If your company has a disaster preparedness plan, congratulations! You are likely ahead of most of your competitors. But how complete is your plan? If it protects people and property but doesn’t account for liability exposures, your plan is missing an important component.
In addition to causing property damage and loss of business income, a disaster can create additional, unexpected liability exposures for a company. Some of the liability exposures a disaster might create include:
Injury or death of non-employees, including independent contractors and temporary workers. A company has responsibility for protecting the lives and safety of its workers and the general public. Workers’ compensation will cover you when an employee is injured or killed on the job; the workers’ compensation bargain also prohibits employees or their families from suing the employer for injury or death. However, workers’ comp does not apply to independent contractors or temporary workers. Barring any separate agreements to the contrary, you can probably expect to be sued if an independent contractor or temp is injured in a disaster on your premises. We can help you examine your insurance program to make sure you have adequate limits for such an event, along with recommending some steps to limit your liability.
Liability to “responding authorities.” In most states, the so-called “firefighter’s rule” protects property owners (and usually occupants) from lawsuits by firefighters and other public safety officers injured in the line of duty on their premises, even when the owner’s or occupant’s negligence caused them to respond. The rule, based on longstanding common law, assumes that firefighters and other public safety officers acknowledge the risks inherent in their jobs and will rely on workers’ compensation to recover for any injuries.
However, some states do not recognize or limit the firefighter’s rule. Businesses in one of these locales might be held liable for harm to a responding public safety officer if your negligence or wrongful behavior caused the incident. Again, we can check your insurance coverages and risk management procedures and offer suggestions for limiting your liability exposures.
“Toxic mold.” Any moist environment can harbor the growth of molds. If your premises have been flooded or subject to leaks, molds can grow unless you can remove and replace any damp materials within 48 hours. If your building has mold contamination that causes health problems in employees, your workers’ compensation policy would cover their health care costs and lost wages.
As far as the cleanup costs are concerned, most business property policies don’t cover mold contamination per se. However, if the mold is caused by an accidental water leak or sprinkler leak, a broad form property policy would generally cover the cost of fixing the water damage and the resulting mold infestation. If the mold were caused by flooding, however, your only source of coverage would be a flood policy. We can help you find flood coverage—please call us for more information.
Environmental liability. Certain disasters, particularly fire and flood, can release contaminants into the environment. In addition to the usual suspects—refineries, gas stations and manufacturing plants—flooding can cause the release of pollutants at many other types of business, including exterminators, landscape contractors, warehouses, farms and golf courses.
Most commercial liability policies exclude coverage for pollution liability. If your pollution liability exposure is low, you can buy a pollution liability endorsement (or addition) to your commercial liability policy. Organizations with more exposure will likely need specialized pollution liability policies, also called environmental impairment liability policies. They cover the insured’s liability for bodily injury or property damage caused when pollutants from the insured site are released onto others’ property.
No matter how well you are prepared, a disaster can cause unintended exposures. For more information on protecting your organization from these liability exposures, please call us.