Winter 2011
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Bret Dixon Insurance News
Our newsletters are intended to keep you up to date on pertinent industry news and offer more in-depth insight into various types of coverage and endorsements.  We publish our newsletters at least once each quarter.  We hope you enjoy it.
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8:30am - 2pm
All times are Central

We will be closed Monday, Feb. 21st in observance of President's Day.

2011 Illinois Dram Shop Statutory Limits

The 1998 amendments to the Illinois Liquor Control Act, commonly known as the Dram Shop Act, require that every January 20th, the Illinois Comptroller determines the increase or decrease in the liability limits for causes of action brought under the Act, in accordance with the consumer price index (CPI-U) published by the Bureaus of Labor Statistics.


The 2011 figures are based on an increase in the CPI-U of 1.5% from 2010.  The liability limits for claims occurring on or after January 20th, 2011 are $61,151.39 for bodily injury and property damage, and $74,740.59 for either loss of means of support or loss of society resulting from the death or injury of any person.


For perspective, below are the limits over the last decade.
Bodily Injury
2001:  $48,541.52
2002:  $49,293.91
2003:  $50,467.11
2004:  $51,415.89
2005:  $53,092.05
2006:  $54,907.80
2007:  $56,302.45
2008:  $58,599.59
2009:  $58,652.33
2010:  $60,247.68
2011:  $61,151.39
Property Damage
2001:  $48,541.52
2002:  $49,293.91
2003:  $50,467.11
2004:  $51,415.89
2005:  $53,092.05
2006:  $54,907.80
2007:  $56,302.45
2008:  $58,599.59
2009:  $58,652.33
2010:  $60,247.68
2011:  $61,151.39
Loss of Society/Loss of Means of Support
2001:  $59,328.52
2002:  $60,248.12
2003:  $61,682.02
2004:  $62,841.64
2005:  $64,890.28
2006:  $67,109.53
2007:  $68,814.11
2008:  $71,621.72
2009:  $71,686.18
2010:  $73,636.05
2011:  $74,740.59
Percent of Change
2002:  +1.55%
2003:  +2.38%
2004:  +1.88%
2005:  +3.26%
2006:  +3.42%
2007:  +2.54%
2008:  +4.08%
2009:  +0.09%
2010:  +2.72%
2011:  +1.50%


The numbers speak for themselves. In the last ten years, Bodily Injury and Property Damage have risen by $12,609.87, respectively, while Loss of Society/Loss of Means of Support has increased by $15,412.07.  The lesson we try to stress to our clients is that the cost of Liquor Liability claims goes up every year.  If you're still carrying the state minimum of $300,000 in liquor liability coverage you have a potentially dangerous exposure, and one that is often inexpensive to remedy.

In a one person claim, you very well may be ok with a lower liability limit.  But even a two person claim, with maximum damages awarded per person for Bodily Injury, Property Damage and LS/LMS, you could face a potential claim well north of $300,000 - putting you almost $100,000 out of pocket without considering whether your policy limit includes or excludes defense costs.
Even with a $500,000 Liquor Liability limit, it doesn't take much stretching of the imagination to envision a potential claim that would exhaust half a million dollars of coverage.  Increasing damage settlements such as this are precisely the reason that $1 Million in liquor liability coverage is becoming the industry standard.
Whether you're in Illinois and are "protected" by the Dram Shop limits, or a state without a dram shop statutue to cap the damages you may face in a suit, the warning is the same:  these big claims happen more than you may hear about.  Don't be caught off-guard and underinsured and jeopardize the the assets and future of your business. 
Safe Handling of Oily or Solvent Waste Rags

Precautions must be taken with waste rags saturated with a flammable liquid because they present a special fire hazard.  An effective method for protecting these rags is to store them in listed self-closing containers.  This will reduce the chances of a fire occurring due to spontaneous combustion.

Spontaneous heating can occur any time a rag is soaked with an organic substance.  The chemical reaction consists of oxidation occurring, resulting in the evolution of heat.

Through the use of listed self-closing containers, we find a lower potential for fire spread due to spontaneous ignition.  The main purpose of the waste containers is to control the potential for spontaneous ignition, which occurs when the material reaches its ignition temperature.

When waste containers are not used, there exists a greater chance of the material catching fire as a result from ignition sources like welding, cutting and other "hot work" operations.  Carelessly discarded cigarettes or matches may have the same devastating consequences.

