young men. Rollover accidents increased the likelihood of fatality by 523 percent for older women, but only 116 percent for young women.

    ·   Vehicles carrying one or more passengers increased the likelihood of driver fatality by 114 percent for young men and 70 percent for middle-aged men, but had no significant effect on the injury levels of older male drivers.

    ·   Vehicles less than five years old increased the likelihood of fatality for older men by 216 percent and for young men by 71 percent, but did not have a significant effect on the likelihood of a fatality for middle-aged men.

    ·   Not using safety belts increased the likelihood of injury by 119 percent for young women, 164 percent for middle-aged women and 187 percent for older women.

    ·   Accidents occurring in rural areas increased the likelihood of fatalities by 208 percent for young women but had no significant effect on the injury levels of other female age categories.

    ·   Vehicles six years old and older increased the likelihood of injury for middle-aged female drivers by more than 200 percent but had no significant impact on the injury levels of other female age categories.

    ·   Fatalities were more likely for middle-aged men who fell asleep at the wheel, exceeded the speed limit, got into an accident at an intersection or had an accident after midnight on Friday or Saturday, while the same factors had no significant effect on the injury levels of middle-aged female drivers.

    ·   Injuries were shown to be more likely for middle-aged women who drive during daytime hours, drive while under the influence of alcohol or drive while ill, while the same factors did not significantly influence the injury levels of middle-aged male drivers.

    ·   Driving on curvy roads and driving vehicles six years old and older increased the likelihood of injury for middle-aged female drivers but were found to have no significant effect on the injury levels of middle-aged male drivers.

    The researchers went on to note that in many cases, alcohol consumption might have had an indirect effect on the outcomes because it increased the probability of not wearing a safety belt and speeding. However, once you take this into account, the effect of alcohol on injury severity isn't significant because the level of injury is a function of the type of accident not of sobriety. Whether or not the accident occurred because the driver was drunk was beyond the scope of the study. The researchers developed their statistical models based on the accident having occurred regardless of the reason.

    Tuesday
    Nov132018

    Age and Gender May Be Factors in the Severity of Car Accidents

    A new study conducted at Purdue University demonstrates there are statistical differences in traffic-accident injuries depending on the gender and age of drivers. The Purdue researchers found significant differences in the severity of injuries suffered in accidents involving men and women drivers and drivers within three age groups: young drivers, 16-24; middle-aged drivers, 25-64; and older drivers, 65 and above. The researchers' findings corroborated national statistics, which indicated that fatalities rose by 7 percent for drivers 75 and older from 1981 to 2000, remained steady for drivers from 65-74, but dropped for younger drivers.

    The study also included the following findings:

    ·   Accidents involving an overturned vehicle increased the likelihood of a fatality by 220 percent for older men, but only 154 percent for young men. Rollover accidents increased the likelihood of fatality by 523 percent for older women, but only 116 percent for young women.

    ·   Vehicles carrying one or more passengers increased the likelihood of driver fatality by 114 percent for young men and 70 percent for middle-aged men, but had no significant effect on the injury levels of older male drivers.

    ·   Vehicles less than five years old increased the likelihood of fatality for older men by 216 percent and for young men by 71 percent, but did not have a significant effect on the likelihood of a fatality for middle-aged men.

    ·   Not using safety belts increased the likelihood of injury by 119 percent for young women, 164 percent for middle-aged women and 187 percent for older women.

    ·   Accidents occurring in rural areas increased the likelihood of fatalities by 208 percent for young women but had no significant effect on the injury levels of other female age categories.

    ·   Vehicles six years old and older increased the likelihood of injury for middle-aged female drivers by more than 200 percent but had no significant impact on the injury levels of other female age categories.

    ·   Fatalities were more likely for middle-aged men who fell asleep at the wheel, exceeded the speed limit, got into an accident at an intersection or had an accident after midnight on Friday or Saturday, while the same factors had no significant effect on the injury levels of middle-aged female drivers.

    ·   Injuries were shown to be more likely for middle-aged women who drive during daytime hours, drive while under the influence of alcohol or drive while ill, while the same factors did not significantly influence the injury levels of middle-aged male drivers.

    ·   Driving on curvy roads and driving vehicles six years old and older increased the likelihood of injury for middle-aged female drivers but were found to have no significant effect on the injury levels of middle-aged male drivers.

    The researchers went on to note that in many cases, alcohol consumption might have had an indirect effect on the outcomes because it increased the probability of not wearing a safety belt and speeding. However, once you take this into account, the effect of alcohol on injury severity isn't significant because the level of injury is a function of the type of accident not of sobriety. Whether or not the accident occurred because the driver was drunk was beyond the scope of the study. The researchers developed their statistical models based on the accident having occurred regardless of the reason.

