Managing Liability Claims against third party lawsuits

As a commercial property owner, you may have had the unfortunate circumstance of being involved in a third party lawsuit. Fortunately, there are insurance policies available to protect Owners against these types of actions.

A standard Commercial General Liability (CGL) policy will pay, on behalf of the owner, all sums obligated to be paid by reason of liability imposed by law, including payment of defense costs, for third party bodily injury and property damage claims. To successfully defend a suit alleging negligence, the property owner must provide evidence showing they did not cause the alleged damages, that a duty of care was not owed to the plaintiff, or that the owner exercised reasonable care and was not negligent in the cause of the alleged damages.  It is therefore critical that Owner’s develop incident reporting protocols to ensure that all incidents that occur on their property are well documented.

Of course, in many instances, the responsibility for the operation, maintenance and safety of a commercial property is transferred to a property manager.  This does not mean however that the property manager assumes the liability of the Owner.  In fact, it is common practice for Owner’s to indemnify the property manager for these types of suits with limited exceptions.  As such, it is important for owner’s to engage competent property managers who exercise a high degree of care in managing the property while also ensuring they follow appropriate incident reporting protocols designed to protect the Owner’s interests in the event of a claim.

Whether the property is insured by the property owner or the property manager, failure to report incidents can lead to insurers denying coverage.  Prompt reporting also assists in protecting the rights of the owners and/or property managers and allowing for early incident investigation and gathering of information for defense purposes.

INTECH recommends the following plan to help guide you on the right path.  The following should occur simultaneously:

• Report – promptly report the claim/incident to the appropriate parties as outlined in the claims reporting protocol (i.e. control adjuster, broker, risk manager or insurer).
• Document – document the events that lead to the incident/claim and those that followed immediately after; (the “what, where, when, how, and who.”) is critical in assisting the insurer in determining coverage and liability.
• Cooperate – whenever requested by the insurer, the owner must aid in securing information and evidence.

It is important to note that a standard policy condition within the CGL policy prohibits an owner or property manager from:

• Voluntarily assuming any liability or settling any claim except at the owners own cost; or
• Interfering in any negotiations for settlement or in any legal proceeding.

Please do not hesitate to reach our to one of our experienced Risk Consultants for assistance in the development of incident and claims reporting protocols designed to protect your rights and preserve coverage in the event of a claim.

TYLER TOWNSEND
Senior Manager, Risk & Insurance Services
ttownsend@intechrisk.com

About INTECH

INTECH Risk Management (“INTECH”) is an independent insurance consulting company involved in the analysis, design, development, implementation and management of insurance programs. INTECH does not sell insurance, nor is it affiliated with any insurance company or brokerage.  This unique independent position in the marketplace enables our consultants to avoid conflicts of interest and provide our clients with unbiased, expert advice. INTECH has been the 2015 and 2016 winning recipient of the IJGlobal Americas Due Diligence Provider of the Year Award.

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