D&O Coverage is Essential for Startups, Too

Directors and officers (D&O) liability coverage is essential for every organization, large or small. Because the fallout – for companies that skimp on liability insurance generally, and particularly on D&O coverage – could be catastrophic.

D&O insurance protects the directors and officers of an organization from liability arising out of their actions taken on behalf of that organization. These actions can include: poor investment oversight, negligence, misstatements, omitting important information, and management decisions and other actions that results in financial loss to shareholders.

Startups need D&O coverage

Newly formed organizations are not exempt. In fact, they’re more likely to need D&O coverage. Startups, by their very nature, are inclined to make seat-of-the-pants decisions and will tolerate more risk, meaning the company’s principals may not have taken the time to assess all the pros and cons of a management decision. Also, after those heady first days, companies may discover that one member of the new management team is a liability waiting to happen, creating issues for the whole organization.

Finally, a D&O liability policy can protect the company itself as well as the individuals who run it. While larger organizations can probably manage a single liability issue, a smaller, newer organization may well be decimated by the same type of issue.

D&O liability is only one part of a package of liability policies most companies will require. For example, the commercial general liability policy and/or a commercial auto policy will protect against allegations of bodily injury or property damage. D&O covers only allegations of wrongful acts, typically resulting in allegations of financial loss.

The basics of D&O coverage

While most publically traded companies, as well as private or non-profit organizations, have coverage that protects the company itself from liability in the event of a claim, others cover only the directors and officers of the corporation. It’s important to discuss with your insurance professional what coverage is important for your company in your industry.

Generally, D&O coverage comprises Side A coverage, which provides a defense and pays losses arising from negligent acts of an officer or director of a company, and Side B coverage, which will reimburse corporations for losses the organization pays to indemnify their directors and officers for claims against them.

Side C coverage was added in the 1990s to offer protection to the corporation against allegations of security irregularities. Additionally, employment practices liability coverage is increasingly common on D&O policies. This coverage provides defense and indemnity against allegations of wrongful termination, sexual harassment, and other violations of state and federal employment laws.

Don’t let your D&O coverage expire

D&O policies are written on a claims-made basis, meaning coverage is triggered when a claim is made. Claims-made coverage means acts committed prior to and during the policy period may be covered. Claims that are filed after the policy’s expiration may not be covered. If you plan to cancel or move from one insurance carrier to another, care must be taken to assure continuity of coverage and avoid gaps.

Small Businesses Can’t Afford Not to Have EPLI

The Equal Employment Opportunity Commission (EEOC) is the federal agency that monitors employment discrimination. Over the last several years, EEOC claims have been on the upswing. In 2012, the EEOC received more than 99,412 private-sector discrimination charges, up from 2009, when charges totaled 93,000 and represented the second-highest level in two decades.

Employment claims aren’t likely to disappear. The previously amended American with Disabilities Act (ADA) expanded the number of people covered under the Act, and as our population ages at a faster rate, more employees than ever will be protected by the ADA. With other economic, political and social changes in the offing, your organization simply can’t afford to operate without Employment Practices Liability Insurance (EPLI).

For smaller companies, in particular, one of the advantages of buying coverage is the risk management assistance most EPLI carriers provide. Employment practices carriers can help reduce your risk by reviewing your current employment policies, if you have them, or helping you develop them if you do not.

If you believe you cannot afford EPL coverage, consider this: For companies with 15 to 100 employees, the courts can award damages of up to $50,000. Add in defense costs, and your business faces substantial risks. Even if a claim is settled outside court, you will have to re-hire or promote the claimant and could be on the hook to pay the employee’s legal costs.

With this much money at stake, can you really afford not to have this coverage?

Buy Added Auto Insurance for Xmas Road Trips

If you’re one of many driving somewhere for the upcoming holidays, ensure you have adequate auto insurance coverage. Even if you have insurance, look into extended protection, particularly in these scenarios:

For rental vehicles

Even though personal auto insurance covers many losses, it’s limited, so always consider rental car coverage. Personal policies may cover property damage in rental car accidents, but not some subsequent costs, such as the rental company’s loss of income or rental car’s diminished value.

