Insurance Solutions Every Professional Should Know About
At JLT – Protection Advantage we specialize in providing insurance solutions for professionals. While professional liability or errors and omissions (E&O) insurance is generally a professional’s greatest exposure and the one we pride ourselves on developing competitive and cost effective products for, there are a host of other everyday insurance products to provide comprehensive solutions that can be tailored for professionals and their practices. The following coverage solutions are available for most professions. Here is a brief explanation of what the coverage is and who might need them. Please refer to this as a guide, but if you have any questions, call us for a further in depth explanation and consultation.
Management Liability Exposures to Loss
- > Directors and Officers
- > Employment Practices
- > Fiduciary Liability
- > Kidnap & Ransom
- > Errors and Omissions/ Professional Liability
- > Internet Liability Coverage
Property, General Liability, Crime and other Exposures to Loss
- > Property and General Liability Coverage
- > Workers Compensation Insurance
- > Commercial Automobile Insurance
- > Commercial Umbrella Insurance
- > Crime Coverage's and who need them
- > Fidelity Bond - Employee Dishonesty
- > ERISA Fidelity Coverage
- > Forgery or Altercation of checks
- > Theft of Money or Securities
- > Counterfeit Money or Money orders
- > Computer Crime
- > Personal Account Forgery or Alteration
This coverage provides insurance to protect you from the judgments and legal defense cost associated with lawsuits or legal action alleging mismanagement of operations or organization assets, self-dealing and conflicts of interest, acts beyond authority granted in by-laws, violation of certain state and federal laws, breach of fiduciary duties and more.
Who Needs this? – Public, Private and Non-Profit organizations purchase this insurance. Public Companies in particular because of financial threats to their Directors and Officers from lawsuits by stockholders, employees, governmental entities, lenders, customers, competitors, and any other third party. These are claims for economic damages. For Private Companies or Non–Profits, other than stockholders, all the other groups can also sue the Directors and Officers individually and/or the entity itself. The larger your organization grows, and the more diffuse its management becomes, the greater your exposure becomes. Every year at budget time, re-access your exposure to these management type claims, and make sure all management, inside and outside directors and officers know the extent they are exposed personally.
This coverage provides insurance to protect you from the judgments and legal defense cost associated with all aspects of your employment operations alleging violations of the Americans with Disabilities Act, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, title VII of the Civil Rights Act of 1964, and many more federal, state, and local employment laws.
Who needs this? – If you have employees, you have an exposure. Lawsuits can come from the employee, their spouse or any other party that has a stake in that employee’s employment with you. As you grow and add more employees, or more locations, your exposure will increase. Do you have a human resource department or an outside party that makes sure you have employee handbooks, policies and procedures in place to effectively comply with employment laws? The less formalized your system and organization, the greater your exposure. Do you purchase Directors and Officers coverage to provide some coverage for employment practices? Most D&O policies provide a basic level of protection against employment practices suits; however, whatever legal costs and judgments are made under the policy means the less in actual D&O limits you have to cover true D&O claims. Again, at budget time, consider the purchase of at least a D&O policy or both D&O and Employment Practices to have complete protection.
Under the Employee Retirement Income Security Act of 1974 (ERISA), fiduciaries–that is, any employee who has discretionary authority over a plan or who assists in its administration–can be held personally liable for losses to a benefit plan incurred as a result of their alleged errors, omissions, or breach of their fiduciary duties. Moreover, designated fiduciaries may not be the only targets of such lawsuits; targets can also include the employer or the plan itself. Suits can be brought by plan participants, participants’ legal estates, the Department of Labor, and the Pension Benefit Guaranty Corporation alleging improper advice or disclosure, inappropriate selection of advisors or service providers, imprudent investments, breach of responsibilities or fiduciary duties imposed by ERISA, conflict of interest with regard to investments, lack of investment diversity, or negligence in the administration of a plan.
