INSURING YOUR PRESENT AND FUTURE PACDC WORKSHOP – February 24, 2011 Jay Barry Harris, Esquire Fineman Krekstein & Harris James R. Domenick Domenick & Associates

OVERVIEW CASE STUDY Lessons learned How your broker and lawyer can assist you GENERAL ISSUES Replacement Costs Material change of risk Reporting a loss CHECKLISTS

LESSON LEARNED Insufficient coverage Insufficient security on the property Insufficient safety measures taken Insufficient evaluation of the risk

BROKER’S ASSISTANCE Evaluating risk Recommending insurance that address the risk Helping to determine the policy limits – Concept of Probable Maximum Loss as it pertains to third party liability

LAWYER’S ASSISTANCE Initiate settlement discussions Evaluate Bad Faith exposure

CASE STUDY Hankinson v. American Western Home FACTS Residential property located at 70 Cabin Road, Tunkhannock, PA Owner lived in Alabama Unoccupied and for Sale Insured for three months for $125,000 as a vacant property and $1,000,000 for liability Owner stated that regular checks were being made to protect the vacant building

CASE STUDY Hankinson v. American Western Home FACTS Policy contained vacancy and secured premises warranties Former partner rented the property to tenants without owner’s consent or knowledge Arson fire Tenant injured and the property destroyed Lawsuits by owner and tenant

LESSON LEARNED Property was inadequately secured Representation in the application process is critical Knowledge and complicity of owner were irrelevant

BROKER’S ASSISTANCE Explain coverages Explain exclusions and warranties

LAWYER’S ASSISTANCE Judge’s role in interpreting the policy Exclusions v. Warranties

GENERAL ISSUES Replacement Cost v. Actual Cash Value Legal Duties of a landowner Duty of care Responsibility of the municipality Material Change of Risk Impact on coverage Insured’s duty to report material changes

GENERAL ISSUES Reporting a Loss Notice of loss Sworn statement under oath Duty to cooperate Shielding your assets