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Tales Of Woe*
*Unless you keep your agent and insurer informed.
These are cautionary insurance tales of real or dramatizations of real
life scenarios.
Who is working on your property?
A Tenant
Bob has a free standing restaurant with only one tenant. The lease
agreement states that the sole tenant must insure the building and that
the tenant is also responsible for the upkeep of the property including
lawn care and the clearing of snow and ice.
Bill had a tenant
shovel snow from his sidewalks and throw down ice melt in exchange for a
small decrease in Bill’s rent. This worked wonderfully for both of
them, for a while that is. Eventually, the tenant failed to salt
the walkways after he shoveled. This was discovered after a
visitor to the apartment complex fell. There was some blame back
and forth between Bill and his tenant for the accident. As the
story goes the tenant had run out of rock salt that Bill had been
supplying and Bill did not know that. Time goes on and there is a
big snow fall, very deep. Bill calls the tenant and asks him to
shovel the roof off. The tenant agrees and falls off of the roof.
Needless to say eventually both the visitor who fell and the tenant sue
Bill.
Bill has a Business Owner’s Policy that included $1,000,000
liability insurance protection to cover the apartment complex.
Bill notifies his insurance company of the claims about a week or so
apart. The insurer investigates both occurrences. While the
insurer does defend Bill for the slip and fall, they want to use the
subrogation clause in the policy to go after his snow removal contract
for failure to salt the walk. There was no contractor to go after
because Bill had been compensating the tenant for his service.
For the fall off of the roof the insurer denies duty to defend or pay
anything because, according to the insurance company, this person was
acting as an employee and a Business Owner’s Policy does not provide
worker’s compensation coverage. Matters get worse when the
Department of Labor steps in and declared the tenant to be an employee
and that Bill is now fined by the state for not having proper
insurance.
Where does Bill get the money to cover the medical
expenses, punitive damages, and fines? He gets the money from the
sale of the apartment complex.
What could Bill have done to save
himself from this tragedy? Hired a contractor to do the work,
verifying the contractor had completed operations coverage enough the
protect his assets and income potential, workers compensation coverage,
an iron clad contract with the contractor requiring Bill be listed as
additional insured on all relevant policies, and Bill would keep copies
of all of these things proving the contract and insurance policies are
in force with the clauses required. Or, Bill could have
protected the worker, who, according to state law fits the description
of an employee, with the state required employment insurances.
There are possible other options that could have been explored if Bill
had only talked with his insurance agent before using the tenant.
We urge you to call us so we may help you plan ways to protect your
assets. Be certain to tell us all aspects of your operational
planning. 607-843-8860
insurance@drickardinsurance.com
Who is working on your property?
A Contractor
The Tenant
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New York State
