Accreditation Organizations
Adjustors
Alarm Monitoring Services
Appraisers (Non-Real Estate)
Consultants (Except Environmental Or Financial)
Delivery Firms
Direct Marketing And Mailing Services
Document/Information Services
Employment Agency
Escrow Agents
Excavation Notification Services
Information Technology/EDP Services
Marketing Consulting/Marketing Research Firms
Mortgage/Loan Brokers and Bankers
Premium Finance Services
Printers
Property Managers
Publishers - Directories, Multiple-Listing Services
Research Organizations
Standards Developers/Managers
Testing Labs

ACCREDITATION ORGANIZATIONS

A medical specialty certification board allowed a doctor to sit for a certification test, even though she did not meet basic requirements. Her tests were subsequently voided. She sued, asking the court to order the board to accept her scores and award $1,000,000 in damages. The board won after eight months of litigation, which cost substantial legal fees.

An immigrant doctor failed the same medical subspecialty examination three times in a five year period. He sued the specialty certification board and several of its employees alleging he failed because they refused to alter the questions to accommodate his unfamiliarity with English. The successful defense cost $100,000.

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ADJUSTORS

A carrier hired an adjustor to investigate a workers comp claim in which an 18 year old man had been blinded by ammonia when he disassembled a spraying unit. When the parties sought to introduce the sprayer as evidence, the employer advised he had disposed of the unit, alleging that the adjustor had told him to. The adjustor then was brought into the suit and because the inability to introduce the sprayer affected the case so significantly, the law pertaining to spoliation of evidence, and the gravity of the plaintiff's injury, the adjustor's carrier paid over $3 million to settle, after a very expensive defense.

An adjustor hired by the insurance carrier of a trucking firm negotiated a settlement under $50,000 for a claim which involved a trucker who fell asleep and struck a parked car, killing an undocumented immigrant and injuring four others. The decedent's parents sued, alleging they had been coerced into settling for too little. The adjustor's carrier defended and paid an additional settlement of about $40,000.

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ALARM MONITORING SERVICES

Two bank tellers were killed during the robbery of a branch bank in which the alarm monitoring service's silent alarm had been installed. The decedents' survivors sued the alarm monitoring service as well as law enforcement and the bank, alleging the response to the scene had been too slow. Because the alarm company's policy contained contingent bodily injury/property damage coverage, its carrier defended the case. The litigation was long, arduous and expensive.

After a convenience store manager left his job, the store owner blamed him for several subsequent false alarm reports. He was arrested but acquitted, and he then sued the owner and the alarm/security company for $1,000,000 plus five times that in punitive damages. Although the claim was favorably resolved, defense fees were substantial.

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APPRAISERS (Non-Real Estate)

A lender retained an appraiser to evaluate the potential borrower's inventory for use as collateral for a loan. When the borrower defaulted, and the liquidated collateral brought less than the remaining amount of the loan, the lender sued the appraiser for $1.8 million, alleging it would not have made the loan but for the appraisal, which was apparently faulty because it did not support the loan. Defense and settlement were very costly.

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CONSULTANTS (Except Environmental or Financial)

Less than a year after moving across the country to take a new executive position, an employee was let go because an efficiency consultant recommended the elimination of his job. His suit against the consultant was favorably resolved but legal costs were almost $50,000.

A kitchen consultant had designed the kitchen of a hospital whose employee sued because he allegedly hit and damaged his knee on the door of a piece of kitchen equipment. He named the consultant as well as the equipment manufacturer and the hospital, saying the kitchen layout and equipment weren't safe. The consultant's carrier spent nearly $30,000 defending the case before it was learned that the plaintiff had in reality injured his knee in a sports accident before he came to work that day!

A lawyer enlisted a litigation support services consulting firm to help him find an expert for a motorcycle accident case. The expert opined that the motorcycle's brakes were faulty, but shortly before trial, he realized he had examined the wrong set of brakes. His change of opinion ruined the case for the lawyer, who had spent hours preparing for trial based on the first opinion. The lawyer sued the consultant for negligently referring the expert. The consultant's carrier paid the lawyer over $20,000 to settle.

A company provided consulting services to architects and developers for large live entertainment venue halls. After the construction of a symphony hall, the owner sued the consulting company and others, alleging the sound quality in the hall was defective. Defending the case was expensive because of the potentially high exposure for the plaintiff's lost profits claim. The suit settled with the architect who had provided faulty specifications for the sound equipment paying the bulk of the settlement.

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DELIVERY FIRMS

A document delivery firm accidentally delivered a food processor's bid to a government agency without the supporting exhibits. When the contract was awarded to the food processor's competitor some six months later, the processor sought damages from the delivery firm for its lost profit. The claim was favorably resolved but legal fees were incurred.

