Is Separate Coverage Required for Suits vs. Claims?
You’ve heard of employees filing a suit against their company. You’ve also heard of people making a claim against their employer to demand financial compensation. So what’s the difference? Are these the same? Do you need separate insurance policies to cover claims and suits?
Suit definition: A suit is a proceeding involving damages due to personal injury, property damage, or bodily injury. It is a civil action, not criminal. Suits also may involve arbitration proceedings and other forms of alternative dispute resolution.
Claim definition: A claim is a “demand” for damages. If a lawsuit involves demands for damages, it is considered a claim. However, not every claim is a lawsuit. Some claims are “requests” for damages, as occurs when an employee doesn’t file a lawsuit but has sent a letter with a complaint requesting money for specific damages. If the request is not met (or not met by a specified date), the employee may then file a lawsuit.
Insurance Coverage: Both claims and suits are typically covered by general liability policies. However, specific circumstances may require endorsements that protect against those particular scenarios.
It’s important to respond promptly to either a suit or a claim made against your company. If you are faced with one, it’s also essential to contact your insurance provider as soon as possible to determine your coverage. Often, providers must approve settlements, such as those made in arbitration, for coverage to kick in.
Ensure you have the proper policies in place by discussing options with your agent.
It May Be “Borrrring,” but if It Boosts Creativity, Bring It On
For the chronically bored among us, here’s a news flash: we actually need (to a certain extent) that state of ennui. In fact, it’s good for us. Perhaps, like banging our heads against a wall, it feels good when we stop. It seems, after time spent being bored, we’re psyched to come up with creative ideas.
This is great news for employers, who sometimes find their employees (or themselves) procrastinate when asked to perform tedious but important tasks. Now science sees boredom as a phase that ushers us into a state of creativity, according to a recent article in Wired online.
As Wired writer Clive Thompson notes, separate experiments by researchers at the University of Central Lancashire and Pennsylvania State University suggest that boredom can actually be leveraged to enhance creativity and abstract thinking.
After engaging in a series of dull, mundane tasks, participants in both studies saw improvement in their creative output. In one, bored subjects came up with more and better ideas than a control group. The explanation may be that their minds were actually primed for the curiosity and creativity that comes after boredom.
These days we often escape boredom by turning to our devices. We seem frightened of being bored. Instead of seeking to escape through our phones and other diversions and activities, we should, as Thompson says, “lean into it,” and consciously experience the journey through boredom to curiosity, and ultimately, to creativity.
We need periods of ennui to come up with the creative ideas that employees welcome and employers value. But not the kind of boredom that disincentivizes us (lethargic boredom). Instead, call it “useful boredom” – acknowledged as valuable in its own right.
HOT BIZ TRENDS
Have You Considered Every Option to Grow Your Business?
You’re an entrepreneur with ambition, and the next step in your upward trajectory is deciding how to grow your small or medium-sized business.
One option you may not have considered is franchising. Does your product or service lend itself to this kind of business model?
If so, here are some things to consider when thinking through the franchise option.
Isaac Singer (of Singer sewing machines fame) became the first franchisor in 1851 when he contracted with other entrepreneurs to sell his products in different locations, ensuring a broader customer base for his sewing machines.
The franchise sector grew dramatically in the 1950s, when restaurants began to expand through franchises.
This year the International Franchise Association expects a 5.2% increase in the franchise industry’s gross domestic product, to a total of $426 billion.
Annual job growth in the sector has also been higher than that of other business categories for the past five years.
As a franchisor, you will be the parent company, and other entrepreneurs will purchase the right to operate a separate location of your business.
The contract between the franchisor and the franchisee defines the rules under which the new location will operate, but among other things, the franchisor will dictate quality control and management philosophy to ensure the new location maintains the same standards as the parent company.
Finally, realize that you’re putting on the line the “goodwill” you’ve built up over the years, and make certain that you and your franchisees are on the same page.
FAQs on Employee Benefits Liability Coverage
A good benefits package can enhance your business by attracting employees and retaining current staff. But there’s a downside: errors in the administration of benefits can result in lawsuits against your company. If this happens, your employee benefits liability (EBL) policy will kick in. How? Here are some FAQs on this important coverage.
What is employee benefits liability coverage? Employee benefits liability insurance protects your company against suits that result from administrative errors. If someone managing your employee benefits makes a mistake and this error results in a lawsuit, EBL protects you from the associated costs. These types of suits are not covered by general liability policies, making this additional coverage a very important add-on; EBL coverage is typically added to your general liability policy as an endorsement.
What kinds of mistakes? Employee benefits packages can be extremely complex. From life insurance policies to maternity leave, these benefits involve minute details and significant administration. When an error is made, affected employees can suffer major financial losses. EBL is available to cover these situations, including:
Descriptions of benefits and eligibility. When explaining coverage to your employees, you or your benefits manager may convey incorrect information, and the employees are more than likely to make benefits choices based on this erroneous info. This decision could cost them down the road, and they may hold you liable for their financial burden. If a lawsuit is filed because of your error, EBL has you covered.
Losses of electronic and/or paper records. Maintaining records of all benefit information is essential. If your HR department accidentally loses a benefit file, the loss could prove costly. If your employee suffers because this information is missing and sues you, your EBL insurance covers the costs.
Enrollment, maintenance, and termination of employees and beneficiaries. If your benefit packages are complex, it can be easy to miss a detail. One mistake on a form could omit an employee’s beneficiary from that person’s plan. Mistakes such as these are covered by EBL insurance.
What plans are covered? EBL offers coverage for a full range of benefits. These include insurance benefits, financial benefits, disability and worker’s compensation benefits, and other fringe benefits such as tuition reimbursement and maternity leave.
Who needs EBL insurance? If your staff includes a large number of employees and you offer a full benefits package, it’s wise to have this policy in place. If you have few workers and offer few benefits, you may not need it, although it’s always wise to check.
As the goal is to provide coverage against large claims by employees or their dependents should they suffer financial loss due to your mismanagement of their benefits, the size of your risk will determine the coverage required. When in doubt, discuss EBL coverage with your agent, who will help you review your insurance policies and decide whether EBL coverage is necessary for your business.
Mistakes happen. If they do, EBL can provide you with peace of mind. And it may prevent the unthinkable: a suit that will sink your company.
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