Face it, companies will do whatever it takes to stay in business. But they could be doing things that were never intended to be covered under their regular insurance policy. A flower shop running a pop up drive in on weeknights for instance. This could expose them, and you to liability.
In this show we discuss seven different businesses and what they are or may be doing to keep the lights on. Some of it, while creative, is not something they normally do and may not be something they even know how to do. Should you be concerned? We say yes. Of course we would, we're in the risk business. But then again, so are you.
Inspectacast Season 2 Episode 7
Caster- Tom LeGros
Unedited Transcript of Inspectacast
All material Copyright 2020 Windowless Media Atlanta and Preferred Reports
All Rights Reserved
Today is Tuesday, July 21. And this is Inspectacast sponsored by preferred reports.
Hello, everyone, hope you're having a Happy Tuesday. This is the Tuesday edition, actually on Tuesday of Inspectacast sponsored by preferred reports the only podcast dedicated to the insurance services industry lost control. So what are your insurance up to? That's kind of our topic today. Do you really know what they're doing and do you have to worry about it? companies want to make money during the pandemic they've got to they want to keep their doors open. Thanks to government restrictions, it can be very difficult to maintain social distance while running a restaurant for instance at 50% capacity or 25% capacity because face it, there's fixed costs involved with operating a business and if If you can at least cover your costs, there's no point in even opening the door. They just want to keep their employees going the and of course, they've had struggles with that because the employees are getting their $600 stipend from the government. And in some cases, that plus the unemployment from the state is more money than they made in the first place. So it can really become a staffing issue too, even if you want to stay open, they end up having family members doing things that they ordinarily didn't do that sort of stuff. So we're going to be doing is we're going to look at seven different business types that are doing unusual things that could have potentially, you know, bad results, particularly in terms of claims that were not anticipated. Because of the type of insurance they have and the type of business they work. And these seven businesses are by no means just the only ones that are trying to do things differently. If you were I owned a business that was very reliant on foot traffic, for instance, a restaurant, we will be doing everything we possibly could to keep the doors open to keep the money coming in. Until then, Get better, because face it, the restaurants that can survive through this are the ones that are going to have, you know, a great deal of business. When the social distancing restrictions ease and look, no matter what you hear about people making this some idea that this is a permanent change to society, it's not going to be. So let's look at things going back to what it was to where you can go to a restaurant, you can go to a bar, you can go to a concert, you can go to a baseball game or a sporting event. Without having to wear a spacesuit and signing 17 waivers of liability before you go in the place. It's going to return to the way it was the idea that suddenly we're going to change the entire society to where we're, we're basically creatures that live inside of bubbles that you know, we don't interact with other people except on the internet. That's not going to happen. So let's let's be realistic. So let's realistically deal with the problem we have in hand. Obviously number one on the list is going to be restaurants because that's the ones you hear about most of all, you have fine dining restaurants that are now doing barbecue, you have barbecue restaurants that are now doing whatever it takes to be able to make money. So one of the first things that we look at is food delivery. Of course, there's Uber Eats, there's Amazon delivery, there's a couple of different companies out there that are third party delivery companies. But the restaurants really don't get any revenue other than the fact that people order and they have home delivery, but they're not getting a cut of whatever it is, Uber Eats gets, or whatever company is using Uber Eats as an example. And that's anything bad or good about them. I'm just using them as an example. So let's say third party delivery service. The third party delivery service almost acts as a broker for the deal, although the deal is pretty much made because the consumer knows where they want to get the food right. And so they have it delivered to them. And of course, the third party takes on the responsibility for picking up the food and delivering it in a timely fashion and taking care of it while it's in their custody. However, restaurants have realized that people are getting used to paying five 610 dollars For their deliveries,
