Advertisements

Additional Insured Certificates: they are just a piece of paper, unless they are part of a contract or there is an insurable interest

There seems to be a hue and cry about collecting additional insured certificates. Unless you need TP or want to wall paper an office wall, they are worthless unless the insurance company/business issuing the certificate recognizes an insurance defined insurable interest, in advance, or you have a contract that identifies an insurable interest and recognizes the need for the certificate.

The latest catch word after this fall’s conferences runs seems to be collect additional insured certificates from everyone. Although this sound’s good and an easy way to solve a problem, legally, it is just another way to kill trees. If nothing else, it will keep you in litigation for another decade between your insurance company and the one issuing the certificate fighting over whether it is valid.

Most Additional Insured Certificates of Zero value to you from an insurance standpoint.

The basis for issuing a certificate listing someone else as an additional insured, or covered by a particular policy is there must be an insurable interest.

Indemnity – Insurable Interest

Insurable interest arose out of defining indemnity. You agree to indemnify another party of their loss. The simplest way to look at this is your relationship with you and your automobile insurance policy. If you have a loss to your car, your insurance policy will indemnify you for that loss. Insurance companies have taken that one step further these days by taking over the loss and doing all the legwork, including paying the repair facility directly.

When those indemnification agreements were larger than the money on hand or the value of the business issuing the indemnification, other ways were developed to “come up with the money” to cover the indemnification. Eventually, insurance played a role in indemnifying a third party for the losses they might incur, even though the insurance policy is issued in the name of the insured.

Think about you, a certificate of insurance is issued to the insured, which was underwritten and covers someone else who was not. Don’t you think there is more to this than just issuing a piece of paper?

Issuing Policy must cover risks of the claims identified in the certificate or the agreement.

By the very nature of the definition, simplified above, you can see there are several issues present. The insurance policy is only going to cover the third party for risks that are insured. That means if the policy issued to you says it will only cover A, B and C as risks, then a claim of Z by the third party will not be covered. No matter what the certificate of insurance says, it only covers the risks insured by the original policy for the original insured.

So even before we get to whether the certificate is valid, you must make sure the policy issuing the certificate lists the claims that the certificate is expected to cover.

You have to look at the certificate itself and see if it covers anything, let alone what you need.

Legally recognizable insurable interest

The next issue is insurance policies only cover if there is a legally recognizable interest in the possible loss. That is called an “insurable interest.”

An insurable interest means the person buying the policy has a legally recognized loss that the policy will cover. The best examples are in the negative.  I cannot buy an insurance policy on my neighbor’s house. I don’t own the house; the house does not secure a debt the neighbor owes me. I have nothing invested in the neighbor’s house; therefore, I have no insurable interest in the neighbor’s house.

Another example would be life insurance. I do not have an insurable interest that would be recognized to buy a life insurance policy on my neighbor. My neighbor’s death would not cause me a loss.

Normally, life insurance policies are only issued to relatives of the insured. The exception is if you could prove an economic loss to you because someone died. So business partners can buy life insurance policies on each other because if one partner died, the other would have to hire someone to do that partners work, and you might have to buy the surviving family members of the deceased interest in the business.

Example; my neighbor and I contractually agreed upon the death of one of us to take care of the other’s property. I would then suffer a loss if my neighbor died so I might be able to purchase a life insurance policy on my neighbor. I would have to prove the contract existed and that a real value existed for the loss I might incur. I would have to prove by contract that I have an insurable interest in my neighbor.

I’m using examples in property insurance, life and health insurance and liability insurance to get these points across. An insurable interest is different in the different types of polices, health, life, property or liability, but not enough to worry about for this discussion.

Insurable interest

Insurable interests arise “naturally” in the law. When a building is purchased the bank making the loan to finance the purchase has an insurable interest. If the property is destroyed, then the banks’ chances of receiving the rest of the loan are diminished, therefore, there is an insurable interest in the bank to insure against loss. Either the bank can buy a policy covering the property or the bank can require as part of the loan that the owner/borrower insure the property for the value of the property listing the bank as an additional insured.

Landlords have a similar insurable interest. They are listed as additional insured’s under their tenant’s policy. If the property is destroyed by actions of the tenant, the landlord will lose the property or at least the rental income. Therefore, they have an insurable interest recognized by the insurance company issuing the tenant’s policy.

Another example is a ski area operating on US Forest Service land. The US Forest Service is the landowner or landlord, and the ski area is the tenant. If the ski area destroys the property, the US Forest Service suffers a loss. So the US Forest Service is listed under the ski area’s policy as an additional insured, and the Forest Service is reimbursed for the loss of value to their land.

This particular insurable interest covers two issues for the US Forest Service. It covers any loss to the property the Forest Service may have, and it protects them from lawsuits if they are joined in a suit with the ski area. The ski area, as the permittee (or tenant) was responsible for the property at the time of the injury to the guest skiing. The US Forest Service did not make the snow, groom or run the lifts; however, as the landlord or owner of the property, the Forest Service maybe sued. As such, the US Forest Service has an insurable interest covered by the ski area for a possible lawsuit.

General or Special Liability Policies and Insurable Interest

Liability interests work the same way. If a skier hits a tree in the ski area and suffers injury, the skier can sue the ski area or the US Forest Service. The ski area is the tenant who received value for the skier being on the land, and the US Forest Service owns the tree. Both can be sued. The agreement between the Forest Service and the ski area then says the ski area must protect the Forest Service from any lawsuit due to the ski area’s occupation or control of the land. By contract and law, the Forest Service has an insurable interest that will be recognized by the ski area’s insurance company.

The owner of the land where a rafting company takes their passenger’s and boats out of the water has an insurable interest. If someone falls down getting out of the boat, both may be sued. Was it the rafting companies fault for where they put the boat or the landowner’s for how the takeout was created? Since the landowner has limited control over the takeout while being used by the rafting company, he should be covered as an additional insured because he has an insurable interest. The chance of a lost due to the acts of someone he contracts with creating liability for him.

What about a restaurant that provides lunches to the rafting company? Who should receive the certificate of additional insured from whom? The rafting company could be sued because the lunch made a customer ill. The rafting company should receive a certificate of insurance from the lunch provider. At the same time, the illness may have been caused by the way the lunch was stored or prepared, so therefore the lunch provider should be an additional insured on the Rafting company’s policy.

It is these situations where both insurance companies can struggle during litigation or a contract properly written in advance might save one or both company’s time and money.

What if the rafting company stops and has their customers walk up the bank and have lunch in a restaurant at the side of the river? If the lunches are part of the trip and the restaurant is the only option, maybe the rafting company should receive a certificate of insurance from the restaurant. However, if the customer is free to pick any meal, they want from one of the several restaurants, probably not. That would be like a restaurant on the side of an interstate asking for certificates of insurance from all trucking companies.

Would the possible insurable interest change if the rafting company received a commission from the restaurant? Yes, the insurable interest would be more compelling because there is a clear financial benefit flowing between the parties. What if the restaurant provided free lunches to the raft guides?

Unless the insurance company recognizes, either by industry or insurance practice that an insurable interest exists or that one is created by contract, that is covered under the policy, having a piece of paper with additional insured on it with you name means nothing. You must prove an insurable interest to prove legal coverage.

(And that is not even getting into the disclaimers listed on many certificates.)

Where are certificates of insurance valid by practice in the outdoor recreation industry? Between:

·         Retailers and Manufacturers

·         Landlords and Tenants

·         Federal Land Managers and Concession or Permit Holders

·         Contractors and the Hiring Company

Every other situation you should check with your attorney or get a contract that identifies the insurable interest and requires a certificate of insurance is issued with coverage for the issue. Even better, require that the contract be given to the insuring insurance company and the necessary language into the contract be incorporated into the certificate of insurance. Otherwise, you may spend more time and money litigating with the certificate issues covers the issue that was litigated.

Issuing additional insured certificates without thinking the process through is also a risk. First insurance companies look at how many and who you issue certificates too. If they see large number or risks or big risks, they can and do increase your premium to cover the additional risks.  So make sure you understand why and the value of issuing a certificate of insurance from your policy also.

Every year when prior to your policy coming up for renewal, you should look through your list of parties you issue certificates of insurance to and see if they still need to be issued. Once you list someone the list is never reduced or culled except by you. I’ve seen insurance policies with over a hundred business listed as insurable interests. When we got done, we only had twenty certificates to issue. Many of the old certificates were issued to companies the client was no longer doing business with or with business who had gone out of business.

This does affect your premium so be aware!

Do Something

Without an insurable interest, a certificate of insurance is worthless and probably is going to be costly. Any insurance company paying a claim is going to look for anyone else to share in that claim. Consequently, they will pull the insured into the claim knowing it may not be valid, but willing to fight that issue out in later years. You requesting your insurance company to issue certificates could pull you into litigation both the original and the later certificate validity litigation for years, for something you had no legal interest in.

Just issuing the certificate or receiving one is not enough. You must identify when and how it is valid. That requires a contract. That contract must say more than you will issue a certificate of insurance. It must identify what the certificate is insuring and why. It must identify an insurable interest.

