When Commercial Lines Exposures Are Close to Home
We never cease to be surprised by the wide range of legal developments we encounter when compiling the content for our Casualty Matters publication. The latest edition was no exception, with diverse court news on risk issues crossing over both commercial and homeowners lines.
In two cases from New York, farming pollution was the focus of attention, involving common farm chemicals reaching a neighbor’s property. In one case, manure run-off entered the ponds of a neighboring property owned by two brothers. The farmowners policy included a “Limited Farm Pollution Liability” endorsement with an aggregate $50,000 limit. The farm insurer paid the $50,000 limit and one of the brothers signed the release. But soon after, the other brother sued for damages - albeit unsuccessfully.
The other claim involved herbicide spray that went beyond where it was intended. The New York court found too many open factual questions to conclude that the herbicide was or was not a pollutant, but concluded that it was approved by the EPA and used in the usual manner.
These were interesting cases because they illustrate how farm insurers need to review the several tools available to them for managing pollution exposures on and near the farm, bearing in mind how exposures are influenced by the type of farm operation and location.
In sharp contrast to the pollution preoccupations of farm insurers, other businesses are generating inquiries to do with risk issues that are a little close to home - specifically around incidental occupational endorsements.
It’s increasingly common for insureds to seek an endorsement to supplement existing business or professional coverage, and many insurers issue such endorsements to provide therapists, social workers and educators with additional protection.
In one case we looked at, a psychologist's Homeowners/Personal Umbrella (HO/PU) policy package included an endorsement for “Incidental Business Occupancy—Psychologist.” The psychologist had sexual relations with a patient, and the relationship continued into social settings outside the office. The patient alleged professional negligence as well as general negligence, including negligent infliction of emotional distress. The Connecticut court held that the negligence counts in the lawsuit did not fall within the Intentional Act exclusion, and that the HO policy did not exclude the claim.
In two other cases we’ve examined, this time to do with teachers and sexual abuse that took place on school property, the courts denied HO coverage.
All three cases show that underwriting professional exposures in a personal lines context is far from cut and dry. For carriers that do offer endorsements for activity inside and outside the home, clearly a few underwriting considerations need to be front of mind, such as: Are you prepared to pick up some exposures that might be excluded from the primary E&O policies?
There’s a whole lot more happening in the courts that could affect your business and personal lines business and in ways you might not imagine. Hopefully, our latest Casualty Matters round-up covers the most important cases and their implications. Let us know what you think.