FUNERAL DIRECTORS OR MORTICIANS PROFESSIONAL LIABILITY INSURANCE

(January 2022)

Funeral directors or morticians and their employees face malpractice exposure arising out of their professional operations.

 

Example: Plaintown Funeral Home provided a memorial service for the Jones family, including cremating Mr. Jones. The home’s director gives the cremains to Mr. Jones’ daughter. Two weeks after the service, Plaintown receives a request from a son of Mr. Jones who lives in another state. He claims that he was supposed to get the cremains and not his sister. He files suit against Plaintown.

 

The Insurance Services Office, Inc. (ISO) offers professional coverage for funeral directors or morticians under their businessowners program (BP 08 02) and under their Market Segments product (MS FH 05). Not all companies have adopted the ISO programs and not all funeral directors qualify for these programs, so coverage may vary substantially among different insurers.

Related Article: Market Segments Division—Funeral Homes

Funeral directors professional liability coverage is usually written as an endorsement to the insured’s general liability policy that covers the funeral director's operations and premises hazards. Some insurers offer complete independent package policies combining property, general liability, and professional liability coverages for funeral directors under a special group program.

COVERAGE

Funeral directors professional liability is not a standard coverage. The language of the insuring agreements and exclusions will differ between insurers, which makes a careful comparison between forms important to discover potential gaps in coverage. The following coverage information is based on a review of several independent policies issued by different insurers as well as the ISO endorsements cited above.

Funeral Directors or Morticians Professional Liability insurance typically pays on behalf of the insured. It pays only the amount for which an insured is legally obligated to pay. The only amounts it will pay are for damages that arise from either the rendering of or the failure to render professional services. These professional services must be directly related to the insured’s funeral director or mortician business. The damages must be due to bodily injury, property damage, personal and advertising injury, or other injury. Bodily injury, property damage and personal and advertising injury are all defined terms within the commercial general liability policy. However, other injury is not defined which leaves this coverage open ended.

Bodily Injury

Bodily injury is often defined to be bodily injury, sickness, disease, or death. It is important to remember that a deceased body cannot sustain bodily injury so the persons who sustain the bodily injury are those who are living at the time of the activity causing the bodily injury. Damage to the body is considered property damage.

Note: This definition of bodily injury does not include mental anguish. Some coverage forms might include such terminology in this definition. While other forms might consider it, as ISO seems to, as other injury.

Personal or Advertising Injury

This is any injury that arises out of one or more of the following offenses but, in this coverage, applies only in relation to professional services. It includes consequential bodily injury.

a. False arrest, detention, or imprisonment

b. Malicious prosecution

c. Wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies when committed by or on behalf of the property owner, property owner, or lessor

d. Any oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products, or services. This can take place using any form of communication, including the Internet and other electronic forms.

e. Oral or written publication of material that violates a person's right of privacy. The violation can take place using any form of communication, including the Internet and other electronic forms.

 

Example: Paragon Funeral Home prepares the body of Ms. Mega Star. A tabloid offers money for pictures of the body before and after embalming and a copy of the sealed cause of death. The family sues Paragon for invasion of privacy when the tabloid publishes the pictures and releases the cause of death. Paragon denies the allegations and their insurance carrier defends them.

 

f. The named insured using the advertising idea of another in its advertisement

g. The named insured's advertisement infringing on the copyright, trade dress or slogan of another

Property Damage

This covers damage to tangible objects including resulting loss of use. Deceased bodies or cremated remains are considered property so any damage to them is considered property damage. Some forms do not cover damage to the deceased body or cremated remains but the ISO endorsements do.

 

Example: Family members witness a loved one's casket falling out of a hearse on the way to the cemetery. The damage is eligible for coverage.

 

Other injury

Other injury is not defined within the ISO endorsements. Mental anguish, mental distress, and other emotionally/stress induced injuries could be covered. Most claims under this coverage would be classified as other injury.