Insurance companies are not going to issue a check just because they issued a certificate. Make sure everyone understands how, when and why, and you’ll make that process quicker, easier and without litigation.

Think about all the work you had to go through to purchase the policy in the first place. Do you believe your insurance company is going to issue another policy just because you said so? Not unless the insurance company believes the chances of paying a claim under the certificate is very very slim.

What do you think? Leave a comment.

If you like this let your friends know or post it on FB, Twitter or LinkedIn

 

Author: Outdoor Recreation Insurance, Risk Management and Lawclip_image002_thumb.jpg

To Purchase Go Here:

Copyright 2016 Recreation Law (720) Edit Law

Email: Rec-law@recreation-law.com

Google+: +Recreation

Twitter: RecreationLaw

Facebook: Rec.Law.Now

Facebook Page: Outdoor Recreation & Adventure Travel Law

Blog: www.recreation-law.com

Mobile Site: http://m.recreation-law.com

By Recreation Law    Rec-law@recreation-law.com         James H. Moss

#AdventureTourism, #AdventureTravelLaw, #AdventureTravelLawyer, #AttorneyatLaw, #Backpacking, #BicyclingLaw, #Camps, #ChallengeCourse, #ChallengeCourseLaw, #ChallengeCourseLawyer, #CyclingLaw, #FitnessLaw, #FitnessLawyer, #Hiking, #HumanPowered, #HumanPoweredRecreation, #IceClimbing, #JamesHMoss, #JimMoss, #Law, #Mountaineering, #Negligence, #OutdoorLaw, #OutdoorRecreationLaw, #OutsideLaw, #OutsideLawyer, #RecLaw, #Rec-Law, #RecLawBlog, #Rec-LawBlog, #RecLawyer, #RecreationalLawyer, #RecreationLaw, #RecreationLawBlog, #RecreationLawcom, #Recreation-Lawcom, #Recreation-Law.com, #RiskManagement, #RockClimbing, #RockClimbingLawyer, #RopesCourse, #RopesCourseLawyer, #SkiAreas, #Skiing, #SkiLaw, #Snowboarding, #SummerCamp, #Tourism, #TravelLaw, #YouthCamps, #ZipLineLawyer, Certificate of Insurance, Additional Insured, Insurance Company, Insurable Interest,

 

Advertisements

Indemnification between businesses requires a contract outlining the type of indemnification and a certificate of insurance from one party to the other so the insurance company knows it is on the hook.

Because no certificate of insurance was issued by the third-party insurance company, company, the contract requiring indemnification between the ski area and the manufacturer failed.

Jiminy Peak Mountain Report, LLC, v. Wiegand Sports, LLC, 2016 U.S. Dist. LEXIS 34209

State: Massachusetts, United States District Court for the District of Massachusetts

Plaintiff: Jiminy Peak Mountain Report, LLC

Defendant: Wiegand Sports, LLC, and, Navigators Specialty Insurance, CO.

Plaintiff Claims:  Indemnification

Defendant Defenses: No contract

Holding: for the Defense

Year: 2016

Obviously, this is not your normal injured guest case. This case looks at the relationship between a resort and a manufacturer who installed a ride at the resort.

In 2006 the defendant Wiegand built an Alpine Coaster for the plaintiff ski area Jiminy Peak Mountain Resort, LLC. The construction/purchase agreement (Consulting, Purchase, Delivery, Assembly and Inspection Contract) also contained language requiring the manufacturer to defend any claims that were brought against the plaintiff for injuries after the ride was built.

The construction agreement required Jiminy Peak to pay part of the premiums for the insurance policy. However, the policy was only in the name of the defendant Wiegand, and did not list Jiminy Peak as an additional insured or co-insured.

Section 8 of the Contract, titled “Rights and Obligations of [Jiminy]” included in its final subsection, 8(j), language stating that Wiegand would purchase product liability insurance for the Coaster, but that Jiminy was required to pay a portion of the premium, the amount of which would be determined based on the purchase price of the Coaster, and Jiminy would then be listed as an additional insured.

The agreement also stated that Wiegand would defend and pay for any claim that Jiminy Peak received.

…in the event of a product liability suit against [Wiegand], [Wiegand] “shall, at its own expense, defend any suit or proceeding brought against [Jiminy] and shall fully protect and indemnify [Jiminy] against any and all losses, liability, cost, recovery, or other expense in or resulting from such . . . suit (provided, however, [Jiminy] has fully performed all ongoing maintenance obligations).

In 2012, two minors were seriously injured riding the coaster. Wiegand had a commercial liability policy with the defendant Navigators Insurance Company. However, Navigators did not issue a certificate of insurance covering Jiminy Peak. The parents of the injured minors filed suit against Jiminy Peak and Wiegand. Jiminy Peak sued Wiegand and Navigator seeking a declaratory judgment requiring Wiegand and Navigator to pay the cost of defending those suits.

A declaratory judgment is a quick request for a court to issue an order. Jiminy and Wiegand dismissed their claims against each other and just were fighting the lawsuit against them. The case between Jiminy and Navigator then is the subject of this decision.

Analysis: making sense of the law based on these facts.

Navigator argued that there was a duty to defend someone who was not a named insured. Jiminy Peak was not listed on the policy as an insured, co-insured or additional insured. Navigator also argued that it had no legal relationship with Jiminy Peak; therefore, it owed Jiminy Peak no money.

Navigators argues that as an insurer it owes a duty to defend its insured, Wiegand, but it does not owe a direct duty to defend Jiminy because Jiminy is not an additional insured under the Policy. Further, the duty Navigators has under the Policy to pay defense costs to a non-insured party pursuant to a contractual liability of its insured only requires it to make payments to the insured, and only when the insured has actually requested payment. In this case, Navigators asserts that even if Wiegand is found to owe Jiminy its defense costs, it will be up to Wiegand to determine whether it wishes to pay the amount or to make a claim to Navigators. Since Navigators owes no duty directly to Jiminy and it would be up to Wiegand to determine whether to make a claim in the event judgment is entered against it with respect to Jiminy’s defense costs…

Jiminy Peak responded by arguing the contract between it, and Wiegand was enough to force Navigator to pay. (You and I go to dinner and try to convince the waiter that your friend who is not at the table should pay for our meal.)

The court looked into the requirements for an insurance company to defend under Massachusetts law.

The court begins its analysis by considering whether Massachusetts law allows Jiminy to compel payment from Navigators based on Navigators’ obligations to its insured, Wiegand. Massachusetts law imposes on insurers a “broad duty to defend its insured against any claims that create a potential for indemnity.” This duty is broad and attaches whenever the claims in the complaint match up with the language in the policy.

However, the broad language of the policy only applies to the companies named in the policy as an insured. Jiminy Peak was not named in any way under the policy.

The Contract also included provisions regarding both additional insureds and “insured contracts,” suggesting that Jiminy, like Navigators and Wiegand, understood that Wiegand’s promise to pay Jiminy’s defense costs would not grant Jiminy the status of an “additional insured” with respect to Navigators.

If Jiminy Peak had been named in the policy or listed as an additional insured, then coverage would have been provided under Navigator’s policy issued to Wiegand.

In the absence of a contractual relationship between Navigators and Jiminy, the court finds no legal basis for ordering Navigators to pay Jiminy’s defense costs directly. Any obligation upon Navigators to pay such costs will arise only after an insured, in this case Wiegand, makes a claim for payment and then its only obligation will be to Wiegand.

Jiminy Peak may still be indemnified by Navigator’s policy. However, to be covered Wiegand will have to make a claim under the policy and if Wiegand was negligent and did something defined under the policy as an insured, then coverage will be provided.

However, I doubt any coverage will be provided unless Jiminy Peak can prove that Wiegand was negligent in its relationship. The contract only applies to product liability or negligence claims of the insured, Wiegand.

So Now What?

Insurance policies are written so the language is clear. The insured or persons covered by the policy are listed on the first page, the declaration page, or as additional insured on the policy. The coverage provided by a policy is broader than the language usually required by state law. However, the broad coverage is only extended to the people listed in the policy.

If you name is not on a piece of paper issued by the insurance company you are not covered under the policy.

A certificate of insurance request by Jiminy Peak would have solved the problem.

However, requesting a certificate of insurance does not solve all problems, in fact it only solves very limited problems. For a simple certificate of insurance to provide protection, the named insured must have done something to create liability for the insured under the certificate of insurance.

Just requesting a certificate of insurance without an agreement outlining what is to be covered is worthless.

Every day I see situations were one company requests a certificate of insurance believing that provides coverage. It does not. To be effective a certificate of insurance should be issued based on a contract which outlines what is to be covered under the certificate of insurance. The certificate of insurance must confirm to the contract between the parties.

A certificate of insurance, by itself is pretty worthless. (If they had real value would insurance companies issue them so easily?)

clip_image002What do you think? Leave a comment.

