A Q6 Advisors, Inc. comprehensive insurance package looks to provide the most robust coverage addressing as many of the foreseeable risks and attempt to address those other risk that may occur in the course of doing business. Thus a comprehensive and dynamic package must provide coverage for a myriad of claims and risks; coverage can include the personal lines or the commercial lines including:
- General Liability
- Business Owners Policy
- Professional Liability
- Errors and Omission
- Director and Officers
- Worker’s Compensation
- State Mandated Disability
In today’s litigious society, even small mishaps can result in large lawsuits. That’s why general liability insurance, along with property and worker’s compensation insurance, is essential for most companies. Liability insurance protects the assets of a business when it is sued for something it did (or didn’t do) to cause an injury or property damage.
General liability insurance can be purchased separately or as part of a business-owner’s policy (BOP). A BOP bundles property and liability insurance into one policy; however, the liability coverage limits are generally pretty low. Businesses that need more coverage usually purchase liability insurance as a separate policy. The amount of coverage a business needs depends on a couple of factors:
- Perceived risk: Business owners should first consider the amount of risk associated with their business.
- The state in which you operate: Businesses that operate in states with a history of awarding high damage amounts to plaintiffs typically need to carry liability insurance with higher coverage limits. Q6 Advisors can help to advise on policy limits and offer suggestion for proper coverage.
How General Liability Works – under a general liability insurance policy, the insurer is obligated to pay the legal costs of a business in a covered liability claim or lawsuit. Covered liability claims include bodily injury, property damage, personal injury, and advertising injury (damage from slander or false advertising). The insurance company also covers compensatory and general damages. Punitive damages aren’t covered under general liability insurance policies because they’re considered to be punishment for intentional acts.
General liability insurance policies always state a maximum amount that the insurer will pay during the policy period. Usually these policies also list the maximum amount the insurer will pay per occurrence.
To cover these types of situations, many companies purchase umbrella liability insurance, which picks up where their general liability coverage ends. Umbrella liability covers payments that exceed their other policy’s limits, and provides additional coverage for liabilities not covered in a standard liability insurance policy.
Most insurance companies require their policyholders to report as soon as possible any accidents that could lead to a liability claim. The insurer may then require the business owner to document the situation, forward all summonses and legal notices, and cooperate fully in any investigations.
Taking precautions before an accident can help keep your liability and insurance rates down. All businesses can take certain steps to lower the chance of a liability insurance claim:
- Set a high standard for product quality control;
- Make sure all company records are complete and up-to-date;
- Be sure employees are properly trained;
- Get safety tips for your type of business from your insurance company.
Errors And Omissions Liability
Errors and Omissions Insurance protects your company from claims if your client holds you responsible for errors, or the failure of your work to perform as promised in your contract.
Coverage includes legal defense costs - no matter how baseless the allegations. Errors and Omissions Insurance will pay for any resulting judgments against you, including court costs, up to the coverage limits on your policy.
Errors & Omissions Insurance coverage extends to both W2 employees and 1099 subcontractors, and can be worldwide in scope.
Group Personal Excess Liability Insurance is a comprehensive benefit for key personnel, managers, and employees. Group Personal Excess Liability provides up to $10,000,000 personal liability coverage for each employee in a defined group, and helps to assure that the most valued staff members’ personal assets are protected. In addition, it awards a cost competitive insurance product to valued employees. Group Personal Excess Liability Insurance is a true “group” policy; the insurance company will not individually underwrite or decline any individual in the designated group.
Employment Practices Liability Insurance is a relatively new form of liability insurance. It provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. It covers your firm, including its Directors and Officers.
Directors & Officers Liability
Unlike general liability insurance -- which any organization that has a physical plant would be foolish not to have – many nonprofits are uncertain whether they need D&O coverage. When a person becomes a board member of a nonprofit organization, she assumes a level of responsibility for the organization ("duty of care"), and exposes herself to claims for not running and managing it in a proper way. Whether or not your organization needs D&O insurance depends on what the likelihood is that one of your board members will be the target of such a claim.
Claims generally fall into two categories: bodily injury (physical harm) and non-bodily injury (non-physical harm, like discrimination or termination). The majority of claims are for bodily injury. Your general liability insurance covers board members, subject to policy terms and conditions, for claims arising out of bodily injury and property damage.
Directors & Officers liability insurance only covers non-bodily injury claims. Non-bodily claims include employment related claims and mismanagement of funds.
Fear of non-bodily injury lawsuits would be one reason to have D&O insurance. Although there are very few reported cases, it doesn’t mean that claims have not been filed and then either settled out of court or dropped.
Generally, there are two types of lawsuits in which a claim might be brought against a board member: derivative lawsuits and direct or third-party lawsuits.
Derivative lawsuits are claims against a board member on behalf of the corporation. The typical claim here would be mismanagement of assets. But, under New York State law only a few people have "standing" or the right to bring such claims. They are: 1) board member(s) suing other board member(s) 2) members of an organization suing a board (if at least 5% of the total membership join the lawsuit), and 3) the state Attorney General.
Because of these restrictive standing rules, very few derivative claims are ever made. It should be noted that claims of these types are not made for awards to an individual, but rather to make the corporation "whole."
Direct or third-party lawsuits are brought by an employee or by a person not connected with the corporation who asserts a claim against it or its board on account of some non-bodily injury.
Employment practices like termination and discrimination are the largest exposure in these types of claims. If you have a small, friendly staff, and feel unlikely to have employment claims resulting in a lawsuit, you might not think it necessary to carry D&O insurance. However, when employees feel they have been wronged and are angry, they may file a claim even if it is baseless. At that point, you will have to hire lawyers. Your D&O then becomes a legal defense policy.
Who is covered? All policies, obviously, include an organization’s directors and officers. Officers include the executive director and possibly a few "key" employees. However, many policies don’t include staff and volunteers or the entity itself. If a claim is filed against a board member, in many cases it will also be filed against the nonprofit. Furthermore, many nonprofits have volunteers other than board members serving on their committees.