Archive for the ‘Liability Risks and Solutions’ Category

teen driverThis time each year, it seems the media is full of back-to-school protection tips advising parents and college students on how to protect their “stuff”.  While the guidance is helpful, these tired articles commonly ignore the host of emerging risks that can expose a family’s assets and jeopardize the welfare of their child.   

Every parent of a college student understands the degree to which their child seems tethered to their smart phone and other connected technology.  The common condition of being too connected has been termed “virtual addiction”, a condition so common there is a website that offers on-line questionnaires to help the public examine the degree to which addiction describes their relationship with technology:   http://virtual-addiction.com/smartphone-abuse-test/  (these tests are eye-opening…)  Whether the student’s use of technology qualifies as an addiction or not, very few college students today are not at least heavy users of modern technology.

As a result, today’s college students face risks that are far more grave that a stolen laptop!  Consider the following risks that can arise from the improper and unmonitored use of the modern technology at every student’s disposal:

  • loss of privacy
  • computer malware or virus
  • stolen identity and personal information
  • mis-use of social media that can cause harm to another
  • texting, e mailing, snapchatting, taking selfies or just plain talking on a cell phone while driving
  • sending, receiving and or forwarding illegal content

The insurance industry can help parents and students to better prepare for the above issues.  Consider reviewing this helpful series of recommendations from ACE Private Risk Services.  For those with college students and younger children, this helpful guide from Chubb offers a number of protection insights.

In addition to having a complete discussion with your child about the risks that can arise from their mis-use of technology, following are two specific protection recommendation I can also offer:

  1. Make sure the homeowner policy that provides primary liability protection for family members includes coverage for “personal injury” related risks: libel, slander, defamation, and other verbal torts. MANY homeowner policies do not!  Be sure to supplement this primary liability protection with adequate excess liability insurance.
  1. If your college student is at school with the use of a car, install a device that restricts the use of their cell phone while operating that car! There are a growing number of providers for this important safety service, but this device from cell control has been well reviewed. (why not also take this step for those children driving cars while at home?)   Preventing distracted driving is achievable, and a cause I am passionate about.


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pounce of protectionA common provision in many contracts stipulates in the event of litigation between parties to the contract, the prevailing party in the litigation is entitled to recover their attorneys’ fees from the losing party. Coverage for this risk is almost always excluded by all forms of insurance policies, leaving unsuccessful litigants exposed to what can become a very significant financial loss.  Contract Litigation Insurance (CLI) provides a degree of protection from the uncertain nature of litigation.  This new form of insurance coverage can insure a plaintiff or defendant in a contractual lawsuit against the risk of paying their adversary’s attorneys’ fees if unsuccessful in prosecuting or defending their contract claim.

This coverage is even available to businesses or individuals during the early stages of a contractual dispute.  What types of contract disputes are most common? The risk of paying an adversary’s attorneys’ fees are especially common in contract actions arising out of employment contracts, real estate contracts, loan agreements, purchase agreements, partnership agreements and leases.

 To summarize:

  • Coverage may be purchased by individuals or businesses currently involved in contractual litigation;
  • CLI is available upon the filing of a contract action for a period of 1 year from the filing/service date;
  • The coverage period matches the duration of the covered litigation; and
  • Coverage is triggered when the opposing party prevails after a contested trial or summary judgment.

Coverage is underwritten by Zurich, an A+ rated carrier, and is available through Sonoma Risk Insurance in Los Angeles, CA. To learn more: http://www.sonomarisk.com/


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teen driverI recently read yet another article by a main stream journalist that promised readers “weird new steps” to lower the cost of auto insurance for those with teenage drivers.  If you have a teenage driver, this topic can sure stimulate interest!

As a parent and insurance insider who has experienced the financial pain associated with 3 teenage drivers, it is my strong view that articles advocating how to lower insurance premiums miss the two FAR far more important objectives that parents of teenage drivers should be encouraged to make their first priorities:

1.      Accident PreventionNationally among all age groups, statistics reveal cell phone distractions are a factor in 25% of all accidents. Imagine what this risk is for younger drivers! While cellular technology adds new risks, other technology exists to help parents manage this risk.  Cellcontrol is one service provider offering a solution that prevents unauthorized in-motion use of mobile phones. Their solution puts parents in control of what a family member can or cannot do with their cell phone while driving. (the same solution is available for those responsible for corporate fleets) To learn more: http://www.cellcontrol.com/stop-texting-while-driving-for-your-family/  

2.      Protect Your Assets: ASK ANY parent of a teenager who has been involved in a serious accident: after the accident: NO parent is concerned with the cost of their insurance, but ALL were concerned with the insurance protection that was available to protect them at the time of the accident.  After an accident is the wrong time to recall the dangers of being “penny wise, but pound foolish”.