If you like this let your friends know or post it on FB, Twitter or LinkedIn

Author: Outdoor Recreation Insurance, Risk Management and Law

To Purchase Go Here:

Copyright 2016 Recreation Law (720) Edit Law

Email: Rec-law@recreation-law.com

Google+: +Recreation

Twitter: RecreationLaw

Facebook: Rec.Law.Now

Facebook Page: Outdoor Recreation & Adventure Travel Law

Blog: www.recreation-law.com

Mobile Site: http://m.recreation-law.com

By Recreation Law           Rec-law@recreation-law.com     James H. Moss

#AdventureTourism, #AdventureTravelLaw, #AdventureTravelLawyer, #AttorneyatLaw, #Backpacking, #BicyclingLaw, #Camps, #ChallengeCourse, #ChallengeCourseLaw, #ChallengeCourseLawyer, #CyclingLaw, #FitnessLaw, #FitnessLawyer, #Hiking, #HumanPowered, #HumanPoweredRecreation, #IceClimbing, #JamesHMoss, #JimMoss, #Law, #Mountaineering, #Negligence, #OutdoorLaw, #OutdoorRecreationLaw, #OutsideLaw, #OutsideLawyer, #RecLaw, #Rec-Law, #RecLawBlog, #Rec-LawBlog, #RecLawyer, #RecreationalLawyer, #RecreationLaw, #RecreationLawBlog, #RecreationLawcom, #Recreation-Lawcom, #Recreation-Law.com, #RiskManagement, #RockClimbing, #RockClimbingLawyer, #RopesCourse, #RopesCourseLawyer, #SkiAreas, #Skiing, #SkiLaw, #Snowboarding, #SummerCamp, #Tourism, #TravelLaw, #YouthCamps, #ZipLineLawyer, Certificate of Insurance, Coaster, Jiminy Peak, Wiegand, Navigator, Indemnification,

 


Jiminy Peak Mountain Report, LLC, v. Wiegand Sports, LLC, 2016 U.S. Dist. LEXIS 34209

Jiminy Peak Mountain Report, LLC, v. Wiegand Sports, LLC, 2016 U.S. Dist. LEXIS 34209

Jiminy Peak Mountain Report, LLC, Plaintiff, v. Wiegand Sports, LLC, and, Navigators Specialty Insurance, CO., Defendants.

Civil Action No. 14-40115-MGM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

2016 U.S. Dist. LEXIS 34209

March 16, 2016, Decided

March 16, 2016, Filed

CORE TERMS: insured, insurer, duty to defend, liability insurance, owe, cross-motions, liability claims, bodily injury’, declaratory, premium, state law, insurance policy, amount in controversy, threshold amount, principal place of business, wholly-owned subsidiary, disclosures, publicly, disputed, traded, judgment ordering, seriously injured, own expense, fully performed, negligence claim, indemnification, cross-claims, contractual, separately, asserting

COUNSEL: [*1] For Jiminy Peak Mountain Resort, LLC, Plaintiff: Jennifer C. Sheehan, Matthew D. Sweet, Richard J. Shea, Hamel, Marcin, Dunn, Reardon & Shea, P.C., Boston, MA.

For Navigators Specialty Insurance Company, Defendant: David A. Grossbaum, LEAD ATTORNEY, Matthew R. Watson, Hinshaw & Culbertson LLP, Boston, MA.

JUDGES: MARK G. MASTROIANNI, United States District Judge.

OPINION BY: MARK G. MASTROIANNI

OPINION

MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR JUDGMENT ON THE PLEADINGS

(Dkt. Nos. 40 & 42)

MASTROIANNI, U.S.D.J.

I. Introduction

Plaintiff, Jiminy Peak Mountain Resort, LLC (“Jiminy”) operates a ski area in Hancock, Massachusetts. In 2005 it entered into a contract with Defendant, Wiegand Sports, LLC (“Wiegand”), to purchase a Wiegand, Alpine Coaster (the “Coaster”). The Coaster opened to the public in 2006. In August of 2012, two minors were seriously injured while riding the Coaster. The parents of the minors subsequently filed two lawsuits (together, the “Underlying Action”), each asserting claims against Jiminy and Wiegand. Jiminy subsequently filed this suit against Wiegand and Defendant, Navigators Specialty Insurance, Co. (“Navigators”), Wiegand’s insurer at the time the minors were injured, seeking a declaratory judgment [*2] ordering Wiegand and Navigators to pay the defense costs incurred by Jiminy in the Underlying Action. Before the court are cross-motions for judgment on the pleadings from Jiminy and Navigators. Jiminy and Wiegand have stipulated to the dismissal of their cross-claims, agreeing to litigate those claims in the Underlying Action, rather than in this lawsuit.

II. Jurisdiction

In this action, Jiminy seeks an order requiring Navigators to pay Jiminy’s past and future defense costs in the Underlying Action based on the terms of the contract between Jiminy and Wiegand and the insurance policy Navigators issued to Wiegand. The relief is requested pursuant to state law. Federal courts have jurisdiction over suits brought pursuant to state law where there is complete diversity of citizenship between the adversaries and the amount in controversy exceeds a threshold amount of $75,000. 28 U.S.C. § 1332; Arbaugh v. Y&H Corp., 546 U.S. 500, 513, 126 S. Ct. 1235, 163 L. Ed. 2d 1097 (2006). Based on the content of the complaint and the corporate disclosures filed by the parties (Dkt. Nos. 20, 21, 55), the court finds that (1) Jiminy is a Massachusetts limited liability company, owned by two other Massachusetts limited liability companies, which in turn are owned by members who reside in Massachusetts [*3] and (2) Navigators is incorporated in Delaware, has its principal place of business in Connecticut, and is a wholly-owned subsidiary of the publicly traded Navigators Group, Inc., less than ten percent (10%) of which is owned by any other single publicly traded corporation.1 Plaintiff asserts the amount in controversy exceeds the statutory threshold amount. In the absence of any challenge from Defendant, the court finds it has jurisdiction in this case pursuant to 28 U.S.C. § 1332.

1 Though Jiminy is no longer pursuing its claim against Wiegand, the court notes that Wiegand, as a wholly-owned subsidiary of a German entity with its principal place of business in Salt Lake City, Utah, is also diverse with respect to Jiminy. (Compl. ¶ 7, Dkt. No. 1, Corp. Disclosure, ¶ 1, Dkt. No. 19.)

III. Standard of Review

“‘A motion for judgment on the pleadings [under Rule 12(c)] is treated much like a Rule 12(b)(6) motion to dismiss,’ with the court viewing ‘the facts contained in the pleadings in the light most favorable to the nonmovant and draw[ing] all reasonable inferences therefrom.'” In re Loestrin 24 Fe Antitrust Litig., No. 14-2071, 2016 U.S. App. LEXIS 3049, 2016 WL 698077, at *8 (1st Cir. Feb. 22, 2016) (quoting Pérez-Acevedo v. Rivero-Cubano, 520 F.3d 26, 29 (1st Cir. 2008)). Where, as here, the court is presented with cross-motions for judgment on the pleadings, the court’s role is [*4] “to determine whether either of the parties deserves judgment as a matter of law on facts that are not disputed.” Curran v. Cousins, 509 F.3d 36, 44 (1st Cir. 2007) (internal citations omitted)). As in the case of a motion under Rule 12(b)(6), the court is permitted to consider documents central to the plaintiff’s claims where the authenticity of the documents is not disputed and the complaint adequately references the documents. Id. (citing Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993)).

IV. Background

In December of 2005, Jiminy and Wiegand entered into a “Consulting, Purchase, Delivery, Assembly and Inspection Contract” (the “Contract”). (Compl. ¶ 9, Dkt. No. 1.) Pursuant to this contract, Jiminy agreed to purchase the Coaster and Wiegand agreed to deliver, assemble, and inspect it. (Id.) Section 8 of the Contract, titled “Rights and Obligations of [Jiminy]” included in its final subsection, 8(j), language stating that Wiegand would purchase product liability insurance for the Coaster, but that Jiminy was required to pay a portion of the premium, the amount of which would be determined based on the purchase price of the Coaster, and Jiminy would then be listed as an additional insured. (Compl. Ex. A, Contract, § 8(j), Dkt. No. 1-1.) (Id.) The Contract did not set forth the term during which Wiegand’s product [*5] liability insurance policy would apply, but did provide that Jiminy would have the option to continue as an additional insured during subsequent periods, provided it continued to pay the “same premium ratio.” Id. The same section also provided that Jiminy would separately maintain a personal injury insurance policy “at its own expense at all times so long as [it] operates [the Coaster].” (Id.) The Complaint does not assert that Jiminy continued to pay premiums to remain an additional insured under Wiegand’s product liability insurance policy.

Separately at Section 12, titled “Indemnification,” the Contract provided that:

in the event of a product liability suit against [Wiegand], [Wiegand] “shall, at its own expense, defend any suit or proceeding brought against [Jiminy] and shall fully protect and indemnify [Jiminy] against any and all losses, liability, cost, recovery, or other expense in or resulting from such . . . suit (provided, however, [Jiminy] has fully performed all ongoing maintenance obligations).

