Bhtmec2
Contributor
...................
This is getting interesting day by day....
This is getting interesting day by day....
PADI getting sued over Insurance Program
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SoccerDad
Contributor
Thalassamania - you are missing an important FACT you do not have to be an insurance company to have an SIR - let me repeat this is a common practice for large property and large commercial general liability.
The broker is the one selling the policy that is how you get the coverage, I do not see anything where you go toPADI or write PADI a check and I checked the website and they disclose that PADI gets a fee. I have not read the brief but I will bet you PADI gets off on selling insurance.
The broker is the one selling the policy that is how you get the coverage, I do not see anything where you go toPADI or write PADI a check and I checked the website and they disclose that PADI gets a fee. I have not read the brief but I will bet you PADI gets off on selling insurance.
SoccerDad - please help me understand this better. I thought a SIR for large property or general liability was essentially a large deductible - the owner agrees to bear a certain amount of risk.
What seems to be different here is that the individual policy owner (any particular dive shop) is not the entity bearing the risk - the training agency they are affiliated with (PADI) is bearing the risk.
Doesn't PADI bearing the risk for the dive shop essentially put them (PADI) in the insurance business?
ItsBruce
Contributor
I had a little free time so I began to do some legal research, so that I could report what I found here.
Subject to every disclaimer and qualifier, and keeping in mind that I am not giving legal advice and spent only a very short time looking at this, preliminarily, it looks like the whole thing may be a perfectly legitimate program. It is sort of convoluted, and there are certain kinds of licenses that appear to be required, but it looks like the vehicle of a risk purchasing group may be permissible.
If I have more time, I'll do some more research. (I may also look up an old friend who does regulatory work.)
There is, of course, an issue about disclosures. However, there is also the bit about proximately caused damage.
Subject to every disclaimer and qualifier, and keeping in mind that I am not giving legal advice and spent only a very short time looking at this, preliminarily, it looks like the whole thing may be a perfectly legitimate program. It is sort of convoluted, and there are certain kinds of licenses that appear to be required, but it looks like the vehicle of a risk purchasing group may be permissible.
If I have more time, I'll do some more research. (I may also look up an old friend who does regulatory work.)
There is, of course, an issue about disclosures. However, there is also the bit about proximately caused damage.
So …
Let’s say I own a timeshare/apartment complex, which is called the “Ace Timeshare and Apartment Complex”, in which there are 1,000 individual apartments/timeshare units. As a prudent Timeshare and Apartment Complex Manager/Owner, I go out and obtain both liability and contents insurance for the entire complex from a company that is called “ACME Insurance Company”.
The insurance company (ACME Insurance Company) offers – and I (“Ace Timeshare and Apartment Complex”
accept – its policy with an annual premium of $500,000.00 USD ($500k USD) and I am insured for up to $5,000,000.00 USD ($5 million USD) per each and every incident ... anywhere on the entire planet !!!
As a “prudent” and “astute” business owner, as well as Timeshare and Apartment Complex Manager, and because I have made it possible for many “first-time” renters and owners to move in to my timeshare and apartment complex, I require ALL of my tenants to purchase liability and property contents insurance to protect not only their interests but mine as well (you never know when someone might try to sue for a slip-and-fall incident, or whatever).
Of course, while my renters and owners are free to choose from “whomever” they can find that will insure them to my specific requirements, I suggestively and aggressively “endorse” the insurance company (“ACME Insurance Company” from whom I (“Ace Timeshare and Apartment Complex” have already purchased the Master Policy from. These premiums are, of course, in addition to the Owners/Renter’s monthly/yearly rents and association dues.
Now, because I have been so “helpful” in the past and have made access to my “Ace Timeshare and Apartment Complex” so easy, and have personally endorsed the “ACME Insurance Company” to provide a relatively easily accessible policy for these required insurance coverages, my Tenants and Owners who have trusted me in the past now trust me again and sign up … for their own good, of course.
Not to mention my "Finder's Fee".
Now, in my Master Policy it is stated that “any additionally insured added to the Master Policy has a $300,000.00 USD ($300k USD) deductible for each and every occurrence.” But, I sold the Policy to them with ACME Insurance Company’s name on the Certificate of Insurance, knowing that ninety-five per cent (95%) of my Owners/ Renters have contents/liability insurance coverage for less than $300,000.00 USD ($300k USD).
