What Is Employment Practices Liability Insurance (EPLI)?

June, 2010 - Insurance Information Institute

EPLI covers businesses against claims by workers that their legal rights as employees of the company have been violated.

The number of lawsuits filed by employees against their employers has been rising. While most suits are filed against large corporations, no company is immune to such lawsuits. Recognizing that smaller companies now need this kind of protection, some insurers provide this coverage as an endorsement to their Businessowners Policy (BOP). An endorsement changes the terms and conditions of the policy. Other companies offer EPLI as a stand-alone coverage.

EPLI provides protection against many kinds of employee lawsuits, including claims of:

• Sexual harassment
• Discrimination
• Wrongful termination
• Breach of employment contract
• Negligent evaluation
• Failure to employ or promote
• Wrongful discipline
• Deprivation of career opportunity
• Wrongful infliction of emotional distress
• Mismanagement of employee benefit plans

The cost of EPLI coverage depends on your type of business, the number of employees you have and various risk factors such as whether your company has been sued over employment practices in the past. The policies will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements. The policy covers legal costs, whether your company wins or loses the suit. Policies also typically do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies such as workers compensation are excluded from EPLI policies.

To prevent employee lawsuits, educate your managers and employees so that you minimize problems in the first place:

• Create effective hiring and screening programs to avoid discrimination in hiring.
• Post corporate policies throughout the workplace and place them in employee handbooks so policies are clear to everyone.
• Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor. Make sure supervisors know where the company stands on what behaviors are not permissible.
• Document everything that occurs and the steps your company is taking to prevent and solve employee disputes.

Troipcal Storm Bonnie threatens Florida

Flood Insurance Program Back in Business Until Sept. 30

July 1, 2010

Insurance Journal 

The U.S. Senate last night approved a temporary reauthorization of the federal flood insurance program until Sept. 30. The reauthorization of the National Flood Insurance Program (NFIP) is retroactive to June 1, the date the program was halted.

The unanimous Senate vote sent the measure to President Barack Obama for his signature. The House had previously approved reauthorization.

Once President Obama signs the bill into law, the NFIP should return to normal operations, according to the Independent Insurance Agents & Brokers of America (the Big "I"). Also, since the extension is retroactive, any new policy applications or renewals that were signed and submitted during the hiatus will be effective from the date of application or, in the case of waiting periods, the waiting period will start from the date of application.

The Big "I" said that while the resumption of the program is welcome, the spring lapse -- the third time this year it has been forced to halt operations-- has caused difficulties for homeowners and small businesses.

"It is alarming that the NFIP was allowed to remain expired for so long, causing so much confusion and potentially leaving desperate homeowners and small businesses unprotected for almost a month," said Robert Rusbuldt, Big "I" president and CEO. "While the Big 'I' is appreciative of Congress extending the program on a temporary basis, we are also greatly concerned that these short expiration periods and patchwork of temporary extensions will negatively impact the market."

The industry has urged Congress to act on a long term extension of the program.

Read more: Insurance Journal

Nation's Flood Insurance Program Remains in Limbo

Insurance Journal

June 16, 2010

The Senate today voted against legislation that included a provision to reauthorize the National Flood Insurance Program (NFIP).

Along with short term extensions for numerous other federal programs, the NFIP extension was passed by the House just prior to the Memorial Day recess. It was voted down by the Senate today amid concerns that other, unrelated provisions in the bill would add to the federal budget deficit. Should the Senate approve an amended version, the legislation would have to go back to the House for another vote in that chamber.

The Senate vote drew criticism from the National Association of Mutual Insurance Companies (NAMIC).

"It's been over two weeks since the National Flood Insurance Program was allowed to expire, and the program is still being held up because of unrelated issues," said Jimi Grande, NAMIC senior vice president of federal and political affairs. "This lack of action by Congress is unacceptable, particularly when we're in the first few weeks of the 2010 hurricane season."

The Atlantic storm season began June 1 and the National Oceanic and Atmospheric Administration has forecasted that 2010 will be among the most active seasons ever. The NOAA predicts that 2010 will see 14 to 23 named storms, with eight to 14 of those developing into hurricanes. Of those, the NOAA has said that three to seven may develop into Category 3 or above hurricanes with winds of over 110 miles per hour.