you know, depending on what kind of restaurant they're ordering from where they live, that sort of thing. Now these restaurants are saying, gee, I have an employee that I'm paying, you know, above minimum wage to a little bit or I'm paying under the table or what have you. If I let him go deliver it, and it's a $10 delivery charge, I get five they get five everybody's happy. He can go to deliver make an extra 20 bucks an hour or whatever. The problem is, you now enter into the world of non owned auto exposure. You may have workers comp issues, if he gets in an accident hurts himself. What happens if he does run into somebody else or, or crashes into a building or something like that? His auto insurance is going to find out what he was doing and say how you were doing food delivery for who? Yeah, we're not going to cover that now. And it's going to fall back on the restaurants GL policy. And some programs prohibit or exclude food delivery or they are not going to write restaurants that do food delivery, it may not be specifically excluded in the policy language. So that's going to be a problem and you can bet that that's going on. The next thing is the idea of restaurants being taken out. That's a great idea. There's some things that the government allowed to happen, that makes it a little bit less so for some places, but still, it's a way for them to get money. Now, the problem you have there, especially in restaurants that really didn't do a lot of takeout business, is you have what I call the old food waiting in the window, you know, in a bag sitting out in a window, for the person that ordered it to come pick it up. And depending on where they live, how long it takes to get there, and whether or not they were told, you know, your order will be ready in 20 minutes, and it was actually ready five minutes after the phone call, that order is going to be sitting up exposed to differences in temperatures exposed or whatever. And then you could potentially have some type of contamination issue that would result in a product liability claim or some issue like that. That's something definitely to consider because that is something that otherwise they wouldn't have had, especially if they weren't a typical takeout company. Another thing and this is a recent trend that the companies are doing the restaurants are doing is they're creating meal packs, where they have all the goodies that go in there to make a meal and they have a direction for Do the recipe, and then they send it to the insured, or excuse me to the to the consumers. And then the consumers go ahead and put together the meal. That's fine. However, I think you start running into some issues because those meals, the contents of those meals were not packaged for that type of service. They use zip locks, they might use some vacuum bags, but they're not using what you might call, you know, government approved USDA approved resale packets. And in fact, a lot of the products that restaurants use are not intended to be packaged resale for things like that. So you're going to come up to another product liability issue. What if the food was sitting around for a while? What if the chicken that they're using was defrosted several days ago and was in the region cooler, and it was exposed to things but now it's in a ziplock and it's being put into a meal pack for somebody to cook then you also have the issue of whether or not the consumers that take it cooked it properly cooked into the right temperature? Granted, you could say that there's some responsibility on their part to do so. But you know what? This is a very litigious society, and somebody is always to blame. And you're certainly opening yourself up to exposure that way. And finally, there's outside dining, outside dining is great. Obviously, it's better in the situation with the virus because it gives you more air circulation, you're not exposed as much the other parts per million to the virus is probably gonna be much, much less out in the open air. However, a lot of these places and in fact, I went to a restaurant just a couple of weeks ago, where the outdoor dining was the parking lot, actually, it was on street parking that they blocked off. They put a big white, you know, one of those white fare tents or whatever over it. And they put up some caution tape and took out 10 spots, put out some high tops and separated people really good. I mean, the weather was nice and everything was covered. It was on a street. So anybody not paying attention driving along, could barrel right through the place and take out 16 patrons, even with social distancing very easily. So what is the exposure to these restaurants and some restaurant programs specifically Don't want to cover restaurants that do outside dining, that's a another consideration. And you look guys in this, whether it's summertime The weather's better, they're able to have a higher occupancy outside, you bet if they have an opportunity to use a part of the parking lot they haven't used before. Or if they can use part of a city street without getting in trouble with the city, you know, because the cities are being a little bit more liberal with this. They're going to do it. And that's going to expose you to more claims. And I said Finally, but there's one more thing, the whole idea of wholesale, or excuse me, the whole idea of liquor to go at a restaurant that was one of the things that where I'm at in Atlanta, they allowed as part of the emergency COVID act or whatever. And in other states, they allowed the only state that I lived in Louisiana specifically in New Orleans, where to go daiquiris is not a big deal happens all the time you drive through you get a milk carton full of strawberry daiquiri or whatever you want, and you go on about your business. not common in other parts of the world. Definitely not common in Atlanta. But yet restaurants were allowed to sell mixed drinks with walk up