A $75,000 check to satisfy a mortgage loan was never delivered to the closing law firm's office. The delivery firm apparently just lost it; it never was seen again. The lender and the law firm pointed the finger at the delivery firm while the borrower fumed because he was in danger of losing a new business opportunity if his old loan didn't get paid. Eventually matters were sorted out, after the delivery firm's carrier paid damages and defense fees.

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DIRECT MARKETING AND MAILING SERVICES

A large retailer hired a bulk mailer to address and mail a mass promotion. In modifying the retailer's computer records for the job, the bulk mailer made a mistake, causing several million documents to be sent to wrong addresses. The carrier paid nearly $300,000 for new catalogs and other damages.

A glitch in the address data base of a fulfillment mailer caused a million pieces of mail to go out with the wrong zip codes. The carrier paid about $700,000 in defense costs, postal penalties and other damages to the insured's client.

A mailer was to match five mailing lists with five product codes to generate five mailings of a retailer's products for a market research project. The mailer correctly matched lists and codes for groups 1, 3, 4 and 5, but the people on mailing list 2 received no mailing and the people on mailing list 4 received two. The error invalidated the whole test. The insurance carrier paid $300,000.

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DOCUMENT/INFORMATION SERVICES

An employer retained an information services company to check prior employment, criminal record and other background information for a prospective employee. The company hired the employee but then fired him two weeks later when they received a report stating he had been convicted of possession of a concealed weapon. In fact he had been arrested but not convicted. He sued and although the case was successfully defended, litigation costs were significant.

An executive was treated at a hospital for injuries he received in a car wreck. His employer requested and received his medical records from a document service used by the hospital. Because the records showed he had illegal drugs in his system at the time of the accident, he was fired. He sued the document service for negligently releasing his records. Over $10,000 in defense fees were expended before the case was settled.

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EMPLOYMENT AGENCY

An agency's client discharged a temporary employee because he was using his Internet connection at work to download sexually explicit material. The disgruntled employee then deleted work-related computer files. The employment agency's carrier defended and settled the resulting claim.

A head hunter for high-dollar management positions for corporate clients placed a woman with management background as a senior officer in a prominent company. The agency discovered subsequently that it had neglected to check her credentials, and when it did so, it learned that, contrary to her representations, she did not possess the requisite college degrees. The employer demanded and received significant damages.

An employment agency recruited a California resident to move to England to take a position there with a British company. Once there, however, she couldn't get a work permit and eventually the British company terminated the contract with her and hired a British subject. She sued the employment agency for all she lost by giving up her old job.

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ESCROW AGENTS

A realty company deposited over $100,000 into an escrow account. A third person presented fraudulent documentation of authority and withdrew the money. When the realty company discovered the withdrawal, it demanded the escrow agent repay the funds. The case settled with the escrow agent's carrier paying over $50,000.

After buying a home, the buyers discovered the sellers had not made agreed-upon repairs. Buyers sued the escrow agent along with sellers and the realtor, alleging the escrow agent, as closing agent, should have made sure the sale closed in accordance with the closing instructions, which included that sellers had made the repairs. Although the claim was eventually resolved in the escrow agent's favor, defense costs were significant.

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EXCAVATION NOTIFICATION SERVICES

A contractor notified an excavation notification service of a location where it planned to dig. The service checked its maps and contacted what it thought were the appropriate utility companies. Unfortunately, it failed to contact the water department and the excavation ruptured a water main, causing almost $80,000 in damages. Because the notification service's insurance policy provided contingent property damage coverage, the carrier paid nearly $50,000 to settle the water department's claim.

A construction company consulted a notification service to see if there were any utility or telephone lines in the area in which it planned to excavate. When it subsequently severed a telephone line, it claimed the notification service had led it to believe there were no telephone lines there. The notification service was named in the phone company's suit for $500,000. The trial court found the phone company and the construction company to be solely at fault, but defending the notification service cost over $30,000.

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INFORMATION TECHNOLOGY/EDP SERVICES

A software developer created an inventory and subscription program for a large public library system. The library alleged the program did not perform as promised by the developer. After several attempts by the developer to modify the program and appease the library, the library sued. The case resulted in years of sizable defense costs and delayed the deployment of the software. Eventually the case was settled in the software developer's favor, once they were able to show they had "fixed" the problems. Unfortunately the software was outdated by then, so the fix included providing the library system an updated program for no additional revenue.

A data processor created a special software program to mail several million seasonal catalogs for a retail client. The program malfunctioned, the catalogs went to the wrong addresses and the retailer claimed nearly $1 million in damages, including lost profits and loss of goodwill. The data processor's carrier paid over $500,000.

Billing software sold by a data processor to a utility company did not process billing as quickly as promised. The utility sued for $5 million for the cost to correct the problem, but the case settled for $500,000.

