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Business Protection Bulletin


By Business Protection Bulletin

Attributing a company’s Workers Compensation costs to an individual department encourages managers and group supervisors to pay increased attention to safety and training programs, and to monitor closely the return to work of injured employees. In some companies, as a further incentive to cut Workers Compensation costs, reimbursements from claims are deducted from departmental budgets, rather than a general fund.

By initiating simple internal processes that place responsibility for Workers Compensation expenses on individual departments, employers can take greater control of implementing preventive measures and injury management procedures, thus decreasing the frequency and severity of injuries. As a result of implementing these procedures, a company could reap substantial savings in reduced claims and Workers Compensation premiums.

Employers can meet safety goals by communicating directly with those employees who are potential Workers Compensation beneficiaries. First, a simple analysis should be performed to identify high-risk groups based on a history of injuries and claims. Bringing together employees on a departmental level to discuss the injury management process will improve communication between all parties in the working environment. Having those employees at risk discuss how a job can be performed more safely will reduce injuries. Or conversely, having employees explain how injuries can occur because of faulty equipment or incomplete work procedures will also assist the employer in modifying its safety procedures and work environment.

Too often, workplace injuries are not reported promptly. Supervisors often fail to acknowledge accidents hoping they will disappear without resulting in medical or lost-time expenses. Evidence shows that this practice can result in increased expenses because the initial injury was not reported and treated immediately.

A study of more than 53,000 permanent partial disability and temporary total disability claims indicated the following when compared with claims reported within a week of occurrence:

  • 1-2 weeks after occurrence – 18% more expensive
  • 3-4 weeks after occurrence – 30% more expensive
  • More than a month after occurrence – 45% more expensive

Sharing these sobering facts with managers and supervisors should result in timely reporting of injuries, thus reducing their department’s Workers Compensation costs, and the company’s.

When stressing safety on the job during training programs and reviewing work patterns periodically, the company will help reduce injuries within each department. Once an employee is injured, the goal of the employer and employee should be returning that employee to work as quickly as possible. Both parties should share a common desire for the most effective care, a timely recovery and a quick, safe return to the workplace.

With each department being responsible for its own Workers Compensation costs, departmental managers can be more involved in helping injured employees return to work. Rather than having the injured employee contacted by a third party — usually a claims adjuster or an attorney in some cases, which can develop into an adversarial stance — the employer’s concern and response is conveyed directly to the out-of-work employee.

Although there are a few workers who purposely defraud the system, they are very much the exception rather than the rule. Analyzing Workers Compensation costs on a departmental level makes it more difficult for malingerers to file fraudulent claims.

Although eliminating all injuries or claims is not possible, accidents do happen. It is feasible, however, that the severity and frequency of injuries can be reduced significantly by placing responsibility for maintaining a safe working environment at the departmental level and, in the long run, rewarding the department for reducing claims.


By Business Protection Bulletin

Directors and Officers Liability insurance, or D&O, covers corporate activities. Because a corporation is legally a person, as are the directors and officers who direct it, D&O serves to protect each from liability associated with various actions and inactions.

But what happens when corporate interests differ from those of these individuals? In short, the coverage is not the same.

An indemnity policy protects the corporation, while a D&O policy covers the individual acts of directors and officers. The two types of policies can work hand-in-hand to provide complementary coverage. They can also work apart.


D&O policies do not cover criminal acts and are primarily for civil remedies, mainly damages. First and foremost, D&O policies represent the interests of the shareholders, as a group, and other corporate constituencies in directing the business and affairs of the corporation within the law.

D&O policies offer individual directors and officers the protection they need from personal liability and financial loss stemming from wrongful acts committed while acting as a corporate officer or director. Most policies also cover the liability of the corporate entity itself when the liability is from a claim involving the company’s purchase or sale of securities.


Keep in mind, all companies — those that employ one or more individuals, work with customers, clients, or even competitors — are at risk. Any perceived violation leaves both the directors and officers of the company, as well as the corporate entity itself, at risk for lawsuit and in need of applicable coverage to adequately protect the business as well as the directors and officers involved.

Employment Practices Liability (EPL) can provide additional coverage, acting like an Excess policy in an employment situation, and can also involve claims by and against management. Enhanced coverage on a standard D&O might cover EPL, but should be verified with your insurance agent.

Actions including wrongful termination or demotion, breach of contract or agreement, negligent evaluation of an employee’s performance, refusal to hire or promote someone, workplace harassment, failure to follow the company’s personnel manual and more, can fall under EPL.

Insurance experts advise protecting yourself and your business with indemnity or D&O coverage and suggest you understand exactly what your policy covers. Remember, if your D&O policy does not cover EPL, you should consider purchasing EPL coverage, or have it written into your D&O policy.


By Business Protection Bulletin

Cell phones now allow employees to conduct business from nearly any conceivable location, but when that location is a vehicle moving at 60 miles per hour, a dangerous situation can occur for which employers are liable.

Cell phone distraction causes 2,600 deaths and 330,000 injuries every year in the United States according to a study in the Journal of Human Factors, a scientific, peer-reviewed publication. Employers across nearly every industry are now highly exposed to this potentially costly liability.

Huge settlements, including those in the multi-million dollar range, have been awarded to individuals who have been injured in accidents caused by drivers conducting business on their cell phones. An employer can potentially be liable even for accidents that occur during personal phone calls if a company provides a cell phone to its employees or if a cell phone is necessary or encouraged as part of their job.


State governments nationwide are acknowledging this danger and are reacting with new legislation. Some states prohibit talking on a cell phone while driving unless a “hands-free” device is used. Other jurisdictions are prohibiting all cell phone use while operating a moving vehicle for certain classes of drivers, such as young drivers and bus drivers.

In order to help protect the safety of employees and others on the road, and also to help mitigate a company’s exposure, employers are strongly urged to develop cell phone usage policies and conduct employee cell phone safety training programs.

Being very cautious, some companies are now requiring a “hands-free” phone, or strictly prohibiting the use of cell phones for business purposes while driving. Employers should know, however, that research including a 1997 study reported in the New England Journal of Medicine indicates that the likelihood of having an automobile accident increases four-fold when talking on a cell phone regardless of whether it is a “hands-free” phone.

Other specific safety guidelines that can be incorporated into a cell phone usage policy include:

  • Dialing only while the car is stopped
  • Not making calls while in traffic or inclement weather
  • Not having stressful conversations while driving
  • Use of speed dialing when possible.

A strong policy should list the disciplinary consequences of not following the cell phone usage guidelines.

Additional measures include equipping company-owned cell phones with a sticker warning of the dangers of driving while talking on a cell phone. Employers can also add language to their cell phone bill reimbursement forms requiring employees to certify that they did not break company policy in using their cell phone.

Although there is no guaranteed release from this new area of liability, companies with strong cell phone policies and training programs do put themselves in a much better legal position. To maximize their protection, companies need to enforce cell phone policies strictly and maintain current documentation. Such documentation should include written acknowledgement of each employee’s receipt of the policy and training, and also records of any violations and disciplinary action.