"We cannot afford to have political disagreements get in the way of protecting millions of Americans from flood losses," Grande said.

Source: NAMIC

Source: Insurance Journal

Over The Counter no longer Eligible after 01/01/2011

One of the more immediate reforms in the Patient Protection and Affordable Care Act (Affordable Care Act) is the requirement that affects Flexible Spending Accounts, Health Savings Accounts and Health Reimbursement Arrangements. Starting January 1, 2011 all OTC (Over The Counter) items eligible for reimbursement must be accompanied by a doctor's prescription and a reimbursement request (claim form). They may no longer be purchased using the benefits card.

When does this change go into effect?

This change will go into effect January 1, 2011 and will apply to the taxable year. This means that both calendar year and off plan year FSA's and HRA's will have the change at the same time.

What if my plan year runs from October 1, 2010 through September 30, 2011? Can I get reimbursed for OTC items through the end of my plan year?

No. Eligibility for OTC items ends on December 31, 2010 regardless of plan end date. However, you may still use remaining funds for all other eligible expenses until the end of your plan year.

I am a diabetic. Will I need a doctor's prescription to get reimbursed for my insulin after December 31, 2010?

No. Insulin that is currently purchased over-the-counter without a prescription will still be eligible for reimbursement. However, the benefits card will no longer be accepted as payment after December 31, 2010, and a manual claim form will be required for reimbursement.

Will I still be able to use my benefits card to get reimbursed for my regular prescription medications?

Yes, prescription drug reimbursement will not be affected by this change and you can still use your card.

If I do get a doctor's prescription for an OTC, can I still use my benefits card to get reimbursed?

No. The benefits card may no longer be used as payment for any OTC items. However, you may use another form of payment then submit a reimbursement request along with the doctor's prescription. You can then mail, email, or FAX your receipt and prescription along with a completed claim form to us. All claims are generally processed in 48-72 hours of receipt.

What if I purchase an OTC item December 31 of 2010 but do not submit the expense until March 2011?

You will still be reimbursed for OTC items purchased prior to January 1, 2011. The new rule only affects those items purchased after January 1, 2011.

What are some of the OTC items that will no longer be eligible for reimbursement without a doctor's prescription under the new legislation?

The items no longer eligible for reimbursement under the new law will include item categories such as cough medicines, pain relievers, acid controllers, and allergy medications, to name a few. A complete list of items being affected by this change has not been made available yet. If a list is made available we will pass along to you.

Does this affect purchases with my benefits card for any other type of expenses?

This legislation will not affect expenses related to doctor's office co-pays, dental co-pays, orthodontia, vision exams, eye glasses, and more. Participants will continue to enjoy the convenience of eliminating up-front and out-of-pocket costs with your benefits card or by manually filing claims.

See attached

Principal 

Are You Shopping for a New Home? Take into Account the Insurance Implications of Buying a Specific House

May, 2010
Insurance Information Institute

With home prices continuing to be competitive and interest rates low, many people are dipping their toes into the real estate market. Regardless of whether you are a first time home buyer, considering the purchase of a second home or an empty nester looking for a cozy smaller property, it is important to factor in the potential insurance costs of the home you are considering when calculating the overall price of owning the house, according to the Insurance Information Institute (I.I.I.).

"When people look at homes, they tend to focus on factors such as property taxes, neighborhoods, school districts and available recreational and cultural opportunities," said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. "But an often overlooked item is the insurance implications of a specific house."

"You will be paying for insurance for as long as you own it, so you should factor the cost of insurance into the home buying process. You don't want to find out that your dream home is more expensive to insure than you thought after you own it," pointed out Salvatore. When looking at prospective new homes, the I.I.I. suggests asking the following questions:

• How far is the home from the fire department? Houses that are near a fire station with professional firefighters usually cost less to insure.
• What is the condition of the plumbing and electrical systems? Poorly maintained, unsafe and/or outdated systems can cost more to insure.
• Is the home vulnerable to wind damage? Find out if private insurance is available, or a state-run insurance program. Is there a windstorm deductible, and how high is it? A home on or near the beach may be more costly to insure than one inland.
• Is the house at risk from flooding? Flood insurance is not covered under a standard homeowners insurance policy. However, it is available from the National Flood Insurance Program, which is serviced by private carriers, and from a few specialty insurers.
• What about earthquake risk? Earthquake insurance requires an endorsement or a separate policy.
• Is the house well built and well maintained? Homes built by reputable builders using disaster resistant materials and designed to meet current building codes are likely to better withstand natural disasters.

