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Uninsured Motorists Coverage (Continued)	3
UM/UIM Insurance Coverage Examples	3
Property Casualty Insurers Continue to Suffer Negative Results	4
Do You Protect The Confidentiality of Your Employees’ Driver Records; and Obtain Their Permission?	4
New Supreme Court Cases	4

Text Box: Legislators were finding that innocent people injured in automobile accidents were having no recourse if the other driver had no insurance. So, they developed Uninsured Motorists (UM)/Underinsured Motorists (UIM) to protect innocent victims. For your own Personal Auto Insurance, you are provided a form to verify whether you wish to purchase such insurance and, if so, at what limit. The tricky part is the application to commercial automobile insurance – i.e. the insurance that your organization purchases for its owned vehicles. Should your organization purchase UM/UIM insurance? Typically, the insurance community has anticipated that their insureds will purchase UM/UIM in a limit equal to the liability limit (typically $1,000,000). It is historically been considered a standard type of coverage warranting very little, if any discussion. In Pennsylvania, carriers are mandated to offer UM limits equal to the liability limits. It is then up to the insured as to whether to reject or modify this coverage. A further examination reveals some issues. If your company-owned vehicle is involved in an accident in which the other party was at fault, the UM/UIM coverage can come into play. See some examples under “Uninsured Motorists Insurance

Text Box: Coverage Examples”. The Options An employer has the following options: 1. Purchase the UM/UIM equal to the liability limit. 2. Purchase the UM/UIM coverage at a lower limit – such as $50,000 3. Reject the purchase of this coverage. The primary advantage of rejecting or limiting the purchase of this insurance is that an employer would limit (or eliminate) a claim on their insurance program. Perhaps recovery would be available under an individual’s health or disability program; or personal UM/UIM coverage. Plaintiff’s attorneys are quite skilled at discerning the existence of UM/UIM coverage that an employer may possess as a ready source of recovery. Another advantage would be the elimination of the need to deal with your automobile insurance carrier, in the event that a claim was paid out under UM/UIM. Many carriers will understand the fact that these claims would have been produced by accidents which were not the fault of the employer. Nonetheless, depending upon market conditions, it may raise itself as a point of contention and result in an increased premium. If your organization transports others, as part of its services, you may feel more of an obligation to allow recourse for the

Text Box: Auto Uninsured Motorists Insurance: Should Your Organization Purchase It?

Text Box: How often does your organization rent an automobile? How do you contemplate the issue of damage to such rented vehicles in the event that your organization is involved in an accident? There can be several sources of protection for damage to rented vehicles: The Collision (or Loss) Damage waiver is an option offered by the Rental Car company. It is relatively expensive costing $10-15 per day depending upon the company and type of vehicle. So, our tendency is not to purchase the coverage and rely on other sources. What are the sources? Your organization may have Hired Car Physical Damage coverage under the Corporate Automobile policy. This means that Collision and Comprehensive coverage is extended to those vehicles that are rented within the auspices of the company. Use of certain credit cards may afford coverage for damaged or rented vehicles. How do we sort out these options? Well, if your organization rarely rents an automobile it is suggested that the Collision Auto Damage waiver be purchased from the rental car agency. Yes, it is relatively expensive for 2 to 3 days of use, however, it is felt worth it since: You eliminate any deductible which would be applicable under a Corporate Automobile policy. You eliminate any Loss of Income exposure which a rental car company may attach to you and which may not be covered under a Corporate Automobile Insurance program. You eliminate any time, effort, and anxiety in dealing with the claims adjusters at the rental car companies. A Rental Car agreement may provide that the Renter pay for the replacement of the automobile—that is, not depreciated value. A corporate Automobile Insurance program will not provide for a vehicle’s replacement cost. It will pay for the depreciated value only.

Text Box: If, however, you do regularly rent automobiles, then it would be best to decline the purchase of the Collision Damage waiver and rely on your Corporate Automobile Insurance program (if applicable) or credit card protection. An American Express Car Rental Loss and Damage Insurance plan was recently reviewed. All in all, not a bad benefit, however, consider the following: 1. In the event that the rented car would be protected under the Corporate Auto Insurance program (Hired Car Physical Damage coverage), then the American Express program would be in excess of the Corporate Auto Insurance program. So, if your organization has Hired Car Physical Damage coverage (and it is generally offered at a very inexpensive premium), then the American Express program will only respond after the organization’s Automobile Insurance program has paid out for the damage. This coverage is also excess of any Collision Damage waiver which is purchased from the rental car company. 2. Coverage is provided to the “card member” if such card member is the “primary renter.” The “primary renter” is defined as the “card member” who is named on the written agreement with the Rental Company “as the person renting and taking control of the rental auto.” The vehicle should be rented in the name of the organization which is showing on the credit card. 3. Certain vehicles are not covered including trucks, pick-ups, cargo cans, custom vans, and full-sized vans. Obviously, there are other terms and conditions which would require additional scrutiny. One other suggestion. If a Collision Damage waiver is chosen, some rental car companies will provide such protection only for those drivers listed on the Rental Car agreement. If someone else were to drive the vehicle, there may be no coverage under the Collision Damage waiver.