Read the fine print about insurance in rental contracts. Talk to your insurer to clarify personal coverage, and get quotes with higher liability limits and lower deductibles, which will help cover losses with ease.

Out-of-state travel

When travelling out of state, explore additional protection. Auto insurance laws vary by state. Those from no-fault states such as Florida or Michigan often only carry state minimum liability limits, or worse, don’t cover bodily injury. This usually means you don’t have adequate coverage. And very little or no protection – even in not-at-fault accidents.

It’s especially important when traveling to these states to carry additional insurance for collision as well as for property damage. Be particularly aware of the limits of your bodily injury coverage. If you’re uninsured or under-insured, you should acquire additional bodily injury coverage. If someone is injured in an accident you caused, you could be sued for medical expenses, court costs, legal fees, and pain and suffering; you’re responsible for those expenses if they exceed your coverage limit for bodily injury.

Peace of mind

You may pay more, but if insufficient coverage results in you having to pay for repairs or for the major expenses resulting from an accident with injuries that exceed your liability limits, you probably won’t be able to take a vacation again for a long time. In that case, the cost of protecting yourself with appropriate coverage is certainly worth it.

Deck the Halls: Think Fire Safety and Watch the Christmas Tree

According to the National Fire Protection Association, 50 percent of house fires occur in December. The usual culprit? Tannenbaums. So before decorating this year’s tree, consider the following:

  • From 2006 to 2010, Christmas trees started an average 240 house fires a year, resulting in four deaths and 21 injuries, not to mention $17.3 million in property damage annually.
  • Forty-two percent of Christmas tree fires happen during the “12 Days of Christmas” – December 23 to January 3.
  • Disposal is crucial. One homeowner wrapped the tree in clear plastic and put it on the patio. The shiny plastic caught the sunlight, and the tree went up in flames.
  • Fake trees are responsible for only a third of all Christmas tree fires.

If a fire happens, contact your insurer immediately. Don’t delay or decide to cover damages yourself. Usually structural damage is worse than you think. Smoke damage alone in a room the size of a bathroom can cause thousands of dollars in damage.

Wiring damage can spread. If it does, your claim could be denied for failing to report previous damage. Condo and townhouse owners and renters would be liable for damage caused to neighbors’ homes.

Tree tips:

  • Ensure lights, extension cords, and power strips are in good condition
  • Unplug lights before leaving home or going to bed
  • Keep trees away from fireplaces and heat sources.
  • Water trees daily.

Even if You Can’t Get Medicare, Lower Cost Options Exist

These days, finding affordable healthcare is most people’s top priority. They realize they need the right coverage for preventive services that fend off long-term illness, and emergency care when accidents happen or illness strikes. Unfortunately, affordable healthcare isn’t always easy to find.

It may be easier when state exchanges are widely accessible, and as some states expand Medicaid, but at the moment those options aren’t fully available. If you don’t qualify for Medicare, it can be difficult, but there are other ideas worth exploring.

If you need low-cost healthcare, you may not even consider private health insurance, but depending on your plan and how much you can afford, private plans could work well for you. Think about combining a high deductible health plan with a Health Savings Account (HSA). This combination offsets risk, but you will to pay more out of pocket. Money in HSA’s can help pay for the deductible, but only for medical expenses.

If you don’t qualify for Medicare, consider Medicaid, which is available for low-income individuals. You need to meet income thresholds, but if you do, Medicaid will help cover preventive services; it also has reduced charges for other services. State-run programs can help you find coverage.

To cover children, if you don’t qualify for Medicaid, you may want to research the Children’s Health Insurance Program (CHIP). CHIP doesn’t cover adults, but provides your children with needed care.

Currently, finding affordable health insurance can be a challenge, but it’s vital to you and your family – so persist.

Concerned About Access to Health Records? Ask

You’ve probably signed quite a few Health Insurance Portability and Accountability Act (HIPAA) forms at your doctor’s office, giving authorization for specified individuals to view your medical records. HIPAA provides for security and confidentiality of your medical records and limits access to them.

