Liability

Commercial General Liability

Commercial General Liability (CGL) policies protect businesses from financial loss should they be liable for property damage or personal and advertising injury caused by your services, business operations, or your employees.

Situations in which your business could be responsible for paying various costs include medical and legal expenses, and compensatory or punitive damages. This could be caused by:

A customer slips and falls on a wet floor in your shop and is injured

An electrical employee leaves water running in a customer’s home causing damages.

A class action lawsuit is filed against your business after a customer alleges published advertisements were false and misleading.

What Commercial General Liability Insurance Covers

CGL coverage is one of the most important types of insurance coverage as liability suits have become more commonplace, unfortunately.

Standard CGL Insurance includes:

Bodily Injury and Property Damage

Bodily injury and property damage coverage provides protection against losses from the legal liability of insureds arising out of non-professional negligent acts or for liability arising out of their premises or business operations. Mental and emotional distress are also covered under the CGL policy.

Personal and Advertising Injury Liability

Personal and advertising injury liability protects an insured against liability arising out of certain offenses, such as:

Slander

Libel

Malicious prosecution
False arrest

Infringing on another’s copyright

Wrongful eviction, entry or invasion of privacy

Use of another’s advertising idea

Medical Payments

Limited coverage for medical payments includes payments for injuries sustained by a non-employee caused by an accident that takes place on the insured’s premises or when exposed to the insured’s business operations. Medical payments coverage can be triggered without legal action.

Medical payments provides for prompt settlement of smaller medical claims without litigation. As part of the CGL policy, all necessary and reasonable medical, surgical, ambulatory, hospital, professional/skilled nursing, and funeral expenses are included in the policy for a person injured or worse in an accident taking place at the insured’s premises or from business operations.

Professional Liability

If you or your business provides professional services or advice to other businesses or individuals, your counsel or service could lead to losses by your client for which you could be held responsible. These losses are covered professional liability insurance, also known as errors and omissions insurance.

Claims not covered by general liability insurance that are covered by professional liability insurance include misrepresentation, negligence, inaccurate advice, violation of good faith, and fair dealing.

What types of businesses needs professional liability insurance?

In some states, professional liability insurance is required, especially for doctors and lawyers. Legal and medical malpractice insurance policies are special types of professional liability insurance.

Other professionals that should consider professional liability insurance include:

Engineers

Accountants

Architects

Information technology (IT) consultants

Graphic designers

Real estate agents and brokers

Insurance professionals

Software developers

Investment advisors

Management consultants

As this list is incomplete, please contact us for assistance in determining the level of professional liability coverage you need.

Coverage Details

There are two types of professional liability policies: claims-made and occurrence. Most professional liability insurance policies are “claims-made,” meaning that the policy must be in effect both when the event took place and when a lawsuit is filed. However, if you change careers or retire, you may want to purchase an “occurrence” policy that
will cover any claim for an event that took place during the period of coverage—even if the suit is filed after the policy expires.

Professional liability insurance will pay the cost of legal fees against claims and judgments against you, up to the limit of the policy. In general, coverage does not extend to non-financial losses or losses caused by intentional, dishonest or criminal acts. Other fees, such as licensing board penalties, may also be included. Policies will generally have a deductible ranging from $1,000 to $25,000. The amount of professional liability insurance you will need and how much it will cost depends upon the size of your business and the level of risk it poses. Please consult us concerning the amount and type of professional liability insurance you may need.

You may be able to include professional liability coverage in a Commercial Package Policy as an endorsement. Note, however, the professional liability coverage is not included in an in-home business policy or Business Owners Policy.

Products Liability

Product liability insurance protects businesses from the repercussions that occur if a product causes injury or other damage to third parties.

Consumers can be inadvertently harmed by product design, manufacturing, marketing, or improper use.

Product liability insurance helps protect the business from manufacturing based lawsuits, for example. Increased claims combined with lawsuit costs makes product liability coverage one of the most important options for manufacturing businesses.

Product liability insurance covers legal fees, medical costs, compensatory and business damages.

How much product liability insurance does your business need?

The amount of coverage required for your business depends on the amount and type of products sold, as well as the various parties involved in production.

If your business even remotely deals in manufacturing, sales, or distribution, product liability insurance will ensure the business is sufficiently covered from lawsuits claiming resulting damages.

Cyber and Privacy

Cyber and privacy insurance policies protect your business from both liability and property losses that result from the business engaging in online activities or data collection within its internal network.