Who needs this? – If you have employees and have any employee benefit plans in place, you need to consider this coverage. There are many chances to have lawsuits from employees, their spouse, children or any other person with a financial stake in an employee benefit program offered by your company. It could be medical plans, life insurance, disability, 401k, or any other benefit plan. As with employment practices, if you have a human resource department or a third party that has as its job to enroll, inform and manage these plans you should have less likelihood of making a mistake. However, the larger your organization becomes, the more diffuse it is geographically, or to the extent employee plans are handled informally, the greater your exposure to making a mistake could become. Annually at budget time, reassess your exposure to these types of claims. In the case of missing the enrollment of an employee or their family in a medical plan, you or your company could end up becoming the un–intended de–facto medical insurer for them. You may be able to get a limited level of coverage under an "employee benefit liability" endorsement to your General Liability policy.
Insurance coverage to help in managing the costs associated with a kidnapping or extortion threat against your property, proprietary information, computer system, or people.
Who needs this?– Any organization that has management or employees that could be valuable targets for ransom might consider this coverage. To the extent you or your employees travel overseas or in locations that are less safe, the greater your need may become.
Errors and Omissions/Professional Liability
This coverage provides insurance to protect you from the judgments and legal defense cost associated with the potentially devastating costs of defending legal action from a customer alleging errors or omissions in the performance of promised services that lead to their loss of economic value, expenses or opportunity. Professional Liability exposure emanates from individuals practicing their profession. To the extent they do not perform up to the standards set, or perceived by their clients, they can be sued and held responsible for causing economic loss. Who is a professional is not determined solely by title, or licensing requirements of any one state – but rather based on the act or services being performed by the individual or business.
Who needs this?– Any individual or business organization that provides services to others may need this coverage. To the extent your services or advise can cause economic damage to your customer or other interested parties, you have an exposure to lawsuits alleging you didn’t fulfill your responsibility, you erred either intentionally or un-intentionally, you didn’t perform it in a professional manner, or your performance was compromised by a real or perceived conflict of interest. The higher the economic stakes to your clients and customers, the greater your exposure to claim and loss. The larger your organization becomes, and to the extent each additional professional added to your organization operates independently, the greater your exposure becomes. To the extent you hire outside independent contractors to fulfill your contracts to clients, the greater your exposure grows. If you do not have this coverage now, investigate the cost and seriously consider purchasing the protection. For Professional Service firms and individuals, this may be the most important liability protection you need to consider.
This coverage is specially designed to protect you against claims that result from the exposures presented by your website and internet activities. Claims involving hacking into your network to steal confidential information, unauthorized access to steal money or securities, use of fraudulent electronic signatures, launching a virus or spamming event that destroys information or shuts down service.
Who needs this?– If you own and maintain a website, you have an exposure. Because you are responsible for the content, potential exists for lawsuits alleging libel, slander and defamation. Unlike printed materials or advertisements, the reach of the internet is worldwide. Websites are vulnerable to attack from hackers who can alter, change, take down or otherwise compromise your site and its content. If you utilize your site to authenticate users and allow them access to higher level material or if you use your site to conduct commerce, you have additional duties to protect a user’s personal information. If this information is inadvertently given to unauthorized parties you can be held liable. Take a minute to access just how you use your website. When you enhance it or develop it to provide a higher degree of transactional functionality, consider the legal implications and how your exposure may be increasing. Clearly the more users that become attracted to your site, the greater your exposure also becomes.
Property and General Liability Coverage
This coverage provides protection against direct physical loss to your building or personal property from fire, windstorm, hail, vandalism, theft, and more. This policy also protects you from judgments and legal defense of lawsuits alleging your negligent ownership, operation and use of your premises, or premises you rent or lease. These claims cover you for actual or alleged Bodily Injury or Property Damage to third parties. This policy does not cover for lawsuits alleging economic or monetary damages (see E&O/Professional Liability or D&O Insurance).