    Thursday
    Nov082018

    OCP Policy: Better Than Additional Insured Coverage?

    When a contractor wins a bid for a job, the contract with the owner or general contractor will often require the contractor to provide liability insurance coverage for both the contractor and the owner or GC. The contractor usually accomplishes this by having his insurance company add the other party to his policy as an additional insured. An additional insured has certain rights under the policy, the most important of which are the right to insurance company provided defense and payment of losses. However, this approach may not satisfy all of the other party's requirements. In this situation, the contractor may want to consider an alternative coverage approach.

    An owners and contractors protective liability insurance policy covers an owner or contractor for liability arising out of the actions of a subcontractor. It is unique in that, while the subcontractor arranges for and purchases it, the sub has no underlying coverage. Rather, the insurance company issues the policy in the name of the owner or GC (the policy information page identifies the contractor doing the work). For example, assume Owner A hires Contractor B to build a small office building. Contractor B purchases an OCP policy insuring Owner A for liability it incurs from Contractor B's work. If Contractor B erroneously cuts down trees on a neighboring property and the neighbor sues Owner A, the OCP policy pays for A's defense and the cost of any settlement.

    This is a much different arrangement than additional insured coverage. In that arrangement, Owner A has coverage under a policy issued in Contractor B's name. Owner A may be one of many parties that B's policy covers.

    Beyond that difference, there are advantages and disadvantages to each approach. Assume that B's policy covers losses up to a total of $2,000,000 during the policy term. If Owner A is an additional insured, he is sharing that $2,000,000 with B and any other parties with coverage under that policy. However, an OCP policy in A's name will provide a separate amount of insurance just for A. Also, Owner A may want the insurance company to notify him in advance if it decides to cancel B's insurance. An additional insured under B's policy usually does not have any rights to advance notification. As the party named on the OCP policy, however, A is entitled to advance notice. This can be important, as the advance notice requirement may be included in the construction contract.

    One disadvantage of an OCP policy is that it does not provide completed operations coverage. Coverage ceases when the contractor finishes the job. If the contract requires completed operations coverage, the subcontractor may have to ask his insurance company to add the GC as an additional insured for this coverage on his own liability policy. Also, because the OCP is a separate policy, the insurance company will charge an additional premium for it, something they might not do for adding an additional insured. The OCP policy covers losses only if the GC is held liable for the subcontractor's actions. It will not cover the GC's sole liability for its own actions. However, recent changes to additional insured coverage have had this effect as well. Finally, OCP policies may be more difficult to obtain than additional insured coverage.

    Which coverage arrangement to choose is a matter of negotiation between the subcontractor and the GC. Both contractors should discuss the options with their insurance agents and become informed about what each form does and does not cover. Most importantly, whichever coverage is selected should meet the insurance requirements and other provisions of the construction contract.

    Tuesday
    Nov062018

    Government Survey Shows Parents Confused About How to Use Child Safety Seats

    The National Highway Traffic Safety Administration (NHTSA) reported in a December 2006 survey that many parents are confused about the correct way to install child safety seats in their cars.

    In 2002, NHTSA mandated that all new cars and child seats be built with locking attachments. The system, called Lower Anchors and Tethers for Children (LATCH), was designed to make safety seats fit snugly and provide a method of attaching the seats without having to use a seat belt. LATCH was intended to simplify child safety seat installation, but the survey results prove otherwise.

    According to the study results, approximately 40 percent of parents still use seat belts when installing a car seat. Safety advocates say that using seat belts to attach a car seat can lead to a loose fit. Furthermore, the researchers discovered that just 55 percent of parents use the top tether built into the vehicle's back seat to help secure their children. Using upper tethers for child safety seats reduces the tilting or rotation of the seat during a frontal crash.

    Although the 55 percent usage rate of the top tether represents a significant improvement compared with earlier surveys, many parents still are not properly protecting their children. The researchers also found that over half of the parents not using the upper or lower tethers said they did not know how.

    Other key findings of the survey include:

    ·   Thirteen percent of respondents said their vehicle was not equipped with lower tethers so a seat belt had to be used to anchor the safety seat.

    ·   Among the 87 percent that use a child safety seat on a car seat with lower tethers, only 60 percent use them to secure the safety seat.

    ·   Eighty-one percent of upper tether users and 74 percent of lower tether users said the tethers weren't easy to use.

    ·   Seventy-five percent of the respondents who have used both seat belts and lower tethers to secure a safety seat preferred the lower tethers.

    The government recommends car safety seats be used for children up to 40 pounds. Children over 40 pounds should use booster seats until they are 8 years old or 4 feet 9 inches tall. All children should ride in the back seat until age 13.


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