There are commercial truck policies for small companies and even single trucks, as well as larger policies available to provide coverage for large fleets of vehicles that might even include subcontracted commercial vehicles. Sometimes commercial truck insurance is called long-haul truck insurance.

This type of insurance isn’t like personal or recreational vehicle insurance. Commercial truck insurance offers different types of coverage that includes pollution liability, and even options to cover specific regional regulations for business vehicles. Some policies will let the owners base the policy on mileage or gross business revenues. Although this method means you pay more when business is better.

Covering the Cargo

Instead of covering the vehicles, motor truck cargo insurance offers protection to the truck owners if they loose or damage the freight they carry. This type of insurance is limited to a maximum load value per vehicle. The freight can be appraised before shipment in order to assess the specific cost of replacement value so that the trucking company is fully protected from liability.

There are options to insure the freight even if it’s not on the truck, for instance in a warehouse or terminal. If something happens and the freight can’t be delivered there is also an option that will help pay for storage. This option is called Warehouseman’s legal liability.

Types of Commercial Truck Insurance

There are statistics indicating that big trucks are involved in accidents where someone is killed or injured every sixteen minutes in the United States. Long-haul semi trucks have a bigger chance of becoming involved in multi-vehicle accidents that are often fatal. Having the right commercial trucking insurance is imperative to protecting your business.

Commercial truck insurance is often called semi-truck insurance. There are several types of coverage including:

• Primary Liability Insurance – is required by law in order to drive any type of motor vehicle on the roads. This type of commercial truck insurance covers those who are injured or their property damage because of an accident with the truck where the driver is at fault. Federal law requires $750,000 minimum coverage for each truck driver on the road. If the truck driver is at fault in an accident the policy would cover the amount up to the limit, then the truck driver or company would be liable for additional amounts. Often truck drivers and companies will choose to carry primary liability insurance in an amount that is higher than the minimum limits required.
• General Liability Insurance – is the part of the policy that would cover incidents that occur when you are not driving, including while stopped at a rest area, when loading or unloading the truck, theft or vandalism any time the commercial vehicle is parked. The specifics of general liability insurance coverage can fluctuate between different insurance providers. Make sure you don’t make assumptions and know exactly what your policy covers.
• Motor Truck Cargo Insurance – as discussed above, this type of coverage protect the actual cargo or freight that is being transported in the commercial truck. While not required by law, your clients may demand that you carry this insurance and that it be at a specific limit before they contract for your services.
• Non-Trucking Liability Insurance – is a form of commercial truck insurance that is sometimes referred to as bobtail or deadhead insurance. This coverage specifically protects your truck while it is stored or parked and empty of a load when you aren’t working.

There are also other forms of commercial truck insurance including a type specifically used by independent truck owners that operate their own vehicles. Known as Occupational and Accidental Injury Insurance, this part of the policy serves as a type of workman’s compensation for the driver/owner, paying for medical and living expenses if they are hurt on the job.

Insurance carriers have the right to request specific driver requirements in order for the insurance coverage to be valid. Besides a federal requirement that all drivers for vehicles over a certain size have a CDL or Commercial Driver’s License, the company can impose additional conditions that may include:

• Higher age limits
• Specified years of experience driving a truck
• Limiting the number of acceptable moving violations, at fault accidents, or major violations over a specified number of years

Summary

The many facets of commercial truck insurance covers liability for personal injuries and property damages, it covers the loss or damage of the freight you carry, and it covers the truck whether it is carrying freight, parked at a terminal, or in your driveway.

As a type of ground and marine insurance, cargo liability is in effect when the goods are in an insured vehicle either in transit or while waiting at a terminal to be loaded. In fact, cargo liability insurance is divided into two varieties, marine and inland. Both forms are paid for by either a transit company or private contractor to guard against any liability that typically occurs from the time the goods are loaded into the truck or boat, until the cargo is unloaded by the company that bought the policy and delivered.

