By William D. Dyer

Q: What the meaning of equal employment opportunity?
A: This typically applies to a business with fifteen or more employees that prohibits discrimination in any aspect of employment and harassment in the workplace based on race, color, age (40 and over), sex, pregnancy, gender, religion, disability, national origin, ethnic background, military service, and/ or citizenship.

Q. What is the ballpark estimate for directors and officer liability insurance?

A. It can be as low as $1,200 for a small business, to millions for a public company

Q. What is the typical annual premium for D&O in small business?

A. Typically it is $1,200 to $5,000.

Q. What is the cost for errors and omissions coverage?

A. This depends on the limits, industry, geographic location, and past claims experience. Some of the most expensive professions would be MD’s, Real Estate Brokerages, and Appraisal Firms, Insurance Brokerages, Engineering Firms and Law Firms.

Q. How do you apply for errors and omissions insurance?

A. You contact an insurance broker with expertise in E&O (it is an insurance specialty). The broker will have you complete an application; if you have coverage currently they will obtain your loss runs for the past five or ten years. The broker will shop your coverage to multiple insurers.

Q. How much is a $100,000 of general liability?

A. Assuming you are not in something risky, an estimate would be $100 to $500 a year. Most companies buy this coverage with limits in the millions.

Q. What is product professional liability?
A. As it implies in its name, it protects you from suits relating to the products that you produce, or a private label.

Q. Can an employer stop group health benefits during workers compensation claims?

A. Yes; and the employer should. You have to check with your health insurer to see what the contract dictates, but most have a limitation that coverage is for full time employees working twenty-five or thirty hours a week. If an employee is on Workers Compensation, he/she is not working, so therefore, he/she is no longer eligible for group health insurance. You should offer him/her COBRA. If you do not do this, the health insurer can deny the claims of the employee. We know of an employer, which is not our client, who kept an employee on his/her group health insurance while the employee was on Workers Compensation. The employee had a massive heart attack while he/she was disabled. The employee mentioned it to the doctor, and it was entered into his medical record that he was out on a Workers Compensation claim. The employee was given open heart surgery that yielded a big bill, which the insurer denied since the employee was not eligible for health insurance at the time of the claim. The employer was sued for the bill and lost in court.

Q. Can you run a CA Family Rights Act with the Federal Family and Medical Leave Act?
A. Yes, CFRA and FMLA can run concurrently.

Q. Is excess workers compensation a liability policy?

A. Not excess, which usually refers to reinsurance – a self insured Workers Comp. However, if the question is, can you buy excess coverage or umbrella insurance to supplement the liability portion of Workers Compensation, the answer is yes. This is one of the reasons why one buys an umbrella for one’s company. If the Workers Comp limits are breached or used up, then the umbrella may respond. Please note that most states limit the liability for the employer to the limits of the Workers Comp policy unless there is gross negligence.

Q. What is worker’s comp aggregate retention?

A. If you self insure your Workers Comp and say if the past five years show your average claims with an inflation of $3,000,000 then a reinsurer may sell you an aggregate reinsurance policy that will pay all claims that exceed the expected claims of $3,000,000. The $3,000,000 is the aggregate retention or deductible.

Q. Where can you buy medical malpractice coverage while on the US rotation?

A. If you are a resident of the US, you can buy it from a typical malpractice insurer. The problem is the policy will be for one year, so if you are here for less than one year, you will want to pay the premium and request a refund for any unused premium and buy tail insurance. Tail insurance is to cover you for any claims that occurred during the time you were covered. If you are returning to your home country and never plan to live in the US, you will want to consult an attorney to see what your exposure is versus buying tail insurance. When in doubt, buy tail insurance.

NOTE: THE ABOVE IS A GENERAL DISCUSSION ABOUT HOW COVERAGES MAY WORK. YOUR INSURANCE POLICY AND ALL ADDENDA ARE THE ONLY AUTHORITY OF HOW YOUR COVERAGE WORKS. DO NOT RELY ON THIS ARTICLE AS AN EXPLANATION OF YOUR COVERAGE. HAVE YOUR ATTORNEY REVIEW YOUR ENTIRE POLICY WITH YOU TO DETERMINE WHAT IS AND IS NOT COVERED.

By William D. Dyer

The work force is ever changing especially during these tough economic times that have resulted in a rise in employment claims and litigation. Big and small business owners need to protect themselves with EPLI or Employment Practices Liability Insurance that covers them for exposures relating to employment (i.e. discrimination, wrongful termination et al). Business owners don’t have the resources to battle these cases on their own, nor are they prepared to implement risk management practices to avoid them. Obtaining business employment practices liability insurance will cover litigation expenses alleged by anybody from the employee to the third party. EPLI premiums are affordable, with minimum premiums that can be less than $1,000. Here are some facts worth noting that should influence small business owners in the right direction, taken from June 2010′s issue of Best Review.

• Hartford Steam Boiler found two out of three [small business owners] were concerned that their employees will file an employment-related charge against them with only a fraction, who have some type of insurance protection for workplace claims.

• U.S. Equal Employment Opportunity Commission reports that employment claims reached the second highest level ever in 2009, with more than $376 million awarded to employees.

• EEOC statistics also show 81% of claims settle for an amount ranging from $22,400 to $40,500 (excluding defense costs).

The time is now to protect your company from employment claims. Don’t wait, because if you get sued then it is too late to buy coverage to cover that claim. A significant employment or workplace claim can be the tipping that can be the ruin of your business.

HCP National is an Employment Practices Liability, EPL, or ELPI provider or broker for over 16 years. As an EPLI broker we know the risk exposures of employment, and we know how to insure it. This blog does not alter or change coverage, nor is meant as legal advice.