RRGs, hold-harmless agreements and more

Lead-paint certification

Q. What is the law in New Jersey regarding lead-paint certification?

A. Regulations have been adopted by the New Jersey Department of Community Affairs setting forth standards for determining that a premises is essentially lead-free.

If a property has received the DCA certification, an insurer may not apply an exclusion to coverage for liability for lead exposure. Otherwise, for policies that were effective on or after Jan. 1, 1999, insurers are free to use lead exclusions for premises constructed prior to 1978.

However, the company must notify its existing insureds at least one year before applying the exclusion. Requirements for lead-liability exclusions are contained in N.J.A.C. 11:13-7.4.—Dan Corbin, CPCU, CIC, LUTC

Rental for business use

Q. My insured is renting a van for a business trip. Does he have liability and physical damage coverage under his personal auto policy?

A. Yes. The 1998 edition of the ISO Personal Auto Policy introduced liability and physical damage coverage for a non-owned van used for business purposes. However, physical damage coverage is contingent upon having at least one scheduled vehicle on the policy covered for physical damage (Part D). The 2005 edition of the ISO Personal Auto Policy introduced medical payments coverage for a non-owned van used for business purposes. However, in New Jersey, coverage would be afforded by the Extended Medical Expense Benefits Coverage with limits of either $1,000 or $10,000.—Dan Corbin, CPCU, CIC, LUTC

Ride hailing–what should I tell my clients

Q. How should I advise my clients if they are considering working with a ride-hailing service?

A. Consumers may believe they have insurance for this type of service. However, that may not be the case. Tell them that their own personal automobile insurance policy may not cover them, so they must contact their personal automobile insurance company before they start ride hailing.

The typical personal automobile liability policy excludes coverage for a livery business conducted via a personal vehicle. It is a common practice for insur- ance carriers to include a question on their initial insurance application or renewal questionnaire, which states: “Are you currently, or have you previously, worked with any ride-hailing services?”.

So, it is best to err on the side of caution and encourage your clients to contact you to discuss their individual policy to determine what coverage, if any, would respond to these types of ride-hailing situations.

The Insurance Services Office Inc. introduced three personal auto policy endorsements in 2015 (see ISO introduces three new TNC endorsements in the PIA QuickSource library).

PIA has tracked this issue as new developments arise. For specific questions, contact PIA’s Industry Resource Center at (800) 424-4244 or email resourcecenter@pia.org.

—Bradford J. Lachut, Esq.

Hold-harmless agreements–injury to employees

Q. We have an insured who signed a contract to defend, hold harmless and indemnify a client for any liability actions—including actions brought by our insured’s employees. However, the insured did not notify the insurance company or our agency prior to signing the contract. One of our insured’s employees got hurt and collected workers’ compensation. In addition, the employee sued the client with whom our insured has the contractual hold-harmless agreement. We need to know if our insured’s policy is going to respond to the lawsuit.

A. Yes, the exposure is covered by the unendorsed ISO commercial general liability policy. The CGL exclusion for lawsuits involving bodily injury to an insured’s employee does not apply to liability assumed by the insured under an “insured contract” (the exception to exclusion e. Employer’s Liability). An “insured contract” is defined to include “that part of any other contract or agreement pertaining to your business ... under which you assume the tort liability of another party to pay for ‘bodily injury’ or ‘property damage’ to a third person or organization.” Of course, you need to make sure the CGL policy has not been modified to remove this coverage.—Dan Corbin, CPCU, CIC, LUTC

No guaranty fund for RRGs

Q. The risk retention group that our insured participates in for liability coverage has been downgraded by AM Best Co. Will the guaranty fund back the policies issued by the risk retention group if it becomes insolvent?

A. Risk retention groups are not covered by insolvency guaranty funds based on the following: “A risk retention group is exempt from any state law, rule, regulation or order.” The code (U.S. Code Title 15, Section 3902) requires a notice be given to policyholders advising the state insurance insolvency guaranty funds are not available for risk retention groups and are not permitted to participate in any insurance insolvency guaranty association to which an insurer licensed in the state is required to belong. You should proceed with caution when your client asks about participating in a risk retention group. Not only are they not covered by an insolvency guaranty association, they are exempt from the state insurance laws.— Helen K. Horn, CIC, CPIA, CISR

Liability exposures on agency book

Q. I am selling my book of business to another agency and I will be working for the new agency under its name. What is my liability if a claim should arise on a policy from last year? How long will I be held liable from prior policies?

A. If you are selling a book of business, you still would have liability exposure for acts or omissions for which you are legally responsible. Therefore, if last year, you committed an act or omission on a policy, you still could be sued even though ownership of the book of business is with another agency. It is difficult to say how long you could be held liable. It depends on the type of lawsuit that is being brought and the applicable statute of limitations.—Bradford

J. Lachut, Esq.