While the cargo is being transferred from one place to another the policy protects the person driving the truck or operating the marine vessel, the company who contracted to move the shipment, and the actual cargo. When the cargo is verified as delivered undamaged and intact, the insurance policy no longer applies. Liability now changes hands, it becomes the concern the person or company who accepted deliver, or falls to the owner as part of a general liability policy.

Inland or Motor Truck Cargo Liability Insurance

In the United States there is a Federal Law covering minimum levels of cargo liability insurance for the transportation and delivery of freight over land. The minimum levels are:

1. Loss or damage to each vehicle contents – $5,000
2. Loss or damage due to any one incident – $10,000
3. If something in the cargo spills into the street and is ruined, the first $5,000 of product would be covered by #1 listed above, with the company or driver held responsible for what is over and above the $5,000. The damage to property due to the spill that is outside the contents of the cargo is covered up to $5,000.

Again, these amounts are federal minimums and often shipping companies or private contractors will choose to increase the minimums depending on the cargo contents and the potential for damage liability. If property is lost or damaged, these issues are typically decided in a courtroom as part of a lawsuit and not by the police. The suit for damages would often include not just the cost of the product, but also any lost income, delay of business, legal fees, and more. The Motor Truck Cargo liability insurance covers these issues.

Marine Cargo Liability Insurance

Marine Cargo Liability Insurance is intended to protect loss of shipments due to theft on open water. It also protects the ship and its operators from any costs that come from the loss or damage of the cargo, as well as against delays and costs associated with delays and the loss of cargo.

Marine Cargo Liability Insurance has to take into account international trade concerns, delays due to bad weather and other incidents that aren’t as critical with delivery of goods over land. Sea-based transport liability must also consider that the cargo could become water damaged.

Often Marine Cargo Liability Insurance carries both a motor cargo element as well as marine. Often goods are transported over land, then over water, and again over land before ultimate delivery of the cargo can be completed. Being able to combine both land and marine liability insurance protects the company against gaps in policies and can reduce the cost of having two separate policies.

Annual or Single Transit Insurance

Transportation companies or private contractors have the option of two types of cargo liability insurance. They can purchase an Annual Transit Policy that covers all liabilities for the cargo they move through a full year or they can purchase Single Transit Insurance that covers liability for a single delivery.

• Annual Transit Insurance – This type of policy can have mileage limits incorporated in the coverage. This limitation is intended to protect the insurance company from disproportionate use based on the coverage. To manage this type of policy the shipping or trucking company would need to monitor and plan for continuing coverage.
• Single Transit Insurance – This type of liability coverage is typically used by shipping companies or is someone who either doesn’t ship regularly enough to pay for an annual policy or just needs to cover the risk of loosing or damaging one single shipment.

It’s interesting to note that small delivery package insurance, such you would use through a service like UPS or FedEx, originated as a form of Single Transit Insurance.

Summary

Cargo Liability Insurance comes in two basic types which are land and sea. Companies can get a blanket, annual transit policy or purchase a single transit policy for occasional shipments.

All accountants are open to the possibility of making a simple mistake that can cost millions. Missing the date for filing taxes, adding too many zeroes or not enough zeroes, putting a decimal in the wrong place and many other minor errors can soon turn into a financial nightmare for the client and ultimately for the accountant who is held responsible for the fiasco they have created.

Keeping up with paperwork alone can be a disaster that leads to costly mistakes. It doesn’t matter if every number is in the right place and all the deadlines have been met, if the accountant isn’t able to back up their numbers with documentation that can be held accountable and ultimately part of a lawsuit.

Most accountants can’t afford to be held financially responsible for their mistakes. Imagine being the accountant for a large corporation and being responsible for the accounting for millions or even billions of dollars. One mistake could cost the company millions of dollars, probably much more money than the accountant has in their personal bank account. However, professional liability insurance is the key to ensuring that a mistake doesn’t cost the accountant their very own livelihood and personal financial stability.

