LEGAL BRIEF

Is Your Business Covered Against That Loss? Taking Inventory of Your Insurance

By Charles S. "Steve" Setliff Owner & Managing Partner, Setliff Law

The wood products industry is unique. Like every other industry, insurance is fundamental for protection against risk and associated liabilities in the logging world. However, the word “insurance” causes most people and businesses to change the subject or postpone indefinitely coming to grips with the reality of their risk-management condition.

Companies cannot afford to have this attitude. They must understand the coverages they have in place, what losses are actually covered, and how much of their risk exposure is insured. In other words, is your insurance doing what you think it does or what you want it to do?

The first step in answering those questions is a thorough analysis and audit of your insurance as part of your company’s risk management plan. Setliff Law has had a good working relationship with Forestry Mutual Insurance Company (FMIC). Their knowledge and expertise have helped companies write the correct insurance needed to avoid legal hassles when a claim occurs. While insurance agents and brokers like FMIC are your obvious starting point in managing risk and providing insurance options, they cannot offer legal opinions on what your insurance does (or doesn’t) provide for you. In Virginia and many other jurisdictions, an insured has a duty to read its insurance policies and cannot rely on its subjective understanding of what its policies insure.

Hence, the importance of an insurance audit. The process starts with examining your company and operations under a microscope to ensure you have the necessary coverage. Information related to operations, records, employees, management, and other areas is reviewed to determine insurance exposure.

States have their laws on what types of insurance and limits are required. For example, Virginia requires workers’ compensation insurance for any business with two or more employees. Sound simple? Unfortunately, it is not, as many companies utilize independent contractors regularly and operate in multiple jurisdictions. On top of that, many companies are really separate entities but still operate in a related industry. They utilize the same employees, complicating who the employer is and what company needs to carry insurance. Does each company qualify as an insured under each policy you rely on?

Commercial general liability insurance (CGL) generally insures against liability for bodily injury, personal injury, and property damage caused during your business’s operations. In theory, it may sound like CGL would broadly cover your business from a wide variety of losses. In practice, however, a company will not find out whether it is covered for a particular loss or claim until after the claim arises. Companies must understand what losses and claims are insured before they occur, or else face the possibility of a denial of insurance coverage just at the moment insurance is most needed. Adding insult to injury, cyber and data breaches involving sensitive information have become increasingly common, exposing companies to liability in various ways until recently unthinkable. If you have cyber insurance, what losses does it exactly cover? Should you have cyber insurance?

Being proactive will help bring peace of mind to your company and clarify how insurance protects your operations. We are here to help review your existing policies in light of your risks and offer legal opinions you can rely on.

Please get in touch with Pete Schurig (pschurig@setlifflaw.com) at 804-377-1276 or Kevin Streit (kstreit@setlifflaw.com) to learn more at 804-377-1270 or visit www.forestrymutual.com.