Why You Need Employer's Liability Insurance Coverage

Everyone workplace carries risks of accidental injury. In some cases, the operation of the business seems normally benign, whereas other businesses are dangerous because of the nature of their operations. It's for these reasons that employers liability insurance often is required.

Employer's liability coverage is designed to shield employers from losses incurred by employees as a result of on-the-job injuries, illnesses resulting from workplace conditions, or death as a result of a work practice or accident.

For instance, suppose somebody spills their coffee in the employees' break room and fails to clean up the spill promptly. A co-worker comes along, slips in the spilled coffee, and falls hard to the tile floor, breaking a hip.

The employer is legally liable for the employee's injury and any losses resulting from it, such as medical expenses or lost pay. That's the reason for employer's liability insurance.

Employer's liability coverage belongs to an insurance type known as "risk financing." For example, the now-famous firm Lloyd's of London was founded by a group of shipping company owners who created a common fund to repay their costs when ships were lost.

Today there are many insurance carriers like Lloyd's that specialize in liability insurance. Large and even some medium-sized companies have an employee, or an entire department devoted to managing workplace risk. The job of risk managers is to whose job is to keep tabs on potential liabilities and to administer liability protection.

In the case of employer's liability insurance, the business owner pays a premium to an insurance carrier for protection against employee claims, also called "third-party claims." Third-party claims are those brought by others outside the contract between the business owner and the insurance carrier. In the above scenario, the injured employee could demand that the employer's liability coverage pay for his or her medical expenses and any lost wages. It might even be to the business owner's advantage for the employee to file such a claim with the insurance company, instead of paying for the employee's losses from business income.

However, if the liability situation is less clear-cut, an insurance company may elect to defend the insured in court rather than pay the claim. An expensive legal battle might follow to determine who actually is responsible for the accident that caused the employee's injury.

Certain businesses, such as transportation companies, factories, building contractors, various types of professionals and factories often are required to have employer's liability insurance. That's because there's an inherent risk in their type of business that could result in injury, so the local or state government seeks to protect employees from the outset.

If you have employees, then you probably are required to have employers liability insurance which protects you against employee lawsuits. Another specialized kind of business liability protection is directors and officers insurance which protects key management members from job performance related lawsuits.

How to Take Your Profits to New Heights by Working ON Your Business Instead of IN It

Most agents and financial advisors usually spend their day putting out fires instead of running and growing their businesses. So at the end of the day, they haven't made any progress toward achieving their goals.

This happens because...

They're Working IN Their Business Instead Of ON It!

Sadly, the majority of agents reach only a fraction of their income potential because they spend most of their day doing low pay-off activities!

When I asked some agents what their highest-payoff activities are, many of them replied, "Seeing prospects and clients."

(Note: When I mention "agent," I'm also referring to brokers, producers, financial planners, and financial advisors.)

In fact, some of them told me they could make up to $1,000 an hour (or more) when they're in front of prospects and clients. But when I inquired, "How many hours do you spend seeing prospects and clients in your average work day?" most of them said, "Less than two hours."

They explained the reason they could spend only about two hours a day seeing prospects and clients is they have to use most of their day trying to get appointments (mainly by cold calling), doing administrative duties and paperwork, putting out fires, and taking care of other low-payoff activities.

Are you in the same dilemma?

Do you also squander most of your day doing the activities that contribute little or nothing to the achievement of your goals? In other words, are you spending your time on 80% of the activities that generate only 20% of your income, instead of doing 20% of the activities that produce 80% of your income?

If so, this is the reason you have to work so long and hard to earn your present income.

To turn this situation around, you'll need to set up your agency or practice in such a way that it will allow you to do your highest-payoff activities during most of your day, such as seeing prospects and clients and figuring out ways to grow your business. And then delegate the rest of your low-payoff functions to your staff.

If you don't do this right away, you'll have to keep on working long hours to make only an average income.

A paradigm shift you need to make in order to produce better results while working fewer hours is:

You Must Start Thinking Of Yourself As A Business Manager
And Builder, Rather Than As An Agency Owner,
A Producer, A Broker, Or A Captive Agent!

As a business manager and builder, the asset you manage and build is your agency, practice, career, or job.

The first step to becoming an effective business manager and builder is to find out how much money you're currently making per hour from the various activities you do daily. After that, you then figure out ways to perform more of the highest-payoff activities and delegate as much of the low-payoff ones to your staff as possible.