A knowledgeable home inspector and your insurance agent can be helpful in answering these questions. "Keep in mind, that the size, location, construction and overall condition of the house can affect the cost, choice and availability of home insurance," noted Salvatore.

To educate consumers about the insurance implication of buying a home, the I.I.I. has created a Home Buyers Insurance Checklist. It provides information on what do before buying a house, factors to consider when looking at homes and placing a bid, as well as tips to properly insure your new home.

The I.I.I. has additional information on home insurance and information on home safety can be found at the Institute for Business& Home Safety.

House aims to extend flood insurance program

(Reuters) - Representative Barney Frank introduced legislation on Friday to extend the National Flood Insurance Program through September, which would give Congress more time to fix the troubled program.

The insurance program, important to more than 5 million homes and businesses in flood plains, has been in debt since major hurricanes in 2004 and 2005. Reform efforts stalled in Congress last year.

"This program is too critical to our housing recovery to be allowed to lapse," Democratic Representative Maxine Waters, who chairs a subcommittee working on the issue, said in a statement.

Twice this year, the program -- which provides flood coverage through more than 90 companies that sell policies and collect premiums for a fee -- has lapsed, affecting people trying to buy homes in flood-prone areas, Waters said.

Insurers like Allstate, Travelers, Hartford Financial Services and Fidelity National Financial are closely watching the debate.

The House Financial Services Committee, which is led by Frank, is working on reauthorizing the program for five years and wants to make a series of changes to help it work better.

Frank's bill would extend the program's ability to write and renew flood insurance policies from its May 31 deadline through September 30.

(Reporting by Roberta Rampton)

Reuters

Lessons Learned To Help Coastal Residents Prepare For 2010 Hurricane Season

April, 2010
Insurance Information Institute

"Those who take the time to prepare for a hurricane stand the best chance of surviving the storm and getting back to their normal lives in a timely manner," stated Ms. Salvatore, who is the I.I.I.'s national consumer spokesperson. Salvatore offered actionable steps coastal residents should take to prepare for a disaster in a presentation today to the 2010 National Hurricane Conference at the Orlando Hilton, Orlando, Florida.

To prepare for the possibility of a hurricane and other natural disasters, the I.I.I. recommends the following five steps:

1. Review your insurance coverage.
   Speak to your agent or company representative to make sure you have the right kind and amount of insurance coverage. You need enough insurance to rebuild your home and to replace all of your personal belongings. If you have made a major alteration or improvement to your home, or significant purchases to furnish it, notify your insurance agent so that the increased value is reflected in your policy.
   
   Speak to your agent or company representative about your homeowners insurance policy deductibles. Most coastal residents have percentage deductibles for storm damage rather than the traditional dollar deductibles that are used for other types of losses such as fire or burglary.
   
   Ask about flood insurance. Flood damage is not covered under most standard home insurance policies. Flood coverage is available, however, from the National Flood Insurance Program (NFIP) and some private insurance companies. It can generally be purchased from the same agent or broker who provides your homeowners or renters insurance, although new NFIP policy purchases have to wait at least until mid-April because Congress allowed the NFIP program to expire on Sunday, March 28. Congress is expected to revisit this issue when it reconvenes on Monday, April 12. Additional information on flood insurance can be found at FloodSmart.gov or by calling 888-379-9531. Should you need coverage over and above the $250,000 for property and $100,000 for contents provided by the NFIP, excess flood insurance is also available from private insurance companies.  
2. Create a home inventory
   A home inventory will help ensure that you have purchased enough insurance to replace your personal belongings. It can also speed the claims process and substantiate losses for income tax purposes. A detailed home inventory is also helpful should you need to apply for disaster aid.
   
