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Monthly Archives

January 2010

EVALUATING GROUP VERSUS INDIVIDUAL DISABILITY INSURANCE

By Life and Health

It’s important to have Disability coverage whether you get it from your employer, or purchase it privately. Disability insurance is your paycheck if you’re sick or disabled and can’t work for an extended period of time. That being said, the question then becomes where do you get the better deal; from your job, or on your own

The most significant difference between group and individual plans is eligibility. Because you’re an employee, you qualify for coverage at work usually on a guaranteed issue basis. However, it isn’t that easy when you apply for an individual policy. A private insurer will require you to meet stringent medical and financial criteria.

Coverage provided through a group plan offers no flexibility. If you become disabled, you are either paid a percentage of your salary, or a fixed amount each week or month. Benefits continue until you recover, or until you reach Social Security retirement age. Typically there are no cost-of-living adjustments to increase your benefits in step with inflation.

An individual policy lets you choose the monthly benefit amount (up to carrier issue limits), waiting period and maximum period of payments. You can also customize a policy to cover a specific occupation, and add cost-of-living increases.

There are some other policy features you should take into consideration when you are looking for the better deal:

  • What is the insurer’s definition of disability? Does the policy define disability as “own-occupation,” which means you are disabled if you cannot perform your current job, but might be able to work in another? If it does, will it eventually change to “any occupation,” or does remain “own occupation” to age 65?
  • Is it portable when you change jobs? You lose coverage provided by an employer when you change jobs, but private insurance is yours to keep no matter where you work.
  • Are the benefits taxable? Premiums paid with pre-tax dollars by your employer result in a benefit that is taxable as ordinary income when you file a claim. When you pay your own premiums with after-tax dollars, any benefits received are tax-free.
  • Does the policy include residual and recovery benefits? Can you receive benefits if you are partially disabled and are earning less because of it, or do you have to be fully disabled and then return to work to receive residual/recovery benefits?

A group plan limits coverage and definitions of disability, but it’s subsidized by the employer, so it will probably be less expensive. However, if your situation warrants quality and quantity of coverage, then buying your own Disability insurance is the better option.

CONSIDER A SECOND OPINION A VITAL PART OF YOUR TREATMENT PLAN

By Life and Health

We live in a time when our knowledge, recognition, and treatment of the diseases and disorders that abound are advanced and life expectancies are long. Unfortunately, there are still some diseases, injuries, and disorders that are so difficult to diagnose properly that a second opinion is not only suggested, but is often vital to ensuring the right treatment is given and the wrong treatment, together with its associated expenses, is avoided.

Disease Misdiagnoses

ALS (amyotrophic lateral sclerosis or Lou Gehrig’s disease) is one example of a difficult to diagnose disease. According to the ALS Association, 15% of those diagnosed with ALS do not actually have the disease. This means they are paying for treatment of ALS when that is not the underlying cause of their symptoms. With a second opinion, possibly from a neurological specialist who treats ALS patients, these wrongly diagnosed individuals could be re-diagnosed with the proper illness — one that might even have a cure and then be given the proper treatment. Whenever you are given a diagnosis as serious as ALS, Muscular Dystrophy, cancer and the like, a second opinion should be a definite part of your treatment plan.

Of course, organic neurological disorders aren’t the only diseases that get misdiagnosed and require a second opinion. Lyme disease, mentioned in the 2004 Reader’s Digest article, “10 Diseases Doctors Miss,” is often misdiagnosed because of its generic, flu-like symptoms. When diagnosed and treated properly, Lyme disease can be cured easily with no long-term damage. A misdiagnosis that results in Lyme disease going untreated can result instead in permanent joint damage. Although every bout of the flu should not result in a second opinion, in the case of long, lingering illnesses that don’t seem to respond to treatment, a second opinion is a good idea.

Unnecessary Surgery

When it comes to unnecessary surgery, second opinions can save you money as well as recovery time. One example of this is knee surgery. The knee is a very complex joint and it takes years of experience for a surgeon to be completely comfortable doing anything less than a total knee replacement. This sometimes leads to surgeons suggesting a total knee replacement when the damage actually done to the knee requires only a partial replacement. Partial knee replacement is less invasive and expensive than a full knee replacement, and the recovery time is much shorter.

