Tag Archives: General Liability

Does The Peanut Corporation of America Have Product Liability Insurance?

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The technical answer to the question, does the Peanut Corporation of America have product liability insurance?’ is “yes”; however, the real answer may be “no”.

Of course the Peanut Corporation of America has a product liability insurance policy, but it may not provide any coverage because of the “intentional acts exclusion” in the policy.

It appears that via email the company president, Stewart Parnell, was informed by the plant manager, Sammy Lightsey, of a positive Salmonella test and despite of that warning instructed the plant manager to ship the products.

Typically, a commercial general liability policy states that the policy does not cover “bodily injury” or “property damage” expected or intended from the standpoint of the insured.  It could be easily argued that Stewart Parnell and Sammy Lightsey could have reasonably expected consumers to get sick and possibly die because of the positive Salmonella test and chose to ignore the positive test and warnings for profit.

The Peanut Corporation of America’s insurance carrier, Hartford Casualty Insurance Company, will be within their rights, in my opinion, to deny the claim. However, based on an inside source at The Hartford, it is more likely The Hartford will pay the $10,000,000 in policy aggregate limits and wash their hands of the ugly mess.

From The Hartford’s viewpoint, even if they could successfully deny product liability coverage based on the “intentional acts exclusion”, they would still pay out the full $10,000,000 in policy limits sooner or later.  All the insurance carriers of the manufacturers such as Cliff Bar and Hershey that used Peanut Corporation of America’s products in their finished products and were sued, as a result, would sue The Hartford to recover their losses.

4 Ways You Can Assume The Liabilities of The Company You Are Purchasing

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While in most cases the company that purchases the assets of another company does not inherit the seller’s liability, there are four exceptions every buyer should be aware of that might transfer liability to buyer or purchasing company.

  1. Examine the purchase agreement carefully.  It may require the buyer to assume the predecessor’s liabilities.
  2. The transaction might be viewed as a merger.  In a merger, the selling company or predecessor’s rights and liabilities transfer to the buyer or surviving entity.
  3. If the company buying the other company is a similar business to the company they are buying, it may be viewed as a continuation of the seller’s operation.
  4. If it is determined that the transaction was fraudulent or for the purpose of the seller to avoid liability, liability could be transferred to the company that purchased the assets.

If any of the above possibilities exist, I recommend that you not only carry a product liability policy with higher than average liability limits, but that you also carry a product recall policy for added protection of you assets.

How Accidents and Your Independent Subcontractors Can Bring Your Business Down

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Do you assume that because you are using independent subcontractors that you are insulated for most, if not all, of the wrong doings of the independent subcontractors you hire?

 

You may find that your independent subs are not as independent as you think in the eyes of the courts and that your independent subcontractor is, in fact, an employee.

 

It is extremely important for businesses to understand that when there is a catastrophic accident, large medical expenses and lawsuits are almost a given in today’s litigious environment and the search for deep pockets by attorneys of injured parties are sure to follow. If, after an accident, your independent sub contractor is found to be an employee, you could be responsible have to pay out of pocket for Worker Compensation benefits such as lost pay and medical expenses and incur lawsuit expenses such as defense cost, settlements and judgments.

 

This is why it is so important to understand if you independent subcontractor could be classified as an employee and take the proper risk management steps to protect your business.

 

To better determine if your subcontractors could be classified as an employee, I recommend that you read Cary Christian’s article “Employee vs. Subcontractor Issues” by going to http://www.peakconsultinginc.com/Articles/employee_vs_independent_contract.htm.   

 

Under most state laws, when there is liability for an auto accident the order of responsibility to pay is as follows:

 

  1. The owner of the vehicle (possibly uninsured or underinsured). 
  2. The driver of the vehicle (possibly uninsured or underinsured). 
  3. The organization or business that was responsible for the driver or owner of the vehicle being on the road at the time of the accident.

 

Two risk management tools I recommend is to 1) have all your subcontractors carry at least $1,000,000 minimum limits of liability on their auto policy so there is enough money to satisfy the judgment in the event of a lawsuit and have the sub provide you a Certificate of Insurance as proof of coverage and 2) always carry Hired & Non-Owned Auto Liability with a minimum $1,000,000 limits on your General Liability or Business Auto policy.  Hired & Non-Owned Auto Liability will provide the needed liability coverage to help your business survive; in the event your independent subcontractor is classified as an employee.