Choosing Professional Liability Insurance for Accountants

Accountants who have realized the need to have professional liability insurance may think it is as simply as going to the Internet and finding insurance; however, this is not the best method and could wind up costing money rather than protecting assets. There are insurance brokers and mediators whose job is to consider every aspect of the accountant’s needs and the type accounting work that they are involved in and then recommend the best policy to meet the needs of the accountant.

Insurance mediators and brokers can be found on the Internet under the term “insurance” and “insurance brokers”. A Google search will result in websites that can help get quotes based on a series of questions that the accountant answers to help guide the query to the best solutions for professional liability insurance needs.

How Much Liability Insurance is Necessary?

Every accountant will have a different amount of risk that they can afford to take as well as a different level of accounting that they handle. This will have a large impact on how much liability insurance the accountant needs to carry. An accountant for a very small company or firm doesn’t need as much insurance as an accountant who handles the books for a multi-million dollar company. The amount of liability is simply vastly different.

Accountants who multi-task, such as those who handle the human resource aspects of a company in addition to the banking aspect of a small company have a higher risk level than someone who handles only the banking aspect. The reason is simply that the person doing only the accounting has fewer disruptions and is able to focus solely on accounting. The multi-tasking accountant has to be able to switch back and forth from one task to another and thus the chances of a mistake increase exponentially. These are the types of things that have to be taken into account when determining how much liability insurance is needed.

Best Practices

The accounting world, like any other profession has what is known as Generally Accepted Accounting Principles which are practices that are typically followed throughout the accounting world; however, these may not always be followed precisely by every accountant and this can lead to confusion over what the accountant is and is not responsible for in the area of mistakes. Professional liability insurance helps provide peace of mind if the accountant does make a mistake, regardless of whether or not the principles are being followed to the letter.

There are many other professions that require professional liability insurance and accounting is just another profession that can benefit from having liability insurance. No one is perfect and mistakes are bound to occur; however, when a mistake can be so costly as to affect finances and livelihood it is a good idea to have insurance to protect personal assets. All accountants should consult and insurance broker and determine how much insurance is needed and get a policy in place.

There have been many instances where companies have been put out of business in Florida because they have had to pay a legal liability claim without insurance. It is important for small business owners to investigate the type of liability insurance they need in order to protect their livelihood.

Florida Business Liability Insurance Options

In Florida there are several options for business liability insurance. The most common type is a general liability insurance policy. This policy will protect your company if an accident occurs at a business location, say if someone slips and falls. The general liability insurance will offer cover service companies if there service causes an injury, or if an offered product causes illness or injury.

General liability insurance will also cover the business from an advertising injury. In Florida, an advertising injury is defined as financial damage done to another business that is caused by your company’s advertisement. An example of this would be making a comparison in your advertisement to another company, if the other company can prove your ad caused them financial injury, they can file a lawsuit for damages.

There are other types of business liability coverage available in Florida. This includes:

• Automotive Liability Coverage – This type of coverage is important whether you have one company vehicle or a fleet of delivery trucks. You can add automotive coverage to a Florida business liability insurance policy in order to cover medical expenses or property damage caused by any employee driving a company vehicle.
• Florida Professional Liability Insurance – This coverage is specifically for professional service companies like lawyers, doctors, interior designers, and even those who offer services like pet care, yard care, or beauty services. The insurance policy will protect your business if the offered professional services cause damage, injury, or illness to a third-party or their property.
• Employers’ Liability Insurance – This type of policy will protect the business from your employees. Unlike workman’s compensation, this coverage handles issues that might include an employee lawsuit for wage dispute, harassment, illness or injury caused by another employee, or any lawsuit initiated by those who work for the company.

There are many other types of business liability insurance available in Florida. If your company manufactures a product, there is a policy to protect you from lawsuits where the product causes damage or injury. It is important for business owners to speak to a knowledgeable insurance agent or broker to discuss the business risks and what type of policies best fit your company.

