Bt 2010, many skilled workers will have retired and there will be too few active workers to replace and support them, even drawing on the dwindling labor resources of the Far East that have provided outsourcing labor. To fill the labor pool employers will increasingly turn to older workers, married women, and disabled individuals.
According to the Bureau of Labor Statistics, the number of workers aged 55 or older is expected to grow 50 Percent between 2005 and 2012.
Monday, November 21, 2005
Wednesday, November 16, 2005
New ISO-CGL Changes Raise Concerns For Additional Insureds and Indemnitors
The whole issue of hold harmless, indemnity, and insurance requirements in contracts is an ongoing battle for risk managers. With the introduction of a new ISO additional insured endorsement and a change in the definition of what constitutes an insured contract, all you thought you might know about the subject is changing. Here is what you must know.
It is assumed by many policyholders that whenever the Insurance Services Office, Inc. (ISO) announces it is “clarifying original intent,” the result will be a reduction in coverage. ISO recently (in December 2003 and in March 2004) announced that it is introducing substantially revised additional insured endorsements as well as-a revised “insured contract” definition. Such changes have the potential to wreak havoc on an already complex and chaotic area of contractual indemnity and additional insured law. While the new ISO endorsements ostensibly are meant to address the insurance industry’s perception that courts have been extending additional insured coverage beyond the drafting intent behind that coverage, the new ISO endorsements also may result in increased litigation-and restricted coverage to additional insureds and indemnitors.
It is common among contracting parties to assess the liability risk of contractual activities and seek the allocation of the economic risk of such liability in advance. Such allocation is most frequently done through a combination of
indemnity provisions and insurance procurement requirements. Subject to certain anti-indemnity statutes and wording requirements, most states allow parties to fully shift liability risk by allowing one party to agree to indemnify another party rather than rely upon the application of common law liability allocation rules. Indemnitors often are more willing to take on such indemnity obligations because the indemnitor relies upon its contractual liability coverage for those “insured contracts.”
However, because even the most well-written indemnification provisions are only as good as the assets that the indemnitor has available to satisfy its obligations, indemnitees frequently require that they also be made additional insureds on the indemnitor’s liability policy. But this indemnity/insurance approach to contractual risk transfer is subject to a maze of statutory restrictions and has generated an enormous amount of widely varying, and frequently irreconcilable, court decisions. Indemnitors, indemnitees, insurers, and the courts have all struggled with the intent behind, and the enforceability of, indemnity provisions. Such a task is made even more difficult where parties have economic incentives to modify their intent and to create ambiguities where none would otherwise exist when large losses occur. Some
courts have been similarly guilty in engaging in result-driven interpretations of indemnity provisions to maximize financial compensation for a victim, despite the parties’ clear mutual contracting intent. These complex interpretation problems have not been limited to contractual indemnity provisions. Contracting parties and their respective insurers also have struggled with the rights of, and scope of
coverage for, additional insureds. As might be expected, the additional insured generally wants to transfer as much of its liability as possible onto the additional
insured carrier and avoid implicating its own coverage. At the same time, the insurer generally wants to construe the additional insured’s coverage
rights as narrowly as possible and to offset its obligations by seeking contribution from the additional insured’s own insurance program.
Outside of construction-related contracts and subject to wording requirements, the majority of states allow parties to broadly shift liability prior to a loss through
indemnity provisions. Further, most courts have construed additional- insured coverage broadly to
encompass not just vicarious or joint negligence, but the additional insured’s sole negligence as well. In response to this majority trend and significant insurance industry exposure, ISO introduced several
new additional insured endorsements and a new “insured contract” definition earlier last year.
Specifically, ISO introduced ten revised additional insured endorsements: CG 2007 01 96 (Engineers, Architects, or Surveyors), CG 20 10 10 01 (Owners,
Lessees,or Contractors as Scheduled),
CG 20 15 11 88 (Vendors), CG 2026 11 85 (Designated Persons or Organizations) CG 20 33 1001 (Automatic Status When Required in Contracts for Owners, Lessees, and Contractors),
CG 203403 97 (Automatic Status When Required in Contracts for Equipment Lessors), and CG 2037 1001 (Completed Operations). Finally, -ISO introduced a new form, CG 242606 04, which seeks to amend the standard ISO-CGL’s “insured contract” definition.
