Two types of liability insurance your practice needs (and likely lacks)Blog added by Ike Devji on May 4, 2011
Ike Devji

Ike Devji

Phoenix, AZ

Joined: May 19, 2010

To address two common exposures that are often overlooked and are important to protecting your business against a potential lawsuit; employment practices liability and cyber liability, I turned to insurance expert Aaron Stauss at Gilbert Insurance for some details on how you can be protected.

If you have employees, a website, or your business works with or stores personal, medical, financial or other valuable data, then your business has exposures that most likely are not covered in your general liability policy.

Employment practices liability

As the number and severity of employee practices claims rise, business with employees should have in place an employment practices liability policy to protect the business against costly litigation and/or damages.

An EPLI policy will provide coverage/defense cost from a potential lawsuit brought forth by an employee for:
  • Discrimination (racial, religious, gender, age)

  • Sexual harassment

  • Wrongful termination

  • Failure to promote

  • Retaliation

  • Employee related libel, slander, defamation

  • Mental anguish, emotional distress

  • Invasion of privacy
According to the Equal Employment Opportunity Commission, the average number of EPLI cases filed per year is 80,000. A recent study finds the average payout on an employee-related claim is approximately $180,000. We could list hundreds of example of employee lawsuits, but to get the idea all you need to do is go to the EEOC’s website and browse through the hundreds of cases in the newsroom.

Cyber liability insurance

As businesses continue to rely more on technology and the Internet, it also increases the potential for data security and privacy breaches. The average cost of a data breach is $204 per lost record. Question: Is your computer network protected from…
  • Hacker attack

  • Human error

  • Fraud

  • Virus transmission

  • Employee sabotage

  • Power failure

  • Natural disaster

  • System malfunction
Examples of the impossible that actually happened

An employee of a financial institution loses a laptop with client data. Multiple lawsuits are pending with defense costs exceeding $700,000.

Computer hackers breach your electronic system containing your patients’ medical records, and you are sued by the patients for failure to protect private information.
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