At the time it seemed like a good idea, and I charged all of my Owners/Renters about $3,300.00 USD per year for their premiums for the insurance that I had under the Master Policy that was issued by ACME Insurance Company; some more, and some less, but it averaged out like I said.
However, in retrospect, it may not have been such a good idea NOT to disclose to them that I (Ace Timeshare and Apartment Complex) am responsible for the first $300,000 USD of their policy.
Somehow they got the impression that they were insured by a Grade A Totally Legitimate insurance company. It may have been from my marketing approach or from some advertising that I may have sent out. In any event (actually in EVERY event) it was “I”, the “Ace Timeshare and Apartment Complex” that was really paying off their “less than $100,000 USD” ($100k) policy, in the unlikely event that I (a.k.a. the “Ace Timeshare and Apartment Complex” determined that their claims were legitimate.
My accountants (who actually work for the “Ace Timeshare and Apartment Complex” have told me that I collected $3,300,000.00 USD ($3.3 million USD) in premiums each and every year for 10 years, which seems to come to something like $33,000,000.00 USD ($33 million USD) over this past decade, not counting for inflation, devaluations and increased “premium” charges back to the Owners/Renters.
My “claims adjustors” (who also work for the “Ace Timeshare and Apartment Complex” have told me that, in the past ten years, I have paid claims filed for 10 fires in which all of my “insureds” had policies that were around $100,000.00 USD ($100k) in coverage.
Being a “prudent” and “astute” business owner, as well as the Apartment Complex Manager, and because I have made it possible for many “first-time” renters and owners to protect their interest with my “endorsed” insurance policy, I had to pay out of my own pocket the total sum of $1,000,000.00 USD ($1 million USD).
That's a lot of money.
My math background tells me that while I had collected $33,000,000.00 USD ($33 million USD) over the past ten years, and I had to pay out about $1,000.000.00 USD ($1 million USD) for “claims/deductibles” (of which I had agreed to cover the first $300,000.00 USD ($300k) anyways as part of my Master Policy from ACME Insurance Company), that I only had about $32,000.000.00 USD ($32 million USD) in "reserves", just sitting around, offshore mostly.
Now ... that's a LOT of money.
As a prudent business man, I could not just let that "reserve" money sit in an empty bank account, so I “invested” it in important things, like cars, houses, trips, et cetera, and the "best values" seemed to be somewhere offshore.
So, as luck would have it, one night somebody broke in to one of my insured’s places and in the process of burning this one unit to the ground, not only succeeded in setting the unit on fire, but set “himself” on fire as well !!!
And, then, kismet being what kismet is … on his way out of the unit slipped and fell down the stairs and broke his neck and back! The panic of the fire alarms and the shrieks of this arsonist’s pain cause such pandemonium throughout the “Ace Timeshare and Apartment Complex” that many other Owners/Renters apparently suffered grave and serious losses as well, and the entire complex (“Ace Timeshare and Apartment Complex” burned to the ground, totally destroyed!
Now, according to my friends at ACME Insurance Company, since my Master Policy states that I am responsible for the first $300,000 USD for each and every occurrence, and since the whole frickin’ Complex has burnt to the ground, that I have to pay the first $300,000.00 USD ($300k) deductible on the claims of 1,000 Owners/Renters … and of course, 1 paraplegic arsonist intruder, to the tune of something like $300,000,000.00 USD ($300 million) in deductible, before the ACME Insurance Company will pay anything to anyone !!!
What do these people think I am? Made of money? Perhaps they think I am a bank? Or perhaps a wealthy insurance company ???
Don't they realize that there was ONLY ONE FIRE ... hence, only one incident ??? Sure, there are going to be 1000 claims ... but in my way of doing the math, there is still only one incident !!!
All I got to keep was a measly $32,000,000.00 USD ($32 million USD) after expenses !!!
So, being the “prudent” and “astute” business owner, as well as Apartment Complex Manager, that I am, and because I have made it possible for many “first-time” renters and owners to move in to my timeshare and apartment complex, and have endorsed this Master Policy (of course, still unbeknownst to most of the Owners/Renters/Paraplegic Intruder), even if I actually wanted to pay off on these claims (which I do not), I would have to try to cash in all my Stocks, Properties, Buildings and Fancy Foreign Cars and whatever else I invested that $32,000,000.00 USD ($32 million USD) that I "thought" that I had (I don't seem to be able to find the Deposit Receipts anywhere) in order to pay these 1001 people their money.
