IRMI Update
Risk Management & Insurance
Commentary, Tips, and Tactics
November 18, 2009 | Issue 217 | ISSN: 1530-7948
In This Issue
Colleague,
Recently, it was reported that Terry Fleming, risk manager for Montgomery
County Maryland and Risk and Insurance Management Society (RIMS) vice president,
called for federal legislation that would standardize workers compensation laws.
His vision would have this national law administered by the states, thus avoiding
the establishment of a new federal bureaucracy.
This sounds like a pretty good idea to me. Having a uniform law and benefit
levels across the states should substantially reduce uncertainty and disputes
regarding applicable statutes. Plus it would simplify the adjusting process
for multistate corporations and insurance companies. A downside is that any
unfavorable aspects of the law would also apply universally instead of being
limited to a single state.
What do you think? Does it make sense to standardize the workers compensation
law but have the states continue to administer it? Would this streamline the
system and reduce costs? Or would it just create more headaches and problems?
[See reader responses].
It is a great pleasure to announce that the number of people who have earned
the Construction
Risk and Insurance Specialist (CRIS) certification surpassed 3,000 at the
end of October. Congratulations to all the contractors, agents, brokers, underwriters,
and risk control specialists who are demonstrating their commitment to construction
risk management and insurance through this program.
Thanks for subscribing to IRMI Update. Have a splendid Thanksgiving holiday.
All the best,
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
International Risk Management Institute, Inc.
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Risk Tip
Keep Evidence as Promised
A California Court of Appeal has held that an insurer may be legally responsible
for monetary damages when it fails to keep evidence as it promised. The decision
in Cooper v. State Farm Mut. Auto. Ins., 177
Cal. App. 4th 876 (2009), is a reminder to all stakeholders involved in risk
management to keep evidence as promised for third-party lawsuits.
In that case, Bryan Cooper was involved in a single-car accident. The tread
had separated on his right rear tire on a 1999 Ford Ranger. State Farm, his
auto insurer, took possession of the vehicle. It had the tire examined by an
expert who opined that the product had a defect. State Farm advised its insured
and promised to keep the tire. Unfortunately, after suit was filed against the
manufacturer, it was learned that State Farm had not only disposed of the vehicle,
but the tire as well. Cooper, unable to present a product liability case without
the tire, brought suit against State Farm.
Although California courts had long since eliminated spoliation of evidence
as a separate cause of action for a third-party suit, Cooper was able to persuade
the California Court of Appeal that the promise to keep the evidence created
a duty running from State Farm to him. The lesson for all stakeholders in claims
practices and procedures: ensure that there is a documented chain of custody
for evidence received to protect against its inadvertent disposal. It not only
impairs potential subrogation against responsible third parties, it could also
lead to potential liability to injured parties who cannot proceed to recover
damages due to the loss of evidence.
By: Howard J. Franco Jr., Attorney at Law
Collins Collins
Muir + Stewart LLP
Orange, CA
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What's New in Your IRMI Library
Take a Realistic Approach in Drafting Contract Insurance Requirements
In any business enterprise that is governed by a contract, questions of insurance
almost always arise and will be addressed in certain contract provisions. It
is very important that these provisions be clear, specific, and practical. After
all, provisions that are confusing or require insurance that is not available
in the marketplace are worthless. Just updated in the IRMI
Contractual Risk Transfer reference service is the discussion of general
considerations that contracting parties must weigh when drafting a contract's
insurance requirements. Sample contract language addressing these general considerations
is provided. Examples include provisions dealing with evidence of insurance
and penalties for failure to comply with the requirements. Other discussions
in the reference provide specific recommendations (including sample language)
by line of insurance. If you subscribe to Contractual
Risk Transfer, be sure to check out this updated discussion and the specific
recommendations by line of insurance (see
SilverPlume or IRMI Online).
For summaries of other new and updated information in your IRMI library, go
to What's New on IRMI Online
or
What's New in SilverPlume.
Recent Articles on IRMI.com
New Expert Commentary
There are over 1,101+ risk management and insurance articles on IRMI.com.
Below you'll find summaries of some recent additions with links to the articles.