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Vol. 3, Iss. 10
June 25, 2014


Happy Half-Christmas: Talking Insurance Coverage With Santa Clause

Randy Spencer is on vacation. And since today is Half-Christmas, there was an easy solution to filling his space. Here is the pre-Christmas interview -- Single Cause Is Comin’ To Town --that Spencer did with Santa Clause in the December 19, 2012 issue of Coverage Opinions.

Santa, thank you so much for taking the time to speak with Coverage Opinions. No doubt you are very busy at the moment.

You can certainly say that again. Believe me, it would be much easier to do this in February. And that’s what I told that reporter from Rolling Stone who wanted to come up here and see this place hummin’ at full throttle – sorry, can’t do it now, call me in a couple of months. But when I heard that Randy Spencer wanted to interview me I dropped everything -- including the tike that had been sitting on my lap. If this interview should happen to throw things off schedule, and kids in Nebraska don’t get any toys, so be it. There’s always next year.

It seems surprising but I’ve heard that insurance coverage is something that greatly interests you.

It is. It’s no secret what occupies most of my time. But people don’t know much about the other things that keep me busy. Let’s just say that, well, sometimes I don’t deliver all of those Xbox 360 games that I should. But insurance coverage is my greatest passion. I’ve even thought about changing the spelling of my name to Clause. But Mrs. Claus says that if I do that I can sleep with the reindeer. Check out the sleigh in the driveway on your way out. The license plate is L8-NOTIC.

Needless to say you have a very unique organization here. This must create a lot of challenging insurance issues. Let’s start with the basics. Tell me about your general liability exposure.

That’s not too complex. We do not have a lot of premises exposure. Not too many people venture up here. It’s cold and there are no direct flights. Our biggest premises risk is the mail man. He comes non-stop starting at Thanksgiving. It’s only a matter of time before he wipes out on that ice on the walkway that sometimes I can’t be bothered to clear.

But we do have some operations exposure. I can’t deny that we cause damage to some roofs. Look, it’s just inherent in the risk of landing the sleigh – which, by the way, is not considered an “auto” under the CGL exclusion. Check out Claus v. North Pole Casualty and Indemnity Company. I really think that people should just let it go in the spirit of the holiday. But many still insist on making a claim for the damage to their roof. But I can tell you that these ingrates never make a second claim because after that I transfer them to the naughty list. And once in a while Blitzen will bite a kid’s hand when taking a carrot. The insurer usually defends based on assumption of the risk, but eventually it is usually just easier to settle for cost of defense and close the file.

Products liability is our biggest general liability concern. I’m still smarting from that Supreme Court decision that made me liable for defective products under the Restatement of Torts Section 402(A). Can you believe that? Talk about no good deed going unpunished. That decision sent our products liability premium through the roof. And now I hate having to say – “Sorry kid, can’t get that for you. Too dangerous. You’ll shoot your eye out. If you are not happy complain to the American Trial Lawyers Association.”

If general liability is your most basic exposure, what is your most unique?

That’s easy. Rudolph’s red nose and my beard are critical to the long term success of this business. They are very challenging to price and only a few options exist for placing them. They are insured by Lloyd’s – the same syndicate that had the risk on Liberace’s hands. But let’s face it -- insuring my beard is much more impressive.

So it’s real?

Yeah wise guy. It’s real.

What other risks do you contend with that no other businesses would?

Some professional liability exposures have been a real problem. And since there isn’t much demand for a Santa E&O Policy it has required a lot of manuscript drafting.

What kind of professional liability exposures do you have?

Kids that ask me for something and then wake up on Christmas morning and find that it’s not there. If a kid asks me for an iPad, and gets a sweater, I can expect a demand letter from his lawyer within a week. And from some of the verdicts that I’ve taken in these cases I can tell you that they have real jury appeal. I make it clear when speaking to the kids that I am not promising to get them anything. But the kids hear what they want to hear. And the next thing I know I’m accepting service of a detrimental reliance suit.

I’m sure you are very careful not to make any promises.

Believe me I am. And we have a good lawyer up here who tells me exactly what to say. He’s even a North Pole Super Lawyer, so you know he’s gotta be good. But it’s an inherent part of the business. The biggest problem are the mall Santas. Those guys mean well, and we do good training, but let’s face it -- they are amateurs. They get caught up in the excitement and the next thing you know some kid thinks that Santa has promised to bring him a pony.

How do you try to minimize this?

It is hard to do. The number of mall Santas is huge. I can’t police all of them. Like I said, we do a lot of training, but the problem can’t be solved. I require that all mall Santas hold me harmless and name me as an additional insured on their policies. And on a primary and non-contributory basis. But it is hard to keep track of all of those certificates of insurance. And you know that sometimes getting AI rights can be challenging.

Are they any other professional liability exposures?

Unfortunately there are. It is not uncommon for a kid to be put on the naughty list and take real issue when he finds coal in his stocking. Some of these delinquents sometimes challenge these determinations and bring claims for what they think I should have brought them, not to mention asking for all sorts of nonsensical consequential damages and attorney’s fees. Look, I’ve been doing this for a long time. I know when a kid deserves to be on the naughty list. These claims are baseless. But because of the expense of defending them I am forced to err on the side of caution, and put some kids on the nice list, when I know they don’t deserve it.

I noticed a lot of elves when I was walking in. It would seem you have your share of workers compensation issues.

The elves are the backbone of this operation. Unfortunately they get hurt more than we’d like to see. They make many wooden toys by hand. That requires cutting a lot of wood. We have some very big mechanical saws out there. Sometimes the elves are exhausted from working 16 hour shifts this time of the year. You can see where I’m going with this. So yes, workers comp. is a big issue for us.

Is there anything special about this year’s trip around the globe that you are looking forward to.

I always appreciate it when the little ones leave cookies and milk. But this year I am hoping that kids in Colorado and Washington leave me brownies.

Last question, can you tell me what you hope to get in your stocking this year?

Oh, that’s an easy one. A copy of the Second Edition of General Liability Insurance Coverage: Key Issues In Every State, by Randy Maniloff and Jeffrey Stempel, available on the Oxford University Press website and Amazon.com. If you see Mrs. Claus on the way out please whisper that to her.

Santa, thank you so much for sitting down with Coverage Opinions and sharing all of this. Can I say hello to the reindeer on my way out.

Sure. Just sign this waiver and keep your hands away from Blitzen.

That’s my time. I’m Randy Spencer.

Contact Randy Spencer at Randy.Spencer@coverageopinions.info

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