Additional insureds should be wary of the use of the new ISO additional insured endorsements, particularly where their risk management programs rely heavily upon their contractors or vendors being fully responsible for the entire risk associated with a project. Further, additional insureds can expect insurers to become increasingly aggressive in trying to characterize losses as arising from the additional insured’s sole negligence, potentially pitting insureds against each other while an underlying claim is pending. Finally, indemnitors who frequently enter into broad form indemnity agreements must make sure those indemnity obligations remain “insured contracts.”
These new endorsements should cause warning bells to sound for named insureds, additional insureds, indemnitors, and indemnitees alike. While ISO’s intent to limit the insurance industry’s exposures through these endorsements is clear, it is less clear whether these new endorsements will clarify these complex issues or, rather, simply result in more coverage disputes.
It is assumed by many policyholders that whenever the Insurance Services Office, Inc. (ISO) announces it is “clarifying original intent,” the result will be a reduction in coverage. ISO recently (in December 2003 and in March 2004) announced that it is introducing substantially revised additional insured endorsements as well as-a revised “insured contract” definition. Such changes have the potential to wreak havoc on an already complex and chaotic area of contractual indemnity and additional insured law. While the new ISO endorsements ostensibly are meant to address the insurance industry’s perception that courts have been extending additional insured coverage beyond the drafting intent behind that coverage, the new ISO endorsements also may result in increased litigation-and restricted coverage to additional insureds and indemnitors.
It is common among contracting parties to assess the liability risk of contractual activities and seek the allocation of the economic risk of such liability in advance. Such allocation is most frequently done through a combination of
indemnity provisions and insurance procurement requirements. Subject to certain anti-indemnity statutes and wording requirements, most states allow parties to fully shift liability risk by allowing one party to agree to indemnify another party rather than rely upon the application of common law liability allocation rules. Indemnitors often are more willing to take on such indemnity obligations because the indemnitor relies upon its contractual liability coverage for those “insured contracts.”
However, because even the most well-written indemnification provisions are only as good as the assets that the indemnitor has available to satisfy its obligations, indemnitees frequently require that they also be made additional insureds on the indemnitor’s liability policy. But this indemnity/insurance approach to contractual risk transfer is subject to a maze of statutory restrictions and has generated an enormous amount of widely varying, and frequently irreconcilable, court decisions. Indemnitors, indemnitees, insurers, and the courts have all struggled with the intent behind, and the enforceability of, indemnity provisions. Such a task is made even more difficult where parties have economic incentives to modify their intent and to create ambiguities where none would otherwise exist when large losses occur. Some
courts have been similarly guilty in engaging in result-driven interpretations of indemnity provisions to maximize financial compensation for a victim, despite the parties’ clear mutual contracting intent. These complex interpretation problems have not been limited to contractual indemnity provisions. Contracting parties and their respective insurers also have struggled with the rights of, and scope of
coverage for, additional insureds. As might be expected, the additional insured generally wants to transfer as much of its liability as possible onto the additional
insured carrier and avoid implicating its own coverage. At the same time, the insurer generally wants to construe the additional insured’s coverage
rights as narrowly as possible and to offset its obligations by seeking contribution from the additional insured’s own insurance program.
Outside of construction-related contracts and subject to wording requirements, the majority of states allow parties to broadly shift liability prior to a loss through
indemnity provisions. Further, most courts have construed additional- insured coverage broadly to
encompass not just vicarious or joint negligence, but the additional insured’s sole negligence as well. In response to this majority trend and significant insurance industry exposure, ISO introduced several
new additional insured endorsements and a new “insured contract” definition earlier last year.
Specifically, ISO introduced ten revised additional insured endorsements: CG 2007 01 96 (Engineers, Architects, or Surveyors), CG 20 10 10 01 (Owners,
Lessees,or Contractors as Scheduled),
CG 20 15 11 88 (Vendors), CG 2026 11 85 (Designated Persons or Organizations) CG 20 33 1001 (Automatic Status When Required in Contracts for Owners, Lessees, and Contractors),
CG 203403 97 (Automatic Status When Required in Contracts for Equipment Lessors), and CG 2037 1001 (Completed Operations). Finally, -ISO introduced a new form, CG 242606 04, which seeks to amend the standard ISO-CGL’s “insured contract” definition.
