Prepared for the Season?

June marks the return of an annual nemesis, the Atlantic Hurricane Season. In Florida and most parts of the Southeast, local news media are advising us to prepare our homes and families for a possible Hurricane. This is also the time for corporations and risk managers to prepare for a possible hurricane. Here are a few insurance specific areas to think about before a hurricane forecast is issued:

• Re-visit your limits. Property underwriters suspend activity anytime a hurricane is forecasted for your general area. So it does no good to call your broker a day or two before a hurricane is coming to raise your limits, the time is now. Review your real property and business property limits for accuracy. Another area of concern is business interruption limits. This is a great time to make sure the limits on the policy are aligned with the current budget/revenues (more below).
• Buy Flood. Flood is fairly inexpensive and easy to obtain. Most property policies exclude flood unless a sublimit has been negotiated. It also has a thirty day waiting period before the coverage goes into effect, so it is critical to get coverage now and not when the meteorologists are tracking a disturbance coming off the Horne of Africa.
• Wind/Hail deductibles. Be sure to review the deductible language in your insurance policy. Many insureds do not understand most deductibles apply to the insured values of a location and not the amount of the loss at a location.
• Civil Authority. Review the civil authority coverage in your policy. Do you know the waiting period? Evacuations are common for areas not affected by the storm causing businesses to cease operations. If you are located in an area commonly evacuated, there may be alternative forms of coverage to minimize loss.
• Contingency planning. Do you know who you will be calling to help with repairs and loss mitigation? This is the time to talk with property restoration companies to determine who can do the work. You can also enter into an agreement where they will come to you first and not when they can “fit you in the schedule”.
• Business continuity. Does the operations team have a plan to continue operations after a storm? In the event a storm affects a location, you may not have access to the area for a week. Continuity plans should address all CAT exposed locations as well as a combination of one or more affected locations.

 These are a few areas to discuss with your insurance professional, as these are easy things to take care of prior to a storm bearing down on the coast.

For more information, contact
Chip Storm: 813 865-0528  | cstorm@oswaldcompanies.com

EPA Proposes Additional New Rules with Immense Implications Regarding Lead and Lead-Based Paint

On May 6, 2010, the EPA proposed additional new rules regarding lead and lead-based paint, including requirements for contractors that may disturb as little as two square feet of paint during their operations.

The proposed new rules also discuss the fact that, although "child-occupied" spaces have been regulated since 1978 as to the permitted lead content in paint, the same regulation has not been in place for commercial, industrial or public buildings. The proposed new rules address these issues.

The EPA has measured the travel capacity of lead dust from renovation and/or demolition work up to 300 yards or more (via air to soil) despite the use of wetting and other approved dust-mitigation techniques.

The implications are enormous. This will affect not only all contractors that may disturb less than two square feet of paint but will also affect owners/operators of structures that have been renovated/demolished or are likely to be renovated or demolished.

We've been talking about ensuring our contractor clients are covered for lead for weeks, but now is the time to ensure that all of our clients, including owners and operators of property are insured for this exposure.

Currently, fixed-site PLL policies exclude abatement of lead in structures, unless carved back into the policy for coverage. However, these policies currently do cover lead in soil or groundwater, as a rule.

Public comments to the proposed rules are due no later than July 6, 2010. See the full rules as proposed and discussed at 75 Fed. Reg. 87 (pages 25037, et. seq.)

Heightened public awareness about these issues will only increase the likelihood of litigation from those that perceive they have been injured by lead ingestion or that their property has been damaged by lead-dust travel.

It is time to get these exposures covered ASAP.

For more information, contact
Mary Busby: 216 367-4920  |  mbusby@oswaldcompanies.com

Social Media Risk Management: New challenges, insurance solutions exist

Facebook, Twitter and YouTube are giving life to new risks for individuals and businesses. The speed at which images and words can be cut, pasted and redistributed by anonymous sources magnifies the risks for any organization that relies on its reputation when transacting. Most people and companies using social media either don’t fully understand these risks or the potential liabilities. While there have been few legal cases yet, experts assert that it is only a matter of time before we witness multimillion-dollar court cases and insurance settlements.

Chubb Insurance, Fireman’s Fund Insurance Company and Travellers Insurance are leaders in underwriting policies for newspapers, broadcasters, movie makers and online media companies. Chubb, however, is now also recognizing the potential risks from social media participation and is investing resources to adapt its underwriting and protect client companies that are not in the business of media.

“We’re coming in and trying to wake people up,” said Ken Goldstein, Chubb’s worldwide media liability manager to The Star Ledger, New Jersey’s leading daily newspaper. “Non-media companies now have the same exposures: defamation, invasion of privacy, copyright infringements, advertising infringement, allegations of false advertising and trade libel.”

Today, non-media companies represent as much as 15 percent of Chubb’s current book of media liability insurance. The carrier anticipates that this number will climb now that social media has turned almost everyone and their mother into a publisher.  

