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Know What's in Your Insurance Policy

What Private Investigators and Process Servers should know when shopping for an insurance policy

Before you begin your search for a private investigator or process server insurance policy there is some basic information you will want to know. Not all insurance policies are alike. The fact is most policies are based on relatively similar basic forms of coverage.

Items in your policy such as endorsements, exclusions, and conditions can make these similar forms move worlds apart. It is important to review your policy so you understand how an exclusions section, for instance, changes the coverage under the other sections of the contract.

The rest of this article outlines items you will want to take note of in the different sections of your policy.

General Liability
Under General Liability, security and private investigative industry products provide coverage for unintentional acts of bodily injury, property damage and personal injury. Bodily injury can come in the frame of an accidental injury to a client or subject caused by the negligence or non-negligence of one of your employees. While intentional acts are excluded, most security contracts contain provisions for assault and battery to be included in the policy coverages. Private investigator specific contracts might not have the assault and battery coverage since this is not as applicable as in the security industry.

Property Damage
Property damage will result from the accidental damage to a third party’s property while in the course of work. Be advised that this coverage and all coverages that we will discuss exclude any damage or injury due to automobile causes. We will discuss auto liability later.

Personal Injury
Personal injury coverage is afforded under most general liability contracts. This can vary by industry but is an important coverage when you are working with the general public each day. This coverage affords libel, slander and defamation of character coverages and has been a popular target for plaintiff attorneys in recent years. The coverage should be included and should not have any form of its protection diminished by endorsement. In some cases, personal injury is excluded. Certain high-risk industries and companies using the Internet for their services can have trouble obtaining this coverage.

Medical Payments
Most policies contain medical payments coverage, which can be used to appease an injured subject to avoid a liability claim. This coverage is used to pay small medical bills and costs associated with injuries for third parties. It can be an effective deterrent to utilize this coverage to convince a claimant not to file a lawsuit. Use of this coverage does not preclude a person from filing a liability claim but can sometimes prevent this from happening.

Fire Liability
Fire Legal Liability is an often-misunderstood coverage. This coverage is also on most general liability policies and is designed to protect the insured from damage to rented premises through events caused by an insured. The coverage will pay for damages to a structure that you rent but do not own. For this coverage to apply, gross negligence would have to be proven. The best example is the coffee pot left on overnight. Should this occurrence cause damage to property not owned by you, coverage could apply.

Errors and Omissions & Professional Liability
Errors and Omissions and Professional Liability are sometimes confused as being different items. In reality, they both refer to the same coverage. In your industry, Errors and Omissions is the most common term. This coverage protects an insured for errors that occur in the line of work that cause a financial loss to a third party. The security industry will see more General Liability claims for damage and injury. The private investigative industry will see more E&O claims due to the nature of the work. Examples of our recently filed claims include missing a lien on a title search and pulling the incorrect credit report.

Automobile Liability
A number of your clients ask you to obtain commercial automobile and non-owned and hired automobile liability for your firms. This coverage can be added to some general liability contracts and in other cases must be written on a separate policy. This coverage will protect the business for auto liability claims that name the firm along with the individual as a defendant. Be sure to verify that each driver of your firm carries adequate personal auto liability coverage, however. Under non-owned and hired coverage, the commercial policy will protect the firm, but not the individual. Coverage for personal liability must be endorsed and is not necessary if the individual carries personal auto coverage with adequate limits of liability.

Fidelity and Crime Insurance
Fidelity and crime insurance is requested by some companies in your contracts. This coverage protects your client for the misuse/theft of private information from the client by one of your employees. It is a fiduciary coverage that pertains to financial loss. Most crime policies carry a conviction clause that requires you to prosecute your employee and have the person convicted of the crime for coverage to apply. For an additional premium, the conviction clause can on occasion be deleted. In this day and age, this is becoming a more common request from your vendors.

Additional Insured
Many clients ask you to add their interests as additional insured. While this is certainly available, it is important that you understand how this affects your coverage. By adding a third party as additional insured, your coverage is now primary for both you and your client should a claim arise for work you perform on the client’s behalf. If a dual suit is filed naming the client and yourself, your policy will protect you and your client before your client’s policy responds. This could effectively reduce your protection by half if a large claim is settled. If you must add additional insureds, consider increasing your limits of insurance so that you have the peace of mind that your coverage will be able to contain a large claim for TWO defendants, you and your client.

As always, there are a couple of items that are not covered regardless of the type of insurance contract you might obtain. These items include intentional acts, poor workmanship, failure to perform, and criminal acts (unless under fidelity/crime). Most of these are obvious, but many question the failure to perform. Claims accusing you of lack of performance will not be insurable unless an error was made in the work performed. Failure to perform is a standard of work issue, not an insurance issue.

Robert Yergey is a principal at Yergey Insurance Agency, a family owned and operated agency started in 1989. Mr. Yergey can be reached during business hours at (800) 683-1226 or [email protected] from Mr. Yergey welcomes inquiries about this article or any facet of insurance coverage, policies, or provisions.

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