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The Protection Quarterly

Text Box: Automobile Rentals and Insurance What Are Your Options?

Text Box: 1. Your employee is injured in an auto accident. The primary coverage to apply is workers compensation. Medical expenses and disability payments will be made under this coverage. This does not preclude an employee from suing a third party. If an employee sues a third party, the workers compensation carrier of the employer would have some level of a lien against any proceeds that the employee would obtain under such a suit. If the other party however had little or no insurance, then the employee has an option to go against the employer’s automobile liability policy under UM/UIM. In PA, the UM/UIM coverage follows the vehicle. This means that an employee would first look to the employer’s policy – not their own personal auto policy for such coverage. Therefore, an employee could be collecting under the workers compensation and UM/UIM coverages – both of an employer.

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Volume 1,Issue 4

Text Box: Auto Uninsured Motorists Coverage (Continued) Is It an Easy Buying Decision?

Text Box: “innocent victim”. A passenger’s (or employee’s) ability to recover would be partially determined by you as the employer. The employer, as the organization which owns the vehicles, makes the decision as to whether to purchase it. Concluding Remarks Under Personal Automobile Insurance, it is the individual who makes their own decisions which would have an impact on them or their family. Under Commercial Automobile Policy, it is the insured (insured’s representative) which makes the decision regarding this type of coverage which would impact individuals who have passage in their automobiles. UM/UIM was designed for the Personal Automobile exposure – not the Commercial exposure. 3. The purchase of UM/UIM coverage should not be considered an automatic decision. It is deserved of review and discussion. It is not all that expensive

Text Box: To add yet another twist, the workers compensation carrier does have a basis for a recovery of what they paid out under workers compensation from the automobile insurer. This would be similar in concept to what a workers compensation carrier would do if an employee recovered damages from a third party’s insurance carrier. 2. A passenger is your organization’s automobile is injured. The other party is at fault and has no insurance. Some medical expenses may be covered under First Party Benefits (no fault) under their Personal Automobile Policy or the employer‘s. Other medical expenses may be covered under the passengers’ personal medical insurance program. If, however, the passenger feels as if there is a “pain and suffering” damage that cannot be satisfied, they would have the option of recovery under your organization’s UM/UIM coverage.

Text Box: and historically has been somewhat downplayed as an issue within the Commercial Auto Insurance Sector. 4. UM/UIM is NOT a required purchase. There is no legal evidence to support any liability to an employer for their decision NOT to purchase UM/UIM Insurance. 5. UM/UIM coverage permits an employee to gain benefits under two types of insurance of an employer – Workers Compensation and UM/UIM. Thus, despite the fact that an employee has medical expenses paid for under Workers Compensation, they could have damages (including “pain & suffering”) paid for under UM/UIM. It is true that a workers compensation insurer (or self-insurer) could place a lien on any UM/UIM claim settlements provided to mitigate the workers compensation claim pay out.

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Text Box: “Mission: To equitably serve the interests of our clients and business associates with creativity, diligence and passion”.

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Text Box: As part of its internal policy, an employer will order motor vehicle records for employees who will be driving within the scope of employment. It makes sense. Employers have the responsibility to entrust their vehicles to individuals who are not careless, or otherwise possess a dubious driving record. It is not the way it used to be. At one time, these documents were considered to be of public record. No more. Care should be taken by an employer in documenting an employee’s authorization for a motor vehicle record to be obtained. Failure to obtain such a consent could be interpreted as a violation of an individual’s privacy rights. Motor vehicle records should be considered as coming within the auspices of a Fair Credit Reporting Act. This issue is such a hot button that two MVR vendors in the commonwealth of Pennsylvania were shut down indefinitely because of such information being served over the Internet. In other words, MVR’s can only be used for one specific purpose and the information not shared with anyone else. Probably, the most important responsibility of an employer is to gain written consent of the employee that such Motor Vehicle Record will be obtained on a minimal annual basis. Failure to do so may constitute a violation under the Fair Credit Reporting Act. If you have any questions regarding this issue, feel free to give us a call. You may also wish to discuss the matter with your legal counsel.

Text Box: According to the September 22nd issue of the Kiplinger Letter, the US Supreme Court will be examining two employment liability issues. One decision will verify whether binding arbitration agreements are unenforceable on employees. Another interesting decision will be made regarding an arbitrator’s decision for an employer to reinstate an employee. An employer feels that they should overrule such a decision when the safety of the work place is in jeopardy.

Text Box: The Property Casualty Insurance Industry suffered a net underwriting loss of $14.7 billion for the first six months of the year 2000. This contrasts with a $7.8 billion net underwriting loss in the first half of 1999. The Property Casualty Industry has started to correct itself with higher premium increases. These negative results are a by-product of many years of under pricing the insurance product.

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Revised: 03/12/2008