The self-closing containers are specifically designed to correct or alleviate the spontaneous combustion problem.  They are constructed of metal and will confine a self-ignited fire.  These cans have self closing covers and are elevated to reduce the chance of adjacent combustible floor materials being ignited. 
Spotlight On: Broadcasting Pay-Per-View Programs

Unauthorized broadcasts of pay-per-view fights, such as Ultimate Fighting Championships, professional boxing, and other professional sporting matches, are prohibited under federal law by the Communications Act of 1934 and the Cable and Television Consumer Protection and Competition Act of 1992.  Because subscription television programming is intended for the benefit of paying subscribers only, unauthorized airing of these programs for commercial gain is unlawful.  Entities that hold the exclusive commercial exhibition and distribution rights can sue any business owner who broadcasts fights at their establishments without a proper license.

How can you violate these laws?  If you are sued for broadcasting fights without the proper license, what kind of exposure do you create for yourself? Can you turn the suit over to your insurer for coverage for losses stemming from these illegal broadcasts?
There are numerous ways a business can violate these laws.  An obvious case is when a business owner intercepts a program from a satellite uplink and "distributes" the event at its place of business.  Less obvious infringing conduct will also create liability, however.  For example, a violation can be found where an individual officer of a business ("John Doe") legally purchases a personal license to watch a fight, but shows it in a commercial setting (at their bar "John Doe's Saloon").  Moreover, a business can also be held liable for a violation if it has "the right and ability to supervise" the infringing activities and had "an obvious and direct financial interest in the exploitation of the copyrighted materials" or if it "authorized" the infringing conduct.
In addition to the costs to defend a lawsuit arising out of such a broadcast, violations create large exposures for businesses, as courts will award attorney fees, statutory damages, and enhanced damages where a willful violation of the statute is shown.  Damages may differ depending on the circumstance.  In instances where a business owner is found to have broadcast the fight to an unknown number of patrons, for example, the court will award a flat sum by taking into account the proportionality between the loss suffered by a plaintiff and the profit gained by the business owner.  Conversely, when the exact number of patrons is known, the court will base an award on the number of patrons in the establishment who viewed the unauthorized showing multiplied by a number set by the court.  If any violation is found, regardless of the number of patrons viewing the broadcast, attorney's fees and costs are mandatory and will be awarded so long as the court finds the fees reasonable.
We have yet to find a policy form that includes coverage for these acts.  They're often excluded on several grounds, and business owners will be responsible for providing their own defense in the event they are sued.  For example, the injury alleged from unauthorized broadcasting is not "bodily injury" or "property damage" as defined by most Businessowners Liability coverage forms.  Moreover, the act of broadcasting a pay-per-view event is not an "occurrence" as defined in a policy and would not be covered.  Finally, the Businessowners Liability coverage forms we've seen do not cover liability arising from violations of federal law.
If you want to air a pay-per-view event, you should contact your cable or satellite provider about obtaining the proper commercial-use license for the event.  Those who violate laws governing the broadcast of these subscription-required events not only do so at their own peril, they almost certainly do so with no right to coverage from their insurers.
Benefits of an Automatic Payment Plan
Heading south to escape the winter chill for a week or two on vacation?  Hopefully, you have a good manager to look after the business while you're gone.  Whether you're getting away or are just too busy to remember to send in your payments on time.  We usually see an uptick in non-payment cancellations in the dead of winter and the doldrums of summer, on one reason we commonly hear is that "the owner is out of town."
Late or missed payments can affect your insurance in a number of ways.  Obviously, the biggest is that your coverage cancels and you have a lapse in coverage.  But that's not all.  There are late fees for the payment not being received by the due date.  These could be a small, flat charge or it could be a small percentage of your monthly amount due (which might not be very small at all, depending on the size of your payment).  
If there's a cancellation issued on your policy, the insurance carrier has to issue "Direct Notice of Cancellation" to you and any additional interests or mortgagees named in the policy.  This generates more work and more cost on the insurance carrier, so most of them could subject your account to a small, flat "Reinstatement Fee".  In many states, it's illegal to charge a fee for cancellation, but insurers are free to refuse to reinstate your coverage once you make your payment.  So in order to reinstate, they'll want a fee.
The price you're quoted at the beginning of a policy term could be much different that the price you end up paying if you're not always prompt and timely with your payments. We've seen clients who are habitually late incur an extra $300 to $500 per year in additional fees.
That's not chump change, especially the way business is right now.
If your business is struggling, that's one thing, but if your difficulty is remembering to send the payment on time, there are alternatives for you.  Pretty much every insurance company has a type of "automatic" payment option available.  It may be called an "ACH" (Automatic Clearing House) or "EFT" (Electronic Funds Transfer) plan, but they all work the same way - you submit a bland, voided check and complete a form authorizing the insurance company to deduct your monthly payments from your account and they do just that. 
You worry about running your business and making sure there's money in the account and they'll make sure your payment is taken on time.  No more late fees, no more cancellations, and one less thing to worry about.
Some companies may also offer a "Recurring Credit Card" (RCC) payment option, which is just what it sounds like - you complete the form and your monthly payments will be billed to your credit card on the due dates. 
Again, specific payment options vary by insurance company, but if you're looking for every nickel and dime you can find, and are comfortable with the idea of having your payments automatically withdrawn, this may be something you'd like to take advantage of.
Recent Liquor Training Courses A Success 
This past November, Bret Dixon Insurance, in conjunction with the ILBA and Illinois Casualty Company put on several "BASSET" Liquor Training classes in Alton, Illinois.  We were able to get about 80-90 owners and servers trained. 
Getting your employees liquor trained offers many benefits.  Your front-line servers will come away better educated on their responsibilities and duties working with liquor.  This will make them more valuable to your business, as they will have the knowledge to prevent your business from assuming more liability.  Many insurers also offer insurance discounts if your employees have liquor training.   
Thanks to those who turned out for the classes.  We hope you've been able to apply a few things you learned in your businesses.  Stay tuned for future liquor training sessions.  If you're interested in taking a course immediately, consider the ILBA's online training course.

