Does your law firm have potential automobile loss exposures that you are not aware of? What about the potential loss from individual employees who operate their own personal vehicles for company business?
Many situations present a potential for you to be held accountable for the actions of your employees while they are driving their own vehicles.
Do administrative employees use their own vehicles to go to the post office or bank on your company’s behalf?
Do you occasionally send an employee to pick up a visiting client?
Have you sent employees to pick up lunch, drop off mail or pick up office supplies?
Have you ever rented a vehicle while on a business trip?
If an employee has an accident under any of these situations, your business can be held accountable and sued for damages. Basic business automobile policies only cover employees while they operate company-owned vehicles to perform company business.
Your best protection: non-owned and hired automobile liability coverage. This type of coverage will kick in if there is an accident and your company is found legally liable. Typically, an employee’s personal automobile insurance will provide primary insurance to both the employee and the business if they use their own vehicle on the company business. However, there is the chance that charges will exceed the employee’s policy limit and would then be passed on to the company. Without non-owned and hired automobile liability coverage, you may be vulnerable to a potentially costly exposure.
Non-owned and hired automobile liability insurance covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees). This coverage is typically added to your business automobile policy; however, it can be added to your general liability policy if you do not have a business automobile policy. It protects your company if it is found legally liable due to an automobile accident that you or your employee has in a hired or non-owned vehicle while on company business. Hired automobile coverage replaces or augments the liability coverage offered by automobile rental agencies.
Workers Compensation Exclusions for Law Firms
Every law firm should be aware of their policy’s workers compensation exclusions. The key idea behind workers’ compensation laws is that a non-exempt employer provides a benefit to cover all on-the-job injuries, regardless of what they are, without determining fault. The real limits of the law come not in the type of injury but in how the injury occurred.
Exclusions from workers’ compensation take place when an employee is injured while committing a crime, if the injury is self-inflicted, if the injury takes place while the employee is under the influence of drugs or alcohol, or if the injury is the result of a specifically restricted activity. In these instances, an insurance provider is not liable to approve the claim.
A work-related injury need not occur on the employer’s premises. If an employee is at an off-site conference, traveling from one facility to another, or in the course of working at a place of business or home of the employer’s client, any injury which occurs will be considered a work-related injury. Any activity conducted in the name of the employer needs to be expressly excluded in advance if, for some reason, workers’ compensation benefits would not be extended in the case of an accident or occupationally related exposure.
Additionally, an employer may contractually add a covered benefit that might otherwise not be included under a particular state’s worker’s compensation laws. If an employee needs to conduct an activity completed on their own time, off the employer’s premises, and/or not directly work-related, but to the employer’s benefit, a claim may be approved. Such instances, however, need to have a written agreement in place before the accident.
In some instances, an employee might experience an illness that results in injury rather than an accident. An exposure to a toxic substance, the activity of a repetitious nature, or a traumatic incident that creates mental health issues could lead to an approved claim. Occasionally, the illness might not surface for many years but still be considered compensable. However, commonly contracted illnesses such as influenza, sickness from mosquito bites, or a headache that the employee believes results from on-the-job contact are excluded from workers compensation laws.
Each state has its own worker’s compensation laws. While they are all similar in content, they may differ from one another on specific issues. It is wise to consult individual state laws to determine if a particular injury or occupationally related illness or the circumstances behind the exposure are compensable under those laws.
Workers’ compensation covers the vast majority of work injuries and diseases. Injuries not covered by workers’ compensation in many states are:
Injuries occurring as a result of crime
Injuries from violation of posted and known company policies
Injuries from intoxication or drug use
Pre-existing conditions, unless exacerbated by current work
Some exceptions to employer immunity or situations that would usually allow injured employees to sue their employers outside of the workers’ compensation system are:
Injuries caused by employers’ malice or recklessness
Injuries caused by employers’ violations of state or federal law, such as violations of the Occupational Safety and Health Act (OSHA)
Injuries caused by employers when acting in dual capacities, such as breaches of legal duties as property owners, landlords, medical providers, or manufacturers of work equipment
Injuries to employee property
Bad faith administration of workers’ compensation claims
Employers’ retaliation against employees for pursuing workers’ compensation claims, such as by firing or demotion
Nonphysical injuries such as defamation or discrimination
General Liability Insurance Overview for Law Firms
General liability insurance coverage is something most law firms simply must-have, so it is essential that you understand what it does and doesn’t cover.
What’s typically protected by commercial liability insurance coverage
Business is inherently risky, but business liability coverage safeguards against many known and unknown risks. Commercial liability insurance coverage protects you, your law firm, and your employees from claims involving bodily injury or property damage up to the limits of your policy.