(Id. at § 12(A)(1).)

The following paragraph then provided that Jiminy would

protect, indemnify, defend and hold [Wiegand] harmless from and against any and all losses of [Wiegand] arising out of or sustained, [*6] in each case, directly or indirectly, from . . . any default by [Jiminy] . . . including without limitation, from defective/bad maintenance and/or operation of the Alpine Coaster caused by [Jiminy’s] gross negligence or willful misconduct.

(Id. at § 12(A)(2).)

Under Section 18, the Contract is to be interpreted in accordance with Massachusetts law.

(Id. at § 18.)

The Coaster was installed and became operational in 2006. In August of 2012, two minors were seriously injured while riding the Coaster. At the time of the accident, Wiegand had a general commercial liability insurance policy with Navigators (“Policy”). (Policy, Ex. C, Dkt. No. 1-3.) The Policy Period ran from March 1, 2012 through March 1, 2013. Id. Pursuant to Section I(1)(a), the Policy provided that Navigators would “pay those sums that [Wiegand] becomes legally obligated to pay as damages because of ‘bodily injury’ . . . to which [the Policy] applies.” (Id. at Section I(1)(a).) The obligation established under Section I(1)(a) is further defined in Section I(2)(b) as excluding certain types of damages, including those assumed in a contract, unless assumed in an “insured contract.” (Id. at Section I(2)(b).) In the case of an “insured contract,” “reasonable [*7] attorney fees and necessary litigation expenses incurred by or for a party other than an insured [was] deemed to be damages because of ‘bodily injury’ . . . , provided . . . that the party’s defense [had] also been assumed in the same ‘insured contract'” and the damages arise in a suit to which the Policy applied. (Id.) An “insured contract” is defined in the Policy as including “[t]hat part of any other contract or agreement pertaining to [Wiegand’s] business . . . under which [Wiegand] assume[d] the tort liability of another party to pay for ‘bodily injury’ . . . to a third person or organization.” (Id. at Section V(9)(f)). “Tort liabililty” is, in turn, defined as “a liability that would be imposed by law in the absence of any contract or agreement.” (Id.)

The parents of the minors injured on the Coaster in August of 2012 subsequently filed the Underlying Action against Jiminy and Wiegand.2 (Compl., Ex. B, Compls. in Underlying Action, Dkt. No. 1-2.) The six-count complaints3 both include a negligence claim against Jiminy (Count I), a negligence claim against Wiegand (Count II), products liability claims against Wiegand (Counts III and IV), breach of implied warranty of merchantability claim against [*8] Wiegand (Count V), and a loss of consortium claim against Wiegand and Jiminy (Count VI). (Id.) After the Underlying Action was filed, Jiminy filed this action against Wiegand and Navigators, seeking a declaratory judgment ordering Wiegand and Navigators to pay the defense costs incurred by Jiminy in connection with the Underlying Action. (Compl., Dkt. No. 1.) As mentioned above, Jiminy and Wiegand agreed to the dismissal of Jiminy’s claim seeking declaratory judgment from Wiegand in this action and instead are litigating the issues in the Underlying Action.

2 These suits were initially filed in the Eastern District of New York, but have since been transferred to this court where they are proceeding as a consolidated case – 13-cv-30108-MGM. The claims brought on behalf of the minors have already been settled. The only remaining claims in those cases are the cross-claims between Jiminy and Wiegand.

3 In both complaints, the claims are actually labeled 1-5 and 7.

V. Discussion

Both Jiminy and Navigators have moved for judgment on the pleadings. Navigators argues that as an insurer it owes a duty to defend its insured, Wiegand, but it does not owe a direct duty to defend Jiminy because Jiminy [*9] is not an additional insured under the Policy.4 Further, the duty Navigators has under the Policy to pay defense costs to a non-insured party pursuant to a contractual liability of its insured only requires it to make payments to the insured, and only when the insured has actually requested payment. In this case, Navigators asserts that even if Wiegand is found to owe Jiminy its defense costs, it will be up to Wiegand to determine whether it wishes to pay the amount or to make a claim to Navigators. Since Navigators owes no duty directly to Jiminy and it would be up to Wiegand to determine whether to make a claim in the event judgment is entered against it with respect to Jiminy’s defense costs, Navigators argues judgment on the pleadings should enter in its favor.

4 In its filings and at oral argument, Jiminy was clear that it was not claiming to be an additional insured under the Policy.

For its part, Jiminy begins its argument with the Contract, asserting first that the language in the Contract at § 12(A)(1) clearly establishes that Wiegand has a duty to pay Jiminy’s defense costs regardless of any potential factual disputes between Jiminy and Wiegand, provided (1) the defense costs are incurred [*10] in litigation in which there is a product liability claim against Wiegand and (2) Jiminy is also a defendant named in the action.5 As the Underlying Action includes product liability claims against Wiegand, as well as other claims against Jiminy, Jiminy asserts the two requirements are met. Jiminy then turns to the Policy, arguing that the Contract is an “insured contract” for purposes of the Policy. Finally, Jiminy argues that since the Policy provides coverage for liability assumed by Wiegand in an “insured contract,” Navigator, as an insurer, is required under Massachusetts law, to pay for Jiminy’s defense, without regard to the resolution of the dispute between Wiegand and Jiminy.

5 Initially, in its memorandum in support of its motion for judgment on the pleadings, Jiminy argued that it would also be necessary to establish that there were no disputes as to whether Jiminy had “fully performed all ongoing maintenance obligations.” (Compl., Ex. B, Contract §12(A)(1).) Subsequently, in its opposition to Navigators’ motion for judgment on the pleadings, Jiminy instead argued that the requirement regarding maintenance obligations applied only to indemnification claims.

Navigators has not contested, [*11] at least relative to the purpose of the motions currently before the court, that the Contract between Jiminy and Wiegand is an “insured contract” for purposes of the Policy. Also, Navigators does not dispute or that the Underlying Action is the type of litigation covered under the Policy. The court begins its analysis by considering whether Massachusetts law allows Jiminy to compel payment from Navigators based on Navigators’ obligations to its insured, Wiegand. Massachusetts law imposes on insurers a “broad duty to defend its insured against any claims that create a potential for indemnity.” Doe v. Liberty Mut. Ins. Co., 423 Mass. 366, 667 N.E.2d 1149, 1151 (Mass. 1996). This duty is broad and attaches whenever the claims in the complaint match up with the language in the policy. See Liberty Mut. Ins. Co. v. SCA Services, Inc., 412 Mass. 330, 588 N.E.2d 1346, 1347 (Mass. 1992). However, the cases cited by the parties all involve cases in which the court discussed the duty in the context of the insured.

Jiminy has not cited any cases in which a court imposed on an insurer a duty to defend a third-party beneficiary of a policy. Instead, Jiminy argues the language of the Policy providing coverage for defense costs of a third-party pursuant to an “insured contract” shows the parties’ intention that Navigators would pay such costs and, therefore, such language [*12] should be construed to impose upon Navigators a duty to make payment directly to Jiminy. The court disagrees. As demonstrated by the provisions in the Policy that allow for the designation of an additional insured, Navigators and Wiegand knew how to extend Navigators’ duties as an insurer to other parties. Damages, including defense costs, associated with “insured contracts” were handled differently, indicating that Navigators and Wiegand did not, in fact, intend that in a case like this one Navigators would have any direct obligations to Jiminy based on the Contract. The Contract also included provisions regarding both additional insureds and “insured contracts,” suggesting that Jiminy, like Navigators and Wiegand, understood that Wiegand’s promise to pay Jiminy’s defense costs would not grant Jiminy the status of an “additional insured” with respect to Navigators.

In the absence of a contractual relationship between Navigators and Jiminy, the court finds no legal basis for ordering Navigators to pay Jiminy’s defense costs directly. Any obligation upon Navigators to pay such costs will arise only after an insured, in this case Wiegand, makes a claim for payment and then its only obligation [*13] will be to Wiegand. Judgment on the pleadings in favor of Navigators is, therefore, appropriate.

VI. Conclusion

For the Foregoing reasons, Plaintiff’s Motion for Judgment on the Pleadings is hereby DENIED and Defendant’s Motion for Judgment on the Pleadings is hereby ALLOWED.

It is So Ordered.

/s/ Mark G. Mastroianni

MARK G. MASTROIANNI

United States District Judge


Insurance policies, you need to read yours and stay in touch with your agent to make sure your insurance is covering you

Several examples of popped up recently where insurance companies have altered their policies leaving the OR industry in the rain

Insurance companies do not change their policies mid-term. However they do make changes to policies and as the policies renew, those new policies incorporate the new changes.

Here is an example.

Traveler’s issues worker’s compensation policies for the cycling industry. Recently the Traveler’s worker’s compensation policy excludes from the policy employees who participate in employer (retailer) sanctioned rides.

In this case, that means that you may get a new question before your renewal or just a denial in the mail leaving you hunting for a new worker’s comp carrier.

