Running Errands that Could Ruin You

by Michael P. Carroll, Insuring Lawyer

Erin’s law firm is located in the Dallas/Fort Worth area.  Erin, the oldest of four girls, daughters of a prominent Texas lawyer, has marketed her firm as family-friendly to groups who live in the vicinity. She is known personally for her local charity work and is well liked and respected in the community.

Being a busy firm, the staff often runs out of simple office supplies or needs to get packages delivered to the court house or another firm or even a client. This may happen many times every week.

The Infamous Accident

One early January day, Erin sent her office manager Mitch to the courthouse since he was going to an early dinner at his sister’s nearby barbeque restaurant. It was the one day a month that the three partners and Mitch could go over the firm’s business. The setting sun was glaring in his eyes and Mitch, who was driving his own car and keeping to the speed limit, didn’t see the car stopping in front of him and had a rear end collision.

Mitch knew he had great car insurance and he didn’t have undue concern about the matter. However the driver of the other car, whose name was Craig, had years earlier sustained a sports injuries to his back and neck. At the time of the accident, Craig was the head basketball coach at the local university and pulling down a sizeable income.

The impact of this rear-ending incident exacerbated the existing injuries to the point that Craig would no longer be able to fulfill his coaching duties and therefore sustained a loss of income. With two years remaining on his coaching contract, he could very closely estimate the amount of the loss that he would be incurred when the university released him from the contract — which they subsequently did.

Where Will the Money Come From?

Mitch’s personal auto insurance coverage allowed for $300,000 in damages. Where would the rest of the over one million dollars come from? I’m sure you’ve already guessed the answer. A good personal injury attorney quickly discovered that Mitch was running an errand for Erin’s legal firm on business time.

Under deposition Mitch was certainly not going to lie. Nor would he ever think he needed to.  He would clearly state that he was on an errand for his boss. Now that attorney knew that Mitch was on business time, so he went after Erin’s firm.

Erin was certain she was protected. After all, she had general liability. Then she learned the frightening truth: general liability is only for your premises! And this was definitely not on the premises.

What Was Missing?

What did Erin need that she did not have? It’s called “Hired Non-Owned Auto Coverage.” This coverage costs a little over $100 per year for a million dollars’ worth of protection. Because Erin didn’t have this coverage, she would have a lien against her property and be sued for all her profits and maybe be put out of business.

While this turned out to be a multi-million lawsuit, I know that if Erin had had the correct coverage, Craig and his attorney would have taken the million offered and gone their way. I’ve seen it happen.  They were looking for the easy way out, and proper coverage provides it.

A lawyer reading this may think this story doesn’t apply in his or her case since they never run out of any supplies or never send an employee anywhere. It doesn’t necessarily have to be an errand to pick up items; it could happen during the daily bank run. Any personal injury lawyer worth his salt will learn this was a business errand on business time, and therefore they will go where the money is.  They will sue the business itself.

Even though this sort of liability arises from a legal matter, the majority of law firms I see do not have the proper coverage.  Since they are not involved in deliveries, they don’t see the need. But for the price, it’s just not worth the risk. Why leave yourself wide open for such a disastrous lawsuit?

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