California Commercial Insurance Broker BLOG

Frequently as a commercial insurance broker, we are looking for solid coverage while also looking to obtain the best pricing for our clients but sometimes their is a hidden benefit that it over looked or undervalued. The often quoted and rarely understood "dovetailing" of policies is a very important factor and should not be overlooked when evalutaing an insurance program. Dovetailing is the practice of obtaining insurance policies that have overlapping areas of coverage from the same carrier to prevent coverage issues should a claim arise.

Example: Web 2.0 Company provides software as a service and sells its software to doctors officers around the country. As the spokesman and CEO, Mr. Saas often speaks with large medical groups about the effectiveness of his product and how it will save their organizations time, money and revolutionize their back office. Web 2.0 Company sells their software to BIG Physicaians Group who pays $1 million in impliemntation fees and $1 million a year for licesening after hearing Mr. Saas speak at a physicians conference. They so believe in his statements and that the software will do what he says that they want it up and running ASAP. Big Physicaians Group installs the software and then it sits for a year. They later determine that the software is not capable of handling their needs, a professional liability claims(E&O) and in addition that they were mislead by Mr. Saas at the conference. A suit is filed alledging the software was purchased by Big Physician Gorup that failed to handle the needs of the client and caused major damage to their existing infrastucture and in addition that Mr. Saas was personally liability for the misleading statements. In this scenario we have two seperate policies being triggered, the professional liability policy would respond to the claim that the software did not perform as it was intended too perform and the major damage to Big Physicians Groups infrastruture. The insureds Director's and officers insurance would respond to personally defend Mr. Saas who was named personally for providing misleading statements about the product.

If these two insurance coverage are placed with different carriers they may have difference on which policy responses, how much limit is available, and even whether they are responsible to defend. If you place the coverage with the same carrier they become dovetailed making sure that any areas of overlapping coverage would fall under the responsibility of the same carrier making these points of contention for the insurance carrier moot.

If you would liek to further discuss the merits of dovetailing coverages, D&O or E&O insurance quotes please contact me, or for a quote you can visit us here.

EPL, sometimes referred to as EPLI, stands for employment practice liability insurance and covers an insured from litigation or action arising out of claims like age discrimination, sexual orientation discrimnation, wrongful termination and racial discrimination. Though this coverage seems straight forward many companies mis this critical piece in their insurance program because many producers do not understand the coverage and theirfore do not offer it to their clients. This is the fastest growing area of litigation and it is growing with the current economic downturn. With cycles of unemployement reaching beyond the six month mark for many industries unemployed workers are seeking out their former employers to cover their expenses. These claims usually come in the form or some type of wrongful termination or in the form of a workers compensation claim. In the case of the first example coverage under the employment practices liability insurance coverage, the average settlement has risen to over $200,000 and has shown a steady increase ove rthe past few years. Even a small case can easily cost $25,000 as in the following example. A small franchisee of a national chain had an employee who was often late, had a bad attitude on the job and was developing an increasingly unsightly appeareance. The employee showed up late to work and the employer terminated the employee on site. A number of missteps lead to the eventual action, the employee hired and attorney and filed a wrongful termination against the employer. The employee had been using drug and claim the employer wrongfully terminated her without warning. This seemingly clear cut case of personal irresponsibility cost the employeer $6,000 in defense cost and an additional $20,000 in an award that was settled out of court. Employement practices liability coverage would have cost him approximately $1,500 in annual premium.

Employment practices liability insurance coverage is often brought up by a litigator once and action has been filed against and insured, this coverage has a simple application and obtaining EPLI quote can be started online contact us by phone or email.

Directors and officers insurance coverage (AKA D&O) has become a critical insurance component of any organizations risk management strategy, who else but an organizations board would demand coverage to protect their own personal assets from being involved in a settlement. Directors and Officers insurance coverage is put into place to protect the named officers of a company as their protection lies outside of the defined coverage found in other policies such as a commercial general liability policy or a professional liability policy. Since the the financial fallout of 2008 and the current economic downturn, the insurance market for directors and officer for organization that need it most has become increasing tight and is getting more expensive. The financial industry has been hit very hard by litigation from collapsed mortgage companies, insurance companies and financial institutions. Obtaining directors and officers coverage for these institutions has become increasingly difficult and occasionally must be obtain in the surplus lines market.

Sarbanes Oxley legislation has made the Dissectors and Officers insurance market place for publicly traded companies an increasingly expensive proposition. As companies go public to raise capital the risk of litigation from their shareholders increases as the number of shareholders increases. Class action law suit, suits arising out of failed mergers and a general beating in the market can all be cause for suits to be filed against C-Level officers and a companies board. It is no longer a policy of option for publicly traded companies as directors and officers coverage was once seen as protection from a rare omission or poor decision. D&O has become a mandatory coverage for publicly traded companies as the above examples are seen as fairly common occurrences.

Other industries have been hit hard by the current economic conditions as well, for example, any organization that deals with franchising understands just how painful a downturn can be to the bottom line, but even worse when franchisees start to fail they turn to the franchisor for compensation. These suits come in the form of actions against the franchisors professional liability coverage and their directors and officers.

Directors and officers or D&O can often be packaged with Employment practices liability insurance and fiduciary liability coverage which can make the package as a whole not only more affordable but it can fill in gaps that would other wise be present should the coverages be purchased from multiple carriers. Obtaining quotes for directors and officers insurance coverage is a fairly straight forward process and can be initiated with an online application by clicking here.

Labels: D andO, Directoers and Offiers Coverage, Public company D O QUOTES