Please: address these two more important objectives first, and THEN work with an insurance professional to examine strategies to intelligently manage the cost of proper insurance coverage.

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Families who decide to personally employ a nanny often fail to understand that their legal obligations as an employer begin the moment their new nanny walks through the front door. Even more dangerous, after years of satisfactory performance, many families regard their nanny not as an employee, but as part of the family. However, state and federal employment laws apply to all domestic employees, and many families place themselves at high risk if they do not manage their nanny and any other staff members as employees and in strict accordance with employment laws.

Failure to understand the employer – employee relationship can expose all family members to personal litigation for violations of employment related conduct towards those they employ. Even inappropriate conduct among different members of the household staff can create a legal exposure for the family. Because the household is seen as a safe and informal space and vague verbal contracts are all too common, many families either ignore or fail to comply with their legal responsibilities as employers. 

One example that frequently invites litigation: given the challenging economic climate, families with older children seeking to trim their costs may terminate the employment of a nanny whose services are no longer essential. To protect against allegations that the dismissal was a wrongful termination, or possibly motivated by age or racial bias, experts advise household employers should document performance expectations and keep a well documented human resources file on every employee. Additionally, a written agreement between the household employer and employee should contain an “employment at will” clause that allows termination without cause for any reason. Precautionary background checks that go beyond simple internet searches are also recommended for any family employing domestic staff. Meanwhile, no matter how attentive, household employers need to know that they cannot totally control the work environment. Just as in a traditional workplace, household employers can be held liable for conduct viewed by their staff as obscene, discriminatory or offensive.

Given these many risks, a select group of personal insurance carriers have developed specialized coverage solutions to address the employment practices risk exposure facing families employing household help.  Such solutions provide coverage not only for damages that may be awarded by a court, but far more importantly, both the legal costs to defend the family such allegations, and the services of a public relations firm to help the family minimize the damage to their reputation.  Often, these same carriers can assist policyholders with services that include comprehensive pre-employment background checks.  Most who learn of the broad coverage that is available agree the protection is well worth the cost.  Those facing this risk should consider securing this valuable form of protection.

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I was surprised at the level of interest in my post a few weeks ago referencing the often overlooked (and uninsured) risk of “personal injury”. For those who missed it, I reminded readers of the need to be aware of this risk, especially for those with children who are active on social media websites.

I recently learned that Peter Spicer, one of the personal insurance industry’s true thought leaders, sat down with NJ.com last year to explain the often overlooked consequences of sharing so much information so freely on the internet.  To read Spicer’s thoughts on on NJ.com click here(it should be noted that while Spicer was working at Chubb at the time of the interview, he’s now working with Ace Private Risk Services, and remains a great source of information on this and other topics concerning personal risk).   

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 In an attempt to speak with a local attorney about the importance of un / underinsured motorists coverage, I clumsily asked how he felt about the topic. My awkward phrasing provided the perfect fodder for this attorney to display his oh-so-sharp wit, and he mockingly replied to my question “Why, I’m 100% against uninsured motorists!”  

Once he was done laughing at his own joke (it took awhile), I explained that what I intended to ask was whether he ever felt it worth his while to recommend to his clients the importance of structuring their automobile insurance to better protect themselves from the costs of injuries caused by a driver with either no insurance, or very low limits of liability coverage.  As I recall, he wasn’t so against uninsured drivers that he felt it important enough to makes his clients aware of the need to protect themselves and their families. According to this news report, neither is Geico.

A large part of Geico’s ability to help consumers “save 15% in 15 minutes” stems from the fact they feature a “select your own coverage” business model. One of the outcomes of DIY insurance: according to this report (check the link above), Geico is not complying with state laws designed to help consumers make informed coverage decisions. Why not?  They are not complying because it is more profitable for Geico to allow consumers to select less protection from un and underinsured motorists

Call me @ 631-329-7246 if you want to understand WHY Geico and several LARGE insurance carriers encourage consumers to “save money” by skimping on important un/underinsured motorists coverage, and to learn what you can do to actually protect your family and your clients from the many drivers who have little or no liability coverage.