Doctors and hospitals may access records, as can family members and friends…if you specify. If an insurer is a member of MIB Inc., that insurer can also review your health information to determine eligibility but is required to provide you with notice on how they intend to use the information.

MIB provides a database containing medical information significant to underwriting insurance policies, and only information you’ve consented to give out or disclosed on insurance applications is available. Not all insurers are members of the MIB, and members pay a fee to join. You won’t have an MIB record if you haven’t applied for health or life insurance in the past seven years.

When member insurers access MIB records, they’re required to notify you and to provide you with a statement on your health policy rights. The notice may come as part of a large package of information, so keep an eye out for it.

Note that pre-existing conditions could be included in MIB records. Under the Affordable Care Act, health insurers aren’t permitted to deny coverage due to pre-existing conditions, but they may affect rates. If you have a pre-existing condition, your insurer will be aware of it through MIB records. Exercise your health consumer rights and ask about the impact of pre-existing conditions on your rates.

In fact, if you have any questions or concerns about the privacy of your records, be sure to ask your insurance company and/or your doctor’s office. It’s your right, and when it comes to something as important as your health, it’s a right you will want to apply.

Even if You Can’t Get Medicare, Lower Cost Options Exist

These days, finding affordable healthcare is most people’s top priority. They realize they need the right coverage for preventive services that fend off long-term illness, and emergency care when accidents happen or illness strikes. Unfortunately, affordable healthcare isn’t always easy to find.

It may be easier when state exchanges are widely accessible, and as some states expand Medicaid, but at the moment those options aren’t fully available. If you don’t qualify for Medicare, it can be difficult, but there are other ideas worth exploring.

If you need low-cost healthcare, you may not even consider private health insurance, but depending on your plan and how much you can afford, private plans could work well for you. Think about combining a high deductible health plan with a Health Savings Account (HSA). This combination offsets risk, but you will to pay more out of pocket. Money in HSA’s can help pay for the deductible, but only for medical expenses.

If you don’t qualify for Medicare, consider Medicaid, which is available for low-income individuals. You need to meet income thresholds, but if you do, Medicaid will help cover preventive services; it also has reduced charges for other services. State-run programs can help you find coverage.

To cover children, if you don’t qualify for Medicaid, you may want to research the Children’s Health Insurance Program (CHIP). CHIP doesn’t cover adults, but provides your children with needed care.

Currently, finding affordable health insurance can be a challenge, but it’s vital to you and your family – so persist.

Beware Buying Life Insurance Online

Many people looking for life insurance turn to the Internet for assistance – but that may not be the best way to get the policy that’s right for you.

Companies now give free life insurance quotes on the Internet, and some even offer advice on your life-insurance needs – if they’re able to do that without a complete understanding of your financial situation and goals, that is.

It also appears easy to compare – one popular website has more than 1,600 policies in its database – and safe: You can compare insurance companies by their Standard & Poor’s and A.M. Best ratings, which reflect different insurance companies’ abilities to pay their claims.

But Caveat Emptor (Buyer Beware). There’s more to selecting the right insurance policy than comparing online quotes. And the fact that there is such a wide choice can easily get you into the wrong product. Term life insurance, for example, provides your heirs with money for a specific term (such as 10 or 20 years) in the event of your death; permanent life insurance offers the same benefit, but with lifetime coverage.

The permanent life insurance category includes whole life insurance and universal life insurance. With whole life insurance, your insurance company puts part of your premiums in a bank account, increasing its “cash value,” which you can borrow against (or receive when surrendering your policy.) Universal life insurance offers many options, such as changing your death benefit and paying your premiums at any time and in any amount (subject to certain limits).

Which is best for you? Instead of relying on an impersonal website, discuss options with your own advisor who understands your individual financial circumstances and goals, and is able to help you select a policy that best meets your needs.

Life insurance is too important a product to leave to the Internet. Even today, nothing replaces the human touch.