Magazine article Risk Management

A Surprise Awaits Some Self Insureds

Magazine article Risk Management

A Surprise Awaits Some Self Insureds

Article excerpt

Eugene R. Anderson and John H. Doyle III are partners in the law firm Anderson Kill Olick & Oshinsky P.C., which has offices in New York, Washington, DC, Philadelphia and Honolulu.

by Eugene R. Anderson and John H. Doyle III

Self insurance may be both an oxymoron and a Trojan Horse.

Ryder/P.I.E. Nationwide Inc., which was self-insured up to $500,000, was required to pay $65,000 on a claim that would have cost a liability insurance company only $15,000.

Ryder, unrelated to truck rental giant Ryder System Inc., was self-insured under the New Jersey mandatory motor vehicle laws. As required by New Jersey law, Ryder posted a $15,000 indemnity bond with the New Jersey Department of Motor Vehicles.

Ryder's employee was making a delivery to a Harbor Bay Corp. warehouse when he was injured by a Harbor Bay employee. Ryder's employee sued Harbor Bay. In "loading and unloading" cases, under New Jersey law and the law of many other states, parties involved in the loading of a motor vehicle are deemed to be "additional insureds" under motor vehicle liability policies.

Because Harbor Bay would have been an additional insured if Ryder had purchased an insurance policy, Ryder agreed that Harbor Bay was covered by its self insurance up to the $15,000 statutory amount. Ryder defended its employee's lawsuit against Harbor Bay and eventually settled the claim for $65,000.

Ryder's Claim Denied

Ryder then made a claim against Harbor Bay for the $50,000 excess of the mandatory $15,000 amount. Ryder contended, in effect, that as a self insured it should not have to pay more on Harbor Bay's behalf than the $15,000 an insurance company would have been required to pay under similar circumstances.

"Not so," said the New Jersey Supreme Court in its recent ruling in Ryder/P. …

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