Additional insureds should be wary of the use of the new ISO additional insured endorsements, particularly where their risk management programs rely heavily upon their contractors or vendors being fully responsible for the entire risk associated with a project. Further, additional insureds can expect insurers to become increasingly aggressive in trying to characterize losses as arising from the additional insured’s sole negligence, potentially pitting insureds against each other while an underlying claim is pending. Finally, indemnitors who frequently enter into broad form indemnity agreements must make sure those indemnity obligations remain “insured contracts.”
These new endorsements should cause warning bells to sound for named insureds, additional insureds, indemnitors, and indemnitees alike. While ISO’s intent to limit the insurance industry’s exposures through these endorsements is clear, it is less clear whether these new endorsements will clarify these complex issues or, rather, simply result in more coverage disputes.
New Bankruptcy Act
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law on April 20, 2005. It largely deals with consumer debt, but several provisions affect employee benefits and executive compensation. The act improves protection from creditors for employee contributions to plans and for interest in retirement and education savings plans. It extends the avoidance period for fraudulent pre-petition transfers from one year to two. The act allows bankruptcy courts to throw out plan changes made within 180 days of the bankruptcy petition. It also significantly limits payments to plan insiders after a bankruptcy petition.
Wednesday, November 09, 2005
Easy To Be Hard
A great line from the musical "Hair." For fiduciaries and plan administrators the words "easy" or "free," should sound loud warning bells. Over two years ago, we warned against pension and fiduciary plan consultants wearing multiple hats, and this year there came subsequent and similar warnings by the SEC and the Department of Labor about consultants and conflicts of interest. ( see articles posted at www.mclaughlin-online.com) Yet, despite the warnings, plan administrators and fiduciaries continue to fall prey to "consultants" who offer to make their job easy by offering "one stop shopping."
Now we are even seeing a few insurance carriers trying to sell coverage directly to plans. Don't fall into that trap! Would you buy Enron stock direct from Ken Lay? As a pension fund trustee or administrator are you comfortable reading a fiduciary insurance policy and understanding the coverage it affords and more importantly, exclusion language contained in multiple endorsements. I can assure you your Fund's lawyer is not and will say so. Lawyers are good at raising questions but cannot give you an interpretation of how a policy will respond. An insurance company will give the interpretation, "the policy speaks for itself." An experienced Independent Insurance Agent specializing in Fund coverages can help you walk through this minefield of "whereas and wherefors" and if he/she is wrong carries E&O coverage to back up their work. Next time a "consultant" offers to sell your plan insurance ask for a copy of their insurance errors and omissions policy and state insurance license. You may be in for a surprise.
Most insurance companies cannot sell fiduciary coverages directly to Plans without violating their agreements with their agents. Besides they have only one incentive and that is to get your business. They have no incentive to "canvass the marketplace" or "explain the coverages or exclusions."
Plan trustees take their fiduciary responsibilities very seriously as they should. Be careful, even when someone you trust offers to get you insurance for "free" or "commission free." A fundamental tenant of risk management is "don't risk a lot for a little." Obtaining insurance coverage for your plan or yourself without a licensed, insured, expert independent agent is violating that tenant.
Independent Insurance Agents add value and protection to Plans. Don't let someone try to convince you otherwise by giving you a "free toaster." If you do, you may end up "burnt toast."
Now we are even seeing a few insurance carriers trying to sell coverage directly to plans. Don't fall into that trap! Would you buy Enron stock direct from Ken Lay? As a pension fund trustee or administrator are you comfortable reading a fiduciary insurance policy and understanding the coverage it affords and more importantly, exclusion language contained in multiple endorsements. I can assure you your Fund's lawyer is not and will say so. Lawyers are good at raising questions but cannot give you an interpretation of how a policy will respond. An insurance company will give the interpretation, "the policy speaks for itself." An experienced Independent Insurance Agent specializing in Fund coverages can help you walk through this minefield of "whereas and wherefors" and if he/she is wrong carries E&O coverage to back up their work. Next time a "consultant" offers to sell your plan insurance ask for a copy of their insurance errors and omissions policy and state insurance license. You may be in for a surprise.