Who needs this?– If you own a building or rent office space, you need this coverage. If you have a landlord with a requirement that you carry general, public or Bodily Injury liability coverage, you may need this policy to secure a certificate of insurance. If you own personal office property including, furniture, fixtures, computers, and other office electronic office equipment, you need this coverage. Every year at budget time is a great time to review you needs in terms of property and liability limits. Most capital expenditure purchases should trigger a question of adequacy and effects on your property and general liability insurance package.
Workers Compensation Insurance
This coverage provides monetary payment for employee’s medical claims as a result of injuries they sustain while on the job or performing a work related activity. It is generally required in all states for any business that has employees. In several states it is only available from the state government or authority; otherwise it is available from licensed insurance agents and brokers through the standard insurance marketplace.
Who Needs this?– All forms of business entities that have employees need to buy this coverage. If you do not, you risk legal action, fine or other punitive action by your state governmental body.
Commercial Automobile Insurance
This coverage is for Bodily Injury or Property Damage caused by the operation of a motor vehicle owned by your business. It can also cover the physical damage to the vehicle caused by collision or any other event. This policy can also cover non-owned liability and hired auto liability which is excess protection over specific coverage that is provided under an individual’s personal automobile policy. If the business does not own a vehicle, the non–owned and hired coverage can usually be purchased under the Property and liability policy.
Who Needs this?– Generally, all businesses that actually own vehicles for business use are required to carry this insurance. Many professionals use their personal auto in the daily business activities. In these cases, their own personal automobile policies and personal umbrella policies provide coverage. However, if you have employees that might use their own vehicles on occasion for business proposes (client visits, picking up mail or just picking up lunches for staff meetings or events); you might want to purchase the Non-owned auto coverage. If you occasionally rent autos and do not have your own personal auto policy, you may want to purchase Hired auto liability and physical damage coverage.
This coverage provides additional limits of liability insurance over and above the limits provided by your General Liability and Automobile Liability policies.
Who needs this?– Any business that based on its size and assets to insure requires higher limits than the basic policies provide, which is normally $1,000,000 per occurrence or accident.
Crime Coverage’s and who need them
If you have employees handling the intake or disbursement of funds, or property of value, you may need one or all of these coverage’s. You may receive limited amounts of these insurance coverages automatically in your Property and Liability package policy. Review the amounts in those policies to make sure they are adequate for your needs. If limits are inadequate you may be able to increase them. If one or more of these coverage’s is not provided you may wish to purchase separate policies covering any combination of coverage’s that may be needed based on your operations and exposures.
Fidelity Bond & Employee Dishonesty
This coverage provides protection against your loss or money, securities and other property due to Employee theft or embezzlement.
This coverage provides protection against the loss or money, securities and other property that belongs to an employer, union or other organization sponsored benefit plan through employee dishonesty and committed by your organization as a fiduciary regardless if the plan is for the benefit of others or your own organization. (Not the same as Fiduciary Liability – see above)
Forgery or Altercation of checks
This coverage provides protection against your loss or money due to forgery or altercation of documents.
This coverage provides protection against your loss or money, securities and other property due to the theft, robbery or safe burglary.
Counterfeit Money or Money orders
This coverage provides protection against your loss or money, securities and other property due to your good faith acceptance of counterfeit money or money orders.
This coverage provides protection against your loss or money, securities and other property due to the use of a computer to fraudulently cause a transfer of money, securities or other property.
Personal Account Forgery or Alteration
This coverage provides protection against your management staff members loss or money, securities and other property due to forgery or alteration of check, notes, or credit or debit cards issued to management staff members for personal use.
Talk to us!
No two businesses are alike, and exposures vary. No two business owners have the same financial circumstances or share the same tolerance for risk. One size does not fit all – insurance coverage is meant to be tailored to your needs. Insurance carriers differ in the policies they offer and what they cover. For these reasons, your agent needs to ask questions and find out details about your business, what it owns, what is does, and what level of risk you as the owner are comfortable with. By doing this, they can offer options and help tailor coverage that is right for you.