Sometimes, surgical procedures are diagnosed that have nothing to do with the actual health issue suffered by the patient. In 2008, the University of West Georgia published an essay on their Aneurysm and Arteriovenous Malformation Support page by a man who had suffered an asthma attack and went to the hospital. Instead of routinely treating the asthma, the physicians thought he was suffering from an aortic dissection, which is a tear in the wall of the aorta, and they performed emergency surgery only to find that there was no tear. Had he gone for a second opinion, the unnecessary heart surgery and opening of his chest cavity could have been avoided.

Conclusion

Although no one wants to prolong treatment of their diagnosis for fear of permanent damage to their health, a second opinion can be beneficial in this time of advanced medical treatment options. Taking the few days or weeks necessary to get a second opinion could result in a more accurate diagnosis and more effective treatment plan. At the very least, it can give you options to help you control your health care options.

HOMEOWNERS – IS YOUR HOME PROPERLY INSURED?

By Personal Perspective

About two out of three U.S. homes are underinsured, according to a 2008 survey by Marshall & Swift/Boeckh LLC (MSB), a leading provider of building replacement cost data. Based on this new data, the average Homeowners policy only insures the home to about 82% of the projected replacement cost of the home. Over the past decade, this point has been driven home as the U.S. has endured hurricanes, wildfires, and tornadoes. Throughout the course of natural disasters, thousands of homeowners were left without enough coverage.

Although the study did not show results regionally, nationwide the average policy falls 18% short of the projected cost to rebuild the house. Put in other terms, the owner of a house insured for $200,000 would be short by $36,000 of the funds needed to rebuild, if the averages held true.

Why do thousands of Americans find themselves in this predicament? The most common reason for all of this is quite innocuous: Homeowners often forget to update their policies. For instance, suppose a homeowner decides to put an addition onto their home, which would drive up the value of the property beyond the stated policy limits. If the home improvement is never reported to the insurance company, no additional coverage is added to the policy. Additionally, rising construction costs and ever-changing building codes are raising the price tag to rebuild.

To avoid this problem, homeowners should re-assess policies as they renew each year. If a homeowner suspects a change in the value of their home, this suspicion should be communicated to their insurance agent. Although not every homeowner wants to insure to the full replacement cost of the home, this possibility should at least be examined and considered.

Is Your Home Properly Insured?

Here are some tips to help you evaluate your Homeowners insurance:

  • Understand what your policy does and does not cover. Remember that just because your bank requires your policy to cover the mortgage at a minimum, this does not mean your insurance should be based on this amount. You need to insure your home, not the mortgage on your home.
  • If available, consider adding an inflation guard to your policy. Although this will cost extra money, it will help offset the rising cost of rebuilding, should disaster strike.
  • If building codes change, which they inevitably do over time, you will most likely be required to rebuild according to the new laws. The older the home, the more expensive it will be to bring it up to code. In most cases, policies will not pay for these extra costs. An “Ordinance or Law Endorsement” can help pay these hidden costs.
  • Talk to builders in your area to get an approximation of replacement costs. The going rate per square foot for new construction should be considered in estimating replacement costs. Current appraisals are also an excellent source to utilize.

SHOP AROUND FOR THE BEST CAR INSURANCE RATES

By Personal Perspective

You just bought a new car, and now you’re searching for affordable Auto insurance. Once you supply an insurance company with some information, including the make and model of your car, your age, your address, etc., they give you a quote for your monthly premium. But how exactly do they calculate that number? Read on to learn how insurance companies determine your rate and how you can save money by shopping around.

Different companies, different rates. Many drivers mistakenly believe that insurance rates are set by the state. Although Auto insurance companies must follow certain laws when calculating rates, the rates themselves are not set by law. When you ask for a quote, the insurance company considers many different factors as they figure out your rate. However, because each insurance company uses their own unique calculation method, you could receive widely varying rates from different insurance providers.

Crunching the numbers. Depending on the laws in your state, insurance companies typically determine your rate based on some or all of the following factors:

  • The year, make, model, body type, engine size, and safety features of your car
  • Your age and gender
  • Your marital status
  • Your personal credit history
  • Your driving record
  • Your usage of the car (such as if you are using the car for work, pleasure, or as a collectible)
  • Home ownership status and occupation
  • How many drivers will be using the car and their ages
  • How many vehicles you own
  • What kind of coverage limits you want
  • Where you live
  • Your weekly, monthly or annual mileage

Generally, your insurance agent will enter all of this information into a computerized system. The system automatically places you into a price group based on your personal information. The insurance company then subtracts any discounts for which you qualify from your group’s rate and you’re left with the resulting quote.