These policies also cover business liability for data breaches and related costs, including notification costs, credit monitoring, state regulation defender claims, fines and penalties, or loss resulting from identity theft.

Additional coverage includes:

Computer Fraud

Data loss/destruction

Business Interruption

Cyber Extortion

Funds Transfer Loss

Cyber and privacy insurance is often confused with technology errors and omissions (tech E&O) insurance. In contrast to cyber and privacy insurance, tech E&O coverage protects providers of technology products and services, such as website designers, computer software and hardware manufacturers, and firms that store corporate data on an off-site basis. Nevertheless, tech E&O insurance policies do contain a number of the same insuring agreements as cyber and privacy policies.

Workers’ Compensation

Workers’ Compensation Insurance provides medical and wage benefits to people who are injured or become ill at work. This coverage, mandated by each state, may have wage and medical benefits that fluctuate based on location. Workers’ compensation is considered a social insurance because it relies on a social contract between owners, management, and labor. In exchange for purchasing workers’ compensation insurance, business owners are protected from civil suits from their workers who become injured on the job. Workers’ compensation insurance is purchased by businesses, and is underwritten by insurance companies and, in some states, underwritten by publicly supported state funds.

Workers’ compensation insurance provides medical expenses, lost wages, and rehabilitation costs to an employee who has an illness, gets injured, or worse, while on the job.

Businesses in each state with comparable workplace injury patterns and costs are grouped into categories or classes. Rates are determined and assigned to each class based on loss costs within the class over the last five years. Economic factors for each state are linked to the data to better determine the class rate.

A system called “experience rating” (sometimes referred to as an X-Mmod) allows for modification of the class rates based on the loss history of an individual business. This system provides business owners a significant amount of control over the cost of their workers’ compensation premium – safe businesses receive lower premiums and unsafe businesses, in which a lot of accidents/claims are reported, are penalized with higher premiums.

All states, with a small number of exceptions, require businesses with employees who are not owners, to purchased workers’ compensation coverage for those employees.

Businesses that fail to provide workers’ compensation coverage can face severe penalties, including payment of claims out of pocket, fines and possible imprisonment, as well as possibly losing the right to conduct business in the state.

For more information about workers’ compensation insurance, including risk management and workplace safety, please contact us.

Medical Professional Liability

Medical professional liability insurance, sometimes known as medical malpractice insurance, is one type of professional liability insurance which protects physicians and other licensed health care professionals from liability associated with wrongful practices resulting in bodily injury, medical expenses and property damage, as well as the cost of defending lawsuits related to such incidents.

A medical professional liability insurance policy covers bodily injury or property damage as well as liability for intangible injuries such as mental anguish. Due to the complexity involved in discovering negligence, a higher percentage of premium dollars going toward defense and cost containment expenses than payouts of actual damages in those cases. However, medical liability insurers spend significant funds investigating and defending claims where there is an adverse patient outcome that did not result from negligence.

There are two basic types of malpractice insurance: occurrence or claims-made. Many insurers write on a claims-made form basis where a policy in effect at the time a claim is reported responds for the loss, while the policy remains in force and during any applicable extended reporting period. The policy that was more popular in earlier times is occurrence-made which covers a loss that “occurs” during the policy period, regardless of when the claim was made, and even after the policy has been canceled.

For more information on Medical professional liability insurance, please contact us at 877-213-1999.

Executive Risk Insurance and Directors and Officers Liability

Executive risk insurance, also known as directors and officers liability (D & O), is considered multi-faceted exposure for most companies.

Directors or officers of any company, public or private, assume great personal risk and could be held personally liable for management actions. We recognize the importance of protecting your executives and have made it our business to understand the complexity of this critical line of coverage.

Officers within a company are exposed to potential liability for all of their actions: management decision-making, supervision and direction, employee activities with co-workers and others, and employee welfare and benefit plan administration and fiduciary activities. The extent of this personal exposure can differ by the individual’s role within the organization.

The company has its own liability exposure as well as its payment obligation for the exposures of individuals. This company exposure may be impacted by the organizational structure of the entity (public, private, non-profit, partnership or limited liability entity).

D&O liability insurance is insurance coverage that protects individuals from personal losses if they are sued as a result of serving as a director or an officer of a business or other type of organization, including non-profits. It can also cover the legal fees and other related costs the organization may incur as a result of such a suit. Most policies exclude fraud and criminal offenses.