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There are many examples to support my strongly held belief that proper insurance planning is not a DIY project. One recent example: when the mainstream press offers guidance on how to manage your risks, be aware that such stories often omit important pieces of information that can leave you and your family’s assets exposed to uncovered losses

In a recent article by Paul Sullivan, the highly acclaimed Wealth Matters columnist for The New York Times, readers are urged to understand and manage the many insurable risks associated with children attending college. Mr. Sullivan begins by reminding his readers that “insurable risks faced by college students have gone up tremendously in the decades since their parents lugged stereos and crates of vinyl records into dormitory rooms”.  So far, so good. 

So, you ask, just what are these new risks facing college students in the 21st Century? Surprisingly, instead of learning about any new insurable risks that have “gone up tremendously”, readers are simply reminded of the usual and obvious risks that I sure hope every parent already knows to prepare for: theft of valuable items, automobile claims, serving alcohol, trip and fall injuries, and identity theft.  While the risk of identity theft has surely risen in the past decade, readers are left to wonder what are the other risks that have actually “gone up tremendously in the decades since…stereos and…records”, as the article forewarns???  

Unfortunately, there actually are risks facing college students and their families that are on the rise, and although these risks were not revealed in this article, you can learn about them here.  Consider for a moment the liability risks (and defense costs) that can arise from your student’s improper use of e mail, blogs, social media sites like Facebook and Twitter, and webcams.  Had The New York Times consulted this risk advisor, they would have learned to warn readers of the increased risk of “personal injury” — the very broad and overlooked category of risks that all parents of teenagers should understand and secure protection for.  Not to be confused with bodily injury, “personal injury” refers to those injuries that don’t affect the body. These include false arrest, wrongful eviction or entry, invasion of the right of privacy in a room or dwelling, slander and defamation, or the violation of the person’s right to privacy.

Few consumers (or even traditional insurance agents, for that matter) ever examine whether coverage for the increasingly real risk of “personal injury” is even covered by the policies that provide their family’s personal liability protection.  Especially for families with children in high school or college, consumers should learn if the liability insurance covering the actions of their family members includes coverage for “personal injury”, as a great many personal insurance policies do not. If your policies do not provide this important protection, contact me for access to the handful of carriers that provide policies that do.  And —- please do not rely on newspaper articles for guidance on how to craft your insurance program, even those appearing in The New York Times.  

For a link to the New York Times article that omits this important information: http://www.nytimes.com/2010/09/18/your-money/home-insurance/18wealth.html?pagewanted=print

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As high net worth individuals embrace the tax and asset protection benefits of placing private property ownership in the name of a trust or LLC, critical insurance coverage issues arise. Few trusted advisors or property owners are aware that the “named insured” insurance contract provisions prohibit the extension of coverage to protect the interests of the real property owner – the trust or LLC – in the event of a covered loss.

The resulting coverage void can remain undetected for years, only becoming apparent after a loss for which the application of coverage has been invalidated. Depending upon their role in the creation and administration of the trust or LLC, some advisors may even discover they have a professional liability exposure in the event of an uncovered loss. 
                                                                                                                                                           Click here to access an article from The CPA Journal that explains this problem and the solutions that can be made available.  

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When asked this common question: “how much liability insurance do I really need?” I respond with another question: “how much might you be sued for?”  Everyone knows that protecting the asset base from the threat of lawsuits, however unlikely, is simply prudent risk management. Deciding how much protection is needed is a little trickier. I have yet to meet someone who was named in a lawsuit who was not immediately concerned with whether they had “enough” coverage.

Deciding “how much do I really need?” requires a close examination of a number of issues, which we can help you address. Among those issues: what is happening in the real worldThis link offers a quick reminder that when it comes to what and how much you can be sued for, you never know….

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I was recently asked by Private Asset Manager, published by Institutional Investor, to review the risks that can threaten the personal assets of those who volunteer their time serving non-profit organizations in a directorship capacity. Taking the time to understand the risks of voluntarism is important and often overlooked. Developing strategies to manage and transfer those risks is essential. Click here for a brief review of this topic, or contact me for more information. 

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