Risk Assessment and Options

A risk assessment of your Florida business will help you decide not only what types of business liability insurance to carry, but what you can do to cut down on the risks of being sued. You can do this yourself, or hire a company that specializes in determining and eliminating risks. Areas to explore include:

• Vehicle and Machinery Maintenance – Are you taking care of your company vehicles and the machinery that employees use? If not, this could potentially create a risk of injury and other liability.
• Storage – Look how you store inventory for manufacturing or goods to be sold. Are the shelves too high for easy and safe access? Is there hazardous material stored where it can be accidently tipped over or mistakenly utilized?

Walk through your place of business with an eye to accidents or possible injury. Ask employees to give you their ideas on creating a safer work environment and to list what they think might be a potential problem. This will help you take the first steps in determining what type of Florida Business Liability Insurance your company needs and to fill in the gaps.

Liability Insurance Costs

Once you’ve determined the areas where you might have the greatest risks, it is time to determine what the policy limits should be, if your business can handle a deductable, and if you need any specialized coverage over and above a general liability policy. Then you can get a few rate quotes to see what Florida Business Liability Insurance will cost.

Get a Quote

If you live in Florida you can get an insurance quote from netQuote for business liability insurance. There is no charge for the quote and you simply have to answer a few questions, like the zip code where your business is located, the number of full- and part-time employees you have, and whether this is a new or replacement policy. The quotes will be provided to you within a few minutes and they will come from National and local insurance companies.

What is an Insurance Broker?

An insurance broker is typically an agent that works with many different insurance agencies to find their clients the best possible policy and premiums that are available. Brokers take the research and hassle out of finding a policy that meets their needs. The broker has already completed the research on the insurance companies and knows which ones will meet the business needs. The broker is also able to negotiate a better price for the business than it could obtain on their own. This is simply due to the broker bringing lots of business to the agency than they might get on their own.

An insurance broker also typically acts as the go between for the insurance company and the business owner. This means that the business owner doesn’t have to deal with the intricacies of policy applications, forms and other things that are necessary when keeping a policy up to date. The broker typically has a more direct contact at the insurance company and doesn’t have to go through the customer support line. This can be an important aspect that helps a business decide to let a broker handle their insurance needs rather than try to find an insurance company on their own.

Questions to Ask the Broker

The following questions are some of the most important questions that any business owner should ask their broker when shopping around for an insurance policy through an insurance broker about the insurance companies that they present for review:

• What is the insurance company’s Moody or AM Best rating? This is a rating that is based on the stability of the insurance company. A high rating is the sign of a strong, stable company. If the company has a low rating, the company should possibly be avoided or at the least researched further. If the broker has confidence in a company with a low rating, it could be worth asking why. It could be that the company is relatively new and is still working on getting a higher rating. Don’t jump to conclusions without having all the facts about the company.
• What types of businesses does the broker typically deal with? Some insurance brokers specialize in a particular type of business. This might make them unsuitable for the business that you run. The main reason for this is the types of claims that the business may have to file. This is also important in choosing the right types of plans that are presented for review. If the broker typically deals with banks and financial services then they might not be well-suited for finding plans that a contractor needs. This is an important factor to consider so that the policies presented equal what the business needs.
• Will the broker always be the one that handles the company’s business? This is also important. Many insurance brokerage firms have several agents that may share the workload. This results in you dealing with a different person every time, not an ideal situation. If at all possible, try to find a broker who will be your once source of contact. This keeps the confusion down and also keeps everyone on the same page.
• Clientele: Ask the insurance broker for a list of clients. There should be no hesitation on the part of the broker. Additionally, make sure to call some or even all of the clients and ask about their experience with the broker. The reputation of the broker, particularly from clients, is a good indicator of their business skills.
• Will the broker be available to personalize polices if necessary? Ask the broker how they handle personalization of insurance policies. This is actually one of the main tasks that a broker is in business to do. They work with insurance companies to get your policies to read how you want them to read.

If you can get the answers to these questions from your insurance broker and you are satisfied with the answers that you get, you will have the ideal insurance broker and should be able to get the policy you need for your business.

It is advisable to seek the advice of a California insurance specialist who can go over the details and specifications that the state requires in terms of business liability insurance. In addition, these agents can also help determine what types and how much insurance coverage are needed in different areas of the state.