Obviously, this is a problem for those retailers that have Travelers.    Most insurance carriers do NOT “willingly” insure the general liability for shops that have shop/group rides.

Shop rides are one of the best ways to attract new customers and retain current ones. Having your employees on these rides is super important as it is the easy way to “soft-sell” new product. Likely, your shop employee will be riding the latest-greatest bike and will be able to address any question about your product line. If the prospective customer has a good time on the ride, they will come back. The more a rider on a shop ride shows up, the more likely that rider will end up being a customer.

So, the insurance industry must feel this is a risky activity.  Yes, there are some increased risks. Making sure your employees do not take any unnecessary risks is important to mitigating the workers compensation exposure.

Do Something

Like attorneys, you need to find a good insurance broker who understands your industry. Your friend down the street maybe great, however it is the little things that can leave you hanging. The more advanced notice you have about possible non-renewals the better chance you will have at getting a good policy if that happens.

Better still is to find an agent who works in your industry and is ahead of the problems finding solutions and letting you know about the issues before you receive the letter in the mail.

Thanks to Scott Chapin who provided this tip. Scott is a broker that specializes in insuring bicycle retailers.  Scott can be reached at: chapins@rjfagencies.com or through his website.

What do you think? Leave a comment.

If you like this let your friends know or post it on FB, Twitter or LinkedIn

Copyright 2013 Recreation Law (720) Edit Law

Email: Rec-law@recreation-law.com

Google+: +Recreation

Twitter: RecreationLaw

Facebook: Rec.Law.Now

Facebook Page: Outdoor Recreation & Adventure Travel Law

Blog: www.recreation-law.com

Mobile Site: http://m.recreation-law.com

By Recreation Law    Rec-law@recreation-law.com      James H. Moss         #Authorrank

<rel=”author” link=” https://plus.google.com/u/0/b/112453188060350225356/” />

#RecreationLaw, #Recreation-Law.com, #OutdoorLaw, #OutdoorRecreationLaw, #AdventureTravelLaw, #law, #TravelLaw, #JimMoss, #JamesHMoss, #Tourism, #AdventureTourism, #Rec-Law, #RiskManagement, #CyclingLaw, #BicyclingLaw, #FitnessLaw, #Recreation-Law.com, #Backpacking, #Hiking, #Mountaineering, #IceClimbing, #RockClimbing, #RopesCourse, #ChallengeCourse, #SummerCamp, #Camps, #YouthCamps, #Skiing, #Ski Areas, #Negligence, #Snowboarding, #RecreationLaw, #@RecreationLaw, #Cycling.Law, #SkiLaw, #Outside.Law, #Recreation.Law, #RecreationLaw.com, #OutdoorLaw, #RecreationLaw, #OutdoorRecreationLaw, #AdventureTravelLaw, #Law, #TravelLaw, #JimMoss, #JamesHMoss, #AttorneyatLaw, #Tourism, #AdventureTourism, #RecLaw, #RecLawBlog, #RecreationLawBlog, #RiskManagement, #HumanPowered, #HumanPoweredRecreation,# CyclingLaw, #BicyclingLaw, #FitnessLaw, #RecreationLaw.com, #Backpacking, #Hiking, #Mountaineering, #IceClimbing, #RockClimbing, #RopesCourse, #ChallengeCourse, #SummerCamp, #Camps, #YouthCamps, #Skiing, #Ski Areas, #Negligence, #Snowboarding, sport and recreation laws, ski law, cycling law, Colorado law, law for recreation and sport managers, bicycling and the law, cycling and the law, ski helmet law, skiers code, skiing accidents, Recreation Lawyer, Ski Lawyer, Paddlesports Lawyer, Cycling Lawyer, Recreational Lawyer, Fitness Lawyer, Rec Lawyer, Challenge Course Lawyer, Ropes Course Lawyer, Zip Line Lawyer, Rock Climbing Lawyer, Adventure Travel Lawyer, Outside Lawyer, Recreation Lawyer, Ski Lawyer, Paddlesports Lawyer, Cycling Lawyer, #RecreationalLawyer, #FitnessLawyer, #RecLawyer, #ChallengeCourseLawyer, #RopesCourseLawyer, #ZipLineLawyer, #RockClimbingLawyer, #AdventureTravelLawyer, #OutsideLawyer, Good Samaritan, Samaritan, First Aid, Insurance, Insurance Broker, IBD, Independent Bicycle Retailer, Cycling, Traveler’s,

 

WordPress Tags: Insurance,policies,agent,Several,examples,industry,Here,example,Traveler,worker,compensation,policy,employees,employer,retailer,renewal,denial,carrier,retailers,Travelers,Most,carriers,Shop,customers,product,employee,bike,customer,rider,workers,exposure,attorneys,broker,friend,street,renewals,Better,solutions,letter,Thanks,Scott,Chapin,bicycle,Leave,Twitter,LinkedIn,Recreation,Edit,Email,Google,RecreationLaw,Facebook,Page,Outdoor,Adventure,Travel,Blog,Mobile,Site,James,Moss,Authorrank,author,OutdoorLaw,OutdoorRecreationLaw,AdventureTravelLaw,TravelLaw,JimMoss,JamesHMoss,Tourism,AdventureTourism,RiskManagement,CyclingLaw,BicyclingLaw,FitnessLaw,RopesCourse,ChallengeCourse,SummerCamp,Camps,YouthCamps,Areas,Negligence,SkiLaw,Outside,AttorneyatLaw,RecLaw,RecLawBlog,RecreationLawBlog,HumanPoweredRecreation,Colorado,managers,helmet,accidents,Lawyer,Paddlesports,Recreational,Challenge,Course,Ropes,Line,Rock,RecreationalLawyer,FitnessLawyer,RecLawyer,ChallengeCourseLawyer,RopesCourseLawyer,ZipLineLawyer,RockClimbingLawyer,AdventureTravelLawyer,OutsideLawyer,Samaritan,Independent

 


Good advice but bad releases can be found at this website.

The disclaimers at the bottom of the free documents are the most important part; you need YOUR attorney to write your release.

I check out this site for information I can pass on: Sadler Sports & Recreation Insurance. A couple of times a year, I pass on good information. At the same time, all websites (even this one) can pass on bad information and Sadler Sports & Recreation Insurance is no exception. They are offering free releases. Here is the disclaimer.

This is a SAMPLE WAIVER FORM only. Final wording should be as directed by the insured’s counsel, but must observe the principles represented within the above. This form provided courtesy of K&K Insurance Group.

The releases are from K&K Insurance Group. K&K is a great insurance company in the outdoor recreation industry. At the same time, by providing bad releases, they are creating their own claims.

The first release offered is a release for a parent to waive a minor’s claims. That only work in a few states. (See States that allow a parent to sign away a minor’s right to sue.) So in every other state, you need an assumption of risk form. This “release” is not that. In those few states that do accept a release to stop a minor’s claims, this release does not meet the requirements of two of the states.

Neither release has a jurisdiction and venue clause. That would allow the injured plaintiff to bring a suit and argue the lawsuit should be in a state where releases are not supported. (See States that do not Support the Use of a Release.) The adult release also includes a place for a parent to sign for a child. (???)

Find an attorney that knows what you do, understands release law and can write a release for you. If you want to print and hand the attorney, these releases (as a joke) do so. If the attorney uses them…..find another attorney.

See Sadler Sports & Recreation Insurance

What do you think? Leave a comment.

If you like this let your friends know or post it on FB, Twitter or LinkedIn

Copyright 2014 Recreation Law (720) Edit Law

Email: Rec-law@recreation-law.com

Google+: +Recreation

Twitter: RecreationLaw

Facebook: Rec.Law.Now

Facebook Page: Outdoor Recreation & Adventure Travel Law

Blog:www.recreation-law.com

Mobile Site: http://m.recreation-law.com

By Recreation Law    Rec-law@recreation-law.com         James H. Moss         #Authorrank

<rel=”author” link=” https://plus.google.com/u/0/b/112453188060350225356/” />

 

 

#AdventureTourism, #AdventureTravelLaw, #AdventureTravelLawyer, #AttorneyatLaw, #Backpacking, #BicyclingLaw, #Camps, #ChallengeCourse, #ChallengeCourseLaw, #ChallengeCourseLawyer, #CyclingLaw, #FitnessLaw, #FitnessLawyer, #Hiking, #HumanPowered, #HumanPoweredRecreation, #IceClimbing, #JamesHMoss, #JimMoss, #Law, #Mountaineering, #Negligence, #OutdoorLaw, #OutdoorRecreationLaw, #OutsideLaw, #OutsideLawyer, #RecLaw, #Rec-Law, #RecLawBlog, #Rec-LawBlog, #RecLawyer, #RecreationalLawyer, #RecreationLaw, #RecreationLawBlog, #RecreationLawcom, #Recreation-Lawcom, #Recreation-Law.com, #RiskManagement, #RockClimbing, #RockClimbingLawyer, #RopesCourse, #RopesCourseLawyer, #SkiAreas, #Skiing, #SkiLaw, #Snowboarding, #SummerCamp, #Tourism, #TravelLaw, #YouthCamps, #ZipLineLawyer, Saddler Sport Insurance, Saddler, Sport Insurance, Release, K&K Insurance,

 


You run a guide service. Should you refer travel insurance to your clients?