Policies shield you from the expense of out-of-court settlements, litigation, and judgments awarded by courts.
Lawsuits, investigations, and settlements
If damages are filed against you, or you’re sued, general liability insurance covers the insurance company’s investigation and attorney expenses, any judgment or settlement, medical expenses in case of injury, and bonds if they must be subsequently posted.
Claims can arise from bodily injury or property damages resulting from accidents on your premises or your products, your operations, or advertising for your business.
What’s typically NOT protected by business liability coverage
Here are some situations that would not be protected by general liability insurance coverage.
Employee injuries. Workers compensation is the insurance you would need to protect your employees when they are hurt on the job.
Professional mistakes. Business liability insurance coverage won’t cover a professional mistake, but professional liability will. It insures against mishaps that may occur as you offer your opinion, solution, service, or recommendations in the course of business.
Auto-related coverage. Business liability coverage does not protect you against auto accidents. Purchase a separate auto policy to protect your business.
Punitive damages. Though there can be exceptions, a general business liability policy rarely pays for punitive damages resulting from a lawsuit.
Intentional acts. General business liability insurance does not cover damages or injuries resulting from expected or intentional acts. For example, if an employee assaults a customer, your business liability coverage would not cover the damages if they sue. But if the employee were defending himself or the company from a criminal act, the liability insurance would provide coverage.
Your work. Referred to as the “workmanship” exclusion, and is common in general liability policies. Insurance policies do not respond to what would normally be picked by a company’s warranty for their work.
Claim Scenario: Age Discrimination
Though not common, law firms can do encounter age discrimination lawsuits.
Every few months, we like to share information on various claims experienced by different firms. While the names and personal information have been removed, the claims are genuine and important to note.
TUV Law Firm terminated a long-time office manager for alienating employees and clients and a general disinterest in her job. The manager was 59 years old when the termination took place, and TUV checked off “other” instead of “poor performance” on the termination form as the reason for the termination.
The office manager filed a charge of discrimination with the Equal Employment Opportunity Commission, alleging she was terminated because of her age. In her charge, she stated that she had always received regular merit pay increases, was replaced by a worker in her 30s and that some members of senior management had made comments about needing “to get rid of the old guard.”
The office manager subsequently filed a lawsuit against the firm seeking two years of lost wages and benefits and compensation for emotional distress. Although TUV believed it was innocent of the allegations, the firm determined that defending against the lawsuit would be costly. The case eventually settled out of court for $250,000, while expenses totaled more than $60,000.
Don’t hesitate to contact our office if you want to find out more about how your law firm can protect itself from this type of claim. We can help provide you with multiple options for employment practices liability insurance.
General Liability Medical Expenses
Every general liability policy includes a medical expenses section. What exactly does this section cover? As it has been established, general liability coverage is when a third-party claims you or your law firm was negligent for bodily injury or property damage and sues for those damages. General liability protects your law firm against incidents that may occur on your premises or at other covered locations where you normally conduct business. When you look at the declarations pages on your commercial general liability policy, it looks like this:
LIMITS OF INSURANCE
LIABILITY AND MEDICAL EXPENSES
MEDICAL EXPENSES – ANY ONE PERSON
PERSONAL AND ADVERTISING INJURY
DAMAGES TO PREMISES RENTED TO YOU
PRODUCTS-COMPLETED OPERATIONS AGGREGATE
Law firms often wonder what this coverage entails. Do they sometimes ask why this limit is so low in comparison to the other limits listed? “Medical expenses are costly; why only $10,000 limits here?” The answer to this question is, where liability coverage is for situations where a third-party claims your negligence for bodily injury or property damage, the medical payments coverage is an exception, as it pays medical expenses for bodily injury to third parties as a result of your operations regardless of fault.
People are less likely to sue you if they receive prompt medical payments to cover the costs of any injuries they have sustained, for which they could claim your law firm is liable. Medical Payments coverage gets them without filing a lawsuit or going to court and engaging in a lengthy claims process. This coverage also allows your insurer to pay small nuisance claims without the need for costly legal expenses.
If a liability claim and medical costs are paid, but a lawsuit still arises, general liability will still protect for a covered claim. The purpose of medical expense coverage, however, is to prevent this from happening.
Overuse injuries are one of the biggest risks law firms face in regards to workers’ compensation injuries. The following is a list of basic ergonomic tips to avoid overuse injuries:
Place the keyboard in a position that allows the forearms to be close to the horizontal and the wrists straight. That is, with the hand in line with the forearm. If this causes the elbows to be held far out from the side of the body, then re-check the work surface height.
