We ARE Risk Retention Services
Risk Retention Services is proud of its history serving the ladder industry as the premier ladder claims service. Still, with the changing market, and economic conditions, we have had to broaden our services and target markets. We now also serve theme parks, resorts, athletic exercise products, and other markets that are diverse, but share the philosophy of “No Liability, No Payment.” Risk Retention Services has also broadened its services.

We provide risk analysis, insurance consultation, and even prosecute first party claims on behalf of our clients. For example, we have represented a large manufacturer who suffered a fire loss, after the insurer low-balled its business interruption claim. A while back, we dropped the name “Ladder Management Services,” not to distance ourselves from our past, but to better describe the diversity of our services and client markets. We are more than ladders. But we still do ladders better than anyone in the business.

AN INSURER DENIES YOUR CLAIM OR TENDER – NOW WHAT?
Insurers are adept at collecting premiums. Back in the good-old-days, insurers would not concentrate their efforts at avoiding claims, instead recognizing their duty of good faith. These days, things have changed. Many insurers routinely challenge claims for a myriad of reasons. Sometimes, they claim that the notice of the claim was too late. Sometimes, they deny a claim based upon an ambiguous provision in the policy.

For example, where a component of a product turns out to be defective, it is perfectly appropriate to tender any resulting claims to the manufacturer of that component. Still, insurers for the manufacturer may deny that tender for a bunches and bunches of reasons, such as failure to have a written contract, the vendor “may” be independently negligent, or the “vendor” insurance should be primary. Or, the insurer may claim that they did not receive notice of a claim in a timely fashion. One example is where a retailer of a product (or distributor) received notice of an accident or injury. The retailer did not notify the underlying manufacturer.

Two years later, suit is filed and the claimant sues the manufacturer and the distributor. The insurer denies the claim – of both. The insurer took the position that, since the distributor was an insured under the policy; and because the insured has a duty to timely report the claim, there was no coverage under the policy. Under these circumstances, the manufacturer/insured is not without remedies. In many states, in order to deny coverage, the insurer must show that it is actually harmed by any act of the insured that did not comply with the policy.

But which state law should apply? Should it be the insurer’s state (place where the contract was drafted)? Should it be the place where the claim arose? Or should it be the manufacturer’s state? These are questions called “choice of law” and need to be analyzed. Often, choice of the applicable law will determine whether you have coverage, and will dictate your course of action. In a recent case, we handled a claim of a company in exactly that situation. Understanding that, the insurer having denied the claim, we stillneeded a defense, we directed the attorney to conduct limited discovery in the underlying case to show that the memories of witnesses remained fresh, the product had been preserved, and that therefore, the insurer had not been harmed in its investigation.

We retained an attorney in an appropriate state to file suit, and notified the insurer of the upcoming litigation. Understanding that the law was against them, and that punitive damages (in that state) were available, the insurer immediately promised to refund all costs expended to date, allowed the insured to keep the same attorney, and accepted coverage without reservation. You are not without remedy when an insurer improperly rejects a tender from you or a vendor under your coverage, but you need to properly implement a strategy to maximize the chance that you will prevail, in court if necessary, to obtain coverage.

In almost every state, where an insurer has wrongfully denied coverage, you are entitled to recover not only the fees expended (above SIR) in the underlying action, but the costs and attorney fees incurred in the lawsuit to obtain coverage. Many states permit punitive damages. Similarly, where an insurer has wrongfully decided to deny coverage to a vendor, it is important that you immediately establish a strategy with your attorney to establish that coverage for the vendor was appropriate. Once established (presumably within the SIR), you can obtain coverage for the vendor.

You need to move quickly, because until coverage is accepted, there will be two (2) attorneys involved in the defense of the claim, and your SIR will effectively be eroded twice as fast. As an aside, it is useful to remember that it is often easier to anticipate the insurer’s reaction before a claim is filed. A purchasing agreement whereby the manufacturer agrees to provide insurance to the vendor which is “primary and non-contributory” will eliminate many of the excuses an insurer may have for not providing insurance coverage to vendors.

Still, even where the manufacturer has taken every reasonable precaution to protect himself and his vendors from a denial of a claim or denial of a tender, insurers may still decline coverage. When that happens, you must be prepared to meet the insurer head-on, and take appropriate actions to obtain the benefits of the insurance (like, coverage) you paid for. Paul Junius of Risk Retention Services is recognized as an expert in handling tenders to insurers, and how to address and deal with insurers who refuse tenders. He has been selected as a panelist at an upcoming Defense Research Institute seminar in Chicago, Illinois, addressing the issue of claim tenders and insurer refusals of coverage – and how to handle such situations.

ACTIVITY REPORT
Over the past quarter RRS closed 33 matters, including four lawsuits and 29 non-litigated claims. All four lawsuits effectively stayed within RRS control, by insurer acquiescence or because they were within the SIR. Two resulted in dismissals on motions for summary judgment, and the other two resulted in defense verdicts at trial. We also closed 29 claims. Only two claims had any payments whatsoever (one paid $1,000, the other $500.00). However, while while simple arithmetic would indicate that the average payment for claims was approximately $57.00, this could be misleading.

In many cases, the claimants were provided with a replacement product as a gesture of goodwill – in exchange for a full and complete release.