LIABILITY INSURANCE

Some Liability policies cover awards for Compensatory Damages, but not for Punitive Damages.  We recommend that any Liability policy that does not cover Punitive Damages be broadened to include them.  Although some jurisdictions do not permit insurance for Punitive Damages, others do.  Therefore, when Punitive Damages are covered by insurance, it is important that the policy contain a “most favorable venue” provision so that the greatest likelihood will exist that the Punitive Damages provision will provide a benefit to you. 

If work is performed on your behalf by independent contractors, it is advisable that such work be covered by a written contract and that such contract have proper insurance, waiver of subrogation, indemnification and hold harmless provisions to provide you adequate forms and amounts of protection.  We recommend periodic review of these contracts or agreements.  We would be happy to assist you in the composition of these aspects of your contracts; but we also strongly recommend that competent legal counsel be used in the creation of these contracts.

Are your limits of Liability insurance adequate?  Most of our clients' insurance programs include Umbrella Liability protection; but the limits of insurance should be reviewed periodically.

Umbrella Liability policies of which we are aware contain an exclusion for lawsuits alleging employment-related discrimination.  While most Umbrella Liability policies also contain an exclusion for lawsuits alleging non-employment-related discrimination (for example, discrimination in property rentals, discrimination in the sale of merchandise, etc.), some Umbrella Liability policies provide coverage for this.  If you feel that your business is exposed to lawsuits alleging non-employment-related discrimination, please let us know and we will explore the availability of this coverage for you.

Do members of your firm travel outside the United States to conduct business?  Most Property, Liability and Worker's Compensation policies contain geographical limitations which have the effect of not affording coverage for such travel.  Foreign Property, Liability and Worker's Compensation insurance is available for such activities. 

Do you serve on the Board of Directors of your firm, of another firm or of a charitable or non-profit organization?  If so, you are exposed to lawsuits alleging negligence in the discharge of your duties as a director.  Director's and Officer's Liability insurance is available for this exposure. 

The recent enactment by state and federal legislatures of laws protecting employees against wrongful termination, sexual harassment, employment discrimination and other wrongful employment-related acts, the stepped-up enforcement of earlier laws governing these actions and the heightened awareness of these actions which has been caused by notorious allegations of wrongdoing lead me to recommend to you the adoption and enforcement of procedures which will guarantee and protect the human and legal rights of employees.  This should include the creation or updating of an Employee Manual which, among other things, clearly expresses that you recognize the rights of employees to certain standards of conduct by you and by fellow-employees.  We also recommend the addition of Employment Practices Liability insurance to your insurance program.  If you would like me to explore this for you, just let me know.

If you are a wholesaler or retailer, the cost of your Product Liability insurance may be able to be reduced by obtaining Vendor's Liability insurance from the product manufacturer. 

Providing Group Insurance, a Retirement Plan and/or other benefits to your employees exposes you to lawsuits alleging that a clerical error or poor advice by you, by one of your employees or by an outside administrator resulted in a loss of benefits by an employee.  ERISA law creates personal liability for fiduciaries.  Clerical errors can  be covered by Employee Benefits Liability insurance.  Broader Fiduciary Liability insurance can cover both clerical errors and alleged poor advice.  If Fiduciary Liability insurance is purchased, we recommend that it include coverage for COBRA-related claims, coverage for 502I and 502l fines and penalties and coverage for Newly-Acquired Plans.  It is also important to select a Fiduciary Liability policy which provides for the reimbursement of claims expenses outside of policy limits so that such expenses will not erode the policy limit otherwise available for the payment of judgments awarded against you.

If you or any of your employees render professional advice or service, Professional Liability insurance should be a part of your insurance program.  If you are uncertain whether your full range of business activities are covered under your General Liability Insurance, please discuss them with me so that we can assist in the determination. 

Most Liability insurance policies have broad exclusions for claims alleging Bodily Injury and/or Property Damage arising from Pollution.  If any of your business activities give rise to the possibility of on-site, off-site or in-transit environmental impairment, Pollution Liability insurance may be available to protect you.  Please remember that many seemingly innocuous spills or seepages may be considered by the government or industry as the subject for an environmental impairment claim.  If you are a building owner, you could be exposed to claims alleging injury resulting from “Sick Building Syndrome” or from claims alleging injury caused by Microbial Matter (mold and/or fungus).  These types of claims may be able to be insured against by Pollution Liability Insurance.

If you are a contractor and transport potential pollutants on your vehicles or mobile equipment and/or bring potential pollutants onto job sites or if you could possibly cause a pollution incident on a job site by the work you are doing, you probably have little or no coverage for your legal exposures which would arise from such incidents.  Contractor’s Pollution Liability insurance is available to insure these exposures.  Care should be taken to also assess the pollution exposures that may exist on premises you own or lease.  Coverage for these may be able to be added to a Contractor’s Pollution Liability policy.

       If you have a Voice Mail system or a computer system, you may be exposed to liability or first-party damages from “hackers.”  One of our clients received invoices from their long distance telephone provider indicating that calls had been made to Indo-China through their phone system.  Upon investigation, it was determined that hackers had gained access to the phone


system through Voice Mail and had run up tens of thousands of dollars of phone service within a 30 day period (presumably, by using the phone lines for 24 hour/day data transmission).  The Phone Company advised that our client was liable for the charges.  It indicated that, although it could sell its customers a cap on such charges (this has to be requested by the customer), the cap starts at $25,000 (that is, even with such a cap, the customer would be responsible for the first $25,000).  “Hacker” insurance is available to insure against your liability to others for these kinds of obligations, for liability arising from the publication by “hackers” of confidential information and from damage to your electronic communications system caused by “hackers.”

If you have an Internet Web Site, you may be exposed to lawsuits alleging copyright infringement, e-mail-generated defamation of character, invasion of privacy, trademark infringement, etc.  Although you may have Personal Injury and/or Advertising Injury Liability insurance, it may not protect you adequately against such allegations as they relate to electronic media and the Internet.  Internet Liability insurance is available to protect your Internet-related activities.

If, by oral or written contract or lease, you have agreed to waive your insurance company’s right of subrogation against another party for damages claimed by a third party as a result of your operations or work, it is necessary that General Liability Form CG 2404 be added to your insurance.  This form provides that the insurer will waive any right of recovery it may have against the other party because of payments it makes for injury or damage arising out of your ongoing operations or your work done under a contract with that entity and included in the "products-completed operations hazard" of your insurance.  It is important to note that this waiver applies only to the entity shown in the schedule contained in the endorsement.  If it is customary for you to hold harmless and indemnify another party for damages claimed by a third party as a result of your operations or work, please let us know and we will attempt to obtain a Blanket Waiver of Subrogation provision from your insurer. 

Businesses engaged in the selling and/or dispensing of alcoholic beverages or building owners who have as tenants those who are engaged in the selling and/or dispensing of alcoholic beverages may be liable for injuries and/or damages caused by selling or serving to someone who is already intoxicated.  This is certainly the case for those operating in states which have a Dram Shop Law.  However, even in states without a Dram Shop Law (such as Maryland), there is a possibility of successful legal action being brought.  If this is applicable to you, Liquor Liability insurance is available to protect against the exposure.