Latest / The Art of Adjusting® Podcast / Episode #95: How Much Liability Are You Hosting This Weekend?

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Episode #95: How Much Liability Are You Hosting This Weekend? · The Art of Adjusting® Podcast

• 0:06
  William Auten: Hello, I'm Bill Auten of Auten Claims Management.
• 0:09
  Chantal Roberts: I'm Chantal Roberts of CMR Consulting, and welcome to the Art of Adjusting Podcast.
• 0:14
  William Auten: Today we're going to talk about life as an insurance adjuster from the perspective of property, auto, liability, or workers' compensation adjusters.
• 0:22
  William Auten: Our goal is to bring interesting topics in the world of claims adjusting to people who are working as an adjuster now and to people who are considering a career as a claims adjuster.
• 0:31
  William Auten: Hey Chantal, how are you?
• 0:32
  Chantal Roberts: I'm doing well.
• 0:33
  Chantal Roberts: Thank you.
• 0:33
  Chantal Roberts: How are you, Bill?
• 0:35
  William Auten: I'm good.
• 0:35
  William Auten: I'm a little beat up and wore out from all the yard work we've been doing since the weather's finally changed here.
• 0:41
  Chantal Roberts: Yes.
• 0:42
  Chantal Roberts: And you know, that leads, of course, right on into our topic, which is Memorial Day weekend and everything that goes on with Memorial Day weekend, such as yard work.
• 0:56
  Chantal Roberts: We I believe we talked a little bit about lawnmowers last time.
• 1:01
  William Auten: Yeah.
• 1:01
  Chantal Roberts: So we won't necessarily get into it uh this time, but excuse me, uh, you know, we all think that it is cool.
• 1:11
  Chantal Roberts: You know, it's Memorial Day weekend, we're having parties, we're out on the boat and blah, blah, blah.
• 1:16
  Chantal Roberts: But nobody actually recognizes the hazards that are coming up with Memorial Day weekend until we get back into the office uh on Tuesday and we have a claim.
• 1:29
  William Auten: And we know all about that.
• 1:31
  Chantal Roberts: Yes.
• 1:31
  Chantal Roberts: And so we're gonna be talking about, you know, borrowing vehicles, um, our side hustles that we do, fireworks, like I said, boats.
• 1:41
  Chantal Roberts: And uh one thing that I'm always really um conscious of is the host liability, social host liabilities.
• 1:51
  Chantal Roberts: So want to talk about that.
• 1:53
  Chantal Roberts: Be sure to like, comment, subscribe, share, all of that, because it helps the algorithm pick us up and um share us with other people.
• 2:03
  Chantal Roberts: So with that being said, I thought we'd um start off with maybe borrowed vehicles, because I know I hate it when someone borrows my vehicle.
• 2:16
  Chantal Roberts: And of course, I think I told you my brother-in-law is staying with us right now, and he is always borrowing Aaron's vehicle.
• 2:26
  Chantal Roberts: And, you know, of course, we do have that share, like, hey, go at the Memorial Day party, go down to the Quickie Mart and get a bag of ice or whatever.
• 2:36
  William Auten: Right.
• 2:37
  Chantal Roberts: You know.
• 2:37
  Chantal Roberts: Um, so we need to talk about that.
• 2:40
  William Auten: Sure.
• 2:41
  Chantal Roberts: Who who has coverage?
• 2:42
  Chantal Roberts: Is that does the coverage follow the car?
• 2:44
  Chantal Roberts: Does it follow the person?
• 2:46
  Chantal Roberts: I always get confused.
• 2:48
  William Auten: I know, I know.
• 2:49
  William Auten: I and I don't do enough auto to be um anything close to an expert on this anymore.
• 2:54
  Chantal Roberts: But um you know that has never stopped us in the past, though.
• 2:57
  William Auten: Right.
• 2:58
  William Auten: I mean so all right, so let's lay out a scenario and talk it out.
• 3:02
  Chantal Roberts: Yeah.
• 3:03
  William Auten: All right, so I'm over at your house and uh you say, Hey, take my car and go get some a bag of ice, and I get an an accident that I cause.
• 3:13
  William Auten: Um, my auto policy certainly would come into play, I believe.
• 3:19
  William Auten: Um yours would as well, I believe.
• 3:24
  William Auten: But which would be primary?
• 3:26
  Chantal Roberts: Okay, so usually auto or insurance follows the car.
• 3:30
  Chantal Roberts: And then if I give you permission to use my car, then you're a permissive user.
• 3:38
  Chantal Roberts: So you would be like a permissive insured or something like that.
• 3:42
  Chantal Roberts: Um, so that's good.
• 3:45
  Chantal Roberts: And then your auto insurance would like be over that.
• 3:49
  William Auten: So excess over yours.
• 3:51
  Chantal Roberts: Yeah, yeah, yeah.
• 3:52
  William Auten: Okay, that makes sense.
• 3:53
  William Auten: I think that's right too.
• 3:55
  Chantal Roberts: Yeah.
• 3:55
  William Auten: Um again, I I would have to have a policy or two in front of me to be able to read this.
• 4:02
  William Auten: I've it's been a while.
• 4:03
  Chantal Roberts: And of course, you know, that's that's true too, is that it's always going to be something that is we have to look at the policy always.
• 4:14
  Chantal Roberts: So um the the the main thing is that we think about is the injuries.
• 4:21
  Chantal Roberts: Um, and one of the things that I tend to point out to people uh, both as an agent, looking at it from an agent point of view of an accident, and both from an adjuster point of view, is that I know a lot of um agents who have told parents, like, hey, you've got a 16-year-old who can drive now.
• 4:44
  Chantal Roberts: We need to put them on their own policy because if we don't, that's really gonna spike your policy way through the roof.
• 4:51
  Chantal Roberts: Because of course, you know, 16-year-olds can't drive.
• 4:55
  William Auten: And well, they can, they just can't do it.
• 4:58
  Chantal Roberts: They can.
• 4:59
  Chantal Roberts: Um, I guess they're able to drive.
• 5:02
  Chantal Roberts: Now, whether they drive well or not is a whole different issue.
• 5:06
  Chantal Roberts: Uh and that could be a whole different podcast.
• 5:09
  Chantal Roberts: But the the uh thing is is that we're going to talk, like I said, about permissive use.