Some people prefer to have their wrists supported on a wrist rest or the desk. Be careful not to have the wrist extended or bent in an up position.
Adjust the seat tilt so that you are comfortable when you are working on the keyboard. Usually, this will be close to horizontal, but some people prefer the seat tilted slightly forwards.
Your knees should be bent at a comfortable angle and greater than 90º flexion. If this places an uncomfortable strain on the leg muscles or the feet do not reach the floor, then a footrest should be used. The footrest height must allow your knees to be bent at 90º; the footrest height may need to be adjustable.
Adjust the backrest so that it supports the lower back when you are sitting upright. A range of chairs is available.
Avoid cradling the phone between your head and shoulder when answering calls. If you need to use your computer simultaneously, use a headset or the phone’s hands-free/speaker-phone capabilities if the environment is suitable.
Set the eye-to-screen distance at the distance that permits you to focus on the screen most easily. Usually, this will be within an arm’s length.
Set the monitor’s height so that the top of the screen is below eye level, and the bottom of the screen can be read without a marked inclination of the head. Usually, this means that the center of the screen will need to be near shoulder height. Your eyes should be level with the toolbar.
People who wear bifocal or multi-focal lenses will need to balance where they see out of their lenses and avoid too much neck flexing. The height of the monitor can be adjusted using a monitor riser.
Place the document holder close to the monitor screen in the position that causes the least twisting or inclination of the head.
Adjust the height of the work surface and/or the chair’s height so that the work surface allows your elbows to be bent at 90º, forearms parallel with the floor, wrist straight, shoulders relaxed.
Place all controls and task materials within a comfortable reach of both hands so that there is no unnecessary twisting of any part of the body. Most people prefer the document holder to be between the keyboard and the monitor. There are many different types of document holders available.
What does crime and fidelity insurance cover for law firms?
Crime and Fidelity Insurance protects law firms from loss of money, securities, or inventory resulting from the crime. Common insurance claims allege employee dishonesty, embezzlement, forgery, robbery, safe burglary, computer fraud, wire transfer fraud, counterfeiting, and other criminal acts.
These schemes involve every possible angle, taking advantage of any potential weakness in your law firm’s financial controls. From fictitious employees, dummy accounts payable, non-existent suppliers to outright theft of money, securities, and property. Fraud and embezzlement in the workplace are on the rise, occurring in even the best work environments.
Any employer that needs to be concerned with Employee Dishonesty or any business handing cash or securities needs protection from robbery or theft will need Fidelity/Crime Insurance.
Because most property insurance policies do not typically cover crime-related losses, crime protection insurance is a necessary component for any business. Unfortunately, the majority of firms don’t purchase enough crime protection.
According to a recent study by the Association of Certified Fraud Examiners (ACFE). It estimates the average business is losing six percent of its total annual revenue from losses involving employees — on average more than $9 per day per employee.
To find out more about how crime insurance can protect your law firm, please contact our office.
What is employee benefits liability?
Employee benefits liability might be one of the most important coverages your law firm didn’t realize it needs to have. Like many employers, your firm may offer employee benefits like health insurance or vision care. Such benefits can help your company compete for qualified workers. Unfortunately, they can also lead to lawsuits against your firm or your benefits employees if they are not administered properly.
Not Covered by Standard Liability Policies
Small clerical errors can have major consequences. For example, suppose your company hires a new employee, and he completes the paperwork to enroll in the company-sponsored health plan. Due to a clerical error by a human resources employee, the employee is not enrolled. Several months later, this employee is hospitalized with a serious illness and discovers that he has no health insurance. When his medical bills begin to pile up, he seeks restitution by suing the HR worker and your firm.
Claims like this are not covered under commercial general liability policies because an administrative error is not an “occurrence” as that term is usually defined. Moreover, such errors typically result in financial losses rather than bodily injury or property damage.
To insure itself against claims resulting from administrative errors, your firm can purchase employee benefits liability (EBL) coverage. EBL coverage is often provided via an endorsement attached to a general liability policy.
Employee benefits liability endorsements typically cover damages the insured becomes legally obligated to pay because of an act, error, or omission committed to administering employee benefits. EBL coverage usually applies on a claims-made basis, but some insurers do offer occurrence coverage.
If you would like to find out more about obtaining this coverage, please contact our office. One of our team members will be more than happy to answer all of your questions.
Law Firm Claim Scenario: Disclosure of Private Information
Here’s an example of a law firm that accidentally had a disclosure of private information. We hope this claim example can help your practice avoid potential problems in the future by providing the details around the claim. The following claim is related to a cyber liability insurance policy.