Where your money goes. If you think the quote is fair and decide to purchase a policy with the Auto insurance company, you’ll start paying a monthly insurance premium. But what exactly does your monthly premium cover? Here’s a typical insurance premium breakdown:

  • About 70% of your premium pays for losses and loss expenses
  • About 26% of your premium goes toward marketing, commissions, and administrative costs
  • About 4% of your premium contributes to the insurance company’s profits

You better shop around. Every insurance company has differing sets of claim payments and expenses, and they set rates for each “price group” accordingly. That’s why you’ll likely receive varying quotes from each insurance company. This is why it’s so important to take the time to shop around and find the best rate. Plus, although insurance companies are prohibited by law from calculating rates based on race and religion, they are allowed to consider your age, gender, and marital status. However, each company places emphasis on different factors. For example, while one insurance company might place more weight on a driver’s gender, another company might think their driving record is more important.

This is yet another reason to request plenty of quotes before you settle on an insurance company. In addition to the rate, you should also consider which company offers the type of coverage you desire. Do your homework and find the best fit for your unique Auto insurance needs. Call our office today!

TAKE STEPS TO FIND AN AUTO MECHANIC YOU CAN TRUST

By Personal Perspective

Even if you’ve been lucky enough to avoid car mechanic nightmares yourself, you’ve probably heard plenty of horror stories from your friends and co-workers — whether it’s the mechanic who charged your sister for a new carburetor when she just needed an oil change, or the jerk who convinced your boss to purchase a brand new set of tires when a good patch job would have done the trick. Despite these horror stories, there are plenty of good car mechanics out there. It just takes some research to find them.

Don’t wait until your next breakdown to hunt down a good auto shop. Find a top-notch mechanic now so you’ll know who to call the next time you need help. Here are a few tips to help you pinpoint a truly trustworthy car mechanic.

Ask for recommendations. Ask your family members, friends, and co-workers if they can recommend a great mechanic. After all, if your brother or best friend was happy with an auto repair shop, odds are you’ll be satisfied with them, too. Of course, you might be better off asking for recommendations from people who have some auto expertise. Although Aunt Betty might heartily recommend ABC Auto Shop, she might not realize they’ve been ripping her off all along because she simply doesn’t know much about cars.

Decide on a dealer vs. independent shop. You might be more comfortable working with a mechanic at your car dealership. That’s fine, but you should keep in mind that dealerships generally charge more for repair services. Remember that any well-trained mechanic can perform first-rate repairs, whether they work for a dealer or a small mom and pop shop. Many independent repair shops can offer a warranty on parts and repairs and use factory parts recommended by your carmaker. This can save you loads of money in the end. On the other hand, if you require repairs associated with a recall or have an extremely unusual problem that is specific to your type of vehicle, you might be better off going to your car dealership.

Look up online ratings and reviews. Search for repair shop ratings and reviews on sites like Women-Drivers.com or mechanicratingz.com to find out how other customers rank local car mechanics. However, keep in mind that just because a shop receives two good reviews doesn’t mean they always do a great job. By the same token, if a mechanic earns two bad reviews, that doesn’t necessarily mean they’re terrible. Although online reviews can be helpful, you should take them with a grain of salt. Visit the shop before you make your final decision.

Do a trial run. If you want to try out a new mechanic, take your car in for regular service, such as an oil change or tune-up. This will give you an idea of how quickly and effectively the shop works, the level of customer service they offer, and how much they charge. When you visit the shop, take notice of how the business runs. See if the shop seems neat and organized and if the staff seems friendly and knowledgeable. Ask if they have certified technicians on-staff and the most cutting-edge equipment. You should also ask whether or not they have credentials, such as Automotive Service Excellence (ASE) certification, or AAA approval. Find out if they concentrate in body or mechanical work and if they specialize in certain vehicle makes and models. Also ask if they offer a warranty and customer satisfaction policy. Also, take note if they have clearly posted labor rates. If so, compare these rates to other shops in the area.

If the staff seems annoyed by your questions or if they don’t offer clear answers, you might want to steer clear. After all, if they have nothing to hide, they’ll be more than willing to answer your questions — especially if they want to earn your business.

INDEPENDENT CONTRACTORS SHOULD EVALUATE BUSINESS CONTRACTS CLOSELY

By Business Protection Bulletin

In the U.S. today, one result of corporate downsizing, is that there are many independent contractors in the marketplace. After picking themselves up off the ground and dusting off their overcoats, many former members of “Corporate America” have struck out on their own. With that shift comes freedom, but also new anxieties, and, perhaps, new found insurance issues. One such issue is that of the business contract.

