11 May An “Open Letter” To All North Carolina Insurance Professionals
They say that there are typically two things that motivate insurance agencies; additional revenue streams from cross selling opportunities and protecting the agency from errors and omissions claims. I would further suggest a third motivation; avoiding the possibility of becoming a “named defendant” in an unknowingly risky vendor referral-associated legal proceeding…
Property Damage Restoration, Water Damage Mitigation and Mold Remediation businesses are around potential pollution, fungi or bacterial hazards on a daily basis and virtually every single general liability policy issued today in the United States has pollution, fungi or bacterial exclusions. This could present a serious predicament for your agency/company in the event “your favored referral” is one such improperly insured contractor, or, if one of your insured contractors are sued for a pollution, fungi or bacterial event on a job even though they did not cause the event. Frankly speaking, this should be a BIG CONCERN for any business (i.e. #RealEstate, #Property #HOA #Manager, #GeneralContractor, etc.) that refers presumably properly covered vendors or uses sub-contractors with improper Risk Coverage, as “GL coverage only” is no longer enough!!!
Please be wary of this to avoid becoming a “named defendant” in any such case, or when your insured reports the claim to you and he finds out he is bare and unknowingly “self-insured”… In the case of your referral, you may yourself need to carefully check out your own GL coverage… In the case of one of your clients, you are now defensible in an errors and omissions case unless you can prove you offered the coverage and they declined.
A proven Risk Manager colleague, Mr. David J. Dybdahl, CPCU, ARM, MBA who has significant knowledge gained on water and mold losses, who is also a member of the consensus drafting committees of both the IICRC S500 and S520 professional standards and guidelines for water and mold remediation, and a trusted “expert witness” in related legal proceedings with a masters degree in insurance and 30+ years of experience insuring contractors, states that there is a huge coverage gap in the General Liability (GL) policy for any claim involving a speck of mold or Category 3 Water!
Mr. Dybdahl further points out that to this day, 80% of “Restoration Firms” still purchase traditional GL insurance policies because they believe it saves them money “short-term”, or, because they have been incorrectly (or the courts may call it “negligently’) sold the wrong kind of coverage in light of today’s overly litigious world… Some restoration firms do not even purchase Contractors Pollution Liability (CPL) which seems downright crazy in light of what they do for a living…
Does this make you just a little NERVOUS about the credibility of “who you refer”, or, “who you insure”?
A New Jersey Court of appeals case settled in October 2011 confirms Mr. Dybdahl’s concerns that:
- The GL policy is not adequate liability insurance on jobs involving Mold or Category 3 Water (any water left improperly mitigated for 6-7 days), and,
- Specially modified Contractors Pollution Liability (CPL) insurance is needed for any firm that may run into water, asbestos, or lead on a job or who may use a chemical treatment of any kind on a project, and,
- The purchase of separate GL and CPL policies should be avoided if at all possible. It is far better from a cost and claims standpoint to have the GL and CPL insurance on the same policy form.
Mr. Dybdahl found this specific case in Lexis, a data base used by legal researchers. This is the first case this proven Risk Manager has ever seen…
The takeaways from this case are: This was a $500,000 problem for the Restoration Firm; the case was actually brought by the CPL insurer of the Restoration Firm to try to recover from the GL insurance policy which was issued by another insurance company not related to the company that issued the CPL policy. Because the loss involved mold and a fungicide the GL carrier successfully denied the original claim in court and through the appeals process. If the contractor was on their own fighting their General Liability insurance company for coverage in court, the firm would have needed enough cash to pay the $500,000 plus attorney fees for five years. This case took five years to work through the courts, and the carrier denying the loss on the GL won!!!
Do you have a favored vendor(s), that owns/owned a company that did (or now wished he had enough business to be doing) construction, renovations or even carpet cleaning, that is now in the Water Damage Restoration business?? Does this sound like anyone you know, a friend from HS or College, perhaps any struggling “old buddy” business friend that you may “regularly refer” or “currently insure” and whom you always feel compelled to always “refer ” purely in the interest of “giving back reciprocal business”? Anyone… Anyone… Bueller?
As a Professional Risk Manager or Business Owner, do YOU take the TIME to truly consider the PERILS you daily take on YOURSELF?
The IICRC S500 /S520 chart below shows that water (and by inference “water on a floor” or “any water loss”) migrates from “clean water” (Cat 1) to “the bacterial/fungal equivalent of sewage” (Cat 3) in just 6-7 days.
Were you aware that within just a 25 mile radius of Raleigh, NC that there are more than 40 companies (and growing) that today claim their business is “Water Damage” clean up (a.k.a. mitigation)? This is Water that can turn the materials that ALL homes and businesses are made of into a “MOLD loving paradise” in just 24-48 hours, and then further migrate into the bacterial/fungal equivalent of “SEWAGE” in only 6-7 days? Yet, the before referenced “80% of Restoration Firms” states that only about “8” of these Raleigh, NC area companies that are statistically likely to be properly insured to be operating this kind of truly specialty business…
We are proud, honored and clearly business savvy enough to be “one of the elite eight”! How about your current favored vendor? Do you just hope so, or do you really know for sure?
Kevin C. Oakley
The Kevin Oakley EMERG-NC Property Rescuers firm (my family owned and operated business) is correctly insured for ALL KNOWN RISKS associated with Emergency Water Damage Mitigation, Microbial Growth Remediation and Property Damage Restoration and is definitely one of the properly insured minority in this area… Please take a moment to review our current Certificate of Insurance coverage below:
If you, or your customers have yet to experience the quality customer service, certified and trained expertise, college educated professionalism, all of which has been proven to maximize customer retention and lower your aggregate claim losses, you should feel completely comfortable referring our firm to your customers with CREDIBLE “ALL RISKS COVERED” CONFIDENCE. In return, as true believers in the “Giver’s Gain” philosophy, WE WILL DELIVER the gift of true customer satisfaction that will allow you to open more commission checks!
Give Us a Shot & We’ll Show You How:
(919) EMERG-NC (919) 36374-62
You will be very glad that you did… Please let me know if you have any further questions at your convenience. My personal cell phone is: (919) 621-8646.
Thank you your careful consideration of this information.
Very truly yours,
Kevin C. Oakley, CRMR
Certified Residential Microbial Remediator
EMERG-NC Property Rescuers
Serving: Wake, Johnston, Harnett, Lee, Wayne,
Chatham, Orange, Durham & Surrounding
Office Direct: (919) EMERG-NC (919) 36374-62
Personal Cell: (919) 621-8646
“Large Enough to Serve You”…
“Small Enough to Know You”…