HR Risk Management – Pairing the Perfect Insurance Solutions
No matter how foolproof you make your hiring process and hr risk management program, there will always be the possibility of risks and claims. For this reason, it is imperative to pair your human resource risks with the appropriate insurance solutions to act as a safety net for those risks that are inevitable in the hiring and employment life cycle. Human resource risks, get ready to meet your perfect match.
Hiring, Firing, Disciplinary, and Workplace Lawsuits
Hopefully you haven’t had the displeasure of going through this scenario but no matter how well you hire, you occasionally end up with an internal conflict that results in one or several employees filing lawsuits against you (as the employer) because they say you harassed or discriminated against them. Sometimes these lawsuits are grounded and other times they are retaliation for taking administrative action against the employee that was completed in line with your policies and procedures. Nonetheless, lawsuits can cost a ton of money even if you end up victorious. And in states where fee shifting is present, you could have a small amount of damages result in a giant expense because you are forced to pay for the disgruntled employee’s attorney fees. And don’t think for one second that those fees are applied in any rational manner.
Your perfect pairing? Employment Practices Liability Insurance (EPLI)!
EPLI – a policy that covers any damages and related legal costs associated with an employee or third-party’s allegation of discrimination, harassment, unsafe work environment, etc. Specific coverage elements to pay attention to are back pay, public relations expenses, and whether legal expense are paid from the total limit or outside of it (big difference here).
Benefits Program Lawsuits
Your benefits solutions package is competitive and has taken a lot of time and attention to get just right. Or at least on the path to being just right. However, somewhere along the line the process of communicating the available benefits and enrollment process went awry. Several employees missed out on enrollment and now that period has passed. So sorry, you’re out of luck. Oh wait, a letter from their attorney/s! Unfortunately, it can and has happened that way countless times. No matter how fool proof your benefits system may seem, it only takes that one pin hole for an issue like this to slip through.
Your perfect pairing? Employee Benefits Liability (EBL)!
EBL – most often this coverage is included in your main General Liability (GL) policy but can sometimes appear in your EPL and D&O policies or as a stand-alone policy. EBL policies typically cover any damages and expenses associated with a claim by employees that they unfairly missed out on appropriate benefits that should’ve been made available to them and they suffered financial losses as a result. This exposure includes retirement accounts so a best practice is to have an outside firm with Fiduciary Liability coverage handle the administration of that part of the package or to pickup Fiduciary Liability coverage for your organization if you will be working as your own plan administrator.
Network & Data Security Losses
Cyber Security Online reports a scary look into the future of cyber crime. By 2021, global cyber losses may top $6 trillion according to Cybersecurity Ventures. Global ransomware damage costs are anticipated to exceed $5 billion in 2017. There are some statistics floating around that about 40% of email traffic includes some form of ransomware software/infection. Many of these attacks are made possible because of employee behavior. And no matter how often you train your team to not click on those suspicious looking emails…my friend Jimmy wouldn’t send me an email if it weren’t worth giving it a look! Even if the title is written in broken English and the domain name on the address is @gotcha.com.
Your perfect pairing? Cyber Liability Insurance (Cyber)!
Cyber Liability Insurance - Covering you for financial losses, regulatory fines, and credit notification/monitoring costs following a malicious attack on your computer network or electronic equipment. The typical example is a hacker gains access to your network and locks it from your use unless you pay them. In this example, the policy would pay for the ransom, investigation of the network to identify and fix the point where the hacker got in, and other costs such as credit notification and monitoring if personal financial information was compromised.
Employee Theft & Embezzlement
What makes employee theft so difficult to prevent? You must trust some employees to hold financially sensitive positions that involve money handling, accounting, banking, etc. Many times, it's the most unlikely individual that perpetrates such a theft. Circumstances that contribute to an employee stealing are varied and very difficult to anticipate/identify. Theft can also happen in small amounts over a long period of time, resulting in very large losses.
Your perfect pairing? Crime Insurance (with a little Fiduciary Liability thrown in)!
Crime Insurance - Covering your property against loss or damage due to theft and burglary. This type of coverage also helps recover from an external theft or robbery. Keys here include that criminal charges be pressed regardless of whether they are an employee or cat burglar. Our honorable mention for fiduciary liability coverage comes about if your employees have access to the assets of others or if they do work on premises at others’ locations. Nana’s family jewelry could be worth a pretty penny if one of your employees runs off with them.
Training & Competency Gaps
Unprepared or poorly performing staff can create a lot of havoc. The biggest risk here is whether they cause financial or physical harm to one of your customers or a member of the public. Any negligent behavior is going to result in your organization being named in the lawsuit. Lawyers always go after the biggest pockets they can. In this case, it doesn’t matter that Jane had the best training money could buy. If someone is injured or their property is damaged, they’re going to sue you to try and get back to whole.
Your perfect pairings? General Liability(GL) and Professional Liability (PL) Insurance!
GL - Covering you for claims made by another party of bodily injury, property damage, and the necessary legal defense costs when that party alleges your operations and activities were performed negligently and were the direct cause of the loss. The typical example is a slip and fall on your property or property you are working on.
PL - Covering you for claims made against you for Bodily Injury and/or Property Damage due to an error or omission in providing a professional service. Professionals are Architects, Engineers, Accountants, Physicians, etc. This type of coverage can also be referred to as Errors & Omissions coverage. Physicians can also call this Medical Malpractice Liability Insurance.
Hey Bob, I can’t reach the top shelf with the forklift. Hop on and I’ll get you up there. Ok so this is an extreme example…but it has happened! Regardless of crazy forklift accidents, even when performing their duties responsibly, your employees face risks to their physical safety. Risk Management Services can certainly provide some protection but until Iron Man suits become cost-effective for everyone, there will be injuries.
Your perfect pairing? Workers Comp (WC) and Employer’s Liability (ELL) insurance!
WC – Covering employees for medical expenses, lost wages, and claims administration expenses for any injuries sustained in the course of employment. The typical example is an employee who is lifting a heavy box and hurts their back; requiring surgery, physical therapy, time away from work, and possibly some amount of permanent disability or loss of physical function.
ELL - Usually included in Workers’ Compensation Policies. Covers workplace sickness and repetitive injury claims.
So there you have it. Love is in the air and your biggest Human Resource Risks have been appropriately paired with their corresponding Insurance Solutions!
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