California Liability Requirements

California has specific requirements that every business operating within the state must follow. Some of these requirements are outlined below; however, an experienced insurance agent should be consulted to make sure that these guidelines have not changed and that the business has the coverage it needs to operate in the state.

• General Liability Insurance: The California General Liability clause protects the policy holder from any claims against it that come about as part of normal operations, such as a visitor to the business falling and breaking their leg. This insurance is a necessity that every business owner needs to make sure is in place and has enough coverage to protect them from being personally sued should such an incident occur. Every business will have different amounts of coverage that are needed and an insurance broker or specialist should be consulted to help determine how much is needed.
• Public Liability Insurance: The business must have public liability coverage which protects public property from damage by the business. Much like general liability, the coverage amount should be high enough to ensure that the business won’t be in financial stress should an incident occur that requires the policy to be needed.
• Product Liability Insurance: This phase of the insurance policy covers protection to the manufacturer from damage due to the product and failure or damage due to the product. This type insurance is particularly important for companies that make products that are edible or used on skin or have any effect on someone’s health in any manner.
• D & O or Directors and Officers Insurance: This liability insurance specifically protects the directors and other officers of the company from claims being brought directly against them. This area of general liability insurance can protect the directors and officers of a company from being wrongly sued or brought to court by disgruntled employees or even clients who feel they have been wronged in some manner.
• Professional Protection: The general liability must also protect the company from claims brought against its professionals. For example, an engineer who is sued over a design would be protected under the company’s professional liability protection clause.

Many California insurance agents will offer to create an insurance package that contains both property and casualty insurance, this P&C insurance is often the best choice for getting the most insurance for the lease amount of money, something all businesses will appreciate.

California liability insurance protects businesses in the state from financial loss due to company negligence. Under the California Liability Insurance laws, legal fees and actual damages may be recovered for many different causes such as:

• Explosions on the property
• Storm damage from lightening
• Fire damage
• Weather  damage such as frozen pipes
• Faulty electrical currents which cause damage
• Heating and cooling systems
• Theft
• Damage such as glass breakage and vehicle damage
• Rioting or gang violence
• Water damage
• Damage due to snow or ice or other weather ailments

This list is by no means exhaustive and a thorough examination of the liability insurance policy should be conducted to determine if damaged suffered falls under the business liability coverage section. Insurance agents who specialize in professional liability in the state of California will be able to help the business determine what is and is not covered under professional liability laws in the state and how much insurance the business needs to be properly covered.

When starting a business in California it is important to consult with a commercial insurance agent or broker that can help identify the insurance needs of the business and at the same time explain the insurance coverage that is required by the state. This will make it much easier to succeed in the state. Understanding the business liability laws in California is not difficult but can be best explained by an insurance broker or agent in the state. All business owners should make sure that they have adequate coverage before ever opening their doors in order to protect their financial assets both personally and professionally.

The propensity for shareholders’ lawsuits against directors and officers of companies has led to a big jump in the number of companies purchasing directors and officers, or D&O as it’s called in the insurance industry, coverage. According to industry experts, about 95 percent of Fortune 500 companies held D&O policies. These policies have become increasingly specialized oer the years, and new products are hitting the market at a rapid pace to meet the needs of individual insureds.

D&O history

D&O insurance has its roots in the Great Depression. In the 30s, famed insurer Lloyd’s of London introduced a new insurance product that covered directors and officers of companies. The product didn’t sell very well until the 60s, when changes in securities law interpretation by the courts made suits against directors and officers more common. As more and more directors and officers saw the potential for their personal fortunes being depleted by lawsuits pertaining to their job performance, they decided to protect their assets with D&O coverage.

The D&O insurance industry has grown by leaps and bounds since then, as the last 30 years have seen an increase in shareholder suits and disputes between federal regulators and D&O insurers. Today nearly 31 percent of all corporations can reasonably expect to have at least one claim filed against the company’s directors and officers.

