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John Buric

As an individual, business owner or a landlord, you are often presented with actual or potential claims by individuals who allege they have suffered personal injuries or property damage on your premises. Depending on the type and the nature of the claim, and the relevant facts, many people are often confused over whether a claim is insured, whether a claim should be submitted to their insurance carrier, and the type of information to provide to the alleged victim.

Generally, individuals and businesses are not liable for injuries or damages which occur on the premises unless they acted negligently or violated a legal requirement. Typically, and in order to be liable, you must have acted negligently by falling below the standard of care of a reasonable person under the circumstances. In many cases there is no bright line definition of exactly what type of conduct constitutes negligence. As a result, liability often hinges on the specific facts.

Except for certain types of events such as automobile accidents, you typically are not under an obligation to provide your insurance information to someone who asserts a claim. You can gather the claim information from the alleged victim and submit it to your own insurance carrier, if appropriate under the circumstances. However, unless and until you are sued (if that ever occurs), you are generally not under an obligation to disclose your insurance information.

When you do submit a claim to your insurance carrier, many insurance carriers report your claim to the Comprehensive Loss Underwriting Exchange (“CLUE”). The CLUE system works as an information exchange system among insurance carriers, allowing them to assess the risk of insuring you. If you have too many claims (even if small or unwarranted), too many payouts or too much risk, your insurance carrier may raise your rates, decline to insure you or cancel your insurance. Further, other insurance carriers may decline to insure you in the future. As a consequence, many businesses resolve smaller claims on their own rather report them to their insurance carrier.

If you do have a claim of substance, it is important to first determine whether you have insurance coverage for the claim and whether your insurance policy requires you to report the claim within a certain period of time. Often times what you think you are insured against and what you are actually insured against may be two different things. Insurance policies frequently contain very complicated language and exclusions which seem incomprehensible to lay people and can even be difficult for some attorneys to comprehend. Because of this complexity, many individuals and business request an attorney to examine their policy of insurance before submitting an insurance claim. After all, if you submit a claim, it may be reported to the CLUE system even if the claim is not covered by your insurance. Thus, you can suffer at both ends, by not being insured for the claim and by adding a black mark against your insurability.

In other instances when you submit a claim to your insurance carrier, your insurance carrier may deny coverage for the claim. In such events, I strongly recommend that you have a qualified attorney examine your policy of insurance to determine whether the claim truly is not insured. Insurance carriers can and do err when it comes to determining whether or not a claim is insured. If an error is made, an attorney can often assist in pointing out the erroneous evaluation performed by the insurance carrier, which may then result in coverage. If the insurer wrongfully fails to provide coverage, then you may have the right to sue the insurance carrier for acting in bad faith. It is also important to recognize that, depending on the facts of the claim and the type of insurance policy, some claims may be covered by more than one policy of insurance, even among different insurance providers, providing you with added benefits.

You pay a lot of money for insurance protection. However, utilizing the insurance system can be complicated and risky, and it should be approached in a cautious manner.

This article was originally published in 2008.