Directors and officer’s liability insurance claims are paid to directors and officers of a company or organization for losses or reimbursement of defense costs if legal action is brought against them. Such coverage can also extend to criminal and regulatory investigations or trial defense costs. Civil and criminal actions are often brought against directors and officers simultaneously. D&O insurance has become closely associated with broader management liability insurance, which covers liabilities of the corporation, as well as the personal liabilities for the directors and officers of the corporation.

Policies can be written to insure against a variety of hazards, but they generally exclude fraud, criminal activity, and illegal profits. Also, most policies contain “insured vs. insured” clauses, whereby no claim is paid when current or former directors and officers sue the company. This prevents the company from profiting from deceit or conspiracy.

We can assist in determining whether you need this critical type of insurance. Please call us at 877-213-1999.

Employment Practice Liability

Employment practice liability insurance (EPLI) covers businesses against claims by
workers that their legal rights have been violated. The number of
lawsuits filed by disgruntled employees is on the rise. While most suits
are filed against relatively large corporations, no company is immune.

Realizing smaller companies are in need of this type of protection, insurers are
offering this coverage as an endorsement to their business owner’s
policy, or as stand-alone coverage. It is important to note that an
endorsement will change the terms and conditions of the policy, however.
An endorsement changes the terms and conditions of the policy. Some
insurers offer EPLI as a stand-alone coverage.

EPLI provides protection against many kinds of employee lawsuits, including claims of:

Employment practice liability insurance (EPLI) covers businesses against claims by
workers that their legal rights have been violated. The number of lawsuits filed by disgruntled employees is on the rise. While most suits are filed against relatively large corporations, no company is immune.

Realizing smaller companies are in need of this type of protection, insurers are offering this coverage as an endorsement to their business owner’s policy, or as stand-alone coverage. It is important to note that an endorsement will change the terms and conditions of the policy, however. An endorsement changes the terms and conditions of the policy. Some insurers offer EPLI as a stand-alone coverage.

EPLI provides protection against many kinds of employee lawsuits, including claims of:

Discrimination
Sexual harassment

Breach of employment contract

Wrongful termination

Wrongful discipline

Wrongful infliction of emotional distress

Negligent evaluation

Failure to employ or promote

Deprivation of career opportunity

Mismanagement of employee benefit plans

The cost of EPLI coverage depends on your type of business, the number of employees, and various risk factors such as whether your company has been sued over employment practices in the past.

The policies will reimburse your company against the costs of defending a lawsuit in court as well as for judgments and settlements. The policy covers legal costs, whether or not your company wins or loses the suit. Policies typically do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies are excluded from EPLI policies.

For more information about EPLI insurance, call us at 877-213-1999.

Business Income and Extra Expense

Business Income is generally defined as the net income (net profit or loss) plus normal and continuing operating expenses. Extra Expense is generally defined as expenses reasonably and necessarily incurred to avoid or minimize the period in which the business is unable to operate.

Property coverage can protect a business from physical damage including fire, windstorm, or vandalism, in addition to other weather-related events. In the instance property damage prevents the business from operating, this coverage protects against certain financial losses.

The timeframe during which these coverages apply is referred to as the period of restoration. The period of restoration begins when covered damage forces a business to suspend its operations, and it ends when the covered damage is, or reasonably could have been, repaired and normal operations resumed.

Some policies also include Extended Business Income coverage. This coverage may protect against a loss of business income that continues after operations have been resumed and the period of restoration has ended. The timeframe during which this coverage applies is typically specified in the policy.

Umbrella/Excess Liability

Umbrella Liability (also known as Excess Liability) provides additional coverage when a claim exceeds an underlying policy’s maximum limits. For example, if your General Liability policy provides $2 million in coverage, but your claim settlement calls for $2.5 million, your umbrella policy would cover the additional half-million dollars.

For a single premium, you can add an Umbrella Liability policy to your General Liability, Hired and Non-Owned Auto Liability, and Employer’s Liability coverage. However, umbrella coverage cannot be used to supplement a Professional Liability policy.

Describing Umbrella Liability Coverage

“Commercial Excess Liability Insurance in the amount of $1,000,000.”

The primary characteristic of umbrella protection is an additional amount of liability insurance, in increments of $1,000,000, that is excess over automobile liability, “basic” general liability, and employer’s liability coverage.