   To make creating a home inventory easier, the I.I.I. provides free Web-based software located at KnowYourStuff.org. The Know Your Stuff software allows you to organize and list your possessions easily, as well as add digital photographs of your valuables and save scanned receipts. The program provides free, secure storage of your inventory on Amazon Web Services. Storing your inventory online gives you the ability to access it from any computer in the event your own computer is destroyed.
3. Protect your property
   Keeping wind and water out of your home is critical to its survival. According to the Institute for Business & Home Safety, a house is most vulnerable to high winds when the building's "envelope" is not sealed by forms of protection such as storm shutters or reinforced garage doors. In addition, homeowners should secure loose roof shingles and seal openings, cracks and holes while also strengthening soffits such as beams, arches and staircases. Keep in mind that unsecured building materials or trash from partially completed homes could, if wind gusts are strong enough, become airborne and pose a serious physical threat to individuals and nearby buildings.
4. Plan your evacuation and what you will need to take
   Identify where you will go and how you will get there. Try to have more than one option: the home of a friend or family member in another town, a hotel or a shelter. Keep a map and the phone numbers and addresses of these locations handy. If you have a pet, identify locations where animals are welcome. When an emergency or disaster strikes you may be forced from your home for several days or even weeks. That's why the First 72 is Up to You! Seventy-two hours is the most critical period after a disaster or emergency has occurred and the time it may take before rescuers can get to you.
   
   In the event of an evacuation, have the following items ready to take with you:
   • Medicines, prescriptions and first aid kit.
   • Bottled water
   • Clothing and bedding (sleeping bags, pillows)
   • Flashlight, battery-powered radio and extra batteries
   • Special items for infants or elderly or disabled family members
   • Computer hard drive or laptop
   • Photographs
   • Pet food and other items for pets (litter boxes, leashes)
   • Important documents such as insurance policies, passports, drivers licenses, wills and deeds, birth, adoption and marriage certificates, recent tax returns, stocks, bonds and other negotiable certificates
   • Your home inventory.
5. Take the Ten Minute Challenge
   Find out if you are ready to evacuate by doing a real-time test. Give yourself just 10 minutes to get your family and belongings into the car and on the road to safety. By planning ahead and practicing, you should be able to gather your family members and pets, along with the most important items they will need, calmly and efficiently, and with a minimum level of stress and confusion.

Insurance Information Institute

Leading by example - How to get the most out of your employees

By Brian Horn

Smart Business Houston, May 2010

When Bob Dean started Dean & Draper Insurance Agency LP some 30 years ago, he started from scratch. Those days are long done, and as the company has grown, he's had the challenge of keeping the small business environment with the demands of a larger company.

"That's been a very difficult task," says the founder, president and CEO of the insurance agency, which posted about $13 million in 2008 revenue. "But you've got to continuously work at it to do it."

Dean and his team established principles that the entire company will try to accomplish as a way of keeping everyone on the same page and avoid departments breaking into silos.

"If you isolate yourself into too many little silos of operation where no one is communicating with each other, then they all have separate goals and it just doesn't work," he says. "So we try to keep the communication flowing."

Smart Business spoke with Dean about how to delegate and how to set goals.

Encourage delegation. I do it by empowering my managers and delegating to them, and in our management meetings, we have one every Wednesday, I've told them several times about delegation as far as getting the most out of your folks. I tell a story about when I was in high school. I was a high school quarterback and I said, ‘If I handed the ball to somebody on a play and I didn't turn loose the ball and I had to tell them what to do, like turn here, turn there, run or whatever, then how are they ever going to be able to use their natural talent?' You've got to turn loose the ball and let the people's natural talent happen. So I try to encourage it through my managers and then hopefully that filters down to where the people ... feel empowered to perform their job because they are all professionals.

Monitor what you delegate. It's a judgment issue on the delegation issue as far as trying to evaluate what the skill set is of the person you are delegating to. While you delegate, you always follow up, too. I was a safety engineer for 10 years. One of the things that I did in establishing safety programs a lot was when I was talking to company owners, I would tell them, ‘If you can't measure it, you can't manage it.' So you need to be able to, when you delegate, No. 1, know if they have the ability or skill set to do it so you aren't setting them up for failure. But then you have to be able to measure it so you can quantify it some way to find out if the job got done and what kind of quality or quantity, depending on what you are looking for.

