Most people buy a personal umbrella policy for its excess coverage, including defense costs. It also has significant value as a risk management tool.
Often there are liability coverage gaps that fall outside the scope of underlying auto, homeowners, and other personal policies. An Independent agent can assist you in recommending an umbrella policy that provides step-down primary coverage for those uninsured exposures.
There is a lack of consistency among umbrella policies. Most personal auto and homeowners policies, are fairly comparable, umbrella policies vary dramatically in their coverage.
For the next few blogs we are going to explore how the right umbrella policy can help an individual obtain coverage for which is normally excluded. For today we are going to discuss automobile exposures.
For individuals who have no personal auto policy of their own and thus have no automatic coverage to drive non-owned cars (they either have no automobiles at all or only have a vehicle furnished by their employer) the purchase of the right umbrella policy may be the way to go. Underlying drive other car or named non-owner coverage is very expensive or unavailable, thus it may be most economical to choose an umbrella policy that will provide step-down coverage.
Certain individuals neither own nor drive their own car and are elderly or disabled. However they may receive rides through the generosity of their friends or family members to shop, see doctors, etc. Under many states principal-agency law, these passengers can be sued and held liable for accidents caused by their drivers because the car that caused the accident was on the road for the sole benefit of the passenger. Again, these individuals can avoid this exposure with an umbrella policy that does not require underlying insurance for this exposure.
Those individuals who are either furnished or have access to a company vehicle and occasionally have coworkers as passengers, umbrella coverage is desirable. If the driver’s negligence injures a coworker, the business auto policy usually excludes coverage for “fellow employee” lawsuits. The driver’s personal auto policy excludes coverage for vehicles “furnished or available for regular use.”
Under most personal auto policies, your collision coverage will transfer on an excess basis to a rental car, but only if you have collision coverage on at least one car. There is no coverage outside the United States and Canada. The right umbrella policy will cover collision damage you cause to a rented or borrowed car on a primary basis and worldwide.
Sometimes an individual signs a fine print contract to defend and pay any judgment against the rental car company, even if you weren’t personally driving the vehicle! (An example would be renting a vehicle on a business trip with a co-worker where you sign the rental contract solely, and the coworker causes the accident with injuries. The obligation is to defend and pay judgments against the rental company even though the signer had nothing to do directly with the accident. This is another instance where the right umbrella policy will protect an individual from an exposure the person doesn’t know exists.
Again, the right umbrella is something an individual should discuss with the person’s Independent Insurance Agent.
Tuesday, October 25, 2005
Wednesday, October 05, 2005
No Good Deed Goes Unpunished
One of Ted Pappas’s, The McLaughlin Company’s President, favorite quotes rings very true to people who elect to serve on not-for-profit boards of directors.
According to a survey by consultants Tillinghast, 96% of the claims brought against nonprofit groups are from employees, compared with 23% against public companies. Nonprofit boards are now being held more accountable, just like corporate directors. The Internal Revenue Service has stepped up scrutiny of private foundations, auditing 400 of them this federal fiscal year (ending Sept. 30), more than double that of recent years. The Department of Labor has beefed up their investigative and audit staffs targeting Labor Unions. The Senate Finance Committee held hearings in April about the oversight of tax-exempt organizations.
Many directors of the nation’s over 1 million charities, labor unions, and other nonprofits are clueless that they have the same fiduciary duties as corporate board members. “If they make a bad decision, someone can come after them,” warns Jeffrey Klenk, senior vice president at St. Paul Travelers, which sells directors and officers (D&O) liability insurance to nonprofits. “It might cost you up to $200,000 from out of your own pocket defending a lawsuit”
One management consultant and investment banker who joined the board of a non-profit agency giving job training to the disadvantaged and the disabled found his charitable impulse landed him in a lawsuit filed by 100 employees seeking unpaid wages. He was aghast to learn that his board had been fed false reports of glowing financial health—and startled to find that he was personally liable. The agency’s coffers were bare, so the only ones left to pay were the directors. The board ended up settling with the workers for $355,000 in back pay and $88,000 in attorneys’ fees.
Luckily for the board, its insurer covered both. Most non-profits are uninsured for such claims. The directors also had to do much of the closing-down work. The consultant spent 600 hours of his time over two years on such chores as filing back payroll and sales tax forms.
Prior to joining a charitable board make sure that fellow directors and the staff are diligent and competent. Then investigate the extent of your group’s D&O policy, should there be one. If one doesn’t exist, contact an independent insurance agent to buy some coverage. Aside from Travelers, nonprofit D&O policies are available from Chubb, Hartford and American International Group. For Unions, both AIG and Ullico offer a Union Liability Policy specifically designed by The McLaughlin Company that covers those unique exposures arising from the Landrum-Griffin and Taft- Hartley Act. Many not-for-profit entities try to save money by telling their Boards that such coverage is not needed. This statement should be a “red flag” and an indication that someone is being “pennywise and pound foolish.”
If all else fails, you may be covered under your standard homeowners and umbrella policy. Talk to your independent agent like The McLaughlin Company about more than your car and homeowners insurance. Let him/her help you identify exposures that you haven’t even thought about, especially those good deeds that “never go unpunished.”
According to a survey by consultants Tillinghast, 96% of the claims brought against nonprofit groups are from employees, compared with 23% against public companies. Nonprofit boards are now being held more accountable, just like corporate directors. The Internal Revenue Service has stepped up scrutiny of private foundations, auditing 400 of them this federal fiscal year (ending Sept. 30), more than double that of recent years. The Department of Labor has beefed up their investigative and audit staffs targeting Labor Unions. The Senate Finance Committee held hearings in April about the oversight of tax-exempt organizations.
Many directors of the nation’s over 1 million charities, labor unions, and other nonprofits are clueless that they have the same fiduciary duties as corporate board members. “If they make a bad decision, someone can come after them,” warns Jeffrey Klenk, senior vice president at St. Paul Travelers, which sells directors and officers (D&O) liability insurance to nonprofits. “It might cost you up to $200,000 from out of your own pocket defending a lawsuit”
One management consultant and investment banker who joined the board of a non-profit agency giving job training to the disadvantaged and the disabled found his charitable impulse landed him in a lawsuit filed by 100 employees seeking unpaid wages. He was aghast to learn that his board had been fed false reports of glowing financial health—and startled to find that he was personally liable. The agency’s coffers were bare, so the only ones left to pay were the directors. The board ended up settling with the workers for $355,000 in back pay and $88,000 in attorneys’ fees.
Luckily for the board, its insurer covered both. Most non-profits are uninsured for such claims. The directors also had to do much of the closing-down work. The consultant spent 600 hours of his time over two years on such chores as filing back payroll and sales tax forms.
Prior to joining a charitable board make sure that fellow directors and the staff are diligent and competent. Then investigate the extent of your group’s D&O policy, should there be one. If one doesn’t exist, contact an independent insurance agent to buy some coverage. Aside from Travelers, nonprofit D&O policies are available from Chubb, Hartford and American International Group. For Unions, both AIG and Ullico offer a Union Liability Policy specifically designed by The McLaughlin Company that covers those unique exposures arising from the Landrum-Griffin and Taft- Hartley Act. Many not-for-profit entities try to save money by telling their Boards that such coverage is not needed. This statement should be a “red flag” and an indication that someone is being “pennywise and pound foolish.”
If all else fails, you may be covered under your standard homeowners and umbrella policy. Talk to your independent agent like The McLaughlin Company about more than your car and homeowners insurance. Let him/her help you identify exposures that you haven’t even thought about, especially those good deeds that “never go unpunished.”
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