Most of us would rather do anything than listen to more spills on insurance. Most small business owners are inundated with policy presentations and overwhelmed by the tremendous cash drain from insurance premiums.
Now more than ever it is of critical importance that you fine-tune your knowledge of your insurance coverages, policy exclusions, options and the risks to your personal net worth. This article addresses just a few of the issues – Employment Practices Liability Insurance, Workplace-Violence Coverage, Health Insurance, Umbrella Policies and Hired/Non-Owned Auto Insurance.
EMPLOYMENT PRACTICES LIABILITY INSURANCE (EPLI)
Sexual harassment is alive and well in corporate America. You should sincerely educate and train your staff to:
- Take it seriously
- Seek qualified counsel
- Gather the facts and don't make judgments
- Keep the matter confidential
- Keep written documentation
- Do a reality check (are you overreacting?) and
- Take charge and don't pass the buck!
However, even with the best workplace environment and training lawsuits happen. So what can you do to protect yourself? Information gleaned from insurance websites indicates that 60 percent of companies have been the target of at least one employment-related lawsuit in the past five years. According to the Western Insurance Information Service, between 1992-1996 the number of civil rights cases filed in federal court more than doubled. Consult with your insurance representative regarding EPLI to cover costs of defense, judgments and settlements. Deductibles usually range from $10,000 to $25,000 with coverage limits up to $50 million. The coverage is not insignificant, but the alternative may be catastrophic to your business. This is coverage that you should really consider due to changes occurring in your business environment.
A January 2003 article in CFO publication details that each workday, approximately 16,400 threats are made on the job, 723 workers are attacked and 43,800 are harassed. This all comes with a high human cost, but also imposes growing financial burdens on the small business. A number of insurance companies are now offering workplace-violence coverage. One such policy covers business interruption (remember there is downtime when you have crime scene investigation), consulting fees, death and dismemberment, and other related expenses such as temporary security measures. Once again, this type of policy is one that fills a gap in your standard general liability, property and casualty, and worker's comp policies.
GROUP HEALTH INSURANCE
News documentaries abound of small businesses that have been forced out of business because they were no longer able to offer insurance to employees. Employees that have previously received insurance coverage generally will not accept being without that coverage regardless of the burden on the business. Costs have skyrocketed and unless there is more regulation of the insurance industry the trend will continue. So, what do you as a small business owner do? The acceptable trend is to pass part of the cost on to the employee. Employees are aware of the health insurance dilemma. Some of the costs must be absorbed by the business, but now employees are being asked to share the burden in many small businesses. You don't want your employee to be forced to opt for no insurance nor do you want them to seek employment with a larger business that can provide insurance. There is no rule of thumb of how much to ask your employees to contribute. You must actively participate in association meetings regarding this matter and inform your representatives and congressmen of the reality of the situation.
UMBRELLA POLICY COVERAGE
Are you certain you have enough coverage? Others have felt certain they did only to be forced out of business due to lawsuits. Umbrella coverage provides excess liability protection that your small business needs for excess coverage over the "underlying" liability insurance you carry, coverage for all other liability exposures (except as specifically excluded) and automatic replacement coverage for underlying policies that have been reduced or exhausted by loss. Consultation with your insurance professional may lead to purchase of an umbrella policy, increasing your liability limits on existing policies or some combination of both. Not convinced? Consider that umbrella coverage can provide extended coverage for mental injury, mental anguish, shock, disability, humiliation, discrimination, oral and written contracts, liquor law liability coverage and many others. Can you risk a multi-million dollar lawsuit?
HIRED/NON-OWNED AUTO INSURANCE
Business owners that use delivery as a part of their business must wake up and formulate a plan regarding this coverage. Perhaps you aren't aware of the issue. Many insurance companies that specialize in insuring drivers under 25 years of age (who else delivers?) are placing specific exclusions of liability coverage on their policies where the vehicle is used for delivery and an accident occurs. As one of our insurance colleagues writes – The Franchises Hired and Non-owned liability carrier price their coverage based on the belief that they will be able to collect at least the minimum state liability limit from your driver's policy. Since there are now policy coverages being written that exclude delivery from the driver's personal policy, you may now have an added provision on your own Hired and Non-owned policy that requires you to warrant that your drivers have collectible insurance. Thus, you must closely examine the additional endorsements to your policies! It may no longer be enough to simply verify driver insurance – you may need to examine exclusions.
Where does this lead? WOW – a scary thought. Historically, once an exclusion becomes a part of a few carriers, then it gradually works its way into all policies. If this turns true, then you will in the future also need to secure coverage that would cover the amount that has been historically sought first from the driver's insurance. Coupled with all the other growing insurance burdens this additional coverage may be the back breaker for the delivery business. Therefore, it is imperative that you begin to work now through your associations and insurance commissions of your particular state, and legislature to address this issue.