What I usually do is I will give them a time frame. I don't believe in micromanagement at all. I'm more of a macro type of manager, and I will give them the project and the task and then I will tell them when I expect it. We will negotiate a time. If they say I can't do it, then we ask them why they can't do it. If they feel like they can do it during that time, then we both have an understanding about the time frame in which we have to get it done. Of course, I may follow up somewhere along halfway through it and say, ‘How's it going?' ‘Well, we're doing OK.' And if they are comfortable with that, then I'll usually let them run with it. If they have questions, they will come to me to ask me specifics about, ‘Is this what you really wanted?' Delegation is to try to let them feel like they are having an effect and that they are feeling good about what they do, as well. There's absolutely no way I can do it all.

Help employees. If we have issues, I will get involved in helping solve some of the details with the employees as well as handling the big decisions. You have to be involved. You cannot sit aloof in your position because they have to respect you. They have to have a respect for you and your skill set and that you're not afraid to get your hands dirty, as some of them may refer to it - to get down and work with solving some of the issues. We try to have a mentor for the managers, as well, if we have a new one. We've got various leadership training courses that some of the companies offer ... and we've sent some folks to that at various times when it was appropriate to help get them on board for things they are going to face.

Set goals. I tell folks here that we first of all have to operate between the white lines. We have to establish systems and procedures so everyone knows what is expected. We also provide employee evaluations on a minimum of an annual basis and sometimes semiannual and we try to provide goals for them and establish career tracks to help them see what their future can be. Again, we're kind of real big on training, and we negotiate with them the best we can to establish some kind of a time frame for them to establish their goals. I've always been real big on education and professional certifications, and I think the more that an employee learns and the more confident they become in what they are doing converts to self-esteem. To me, the self-esteem and how someone feels about themselves is directly beneficial not only to them but to the company.

How to reach: Dean & Draper Insurance Agency LP, (713) 527-0444 or http://www.deandraper.com/

Smart Business Houston

Stop Gap Coverage

An employer's responsibility for injuries to his or her employees is usually handled through workers compensation coverage; this coverage is designed to provide injured employees with a schedule of benefits in exchange for their giving up the right to sue the employer. However, there are instances when an employer can be sued for injuries to employees, regardless of the existence of workers compensation.

In such instances, the employer should have employers liability insurance; this coverage is normally part of the standard workers comp policy. A problem arises, though, when the standard workers comp policy can not be written, as for example when the workers comp program is run by the state through a monopolistic state fund. When the state runs the workers comp program, employers liability coverage is not offered by the state, and in that situation, a gap in coverage for the employer exists. Coverage known as "stop gap" is there to plug that gap. This article offers a description of stop gap coverage.

Note first of all that stop gap coverage is not a substitute for workers compensation (WC) coverage. Stop gap coverage is designed to provide liability insurance for an employer who can be sued by an employee injured in the course of employment. Now, the standard workers compensation policy does provide employers liability insurance which applies to sums that the employer legally must pay as damages because of bodily injury to employees; insurance protection, in effect, for employers who are sued by their employees. However, such insurance is not offered under the workers comp program written in monopolistic workers compensation states, such as Ohio. To fill this "gap" in employer protection, stop gap coverage should be purchased.

In the monopolistic workers comp state funds jurisdictions, employers can purchase stop gap coverage from private insurers to give themselves employers liability coverage (or self insure the exposure). If the employer does buy stop gap coverage, the coverage can be the same as exists under the terms of the employers liability section of the workers comp policy; however, the terms of stop gap coverage do not automatically mirror those found in the employers liability insurance part of the workers comp policy. Stop gap coverage is not a standardized policy-such as, an ISO personal auto policy or a commercial general liability form-and the insured needs to read the specifics to make sure he or she is getting the coverage needed and requested.

Since insurers can write their own version of stop gap coverage, the premium charge relies heavily on the individual insurer's underwriting rules and procedures. However, the National Council on Compensation Insurance (NCCI) does offer guidelines for rating a stop gap exposure. Basic limits of liability are $100,000 each accident for bodily injury by accident; $100,000 each employee for bodily injury by disease; and $500,000 policy limit for bodily injury by disease. Higher limits of liability are permitted. The premium is based on the WC classifications and rates in the NCCI workers comp manual. The initial premium is estimated, with the final premium subject to an audit of the employer's actual exposures.