One of the three classes put on on 11/16/2010.

Use Technology to Document Your Inventory  
It's a new year.  Did Santa bring you a new toy or goodie? And if he did, did you consider the insurance ramifications of your new possessions?
It's not a bad idea to update your inventory list this time of year.  As far as personal lines go, you might've added several hundred dollars worth of items to your home.  Not only should you double-check your Coverage B "Personal Property" limit on your Homeowners policy, it's a good idea to keep a record of your contents as well.
One method that's gaining popularity is to document your property in a video.  Not only does this get you out of creating and maintaining a spreadsheet of contents, it's pretty easy to just walk around your place and point out the things in your home.  With the quality of some video cameras in cell phones these days, you don't even have to have a camcorder to do this.
Furthermore, you could then upload the video to a video-hosting website such as YouTube so that you have a copy stored off-premises.  That way, if something does happen to your home your copy of your inventory doesn't get destroyed as well.  Just change the privacy settings of your video upload to or 'Private' to ensure you're the only one who can see what you have in your home.
This is a quick, clever way to document what you had, rather than trying to recreate it from memory after a disaster.  
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Bret Dixon Insurance
In This Email
2011 Illinois Dram Shop Limits
Safe Handling of Waste Rags
Spotlight On: Broadcasting Pay-Per-View
Benefits of an Auto Payment Plan
Liquor Training Recap
Use Technology to Document Inventory
What happens 473 times every hour? 
According to the Department of Transportation, traffic accidents happened at that rate in 2008 (the most recent stats we could find).  Are your personal auto limits up to par, or are you carrying low-limit, cut-rate coverage?

We offer a full-line of personal lines coverages for your home, auto, boats, motorcycles, RVs, and more.  Give us a shot at your next renewal to see how we compete. 
Click here for more information.

Carrier Corner 
We represent over 15 insurance carriers and have access to many more via brokers, but you may only know one or two that we deal with.  Each issue, we'll highlight one of our valued partners in this space. 

Travelers is an "A+" rated company based in Conneticut that writes business nationwide. We use them to write homeowners and auto on the personal lines side, and commercial risks such as auto garages, contractors, restaurants, golf courses and a host of "main street" businesses.

One of the major benefits Travelers has developed for their policyholders is their Risk Control Services website. There, policy holders can find, free of charge, a whole slew of value-added benefits for almost every type of business and industry.
 Check out the overview here