By getting staff to handle your low-payoff activities, you could triple and even quadruple your income without having to work a single minute harder. The more low-payoff activities you can delegate to your staff, the more successful you'll become.

Whatever your hourly average income is, you shouldn't be doing any activity that produces less than this amount. Find out how many activities generate less than this amount and stop doing some of them, and then focus your time and effort on the functions that can produce better results.

Even if you're a one-person operation and think you can't afford to hire an employee to do most or all of the low-payoff tasks for you, you must hire that person.

Since you're spending most of your time doing the low-payoff activities right now, this means, like most agents, you're working IN your business.

Until you've learned how to work ON your business, instead of IN it, you'll never be able to make the kind of income you want.

In the beginning, as you train your staff to handle your low-payoff tasks, you may be able to delegate only 10 or 15% of these activities to that person.

This is fine. Each week, as you delegate more and more of your low-payoff activities to your staff, you'll have more and more time to work on your high-payoff activities, increasing your income steadily. And doing so without having to work any harder.

Here's an interesting fact: My research has shown that even the agents who have qualified for the Million Dollar Round Table's Top of the Table (TOT) membership (making at least $404,400 in first year commissions) only spend about 45 to 50% of their time in face-to-face selling.

If your most profitable activity is seeing prospects and clients, can you imagine how much more money you would make when you can spend most of your time in front of your prospects and clients?

You'll skyrocket your income to a level greater than your wildest expectations!

Ken Varga was in the insurance business for 33 years and created an agency that had 459,182 policyholders. He sold his business in 2001 for more than $100 million. He's written a book called, "How To Make A Fortune In The Insurance Profession," which shows insurance agents and financial advisors how to build their million-dollar agency or practice in record time. Best of all, you can get it absolutely free.

Check out what some agents and advisors have said about his strategies and systems...

"One idea alone has helped me make an extra $93,400.00 in new commissions, both from cross-selling additional products and generating new referrals!" ~ Walter Dobrowolski, San Marcos, CA

"It's been about five weeks since I downloaded your book, and so far I have received 68 referrals!" ~ Victor M. Lastra, Boca Raton, FL

"I doubled my insurance production last year thanks to your strategies." ~ Barbara Boyce, Dallas, TX

"I've had your program for about two and a half years. And during this period, my income has more than doubled." ~ Mark Brady, Roseburg, OR

"I can't thank you enough for the Referral Course. I implemented the program last week and the referrals are rolling in. I had no idea getting referrals was so easy." ~ Craig Peters, Bellevue, WA

"Bring in about 10 new clients a week." ~ Ron Martinez, Aurora, CO

"The book is probably the most practical and fundamentally sound book I've read that pertains primarily to the insurance industry and I've searched!" ~ Joseph Hall, Matthews, NC

This is the greatest insurance selling program I have seen and used in 10 years of being in the business! Very client centered! My financial agency's retention rate is over 97%." ~ Andy Zurbuch, Bloomington, IN

Get Varga's free book and take your business to the next level fast.

Directors and Officers Liability - Bleak Days For Directors and Officers

In a June 18th webinar sponsored by Zurich Financial Services in London, a forum was held to discuss director and officer liability exposures.

These are bleak days for corporate directors and officers.

In 2008 there were over 150,000 insolvencies in Western Europe alone. In the first quarter of 2009, the United States had over 5,000 corporate insolvencies. Mario Vitale, CEO of Zurich's Global Corporate Division, predicts over 62,000 American corporate insolvencies for 2009, an increase of over 56% from the previous year. And the bankruptcies are not limited to the financial sector. They are widely spread over every type of business.

Vitale asserts that there is a direct relationship between corporate insolvencies and lawsuits filed against corporate directors and officers. In one American court jurisdiction alone, considering all the public company bankruptcies filed in 2008, 77% had a class action lawsuit filed against them.

One of the other daunting challenges to today's corporate officer or director are the massive changes that have occurred in securities law. The Securities and Exchange Commission is holding officers criminally responsible for what they say regarding the financial health of their companies, including the information in their annual reports and financial statements.

Today's economic uncertainties are dangerous for corporations. They must consider:

- Whether their line of credit is secure
- Whether their bank, who issues the line of credit, is financially healthy
- The financial health of the companies in their supply chain
- The financial health of their customers. Can they pay their invoices?

