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Who Is Insured?
There are five basic requirements that must be satisfied before an insurance policy will respond to a loss:
- If the policy is an occurrence policy, the insurance must be in effect at the time of the loss. If the policy is a claims made policy, the insurance must be in effect at the time of the claim.
- The allegation must trigger coverage
- The loss must occur in the coverage territory
- The loss must not be excluded by the policy
- The entity being asked to pay must be an insured under the policy.
If all of these requirements are satisfied, the insurance policy will respond. If not things can get troublesome.
Insurance companies have been fighting with their customers since the earliest days of the modern insurance industry, when merchants pooled their assets at places like Lloyd's of London to protect against individual cargoes being lost at sea. Unfortunately, then as now, the question that is the easiest to address before the claim is the one that presents the biggest problem after the claim: Who is insured?
We felt it was important for insurance companies to thoroughly understand the structure and interrelationships of the labor organizations they insure. We wanted to be sure that everyone knew the answer to the question: Is the entity being asked to pay an insured under the policy?
The definition of insured varies from policy to policy. The following is an overview of the entities named under various liability contracts:
Union Liability: The Union and all natural persons who were, are, or become directors, trustees, officers, employees, committee members, shop stewards, volunteers, or business agents whether or not they are salaried, of the Union, solely in their capacities as such; or any other person acting on behalf of the Union or at the written direction of an officer or director of the Union.
Fiduciary Liability: Employee Benefit Plan(s), Trustees, Employees of the Plan (In some cases the Administrator may be insured.)
Commercial General Liability: Named Insured, Officers, Directors, Stockholders, Real Estate Managers, New Acquired Corporations, (sometimes employees)
Business Auto Policy: Named Insured, others using covered autos with permission (except: owner of auto, employee using own auto)
Employer’s Liability: Named Insured
Liquor Liability: Named Insured and employees.
The questions were:
- How do you define local?
- How do you describe the relationship between locals, district councils, regions and the international?
- What are the responsibilities of each body to the others?
- Where are these definitions, relationships, and responsibilities in your constitution?
What we found were numerous definitions and significant variations in the explanations of the relationships. We regret that we are no closer to coming up with a universal description. In the meantime, we continue to see debates between our insureds and the insurance companies. What follows are just a few of the disputed claims:
The insured believed their policy covered all locals affiliated with the district council.
A local union officer contended he was functioning at the direction of the international. The local and the individual were sued. The international was not.
Plaintiffs alleged that a local union was the "actual and implied" agent of the international and that the international failed to oppose discriminatory practices in the local’s training fund. All three entities were sued. Only one, the international, had insurance.
The issue is further complicated by the increase in the practice of forming strategic alliances among unions for organizing, education and political activity. We are concerned that these may be viewed as "joint ventures" by insurance carriers.
Review your own policies today!
- Check the Named Insured that appears on the declarations page of each of your policies. Are there any entities—other than the entities shown in the exhibit—which might be asked to pay?
- Joint ventures create special coverage problems because no person or organization is an insured with respect to the conduct of any past partnership or joint venture unless that entity is shown as a Named insured in the Declarations. Have you ever joint ventured with other organizations?
- Do you employ any professionals (for example: doctors, nurses, architects, engineers, lawyers, actuaries)?
- Have you signed any contacts, leases or indemnification agreements?
If you have answered "yes" to any of these questions, you need to make sure all entities that might be asked to pay are insured under all your policies.
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SOLUTIONS is a service of The McLaughlin Company and Creative Risk Management, Inc.—offering you timely and creative solutions to all your INSURANCE and RISK MANAGEMENT needs.
THE McLAUGHLIN COMPANY
CREATIVE RISK MANAGEMENT, INC.
1725 DeSales Street, NW
Washington DC 20036
Fax 202-857-8355 - 800-233-2258 - 202-293-5566
