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Originally Posted by 70ToppsFanatic
On the subject of the guarantee everyone so far is making an assumption that PSA would have to pay for these out of “reserves”. However, there is another possibility.
Most service businesses carry Errors & Omissions liability insurance, as well as quite a few addition liability coverages. If a TPG carries E&O coverage it would certainly be to cover extraordinary guarantee costs beyond a reasonable deductible level that the TPG would have to pay first.
While their future premiums could be increased dramatically as a result of this, I doubt very much that a large number of guarantee claims resulting from this situation would dent a TPG too badly in terms of depleting their reserves.
And besides, in this case there is a patsy named Brent who is basically going to take the brunt of it all. The TPG records are almost certainly sufficient to be used as the basis for going after Brent criminally if he doesn’t do exactly what the TPGs he brought into harms way want him to do.
More than likely almost none of the stink of this falls back on the TPGs if they intelligently leverage what they have to hold over Brent’s head.
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I believe in the stockholder statement that revealed the $800k reserves they indicated they have no insurance for guarantee returns. Why would you have a contingency fund if you carried insurance?