• 5:16
  Chantal Roberts: If I sit there and say, yeah, go ahead and and take my car while you run down to the quickie mart and grab some ice or a bottle of wine or whatever, you have permissive use.
• 5:27
  Chantal Roberts: If and and you do have your own insurance policy, great, good.
• 5:31
  Chantal Roberts: The issue is though, that um what we have, like if I have children living in my house, or since my brother-in-law lives in my house and he has regular access to the keys, we need to be looking at that policy language as well.
• 5:51
  Chantal Roberts: Because if the child has regular access to the keys, they're still an insured on the parent's policy by the definition of the policy, even if they're not named on the policy.
• 6:04
  Chantal Roberts: So, because a lot of times that are named insured is the name that's like listed on the policy, but there's also an insured by definition, such as your spouse or your employee, if it's a commercial policy or someone who lives with you, or something to that effect.
• 6:24
  William Auten: So that is something question for you.
• 6:27
  William Auten: If uh in the scenario we laid out, I cause an accident and um I injure somebody else, but I also get injured myself.
• 6:35
  William Auten: Um, I believe where you are that the you have a no-fault kind of coverage for people who are injured in the insured vehicle, correct?
• 6:44
  William Auten: So that would apply to me.
• 6:47
  Chantal Roberts: Right.
• 6:48
  Chantal Roberts: Yes.
• 6:48
  William Auten: Um would any similar coverage on my policy kick in afterwards or supplement in any way?
• 6:57
  Chantal Roberts: I think it would depend again on the policy, but my knee-jerk reaction is yes, it it would.
• 7:04
  Chantal Roberts: Uh I've I've really never seen it though, for the for the most part.
• 7:09
  Chantal Roberts: It for the most part, when the driver of the vehicle is injured, you give them the med pay, right?
• 7:16
  Chantal Roberts: And a lot of times med pay isn't necessarily uh a lot.
• 7:20
  Chantal Roberts: So uh they would then continue to file on their health insurance because they can't file liability on the the car, like their insurance, right?
• 7:36
  Chantal Roberts: They can't file against themselves.
• 7:39
  Chantal Roberts: Now, now your wife could file against you and my policy if she was in the car.
• 7:47
  William Auten: Right, right, right.
• 7:48
  Chantal Roberts: Uh but how about we know that you're infamous infamously a bad driver.
• 7:52
  William Auten: So yeah, if you knew that, then you would have uh negligent entrustment to deal with.
• 7:56
  William Auten: Anyway, um, what about underinsured motors coverage?
• 8:03
  William Auten: Uninsured, underinsured motors coverage.
• 8:06
  Chantal Roberts: Yeah, that's a great question.
• 8:07
  Chantal Roberts: And you know, I think as adjusters, we don't treat that with the respect that we should.
• 8:17
  Chantal Roberts: And I'm not quite sure why.
• 8:19
  Chantal Roberts: I think maybe it has to do with a lack of education, maybe uh because let's think about this.
• 8:28
  Chantal Roberts: Uninsured, underinsured.
• 8:30
  Chantal Roberts: What we're basically talking about is we as the insured's automobile carrier, we step in the place of that at fault carrier.
• 8:42
  Chantal Roberts: Either they didn't have insurance.
• 8:44
  William Auten: I I have to change my story for this conversation to work, though, because my initial premise was my I was at fault, but for underinsured motorist coverage to kick in, it's got to be somebody else's fault, and they have to be either uh without insurance or with very low limits.
• 9:02
  William Auten: Exactly.
• 9:02
  William Auten: So let's change our story.
• 9:05
  William Auten: Now it's not my fault.
• 9:06
  William Auten: I'm driver of the year, except somebody else ran the red light, which is also true.
• 9:10
  William Auten: And wrecked wrecked your car.
• 9:12
  Chantal Roberts: Right.
• 9:13
  Chantal Roberts: So you're still driving, let's say my car, right?
• 9:17
  Chantal Roberts: And this other car that hits you, no fault of your own, doesn't have insurance.
• 9:24
  Chantal Roberts: So that's uninsured motorist.
• 9:27
  William Auten: Right.
• 9:27
  William Auten: Okay, so then I can make a claim against your carrier.
• 9:31
  Chantal Roberts: You can in that instance, and my carrier would step forward and say, Hey, you know, we we're here, we're here to help you.
• 9:40
  Chantal Roberts: And they would step in the shoes of the atfault carrier.
• 9:45
  Chantal Roberts: And I think this is where a lot of adjusters at fault driver.
• 9:49
  Chantal Roberts: Well, yes, andor they're a their carrier that they're supposed to have.
• 9:53
  Chantal Roberts: Right.
• 9:54
  Chantal Roberts: Because we're all supposed to have at least liability.
• 9:57
  Chantal Roberts: Um, so I think this is where most adjusters get messed up, is because when we're acting like a third-party carrier with uninsured motorists, I think we begin treating our insureds like claimants.
• 10:18
  Chantal Roberts: And I think that may be a little bit dangerous.
• 10:21
  Chantal Roberts: Yes, they are claimants, like third quote unquote third-party claimants, because we're supposed to be acting like the third party carrier.
• 10:31
  Chantal Roberts: But on the flip side, we're also the first party carrier, and this is our client.
• 10:38
  Chantal Roberts: So do we really want to jerk them around and you start requesting a lot of documentation repeatedly, and low-balling estimates and bodily injury settlements?
• 10:53
  Chantal Roberts: And I have seen this on underinsured and uninsured.
• 10:57
  Chantal Roberts: We'll talk about uninsured in just a minute.
• 10:59
  Chantal Roberts: But I think we forget that this is our client and we have a fiduciary duty to our client.
• 11:07
  William Auten: Be I think we forget it's because we're stepping in the shoes of it's a it's a confounding uh way to provide uh uh coverage to something because uh your insurance company who's supposed to be on your side is um actually adverse in that scenario because they're they're not they're not insuring that other party, but they kind of are.
• 11:37
  William Auten: I mean, they're like you say, stepping into the shoes, so it it creates a strange dynamic.
• 11:43
  William Auten: Um, I've never handled one of those claims.
• 11:47
  William Auten: Again, we don't do much in the way of auto, um, but God bless the folks who handle those claims.
• 11:54
  William Auten: Oh my gosh.
• 11:55
  Chantal Roberts: Yeah, yeah.
• 11:56
  Chantal Roberts: Uh so let's talk about underinsured motorists.
• 12:00
  Chantal Roberts: So underinsured is when you're driving along with the missus in my car and someone hits you and they have state limits.
• 12:09
  Chantal Roberts: And I wanna say Kansas is 25,000.
• 12:12
  Chantal Roberts: I'm don't quote me on that, but I want to say it's 25,000.
• 12:15
  Chantal Roberts: 25,000 does not go a long way these days uh for a medium to severe injury uh kind of deal.
• 12:24
  Chantal Roberts: So, anywho, what we would be looking at in this particular instance is the atfault driver and their carrier would pay up to their limits, right?
• 12:36
  Chantal Roberts: And that would be 25,000 in property damage or liability, both who knows what they have, but I'm just gonna say 25,000.
• 12:48
  Chantal Roberts: Then you've got additional, let's say, medical bills.
• 12:52
  Chantal Roberts: And then so you turn around and you would file a claim with my insurance company.
• 12:58
  Chantal Roberts: And again, my insurance company would step in and for example, let's say both of you and the missus injuries are 75,000.
• 13:10
  Chantal Roberts: We take off that 25,000 and that would leave us 50 that my company would pay.
• 13:19
  Chantal Roberts: So um that is the the the difference there.
• 13:25
  Chantal Roberts: Uh when adjusters, you so you would take credit for whatever got paid.
• 13:32
  Chantal Roberts: Adjusters, when you are thinking or looking at this and who's at fault and and that sort of thing, you need to also think about the made whole statutes or rules, because a lot of times when we're pursuing subrogation, we can't get full recovery for the amounts that we've paid because our insured has to be made whole.
• 13:58
  Chantal Roberts: So for example, uh let's say it's just a regular everyday, like I get into a car accident, they're underinsured, right?
• 14:09
  Chantal Roberts: Um, so I get the $50,000, whatever.
• 14:14
  Chantal Roberts: My insurance company wouldn't be able to subrogate against that other carrier.
• 14:21
  William Auten: Because their limits are exhausted.
• 14:23
  Chantal Roberts: Well, their limits are exhausted.
• 14:24
  Chantal Roberts: Um let me give you another example because because yeah, we're sitting there going, okay, whatever.
• 14:30
  Chantal Roberts: Let's say limits are $100,000.
• 14:33
  Chantal Roberts: My damages are 75, but I have some things that aren't covered.
• 14:37
  Chantal Roberts: I don't know what.
• 14:38
  Chantal Roberts: We'll figure something out.
• 14:39
  William Auten: Just we'll say you were carrying an antique something in your car and it got destroyed and it's worth $25,000.
• 14:48
  Chantal Roberts: Right.
• 14:48
  Chantal Roberts: Okay, whatever.
• 14:48
  Chantal Roberts: Yeah, that's it.
• 14:49
  Chantal Roberts: Okay.
• 14:50
  Chantal Roberts: So I've got a $25,000 property damage claim that wouldn't be covered under my auto for some reason.
• 14:56
  Chantal Roberts: Uh, and so auto pays everything.
• 15:00
  Chantal Roberts: And because the auto adjuster is like stepping forward for me, they're like, okay, look, I need the thousand dollar deductibles that Chantel paid.
• 15:11
  Chantal Roberts: I need um, you know, the 75 for me, and then um the 25 for the antique, which would also go to Chantel because um, you know, I don't pay for it.
• 15:29
  Chantal Roberts: And the limits for the at fault carrier is 50.
• 15:33
  Chantal Roberts: Well, obviously, my damage at 75 and 25 for that antique are gonna breach the limits.
• 15:43
  Chantal Roberts: So the most that that carrier would be able to pay would be the limits, but my insurance carrier would have to take a pro rata because the at fault carrier must pay me whole total 100% before the insurance, my insurance carrier can get money from their subrogation.
• 16:08
  Chantal Roberts: I I hope that I've made that sense because I know there's math and we've I've been trying to use small numbers, but you know, it gets it does get complicated.
• 16:18
  Chantal Roberts: And basically what I'm saying is pay attention to making your your insured whole.
• 16:27
  William Auten: Yes.
• 16:27
  Chantal Roberts: Ask for the deductible at least.
• 16:30
  William Auten: Yeah, yep.
• 16:32
  Chantal Roberts: To be sent back to the to the insured.
• 16:35
  Chantal Roberts: Okay.
• 16:35
  Chantal Roberts: And yeah, I think we've uh, you know, like multiple carriers involved, I think we've talked about all of that.
• 16:41
  Chantal Roberts: Um yeah.
• 16:44
  William Auten: Uh so you've got here side hustle exposures.
• 16:48
  William Auten: Um when you talk about a side hustle, are you talking about something you do for an income, like you've got an Etsy shop in your basement or you're mowing lawns for people, or what's uh yeah, and also I'm thinking like the Uber Eats or the Door Dashing or whatever, because what we need to be remembering is that our personal auto only covers us for when we're driving our car for personal issues.
• 17:18
  Chantal Roberts: Uh business issues are not covered, and for that, you would need to have the either a commercial auto policy or a um endorsement.
• 17:32
  Chantal Roberts: I know some some carriers offer an endorsement now for light use of the auto for a side hustle.
• 17:41
  Chantal Roberts: So um, and and and what the insured should be doing, hopefully, is keeping mileage logs or at least time logs when they're logged on to Uber or DoorDash or Lyft or whatever.
• 17:58
  William Auten: I think that's pretty automated in their apps systems.
• 18:01
  William Auten: Um, but um are is it an assumption of mine that's correct that these that carriers are offering endorsements on a personal auto policy for um DoorDash and things like that?
• 18:15
  Chantal Roberts: I have seen a few of them.
• 18:16
  Chantal Roberts: Yeah, they're very, very limited uh for for liability.
• 18:21
  Chantal Roberts: And it's mostly liability.
• 18:24
  Chantal Roberts: I don't think I've ever seen coverage for for collision in that particular instance, but it's very limited.
• 18:30
  Chantal Roberts: Like, I don't know.
• 18:32
  Chantal Roberts: I don't I don't even want to guess at the at the type of thing.
• 18:38
  William Auten: Um well another uh a similar topic that we could probably do a whole episode on is um the uh Airbnb and Verbo uh rentals.
• 18:50
  William Auten: So those companies actually set up additional liability coverage for their customers to protect the owner of the property um in addition to whatever liability insurance they may ever already have.
• 19:03
  William Auten: Do you know if DoorDash or Uber Eats um offer another coverage protection?
• 19:11
  William Auten: They do, okay.
• 19:12
  Chantal Roberts: Yeah, yeah, they do.
• 19:13
  Chantal Roberts: I have never seen one of their policies, and by the way, you know that Bill and I are coverage nerds.
• 19:20
  Chantal Roberts: So if you have, uh redact the information.
• 19:23
  Chantal Roberts: I don't need to know who it is, but send me the policy.
• 19:27
  Chantal Roberts: I'd love to see it.
• 19:28
  Chantal Roberts: I I I read insurance policies for fun.
• 19:31
  Chantal Roberts: Sad, sad state of affairs.
• 19:35
  William Auten: Anyway, um, yeah, so we've seen the we've seen the Airbnb and and verbo policies that are issued by uh a national carrier.
• 19:45
  William Auten: Um, and we actually deal with them all the time.
• 19:50
  Chantal Roberts: Um how are those done?
• 19:55
  Chantal Roberts: Who who's primary?
• 19:57
  Chantal Roberts: I guess the the whoever like the Airbnb or the Verbo or whatever is the primary.
• 20:05
  William Auten: Yeah, so there's two different versions depending on who the the depending on what the rental vendor, if you want to, whatever you call them, um, is and uh one is uh one functions as primary.
• 20:25
  William Auten: And it will say that your homeowner's policy is excess only.
• 20:30
  William Auten: Uh we're primary, and that makes it easy.
• 20:33
  Chantal Roberts: Yeah.
• 20:34
  William Auten: The other form that they have contains a really complex um language about other insurance and what generally happens because most uh most policies will say that they're excess over any other uh policy.
• 20:53
  William Auten: This one does too, but it also says some other things just in case for different coverage scenarios.
• 20:58
  William Auten: But basically, you've got two forms that are mutually repugnant, so you wind up um doing like a pro rata would be pro rata equal share kind of kind of deal.
• 21:12
  William Auten: Um but it's but the language in their policy I think it says they'll only revert to 50-50.
• 21:27
  Chantal Roberts: Okay.
• 21:28
  William Auten: Yeah.
• 21:28
  William Auten: So so if the if the rental policy is a million dollars and you have five hundred thousand dollars in coverage, you would think that they would pay two-thirds of the loss and you'd pay a third.
• 21:41
  William Auten: But I think the way the language in that policy is written is that they share.
• 21:45
  William Auten: That they're both co primary, I think is the way it's written.
• 21:49
  Chantal Roberts: Oh, interesting.
• 21:50
  Chantal Roberts: Interesting, yeah.
• 21:52
  Chantal Roberts: Um, that is kind of like what I thought it would be uh is that I I know.
• 21:59
  Chantal Roberts: For DoorDash and Uber and Lyft, they do have their own policies that would cover you strictly when you are driving for them.
• 22:10
  Chantal Roberts: So that is the another reason why the adjusters need to obtain a recorded statement because we need to find out exactly when that loss happened.
• 22:23
  Chantal Roberts: Were you on the clock?
• 22:24
  Chantal Roberts: Were you not on the clock?
• 22:26
  Chantal Roberts: Um, was the house being rented?
• 22:28
  Chantal Roberts: Was it not being rented?
• 22:30
  Chantal Roberts: That sort of deal.
• 22:31
  Chantal Roberts: So we know which policy would respond.
• 22:35
  William Auten: And yeah.
• 22:36
  William Auten: Well, like I said, that's that's worthy of an entire entire episode.
• 22:41
  Chantal Roberts: Absolutely.
• 22:42
  Chantal Roberts: Um, the other thing that I see is when we're out um with now that it's getting warmer, you know, you've got baseball and and all of that.
• 22:55
  Chantal Roberts: So you've got these pop-up, you know, maybe the the parents are selling something or not necessarily what like I'm not talking about the food trucks per se, because again, those would have their own insurance.
• 23:09
  Chantal Roberts: And I'm not talking necessarily about the concession stands, because again, at those should should have their own insurance.
• 23:18
  Chantal Roberts: I'm talking about maybe someone setting up a barbecue grill and selling plates and charging for drinks or you know, uh like a lemonade stand kind of thing.
• 23:29
  William Auten: Yeah.
• 23:30
  Chantal Roberts: Yeah, yeah, yeah.
• 23:31
  William Auten: Uh brownies at you know, cookies and brownies for nickel or whatever.
• 23:35
  Chantal Roberts: Exactly, because you're fundraising for for the the team.
• 23:40
  Chantal Roberts: And gosh knows I've done it before too, and never thought about the insurance implications.
• 23:47
  Chantal Roberts: When when my stepsons were going through basketball, you know, we were always having to fundraise.
• 23:53
  Chantal Roberts: And I'm not talking about selling the candy bars or whatever, but I am talking about setting up outside of the uh basketball court and bringing a grill and flipping some burgers and selling those for a dollar as fundraisers or, you know, whatever.
• 24:09
  Chantal Roberts: Uh we would say, okay, you know, it's it's for charitable cause, we're just doing this for whatever.
• 24:17
  Chantal Roberts: Um, but if we're repeatedly doing it and we do have some kind of profit motive, which is even if we're donating it to this group for our kids to fundraise or go to states or nationals, or if it's some kind of organized setup, we need to realize that that may be a business venture.
• 24:43
  William Auten: Right.
• 24:45
  Chantal Roberts: And so maybe our homeowners would not cover it.
• 24:50
  William Auten: Maybe.
• 24:50
  William Auten: That's interesting.
• 24:52
  William Auten: So let's take it to the extreme.
• 24:55
  William Auten: You're uh you're because you know, why not?
• 24:58
  William Auten: Why not?
• 24:59
  William Auten: Your 10-year-old decides they want to have a lemonade stand, so you have a lemonade stand and they're selling it there.
• 25:05
  William Auten: Is that a business adventure, a business venture?
• 25:07
  William Auten: And I I know I've seen this topic come up in the in the in the realm of taxes, and um, and I think, you know, technically, like I think that's a business and the pro any profit made has they have to pay taxes, but it's below threshold.