Yes, however, you need to understand, and probably communicate to your clients that travel insurance is extremely limited for outdoor recreation activities.

Travel insurance was created for European vacations. You booked a 12-day trip to Europe. If you got sick, or the bus, you were traveling on died, and you came home on day eight, then your travel insurance sent you a check for 1/3 of what you spent except your trip. It was simple math and very simple underwriting defined by the travel insurance policies. Europe was like the US, and the risks were known.

The UK added to travel insurance because its health care system did not extend beyond its boundaries. So UK travelers leaving the UK have always bought travel health insurance. Again, this is simple underwriting:  travelers are normally in good health and so the only real risk was an accident while traveling.

Everest Base camp does not really fit into the underwriting of either of those types of polices, yet the policies have not changed since they were first written.

Understanding Policies

First, there are two types of travel insurance that are very different and both called travel insurance. One covers medical and sometimes evacuation home or at least to a local hospital when you are outside of your home country. The second reimburses you for costs if your trip is canceled (before departure) or interrupted (after the trip starts).

Most travel medical policies are fairly easy to understand and read. They have a specific limit on how much they will pay, and a specific time frame where your injury and medical services must occur. As I stated earlier, I’ve found the best ones are those sold for UK travelers. I’ve even purchased some policies that paid for rescue up to 20,000 feet.

Travel Medical insurance policies are great to have because of the limits that HMO’s and PPO’s my place on services outside of the US. When in doubt spend the money and buy a policy if you are traveling outside of the US>

Travel Insurance Policies

Travel insurance policies are also easy to understand if you take the time to read the policy. Most policies are online and easy to find. If you are traveling for an outdoor recreation trip, you must read the policies.

And by policies, I mean the actual policy, not the lengthy description listed on the website. Most travel insurance companies have their policy online if you dig enough. If not call or email the company, tell them you are getting ready to travel in a few months and want to see a copy of their policy. Tell them you have read the coverage review on the website, but you want more information. TravelEx, a leading company calls their policy “Description of Coverage.”

As an example, the policies sold by online sites that you are booking your air or hotel through are very specific and will only cover your air or hotel – nothing more. A sleeping bag or tents are not either of those.

Travel insurance policies are very different from other insurance policies you may purchase in the US. The policies are written so absolutely only what is listed is covered with no exceptions. They are written to say for $XX you get $XX paid back if something listed in the policy occurs. If it is not listed it is not covered.

Many policies will have a grace period or cancellation period. You can purchase the policy and then have 10-15 days to cancel the policy if it is not what you want.

Travel Insurance policies may have a small medical benefit. However, this is not insurance. Meaning after you have paid the medical bill you can file a claim and ask to be reimbursed for the amount of the bill up to the limits of the policy. The medical benefit is usually around $10,000 so if you have a large medical bill you are going to eat the rest and will only be paid the $10K once you show the insurance company paid receipts.

Any claim will only be paid by including your receipts with the claim. So keep every receipt. If you are having a hard time tracking your receipts use your phone or camera to photograph the receipts. Several good apps are also available to track receipts. Again if you don’t have receipts, you won’t receive any money from the insurance company.

Claims

Claims are paid if the cause of your claim fits squarely in the list of coverage. As an example, this is the list of coverage’s from a common travel insurance policy.

Trip Cancellation and Interruption Covered Reasons Coverage is provided for the following unforeseeable events or their consequences, which occur while coverage is, in effect, under this Policy if there is a change in plans by you, a Family Member traveling with you, or Traveling Companion:

1. Sickness, Injury or death of you or your Traveling Companion and/or you or your Traveling Companion’s Family Member or Business Partner. The Sickness must commence while coverage is in effect, require the examination of a Physician, in person, at the time of Trip Cancellation or Trip Interruption and, in the written opinion of the treating Physician, be so disabling as to prevent you from taking or continuing your Covered Trip.

2. Common Carrier delays resulting from inclement weather, or mechanical breakdown or organized labor strikes that affect public transportation;

3. arrangements canceled by an airline, cruise line, motor coach company, or tour operator, resulting from inclement weather, mechanical breakdown or organized labor strikes that affect public transportation.

4. arrangements canceled by a tour operator, cruise line, airline, rental car company, hotel, condominium, railroad, motor coach company, or other supplier of travel services, resulting from Financial Insolvency;

5. being directly involved in a documented traffic accident while en route to departure;

6. being hijacked, quarantined, required to serve on a jury, or required by a court order to appear as a witness in a legal action, provided you, Family Member traveling with you or a Traveling Companion is not 1) a party to the legal action, or 2) appearing as a law enforcement officer;

7. your Home made uninhabitable by fire, flood, volcano, earthquake, hurricane or other natural disaster;

8. your destination made uninhabitable by fire, flood, volcano, earthquake, hurricane or other natural disaster;

9. mandatory evacuation ordered by local authorities at your destination due to hurricane or other natural disaster;

10. being called into active military service to provide aid or relief in the event of a natural disaster;

11. a documented theft of passports or visas;

12. a Terrorist Act which occurs in your departure city or in a city which is a scheduled destination for your Covered Trip provided the Terrorist Act occurs within 30 days of the Scheduled Departure Date for your Covered Trip or during your Covered Trip;

13. a cancellation of your Covered Trip if your arrival on the Covered Trip is delayed and causes you to lose 50% or more of the scheduled Covered Trip duration due to the reasons covered under the Covered Trip Delay Benefit;

14. a transfer of employment of 250 miles or more;

15. your involuntary termination of employment or layoff and was not under your control. You must have been continuously employed with the same employer for 1 year prior to the termination or layoff. This provision is not applicable to temporary employment, independent contractors or self-employed persons;

16. your host at destination is hospitalized or dies, provided you made previous arrangements to stay at the host’s personal residence during the Covered Trip.

If you claim does not fit within one of the 16 listed above claims you do not have a chance. The next issue then is to look at your claim and see if it fits the claim you have identified perfectly. The language of the coverage list is defined in the policy in preceding paragraphs.

For Example, let’s look at the Everest season ending this year.

You might first think that if you bought a policy and could not climb Mount Everest this year because of the deaths and closing of the ice fall you would have a claim under paragraph 2, “organized labor strikes.” However, I don’t think that would qualify because Sherpa’s are not common carriers nor are they public transportation. Common carriers are airlines, bus lines, etc., and I doubt much in Nepal except the airline would qualify. Public transportation is like your local city bus service…..which has not made to the south side base camp yet.

Paragraph 3 would not work for about the same reasons.

Paragraph 8 may qualify. “your destination made uninhabitable by fire, flood, volcano, earthquake, hurricane or other natural disaster” However, the top of Mt. Everest, your destination was fine; the route to your destination was destroyed.

Paragraph 9 would work if the Nepalese government had closed base camp or Everest from the south side, however, all news reports stated just the opposite, the Nepalese government worked hard to keep the Sherpa’s on the mountain and working.

As you can see, the language of the policy fits European vacations, the issues and claims the policies were originally written for.

Another policy My Travel Guard had this list of claims:

The Company will reimburse the Insured a benefit, up to the Maximum Limit shown in the Schedule or Declarations Page if an Insured cancels his/her Trip or is unable to continue on his/her Trip due to any of the following Unforeseen events:

(a) Sickness, Injury or death of an Insured, Family Member, Traveling Companion or Business Partner;

(1) Sickness or Injury of an Insured, Traveling Companion or Family Member traveling with the Insured must be so disabling as to reasonably cause a Trip to be canceled or interrupted or which results in medically imposed restrictions as certified by a Physician at the time of Loss preventing continued participation in the Trip;

(2) Sickness or Injury of a Family Member not traveling with the Insured Such disability must be so disabling as to reasonably cause a Trip to be canceled or interrupted and must be certified by a Physician;

(3) Sickness or Injury of the Business Partner must be so disabling as to reasonably cause the Insured to cancel or interrupt the Trip to assume daily management of the business. Such disability must be certified by a Physician;

(b) Inclement Weather causing delay or cancellation of travel;

(c) Strike causing complete cessation of travel services at the point of departure or Destination;

(d) the Insured’s Primary Residence or Destination being made Uninhabitable or Inaccessible by Natural Disaster, vandalism or burglary;

(e) the Insured or Traveling Companion is hijacked, quarantined, subpoenaed or required to serve on a jury;

(f) the Insured or Traveling Companion is called to active military service or military leave is revoked or reassigned.