service drive up service wherever you will Polish curbside service got a couple of old fashions with their their meal. And of course that was because government was saying, Hey, you know, we understand that you want to make money, there's a great deal of profit, obviously an alcohol sales. So we're going to go ahead and allow it that people will be able to buy a Daiquiri or mohito or whatever and take it home with them. However, that doesn't take the restaurant off the hook for the liquor liability that occurs. And most liquor liability policies when the actuaries were calculating the premiums and risks did not factor in the fact of walk up or drive up full liquor consumption off premises, totally unobserved by the restaurant owner that has the responsibility for it. Another thing to think about our next one we're gonna look at and actually they're kind of combined it's it's property owners or tenants in agricultural land owners, because both of them can do pretty much the same thing. And that is, and yes, it's it's the thing is pop up drive ins. Some movie theaters have been doing this in their parking lot because movie theaters have huge parking lots It, so it'd be very easy to do that. And since it is a movie theater, I suppose under the business classification, it would all depend on how the insurance was written as to whether or not you know, doing the movie actually outside rather than in the theater is fine. But if you happen to own a strip shopping mall, that's half unoccupied, and you've got a big space, or just a regular interior mall that you've lost some of your tenants, you have a huge parking lot europen off, throw up a screen and sell tickets for people to come in and you transmit the audio of the movie over Wi Fi or over an FM signal that they can pick up in their car. That's great, except that generally I am not sure whether that kind of exposure is was anticipated underneath the policy for that particular type of property. also true for agricultural land, because agricultural land is being converted, you know, this flat and unplanted, they're converting it into you know, quick pop up drive ins is better out in the country because there's less light pollution. You can Project the image a little bit further, you can get more people in. However, there's all sorts of issues with both venues in that the driving surface may not be even walking surface certainly isn't even it's not lighted. There's exposure to people getting
hit. If they get out of the car, there's exposure to people running into cars and injuring people. And let's not even talk about the safety and security issues with a dark field that the only light you see is a movie theater light, you know from the movie projector. And that's pretty much it. And then when it's all over with everybody's in our free for all getting out because there's no organized way of leaving. That is a big exposure and it's happening today. In fact, if you do a Google search on pop up drive ins, you'll see that everybody from flower shops to Walmart's are doing pop in pop up drive ins some of them are not for charge. They're just to get people you know out and socializing as best you can inside a car. But at the same time, that does not exempt you from any type of liability that could arise from the increase in use in your property. That was it. anticipated. So certainly, you know, those are those are claims that they're being exposed to that were never anticipated when those policies were were created. And certainly, the programs were created to ensure those things. And here's another one and you've heard about this a lot. There's been a shortage, not so much anymore. But there was a shortage originally of alcohol, hand sanitizers and alcohol wipes. It had to be 70% or better and had to be alcohol. Preferably, you know, your typical rubbing alcohol style. We had distilleries whose alcohol orders were dropping because they were producing booze for restaurants and the restaurant consumption was dropping. So they decided to go ahead and let's go ahead and see if we can take our grain alcohol and start producing hand sanitizer. That would make sense except for the fact that hand sanitizer is a quasi medical substance. In fact, from what I understand from my research, some states actually require that the formulas be overseen by pharmacists are licensed people to do drugs and things like that. So that way they can be tested to assure The alcohol level of the ethanol that's in it, and the quality of it, and also the quality of any of the things that is mixed with aloe vera, or whatever, because alcohol can be in large quantities absorbed through the skin. So you can potentially have a case to where somebody who's very sensitive alcohol, whatever it can become, you know, I can't say intoxicated, I'm not a doctor, but certainly if they can absorb alcohol through their skin, and they're very concerned about the virus and it keeps flossing this stuff on. And it's got a higher concentration of alcohol than expected. You could have issues for product liability. Same thing, if there's an allergic reaction from something was mixed with, etc. I mean, there's all sorts of formulas people are using. There's wineries that are putting their own stuff out and they're labeling it with their label on it is not just a black and white label that says hand sanitizer and nothing else on it. So these things are being used for a basically a medical sterilization purpose. And