Insurance coverage and risk management remain a hot topic during the pandemic. This is the second in a two-article series highlighting the most frequently asked COVID-related questions I have received from my insurance clients.
Q. What are the liability risks if my hospital offers a pet taxi service?
A. You must consider two major exposures. First, ensure that you have adequate animal bailee in-transit coverage, which responds if an animal escapes during transport or is injured or killed in a traffic accident. (Read more in Part 1 at bit.ly/tvb-covid-insurance.) The second exposure involves an at-fault accident. In most states, three entities can be held liable for third-party bodily injury or property damage: the vehicle’s driver, the vehicle’s owner, and the business that owns the vehicle or on whose behalf the vehicle was being used.
To determine potential liability and how auto coverage would respond, who owns the vehicle must be determined first. If the vehicle is owned by and titled in the veterinary practice’s name and insured under a business auto policy, the policy will cover injuries to passengers in the business vehicle, pedestrians and other vehicles. Damage to personal and commercial property will be subject to the policy limits. A lawsuit filed against the driver or business would be covered under the business auto policy. The liability limits are generally $500,000 or $1 million per occurrence.
All injuries incurred by employees would be covered by the practice’s worker’s compensation policy.
Assuming the clinic’s vehicle has collision coverage, any repairs to or replacement of the vehicle would fall under the business auto policy.
If the vehicle is owned by an employee, the practice owner or another third party, the vehicle will be insured through a personal auto policy not associated with the business. This is a very different scenario. In this case, the vehicle owner’s personal auto policy should respond to claims of bodily injury to passengers in each vehicle and pedestrians, and damage to personal or commercial property.
Once again, any payouts are subject to liability limits. Unlike business auto policies, personal auto policies often have lower limits — as little as $15,000 for the death or injury to one person and $30,000 for multiple people.
If the cost of injuries and property damage exceeds the vehicle owner’s policy limits, be assured that the veterinary practice for which the employee was doing business will be sued.
Furthermore, the vehicle owner’s personal auto policy will not respond to a lawsuit filed against the clinic. Practice owners should make sure that their business liability policy has a hired and non-owned auto endorsement. What is important to note is that a hired and non-owned auto policy typically provides liability coverage for the business but not the driver. The driver’s personal policy is designed to provide liability protection up to the limits.
Q. How do deductibles work if an employee gets in a traffic accident while driving either a clinic or personal vehicle on company business?
A. In the case of a clinic-owned vehicle, the practice is responsible for any policy deductibles. However, if a personal vehicle was used and was not subject to any state COVID exemptions for essential delivery services, then any deductible would be the vehicle owner’s responsibility. The business’s liability policy would not pay the vehicle owner’s deductible.
Q. As essential businesses, veterinary practices have remained open during the COVID-19 crisis. The additional stress on the entire health care team is well documented in the veterinary literature. How do practices protect themselves from employee-related claims during these stressful times?
A. As noted in the question, an extensive number of articles on the subject have been published. Leveraging the advice of mental health professionals is certainly advisable.
From an insurance standpoint, employment practices liability insurance (EPLI) provides legal and financial protection against employee allegations such as workplace harassment, discrimination, retaliation and breach of an employment contract. Some standard business property and liability policies include a minimal amount of EPLI coverage. The typical limits are woefully insufficient to defend the average claim, which can easily exceed $100,000. Procuring either an expanded EPLI endorsement or a standalone EPLI policy containing broader coverage and higher limits is strongly recommended during these uncertain times.
Q. Since COVID-19 began, we prevented clients from entering our clinic. Now, we are permitting them to re-enter. What are the risks?
A. First, all team members and clients should strictly adhere to appropriate and ongoing COVID-19 precautions. The risk of human-to-human infectious disease transmission increases significantly once clients re-enter the practice.
Second, now is a good time to reassess the property and safety protocols both outside and inside your clinic. Anytime a client steps foot on your property, whether it’s owned or leased, your practice becomes potentially liable for a claim of bodily injury. As clients exit their cars, the condition of your parking lot and the location and colors of tire barriers, steps and entryways all pose potential injury risks.
The risk often magnifies when someone enters your clinic. Handling animals in a confined, stressful environment creates a variety of potential issues. Slips, trips and falls are common. Likewise, bites, scratches and other animal-caused injuries are possible. In most instances, the hospital’s general liability policy will respond to allegations of injury arising from a client’s presence on your property.
Q. We heard that cyberattacks increased dramatically during the pandemic. What are the potential exposures?
A. As more and more sensitive data is stored or shared globally, the boundaries of cyberliability have expanded dramatically. More than ever, practices are looking to vendors to host services that require the electronic sharing of sensitive data. Although business partners such as credit card processors, payroll administrators and cloud-based data-storage providers handle your proprietary information, the customer (your veterinary hospital) typically bears ultimate responsibility for protecting the information and responding appropriately in the event of a breach. Considering that almost half of all data breaches take place while the data is with a third-party vendor and the majority of cyberattacks are against small businesses, you likely have significant exposure if you transmit proprietary information such as payroll records or credit card numbers. Even if you save credit card numbers in your practice management information system, hackers can access the data during transmission or get into the cache system of your computers or servers. I recommend you do two things:
- Understand your vendors’ contractual responsibilities.
- Consider procuring a network security/cyberliability insurance policy. Some standard business policies provide limited cyber- or data-protection coverage. However, this is insufficient in virtually all instances given the risks and costs of such an attack on your practice. The good news is that good network security/cyberliability policies are available in today’s insurance marketplace at a very reasonable cost.
I have heard many times, “We have an IT expert or vendor who keeps our system safe.” My response is, “So did Apple, eBay, Equifax, Target, Home Depot, Capital One and the Pentagon. They have all been hacked by cybercriminals. Can you afford to take the chance that you, too, are wrong?”
HOW SAFE ARE YOUR DRIVERS?
The Occupational Safety and Health Administration recommends that businesses confirm that an employee is fit to drive on behalf of the company.
“You must screen out drivers who have poor driving records since they are most likely to cause problems in the future,” OSHA reported, summarizing advice from the non-profit Network of Employers for Traffic Safety. “(Motor vehicle records) should be reviewed periodically to ensure that the driver maintains a good driving record. Clearly define the number of violations an employee/driver can have before losing the privilege of driving for work, and provide training where indicated.”
Businesses might be able to obtain an employee’s driving record directly from their state department of motor vehicles. Other options are to purchase the record from a third-party vendor or have the employee request the record from the state.