• 25:26
  Chantal Roberts: Yeah, yeah, yeah, yeah.
• 25:27
  Chantal Roberts: And I and and so let's let's take our 10-year-old who has uh who's an entrepreneur, and I don't again don't quote me because this is why I have an accountant because I can't even do my own taxes.
• 25:40
  Chantal Roberts: I mean, the IRS scares me.
• 25:42
  Chantal Roberts: And so I believe it's like $500, $1,000, somewhere around there.
• 25:50
  Chantal Roberts: Like if you make under $500 or under a thousand or something to that effect, um, you wouldn't have to report it, you wouldn't have to pay taxes on it.
• 25:59
  Chantal Roberts: So is our 10-year-old going to sell $500?
• 26:03
  Chantal Roberts: Let's just say it's $500, $500 of lemonade in a weekend.
• 26:07
  Chantal Roberts: I doubt it.
• 26:09
  William Auten: Well, tax implications aside, the the bigger question is if you if someone comes onto the property to buy some lemonade and trips and falls and breaks their ankle.
• 26:20
  Chantal Roberts: Okay, so yeah, let's get on to that.
• 26:24
  William Auten: Okay.
• 26:24
  William Auten: So is is that is it so the carrier's gotta decide, is this a business venture?
• 26:33
  William Auten: And um is there a problem with coverage?
• 26:36
  William Auten: I gotta pull up a CGL now.
• 26:39
  Chantal Roberts: Well, I don't I personally, and this is why I started off with the with the tax issue, is I don't think if a 10-year-old sold lemonade, let's just say every Saturday for the month of July.
• 26:57
  Chantal Roberts: That's four Saturdays, maybe five, right?
• 26:59
  Chantal Roberts: I don't think that would constitute a business pursuit.
• 27:07
  William Auten: So here's what the HO3 says.
• 27:09
  Chantal Roberts: Okay.
• 27:10
  William Auten: A business means a trade, profession, or occupation engaged in on a full-time, part-time, or occasional basis.
• 27:16
  William Auten: Okay, it's not that.
• 27:18
  Chantal Roberts: Well, it is occasional.
• 27:20
  William Auten: I know, but it's not a trade.
• 27:22
  William Auten: Well, it's an occupation.
• 27:24
  Chantal Roberts: It is an occupation, maybe.
• 27:26
  Chantal Roberts: I mean, I'm sure occupation isn't defined, and we know what that means.
• 27:30
  William Auten: So uh no, it's not.
• 27:32
  Chantal Roberts: Yeah.
• 27:33
  William Auten: So um B, any other activity engaged in for money or other compensation except one of the more one or more activities not described in two through far below, for which no insured receives more than $2,000 total compensation for the 12 months before the beginning of the policy period.
• 27:54
  Chantal Roberts: Okay.
• 27:56
  William Auten: Uh volunteer activities for which no money is received other than payment for expenses incurred to perform the activity.
• 28:02
  William Auten: That makes sense.
• 28:04
  William Auten: Providing home daycare services for which no compensation is received other than the mutual exchange of such services.
• 28:14
  Chantal Roberts: So you can trade.
• 28:15
  William Auten: Yeah.
• 28:16
  William Auten: The rendering of home daycare services to a relative of an insured.
• 28:21
  William Auten: So none of those qualify.
• 28:24
  William Auten: Wait, any other except so those four items do not qualify as a business.
• 28:31
  Chantal Roberts: So I'm sticking to uh your 10-year-old, even if they did it for let's say the summer, June through August on Saturdays.
• 28:42
  William Auten: If they made $2,500, there'd be no coverage.
• 28:46
  Chantal Roberts: Or less.
• 28:47
  Chantal Roberts: Oh, yeah, yeah, yeah, yeah, yeah, yeah.
• 28:51
  Chantal Roberts: If they made over $2,000.
• 28:53
  Chantal Roberts: So if they made $2,000 and one dollar, there would be no coverage.
• 28:56
  William Auten: Right.
• 28:57
  William Auten: So carriers got, you know, the that's the letter of the policy.
• 29:01
  William Auten: Okay.
• 29:01
  William Auten: So look at that.
• 29:03
  William Auten: And then you got to decide, are you are you really going to deny coverage for this claim where this person broke their leg and they're now going to sue?
• 29:14
  Chantal Roberts: So the issue is, adjusters, you need to get your 10-year-old insured's uh bank account and see the profit and loss statements.
• 29:22
  Chantal Roberts: Um, because I guarantee you, uh mom and dad are probably buying the lemonade uh and and donating it so the kid can make a profit.
• 29:32
  William Auten: Um, it says total compensation, so it sounds like it's a gross sales figure.
• 29:39
  Chantal Roberts: I mean, we're we're being tongue in cheek, but these things happen.
• 29:42
  Chantal Roberts: Honest to goodness, I think that it would just be a homeowner's claim.
• 29:46
  Chantal Roberts: And you know, we would offer that med pay to the the person who tripped and fell and broke their leg and then offer liability.
• 29:56
  Chantal Roberts: But that's just me.
• 29:57
  Chantal Roberts: I don't think that there's a business pursuit here, unless you go over $2,000.
• 30:03
  William Auten: I don't know if that's been litigated anywhere yet.
• 30:06
  William Auten: Um if anybody knows of a case where um but I mean if you could if you could prove that the kid made $2,001 according to this, um that would be a trade profession or occupation engaged in yeah.
• 30:29
  Chantal Roberts: Yeah.
• 30:29
  Chantal Roberts: So yeah.
• 30:31
  William Auten: Devil's in the details, I guess.
• 30:33
  Chantal Roberts: It it it is, and and that's something that I know that we've repeatedly mentioned a lot of times.
• 30:38
  Chantal Roberts: Uh so this would be something again that you would want to bring up in your recorded statements, both with the parents and with the child, because FYI, if the child's a minor, you can't be doing a recorded statement without one of the parents or guardian being there.
• 30:56
  William Auten: So yeah.
• 30:57
  Chantal Roberts: FYI.
• 30:58
  William Auten: Let's move on to boats and ATVs.
• 31:00
  Chantal Roberts: Oh, yeah, those are so much fun.
• 31:02
  Chantal Roberts: No, not really.
• 31:04
  Chantal Roberts: Um, you know, boats and ATVs.
• 31:07
  Chantal Roberts: Boats I have always gotten confused on because boats are covered under your homeowners policy up to a certain point.
