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26 SNJ Business People

Governor Christie Addresses Business Leaders On April 30, Chris Christie addressed members of the Chamber of Commerce Southern New Jersey for the fi rst time as Governor of The State of New Jersey. Five-hundred Chamber members gathered to hear the Governor discuss issues of interest to the business community and the Fiscal Year 2011 Budget.

Pictured with Governor Christie before his address are: (left to right) CCSNJ President & CEO Debra DiLorenzo; Board member Michael Renna, South Jersey Industries; CCSNJ Board Chairman Dr. Herman Saatkamp, Jr., The Richard Stockton

College of New Jersey; CCSNJ Board Vice Chair Judith Roman, AmeriHealth New Jersey; and CCSNJ Executive Vice President & COO Kathleen Davis

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Newest Insurance Products: Bells & Whistles or Necessities?

With the current state of the economy everyone is rethinking their spending. This article will outline the some of the latest business insurance coverage’s so you can make an informed decision when selecting for your company. In spite of the near-universal recognition that insurance is a necessary and important part of business planning, some of the most recent insurance product innovations have been given the cold shoulder by business owners. Failing to consider some of the latest coverage products could expose your business to a fi nancial loss just as devastating as a fi re or a general liability lawsuit. Here is a review of some of these newest policies and their functions: Employer Practices Liability: This coverage provides funds for the defense and settlement of employee discrimination, unlawful termination and sexual harassment claims. Lawsuits for these issues have been steadily rising each year. The Equal Employment Opportunity Commission (EEOC) reports that 93,277 charges were fi led by employees in 2009. This is a 20% increase since 1999. The average EEOC lawsuit exceeded $250,000 in 2009. In addition companies least able to afford the costs of these lawsuits are in the crosshairs, since businesses with less than 100 employees are most often the targets of these lawsuits. Many of these policies now also offer coverage for wage violations lawsuits according to the Fair Labor Standards Act (FLSA) as well. Fiduciary Liability: If your company sponsors a 401k or other pension or profi t sharing plan, the company owners have exposure to fi duciary lawsuits for negligent investment of these funds. Even though you have hired an investment company and even though your employee chooses the investment funds he or she will participate in, the company owners are ultimately responsible for payment in the event of a lawsuit…unless there is applicable insurance. Considering the volatility of the investment market right now and the relatively low cost of the coverage ($1,000-$1,500 per year on average), the risk-reward favors the purchase of insurance. Directors & Offi cers Liability: Many businesspeople think of “D&O” as only necessary for public companies to protect against stockholder lawsuits. However, D&O coverage also provides protection in a number of different situations faced by private companies. Disagreements with competitors, customers, creditors or regulators can result in a lawsuit against the owners and directors of a

company. Private stockholders who are depending upon a return on their investment may also have cause to sue company owners if results are not as expected. The reality is that the owners and directors of many non-public companies do need D&O insurance. I have a few D&O lawsuits among my own clients, all non-public companies. Internet Liability: The internet has made shopping easy and effi cient. Products can be researched, compared and priced online from a number of different

internet merchants. If your business sells its products online, taking credit card and other personal information from customers, you have the obligation to secure their data. Unfortunately, cyberspace has spawned its own breed of invisible criminals that live off of the credit card numbers

of others. Twice over the past year I have had to cancel credit cards when items that I had not purchased appeared on my statement. Internet data security isn’t the only exposure covered by these policies. If your company sources any content from the website(s) of others, you may have copyright exposure. There are other internet issues as well, too numerous for the scope of this article. Professional Liability: If your company is an architect or engineering fi rm, a medical provider or a computer software developer you probably already carry professional liability coverage (also known as Errors & Omissions insurance).On the other hand if you are a wholesale distributor, for example, you probably do not have professional liability coverage (or risk). Some companies, however, operate in a gray area where they may provide some services that can be considered professional even though their core activities are not professional. For instance, I have a client who sells warehouse racking and storage systems. This would not seem to require professional liability, but as part of their service they lay out the storage scheme in the customer’s warehouse. Might a claim occur if the suggested racking layout constricts the customer business fl ow instead of aiding it, causing the customer a loss of business? This is the type of question that should be asked by insurance buyers before ruling out the need for professional liability. The point of this article is to cast some light on policies that may have been discounted by business owners in the past. The insurance policies listed above are either relatively new or are not often thought of as applicable coverage. Writing them off as unnecessary, though, ignores substantial risk of loss

By: Joseph L. Pilato

Joseph L. Pilato

Article provided by: Joseph L. Pilato, CPCU of Maran Corporate Risk Associates

Vol. 4, Issue 5, 2010