Friday, March 9, 2012


Hopefully the proprietor of this fine establishment in Greensburg, PA has an agent who has educated their client on possible coverage options, in addition to doing whatever quality control work they feel compelled to do...

I've not spent much time writing about Employment Practices Liability, as it really belongs in the "management liability" category, but as I see more and more submissions I think it's time to offer some thoughts. As you probably know, many, many standard carriers provide this coverage, so most agents have access to markets. However, there are some other considerations and here are just two things to be aware of; (1) tougher risks, like restaurants, real estate and law firms for example, don't have as many market options available and (2) even though this is a highly competitive class, coverage options are still all over the place.

Here are some policy benefits or coverage options you should be aware of...

Risk Management: I know, I know, most insured's could care less. Hopefully as an agent you're at least talking with your client about the benefits of using the services many carriers provide at no cost to your customer. Those services vary with the carrier but can include:
  • online access to forms and procedures
  • worksheets/checklists your client can use to see where they stand in comparison to other business operations
  • some sort of telephone or internet based help line or similar service
  • online or in office training for managers and/or employees
While I understand it's not going to be all that interesting to many insured's, those with claim history or larger or more sophisticated clients should be willing to factor these features into the mix.

ID Fraud Expense: This is definitely not an option that is universal, but some of the carriers are now including a small limit for ID Fraud Expense Reimbursement per employee as a value added item. Usually the "coverage" is for the cost of clearing up credit, not coverage for any lawsuits, and includes some help in navigating through the process. Limits are in the $1000 to $2500 range per employee, but the insured may have the option to purchase a higher limit.
Information Security: This may also be referred to as Network Security, Data Breach or Cyber Liability. There may well be other terms used by other carriers. The coverage could be for the full policy limits, or could be provided as a sub-limit. If this coverage is added by endorsement or included in the policy wording, make sure you understand how it applies. In general, data breach is for loss that arises out of unauthorized access to private data. If it's added to an EPL policy, you should expect it to apply to employment information for past, present or future (applicants) employees.

That's a critical point, because if that's how coverage applies (employees or applicants for employment) it will not substitute for data breach/information security coverage your client may need if they acquire and maintain private data for customers. Don't make the mistake of assuming that "data breach" is "data breach", i.e. it's all the same coverage, and make sure your client is aware of what is intended and what is not.
More to follow...

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