• 31:16
  Chantal Roberts: And it seems really weird to me.
• 31:18
  Chantal Roberts: I always thought, okay, why don't we just exclude boats, period?
• 31:22
  Chantal Roberts: It would just make things so much easier.
• 31:26
  Chantal Roberts: But um, boat size matters for and and and I'm looking at the homeowner's policy 03 specialized 0511, even though there is a that's what I have up here now.
• 31:41
  Chantal Roberts: Uh, even though there is a newer one, I think it's 0322 is the next edition date.
• 31:46
  Chantal Roberts: But I think most of us still use the 0511 or we'll use a manuscript policy.
• 31:52
  Chantal Roberts: And so if you look under coverage C, which is property contents, we're looking at small non-motorized boats.
• 32:03
  Chantal Roberts: So like our canoes, kayaks, and rowboats, they're considered to be personal property.
• 32:09
  William Auten: And I would think special limit.
• 32:11
  Chantal Roberts: Yeah, and uh, I think 1,500 total.
• 32:15
  Chantal Roberts: Yep.
• 32:15
  Chantal Roberts: Um, so there's there's that.
• 32:17
  Chantal Roberts: Now you've got coverage E as well, because remember, our HO policies are those lovely packaged policies, unlike our commercial policies, our packaged policies.
• 32:28
  Chantal Roberts: So coverage E is a liability.
• 32:31
  Chantal Roberts: And again, for non-motorized watercraft and certain small motorized boats, we've got up to a general horsepower.
• 32:41
  Chantal Roberts: It says inboard or inboard outdrive boats with 50 horsepower or less, or outboard motors with 25 horsepower or less.
• 32:53
  Chantal Roberts: Um and then anything above those thresholds, which would be excluded.
• 33:01
  William Auten: Right.
• 33:02
  Chantal Roberts: So your yacht, you would need yacht coverage, which is of course what I have.
• 33:06
  Chantal Roberts: I've I've got that big super duper yacht um with all of the money that I get from being an adjuster.
• 33:14
  William Auten: Uh I think uh the general idea here is if you own a boat, chances are you're gonna want a separate policy for your boat, unless it's a little rowboat or something like that, or if it has an engine that meets these these uh requirements here, but who wants to go reading their policy and risk that they're understanding it correctly?
• 33:36
  Chantal Roberts: Um and and and I think that this is what we need to be explaining to our insureds if your agents uh especially if if you're near a lake or something like that.
• 33:46
  Chantal Roberts: For example, Arkansas is very outdoor-oriented, and so a lot of people had um, you know, pontoons or not really houseboats, because that would give the wrong connotation, but they did have boats, fishing boats, they had jet skis.
• 34:00
  Chantal Roberts: Jet skis are excluded.
• 34:02
  Chantal Roberts: So you would need to have a specific policy for uh, you know, maybe liability of hitting someone or causing someone to flip over, or they get injured on your jet ski that they're using, not to mention maybe your jet ski being damaged somehow.
• 34:27
  William Auten: Yeah, uh lots of coverage um uh time bombs here with with watercraft.
• 34:34
  William Auten: Yes.
• 34:35
  William Auten: And of course your next when you buy a uh boat of any kind used, new, whatever, your next call needs to be to your insurance agent.
• 34:42
  William Auten: Absolutely.
• 34:43
  William Auten: Yes, and find out what they what they cover.
• 34:46
  Chantal Roberts: And again, as a and as an adjuster, your devils are gonna be in your details.
• 34:50
  Chantal Roberts: Uh, you know, you're gonna be looking maybe um, and and honest to goodness, I don't know if there are any endorsements for jet skis or something to that effect.
• 34:59
  Chantal Roberts: I have I've never seen them.
• 35:01
  Chantal Roberts: So I would not think that, but as an adjuster, you need to be reading all of the policy and again asking these very specific questions like what size is the motor on your boat?
• 35:14
  Chantal Roberts: If there is coverage.
• 35:17
  Chantal Roberts: Uh and you know, you're going to have different layers of coverage for who owns the boat.
• 35:26
  Chantal Roberts: If you've got passengers and they've they're injured, the stakes can be really high.
• 35:32
  William Auten: Yes, because you can somebody can get injured very badly in a boat accident.
• 35:37
  William Auten: And it's happening.
• 35:38
  William Auten: If and if there's um if there are coverage questions like this, it's gonna be super important.
• 35:46
  William Auten: Not you you're gonna have to ask the insured in a statement what the size of the the motor is, but you're also gonna have to go look at it yourself and just verify what that is and um and really do a deep dive investigation because there's a lot at stake.
• 36:03
  Chantal Roberts: And people die.
• 36:05
  William Auten: If there's a half a million dollar policy on the table here and um and you might owe it, it would be a shame if um you lost coverage because of one of these conditions, or worse yet, that you lied about one of these things.
• 36:23
  Chantal Roberts: Right, you know, yeah, and and you know, people die as a result of boating accidents, uh, they fall off, they drown, and and so there are going to be claims and and they will be expensive because now we're looking at what is the value of a life.
• 36:42
  Chantal Roberts: And when we get liquor involved, that puts in a whole nother layer.
• 36:48
  Chantal Roberts: And of course, everybody is drinking on the lake or on the river, or or is that just an Arkansas?
• 36:56
  Chantal Roberts: Yeah, it might be just an Arkansas, I don't know.
• 36:58
  William Auten: But we have, you know, no, it's it's it's in New York too.
• 37:01
  William Auten: I'm pretty sure.
• 37:02
  Chantal Roberts: Okay, okay, good.
• 37:03
  Chantal Roberts: Um, yeah, so we all go drinking when we're on our fishing boats or we're on, you know, Lake Hamilton or something like that in hot springs.
• 37:12
  Chantal Roberts: So that's a whole nother thing, because then you have our social host liability.
• 37:19
  Chantal Roberts: And like I said, that is a very big issue for me because I don't think our consumers know about it.
• 37:27
  Chantal Roberts: And if our consumers don't know about it, I wonder if our adjusters necessarily know about it.
• 37:34
  Chantal Roberts: Because we all know about liquor liability when it comes to a restaurant or a bar.
• 37:42
  Chantal Roberts: Like we can't overserve.
• 37:44
  Chantal Roberts: Okay, great.
