BAR LIABILITY ARTICLE
015 always insisted on liability coverage for bar fights and the like , and the Court agreed this evidence was sufficient to prevent dismissal of the claim for coverage by summary judgment .
Although application of this doctrine requires more than the insured ’ s “ fervent hope ,” of coverage , the Fall opinion highlights the potential pitfall carriers may find themselves in if they rely solely on the limitations or exclusions from coverage provided by the assault and battery endorsement , without additional investigation . The lack of specific , authoritative case law on coverage combined with the potential for excess exposure can leave Defendants in a precarious situation , and more than happy to assign their rights against the carrier to an injured party . Practically speaking , in cases where the Plaintiff ’ s primary injury was caused or related to any contact with other patrons or bar employees , confirming the existence of any sub-limits or exclusions is the first step in a carrier ’ s coverage analysis , but it should not be the last step .
Based on the Court ’ s analysis in Fall , instead of relying on the lack of ambiguity of an endorsement , a claims handler has to watch out for the reasonable expectations of coverage and should also investigate and review the underwriting of the policy , before denying coverage , to determine if the insureds discussed the costs and coverage options regarding assault and battery endorsements , or if they asked for and were promised coverage “ for bar fights .” In situations where the insured also has policies on other bars or restaurants , carriers should identify if those other policies contain similar endorsements , to avoid arguments that they expected the coverages in all of their policies to be equivalent , as was argued in Fall .
Moving forward , to ensure the validity of endorsements limiting or excluding coverage , carriers may want to consider requiring additional signatures for these endorsements , similar to the specific waiver that is required to turn down UM / UIM coverage in automobile policies . A signed waiver would allow carriers to continue to offer lower premiums to small or newer businesses without fear of a subsequent coverage and bad faith case based on the reasonable expectations of the insured .
Drawing attention to these endorsements also benefits the insureds themselves . On one hand , if an insured specifically waives coverage , or agrees to a limitation , then they at the very least were given notice concerning the parameters of their coverage , and ostensibly have the opportunity to preemptively prepare for accidents and claims that may not be covered . They could do this by saving for additional self-insurance , or by mandating additional security training and oversight on behalf of their employees in regard to bar fights . On the other hand , more risk-averse insureds may opt instead to spend the additional money in higher premiums for policies without exclusions or with higher sub-limits . Either way , fully informing insureds about the contents of their commercial liability policies from the start protects both the insureds and carriers in the long-run while also preventing further “ after the fact ” reasonable expectation attacks on assault and battery endorsements .
ABOUT THE AUTHOR MICHAEL HENSLEY
Mike concentrates his practice on general civil litigation and insurance defense litigation of all types , including life , health , disability and ERISA claims litigation , Bad Faith defense , professional liability defense , employment law and employee benefits law .
602.263.1775 | mhensley @ jshfirm . com
ABOUT THE AUTHOR ERICA SPURLOCK
Erica focuses her practice on dram shop / social host liability defense , personal injury defense , general liability defense and employment law . She has established a fundamental background in dram shop defense by working for several restaurants and catering companies filling a variety of front-of-house positions .
602.263.1775 | espurlock @ jshfirm . com