really, they're not being held up to any particular standard. So that is of a concern. Now, obviously, the insurance is in the business of distilling alcohol. So, but that's generally alcohol for consumption unless they have some other licenses involved. And they're being allowed to produce these things for hand sanitizer. But again, that's not what they do. They're not pharmacists, they're, you know, a brewery. They're a distiller who makes in 70, proof, 60 proof, 40 proof, 30 proof alcohol, and not 70% or greater hand sanitizer that's mixed in with other substances. So there's a concern down to our last few trucking during the COVID emergencies, the Coronavirus, emergency orders that were issued by the states and the federal government, the states as well as the feds suspended a lot of the service our restrictions on trucking in order to maintain supply chains. This is not in effect in all places anymore, but some places it still is because they want to make sure they're able to move materials from the distribution centers, from the docks or wherever get it out into the stores. Get it to where it needs to go. And to do that. Obviously expected to have some, some losses from people getting sick that were drivers. So they need to make sure they had the maximum number of drivers capable of going on the street with the maximum number of hours that could be worked. So let's look at that from a fleet perspective, you're now going to have more road time, that's without a doubt, more miles more road time, you're going to run the risk of tired drivers, because they're not restricted to the hours that they used to be able to do so. And of course, they're, they're going to be incentivized to keep pushing on to make their delivery targets, you're going to have a higher risk of equipment failure, because trucking companies, especially smaller ones, or owner operators are not gonna want to take equipment offline for repairs, even preventative maintenance, which will lead to more failures. And since you're on the road more, and you're not keeping up your equipment as well and you're more tired,
your chance of an accident increases dramatically. You also have cases where there's drivers that ordinarily delivered to a certain area that are now being told, okay, we need you to go to Boston with this run. We've got to get it up there tomorrow night. 12 hours away Get going. They're unfamiliar with the area they're unfamiliar with, with how to how to navigate to get to where they're going. And although they had their nice GPS in ways or whatever, they still don't know the best routes to get there when you're in a semi truck, so you increase your chances for problems there. And of course, you have in the Marine claims for the potential loss or theft, as more and more trucks are dropping off their payloads and parking lots, because there's not enough people to unload them at the warehouse, and they've got to move on to the next pickup, and that that responsibility may not have passed on to the distribution center from the truck. So the coverage may not have ended when the truck was on hitched. It all depends on how the policies are written and all depends on all the bill of lading paperwork and all that stuff. But obviously, there's an opportunity there to run into trouble. And here's one that you probably haven't thought about. And that's retail clothing. They're having a lot of issues. I mean, Brooks Brothers out of business, well, they're bankrupt. They're gonna be closing stores. You've got other big retail stores. that some of them were in trouble beforehand. And this is not any better for them. These retail clothing places sell clothes, that's their job, they buy clothes from somewhere and they sell them. They basically buy them for one price sell them for another, they make the profit on the difference. Now they're in the business of manufacturing cloth face masks. So they're getting materials from some distributor somewhere or they're taking old fabric or whatever chopping it up, and they're turning it into face masks. What could be the harm in that volunteers doing it as a favor to the to the community, probably not a liability there. Not a lot of liability there because there's nobody to sue. I mean, you can't trace back and individual mass to an injured person. But when you have a company, manufacturing cloth face masks, and then selling them to the public for a price, chances are they don't have proper disclaimers on the label saying is not for medical use, even though they're using it to protect themselves from the virus etc. And that's what the CDC is recommending. It's still being used for medical use. So there's every chance That is not going to prevent anything. I won't get into a long history of surgical masks or anything like that. But the best thing they are therefore is to protect you from getting whatever the person wearing the mask has. So there's value in that. But as far as stopping it from getting on you from inhaling, not so good, but if you cough, your cough spray, or your aerosolized germs or whatever, generally not going to get out. So this is a good thing, having a mask. You also have a situation and many of us saw this on TV when all the nurses and doctors were working 24 seven wearing everything they could, you know, for masks, you got pressure sores, you have allergic reactions, you have all kinds of things that occur because people are wearing materials that ordinarily are not up against facial