Here is an example of stop gap coverage language: it is agreed that such insurance as is afforded by the policy under bodily injury liability applies also to the liability of the insured for damages because of bodily injury by accident or disease, including death at any time resulting therefrom, sustained by any employee of the insured arising out of and in the course of his employment by the insured.

Note that this wording does sound like that found in the employers liability insurance part of the workers compensation policy. But, regardless of how the stop gap coverage is worded, the bottom line is: stop gap coverage applies to employers liability for damages because of bodily injury to employees, bodily injury not covered by workers comp statutes. But stop gap coverage does not necessarily end there.

Defense costs can also be provided by stop gap insurance. If an employee can sue an employer over work-related injuries, that lawsuit brings with it attorneys' fees and court costs, even if the lawsuit is found to be frivolous or is dismissed-and stop gap can help defray those costs.

Lawsuits brought by spouses or other family members of the injured employees for loss of consortium or loss of services could be another item handled by stop gap coverage. And, dual capacity and third-party-over claims can likewise be subject matters for stop gap.

One more thing to consider here-intentional torts. Employers liability insurance ideally does not cover bodily injury intentionally caused by the employer; neither should stop gap coverage. However, consider the case of Harasyn v. Normandy Metals, Inc., 551 N.E.2d 962 (1990). In that case, the Ohio Supreme Court held that "where an employer's policy of coverage purports to cover an injury to his employee arising out of and in the course of employment, intentional tort which is inferred from a substantial certainty of injury and not as a deliberate intent to harm an employee, is covered by the policy".

The Ohio Supreme Court is saying that there is a difference between an intentional tort based on a "direct intent to injure" and one based on an "act performed with knowledge that an injury was substantially certain to occur". The prior intentional tort is not to be insured; the latter one can be, if the insurance policy language infers it, either directly or implied. So, it is possible for stop gap coverage to be interpreted as providing coverage for the intentional torts of employers; and it is up to the insurer, as the author of a stop gap endorsement, to phrase the insuring agreement and the exclusions in such a way as to preclude any coverage for intentionally caused bodily injury.

Note that the ruling in the Harasyn case was questioned in a later case due to the fact that the Ohio legislature repealed a state law that was enacted in conjunction with the Harasyn ruling. However, in Presrite Corporation v. Commercial Union Insurance Company, 680 N.E.2d 216 (1996), an Ohio appeals court said that the repeal of the state statute did not affect the policy reasons stated in the Harasyn for allowing intentional tort insurance. Ohio public policy does not prohibit insurance for substantial certainty intentional torts.

Stop gap coverage can be added as an endorsement to either a general liability policy or a workers compensation policy, depending on the situation of the insured and the underwriting guidelines of the insurer.

An example of an endorsement to a general liability policy was reviewed previously. Here is another example: in consideration of the premium herein provided, it is agreed that if under any circumstances it is determined that any employee of the insured who is reported and declared as injured in the course of his employment, but is not entitled to receive, or elects not to accept, the benefits provided by the workers compensation laws of the state where he or she is employed at the time of the injury, then this policy shall cover the legal liability of the insured for such bodily injury, disease, or death.

The wording of the two examples is a bit different, but the results are the same-the employer has insurance to apply to his legal liability that may arise due to an employee being injured in the course of employment.

As for an endorsement to a workers comp policy, NCCI offers a couple of examples for providing stop gap coverage in monopolistic workers comp states.

WC 00 03 B-employers liability coverage endorsement-applies to work in the states shown in the endorsement's schedule. WC 00 03 B applies the employers liability insurance provisions of a workers compensation policy to work in states shown in the schedule. This endorsement can be used in monopolistic state fund states, except Ohio.

For Ohio, NCCI offers WC 34 03 B. This endorsement applies only to work in Ohio. WC 34 03 B states that the workers compensation part of a workers comp policy does not apply to work in Ohio, but that the employers liability insurance part does.

Of course, the examples shown here do not exhaust the methods by which stop gap coverage can be provided. As noted previously, insurers can write their own versions of the coverage.

FC&S