Detailed business contracts with explicit and often confusing legalese have become a common document for independent contractors to evaluate. The contractor must often either acquiesce to unfavorable terms dictated by corporate legal departments, or forego the contract. Below are some suggestions on how to resolve the contractual dilemma of whether or not to sign on the dotted line.

  1. Speak with your attorney. Although it might not be practical to have a lawyer review every contract offered to you prior to signing, it is usually better than the alternative. It is probably better to limit the legal review to advice rather than negotiations, though there are some contract negotiations for which it would be appropriate to have a lawyer or a representative agent present. However, for a typical small contract where you are being asked to sign boilerplate language, it might send the wrong signal to your client.
  2. Consult with our insurance agents. Contracts generally contain clauses that might impact your insurance coverage. They might require either indemnification, certificates of insurance, and/or additional insured status for the client (on your Professional Liability, General Liability, and/or Workers Compensation policies to name a few). Each of these provisions could impact your insurance as follows
    • Indemnifications – a typical indemnification provision looks something like this: “Consultant (or contractor or subcontractor)” shall indemnify, defend, and hold harmless Client against any and all claims, liabilities, losses and expenses arising out of or in connection with Consultant’s performance of the Services hereunder … ” This is considered a unilateral indemnification. It is the least favorable to the contractor and you would do well to request a mutual indemnification provision where both parties agree to indemnify the other for liability arising out of their respective negligence. The worst that can happen is your suggestion being rejected.
    • Certificates of Insurance – it is quite common for certificates of insurance to be requested by your client. This documentation of your insured status serves as a confirmation to the existence of your coverage. With the request often comes a provision for notice to the client if coverage lapses. Check with your insurer to see if he will agree to this provision. Many insurers don’t have a mechanism for notifying certificate holders of the imminent lapse of a policy and will not agree to, though some will compromise with less onerous “endeavor to” wording, such as, “we will endeavor to notify you within 30 days of the termination of the policy … ”
    • Additional Insured – additional insured status for your client can provide an acknowledgement of the liability that you have taken on in the contract and effectively transfers the liability to the insurer, subject to all the terms and conditions of the policy. Check with our agents to see if there is any cost for adding on additional insureds. If there is any charge at all, it is usually nominal.
  3. Review your Liability insurance contracts for exclusions. Many liability contracts exclude contractual liability, with the exception of liability that would attach to you in the absence of the contract. An example of a contractual liability that might be excluded would be a penalty for failing to meet a deadline. On the other hand, indemnifications are often considered a liability you would incur regardless of the contractual provision. For instance, if a suit is brought against you and your client, and it is clear that it was your work that was being questioned, your insurer might offer to defend your client to avoid the potential for a hostile witness.
  4. Create your own engagement letter. It is always a good idea to spell out your thoughts regarding payment terms, work expectations, limitations of liability, and other aspects of the work you will perform. In lieu of or in addition to a client’s contract, this letter could help to prevent future misunderstandings.

UNDERSTAND THE RIGHTS AND RESPONSIBILITIES OF TEEN EMPLOYEES IN THE WORKPLACE

By Business Protection Bulletin

Every year, millions of teenagers join the workplace for the first time. A first job can be a positive experience for many, teaching them discipline and responsibility in addition to giving them some extra money. However, some teens find themselves working in hostile environments. Their supervisors might treat them unfairly because of their sex or race, harass them, hassle them about reasonable work accommodations, and retaliate against them if they complain to upper management about these conditions. Employers who tolerate mistreatment of employees, including teens, could find themselves in trouble with the law.

The federal Equal Employment Opportunity Commission described several examples of harassment of teens on its YouthAtWork.com Web site:

  • In Pennsylvania, a 19 year-old shift supervisor at a Mexican restaurant sexually assaulted a 16 year-old female employee. His manager accused the girl of making it up, but after the supervisor confessed to the police, the EEOC sued the restaurant, which paid $150,000 in restitution to the employee and a fine to the EEOC.
  • A store manager at a fast food place in Kansas harassed and sexually assaulted a 14 year-old girl. He eventually went to prison, but because the company had permitted him to harass at least four female employees, it paid restitution, wrote letters of apology, and was required to implement mandatory sexual harassment training for employees.
  • Several women, both teen-aged and older, were sexually harassed by a store manager at a California bagel shop. Their complaints to management did not improve the situation, and eventually some of them quit. The EEOC sued the shop, the offending manager lost his job, and the owners of the shop paid a steep penalty.

