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Liability Exclusions That Could Affect Your Business

Liability Exclusions That Could Affect Your Business

We all know how easy it is to click the “I Agree” button on a website or for a piece of software when it is required. Most of us don’t read the fine print and have no idea what we are agreeing to. Sometimes that can come back and bite us later on. Insurance policies are contracts, just like those terms and conditions. You are usually made aware of the terms and conditions of an insurance contract twice: once when you receive the quote or proposal and then when you receive the policy. Do you read them? If not, you should. What you don’t know can hurt your business. Here are a few sample liability exclusions and endorsements that could come back to haunt you. Designated Premises Endorsement This endorsement, sometimes called Limitation of Coverage to Designated Premises or Project (CG 21 44 sample here), is most often used on liability policies that are project or location-specific. However, the endorsement may show up on liability policies to help curb premium costs. Let’s say you run a restaurant. Most restaurants operate out of a fixed location. So the liability coverage is limited to anything that happens at your restaurant on 123 Main Street. Now your cute little Anytown, USA is going to have a centennial celebration in the town square two miles down the road. You’ve decided to set up a booth there to sell food and drink.  If your policy has a Designated Premises Endorsement, there would be no coverage for bodily injury or property damage incurred by patrons of your restaurant’s booth while they are at the centennial...
Does My Mobile Cannabis Business Need Insurance?

Does My Mobile Cannabis Business Need Insurance?

It is a fallacy that many mobile cannabis businesses fall into: if I don’t have a retail location, I don’t need insurance.  The truth is, if you have a business of any type, you need insurance to protect yourself and your investors. No Retail Location? You Still Need Insurance. Many only equate the need for insurance with business locations and landlords. However, if you run your business out of your home you still need insurance coverage.  Why? Because both typical and atypical business pursuits are excluded by your homeowners or renters insurance. Personal lines policies exclude any business done in the home or anywhere on the home premises. The policies exclude the work being done, the work product, employees, inventory and business equipment. Some policies may even cancel coverage for homeowners operating businesses out of their homes. If you are storing stock in your garage or in your spare bedroom, there is no coverage for it in the event of a fire, theft or other hazards. Liability coverage under your homeowners policy also will not extend to business pursuits. There will be no coverage for customers on premises, products liability, or personal or advertising injury, as businesses are excluded from the policy. The good news is both of these coverage lines can be written on your business even if you are operating out of your home. No Commercial Auto? You Still Need Insurance We have previously blogged about the need for commercial insurance for delivery services. The exclusions for livery use of personal vehicles applies whether the car is owned by you, your spouse, or an employee.  The only...
Case Study: Cuisinart Products Liability

Case Study: Cuisinart Products Liability

In December 2016 Cuisinart was the talk of the town, and not in a good way. Consumers of Cuisinart food processors began reporting mouth injuries and tooth damage related to pieces of processor blades that ended up in their food. Cuisinart announced a massive recall of the riveted blade products sold in the US and Canada. The recall encompassed products sold from July 1996 to December 2015. The large window for item production causes other issues, which we will address in a moment. What Does Products Liability Cover? Products liability insurance is the coverage that would respond to bodily injury and property damage claims caused by products produced by the policyholder. Sometimes this coverage is included in a general liability insurance policy, but for companies that produce large numbers of consumer products it is often stand-alone coverage. This insurance protects against medical claims for bodily injury or illness, financial claims against property damage, and legal defense costs should a claim turn into a lawsuit. A large number of claims due to a product or products could result in a class action lawsuit, like in the case of the Cuisinart recall. With such a lengthy timeline of products being sold, where is the products liability coverage? Which Policy Responds? This is a complex question with many possible answers: All of the Cuisinart blade injuries have been reported in the last several months. Products liability for any bodily injury or property damage may come from the current policy. Or would it? The affected products were sold over a 19 year period. Products liability coverage is typically triggered by a claim, so...
Products Liability

Products Liability

Hayes Brokers believes that every business should have insurance.  The type of business you own and the operations of your business will determine the types of insurance policies you will need. If your business makes or distributes products to consumers, it is imperative that your business have either a general liability policy that includes products liability or a stand-alone products liability policy. What Is Products Liability Insurance? Products liability insurance is often referred to as products and completed operations insurance. It is usually, but not always, included in a General Liability or Business Owners Package policy. The Insurance Services Office (ISO) defines a products and completed operations hazard as “‘bodily injury’ or ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’…” (CG0001 Page 15). While this is a standard definition, it may vary slightly by insurance company and policy. It is important to note that products liability covers not only a physical product, but also work product such as building and installation.  This coverage is triggered by bodily injury (including death) or property damage.  However, products liability insurance does NOT cover product recall. Do You Have Products Liability Insurance? The best way to determine if you have products liability coverage is to review your policies with your insurance broker.  While this coverage is often included in some policies, the coverage may be excluded for certain business sectors including those that manufacture or distribute the following types of products: Products for children. Consumables (food and drink). Products that are applied to the body (pharmaceuticals and cosmetics). Medical products. Holistic health...
MMJ Products Liability

MMJ Products Liability

As more states begin to pass legislation legalizing cannabis for medical and/or recreational use, the writing seems to be on the wall: cannabis is going to be big business in the coming years. More consumers using these products means more litigious exposure for business owners. Because the cannabis industry is in the business of producing consumable products and devices for consumption, they have huge products liability exposure.  In fact, the first cannabis industry products liability class-action suit was filed in Colorado in October 2015.  It won’t be the last. As an industry that makes or distributes products to consumers, it is imperative that your business have products liability insurance. What Is Products Liability Insurance? Products liability insurance is often referred to as products and completed operations insurance. It is sometimes, but not always, included in a General Liability or Business Owners Package policy.  However, this coverage is usually excluded for cannabis operations. The Insurance Services Office (ISO) defines a products and completed operations hazard as “‘bodily injury’ or ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’…” (CG0001 Page 15). While this is a standard definition, it may vary slightly by insurance company and policy. It is important to note that products liability covers not only a physical product, but also work product such as building and installation.  This coverage is triggered by bodily injury (including death) or property damage.  However, products liability insurance does NOT cover product recall. Do You Have Products Liability Insurance? The best way to determine if you have products liability coverage is to review...