• 37:46
  Chantal Roberts: But we have that same duty as a host when people are coming to our house and having a barbecue, or they're on our boat and they're drinking, or whatever.
• 38:01
  Chantal Roberts: And what makes it even worse is when a guest over imbides and they leave and they cause an auto accident.
• 38:13
  Chantal Roberts: And I've actually worked those kinds of claims from a liquor liability standpoint.
• 38:20
  Chantal Roberts: Um, it was very salacious.
• 38:23
  Chantal Roberts: It was a uh strip club and the patron had killed someone.
• 38:32
  Chantal Roberts: And it was it was a big deal.
• 38:35
  Chantal Roberts: Like, did we over imbibe that person?
• 38:38
  Chantal Roberts: Right.
• 38:38
  Chantal Roberts: And it was an ugly, ugly, ugly claim.
• 38:41
  Chantal Roberts: So we see that we we we see that when we see liquor liability, but we have that issue at our house too, and I don't think a lot of people know that.
• 38:53
  William Auten: Right.
• 38:54
  William Auten: Yeah, serious issue.
• 38:56
  William Auten: Um, but uh and and that applies to boats, but also ATVs.
• 39:01
  William Auten: And ATVs can be you know used for recreation, and when they are, sometimes alcohol is involved, unfortunately.
• 39:10
  Chantal Roberts: And um let's talk about the ATVs because those we call them four-wheelers again in in Arkansas.
• 39:17
  Chantal Roberts: We go mudding, uh just driving around the deer camp or whatever.
• 39:22
  Chantal Roberts: Uh, and that can flip over, break a neck, cause paralysis.
• 39:29
  Chantal Roberts: Those are big deals.
• 39:30
  Chantal Roberts: And again, we've talked a little bit about lawn mowers last week, but what are some of the coverage issues for ATVs on our homeowners?
• 39:44
  William Auten: Uh well, the homeowners policy, first of all, um excludes coverage for motor vehicles.
• 39:50
  William Auten: And the main reason for that is they they don't want the coverage triggered if you're in an auto accident.
• 39:57
  William Auten: So the policy does a really good job of making sure they don't have to ever pay uh for an automobile claim.
• 40:05
  William Auten: Um but the the waters get a little muddy when you talk about UTVs and ATVs and lawnmowers riding lawnmowers.
• 40:14
  William Auten: Um so the policy, without reading ad nauseum, the the language, because it's there's a lot of it, but um basically what it does is kind of defines the difference between um a motorized, like a registered motor vehicle uh that's designed for use on the roads, that wouldn't be covered.
• 40:37
  William Auten: Um a motorized vehicle used for recreation is generally not you're not gonna have coverage for that either.
• 40:44
  William Auten: If all you use it for is fun on the property or taking it to dunes and you know that kind of thing.
• 40:52
  William Auten: Um generally they want to make sure they're insuring for vehicles that are uh uh used to service the property.
• 41:01
  William Auten: So if you've got a side-by-side or UTV and that thing has a dump bed in it and it's got a governor that only allows it to go 20 miles an hour.
• 41:12
  William Auten: Um and that that gets in an accident and hurts somebody, chances are there's gonna be coverage there.
• 41:18
  William Auten: If it's uh set up like a racing machine with no storage capacity whatsoever, except for maybe a spare tire or something, um that's probably not gonna have coverage because it's not primarily used to service the property.
• 41:37
  William Auten: So that's kind of the lines to think about.
• 41:40
  William Auten: So if you've got one of these things, definitely ask your agent whether or not you need to have a separate policy on that.
• 41:48
  William Auten: Chances are for most of them you do.
• 41:51
  William Auten: Uh chances are it makes sense.
• 41:53
  William Auten: Even if you say, all right, I have this, I have this thing and I use it to haul firewood.
• 42:01
  Chantal Roberts: Right.
• 42:02
  William Auten: But every once in a while, you know, you take it up at the top of the hill to watch the sunset, or you take the kids for a ride around the the property or whatever.
• 42:11
  William Auten: Um, now all of a sudden that changes the use of that vehicle.
• 42:15
  William Auten: And if you get enough people familiar with your property who will raise their hand and say, Oh yeah, I remember they were using that to, you know, pull the kids around in the winter or whatever.
• 42:26
  William Auten: Um, so err on the side of caution, get the thing insured.
• 42:32
  William Auten: Those those policies are not that expensive.
• 42:34
  Chantal Roberts: And this brings up a very good issue.
• 42:36
  Chantal Roberts: We talked a couple of episodes ago about maybe having off, or maybe we didn't, maybe I'm confusing this with my class, but uh I didn't use the word aggregment, I know that, but but we've talked about maybe hail bay rides, hail uh not hail, hay rides, excuse me, hay rides, uh uh these sorts of things, pumpkin patches, where we're hauling people around on our farm, or we have these farm to table kinds of deals.
• 43:09
  Chantal Roberts: It if we're using the ATV for for those kinds of things, there that is not in service of the the property.
• 43:19
  unknown: Right.
• 43:19
  Chantal Roberts: That's a whole different thing.
• 43:21
  Chantal Roberts: That's going to be a business pursuit.
• 43:22
  Chantal Roberts: You may the the insured may think that it's in service of the property because hey, I'm paying uh or people are paying me so that I can pay rent or you know, make a business or whatever, but it's to make a business, you know, to make money so that I can pay rent or do whatever, uh, pay the mortgage.
• 43:42
  William Auten: Farm owners policies are really um strange animals because they they mix a lot of commercial exposures with your homeowner, uh homeowners policy.
• 43:53
  William Auten: And uh, you know, people look at farms and they look idyllic and you know, the pastures and everything and the old barns and the the livestock um beautiful right pretty but farms are dangerous places and they have uh some really industrial equipment that um this stuff is huge and uh the injuries that happen on farms are are catastrophic and um when you mix the public with in that environment um you've got to take extra special uh precautions but uh not only that but carriers need to understand that risk you know um it's a very specialized kind of deal yeah we work for a lot of uh small mutuals that made their way in this business by insuring farms only back in the 1800s that's what they were initially designed to do and um they evolved over the years and created homeowners policies to get that kind of market um and what they did is they combined the homeowners with these add-on endorsements for farming and um what they wound up with today is that they've got this baby little homeowners policy ensuring this great big old farm with you know all kinds of equipment and hazards and risks and stuff and uh uh and that can be tricky and there's a weird thing going on in agriculture now where the smaller farms are just kind of disappearing.