The EEOC’s Web site lists several rights and responsibilities of teen-aged workers, including:

  • The right to work free of discrimination.
  • The responsibility to treat other employees without discrimination.
  • The right to work free of harassment.
  • The right to complain about job discrimination without punishment, and the responsibility to inform management of discrimination.
  • The right and responsibility to request workplace changes for the worker’s religion or disability.

The right to keep medical information private. To avoid harassment claims from any employees, young or old, employers should:

  • Adopt, promote, and enforce a formal policy against sexual harassment.
  • Take reports of harassment seriously. Investigate all reports and take appropriate action, if required.
  • Emphasize to supervisors and managers that they are not to retaliate against employees who complain of harassment.
  • Provide training for managers on how to recognize sexual harassment and how to receive complaints.
  • Train new employees on how to recognize harassment and how to make complaints.

Employers should also carry Employment Practices Liability insurance (EPLI) to protect themselves against the financial consequences of claims that do occur. EPLI policies cover the employer’s liability for discrimination, wrongful termination of employment, sexual harassment, rights violations, and other harmful acts committed by company managers. One of our professional insurance agents can give advice on the different policies available and their cost.

Employers have a responsibility to provide a safe working environment for all employees, but that responsibility is magnified when it comes to teenage employees. Keeping your workplace harassment-free will ensure a happy, productive workforce and keep your attention where it should be — on growing your business.

CONSIDER THE POSITIVES AND NEGATIVES OF EMPLOYEE LEASING

By Business Protection Bulletin

Employee leasing firms earned $68 billion in gross revenues in 2008, according to the National Association of Professional Employer Organizations (NAPEO). Their clients, primarily small businesses with fewer than 20 employees, outsource to leasing firms the responsibilities for payroll administration, employee benefits, Workers Compensation claim management, human resource management, and related operations. Businesses trying to reduce costs and focus on growth might find employee leasing to be an attractive option. It is an option, however, that comes with advantages and disadvantages for both employer and employee.

The NAPEO cites a number of benefits from employee leasing. The benefits for employers include:

  • Access to professionals with expertise in human resources, payroll, risk management, and employee benefits.
  • Assistance with labor law compliance.
  • Professional claim management.
  • Reduced and controlled administrative costs.
  • Professionally written employee handbooks, policies, and procedures.
  • Relief from some employment-related liabilities.
  • Reduced Workers Compensation costs resulting from improved workplace safety.

Employees might also benefit from leasing in several ways.

  • Access to benefits that might not have otherwise been available, such as 401(k) plans, cafeteria plans, insurance, and credit union membership.
  • Timely and accurate paychecks.
  • Protection under federal labor laws.
  • Improved communication among and between employees.
  • Employees who move from one leasing client to another do not lose eligibility for benefits.
  • Efficient and timely claim processing.
  • Assistance with employment-related issues.

Employee leasing carries some risks. A poorly managed leasing firm might mishandle payroll and benefits or could go out of business, leaving the client with its obligations. The employer might also be legally liable for the actions or inactions of the leasing firm. For example, if the leasing firm fails to comply with regulations, it could be the employer who bears ultimate responsibility. Also, the employer is ceding control of its workforce to a third party who might or might not do things the way the employer would. Employee relations could suffer during the transition to leasing.

From the employees’ standpoint, the employer would have to fire them and the leasing firm would have to re-hire them. Also, there is no guarantee that the leasing firm’s benefits will be as good as those the employer offered. Some employers have also used leasing as a means to avoid dealing with unions, though federal rules might limit their ability to do this.

Employers who decide to lease their employees should evaluate the leasing firms it considers carefully. The financial stability of the firm and of the insurance companies providing its benefits are a major consideration, as the failure of either could leave the employer with unfunded obligations. The firm’s experience in the employer’s industry, track record of success, and safety record are also important. Another consideration is the range of benefits the firm offers; a plan that does not meet the employer’s needs will not be worth the expense of hiring the leasing firm.

Employee leasing is a big step and not one to be taken lightly. Employers must weigh the upsides and downsides of leasing and make decisions that are best for their employees and their businesses.

HOLD HARMLESS AGREEMENTS AND CONTRACTUAL LIABILITY INSURANCE HELP MANAGE RISK

By Construction Insurance Bulletin

Lawsuits are a common occurrence in our litigious society. An effective way to limit your liability is to specify your responsibility in a contractual relationship. Risk can be transferred contractually by including “hold harmless” clauses in agreements.