An incident that is likely to require the additional coverage is auto accidents that occur while an employee is driving on company business. The catastrophic results of car/truck accidents on highways and local roads underscore the need by every business for high limits of liability insurance.

The high limits provided by an umbrella policy are a sound recommendation for companies focused on reducing chances of being responsible for a claim over and above policy limits.

Pollution Liability

Companies that work with hazardous chemicals face unique liability risks. Their work may affect neighboring properties or spill toxic chemicals into ground water or the air. Coverage for pollution-related incidents is currently excluded from general liability insurance policies. Most insurance companies allow you to purchase a policy to cover all of the company’s operations or project-specific coverage for a limited period of time.

Pollution liability insurance covers personal injury and property damage. Companies may also be covered for clean-up and removal costs to and to restore the property to usable condition. Some insurance companies also include coverage for legal fees and investigation costs involved in pollution-related incidents. This usually requires a rider to your policy and an additional premium to compensate for the increased risk.

Contractors may need such coverage when working with utilities such as water lines or sewers. Other businesses who should purchase pollution liability insurance includes those who produce emissions, such as truck stops, HVAC Installers, excavators, landscapers, or other subcontractors.

Coverage is limited by the terms of the policy and may have a per person limit or aggregate limit for an entire incident. You may have a per person limit and an aggregate limit for an entire incident. There will also be a deductible that you must pay out of pocket before any insurance coverage starts. Increasing your deductible and out of pocket exposure will typically reduce your premium costs.

For more information on Pollution Liability Insurance, contact us at 877-213-1999.

Products Recall

Product recall insurance covers expenses associated with recalling a product from the market. Product recall insurance is purchased by manufacturers such as beverage, food, electronics and toy, companies to cover costs such as customer notification of the recall, shipping costs, and disposal costs. Coverage applies only to the firm itself, although additional coverage can be purchased to cover the exposures of related third parties.

Product recall insurance reimburses policyholders for financial losses incurred when a product is recalled. The recalls can be involuntary (i.e. required by government or regulatory agency) or voluntary (i.e. strongly suggested by manufacturer). Some product types are generally not covered under product recall insurance, such as automobiles and related products, explosives, and tobacco.

While arguably good for consumers, more stringent product quality requirements pose challenges and risks for manufacturers, and the risks are greater today than ever before, as supply chains are geographically spread and manufacturing protocols and standards differ among varying locales. The risk of a product recall has increased dramatically in recent years due to increasing numbers of global regulatory standards and frequent rollout of new product safety rules.

The coverage “trigger” under a product recall policy for a food and beverage company, for instance, would be the knowledge that an accidentally or maliciously contaminated product could cause bodily injury if consumed by the public. Even if the product results in a finding of no liability, the insured has expenses that are reimbursed for certain financial costs related to the incident.

Fiduciary Liability

Fiduciary liability insurance protects businesses’ and employers’ assets against fiduciary-related claims of mismanagement of a company’s employee benefit plans. It is not required by the Employee Retirement Income Security Act (ERISA) or any federal statute. If a claim is made against the policyholder of this insurance, it covers the legal expenses of defending the claim, as well as the financial losses the plan may have incurred due to errors, omissions or breach of fiduciary duty.

The ERISA Act of 1974 holds that fiduciaries may be held personally responsible for the mismanagement of employee benefit plans.

ERISA regulates not just retirement plans, but virtually all employer plans that provide employee benefits, including health, life, profit sharing, disability, and employee leave. Although ERISA does not require employers to establish benefit plans for their employees, it sets out minimum standards for these plans, including a clear code of conduct for fiduciaries who are charged with managing and overseeing employee benefit plans and programs.

Under ERISA Section 409, both employers (the plan sponsors) and outside providers hired in a fiduciary capacity are potentially exposed to significant liabilities. If a plan is not managed properly and/or benefits are lost because employees were not given adequate information or instruction, fiduciaries can be held “personally liable” to “make good” any losses that they’re responsible for. The ramifications are broad, from legal claims arising from poorly invested pensions, to charges of failing to inform employees about their eligibility for coverage for medical procedures or other welfare benefits.

If you purchase fiduciary liability insurance for your company and employees engaged in fiduciary roles, the policy does not extend to any outside advisers, consultants, or administrators of your benefits plans. These providers are responsible for securing their own fiduciary coverage. Also, keep in mind that even if you hire outside advisers to take on your plans’ fiduciary functions, this doesn’t automatically exclude you from any associated liabilities.