This is the eleventh and final article in an 11-part series on Owner Controlled Insurance Programs. Preceding articles in this series can be found herePart 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, and Part 10.
Presentation Of Liability Claims Under An Owner Controlled Insurance Program.
The preceding portions of this series outline the analysis of liability claims under an Owner Controlled Insurance Program, but principally from the perspective of the insurance carrier. There are ways that insureds and claimants can present claims under an Owner Controlled Insurance Program that will speed the resolution process and avoid gridlock.
The claimant that has incurred a loss should remember "point of view” in the presentation of a claim. Since an owner controlled insurance program is, in effect, a liability policy insuring each and every contractor, the tendering party should bear in mind that the insurance company must set up a claim file to protect the rights of its "insured.” To the extent that privileged materials are obtained which could benefit that "insured” in subsequent litigation with any third party, the insurance carrier has to protect those rights and privileges against disclosure to third persons. In Soltani-Rastegar vs. Superior Court (1989) 208 Cal.App.3d 424, the court recognized that the statements made to the insurance carrier by an insured are privileged and within the work-product and "attorney-client privilege” of that insured.
Therefore, if the tendering party recognizes that the insurer must maintain those rights and protect those privileges, it can assist the process by clarifying against whom the claim is being presented. Since each insured must be treated separately, it may receive multiple positions from the same insurance company with regard to coverage under the policy. For example, the sponsor of the program may get a denial of coverage as to their claim that they made repairs to a work site as a result of an onsite accident. It could then receive an acceptance of liability on behalf of a subcontractor.
Given the difference in coverage limitations that apply to different enrollees of an Owner Controlled Insurance Program, a detailed factual record is critical for the insurer to understand the liability and coverage. Only where there is liability of an "insured/enrolled contractor,” the claim against that enrolled contractor is covered by the policy, will there be any indemnity paid. Therefore, the insurance carrier will need to be able to address the following questions:
- What happened?
- Who was present at the time of the incident?
- For operations losses, what work was supposed to be done by the responsible subcontractor, and what was deficient, incomplete, or negligently performed?
- Who was injured as a result of the work by an enrolled contractor? Whose employee, what contractor's work, etc.?
- What was the response to the incident?
- Who organized the response?
- Who investigated the loss?
- Who decided what work or response was to be made to the incident?
- What alternatives were considered?
- Was a notice of liability given to the responsible subcontractor, and was there any response to that notice?
- Was the builders risk carrier notified—for an operations loss?
- Document all direct and indirect costs which are the subject of a liability claim.
- Work orders for the repair of damage caused by the incident.
- Bills/invoices for outside contractors used, including detailed description of the work performed.
- Estimates obtained, if any, or explanation as to why a course of conduct was engaged in.
- Notes concerning progress of the repairs.
- Complete documentation of the loss elements that could be presented to a court to establish liability against an enrolled contractor.
In addition to the basic factual record and documentation surrounding the damages, the party compiling the package should bear in mind the coverage limitations contained within the policy as outlined above. Understanding the basics of Commercial General Liability coverage and the carrier's duty to defend or indemnify will assist greatly in setting up the correct claim file or files, and evaluating the claim from a perspective that will maximize the recovery from the standpoint of the sponsor or tendering party.