 

Examples: The following are instances of other injury that may be eligible for coverage:

·         A person who discovers that the wrong body was buried in her spouse's grave

·         A mortuary staffer damages a body during the preparation or embalming process

·         Family members suffering from seeing the wrong body displayed during a visitation or funeral service

·         A deceased is mistakenly cremated rather than prepared for a funeral service and burial

·         Anguish caused to a family learning that, in error, a loved one's body was delivered as a cadaver donation to an out-of-state hospital

·         Family members distressed when a body is embalmed contrary to their religious beliefs

·         Emotional distress when funeral home follows body preparation and funeral directions from an unauthorized party.

 

Defense

This provides protection for the customary expenses found in most liability insurance contracts for defense, settlement, and supplementary payments. While the ISO endorsement provides defense coverage in addition to the policy limits of liability, this is not true of all professional liability policies that cover funeral directors. Some include defense expenses within the policy’s limit of liability; others will have a separate, stated limit for defense coverage. Make sure you have carefully reviewed the contract with respect to defense expense coverage.

EXCLUSIONS AND LIMITATIONS

Because most funeral directors/mortician’s professional liability forms are endorsements of a general liability coverage form, all those exclusions continue to apply unless specifically removed for the endorsement or modified in some way. This means a few reviews are required.

  1. Many commercial general liability exclusions state that they apply to bodily injury, personal and advertising injury and/or property damage. When coverage in the funeral director’s form extends to other injury or another type of injury, these exclusions would NOT apply to those types of injury unless the exclusion is reworded to add the new term.
  2. Some commercial general liability forms exclude professional coverages. Such exclusions would need to be modified or eliminated to prevent confusion.
  3. Most forms modify exclusions. The following amendments are examples:

a.     Contractual liability

This is modified by adding the term “other injury.”

b.     Criminal Acts

This is modified by adding the term “other injury.”

c.     Care, Custody and Control

The deceased body plus personal clothing, jewelry, and more are placed in the care, custody, and control of the funeral director. The standard property damage exclusions would deny coverage for any loss to these items. However, most policies will provide coverage subject to limitation of perils. The ISO endorsements provide coverage if the property damage is caused by theft or by a hostile fire while other forms may expand to provide coverage for other specified perils.

 

Example: Geoffrey and Sons have control of Melanie’s furs and rings that were placed on her during the visitation but removed prior to the sealing of the casket. Jessica, Melanie’s daughter, takes all of these at the same time she was picking up flowers and other items at the funeral home. Patricia, the executor of Melanie’s estate, arrives at the funeral home and requests the items. Patricia is furious that they are no longer available and sues Geoffrey’s on behalf of the estate because Melanie has left the state and cannot be found. If the items were taken when employees were out of the area, this could be theft and covered. If an employee gave the items to Jessica, this action may be excluded.

d.     Damage to Your Work

The property damage when caused by the named insured’s work or work provided by others on its behalf exclusion does not apply. This is important because if there is no property damage for the named insured’s work, there is no property damage cover for the deceased body.

 

Example: Paisley Place funeral home failed in its embalming so much that no attempt was successful in making Eric look natural. The family had to change their plan to have an open casket. Later, the family sued Paisley for the damage to the body and for their related mental anguish.

 

e.     Damage to a Particular Part of Property Being Worked On

Like the damage to your work exclusion, this exclusion removes coverage for the particular property upon which the named insured or others on its behalf are working on. If this exclusion is on the policy, there is no coverage for the deceased body. The ISO forms eliminate this exclusion.

 

Example: Marcia is shocked to discover that the funeral home broke the legs in her father’s body to fit him into the standard sized casket that it had ordered. She sues the funeral home for the damage to the body and for the accompanying mental distress. Damage to the body could be covered due to this revised property damage exclusion.