What it does?

In general, D&O insurance provides coverage to directors and officers of corporations from claims that may arise from actions related to their position in the company. Directors and officers can be held liable for claims if they hurt their corporation by failing to disclose conflicts of interest, mixing their business and personal assets or by breaching their duties to the company.

For publicly traded corporations, D&O policies primarily exist to offer coverage to directors and officers against shareholder suits. For private companies and non-profits, D&O policies are tailored to mostly cover wrongful dismissal, discrimination and other employment related suits.

The D&O field has greatly expanded beyond the basic level of coverage mentioned earlier, with policies providing a wide variety of options via standard form or endorsement. D&O coverage can extend to many circumstances. It can extend to the cost of defending criminal and regulatory investigations, as well as civil actions. The coverage has become linked in many cases to broader management liability insurance, this form of coverage handles the liabilities of the company as well as any liability that may be assessed against the company’s directors and officers.

Typical claimants under D&O policies include customers, regulators, shareholders and competitors who file unfair trade or anti-trust suits.  Most companies purchase D&O coverage for their directors and officers as part of their compensation package.

Contrary to popular conception, D&O coverage does not extend to intentional acts of wrongdoing by directors and officers. When directors and officers commit intentionally illegal acts, these actions are not covered by D&O policies. D&O coverage only extends to wrongful acts which are narrowly defined by the policy to regard certain omissions, acts and misstatements made in the insureds’ capacity of a director or officer of a corporation.

Claims

In general, D&O policies act on a claims-made basis. This means that the coverage extends only to claims made during the policy period related to events that occurred during the policy period. Claims are defined as a civil, criminal or administrative proceeding or a demand for damages against an insured made in writing. Most D&O policies contain language narrowly defining what circumstances are considered to be a claim. For example, a large number of policies limit claims only to proceedings or demands against a director or officer regarding their capacity as insureds, further limiting coverage by language defining what an “insured” or “wrongful act” constitutes.

How much?

Like any other insurance product, how much D&O coverage your company needs largely depends on the individual circumstances of the folks you want to insure. For example, biotech and pharmaceutical companies tend to carry the largest amounts of D&O coverage because of the propensity of suits against directors and officers of companies in that field. In general, a small private company will usually carry about $10 million in D&O coverage while large publicly traded companies may carry $200 million or more. A qualified insurance broker can help provide a risk analysis and suggest the appropriate level of coverage for your company and steer you to someone who can write a policy that addresses your company’s unique needs.

Employment practices liability insurance provides companies with coverage for claims that may arise as a result of a company’s employment practices. According to industry experts, the chance of a business facing an employment claim is much greater than that of it facing a general liability claim. These claims can be costly. The average out-of-court settlement for an employment practices case is about $40,000. If the case goes to court, the average award is $218,000, and nearly 10 percent of these cases can result in an award of more than $1 million. Legal fees are also quite expensive in these cases. The average cost of defending a wrongful termination or employment case is about $45,000.

With the potential for big losses that employment-related suits pose, it’s no surprise that more and more employers are purchasing EPLI policies.

What it covers

An employment practices liability insurance policy will cover judgments, settlements and defense expenses related to employment related suits as defined by the policy. In general, EPLI policies cover claims for:

Wrongful termination — Perhaps the most commonly litigated employment dispute, wrongful termination involves the unjust firing of an employee. This also includes “constructive discharge,” which is basically the creation of a hostile work environment by the employer to induce an employee to quit or retire.

Discrimination — These suits involve employment-related discrimination committed by the employer based on race, sexual orientation, color, creed, marital status, sex, age, disability, pregnancy, or other status protected by federal civil rights law. This also includes claims involving retaliation regarding an employee’s exercise of his or her rights regarding worker’s comp or COBRA benefits. These types of claims have increased in recent years, tripling between 1990 and 1998.

Sexual harassment — As the name suggests, this involves claims of sexual harassment as that concept is defined under the Equal Employment Opportunity Commission, including claims made against fellow employees and supervisors.

