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 ABD Risk Management Forgotten Coverages By Bob Murphy, CIC Branch President/Central Coast Division, ABD Insurance & Financial Services It is all too easy to think that buying insurance is the same as managing risk. To contradict this view this article examines some of the areas often ignored or forgotten by insurance buyers and risk managers. As you read through these coverages keep in mind the importance of identifying and assessing the risk and evaluating non-insurance solutions to the same exposures. Not every company should buy each of these coverages but each company should make a conscious decision about how they will handle the risks. Forgotten Coverages Employment Practices Liability (EPLI) Professional liability insurance that covers wrongful termination, discrimination, or sexual harassment toward employees or former employees. Many policies include coverage for claims by job applicants. Some policies provide very specific coverage, such as for claims brought under the Americans with Disabilities Act or the Civil Rights Act. This protection is generally provided in a separate policy, though coverage can be added to a business liability policy or a directors' and officers' liability policy in some instances. One of the most valuable aspects of this and other liability coverages is payment / reimbursement for the legal defense of even ungrounded allegations. Fiduciary Liability Professional liability coverage for people and organizations who act as a fiduciary under the provisions of the Employee Retirement Income Security Act (ERISA). Fiduciaries include anyone responsible for the investment, control or disposition of assets held by any plan covered under the Act. Coverage is sometimes included for administrative errors and omissions liability (which is the same as the employee benefit plan liability coverage, discussed below, that can be added to a general liability policy). Employee Benefit Plan Liability Insurance coverage for claims by employees or former employees alleging negligent acts, errors or omissions in the administration of employee benefit programs. As noted above, this coverage can be endorsed to a general liability policy, written as a separate policy, or included in a financial liability policy. Errors and Omissions Coverage for damages arising out of the insured's negligence, mistakes, or failure to take appropriate action in the performance of business or professional duties. The coverage frequently carries a high deductible ($1,000 or more) and usually does not require the insured's consent to settle claims (unlike professional liability insurance - a term sometimes used interchangeably with errors and omissions). There are a wide variety of errors and omissions coverage forms including those designed for software and hardware developers as well as Internet liability exposures. Employed Attorney’s Errors and Omissions Insurance for in-house attorneys employed by organizations other than law firms, covering claims for losses arising from legal services rendered on behalf of their employers and extended to cover legal services performed outside the scope of their employment. Patent Insurance Insurance that protects a patent holder against loss due to infringement of a patent. Also liability insurance that protects the insured against infringement claims by a patent holder. Patent Enforcement Litigation Insurance Insurance for a holder of a patent against infringement by another person. Coverage is written on a claims-made basis and includes the cost of legal defense to enforce the patent. The policy includes a co-payment provision, usually 25%. Excluded are liability for compensatory or consequential damages, fines, punitive damages, exemplary damages, and multiple damages. Intellectual Property Coverage A broadened form of patent enforcement litigation insurance that expands coverage to include trademarks, copyrights, and computer software design. Exclusions from coverage include liability for compensatory or consequential damages, fines, punitive damages, exemplary damages and multiple damages. Exhibition Floater – Cargo Insurance A trip transit policy that covers property during transit, from the original location to the place of exhibit, while the property is on exhibition, and during the return trip to the original location. Coverage is usually written on an all-risk basis. This list certainly represents only a few types of insurance coverages which should be considered. In addition to those mentioned here, it is also important to consider some of the international insurance options, kidnap and ransom coverages and employee benefit areas. It is important to review your risks with your insurance broker periodically to determine if there are insurance options available. It almost goes without saying that the best time to determine if you want to purchase insurance is before the first major loss. ABD Insurance and Financial Services provides clients with the tools they need to effectively identify and manage their risks. APPMA members may receive free risk management and employee benefit portfolio assessments by contacting Bob Murphy at 800-246-0901 x207 or via email at rlm@abdi.com. |
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