In a hold harmless agreement, one party agrees to protect or “indemnify” another from claims brought by a third party for financial loss or damage. A good example is a general contractor who hires a subcontractor to complete a job for a third party. To protect himself, the general contractor may require the subcontractor to sign a hold harmless agreement. The agreement would indemnify the general contractor if any problems arose from the subcontractor’s work.

Read before You Sign on the Dotted Line

In a hold harmless agreement, the indemnitor (the party that has assumed the liability) is responsible for all financial loss. Some hold harmless clauses are very broad. Surprisingly, they may include liability even if the indemnified company was solely responsible for the damage. On the other hand, a Contractual Liability insurance policy can protect the indemnitor, but might not cover all aspects of liability.

In our example above, the hold harmless agreement gives the general contractor the right to collect for damages paid to the third party to the extent enforceable under the law. However, the indemnified party should exercise caution. The ability to uphold indemnification agreements differs by state, because state laws vary as to what risks may be transferred. Also, some courts have ruled indemnification clauses unenforceable if they were not clear and precise.

Protect Your Assets

With a General Liability policy, Contractual Liability insurance is provided automatically. The coverage is created to pay to a third party damages assumed as part of an “insured contract.” However, the definition of an insured contract is limited, and coverage is written as an exception to an exclusion. That means the policy excludes coverage except for specific circumstances. Additional policies, such as Professional Liability insurance, might be required to cover exposures that are not covered under General Liability policies.

Usually, General Liability insurance covers only bodily injury or property damage. But once again, these are subject to exclusions, conditions, and limitations, and the injury or damage must have occurred after entering into the contract.

Furthermore, the liability must be one that would be imposed without the contract or one that is assumed in a hold harmless or indemnity agreement that falls within the definition of insured contract under the policy. General Liability policies do not cover breach of contract.

Before signing any contract, it is wise to talk to an attorney, so that you do not assume liability that is not covered under your General Liability insurance policy. Take time to read your insurance policy endorsements carefully, and don’t be afraid to ask our insurance agents to explain anything you do not understand. We will help you to determine the types of coverages your business needs to protect your assets.

HOLD HARMLESS AGREEMENTS AND CONTRACTUAL LIABILITY INSURANCE HELP MANAGE RISK

By Construction Insurance Bulletin

Lawsuits are a common occurrence in our litigious society. An effective way to limit your liability is to specify your responsibility in a contractual relationship. Risk can be transferred contractually by including “hold harmless” clauses in agreements.

In a hold harmless agreement, one party agrees to protect or “indemnify” another from claims brought by a third party for financial loss or damage. A good example is a general contractor who hires a subcontractor to complete a job for a third party. To protect himself, the general contractor may require the subcontractor to sign a hold harmless agreement. The agreement would indemnify the general contractor if any problems arose from the subcontractor’s work.

Read before You Sign on the Dotted Line

In a hold harmless agreement, the indemnitor (the party that has assumed the liability) is responsible for all financial loss. Some hold harmless clauses are very broad. Surprisingly, they may include liability even if the indemnified company was solely responsible for the damage. On the other hand, a Contractual Liability insurance policy can protect the indemnitor, but might not cover all aspects of liability.

In our example above, the hold harmless agreement gives the general contractor the right to collect for damages paid to the third party to the extent enforceable under the law. However, the indemnified party should exercise caution. The ability to uphold indemnification agreements differs by state, because state laws vary as to what risks may be transferred. Also, some courts have ruled indemnification clauses unenforceable if they were not clear and precise.

Protect Your Assets

With a General Liability policy, Contractual Liability insurance is provided automatically. The coverage is created to pay to a third party damages assumed as part of an “insured contract.” However, the definition of an insured contract is limited, and coverage is written as an exception to an exclusion. That means the policy excludes coverage except for specific circumstances. Additional policies, such as Professional Liability insurance, might be required to cover exposures that are not covered under General Liability policies.

Usually, General Liability insurance covers only bodily injury or property damage. But once again, these are subject to exclusions, conditions, and limitations, and the injury or damage must have occurred after entering into the contract.

Furthermore, the liability must be one that would be imposed without the contract or one that is assumed in a hold harmless or indemnity agreement that falls within the definition of insured contract under the policy. General Liability policies do not cover breach of contract.

Before signing any contract, it is wise to talk to an attorney, so that you do not assume liability that is not covered under your General Liability insurance policy. Take time to read your insurance policy endorsements carefully, and don’t be afraid to ask our insurance agents to explain anything you do not understand. We will help you to determine the types of coverages your business needs to protect your assets.