A company wishing to expand its computer-based training programs for commercial software contracted with an entrepreneur for the use of creative source code enabling the training program to duplicate actual software screens. After the company stopped paying him royalties, the entrepreneur sued, alleging the company had infringed his copyright in the source code. The carrier paid him $350,000 in settlement.

After a serious automobile collision at an intersection, both drivers, one west-bound and one south-bound, claimed to have had a green light. The drivers sued the company which had programmed the computer systems for changing the lights. Because its policy had a bodily injury/property damage endorsement, the carrier paid for the defense and settled with both plaintiffs.

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MARKETING CONSULTING/MARKETING RESEARCH FIRMS

A baby food company retained a marketing consultant to direct television stations to the most effective times to air its commercials. Due to the consultant's clerical error, the wrong ads were televised, so that some products unavailable in certain areas were advertised in those areas, and some products were advertised at the wrong time of day. The marketing consultant's carrier negotiated and settled the baby food company's $100,000 claim for $85,000 but not before defense costs of over $50,000 had been incurred.

A marketing consultant prepared a list of random telephone numbers to be randomly broken into four lists and sent to four field services for a market research project. The consultant mistakenly sent the same list to two of the four services, so that one list was never sent at all. Furthermore, the lists that were sent were sorted by county, thus were not completely random. As a result, the data was unusable. The marketing consultant's insurance carrier paid $50,000 to settle the claim.

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MORTGAGE/LOAN BROKERS AND BANKERS

A couple applying for a mortgage loan repeatedly asked the broker if there were any charges other than closing costs and points for their assumption of an FHA loan. They claim they were assured there were none, but several months after the closing, the FHA notified them they had to pay for mortgage loan insurance during the life of the mortgage. They demanded the broker pay for the insurance or rescind the loan. The case was favorably resolved but defense costs were significant.

A mortgage broker confirmed in writing to a potential mortgage refinancing borrower that very favorable terms were available for a limited time. The broker then misplaced the paperwork, and by the time he found it, the good terms had expired. The borrower's suit was settled for almost $10,000 but the costs of defense were twice that!

After a mortgage broker originated and closed a loan for a couple purchasing rural property, the new owners discovered a previously undisclosed lien on the property. In the ensuing litigation, the mortgage broker's insurance carrier successfully defended by asserting a claim against the title company that failed to detect the encumbrance.

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PREMIUM FINANCE SERVICES

An elderly lady who had always paid for the homeowner's policy on her mobile home in a lump sum was offered a payment plan by her agent. She agreed to it, and the agent took care of the paperwork. Unfortunately, he didn't provide the correct Truth in Lending information, and she alleged that she only learned that she was paying a very high interest rate after she had made several payments and only after she specifically inquired. She sued the premium finance company as well as her agent, alleging the rate had been kept from her deliberately. The premium finance company's carrier paid over $50,000 to settle with her; defense costs were very high too.

A car owner's policy, financed through a premium finance company, was cancelled by the premium finance company for failure to make the installment payments on the loan. Proper notice of cancellation was sent. The policyholder then had an automobile accident, and when coverage was denied, he sued, alleging the finance company had previously accepted late payments, leading him to believe he would still have coverage even in the face of further late payments. The case was favorably resolved but defense fees were significant.

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PRINTERS

A small correction to the ingredients on a label printed for packages of frosted chocolate cookies crowded off one line of the bar code. The missing line went unnoticed, the labels were affixed to the cookie packages, and the cookies were shipped to various retail stores. Unfortunately, when the scanning troubles began, many stores demanded reparations. The printer's insurance carrier prevented a suit by stepping in and paying damages as the claims came in.

A printer was hired to print a series of baseball contest cards to promote a sporting event. Each card had a scratch-off area to reveal numbers or symbols which could be used to win a contest. A sports writer discovered and published the information that the cards could be taken into a dark room and illuminated with a flash light so that the numbers or symbols shone through. The printer was sued for using the wrong level of opacity to conceal the numbers. The printer's carrier paid to defend and settle the suit.

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PROPERTY MANAGERS

The owners of a mall retained a commercial property management company to manage the mall and collect rent from the tenants. The anchor tenant, a large clothing retailer, sued the mall owner and the management company, alleging that it had been overcharged nearly $175,000 in rent due to the management company's negligent miscalculation of the floor space it rented. The case settled with a payment of over $150,000 to the retailer.

A condominium association in a resort area hired a property manager to manage it, and to rent out its condos when the residents were absent. The new manager sent out letters to the condo owners letting them know it was there to serve them in the manager role, and soliciting their rental business. The old manager, not happy at the prospect of losing the rental business, sued for interference with business relationships, theft of trade secrets and defamation. The insurance carrier successfully defended and settled the case.