Whistleblower retaliation — These claims involve employees who allege they were retaliated against because they reported an illegal or unethical practice by an employer.

Wage and hour disputes — These claims regard employee actions involving employer violation of federal laws regarding minimum wage and overtime.

Other employment claims — This covers claims such as libel, slander and defamation, as well as invasion of privacy, emotional distress, assault, battery, negligent hiring, supervision, promotion etc.

EPLI policies generally operate under a claims made basis. This means that a claim is covered under an EPLI policy only if the incident related to the claim happens during the policy’s period of coverage, and only if the claim is made during the period.

What it doesn’t cover

Most, if not all, EPLI policies have a list of exclusions specifying what the policies won’t cover. These usually include risks covered by other types of policies. For example, most EPLI policies don’t offer coverage for bodily injury or property damage because these claims are covered by commercial general liability policies.

Other policy exclusions include bans on coverage for intentional conduct, such as assault or battery or criminal conduct. EPLI policies also frequently exclude coverage for punitive damages and fines or penalties.

Also, many EPLI policies include hammer clauses. These clauses give the insurer the right to tell the insured that it should allow the insurer to settle the case for a specified amount. If the insured bucks this advice, goes to court and loses, the insurer is off the hook for having to pay

Recent trends

As society has grown more litigious, the cost of EPLI policies have gone up as insurers are having to defend their insureds more often and as they are more frequently having to pay out claims.

Recent big awards such as a $5 billion claim in an employment suit against Microsoft and a $192 million settlement in a case against Coca Cola have caused trial lawyers to swarm to these types of cases, clogging court dockets with a legion of employment cases. Many insurers now say that they’re losing money on EPLI policies and are seeking to remedy this situation. The insurers are lowering policy limits, jacking up premiums and have implemented a more stringent underwriting process to stem their losses.

The company officers responsible for administering these plans may be held liable for claims from employee lawsuits regarding lost benefits, so it is hopeful that many of these companies had good fiduciary liability insurance and employee benefit liability coverage.

Fiduciary liability insurance basics

Fiduciary liability insurance helps cover officers of companies and other people involved in pension, savings, health, welfare and profit sharing plans from claims of breach of fiduciary duties. Many of the claims for breach of fiduciary duty stem from the 1974 ERISA, or Employee Retirement Income Security Act, which specified the duties and responsibility of fiduciaries with regard to employee benefit plans and also increased their liability.

The law was created to help protect the interests of employees covered under pension and other benefit plans. With regard to fiduciaries, ERISA defines a fiduciary as someone who exercises any sort of discretionary authority or control over an employee benefit plan. The law defines employee benefit plans as plans or programs created to provide employee benefits to beneficiaries or participants.

Under ERISA, people defined as fiduciaries can be held liable for acts, errors and/or ommisions with regard to their work as fiduciaries. This responsibility can extend to accounting firms, law firms, investment advisiers and consulting firms outside the company that exercise control or authority over the plan.

If a employee or beneficiary of a employee benefit plan feels their interests have been harmed by a fiduciary of that plan, he or she may assert a claim against not only the plan, but also the fiduciary, putting the fiduciary’s personal assets at risk of being tapped to pay damages. While it’s often assumed that a D&O policy will cover these types of claims, the truth is that most D&O policies carry exclusions barring coverage for fiduciary claims.

What fiduciary liability insurance does is provide coverage for acts, errors and ommissions to parties that may be considered as fiduciaries. This coverage is often sold along with fidelity bonds and employee benefit liability insurance.

Fidelity bonds

A fidelity bond, essentially, is a bond that offers coverage to policy holders for any losses they might incur because of dishonest or fraudulent acts of individuals. Unfortunately, in some corporate collapses where employee benefits are harmed as a result, investigations will show that corporate officers raided or otherwise improperly made use of funds from employee benefit plans.

What fidelity bonds do is offer coverage for the benefits lost because of the dishonest or fraudulent act of plan fiduciaries. They don’t protect fiduciaries from liability claims arising from fraudulent or dishonest acts.

