We ordinarily focus on the world of commercial insurance, but I cannot help but wonder what property insurers are going to do about the multi-million dollar homes that recently slid down a cliff in Laguna Beach, California. The LA Times has a summary of the event, which links to a compelling set of photographs. Fortunately, no deaths or serious injuries were blamed on the slide, which begain literally with a bang as wooden beams in dozens of homes just snapped. The slide, blamed on recent rains, sheared away part of the face of Laguna’s Bluebird Canyon. At last count 17 homes were completely destroyed and 11 seriously damaged.
Here is my question. Let’s assume that insurance companies accept the claims — as opposed to denying at least some of them for lack of “flood” insurance. (A lot of rain does not equal a flood; it surely is “water damage.”) Insurers will pay up to policy limits for the homes and their contents. But what about the lots on which the houses stood? The very expensive land on which these homes were built no longer exists. The palatial home perched on a hillside has crumbled into a muddy pit. Indeed, more that one homeowner might have a claim on the same flattened piece of real estate — assuming, of course, that any rebuilding can take place. Will insurance cover the cost of replacing the lost lots? Or are homeowners on the hook for it? I reviewed conventional insurance offerings in California and found, not surprisingly, that they do not contemplate the risk of a building lot simply disappearing. I suspect that the homeowners may be on their own when it comes to paying for a new place to build their homes.
When in Doubt, Litigate!
Risk transfer is usually a pretty straight-forward business. But in this unusual California situation (rather likely to recur), risk transfer is nothing short of a soggy mess. With the workers comp market in that state finally tightening up, perhaps this is the opportunity that some local attorneys have been waiting for.
Archive for June, 2005
The Lot That Isn’t There…
Thursday, June 2nd, 2005The X Factor: creating a safety culture
Wednesday, June 1st, 2005Ever wonder why your loss costs continue to rise despite your organization’s strong safety programs? Or why one of your company’s locations has a much stronger safety performance than another? Larry Hansen does, and he has written an excellent and lengthy article entitled Stepping up to occupational hazards in this month’s edition of Occupational Hazards that explores these issues. He singles out culture as the X Factor (or the ‘excellence differentiator’) in achieving stellar safety performance. Here’s an excerpt:
“In his October 2003 Occupational Hazards article, “Getting the Culture Right,” Don Eckenfelder contends that organizational attitude ultimately determines whether safety initiatives succeed or fail, and proposes three core truths: “1 – Culture predicts performance; 2 – Culture can be measured; and 3 – Nothing is more important than getting the culture right!” The culture of an organization – its basic beliefs and values concerning people – is what drives safety excellence.
Tom Peters and Bob Waterman spent a decade In Search of Excellence, attempting to discover what lies at the core of operational excellence. After years of research, they summarized their findings in a simple, yet powerful message to American management: “Figure out your values system!” Values lie at the core of an organization’s culture, and are the predictors of, and ultimate determinants of, all operational outcomes … safety included.”
Hanson