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PUBLISHERS - DIRECTORIES, MULTIPLE-LISTING SERVICES

A chain of dry cleaning stores contracted with a directory publisher for placement of its advertisement in a local phone directory. When the directory was published, the telephone number appeared under the entry for an escort service. The dry cleaner sent a letter to the directory publisher accusing it of negligence and demanding nearly $300,000 as settlement for nuisance, lost business, and employee time lost in answering repeated telephone calls for escort services. The case was favorably resolved, but defense fees of almost $18,000 were incurred.

A restaurant franchisee contracted with a phone directory publisher for placement of an ad in a local directory. Although the franchisee later asked the publisher to cancel the ad because the franchisor had not authorized the ad's text, the publisher erroneously printed it, causing the franchisee to lose its contract with the franchisor. The franchisee sued the publisher for over $200,000 for negligent interference with prospective business relationships (lost future customers). A judgment of nearly $200,000 was entered against the publisher at trial.

A pet store contracted with a directory publisher to place an ad in a local phone directory stressing a specialty in exotic birds. When the directory was published, a typographical error resulted in a reference to "erotic birds." The pet store sued the publisher for $72,000 because of the lost business and harassment from obscene phone calls. Defense fees were significant although the outcome was successful.

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RESEARCH ORGANIZATIONS

A research firm hired by a developer reported that a planned housing development was not in a flood plain. However, once the developer had built two of the four phases, he discovered the property was indeed within a flood plain. Although there had been no flooding, he argued the existence of the possibility reduced the property values. He sued and the researcher's carrier defended. The case settled for a payment in excess of $300,000 plus defense costs.

A research laboratory developed a test for the flammability of its customer's new building material so that the material would be accepted as safe. When the customer then discovered that the research lab was utilizing the same test for other customers he sued, alleging the test procedure belonged to him and the lab was revealing his trade secret. Defense costs were well over $100,000 but the result was successful.

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STANDARDS DEVELOPERS/MANAGERS

An association that promulgates rules and regulations for manufacturers of rubber products was sued as one of many defendants when a tire exploded as plaintiff was attempting to put a certain-sized tire on a rim/wheel that was just slightly smaller. Plaintiff alleged his permanent, disabling injuries were due to the association's failure to properly test the designs of the tire and rim, failure to warn of the danger, and failure to instruct on the safe use. Although no damages were paid, the successful defense was costly.

Plaintiffs, injured in a fire at their personal residence, sued, alleging certain construction material used in their home was unreasonably dangerous because it caused the fire to spread rapidly. They included a trade association which tested and advocated the material, alleging the association had conspired for many years to hide the flammable characteristics of the material. Plaintiffs also claimed that burn tests the association sponsored were manipulated, that unfavorable results were concealed and that misleading information was provided to building code authorities and fire trade press. The insured association was successfully defended but it cost over $600,000.

A library sued a fireproofing company for the value of rare documents which were destroyed in a fire at the library. The library later added a standards certification association as a defendant on the grounds that it had failed to instruct the fireproofing company on installation and testing procedures for the fire suppression system. The case was favorably resolved but defense costs were incurred prior to dismissal.

A data processing company suffered damage to its computer equipment when a pipe on the floor above the equipment apparently burst under pressure. The data processing company sued the contractor which had installed the pipe, the manufacturer of the pipe, and a standards certification association, alleging the association had negligently formulated standards for bursting strength. Because the association's policy provided contingent property damage coverage, its carrier paid over $40,000 in defense fees, and finally had the suit dismissed prior to trial.

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TESTING LABS

A producer of bottles for malt beverages retained a laboratory to test the breakage resistance of its bottles. Unfortunately the lab used an improper test, which resulted in the producer manufacturing six weeks worth of defective bottles. All of those offending bottles had to be recalled at a cost of almost $60,000. The producer demanded compensation from the lab. No suit was filed but the lab's insurance carrier paid over $50,000 to the producer.

A testing lab was allegedly sent an air sample, allegedly sealed at the lab's instruction inside a container and carried by private airplane to a distant destination. The pilot claimed the container came open in mid-flight so that whatever was inside was released into the cockpit where he inhaled it. He claimed permanent, disabling injury, preventing him from ever flying again. The lab's personnel recalled an inquiry, but denied any other involvement. Nevertheless, the lab was sued along with others. The carrier paid $27,000 to defend and $32,000 for the lab's share of the settlement.

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*These claims are examples of those encountered in the types of businesses insured by Media/Professional Insurance.

Some are claims we've handled; in others, we were not directly involved. Coverage for these claims is not to be inferred from this list but must always be determined in reference to a particular insurance policy, which is the controlling document, as well as the facts and circumstances of each claim and applicable law.