And ... it STILL would not even come CLOSE to meeting the deductible that I had agreed to when I purchased the Master Policy from the ACME Insruance Company !!!! So ... why should I even try? It's not like it "my fault" that "they" had a legitimate claim or anything !!!
My friends at the ACME Insurance Company are saying, “Phuque, (not my real name) we can’t (and won’t and don't have to) help you until you pay YOUR portion of the deductible FIRST !!!
Meanwhile, since I don’t want to give up my money, my cars, my trips and my et ceteras, the Owners/Renters at (what's left of) my complex (“Ace Timeshare and Apartment Complex” don’t have a home to go to, or the money to move into a new one place. In fact, they not only don’t have any place to go to, they probably don’t even have the proverbial pot to piss in, but since their windows burned to the ground in the fire their proverbial pot would have been useless to them anyway !!!!!!
They may be living on the beach … they may be thinking about committing suicide … or they may just be wondering “why” it is taking the “ACME Insurance Company” so darned long to make good on the policy that I sold them. What do I care? I don’t know them anyway.
They have most likely lost everything they every owned or worked for, and even after eight or nine months I still have a hard time coughing up the money so they can get off the beach or out from under the bridge … or wherever “those” kinds of people go. All I want for them to do is get off of MY back !!!
They have NO idea of how hard I have worked.
So …
Since I am acting as the Primary Insurer in 95% of these incidents, can you tell me why these people think I was acting like an unlicensed insurance company?
Since I am acting as the Primary Insurer and the “real” insurance doesn’t kick in until I have paid my initial $300,000.00 USD ($300k USD) per incident … can you tell me “why” they even needed the ACME Insurance Company’s “endorsed policy” in the first place???
After all, it’s not like I’m a real insurance company. Do YOU see the words “real insurance company” in my name”? Of course not … because I’m the “Ace Timeshare and Apartment Complex” guy.
Again, this is all hypothetical and is not intended as a legal opinion.
Let’s say I own a timeshare/apartment complex, which is called the “Ace Timeshare and Apartment Complex”, in which there are 1,000 individual apartments/timeshare units. As a prudent Timeshare and Apartment Complex Manager/Owner, I go out and obtain both liability and contents insurance for the entire complex from a company that is called “ACME Insurance Company”.
The insurance company (ACME Insurance Company) offers – and I (“Ace Timeshare and Apartment Complex”
accept – its policy with an annual premium of $500,000.00 USD ($500k USD) and I am insured for up to $5,000,000.00 USD ($5 million USD) per each and every incident ... anywhere on the entire planet !!!As a “prudent” and “astute” business owner, as well as Timeshare and Apartment Complex Manager, and because I have made it possible for many “first-time” renters and owners to move in to my timeshare and apartment complex, I require ALL of my tenants to purchase liability and property contents insurance to protect not only their interests but mine as well (you never know when someone might try to sue for a slip-and-fall incident, or whatever).
Of course, while my renters and owners are free to choose from “whomever” they can find that will insure them to my specific requirements, I suggestively and aggressively “endorse” the insurance company (“ACME Insurance Company”
from whom I (“Ace Timeshare and Apartment Complex” have already purchased the Master Policy from. These premiums are, of course, in addition to the Owners/Renter’s monthly/yearly rents and association dues.Now, because I have been so “helpful” in the past and have made access to my “Ace Timeshare and Apartment Complex” so easy, and have personally endorsed the “ACME Insurance Company” to provide a relatively easily accessible policy for these required insurance coverages, my Tenants and Owners who have trusted me in the past now trust me again and sign up … for their own good, of course.
Not to mention my "Finder's Fee".
Now, in my Master Policy it is stated that “any additionally insured added to the Master Policy has a $300,000.00 USD ($300k USD) deductible for each and every occurrence.” But, I sold the Policy to them with ACME Insurance Company’s name on the Certificate of Insurance, knowing that ninety-five per cent (95%) of my Owners/ Renters have contents/liability insurance coverage for less than $300,000.00 USD ($300k USD).