skin that are ordinarily not left there for long periods of time. And all of that leads us into a product liability issue. Is this going to be a big deal? Probably not. But there's still an opportunity and that is a business that you've ensured as a retail clothing store that is now operating As a medical equipment manufacturer, even though it's not, you know, an FDA level, medical equipment manufacturer is still something that's being used for a medical purpose. And while the CDC guidelines say, Hey, y'all can wear whatever you want, I don't know that they envisioned the fact that they would have, you know, your local dance barn or whatever, making masks and selling them, you know, for profit. I don't blame them, they have to make money. And it's for a good cause. Right? But still, there's liability that attaches with anything you do. And here's the last one probably people didn't think about. But I noticed this just the other day, computer companies, specifically ones that make programs whether they're apps, or whether there are software as a service or software that you would download and run your computers. There is a cottage business right now on COVID compliance programs. These programs are intended to guide you on how to safely reopen your company on how to safely deal with the public etc. And it's intended to document things such as employee health log, so if you were taking temperatures of your employee, you put in john smith It's reported at temperatures 190 6.9 degrees with an infrared thermometer states that he has no, you know, complaints, similar covid went to
work. And then there's other things that if you put in certain variables, it makes a recommendation for you and what you should do. It also can assist with contact tracing, it can do a number of things. The problem is these programs were in some cases come up with companies that were had no experience whatsoever working in the medical business. And they were going on CDC guidelines that just four days ago changed with some of the self isolation requirements and the discharge requirements for people that did have COVID. So these things change in some cases, day by day, depending on what the current research shows and what the current trends show in the different numbers that you see in statistics. So that means that these programs unless they're constantly updated, are prone to errors. So the advice you get may not be consistent with CDC guidelines and may not have been also adapted for your local health department. Because the CDC is a lot like the NFLPA, they're an agency that can make recommendations, but they cannot mandate certain things, they have to have the state health departments agree. And in some cases, even in the state health departments, they still need to have some type of executive order from a governor or legislative action to make things enforceable. So that kind of opens the door to, you know, not getting a program to give you what you think it's going to be. Some of you may have seen this when you buy programs that help you with safety plans, or policies or whatever. Some states don't do certain things. And yet the programs are built to be pretty much applicable in most states, maybe not your state, and you end up getting in trouble. This is the same situation. And then when it comes to actually calculating things like let's say, calculating a risk of something or whatever, you run into trouble there because if there's some type of programming error that you can't readily see the answer, you get maybe wrong. And then the big thing I think, is the privacy issue. Because HIPAA attaches. There's there's privacy concerns When you have medical information stored somewhere on a person, that employee, even though you are just a regular old employee, checking the temperature somebody and writing it down, you're now acting as you know, a quasi healthcare worker, you're doing a medical procedure, which is taking vital signs or temperature readings off of an employee, you're now recording this into a document that has their name on it,
that is now in medical record. And that in some cases could be seen as protective, protected information, which means you have to put it into an environment that is HIPAA compliant. And as any small town doctor can tell you, it's difficult and expensive to have a system that is not HIPAA compliant, become HIPAA compliant, because that means your emails have to be scanned, you're, I mean, there's all sorts of things that you have to activate your system has to be designed to be HIPAA compliant. And a lot of companies. You know, depending on what you use, you can throw some switches and it'll turn that compliance on but if you're not in that business, normally, you're not going to know how to use it. You're not going to want to use it and you won't understand it so you have privacy issues. And if for some reason you had an employee that was checking temperatures, decided to share the log with a manager that maybe not maybe has no reason to even see it, HIPAA violation, any, any employee that knows that their information was disclosed to a party that had no reason to know it can file a grievance and the government, or they can file a lawsuit or whatever, and come after you for privacy violation, because that is letting lose patient information. And finally, with the computer stuff, there's inadequate user training, if you throw stuff out, and you're not really training people on what its