So, for public corporations seeking investors, what can they tell prospective investors about the financial health of their company when the future cannot be accurately forecast in any substantive way?

What you can be absolutely certain about is when there is a corporate insolvency, the shareholders, hedge funds and the "vulture funds" will be picking the bones of the company's financial documents to find the slightest half-truth for their basis for lawsuits.

Francis Kean, attorney at partner at the UK firm Barlow Lyde & Gilbert, boldly stated that the worst event "by a country mile" that could happen to a director or officer is the insolvency of the company upon whose board they serve. A director's responsibility is to the company he serves and helps to control. However, in a bankruptcy, the Court takes control. It must not only settle financial claims against the company, but analyze the reasons for the insolvency, including whether or not directors can be found liable.

The other wild card is that the potential claim can be "sold" to the highest bidder because the claim can be perceived as an asset against the directors.

German corporate securities law stipulates that once a company's directors decide that the company should be liquidated, the directors only have 21 calendar days to place the company into insolvency. Failure to meet this deadline can result in criminal charges against the directors with a maximum jail term of three years.

Anything like that here in the United States? Are you sure?

Why would anyone choose to be a corporate director in this sort of business and regulatory climate?

So, how do directors and officers of corporations protect their own assets in this hostile business environment? The corporate director or officer cannot be certain that the company they serve will be there to defend and indemnify them in case of insolvency and subsequent legal challenges.

Can the director simply resign from the board? Not really. The director must eventually prove that he did everything humanly possible to minimize the losses for the creditors. Anything short of that effort could be considered a claim against the director.

The director must plan ahead, and prepare for the worst.

First, know your liabilities. Know who might be a plaintiff and the reasons they might file a lawsuit against you.

Second, buy a Directors and Officers (D&O) Liability insurance policy at the time you are either a director or officer. But buy the coverage while your company is still solvent. Buy from an insurance company that also has a strong balance sheet, and is going to be there when you need the protection.

Here is a new complication for directors, though. Some insurers are coming out with Insolvency Exclusions. Some are broadly worded, some narrowly worded. Be very careful of the wording of your policy.

Also be aware that most of these policies are "Claims Made" policies, which means that the trigger event must have happened within the policy period. But, is the bankruptcy the triggering event, or is the claim date the trigger? The claim may be made months after the bankruptcy filing and by that time, the policy may have expired. This question will be determined in the courts.

I recommend carrying your D&O policy for a couple years after you leave the Board of any company. I also recommend high policy limits.

Protect your assets with Directors and Officers Liability insurance.

Copyright 2009 by Russell D. Longcore

P.S. WARNING!! Do Not Buy Insurance, or Submit an Insurance Claim Without Visiting This Website!

A Great Way to Save on Homeowner and Renters Insurance

It seems that the more money in insurance dues we pay out, the more "they" get the last laugh. If in fact we find ourselves filing a claim, now we have the sweat on our brow worrying whether or not our trusting insurance company will continue to insure our home. Its almost a double edged sword. Not much we can do about the corporate decisions of insurance companies that happily accept our thousands of dollars a year in dues, but what we can do is take advantage of little things that may reduce the overall premiums we pay yearly.

After doing some online research, I presumably came to the conclusion that if some "additions" were added to our home, perhaps in turn, our premiums would decrease. Well, after taking appropriate steps, and installing some "additions" of the home security nature, my fiance and I spoke with our insurer, told them of our "additions" and... Voila! A break in our yearly premium! Needless to say, I was elated! The items purchased to secure our home, give us a better nights sleep, and reduce our yearly, will be paid off in no time considering the monies saved from our previous home insurance premium. Bottom line, free! Well not exactly, but you see what I'm getting at. After all was said and done, we felt secure, we were saving, and maybe, just maybe, I'll surprise my fiance with a little "getaway" by parlaying that extra savings that we made happen, just by doing a little research, developing a plan, and setting the plan in motion.

I implore you, the reader, to take initiative. Whether it be to save on your home or renters insurance, to stop eating fast food, to walk that extra half mile, whatever it may be. Find a way to capitalize on something positive. Your health, love life, career, anything. You can do it. We did. We're not basking in our complacency either, its on to the next challenge. How can we better our future? How can you better yours?