At the time it seemed like a good idea, and I charged all of my Owners/Renters about $3,300.00 USD per year for their premiums for the insurance that I had under the Master Policy that was issued by ACME Insurance Company; some more, and some less, but it averaged out like I said.
However, in retrospect, it may not have been such a good idea NOT to disclose to them that I (Ace Timeshare and Apartment Complex) am responsible for the first $300,000 USD of their policy.
Somehow they got the impression that they were insured by a Grade A Totally Legitimate insurance company. It may have been from my marketing approach or from some advertising that I may have sent out. In any event (actually in EVERY event) it was “I”, the “Ace Timeshare and Apartment Complex” that was really paying off their “less than $100,000 USD” ($100k) policy, in the unlikely event that I (a.k.a. the “Ace Timeshare and Apartment Complex”
determined that their claims were legitimate.My accountants (who actually work for the “Ace Timeshare and Apartment Complex”
have told me that I collected $3,300,000.00 USD ($3.3 million USD) in premiums each and every year for 10 years, which seems to come to something like $33,000,000.00 USD ($33 million USD) over this past decade, not counting for inflation, devaluations and increased “premium” charges back to the Owners/Renters.My “claims adjustors” (who also work for the “Ace Timeshare and Apartment Complex”
have told me that, in the past ten years, I have paid claims filed for 10 fires in which all of my “insureds” had policies that were around $100,000.00 USD ($100k) in coverage. Being a “prudent” and “astute” business owner, as well as the Apartment Complex Manager, and because I have made it possible for many “first-time” renters and owners to protect their interest with my “endorsed” insurance policy, I had to pay out of my own pocket the total sum of $1,000,000.00 USD ($1 million USD).
That's a lot of money.
My math background tells me that while I had collected $33,000,000.00 USD ($33 million USD) over the past ten years, and I had to pay out about $1,000.000.00 USD ($1 million USD) for “claims/deductibles” (of which I had agreed to cover the first $300,000.00 USD ($300k) anyways as part of my Master Policy from ACME Insurance Company), that I only had about $32,000.000.00 USD ($32 million USD) in "reserves", just sitting around, offshore mostly.
Now ... that's a LOT of money.
As a prudent business man, I could not just let that "reserve" money sit in an empty bank account, so I “invested” it in important things, like cars, houses, trips, et cetera, and the "best values" seemed to be somewhere offshore.
So, as luck would have it, one night somebody broke in to one of my insured’s places and in the process of burning this one unit to the ground, not only succeeded in setting the unit on fire, but set “himself” on fire as well !!!
And, then, kismet being what kismet is … on his way out of the unit slipped and fell down the stairs and broke his neck and back! The panic of the fire alarms and the shrieks of this arsonist’s pain cause such pandemonium throughout the “Ace Timeshare and Apartment Complex” that many other Owners/Renters apparently suffered grave and serious losses as well, and the entire complex (“Ace Timeshare and Apartment Complex”
burned to the ground, totally destroyed!Now, according to my friends at ACME Insurance Company, since my Master Policy states that I am responsible for the first $300,000 USD for each and every occurrence, and since the whole frickin’ Complex has burnt to the ground, that I have to pay the first $300,000.00 USD ($300k) deductible on the claims of 1,000 Owners/Renters … and of course, 1 paraplegic arsonist intruder, to the tune of something like $300,000,000.00 USD ($300 million) in deductible, before the ACME Insurance Company will pay anything to anyone !!!
What do these people think I am? Made of money? Perhaps they think I am a bank? Or perhaps a wealthy insurance company ???
Don't they realize that there was ONLY ONE FIRE ... hence, only one incident ??? Sure, there are going to be 1000 claims ... but in my way of doing the math, there is still only one incident !!!
All I got to keep was a measly $32,000,000.00 USD ($32 million USD) after expenses !!!
So, being the “prudent” and “astute” business owner, as well as Apartment Complex Manager, that I am, and because I have made it possible for many “first-time” renters and owners to move in to my timeshare and apartment complex, and have endorsed this Master Policy (of course, still unbeknownst to most of the Owners/Renters/Paraplegic Intruder), even if I actually wanted to pay off on these claims (which I do not), I would have to try to cash in all my Stocks, Properties, Buildings and Fancy Foreign Cars and whatever else I invested that $32,000,000.00 USD ($32 million USD) that I "thought" that I had (I don't seem to be able to find the Deposit Receipts anywhere) in order to pay these 1001 people their money.