• 45:31
  Chantal Roberts: Yeah they're being bought up or they can't make it so they're going bankrupt and that sort of thing.
• 45:36
  Chantal Roberts: Yeah.
• 45:37
  William Auten: Unfortunately it's kind of a problem that's sorting itself out um just because these farms are not functioning like they used to they still have that same coverage maybe don't really need all of it but it's not a full blown commercial policy like some of the big commercial outfits are anyway that's my that's my farming rant yeah no but it's it's a very important part to understand that if if we're going to a farm to table kind of dinner or pumpkin patch, Christmas tree farm um the hay rice hay rides huge huge deal.
• 46:15
  Chantal Roberts: Oh yeah uh we have the sunflowers uh here of course in Kansas so we go to sunflower farms and you they let us walk around when the sunflowers are all up right before they start harvesting them you know you trip and falls whatever and then those insureds are selling jelly and jam and those sorts of things and again that's all business even though their house is sitting less than a hundred feet away so that's not going to be covered under their homeowners they're gonna be needing a farm policy and by the way agrittainment is usually not covered under the farm policy.
• 46:59
  Chantal Roberts: So that's something that's going to need to be taken a look at and of course there's usually definitions for agritment and what that is uh of course what it sounds like is a combination of agriculture and entertainment such as a farm to table such as a hayride or a sunflower farm where we get to go walk around and have pictures taken in the sunflowers and and that sort of thing.
• 47:23
  William Auten: So um we had an interesting uh scenario a few years ago where we have um we had insured a lot of crafters people that would make wicker baskets and needlepoint whatever they would sell it at the at these craft fairs and um the one risk came through and they were doing soap and um the reinsurer was with small mutuals they rely heavily on reinsurance and um you know most of their like many of the large claims are mostly paid by reinsurance.
• 47:59
  William Auten: They have a really small retention in the big scheme of things.
• 48:02
  William Auten: So the reinsurer really dictate dictates what they can and can't write and the reinsurer came back and said no we we're not doing soap.
• 48:10
  William Auten: And the underwriter was really taken aback and kind of annoyed and and um and I said well you know um soap has a lot of stuff in it and they're mixing all these scents and chemicals in there to make them pretty or make them smell nice or whatever.
• 48:27
  William Auten: And um you get somebody who has an unknown allergy yeah that could go south pretty quick.
• 48:33
  William Auten: Yeah because soap isn't just something that you just touch with your fingers you're supposed to at least you're supposed to right um but so I understood it it from a risk standpoint.
• 48:49
  Chantal Roberts: She did not but that's okay we butted heads a lot but uh love you Amy um the um uh another one that came up was um lip balm they were making like uh some sort of I forget lip balm with honey or something like that um but yeah it's very easy to to have that is also with the cream like the buttercream and all that kind of stuff so I would say when you're an adjuster some of the the takeaways that you need to be looking at is is identifying who owned what uh identifying who controlled what who was using what track our money flows track how big a motor is or um what the object was used for like the ATV versus a boat versus I don't know um our lawn mower which we talked about right a couple weeks ago um a dirt bike is almost never gonna be covered with oh yeah liability or uh personal property you're gonna need something different uh was alcohol involved yeah that's gonna be a the fun one right there uh well here's the thing though um which people may not realize is that driving one of these things while you're intoxicated doesn't eliminate coverage no um but what it what what it can do is lead to something that's so bad that your policy limits are ex exceeded right and that's where things could get ugly and and that's make a makes a good point even about our auto claims which we're not necessarily talking about but if you as the insured are driving drunk and you have an accident adjusters just because the insured was driving drunk does not eliminate coverage.
• 50:48
  Chantal Roberts: Yeah uh unless there's a specific endorsement that says if you're drunk we don't cover liability for that but I have never seen that.
• 50:56
  William Auten: Yeah pip coverage no fault coverage here in New York um I want to say for motorcycles it could be caught see I don't do enough auto anymore.
• 51:12
  William Auten: But I think if you're if you're drive if you're um arrested for drunk driving you don't get any no fault benefits your PIP med pay benefits.
• 51:22
  William Auten: I think that's the way it works we need a troll to get on our comments and really really torture me to death on this.
• 51:31
  Chantal Roberts: I mean or or just a fan that wants to make sure that we're always correct about things because you know we do make things up as we go along.
• 51:39
  Chantal Roberts: We do we do yeah um and if you comment you could become famous yes you could with all of our 10 viewers right and listeners.
• 51:50
  Chantal Roberts: Uh so memorial day happy memorial day everybody happy memorial day and our next episode is going to be June 4th we're gonna talk about bad faith allegations.
• 52:02
  Chantal Roberts: Now usually you and I do the Unfair Trade Practices act or unfair claims settlement handling claims handling settlement act and at the beginning of the year because I always want to put myself out of business.
• 52:16
  Chantal Roberts: But what I thought we would specifically concentrate on this time is maybe the things that I see adjusters doing that maybe I can go ah that's that right there that's where we took a left turn which is actually that way on left turn.
• 52:35
  Chantal Roberts: So yeah I thought maybe that would be a good thing.
• 52:39
  Chantal Roberts: So when you see yourself doing that you're like oh hey self I need to back up off of that so this is an episode on the the mistakes adjusters make yeah yeah not necessarily how to avoid them but maybe these are the mistakes that I see and and so let's avoid them and put me out of that one's gonna give me agita oh why is that oh I'm I'd be put I'll be putting myself under a microscope ah okay but you always do everything correctly so that's true that's true there's there's no no worries there.
• 53:12
  William Auten: Yeah no worries there okay well we will see you in two weeks then yeah yes ma'am okay bye bye bye thanks for joining us on the Art of Adjusting podcast where we talk about life as an insurance adjuster hit that subscribe button real quick and tell all of your adjuster friends to check this out as well for independent adjusting services go to www.autin.claims and for anyone interested in working as an independent liability adjuster go to the contact us tab to join our roster.
• 53:43
  Chantal Roberts: So this wraps up another Art of Adjusting podcast if you enjoyed this podcast or this episode please give us five stars and a review it does help the algorithm pick us up in the meantime you can contact me at theartofadjusting dot com for consulting and training purposes