The question of the month deals with what goes into the process of forming a captive insurance company. There are several factors that should be considered when forming captives, among these are tax savings, operating costs savings, program control, enhanced program flexibility, and access to multinational programs. If there is a plan to from a captive insurance company, these factors and questions about the types of captives and steps to take to form a captive will all need to be answered. For information and answers to questions about captives, see the designated article in the Bulletins.

The court cases in this month's Dec Page pertain to definitions. The meaning of collapse, the meaning of occurrence, and the meaning of employee are all explored in the court rulings.

The New York Supreme Court, Appellate Division, recently weighed in on the meaning of collapse. A building had severe cracking, bulging, splaying, and displacement of the exterior brick façade. The insured claimed this was a collapse which was covered under the terms of the insurance policy; the insurer said this was not a collapse as defined in the policy. The New York court had to decide.

Courts in Ohio and Washington addressed the question of what constitutes an occurrence. The Ohio court ruled in a case where the insured sold stolen equipment. The insurer here said that the since the insured sold the items intentionally, this was not an occurrence. The insured countered that, while the sale was intentional, this was an occurrence since the insured had no knowledge that the equipment was stolen. In Washington , the court encountered a question of whether a series of employee thefts were a single occurrence or separate occurrences. The insurer stated that the same employee stole money from the insured employer over a period of time and this equaled separate occurrences; the insured said the policy defined this theft as one occurrence. Recovery by the insured depended on how the court defined “occurrence”.

In the final court decision, a circuit court was faced with the question of whether a sole proprietor could be considered an employee. This was in connection with a single-vehicle accident that resulted in the death of a trucking company sole proprietor and whether the fellow employee exclusion was applicable.

Questions and Answers:

The insured is a fertilizer dealer who applied fertilizer to a crop. The crop was damaged. Is this a completed operations claim and, if so, does the your work exclusion in the CGL form apply? See Completed Operations and Your Work Exclusion. An insured displayed a body cast as a work of art. The subject of the body cast objected and filed suit. Would this claim be included in the personal and advertising injury coverage of the CGL form? See Personal and Advertising Injury Liability Claim Based on Body Cast Art Work.

Does a real estate property manager need his own liability insurance? See Real Estate Manager as an Insured. While moving an old boiler to make room for a replacement, the insured allowed oil to leak onto a carpet, causing damage. Does the BAP cover this claim or does the CGL form apply? See Loading or Unloading Issue under BAP and CGL Form. Molten metal thrown onto a car caused windshield rubber to smolder and melt, and paint on the hood of the car to burn.

Subrogation:

This article in the General Sub- pages provides an overview of the provision of subrogation including essential elements, in whose name can subrogation be filed, public policy, and waiver of subrogation. Legal cites are included. See Subrogation.