And ... it STILL would not even come CLOSE to meeting the deductible that I had agreed to when I purchased the Master Policy from the ACME Insruance Company !!!! So ... why should I even try? It's not like it "my fault" that "they" had a legitimate claim or anything !!!
My friends at the ACME Insurance Company are saying, “Phuque, (not my real name) we can’t (and won’t and don't have to) help you until you pay YOUR portion of the deductible FIRST !!!
Meanwhile, since I don’t want to give up my money, my cars, my trips and my et ceteras, the Owners/Renters at (what's left of) my complex (“Ace Timeshare and Apartment Complex”
don’t have a home to go to, or the money to move into a new one place. In fact, they not only don’t have any place to go to, they probably don’t even have the proverbial pot to piss in, but since their windows burned to the ground in the fire their proverbial pot would have been useless to them anyway !!!!!!They may be living on the beach … they may be thinking about committing suicide … or they may just be wondering “why” it is taking the “ACME Insurance Company” so darned long to make good on the policy that I sold them. What do I care? I don’t know them anyway.
They have most likely lost everything they every owned or worked for, and even after eight or nine months I still have a hard time coughing up the money so they can get off the beach or out from under the bridge … or wherever “those” kinds of people go. All I want for them to do is get off of MY back !!!
They have NO idea of how hard I have worked.
So …
Since I am acting as the Primary Insurer in 95% of these incidents, can you tell me why these people think I was acting like an unlicensed insurance company?
Since I am acting as the Primary Insurer and the “real” insurance doesn’t kick in until I have paid my initial $300,000.00 USD ($300k USD) per incident … can you tell me “why” they even needed the ACME Insurance Company’s “endorsed policy” in the first place???
After all, it’s not like I’m a real insurance company. Do YOU see the words “real insurance company” in my name”? Of course not … because I’m the “Ace Timeshare and Apartment Complex” guy.
Again, this is all hypothetical and is not intended as a legal opinion.
Last edited:
ItsBruce
Contributor
Very nicely done ... except I got lost at the "Not to mention my 'Finder's Fee'" part. In the paragraph before that, you talk about recommending ACME. In the paragraph after that, you talk about you selling the policy. How do you get from the one to the other?
I'm also unclear about the last sentence of the quoted paragraph: "knowing that ninety-five per cent (95%) of my Owners/ Renters have contents/liability insurance coverage for less than $300,000.00 USD ($300k USD)..." Do you mean they have less than $300K in contents for which they need coverage? Do you mean that they don't need more than $300K in liability coverage.
I'm also unclear what the paperwork says. Do the tenants/owners receive a policy, an explainer, or just a certificate that says they are insured by ACME?
Subject to what seems to me to be a disconnect, my thoughts are:
1. If rather than recommending ACME, you are telling people that if they pay you $3,300, you will insure them, you are in a world of trouble, i.e. issuing insurance without proper licensing, etc.
2. If you are telling people that if they pay you, you will have ACME name them as additional insureds on your master policy, I'm not so sure that that is a problem. Things like that are done every day. For example, health insurance that is offered by many employers works like that, i.e. there is a master policy and employees are named as certificate holders. Likewise, on construction projects, the general contractor requires subcontractors to name it as an additional insured on their policies as part of the consideration for hiring those subcontractors.
Of course, if you were only recommending ACME and the transaction was being done through a licensed insurance broker, even if the broker was paying you a finder's fee, the whole situation changes.
BTW: I'm not sure your analysis of the number of occurrences is accurate.
AND: I still have not seen a copy of any policy forms, explainers or certificates. Is there anyone who can tell me whether reading whatever it is that one might get would alert them to the fact they are only certificate holders on a master policy?
Delta_P
Contributor
DCBC;5556231 and there has been at least one case that I've been involved with that PADI's standards have been held to be "insufficient."[/QUOTE:
cocoajoe
Contributor
Your honor, I object! Council is baggering the witness.
Hi boys. Though this dredging a little, I am wondering what is happening with this. Anyone, anyone? Bueller?
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