A woman purchased a used computer from a law firm that was selling old equipment. The computer still contained the personal records, including names, addresses, and social security numbers of prior companies, their officers, and even employees.
Loss: The cost of notifying affected parties per state law totaled nearly $110,000. Two lawsuits have been filed: one alleges damages over $200,000 from a party who claims she lost her job due to the disclosure; the second alleges that the plaintiff’s identity was stolen and that costs of correction and emotional distress will exceed $100,000.
Thankfully, in this case, the law firm in question purchased a cyber liability policy, which means their insurance company is currently handling the claim’s defense and may ultimately have to pay for the claims.
If you would like to find out more about obtaining a cyber liability policy for your company, please feel free to contact us.
What is personal and advertising injury coverage?
Included on every general liability insurance policy for law firms is a coverage entitled “Personal and Advertising Injury.” The problem is that very few people understand what this coverage is and how it can protect your company.
Personal and Advertising Injury is Limited in Scope
First, Personal and Advertising Injury (Coverage B) is much narrower in scope than your Bodily Injury and Property Damage (coverage A) portion of your general liability insurance. The latter is quite broad. It covers virtually any claim or suit for bodily injury or property damage caused by an occurrence, as long as the claim is not subject to an exclusion. Personal and Advertising Injury applies only to claims that result from the specific offenses included in the definition of a claim.
Covers Intentional Acts, Not Intentional Injury
Another difference between Coverage B and Coverage A has to do with the types of covered acts. Coverage A applies to bodily injury or property damage caused by an occurrence that results from your negligence. Negligence is a type of tort (civil wrong) committed unintentionally, meaning the accident occurred because you failed to exercise reasonable care, not because of something you did intentionally.
Coverage B, on the other hand, covers intentional torts. Intentional torts include acts like libel, slander, and false arrest. They are called intentional torts because they arise out of intentional acts.
Suppose you own an apartment building. Tim, one of your tenants, has been acting suspiciously, and you fear he may be conducting a drug-making operation.
One day while Tim is out, you enter his apartment (an intentional act) to look for drugs. Tim learns that you were in his apartment without his permission and sues you for wrongful entry. Wrongful entry is an intentional tort that is covered under Coverage B.
Coverage B applies to intentional acts that result in unintentional injury. It does not cover injury that you inflict on someone deliberately.
Requirements for Coverage
To be covered under Coverage B, a claim must seek damages for personal and advertising injury caused by an offense that arises from your business. The offense must be committed in the coverage territory and during the policy period. Moreover, no coverage is afforded for an offense that arises from the material you published before the policy period.
Coverage B excludes claims arising from any of the following:
Knowing Violation of Rights Injury you inflict on someone intentionally. No coverage is provided for an offense if you knew, when you committed it, that it would violate someone’s rights and cause injury.
Publication With Knowledge of Falsity False statements you published verbally or in writing if you knew they were false when you published them.
Contractual Liability Liability for personal and advertising injury that you assume on behalf of someone else under a contract.
Breach of Contract Your failure to adhere to the terms of a contract. Coverage is afforded for breach of an implied contract to use someone else’s advertising idea in your advertisement.
Statements About Price or Quality False statements you make in an advertisement about your product or service’s price or quality. For instance, suppose you publish an ad stating that your business, Best Buns, uses 100% organic ingredients in all of its products. If a customer sues you because the muffin she bought from you contains no organic ingredients, the claim will not be covered.
Intellectual Property Your breach of someone else’s copyright, patent, trademark, or trade secret. An exception to this exclusion is an infringement (in your advertisement) of someone else’s copyright, trade dress, or slogan. Such infringement is included in the definition of personal and advertising injury.
Chatrooms, Bulletin Boards, Unauthorized Use Your Internet chatrooms or bulletin boards, or your unauthorized use of someone’s email address or domain name.
War, Pollution, Certain Laws War, pollution, and violations of the Telephone Consumer Protection Act and the CAN-SPAM Act. The TCPA prohibits certain marketing solicitations via telephone or fax. The CAN-SPAM Act applies to unsolicited emails.
Your policy may contain other exclusions besides the ones listed above.
Personal and advertising injury is subject to a limit that applies to “each person or organization.” This limit is the most the insurer will pay for all damages assessed against any one person or company. Damages or settlements paid under Coverage B are also subject to the General Aggregate limit in the policy.
If you are sued for an offense covered under personal and advertising injury liability, your insurer will defend you. The costs related to your defense will not reduce the limits cited above. In other words, your defense costs will be paid in addition to the limits.