Best Practices to Minimize Action Over Claims
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BestPracticestoMinimize ActionOverClaims DavidMatthiessen VicePresident,Claims EverestNationalInsuranceCompany Theinformationpresentedinthismaterialhasbeendevelopedfromsourcesbelievedto bereliable.Itispresentedforinformationalpurposesonlyandshouldnotbe constructedaslegal,professionalorbusinessadvice. EverestNationalInsuranceCompanyanditsaffiliatesacceptsnoresponsibilityforthe accuracyorcompletenessofthismaterial.Itmakesnorepresentationsorwarrantiesof anykindhereinanddisclaimsallsuchrepresentationsandwarranties. NeitherEverestNationalInsuranceCompanyoritsaffiliateswillbeliableforany damagesallegedtobecausedbytheinformationcontainedherein.Itrecommendsyou consultwithlegalcounseland/orotherprofessionalpersonsbeforeapplyingthis material. Thisinformationissolelyforillustrativepurposesanddoesnotconstituteacontract. Onlytherelevantinsurancepolicycanprovidetheactualterms,coverages,amounts, conditionsandexclusions. Whatisan“ActionOver”claim? Atypeofactioninwhichaninjuredemployeesuesa thirdpartyforcausingorcontributingtothe employeesinjurythen,becauseofacontractual relationshipliabilityispassedbacktotheemployer. RiskTransfer Responsibilityfordamages stemmingfromtortliability isshiftedfromonepartyto another Indemnification Therighttoindemnificationcanarise pursuanttothetermsofawrittencontract, oratcommonlaw TheRiskTransferMechanisms Primarymethodsfortransferringrisk: ¾CommonLawIndemnification ¾ContractualIndemnification ¾AdditionalInsuredCoverage CommonLaw Anequitableremedythatultimatelyshiftstheentire responsibilityfordamagesfromapartythathasbeen requiredtopayaclaimbecauseofsomelegal relationshiptothepartyatfault ContractualIndemnification Acontractunderwhichoneparty(indemnitor)agrees toassumethetortliabilityofanother(indemnitee) ContractualIndemnification Threebasictypesofindemnityagreements: 1) Indemnificationonlyforliabilityarisingfromindemnitor’s negligence 2) Indemnificationforallliabilityexceptliabilityarisingfrom theindemnitee’sownnegligence 3) Indemnificationforallliabilityincludingliabilityarisingfrom theindemnitee’sownnegligence TypicalContractProvisions • Indemnification/HoldHarmlessSection • InsuranceProcurementSection TypicalContractTypes • • • • • Constructioncontract Servicecontract Propertylease FranchiseandDistributionagreements Equipmentlease Enforceability Indemnificationprovisionsincontractsare typicallyenforceable Exceptions– VarybyState • • • • • Antiindemnificationstatutes– professionalservices Hazardousactivities Misconduct Intentionalorgrossnegligence Insufficientlanguage Indemnitee’sNegligence Indemnificationforanindemnitee’sown negligencemaynotbepermittedbystatuteor caselaw Stateswithstatutesprohibitingindemnification forindemnitee’sownnegligenceinclude: ¾ ¾ ¾ ¾ ¾ Connecticut Florida Illinois NewYork NewJersey AdditionalInsuredCoverage Risktransferpursuanttotermsofaninsurancepolicy • Typicallyaccomplishedthroughendorsements conferringinsuredstatusuponnamedentitiesoron a“blanket”basistyingbacktocontractual requirements CertificatesofInsurance Certificateholdersareoftennotedtobeincludedas additionalinsuredsonaCertificateofInsurance MostCourtshavefoundthataninsurer’sobligations aredeterminedsolelybythetermsofitspolicy ContractualIndemnittee vs. AdditionalInsured ¾ Verydistinctdifferences ¾ Varygreatlybycontractorpolicy wording ContractualLiabilityClaim • Employer– ABCExcavation • Employee– TomMisfortune • BackhoeOwner– XYZEquipmentRental TomMisfortuneisoperatingabackhoewhileworkingforABC Excavation.ABCrentedthebackhoefromXYZEquipmentRental. Tomrollsthebackhoeandisseverelyinjured.Hemakesaworkers compensationclaimagainstABCandaliabilityclaimagainstXYZ.The contractbetweenABCandXYZcontainsanindemnification agreementbutdoesnotrequireadditionalinsuredcoverage. AdditionalInsuredClaim • Employer– ABCExcavation • Employee– TomMisfortune • BackhoeOwner– XYZEquipmentRental TomMisfortuneisoperatingabackhoewhileworkingforABC Excavation.ABCrentedthebackhoefromXYZEquipmentRental. Tomrollsthebackhoeandisseverelyinjured.Hemakesaworkers compensationclaimagainstABCandaliabilityclaimagainstXYZ.By contract,XYZisanadditionalinsuredonthegeneralliability insurancepolicyforABC.Thereisnoindemnificationagreementin thecontractbetweenABCandXYZ. ContractualLiability– Whatcanyoucontrol? Indemnification/HoldHarmlessProvisions: Avoidtheuseofbroadlanguage Specifythatyouwillholdthecustomerharmlessonlyforyour liability Specifythatyouwillnotholdthecustomerharmlessfortheir negligence Avoidagreementstodefend/indemnifyforuninsuredexposures (intentionalacts) Avoidagreementstoindemnifyfortheworkofsubcontractors ContractualLiability– Whatcanyoucontrol? ScopeofWork: Outlineexactservicesprovidedandnotprovided Attachorders,quotes,bids,etc. Avoidvaguestatements ContractualLiability– Whatcanyoucontrol? MonetaryAmountof Indemnification: Negotiateaswithanyotherpartof theagreement Limitindemnificationtoaspecified dollaramount Limitindemnificationtotheamount ofcollectableinsurance Limitindemnificationtoamultipleof thecontractprice ContractualLiability– Whatcanyoucontrol? InsuranceProcurementProvision: Avoidbroadlanguageagreeingtoaddmanypartiesasadditional insured Specifythattheinsurancewillonlyapplyforyourliability Specifythattheinsurancewillnotprovidecoveragefortheir negligence BeawareofActionOverexclusions ActionOverClaimCostControl ThroughLossPrevention JenniferM.Arrison Manager,LossControl EverestNationalInsuranceCompany CostControlThroughInjuryPrevention Solution PreventingWCClaimsPreventsActionOverClaims AnEffectiveInjuryPreventionProgramPaysOff ElementsofAnEffectiveInjury PreventionProgram ManagementLeadership HazardAnalyses HazardPrevention&Control TrainingandEducation WorkforceParticipation MonitoringResults HazardAnalysis ¾ PresiteHazardAssessment &Identificationofemployeeriskexposures HazardPrevention ¾ Engineering/Administrative/Personal Protection ¾ PreventativeMaintenance ¾ Inspections ¾ EmergencyPreparedness ¾ MedicalPrograms TrainingandEducation Job,TaskSpecific Addressanticipatedhazards,safeworkpractices,rules,equipment, materials,&emergencies Newhires,newlyassignedworkers Whennewchanges,processes,materialsorequipmentareintroduced Whenobservations,nearmissesorclaimsindicateaneed ProgramAssessmentandMonitoring 9 CompareResultsAgainstGoals 9 PreClaimMeasures:Training,Observations,Inspections& Participation 9 PostClaimMeasures– Frequency,Severity,Trends EverestProvidesResources LOSSCONTROLRESOURCES: • ESMART(SafetyManagementAssessment&ReviewTool) 9 ContractualRiskTransfer 9 EvaluatingYourSafetyProgram • LCAlerts • ModelInjuryandillnessPreventionPrograms 9 RiskTransferStrategiesSelectingSubContractorsChecklist 9 WCClaimsContainmentStrategies PleasevisitourLossControlwebpageresourcesat: EverestLossControlServices LossControlAlerts Newsletters Linkstoregulatoryandotherinformationsites QuestionsandAnswers