Employee Benefit Liability Insurance

These policies are often sold in conjunction with fiduciary liability insurance and serve to cover many of the claims that can arise from errors or omissions in the administration of a pension or benefit plan, including a failure by the company to enroll an employee in the plan or improper advice to employees regarding benefits.

Things to consider

When purchasing fiduciary liability insurance, be sure to read the policy so that you understand what your policy does and does not cover. Be wary of excessive exclusions or language in the policy that you don’t understand.

When you purchase a fiduciary liability insurance policy make sure that it offers coverage for wrongful acts and that you understand the policy’s definition of wrongful acts. Also make sure that the policy covers your legal expenses and that you understand its definition of damages. Some policies may not cover punitive damages, which can be quite high in these types of cases.

Also, find out whether the coverage is claims made, and how that coverage definition might relate to your business. Claims made policies only cover incidents that arise and are reported within the coverage period of the policy.

The uncertain economic environment and its potential impact on benefit plans make it an increasingly prudent decision for companies to protect their officers by purchasing coverage for suits regarding employee benefits and pension plans.

In times past, professional liability policies were only issued to a small customer base of professionals whom courts imposed very high standards of care regarding responsibility for their errors, omissions and acts of negligence. Over the last 30 years, courts have been holding a wider variety of professionals responsible for errors, omissions and acts of negligence with regard to their clients and third parties. This legal trend has led to a large increase in the number of businesses buying professional liability, or E&O coverage, to supplement their general liability insurance coverage.

What it covers?

Professional liability insurance differs from general liability coverage in that general liability insurance only applies to claims of bodily injury, property damage, advertising injury, or personal injury claims. Professional services can give rise to claims not covered by general liability insurance. The theory behind professional liability claims is that because professionals in certain fields are required to have very specialized training or education, they should be held liable if they do not perform up to a certain standard held by the industry.

Claims that aren’t covered by general liability insurance that are covered by professional liability insurance include claims of negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. These claims can cause damages to a client that don’t fall under bodily injury, property damage, advertising injury, or personal injury.

Coverage provided by professional liability insurance includes your cost of legal defense against claims, no matter how frivolous or baseless they are, and payment of judgments against you, including court costs, up to the limit of the policy. In general, coverage does not extend to non-financial losses or losses caused by intentional or dishonest acts.

In liability insurance, there are two main types of policies, claims made and occurrence policies. The majority of professional liability insurance are claims made policies. Claims made policies are triggered only if a claim is made and reported during the period of the policy. This differs from occurrence policies which cover claims that occur during the policy period, but might not be reported until later.

The big difference in these two types of policies is that while an occurrence policy will provide coverage no matter when a claim is made, even years after a policy is allowed to expire, claims made policies only cover claims that are reported during the policy period.

How it works?

Here’s an example of an professional liability claim:

A software firm undertakes to build a new database for a company. The firm completes the database, but omits several key bits of information, rendering the database useless and costing the client company hundreds of thousands in lost business and costs to have a new database built. The client company sues the software firm. Because the claim doesn’t have bodily injury, property damage, advertising injury, or personal injury, the claim doesn’t fall under the company’s general liability policy. The heads of the company were wise enough to purchase professional liability, or E&O insurance however, and are able to seek coverage under that policy.

Who needs it?

Professionals engaged in lines of work where they are presumed to have extensive technical knowledge or training and may be held to that standard in a court of law should seriously consider purchasing professional liability insurance.

The amount of professional liability insurance you will need and how much it will cost depends upon the size of your business, the level of coverage you require and your past claim history. As with all types of insurance, the biggest variable in determining the cost of your premium will be the level of risk you pose to your insurer. People who often have claims filed against them will most likely pay larger premiums than lower risk clients. For a small business, professional liability insurance can cost anywhere from $5,000 to $7,000 per year, according to industry experts.

Technology based companies are a growing client pool for professional liability policies because of the potential for costly negligence claims for products and services that don’t work properly.