The following only apply if the Additional Unforeseen Events Upgrade is purchased:

(a) Sickness, Injury, death or hospitalization of the Insured’s Host at Destination. A Physician must certify the Sickness or Injury;

(b) Financial Default of an airline, Cruise line or tour operator provided the Financial Default occurs more than 14 days following an Insured’s effective date for the Trip Cancellation or Trip Interruption Benefits. There is no coverage for the Financial Default of any person, organization, agency, or firm from whom the Insured purchased travel arrangements supplied by others;

(c) a Terrorist Incident in a City listed on the Insured’s itinerary within 30 days of the Insured’s scheduled arrival;

(d) the Insured or Traveling Companion is involuntarily terminated or laid off through no fault of his or her own provided that he or she has been an active employee for the same employer for at least 1 year. Termination must occur following the effective date of coverage. This provision is not applicable to temporary employment, seasonal employment, independent contractors or self-employed persons;

(e) the Insured and/or Traveling Companion is directly involved in or delayed due to an traffic accident, substantiated by a police report, while en route to the Insured’s Destination;

(f) the Insured or a Traveling Companion being the victim of a Felonious Assault within 10 days prior to the Departure Date. No coverage is provided for Felonious Assault committed by another Insured, Family Member, Traveling Companion or Traveling Companion’s Family Member;

(g) mechanical/equipment failure of a Common Carrier that occurs on a scheduled Trip and causes complete cessation of the Insured’s travel and results in a Loss of 50% of the Insured’s Trip length;

(h) the Insured or Traveling Companion is required to work during his/her scheduled Trip. He/she must provide proof of requirement to work, such as a notarized statement signed by an officer of his/her employer. In the situation of self-employment, proof of self-employment and a notarized statement confirming that the Insured is unable to travel due to his or her job obligations will be required;

(i) the Insured or Traveling Companion is directly involved in a merger, acquisition, government required product recall or bankruptcy proceedings and must be currently employed by the company that is involved in said event;

(j) the Insured’s or Traveling Companion’s company is deemed to be unsuitable for business due to burglary or Natural Disaster and the Insured or Traveling Companion is directly involved as a Key Employee of the disaster recovery team.

Here paragraph c might qualify, if you can call the actions of the Sherpa’s a strike. “Strike causing complete cessation of travel services at the point of departure or Destination” However, once you read the definition of a strike as defined in the policy, it will not qualify.

“Strike” means a stoppage of work which:

(a) is announced, organized, and sanctioned by a labor union; and

(b) interferes with the normal departure and arrival of a Common Carrier.

Again, Sherpa’s are not common carriers and not recognized by any labor union.

After reading all the covered claims, I don’t think any would apply to the Everest disaster this year.

So

If you are looking for insurance coverage for an outdoor recreation trip start with what you already have and then try to fill in the gaps with what you can buy.

Your homeowner’s/condo/renter’s insurance may provide coverage for your gear while traveling. That coverage is usually only for it being total loss, not just delayed. You may have additional protection so check this policy first.

The credit cards you paid for your trip with, may provide coverage that a lot of travel policies cover.

Go over your health insurance policy with a fine-tooth comb. Make sure you understand what coverage you have and do not have. Again, buy a policy to fill in the gaps. Compare the coverage on the travel insurance policies to the coverage provided by a travel medical insurance policy. Most travel medical insurance policies have a broader coverage.

Keep track of all of your receipts. Without receipts, you don’t have a claim. Keep a diary tracking date and times because you may have to prove what happened when. You might be able to job your memory with your photographs also.

The risk of outdoor recreation trips is greater than just the chance of getting hurt or injured on the water, under the ground or on the mountain. You may never get the chance to try.

What do you think? Leave a comment.

If you like this let your friends know or post it on FB, Twitter or LinkedIn

Copyright 2014 Recreation Law (720) 334-8529

 

Call or Email me if you need legal services around these issues.

Email: Rec-law@recreation-law.com

Google+: +Recreation

Twitter: RecreationLaw

Facebook: Rec.Law.Now

Facebook Page: Outdoor Recreation & Adventure Travel Law

Blog:www.recreation-law.com

Mobile Site: http://m.recreation-law.com

By Recreation Law    Rec-law@recreation-law.com         James H. Moss         #Authorrank

<rel=”author” link=” https://plus.google.com/u/0/b/112453188060350225356/” />

 

 

#AdventureTourism, #AdventureTravelLaw, #AdventureTravelLawyer, #AttorneyatLaw, #Backpacking, #BicyclingLaw, #Camps, #ChallengeCourse, #ChallengeCourseLaw, #ChallengeCourseLawyer, #CyclingLaw, #FitnessLaw, #FitnessLawyer, #Hiking, #HumanPowered, #HumanPoweredRecreation, #IceClimbing, #JamesHMoss, #JimMoss, #Law, #Mountaineering, #Negligence, #OutdoorLaw, #OutdoorRecreationLaw, #OutsideLaw, #OutsideLawyer, #RecLaw, #Rec-Law, #RecLawBlog, #Rec-LawBlog, #RecLawyer, #RecreationalLawyer, #RecreationLaw, #RecreationLawBlog, #RecreationLawcom, #Recreation-Lawcom, #Recreation-Law.com, #RiskManagement, #RockClimbing, #RockClimbingLawyer, #RopesCourse, #RopesCourseLawyer, #SkiAreas, #Skiing, #SkiLaw, #Snowboarding, #SummerCamp, #Tourism, #TravelLaw, #YouthCamps, #ZipLineLawyer, TravelEx, Travel Guard, Travel Insurance, Everest, Sherpa,

WordPress Tags: Should,insurance,clients,recreation,Travel,European,vacations,Europe,math,policies,health,system,boundaries,Again,accident,Everest,Base,evacuation,hospital,departure,Most,injury,feet,Medical,money,policy,description,Tell,coverage,information,TravelEx,example,hotel,tents,exceptions,Many,cancellation,receipts,receipt,Several,Claims,Trip,Interruption,Reasons,events,consequences,Member,Companion,death,Partner,examination,Physician,person,opinion,Common,Carrier,breakdown,transportation,airline,operator,rental,condominium,supplier,Financial,Insolvency,jury,action,enforcement,officer,Home,earthquake,hurricane,disaster,destination,relief,event,theft,passports,visas,Terrorist,Date,arrival,duration,Delay,Benefit,employment,termination,layoff,employer,provision,contractors,self,residence,paragraphs,Mount,deaths,paragraph,Sherpa,carriers,airlines,Nepal,Public,Nepalese,government,news,mountain,Another,Guard,Company,Maximum,Limit,Schedule,Declarations,Page,restrictions,Loss,participation,management,Inclement,Weather,Strike,cessation,Primary,Uninhabitable,Inaccessible,Natural,vandalism,burglary,Additional,Upgrade,Host,Default,Cruise,Benefits,agency,Incident,itinerary,employee,victim,Felonious,Assault,equipment,failure,length,requirement,statement,situation,obligations,merger,acquisition,product,bankruptcy,proceedings,recovery,team,Here,definition,stoppage,homeowner,renter,gear,protection,cards,tooth,Make,Compare,Keep,diary,memory,Leave,Twitter,LinkedIn,Call,Email,Google,RecreationLaw,Facebook,Outdoor,Adventure,Blog,Mobile,Site,James,Moss,Authorrank,author,AdventureTourism,AdventureTravelLaw,AdventureTravelLawyer,AttorneyatLaw,BicyclingLaw,Camps,ChallengeCourse,ChallengeCourseLaw,ChallengeCourseLawyer,CyclingLaw,FitnessLaw,FitnessLawyer,HumanPoweredRecreation,JamesHMoss,JimMoss,Negligence,OutdoorLaw,OutdoorRecreationLaw,OutsideLaw,OutsideLawyer,RecLaw,RecLawBlog,LawBlog,RecLawyer,RecreationalLawyer,RecreationLawBlog,RecreationLawcom,Lawcom,RiskManagement,RockClimbingLawyer,RopesCourse,RopesCourseLawyer,SkiAreas,SkiLaw,SummerCamp,Tourism,TravelLaw,YouthCamps,ZipLineLawyer,website,volcano,south

 

Enhanced by Zemanta

Release is used to prove an activity is hazardous and deny a claim for life insurance. Heli-skiing should have been disclosed as a risk activity or hobby according to the court when buying life insurance.

“Rating up” is a term used to say an insured is a higher than normal risk, and the insurance rate will increase. The amount of the increase is dependent upon the risk. Heli-skiing would have tripled the cost of a life insurance policy. However, not telling the insurance company denied the claim.

West Coast Life Insurance Company. Hoar, 558 F.3d 1151; 2009 U.S. App. LEXIS 5266

Date of the Decision: 2009

Plaintiff: West Coast Life Insurance Company

Defendants: Martha Hoar, as the personal representative of the other Estate of Stephen M. Butts; Telluride Properties, Llc., a Colorado Limited Liability Company; Telluride Properties, Inc., a Colorado corporation; Albert D. Roer, an individual; Polly Lychee, an individual

Plaintiff Claims: (1) breach of contract, (2) bad faith, and (3) violation of the Colorado Consumer Protection Act

Defendant Defenses: Rescission

Holding: for the plaintiff life insurance company

Owners in a business want to make sure the business will survive if one of the owners is disabled or dies. There is also a desire to take care of the family of the deceased. Finally, immediately purchasing the deceased share of the business keeps the business running smoothly without the worry or probate or someone with no business experience from running the business. This usually takes the form of a buy-sell agreement. The agreement sets out the terms on when the contract kicks in, how to value the business and how to pay the estate of the deceased or the disabled owner.