Most insurance companies cannot sell fiduciary coverages directly to Plans without violating their agreements with their agents. Besides they have only one incentive and that is to get your business. They have no incentive to "canvass the marketplace" or "explain the coverages or exclusions."
Plan trustees take their fiduciary responsibilities very seriously as they should. Be careful, even when someone you trust offers to get you insurance for "free" or "commission free." A fundamental tenant of risk management is "don't risk a lot for a little." Obtaining insurance coverage for your plan or yourself without a licensed, insured, expert independent agent is violating that tenant.
Independent Insurance Agents add value and protection to Plans. Don't let someone try to convince you otherwise by giving you a "free toaster." If you do, you may end up "burnt toast."
Revision to DeMinimus Standard for LM-30's
FORM LM-30 ADVISORY - DE MINIMIS EXEMPTION INCREASED
The Form LM-30 (Union Officer and Emolovee Report) informs filers that they “do not have to report any sporadic or occasional gifts, gratuities, or loans of insubstantial value, given under circumstances and terms unrelated to the [filer’s] status in a labor organization.” (Form LM-30 Instructions, General Instructions.) This test has been referred to as a “de minimis exemption.” If the test is satisfied, the filer need not report the gift or gratuity on Form LM-30. If the test is not satisfied, the gift or gratuity must be reported on Form LM-30.
Guidance previously issued by the Office of Labor-Management Standards (OLMS) on “de minimis” situations included examples of an employer picking up a lunch tab or an employer giving a union officer a Christmas gift of nominal value. A car was given as an example of a gift that would require a report. In March 2005, in order to provide more guidance on this issue, OLMS revised its LMRDA Interpretative Manual to quantify as “de minimis” an item with a value of $25 or less.
Between March and October 2005, because of a grace period, Form LM-30 reporting increased dramatically compared to historical practice. Based on a review of these reports, and considering comments from union officers and employees that the de minimis threshold was too low, OLMS has concluded that setting the reporting threshold at $25 places an unnecessary reporting burden on union officials without a corresponding benefit to union members or the public. As an interim measure, pending issuance of a final rule establishing revised Form LM-30 reporting obligations, OLMS has determined that gifts, gratuities or loans with a value of $250 or less received by a union officer or employee will be considered insubstantial for the purposes of Form LM-30 reporting. However, if the aggregate value of multiple gifts or loans from a single employer to a single union officer or employee exceeds $250 in a fiscal year, the transaction will no longer be treated as “de minimis,” and the aggregate value of the transactions will be reportable. Gifts or loans from multiple employees of one employer should be treated as originating from a single employer when calculating whether the $250 threshold has been exceeded.
Although offers of numerous small gratuities would appear to be outside the de minimis exemption because they are not provided on an “infrequent or sporadic” basis, the Department will not seek to enforce the reporting requirement, so long as the aggregate value of these gratuities does not exceed $250 per union officer or employee. For example, a union officer or employee who receives coffee, provided by an employer, at bi-weekly meetings over the course of a year would not be required to report this gratuity on a Form LM-30.
In a Notice of Proposed Rulemaking, published in the Federal Register on August 29, 2005, concerning the Form LM-30, the Department has sought comment on this standard and the dollar threshold. (70 Fed. Reg. 51166, 51175.) The comment period has been extended to January 26, 2006. (70 Fed. Reg. 61,400.) The Department encourages comments from all members of the public on all aspects of this rulemaking.
Last Updated: 11/07/05
The Form LM-30 (Union Officer and Emolovee Report) informs filers that they “do not have to report any sporadic or occasional gifts, gratuities, or loans of insubstantial value, given under circumstances and terms unrelated to the [filer’s] status in a labor organization.” (Form LM-30 Instructions, General Instructions.) This test has been referred to as a “de minimis exemption.” If the test is satisfied, the filer need not report the gift or gratuity on Form LM-30. If the test is not satisfied, the gift or gratuity must be reported on Form LM-30.
Guidance previously issued by the Office of Labor-Management Standards (OLMS) on “de minimis” situations included examples of an employer picking up a lunch tab or an employer giving a union officer a Christmas gift of nominal value. A car was given as an example of a gift that would require a report. In March 2005, in order to provide more guidance on this issue, OLMS revised its LMRDA Interpretative Manual to quantify as “de minimis” an item with a value of $25 or less.
Between March and October 2005, because of a grace period, Form LM-30 reporting increased dramatically compared to historical practice. Based on a review of these reports, and considering comments from union officers and employees that the de minimis threshold was too low, OLMS has concluded that setting the reporting threshold at $25 places an unnecessary reporting burden on union officials without a corresponding benefit to union members or the public. As an interim measure, pending issuance of a final rule establishing revised Form LM-30 reporting obligations, OLMS has determined that gifts, gratuities or loans with a value of $250 or less received by a union officer or employee will be considered insubstantial for the purposes of Form LM-30 reporting. However, if the aggregate value of multiple gifts or loans from a single employer to a single union officer or employee exceeds $250 in a fiscal year, the transaction will no longer be treated as “de minimis,” and the aggregate value of the transactions will be reportable. Gifts or loans from multiple employees of one employer should be treated as originating from a single employer when calculating whether the $250 threshold has been exceeded.
Although offers of numerous small gratuities would appear to be outside the de minimis exemption because they are not provided on an “infrequent or sporadic” basis, the Department will not seek to enforce the reporting requirement, so long as the aggregate value of these gratuities does not exceed $250 per union officer or employee. For example, a union officer or employee who receives coffee, provided by an employer, at bi-weekly meetings over the course of a year would not be required to report this gratuity on a Form LM-30.
In a Notice of Proposed Rulemaking, published in the Federal Register on August 29, 2005, concerning the Form LM-30, the Department has sought comment on this standard and the dollar threshold. (70 Fed. Reg. 51166, 51175.) The comment period has been extended to January 26, 2006. (70 Fed. Reg. 61,400.) The Department encourages comments from all members of the public on all aspects of this rulemaking.
Last Updated: 11/07/05
Tuesday, November 08, 2005
Employment Related Practices Insurance
In case, you have been putting off talking to your Independent Insurance Agent about that Employment related practices insurance or Union liability insurance he/she has been recommending consider the following:
1. 1991 “Tailhook” convention —— $ 8 million to settle allegations of physical and verbal sexual abuse
2. State Farm —— $157 million to 800 staff employees to settle allegations of failure to pronlote and denial of opportunity
3. IDS Financial Services -- $ 35 million to 32 former employees to settle age discrimination allegations
4. Shoney’s -- $134 million out-of-court settlement arising from race discrimination allegations
Employment Related claims
1. Three of five businesses will be sued this year by an employee or a former
employee over an employment practice
41.5% of all claims-- employers of’ 15 to 100
23.9% of all claims -— employers of 500 or more
18.0% of’ all claims -- employers of’ 101 to 499
16.6% of all claims-- employers of less than 15
2. Employment practices suits account for 20% of all Federal Court filings
3. 56% of all employment practice filings going to trial result in a verdict for the plaintiff employee
4. The average jury award is S250.000, with 15% exceeding $1 million
5. 33% of wrongful termination verdicts have punitive damages equal to or exceeding compensatory damage.
Here are just a few sources of Liability for Employment Related Practices
• Civi1 Rights Act of 1964
• Civil Rights Act of 1991
• Americans With Disabilities Act (ADA)
• Age Discrimination in Employment Act of 1967 (ADEA)
• Worker Adjustment and Retraining Act (WARN)
• Employee Polygraph Protection Act of 1988
• Equal Pay Act
• Older Worker Benefit Protection Act
• National Labor Relations Act
• Uniform Services Employment and Reemployment Rights Act of 1994
• Family and Medical Leave Act (FM LA)
• Fair Labor Standards Act (FLSA)
• Immigration Reform and Control Act
• Occupational Safety and Health Act (OSHA)
• Civil Rights Act of 1866
• Attorneys Fees Award Act of 1976
• Pregnancy Discrimination Act of’ 1978
• State parallel laws
• Local parallel laws
Next time take a few minutes to discuss this with your Independent Insurance Agent.
1. 1991 “Tailhook” convention —— $ 8 million to settle allegations of physical and verbal sexual abuse
2. State Farm —— $157 million to 800 staff employees to settle allegations of failure to pronlote and denial of opportunity
3. IDS Financial Services -- $ 35 million to 32 former employees to settle age discrimination allegations
4. Shoney’s -- $134 million out-of-court settlement arising from race discrimination allegations
Employment Related claims
1. Three of five businesses will be sued this year by an employee or a former
employee over an employment practice
41.5% of all claims-- employers of’ 15 to 100
23.9% of all claims -— employers of 500 or more
18.0% of’ all claims -- employers of’ 101 to 499
16.6% of all claims-- employers of less than 15
2. Employment practices suits account for 20% of all Federal Court filings
3. 56% of all employment practice filings going to trial result in a verdict for the plaintiff employee
4. The average jury award is S250.000, with 15% exceeding $1 million
5. 33% of wrongful termination verdicts have punitive damages equal to or exceeding compensatory damage.
Here are just a few sources of Liability for Employment Related Practices
• Civi1 Rights Act of 1964
• Civil Rights Act of 1991
• Americans With Disabilities Act (ADA)
• Age Discrimination in Employment Act of 1967 (ADEA)
• Worker Adjustment and Retraining Act (WARN)
• Employee Polygraph Protection Act of 1988
• Equal Pay Act
• Older Worker Benefit Protection Act
• National Labor Relations Act
• Uniform Services Employment and Reemployment Rights Act of 1994
• Family and Medical Leave Act (FM LA)
• Fair Labor Standards Act (FLSA)
• Immigration Reform and Control Act
• Occupational Safety and Health Act (OSHA)
• Civil Rights Act of 1866
• Attorneys Fees Award Act of 1976
• Pregnancy Discrimination Act of’ 1978
• State parallel laws
• Local parallel laws
Next time take a few minutes to discuss this with your Independent Insurance Agent.
Tuesday, November 01, 2005
Non-Profit Executive Compensation
Do you have friends who serve as directors on boards of nonprofit hospitals, charities, social welfare organizations, other 501(c)(3) or 501(c)(4) organizations or foundations who are responsible for determining executive compensation? Please warn them about the new, aggressively funded IRS and state audits of nonprofit executive compensation. Those responsible for approving remuneration now face potential personal liability if found to have negligently determined excessive compensation packages (IRC § 4958).
The IRS is staffing offices and adding personnel to question excessively high-paying nonprofit organizations. And many state Attorney General offices are now actively reviewing their state-chartered nonprofit and not-for-profit corporations (New York and California both have new laws specifically focused on reasonable and/or “just” pay).
The IRS basically defines reasonable compensation as average compensation, and half of all tax-exempt executives are paid “above average.” That may be OK, but only if you have a documented rationale for higher compensation levels, including an independent competitive compensation analysis.
If you have anything to do with executive compensation at a nonprofit, educate your Board, CEO/Executive Director and CFO before it is too late. Here are easy steps you can take:
Tax-Exempt Survey Data: Subscribe to the survey that the IRS, the State AG Office of New York and others use to define reasonable compensation.
Online Nonprofit Executive Compensation Data: Smaller organizations can use the SalaryExpert.com executive compensation report for organizations with less than $1 million in revenue.
Compensation Committee Certification: Treasury regulations on intermediate sanctions imply that using good data is not enough if your Board members are not competent to use it. Encourage compensation committee members to become certified in executive pay oversight.
Finally, make sure you and your friends sit only on Boards that have D&O Insurance. Many organizations will try and convince you this is not a expense the organization needs or can afford. As a Board member you can't afford not to have it or comprable coverage.
The IRS is staffing offices and adding personnel to question excessively high-paying nonprofit organizations. And many state Attorney General offices are now actively reviewing their state-chartered nonprofit and not-for-profit corporations (New York and California both have new laws specifically focused on reasonable and/or “just” pay).
The IRS basically defines reasonable compensation as average compensation, and half of all tax-exempt executives are paid “above average.” That may be OK, but only if you have a documented rationale for higher compensation levels, including an independent competitive compensation analysis.
If you have anything to do with executive compensation at a nonprofit, educate your Board, CEO/Executive Director and CFO before it is too late. Here are easy steps you can take:
Tax-Exempt Survey Data: Subscribe to the survey that the IRS, the State AG Office of New York and others use to define reasonable compensation.
Online Nonprofit Executive Compensation Data: Smaller organizations can use the SalaryExpert.com executive compensation report for organizations with less than $1 million in revenue.
Compensation Committee Certification: Treasury regulations on intermediate sanctions imply that using good data is not enough if your Board members are not competent to use it. Encourage compensation committee members to become certified in executive pay oversight.
Finally, make sure you and your friends sit only on Boards that have D&O Insurance. Many organizations will try and convince you this is not a expense the organization needs or can afford. As a Board member you can't afford not to have it or comprable coverage.
Personal Umbrella Policy Continued
Work-Related home premises liability is liability for injuries to those coming on your premises for business purposes, such as a courier bringing a package from your employer, who falls on your premises and sues for their injuries. Homeowner policies completely exclude business-related lawsuits. These are people that either have home businesses or bring business home to work.
This is one of the most overlooked exposures not covered by homeowner’s policies. This coverage under an umbrella policy sometimes is provided only if there is underlying coverage on the homeowners and sometimes even if underlying coverage is added to the homeowners, the umbrella will not extend unless you ask for and pay for additionally a separate incidental office endorsement to the umbrella policy.
Employer’s liability is coverage for clients with domestic workers (nannies, handyman, personal care attendants); this exposure is completely excluded by underlying policies. It is available through some umbrella policies sometimes requiring underlying primary coverage or sometimes as a freestanding coverage not requiring underlying coverage at all.
Many times an individual assumes liability when they sign a contract. At times the exposure is a huge and assumed unwittingly. Here are some examples:
1. An individual has an elevator installed in his/her home. The contract with the elevator maintenance company requires the individual to defend and pay judgments against them even when the cause of the injury was at least partially caused by the negligence of the elevator maintenance company.
2. A wedding reception contract contains a restaurant requirement that the bride and groom defend and pay judgments against the restaurant even if caused by the negligence of the restaurant (i.e., 100 guests getting seriously ill from food poisoning).
3. A group of friends, all turning 30 years old, rent a building for a birthday party. In the contract, one of the friends agrees to defend and pay any judgment the building owner for injuries or property damage regardless of who was at fault.
Each of these examples represent a liability exposure that is largely uninsured by primary liability coverage. Many of these exposures are excluded by some umbrella policies but are covered by others. To properly manage risk, the Independent agent must first determine what liability risks your client faces that are not insured by his primary policies. Then locate an umbrella policy or policies that best covers as many of these uninsured risks as possible.
This is one of the most overlooked exposures not covered by homeowner’s policies. This coverage under an umbrella policy sometimes is provided only if there is underlying coverage on the homeowners and sometimes even if underlying coverage is added to the homeowners, the umbrella will not extend unless you ask for and pay for additionally a separate incidental office endorsement to the umbrella policy.
Employer’s liability is coverage for clients with domestic workers (nannies, handyman, personal care attendants); this exposure is completely excluded by underlying policies. It is available through some umbrella policies sometimes requiring underlying primary coverage or sometimes as a freestanding coverage not requiring underlying coverage at all.
Many times an individual assumes liability when they sign a contract. At times the exposure is a huge and assumed unwittingly. Here are some examples:
1. An individual has an elevator installed in his/her home. The contract with the elevator maintenance company requires the individual to defend and pay judgments against them even when the cause of the injury was at least partially caused by the negligence of the elevator maintenance company.
2. A wedding reception contract contains a restaurant requirement that the bride and groom defend and pay judgments against the restaurant even if caused by the negligence of the restaurant (i.e., 100 guests getting seriously ill from food poisoning).
3. A group of friends, all turning 30 years old, rent a building for a birthday party. In the contract, one of the friends agrees to defend and pay any judgment the building owner for injuries or property damage regardless of who was at fault.
Each of these examples represent a liability exposure that is largely uninsured by primary liability coverage. Many of these exposures are excluded by some umbrella policies but are covered by others. To properly manage risk, the Independent agent must first determine what liability risks your client faces that are not insured by his primary policies. Then locate an umbrella policy or policies that best covers as many of these uninsured risks as possible.
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