t was preview time at a typical Thursday consignment auction. There was nothing special about the day, as it was the regularly scheduled auction, and there were many items on display. There were the usual suspects and a few new buyers who had come to see what all the excitement was about. Everyone was browsing around; looking at what could be their next purchase or an item that they simply couldn’t live without. All items were on display for the patrons to view prior to bidding on them, just as it should have been.
One of the regular bidders came up to a staff person and asked if he could view a pocket knife that had been on display in a locked case for safety. This customer was a State Trooper by profession and was always more interested in knives than guns. The auction staff member unlocked the glass case, took the knife from the display, and carefully handed the knife to the prospective bidder. The customer attempted to open the knife after looking it over. The pocket knife was different than most, so the customer opened it with difficulty, cutting himself in the process. The staff member quickly alerted the Auctioneer / business owner and explained to him what had happened. The Auctioneer and the staff person did everything in their power to make sure that the customer was alright, but the customer insisted that he was fine, that it was just a “little cut”. Refusing treatment, he wrapped his finger with paper towel to stop the bleeding and proceeded to view the other auction items.
The bidder went about his business at the auction as he normally would, but with a cut finger. He sat through the entire auction. He actually bid on the knife that he cut himself with, but unfortunately was not the highest bidder. The man left after the auction was over and never said a word to the owner or any of the owner’s support staff about what had occurred earlier in the day.
Approximately three weeks later the auctioneer received a letter from the customer’s attorney expressing that the customer had engaged counsel and had decided to sue the auctioneer because he cut himself at the auction with the auctioneer’s knife. Nobody at the site of the incident had thought that this man’s wound had been all that serious, let alone needing medical assistance. However, the customer claimed that he cut a tendon in his finger and would need surgery and rehab to nurse his finger back to health. Being a State Trooper, he needed that specific finger for work as it was his shooting finger.
Unfortunately, the auctioneer did not report the letter or “notice of a claim” to his insurance company until four months later when he received a second letter stating that he was being sued for medical expenses due to the customer’s injuries. The lesson here is ALWAYS, ALWAYS, ALWAYS give the insurance company notice as soon as possible. Most policies have an exclusion in them that allows the carrier to deny a claim if “timely notice” is not given.
The good news is that the carrier, once put on notice, opened a claim file and is now working to settle the claim. The claim is already up to $67,000 and still growing. This amount is only the medical expenses, so we anticipate the cost of this claim will continue to increase.
Where is the coverage…? This coverage is in the General Liability policy. This is part of the bodily injury portion of the policy which states that if someone gets hurt on your property, there is medical expense coverage of usually $5,000 to $10,000 to cover the little stuff. If you get sued, however, the occurrence limit of the policy can kick in to cover the additional cost. In most cases the General Liability policy will pay for the bodily injury claim, damages, and legal expenses.
It has now been almost eight months since the auction. The insurance company has paid out over $67,000 to date, just in medical expenses. There are still more medical bills, damages, and the legal expenses of settling this claim to deal with. This is still an open case, so it is impossible to say what the total cost will be.
Where is the coverage…? What we do know is that had the auctioneer not had a General Liability policy, he would have been self-insured.