capabilities are, you're just saying, Hey, this is a COBie compliance program, just answer the questions. It tells you what to do. You don't tell them that they have to update it. You don't tell them that they have to put in these different things when they're setting it up or whatever. So it doesn't work right. And it leads to some bad decisions. There's liability. Now in conclusion, I think what you're going to hear from a lot of people are well in my state COVID claims are exempt. You can't sue me for that. I think they need to read the laws because with They will find is that even in cases where they're waiving liability, one is not really a liability waiver into it's very limited in scope. It's not a broad application. I'm not an attorney, certainly, please consult with an attorney. I'm not giving you legal advice. But those type of exemptions are from claims that could arise generally from a person who said they caught the disease on your property. And what the law is saying is, well, you know, you're you're expected to understand that there's a risk that way that you might catch something when you go out. So you can't sue these people for that, however, talk to an attorney, they can come up with about 90 different ways to get around that. The first being negligence or intentional acts generally are not covered by any type of waiver of liability. If you intentionally did something that you knew or had reason to know, or that anybody else with similar knowledge would have reason to know that it would lead to some type of exposure to a patron or an employee, there is liability. And on top of that, it doesn't protect you. If somebody gets Sit in your parking lot, because they're sitting on folding chairs and tables out in the parking lot with no protection as your outdoor dining area, or they're cooking food out of a box with inventory that was two weeks past the use by date that because you didn't want to get rid of inventory didn't want to have that kind of loss on your hands. So you reused it on a kit that you sell sold to somebody. Those kind of things are not usually exempt. And there's a whole big argument about it depends on what state you're in and what state law is, and all this kind of fun stuff. That's more for attorneys, certainly not for me. But in terms of risk management. Hopefully, I haven't scared you too much. But I think the the real point of all this is you need to know what your insurance are doing. And if your insurance are doing things that are way outside what you expected. You need to tell them, you may need to help them make sure that they have the insurance coverage so that they're protected. And certainly the coverage so that the brokerage the mga or the carrier is protected from not getting claims at that Ordinarily shouldn't have been covered under that particular program and you get in trouble with the underwriters or whatever or the reinsurers, it's better to know than to not know. And granted, there may be an argument of exclusion, if they're doing something that's excluded, then you shouldn't have to worry about it. But remember, you're still going to have legal fees, you're still going to have to deal with the claims, you're still going to have to deal with all the negative publicity that arises from insurance companies denying poor companies claims for not covering something that should have been covered in the first place. We're seeing that now. So it's better to get out there, find out what's going on, and make adjustments accordingly. And that's through education that's through selling, you know, other products to help them cover for the short term that they'll be doing these things. Certainly they don't need to buy a year's worth of policy to cover, you know, pop up drive in theaters, they need to be crafted just specifically for their exposure, but that's what you guys do. I mean, that's what underwriters do. That's what programs do and you can certainly put that together to protect them from loss. Certainly the agents should be working with you to give you the information. If you go through them to get the information they they may be able to find out or you can use a company like preferred reports to go out and do a visit on what their operations are now, and what they're planning on doing and what they've done since the beginning of COVID, that they may not be doing anymore that they may have discontinued, because obviously, all of that falls in the policy period. All right, thanks, folks. We didn't do a commercial break or anything like that. So no reason for that. Today, I just wanted to make sure that everyone was thinking about the other things that are going on out there, the other things that your flower shop might be doing to make money. So that way you can protect yourselves from some loss and maybe help them down the road with some additional insurance coverage or guidance on what they should or should not. Thank you for listening to inspect the cast. We'll be back next Tuesday with another show. Put the topic out on social media. As you know, we like to stay timely. So I generally don't do the topics too far in advance. Because I don't want to disappoint you and say one thing is going to be and then we'll do something else because the news has something else in it. That's much more important. So thank you for tuning in. We appreciate it. And this has been Inspectacast sponsored by preferred report.
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