The Insurance & Risk Report
September 2014
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I Can Buy Insurance For That?
Insuring Income  Loss After You Are Rebuilt
At the time of re-opening following a fire or other covered cause of loss, most businesses will continue to suffer financial loss while they regain market share.
Most standard policies only give you thirty days of coverage for this contingency following the time you are rebuilt.  This may be inadequate and longer periods up to a year or longer can be negotiated.
Lawyers Weekly Article Cites Hale Case
Involving Fire


Michael S. Hale was referenced in a cover story in the August 18, 2014 edition of Michigan Lawyers Weekly
relating to a case involving liability of a tenant for damage to space it was leasing.


Most tenant's are underinsured in this area, particularly if they do not, like this case, benefit from a waiver of subrogation in the lease.


For a copy of the article, click here.


Looking to Assess a Claim Denial?
Commercial or personal lines claim denial or reservation of rights?  We can help assess the viability of the insurer's decision and provide input on the claims process.  Call us at 248-321-8941 for additional information.
Our Experts Have Been Published In The Following:
  • Insurance Law & Practice (ICLE)
  • Michigan Lawyers Weekly
  • The Michigan Bar Journal
  • The CPCU Journal
  • The Michigan Agent Magazine
Looking to Assess a Claim Denial?
Commercial or personal lines claim denial or reservation of rights?  We can help assess the viability of the insurer's decision and provide input on the claims process.  Call us at 248-321-8941 for additional information.
How Clairmont Can Help You
  • Expert help from seasoned insurance attorneys who are also insurance brokers.
  • Checklists on commercial and personal key coverage provisions.
  • Best practices from our how-to guides on handling errors and omissions cases.
  • Time-saving sample insurance requirements provisions and waivers of subrogation.
  • Review of insurance programs and broker selection / oversight.
  • Insurance pricing reduction consultation.
  • Risk management services including contract and lease review.
Michael S. Hale, J.D., CPCU, AAI
Triple net leases pose major insurance issues.  You generally should avoid allowing someone else to insure your assets for you.  Our article on this discusses the landmines in this area.
We have found that it is common for an employer to think that any firing for any reason is grounds for the disqualification of unemployment benefits. It may not be that easy. A recent Michigan published decision reaffirms the standard in this area.
We also address younger driver insurance costs and discuss a recent case involving an insured versus insured exclusion in a liability insurance policy.

We hope that you find these articles of interest. If we can be of assistance to you, please contact us.

Please Tell Us You Are Not Allowing Your Tenant To Insure Your Assets
If you are a landlord, think twice about provisions of triple net leases that require the tenant to insure the building.  In cases we have consulted on we have seen first-hand that these arrangements are a disaster waiting to happen.  Here are five reasons:  
  1. The landlord should not be trusting an unknown party i.e. the tenant's insurance agent, to insure its assets.
  2. In these arrangements the landlord is typically listed incorrectly as a loss payee which means that if the tenant voids the policy by arson or otherwise, the landlord has no coverage. 
  3. If the tenant changes coverage or does not pay the premium, there is a real potential that the landlord will not be informed.
  4. The landlord may have big time problems in negotiating with the insurer who will likely deal with the tenant as the insured.
  5. A copy of the entire policy is rarely received by the landlord which instead relies upon a certificate that confers no rights.  
It is usually better to have the landlord insure its own assets and bill the tenant back for the premiums.
Melissa L. Hirn, Esq.
Denying Unemployment
 Benefts Where Employee Terminated for Rule Violation May Be Harder Than You Think
In a recent Michigan case, released for publication on July 15, 2014, Hodge v US Security Associates, Inc, (Docket No. 311387), the Michigan Court of Appeals addressed whether a former employee was entitled to unemployment benefits.    There, the claimant worked for the employer as a security guard and was terminated from employment for violating company rules and regulations pertaining to computer use by assisting an airline passenger with departure and arrival information.
The Court of Appeals determined that the claimant's action did not fall within the scope of misconduct as defined by the Michigan Employment Security Act (MESA).   Michigan courts have previously defined "misconduct" in the scope of the MESA as follows:

"Conduct evincing such willful or wanton disregard of an employer's interest as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to his employer."  

In applying this standard, the court determined that this violation was a good-faith error in judgment but did not constitute misconduct.
Although the misconduct standard has been previously defined by the courts in Michigan, this case further defines what courts in Michigan determine to be misconduct disqualifying a claimant from unemployment benefits.  In its analysis of several prior unemployment decisions, the Court has made it clear that not every breach of company rules and employment policies will rise to the level of misconduct.
Contractual Indemnification  - A Powerful Risk Management Tool 
Subcontractors Left Holding The Bag 

If you are a property owner or a developer, look carefully at your agreements with contractors to shift potential or actual liability for injuries.


In a July 2014 Michigan Court of Appeals decision, two

subcontractors were left equally holding the bag for the liability of the owner, general contractor and employer of the injured party.


Contractually required indemnification is a critical risk management tool. However, the language of such provisions must be carefully negotiated.  As this case demonstrates, such clauses can save the day for owners and general contractors except for their sole negligence which cannot, by Michigan law, be assumed by others.


In that case, the court looked to the plain and unambiguous language of the contract between the general contractor and the subcontractors which required the subs to indemnify all parties above them.  The provision did not require that the injury be causally related to their work given the language: "occurring in connection with the performance of the work or any activity associated with the work."


Teenage Drivers Cost Parents Lots In Increased Premiums
Michigan Averages 57%
According to, average premium increases for parents of brand new drivers are 82% for females and 110% for males.  Rates, however, decline each year on average for 19-year-olds at  48% female and 69% male.


According to the report, Michigan averages an increase of 57% for parents of new drivers but does not discriminate based upon gender.


Even though it is painful, disclose to your insurer the new driver, including those with learning permits.  If you do not, you could be risking coverage.

Insured v. Insured Exclusions - They Likely Apply To You! 
We find that insurance agents often do not give the proper attention to insured versus insured exclusions which are found in most Directors and Officers and professional liability insurance policies and appear in some specialty general liability and umbrella policies.
In a case we were recently involved with, an employee of one insured i.e. a PEO, sued another company which was insured under the same insurance program. The umbrella policy contained an insured versus insured exclusion. Since the employee was an insured under the policy, the insurer stated that there was no coverage for the company he was suing because it was also an insured under the same policy. 
Sometimes these exclusions can be negotiated away.  Where this is not possible, look for carve-backs (exceptions) to the exclusions which some insurers will provide.

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