Financial & Professional Services

Commercial liability packages (sometimes referred to as CPP's or BOP's) provide balance sheet protection in the form of financial reimbursement and liability protection in the form of coverage for defense costs and damages resulting from:

• Claims asserting bodily injury and/or property damage
• Product liability claims (unless excluded)
• Advertising Injury such as libel, slander and infringement related claims 
• Theft and property damage losses for inventory, business property, machinery, etc
• Loss of business income
• Equipment breakdown
• Key Broadening endorsements (Transit coverage, basic cyber, employee dishonesty, ERISA, basic EPLI, and more)

Due to the fact that endorsements can either broaden and extend coverage or limit/exclude coverage, policies should be carefully reviewed. Seemingly small endorsements such as “selling price” endorsements and business income coverage for dependent properties (such as suppliers, retailers and leaders) can provide substantial coverage enhancements. Due to the advertising risks faced by this sector, it is also often wise to seek coverage through a carrier that has a strong reputation for advertising coverage.

Lawyers professional (malpractice) insurance varies greatly from carrier to carrier. Policies should be carefully audited to ensure that there is coverage for (among other terms and conditions):

• Former lawyers, future lawyers, “non attorney employees” and independent contractors
• Investigations, regulatory & administrative proceedings (such as SEC or bar association), fines, penalties and punitive damages
• Coverage written on a “duty to defend” basis (which is broader than “duty to indemnify”)
• All “professional services” provided by the firm. As some policies specifically schedule services covered. This is an important consideration for law firms that provide additional services such as: pro-bono services, notary and title agent services, consulting, acting in a fiduciary capacity, mediation/arbitration and other moonlighting services.
• Ensure the policy does not contain any carve outs for higher-risk legal services such as that related to securities or real estate law
• For lawyers with directorship seats on boards, ensure the company’s D&O policy provides coverage for “employed lawyers”

Trends increasing E&O claim frequency/severity include:

•  An increase in “conflict of interest” claims related to hourly billing practices
• Administrative and procedural errors continue to be a leading cause of claims
• Malpractice related claims arising from data breaches and unauthorized access
• Defense costs related to malpractice claims are increasing

Workers Compensation insurance is a mandatory coverage for companies with employees (including volunteers, uninsured independent contractors, leased or part time labor). It provides coverage for employees’ wages and medical payments resulting from injuries sustained while “on the job”. Coverages to consider include “broad form all states” coverage and foreign workers compensation coverage (especially important for employees traveling abroad for business). Additional employee related coverages that should be considered include: 

• EPLI/Employment liability (protection for the hiring/firing of employees and discrimination/harassment related claims)
• Employee benefits
• ERISA/Fiduciary coverage (for the administration of employee benefits)
• Long term disability
• Kidnap & Ransom (for employees traveling abroad for business)

While there is some overlap in terms of directors and officers (D&O) insurance and professional liability insurance (E&O), the two are not synonymous. Where E&O provides protection against claims made during the rendering (or failure to render) legal services, D&O insurance provides coverage for damages resulting from business decisions. Claims typically covered by D&O insurance include claims related to:

• Creditor, Investor & Bankruptcy Claims 
• Assertions of fraud
• False advertising & anti-trust related claims
• Mis-representation and mis-management
• Breaches of fiduciary duties

D&O insurance policies can be structured a number of ways, but typically include options to include employment liability (EPLI), crime coverage, and Fiduciary insurance. With most law purchasing coverage for employment practice liability, it is important to understand that there is no standardization when it comes to coverage. D&O Policies differ significantly from carrier to carrier and coverage can range from basic coverage to very broad. Critical coverage differences can include:

• FLSA/Wage and hour defense coverage
• Coverage for claims asserted by partners and claims of failure to promote partners
• “Intentional acts” exclusions
• Coverage for volunteers and independent contractors
• Coverage for punitive damages
• Coverage for breach of employment contracts
• 3rd party coverage (brought by clients, associates and other 3rd parties)
• Coverage for sexual harassment
• “Hard” Consent To Settle (or Hammer Clauses) which can create an un-intended “soft target” and increase the potential for future employment related claims.

Due to the large amount of personal information, and and potential health records, law firms are a target for hackers. And with hackers becoming more sophisticated, utilizing sensitive/insider information for personal profit, law firms with corporate confidential information and IP are also being targeted. With many cyber insurers limiting breaches to those that exposure personal information only, corporate law firms should perform careful policy reviews to ensure that their policies will respond to breaches exposing corporate confidential information and/or IP. Cyber insurance also provides coverage for crisis management which serves as a layer of protection against the reputational risks associated with publicized breaches. Due to the lack of coverage standardization, careful consideration should be given to the policy’s terms and conditions, particularly:

• Does the policy provide coverage for paper records as well as digital records?
• Is coverage provided for data in the custody of a 3rd party such as a cloud provider
• Is coverage for viruses (self propagating code) excluded?
• Does the policy contain a requirement that all data be encrypted?
• Is coverage included for first party damages such as loss of business income, and notification/credit monitoring expenses (among others)
• Are offsite losses covered (away from the insured premises)?

Crime & fidelity insurance provides protection for the entity against financial losses resulting from crime, theft and dishonest acts committed by employees, executives, independent contractors and other parties. Claims can include theft of money or securities, forgery, alteration, computer fraud, fraudulent invoicing, credit card and funds transfer fraud and more. More modern schemes include social engineering attacks (such as business email compromise, also known as CEO fraud). Third party crime coverage provides protection for claims of theft asserted by clients or customers while your employees are working on their premises or have access to computer networks.