Dealing with liability
Unlike a traditional media company, the issue for businesses putting up Facebook pages or participating in LinkedIn Groups is the law will likely consider these to be a promotional vehicle or an extension of their brand, which means these web pages and forums are governed by rules for commercial speech.

“You are more exposed to liability for false statements made in advertisements,” as told by David Heller, a senior staff lawyer for the nonprofit Media Law Resource Center, to The Star Ledger. “I think as users feel their way through the new social media, so too will lawyers and judges get a sense of what the norms are for this type of communication.”

Looking ahead

The quickly changing media landscape means companies need to rethink how to protect their brand from potentially devastating lawsuits, as any company that is involved in social media needs to reconsider securing a traditional errors and omissions insurance, even if it has never been a past requirement.

In 2009 there were hundreds of legal threats and thousands of copyright notices sent to the members of the Media Bloggers Association, said Robert Cox, the group’s president to The Star Ledger. Interestingly, he indicated that well over a third of these members write for businesses across all social media platforms.

“I have had personal experience with being legally threatened,” Cox said. “What I learned is how vulnerable we are; all the laws that apply to mainstream media don’t apply to us.”

With a little courage and a lot of common sense, the rewards from sharing information through social media outweigh the risks. These communications vehicles are just like any new business trend as they offer both an opportunity and a threat, which is why you are wise to consult professionals when weighing the costs and benefits.

For more information, contact Drew Gunn at dgunn@oswaldcompanies.com or 216 367-3286.  ■

New Lead-Based Paint Law - Effect on Contractors - What to Do?

Well, today is the day. It isn't just Earth Day; it is the day the new law concerning lead and lead-based paint goes into effect.

We have received inquiries from all over the industry. So we saw a need for a greater conversation and thought this is as good as a place as any.
Here's the skinny: This new law will immediately impact all sorts of contractors, demolition, construction, renovation, emergency response, disaster recovery, etc. to name several.

The following are some links offering EPA documents that are designed to cover both the basics and specifics of what needs to be done as well as the penalties for noncompliance:

Lead Contractor's Guide
Renovate Right

These EPA pieces provoke questions: Can contractors get coverage for these changes? What will the insurance cover? What is the market likely to do, and what is the pricing likely to be? Will the claims really be covered, or will the policies merely cover to defend? Is this the next "mold"?

There are answers. Contractors can get insurance coverage. If they already have Contractors Pollution coverage (CPL/CPO), and if lead is not excluded on the existing policy, the risk is probably already covered. If they do not currently have CPL/CPO, then I recommend that they get it - and quickly.

Why quickly? The market hasn't had time to react yet, but it will. I predict that initial reaction will be somewhat akin to the former reaction to mold in the marketplace. If history tells us anything, the carriers willing to cover this exposure may price this coverage in one of two ways (1) very inexpensively as an add-on to a larger policy or (2) very expensively. Other carriers are likely to go the way they did when mold was the flavor of the day and exclude it with an expensive buyback.

Why is this coverage likely to be expensive, and why are those carriers that price it cheaply likely to regret doing so?

Well, just think about lead and how it works. Lead builds up in the body over time. We all have lead in our blood. If we were left alone in a playpen at a young age, and we liked to gnaw on things (e.g., window sills, teething rings/binkies, plastic toys, wooden toys), we've ingested lead. The body doesn't get rid of lead; it accumulates it. Not until lead reaches a critical level will we start to notice the symptoms of lead poisoning. As adults, we can also walk past renovation or construction work without even thinking about it and inhale lead dust.

So, what is likely to happen now when, for instance, a homeowner who has new windows installed, has water damage repaired, or remodels their bathroom? The contractor, now properly certified, informs the homeowner of the likely presence of lead and the likely exposure to that lead as a result of their operations. The contractor may even include a line item covering lead abatement. The homeowner, now having on their radar that they and their family may have been exposed to lead, runs out and gets everybody tested. Sure enough, they all have varying levels of lead in their blood, and they sue the contractor.

If the contractor has pollution coverage, how is the carrier going to respond? If lead is not excluded, then the carrier should respond with defense of the claim.

Is the contractor really liable? We will have to see how the law develops around this, but let's think about the cause of the presence of lead in the blood of the plaintiffs. Certainly one exposure to a little bit of lead dust over the course of one project is not likely to be the cause. Remember, lead builds over time. So, the carrier will engage in an expensive defense and may ultimately succeed.

Post-market reaction, retentions on these policies are likely to be high, as are premiums.

It's time to review your CPL/CPO policies for lead exclusions; and check applications for lack of disclosure issues. Last, we assert to get uncovered contractors covered ASAP. Here’s one solution:  Bonding Alternative:
An insurance solution for Donley’s

Mary Busby, Esq., Environmental Practice Leader, (216) 367-4920, mbusby@oswaldcompanies.com