 

  1. While all exclusions are important. The following are particularly important to this coverage:

·         Intentional acts by the named insured or ones acting on its behalf. As an example, while misdelivery of the wrong body for scientific research is covered, intentional sale of the body or body parts is not.

 

Example: Buy-Beloved Mortuary Inc. is insured by Grounded Fire & Casualty's Funeral Director's policy. Buy-B is sued by the spouse of J. Smith after she discovers that, without legal permission, J.'s kidney and liver were sold to an area tissue bank. Grounded notifies Buy-B that their intentional and criminal act is excluded from coverage.

 

·         Fraud, misrepresentation or violation of any law or ordinance or criminal act

 

Note: This exclusion does not apply to an act done in good faith at the request of a public official having apparent authority to require or permit such an act.

 

Example: The city coroner signed a contract with Julian’s Funeral Home to cremate unclaimed bodies after a tissue bank had harvested tissue from them. Julian was unaware that the city coroner was pocketing the money and had no authorization to enter into this contract. Julian’s performed its function as required based on its contract. The family of the deceased sued the city coroner and Julian’s. Julian’s was covered because, while the action was a criminal act by the city coroner, Julian was acting in good faith.

 

·         Liability assumed by the insured under any contract or agreement

Note: This exclusion does not apply to liability for damages that are otherwise eligible for coverage under the policy.

·         Damages related to the ownership, maintenance or use of any automobile or animal-drawn vehicle while away from any premises owned, rented, or controlled by the insured

 

Example: Buy-Beloved Mortuary Inc.’s hearse is transporting a casket and the deceased to a nearby cemetery. On the way, the hearse’s driver makes a turn too sharply, runs up on a corner curb and injures a pedestrian. A claim is turned in under their Funeral Director's policy. A company claims supervisor tells them that coverage is excluded under the funeral director policy, but they are processing the claim under Buy-B’s Business Auto Policy.

 

·         Property damage to any property or facility that an insured owns, occupies, rents, or holds on consignment.

Note: These property exposures should be covered under an insured’s property policy or property section of a commercial package policy.

·         Damages and expenses related to the release, disposal, etc., of medical waste and chemicals used with embalming, preparations, and related activities

Note: These exposures would have to be managed by securing a pollution liability policy.

Definitions

Some forms add definitions for only this coverage that alter definitions in the commercial general liability coverage part. The following are examples:

Damage to Deceased typically refers to physical loss involving the deceased person, cremated remains, clothing, and personal effects.

Deceased human body includes an entire human body, any part of a human body that has been severed, or ashes of a human body after legal cremation.

Occurrence means an event causing bodily injury, property damage, or personal and advertising injury. It also includes errors, omission or acts while rendering or failing to render professional services as a funeral director or a mortician.

Professional services are malpractice errors or mistakes in the embalming, handling, disposition, burial, disinterment or removal of any deceased human body or any conduct of any memorial service by the insured, even though no deceased human body is present. Injury to, destruction of or interference with the right of burial of a deceased body is also included.

Important Provisions

Funeral directors and mortician’s professional liability insurance applies only to acts or omissions that occur during the policy period and arise out of the rendering of or failure to render professional services as a funeral director or mortician. This coverage is generally written on an occurrence basis.

The insured must give written notice to the company or an authorized agent of the company as soon as practicable upon becoming aware of any injury, loss or occurrence covered under the policy or of any claim alleging malpractice, error or mistake committed by the insured. The notice must be made in accordance with stated policy conditions.

Related Court Case: "Notice to Broker Was Not Notice to Insurance Company" –illustrates the importance of proper notification of insurer.

The insurance is written either on a single limit basis for all damages arising out of error or mistake during the policy period, or on a dual limit basis covering a limit per claim and an aggregate limit for all damages occurring within the policy period. Review the policy carefully for specific provisions pertaining to the limit of liability.

Additional Coverages

This depends entirely upon the applicable company, but some insurers may offer distinct types of optional, additional coverages related to funeral director activities, such as: