Legal firm Norton Rose Fulbright recently released the results of its 2015 Litigation Trends Annual Survey. The survey involved companies in 26 countries and over 800 corporate legal representatives. These results indicate the areas business owners may want to examine closely as part of a review of their current insurance coverage.
Of the U.S.-based businesses surveyed, 55% reported facing more than five lawsuits in the past year, while only 18% reported zero lawsuits. All surveyed were asked to choose the top three types of litigation their companies faced in the past year. Out of the 20-plus categories listed, these were contracts, labor/employment, and regulatory/investigations.
What does this mean for business owners? In addition to general liability insurance, which is a must, you may want to consider obtaining coverage that targets these high-litigation areas.
Depending on the specific needs of your business, some types of coverage may be more relevant than others. But here are some policies you may want to focus on in light of the top areas identified in the survey.
Contract Litigation Insurance (CLI) offers an important type of protection: Are you aware that generally the losing party in a contract dispute is forced to pay the winning party’s attorney fees? These fees can range from thousands to millions of dollars, depending on the case. General Liability, Errors and Omissions, and other types of policies may cover your own legal costs but typically do not offer protection from paying the other side’s legal costs. CLI offers this coverage.
Workers’ Compensation Insurance is required for any business owner with employees. It must provide strong coverage and reflect the needs of your business. But if your company is particularly concerned with the area of labor relations, you may also want to consider Employment Practices Liability Insurance, which will extend your protection to cover suits involving sexual harassment, hostile workplace claims, unfair employment practices, and discrimination. In addition, ensure that your company is following regulations for Unemployment Insurance and adhering to any specific regulations applicable to your type of workforce.
Leaders of a company facing litigation can themselves be charged for breaches such as failure to follow regulations, mismanagement, and operational failures. Other policies in place may cover the business, but individuals may not be protected from a lawsuit. If your business has concerns about regulatory/investigations litigation, Directors and Officers (D&O) Insurance may be a good safeguard. This offers coverage for individuals against claims made while they served as an officer or on the board.
In addition to these specialized policies, it is often necessary to simply increase your general coverage. A high-payout lawsuit could require funds beyond the limits of your general liability insurance. To protect yourself in these cases, you can add an umbrella policy. This business liability “umbrella” insurance will kick in when your general liability insurance limits are reached.
By remaining aware of trends in your industry, you can protect your business by having the proper policies in place for your commercial needs.