Even with the company cutbacks in travel expenses in today's poor economic times, employees still have to take some business trips. Whether it is a company CEO networking, a sales representative hoping to make a sale, or a business professional seeking innovative business techniques, employees leave the office and travel to meetings and conventions. This travel opens up the employee to many risk exposures, including personal injury, property loss, liability claims, and crime. Fortunately for the employee, there are insurance policies that, while not eliminating those risk exposures, can at least offer some protection against loss.
What If?
While attending a convention, an employee can be either the victim or the cause of a loss, occurrences that, in general, can be covered by various insurance policies. For example, let's say Joe — the employee, not the plumber — is attending a convention in California when an earthquake strikes. Joe is severely injured. If the employer has the proper workers' compensation coverage, then Joe's bodily injury expenses will be paid under the terms of the workers' compensation policy. But what happens if Joe is on the golf course or socializing with colleagues at a bar when he is injured? Will the workers' compensation policy apply then? Is Joe in the course of employment at the time of his injuries? Neither the workers' compensation policy nor state workers' compensation laws define the phrase "in the course of employment." Invariably, this task of deciding the question usually falls to the courts.
Thus, courts decide workers' compensation coverage disputes on a case-by-case basis, but the usual guidepost is the causal connection. A connection between the employee's injuries and the employment must exist, either through the activities, the conditions, or the environment of the employment. That is, the employment must cause the injury. If Joe was playing golf or socializing in a bar to further the interests of the employer, then there is a strong case for viewing the activities as being "in the course of employment." On the other hand, if Joe was done with work for the day and was just relaxing with acquaintances, then there would be just as strong a case for no connection between the job and the injuries. This could be seen as a personal risk instead of a business risk and therefore not be covered under the workers' compensation policy. Of course, Joe (hopefully) has his health insurance as a backup, just in case workers' compensation benefits are denied.
Another example involves crime. Let's assume that Joe is attending a business convention in Las Vegas when he is mugged and robbed — not by the slot machines but actual assailants. Or, perhaps someone breaks into Joe's hotel room and steals his money, credit cards, and computer. If the property (such as a computer) belongs to the employer, then a theft loss would be covered by the employer's commercial property form, although that form does limit the amount paid for such an off-premises loss. If the property belongs to Joe, then he will look to his homeowners' policy to cover the loss of his property. The typical homeowners' policy covers a loss of personal property due to theft anywhere in the world. However, there are limits specified in the policy for certain items.
A standard homeowners' policy lists the following limits: a $200 limit of liability on money; a $1,500 limit for theft of jewelry and watches; a $500 limit on property away from the residence premises used primarily for business purposes; a $1,500 limit on electronic apparatus and accessories; and a $500 limit of liability for the legal obligation of an insured to pay because of the theft or unauthorized use of credit cards issued to the named insured homeowner. The insured should note that particular insurers may apply different limits of liability for these items, so it is important to review the policy for this information.
Injured and Injurer
Now, on the other side of the coin for the convention-going employee is when he or she is the cause of the loss. Let's ponder another scenario. Diana, another hypothetical employee, is manning the company information booth when she accidentally injures a customer by dropping a computer on him. Or, perhaps Diana is playing golf with business associates and runs over someone with a golf cart. Her bad luck continues, as she rents a car and causes an accident, severely injuring another driver and demolishing that driver's car. In any of these situations, much depends on whether Diana is acting within the scope of her employment.
The general liability (CGL) policy of the employer considers employees to be insureds for acts within the scope of employment or while performing duties related to the conduct of the business. So, the dropping of the computer while at the information booth would be within the scope of employment and Diana would receive liability coverage under the company's CGL form. Diana's homeowner's policy has an exclusion pertaining to injury or damage arising out of or in connection with a business engaged in by the insured, whether the business is owned or operated by the insured. Therefore, injuries or damages arising out of any business-related activity by Diana will not be covered by her homeowner's policy. If Diana causes injury or property damage to another person while not engaged in any business activity, then her homeowner's policy will provide the liability coverage, as that coverage is effective for the insured anywhere in the world.
Liability coverage for running over someone on the golf course is quite generous to the insured. The homeowner's policy does allow coverage for motor vehicle liability if the vehicle is a motorized golf cart while on a golfing facility. In addition, the homeowner's policy does provide liability coverage for the use of a motor vehicle, such as a golf cart designed for recreational use off public roads and not owned by the insured. So, whether the use of the golf cart by Diana is for business purposes or otherwise, her homeowner's policy will provide liability coverage for her. Also, the employer's general liability policy will provide liability coverage for the employee acting within the scope of employment while using mobile equipment, and golf carts are mobile equipment. Either way, Diana will have liability coverage for the injuries she caused with the golf cart. As for her auto accident, that won't be covered by either the CGL form or the homeowner's policy. This is because both exclude bodily injury or property damage arising out of the use of automobiles. Diana will have to look to the business auto policy (BAP) or the personal auto policy (PAP) for coverage.
The BAP will provide liability coverage for Diana as an employee if the named insured employer has chosen the correct covered auto designation symbol, and if Diana is considered an insured under the terms of the BAP. If the named insured has chosen symbol 1 — any auto, or symbol 8, hired autos — as the covered auto designation symbol, then any auto the named insured rents or hires will be a covered auto. As such, the employee, as a permissive driver, will be considered an insured under the BAP for the use of that auto. Now, if Diana rents the vehicle in her own name, then the automobile would be covered if the named insured had chosen symbol 1 or symbol 9, non-owned autos. However, Diana would be considered an insured under the BAP only if the employee-hired auto endorsement is attached to the BAP. This endorsement specifically makes an employee an insured while operating an auto rented under a contract in that employee's name with the named insured's permission and while performing duties related to the conduct of the business.
Diana's personal auto policy will pay damages for bodily injury or property damage for which she becomes legally responsible because of an auto accident. Because Diana is the named insured, she is an insured for the use of any auto. Therefore, the auto she rented falls into this category, meaning that Diana has insurance coverage under her PAP for the auto injuries and damages she caused while at the convention. There is an exclusion on the standard PAP for using any vehicle while the insured is engaged in any business; however, this exclusion does not apply to the use of a private passenger automobile, pickup, or van. So, unless Diana has rented a truck to drive around the convention city, the business exclusion on the PAP won't affect her coverage.
Now, the potential losses discussed above are just some of the risk exposures that convention-goers can face. But with insurance policies that provide proper coverage and adequate limits of insurance, neither Joe nor Diana should worry about losing more than a little sleep.
David D. Thamann, JD, CPCU, ARM, is managing editor for the FC&S Bulletins. He may be reached at dthamann@nuco.com.
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