Many times the owners will want to make the purchase of the deceased estate immediate, so the business purchases life insurance on the owners. Upon the death of an insured, the insurance proceeds are used to keep the business going to pay for the ownership of the business from the estate of the deceased.

In this case, the parties created a business and purchased a $3 million-dollar policy on the owners. For large life insurance policies more underwriting, questions are asked and sometimes physicals are required. In this case, the insured owner was asked if he “”[e]ngaged in auto, motorcycle or boat racing, parachuting, skin or scuba diving, skydiving, or hang gliding or other hazardous avocation or hobby.” The insured said he was a scuba diver and skier. At the end of the form the insured had to affirm that all of his answers were full, complete, and true to the best of his knowledge and belief.

The insured was then interviewed by a third party hired to investigate the insured. The insured was asked what he did in his spare time. The insured answered he skied and golfed. He also stated he was into private aviation and scuba diving. At no time did the insured ask any clarifying questions as to what hazardous activities meant.

The insured regularly participated in heli-ski trips in Canada. He had been heli-skiing for at least six years. He purchased a Black Diamond Avalung for his ski trips. The heli-ski operation required the insured to sign a “Release of Liability, Waiver of Claims, Assumption of Risk and Indemnity Agreement.” The heli-ski operation also required avalanche rescue training, helicopter safety training and required the use of avalanche beacons.

During a heli-ski trip, the insured was killed in an avalanche.

The insurance company refused to pay the life insurance benefit because the insured had not been truthful on his application for insurance. The life insurance company sued for rescission. The trial court granted the life insurance company’s motion for summary judgment, and the case was appealed.

Summary of the case

Rescission is the term applied when a contract is unwound, and both parties are placed back in their original position. There must be a legally recognized cause for a court to require rescission. Material breach, or as in this case fraud, can be a cause for a court to rescind a contract.

To win a claim of rescission under Colorado law the insurance company had to prove:

(1) the applicant made a false statement of fact or concealed a fact in his application for insurance; (2) the applicant knowingly made the false statement or knowingly concealed the fact; (3) the false statement of fact or the concealed fact materially affected either the acceptance of the risk or the hazard assumed by the insurer; (4) the insurer was ignorant of the false statement of fact or concealment of fact and is not chargeable with knowledge of the fact; (5) the insurer relied, to its detriment, on the false statement of fact or concealment of fact in issuing the policy.

The court focused on the first and second claims that the deceased made a false statement or concealed a fact and did so knowingly.

The court did a thorough review of all the facts the life insurance company presented, which stated that heli-skiing was a high-risk operation. These facts included the acts of the insured/deceased as outlined above and statements made by the expert witness of the insurance company. One statement which the court found particularly informative was that heli-skier was “… approximately 18,702 times more likely to be killed in an avalanche than an individual skiing inbounds at a ski area.” This statement was then supported by this footnote the court included. “The probability of an avalanche fatality occurring while heli-skiing or snowcat skiing is approximately 1 per 29,000 visits.

The risk of heli-skiing was then supported in the court’s argument by the fact the deceased had signed a release. “This is especially true where heli-skiers such as Butts were required to sign a waiver explicitly acknowledging heli-skiing was far more dangerous than resort skiing.”

The fact that the deceased had signed the release, purchased a Black Diamond Avalung, and took avalanche and helicopter training showed the activity was dangerous. That was proof of knowledge and intent that heli-skiing was a high-risk activity which his involvement in should have been disclosed to the insurance company.

The next argument was over the fourth element. The court found for this argument the insurance company had to have knowledge that the life insurance policy applicant was not truthful in answer questions.

Consequently, the beneficiary of the insurance policy, the defendants were not able to argue the contract should not be rescinded. The insurance company was granted rescission and did not have to pay the $3 million-dollar policy benefit.

So Now What?

The increase due to heli-skiing would have increased the yearly premium from $4,800 to $12,380. For most people making a living in the outdoor recreation, the basic premium is too much, the increased premium out of reach. Disability insurance can cost more.

Health insurance is probably no longer subject to such rating changes to do the Patient Protection and Affordable Care Act, which is one blessing for those of us making a living in the outdoors.

If you are just starting out, make sure you have good health, life and disability policies. Lying or misrepresenting the risks you take will subject your family to a similar situation. Purchasing the policies before you have gone too far…outdoors, may save you some money.

If you die mowing the lawn or in a car accident, the chances of this occurring are low. The investigation is triggered when you die doing a high-risk  activity, and the insurance company finds out you regularly participated in the activity and did not tell them at the time you applied for the policy.

You’ll probably not have to worry about this issue.  You’ll be dead.

What do you think? Leave a comment.

If you like this let your friends know or post it on FaceBook, Twitter or LinkedIn

Copyright 2014 Recreation Law (720) Edit Law

Email: Rec-law@recreation-law.com

Google+: +Recreation

Twitter: RecreationLaw

Facebook: Rec.Law.Now

Facebook Page: Outdoor Recreation & Adventure Travel Law

Blog: www.recreation-law.com

Mobile Site: http://m.recreation-law.com

By Recreation Law       Rec-law@recreation-law.com              James H. Moss               #Authorrank

<rel=”author” link=” https://plus.google.com/u/0/b/112453188060350225356/” />

#AdventureTourism, #AdventureTravelLaw, #AdventureTravelLawyer, #AttorneyatLaw, #Backpacking, #BicyclingLaw, #Camps, #ChallengeCourse, #ChallengeCourseLaw, #ChallengeCourseLawyer, #CyclingLaw, #FitnessLaw, #FitnessLawyer, #Hiking, #HumanPowered, #HumanPoweredRecreation, #IceClimbing, #JamesHMoss, #JimMoss, #Law, #Mountaineering, #Negligence, #OutdoorLaw, #OutdoorRecreationLaw, #OutsideLaw, #OutsideLawyer, #RecLaw, #Rec-Law, #RecLawBlog, #Rec-LawBlog, #RecLawyer, #RecreationalLawyer, #RecreationLaw, #RecreationLawBlog, #RecreationLawcom, #Recreation-Lawcom, #Recreation-Law.com, #RiskManagement, #RockClimbing, #RockClimbingLawyer, #RopesCourse, #RopesCourseLawyer, #SkiAreas, #Skiing, #SkiLaw, #Snowboarding, #SummerCamp, #Tourism, #TravelLaw, #YouthCamps, #ZipLineLawyer, Life Insurance, Rescission, Policy, Premium, Health Insurance, Disability Insurance, Heli-Skiing, Skiing, Scuba Diving, Life Insurance, Buy Sell Agreement, Buy-Sell Agreement,

 

 

WordPress Tags: Release,life,insurance,Heli,hobby,cost,policy,West,Coast,Company,Hoar,LEXIS,Date,Decision,Plaintiff,Defendants,Martha,Estate,Stephen,Butts,Telluride,Properties,Colorado,corporation,Albert,Roer,Lychee,Claims,faith,violation,Consumer,Protection,Defendant,Defenses,Rescission,Owners,probate,agreement,owner,Many,Upon,death,ownership,million,dollar,policies,auto,motorcycle,boat,avocation,diver,knowledge,belief,aviation,Canada,Black,Diamond,Avalung,Waiver,Assumption,Risk,avalanche,helicopter,beacons,judgment,Summary,Material,fraud,applicant,statement,fact,acceptance,insurer,concealment,detriment,statements,area,footnote,argument,resort,involvement,fourth,beneficiary,recreation,Health,Patient,Affordable,Care,situation,money,lawn,accident,investigation,Leave,FaceBook,Twitter,LinkedIn,Edit,Email,Google,RecreationLaw,Page,Outdoor,Adventure,Travel,Blog,Mobile,Site,James,Moss,Authorrank,author,AdventureTourism,AdventureTravelLaw,AdventureTravelLawyer,AttorneyatLaw,BicyclingLaw,Camps,ChallengeCourse,ChallengeCourseLaw,ChallengeCourseLawyer,CyclingLaw,FitnessLaw,FitnessLawyer,HumanPoweredRecreation,JamesHMoss,JimMoss,Negligence,OutdoorLaw,OutdoorRecreationLaw,OutsideLaw,OutsideLawyer,RecLaw,RecLawBlog,LawBlog,RecLawyer,RecreationalLawyer,RecreationLawBlog,RecreationLawcom,Lawcom,RiskManagement,RockClimbingLawyer,RopesCourse,RopesCourseLawyer,SkiAreas,SkiLaw,SummerCamp,Tourism,TravelLaw,YouthCamps,ZipLineLawyer,Premium,Scuba,Sell,skier