These are a collection of real claim scenarios from FDA Services
(FDAS) staff.
Hurricane Irma Claim
Recently, I worked with a member who had purchased a Business Owner’s Package Policy Extension, providing additional coverage for their business. The policy was purchased through Liberty Mutual and it had excellent “civil authority” coverage. When Hurricane Irma came through Florida and this dentist was unable to return to his office, this extension ended up paying out lost income due to city authorities not allowing residents back into the city, even though there was no building damage.
Total paid: $31,000 for three days of office closure.
Professional tip: Make sure your office insurance policy includes civil authority coverage!
Cyber Liability Claim
An insured called me to discuss his professional liability and mentioned that his computer system had been hacked. He told me that he had hired a third-party administrator to try and restore his system and get him up and running. The hackers were demanding a ransom, but the third-party thought they could restore him from backups. The cost of the third party was about $5,000 and the ransom was $2,500. I advised him to call The Doctors Company right away, as all professional liability policies have $50,000 in coverage under the professional liability policy for Cyberliability. This includes coverage for cyber extortion. Beazley, the administrator of the insurance, was able to get the insured fully functional at no out-of-pocket cost.
Total Paid: $5,000 in IT services put in by the Beazley team.
Professional tip: Every professional liability policy with The Doctors Company includes a $50,000 Cyberguard policy. You can increase that to $1,000,000, starting at $600 annually for a solo-practitioner.
Hurricane Irma Claim
This past hurricane season, two different clients of mine reached out regarding a similar coverage question, “My sign was damaged due to the hurricane [or complications from the hurricane]. Do I have coverage to replace the sign?” Most of the business owners’ policies that FDAS sells contain some type of property coverage (whether that’s building coverage, business personal property coverage or both), general liability coverage and a bunch of extra coverages that I like to call the “bells and whistles.” Sign coverage is one of those little “bells and whistles” coverages for consideration.
Total paid: $10,000 for sign replacement.
Professional tip: Here are a few details to help understand what your policy may cover if your sign is damaged:
- Was my sign damaged due to a covered cause of loss? For example: If your sign was struck by an object during the hurricane, one of your first items for consideration should be if you have wind coverage on your policy or no.
- Is there a limit on my sign coverage? Is that enough?
- Is there a separate deductible for my sign?
- Is my sign attached or detached from the building? Policy verbiage may vary based on this information, so it is best to refer to your policy for additional details.
Employers Practices Liability Claim
Dr. XYZ had a discrimination claim. A female dentist owner had a current female employee file a discrimination suit against her because the employee felt she was being pushed out for being pregnant and could not work as much. This is the second time we have had a female employer be sued by a female employee for discrimination related to pregnancy.
Total paid: Pending, but employer liability coverage is in place up to $150,000.
Professional tip: All employers should have employers’ practices liability coverage in place in the amount of at least $100,000 and higher if there are more than five employees. Practices of all sizes experience discrimination suits.
Hurricane Irma Claim
During this hurricane season, I received many claims for business income from power outages due to a named storm. Many of the policyholders did not suffer direct damage, but rather power outages from damage off premises. Each policy is different in how this coverage will pay and therefore, it is important to look at the coverages, exclusions and endorsements.
We received a claim from an insured for business income loss as a result of a tropical storm. The insured has two locations on his policy and filed a claim for location No. 1 that did not have any power for a period of 10 days. The loss was a result of power failure from downed power lines down the street caused by the windstorm.
Initially the claim was denied, citing that there is an exclusion on the policy that specifically denies coverage for power outage if the outage occurs away from the premises. The insured argued that he has the Ultra PLUS endorsement, which provides business income coverage from a covered cause of loss to electric power transmission lines not located at the described premises.
Total Paid: $0. The claim was reviewed and denied again. Why? The insured’s policy provides windstorm coverage for location No. 2, but not for location No. 1. Since the cause of loss was due to a tropical storm, the claim was denied.
Professional tip: In Florida, many business owners are located in coastal areas, and as a result, windstorm coverage is typically excluded on a business owner’s policy. A separate windstorm policy can be purchased; however, windstorm policies only provide coverage for direct physical loss to the building. Currently, windstorm policies do not provide the extra coverage you would find in a business owner’s policy. As a result, business owners who live in coastal areas in which windstorm coverage is excluded risk the loss of business income and other valuable coverage.
Employers Practices Liability Claim
Our insured was contacted by a former employee’s legal representative demanding $50,000 in unpaid wages the employee felt they were owed. The employee had alternated weekly work schedules, working 45 hours and 30 hours. They were stating that they were not paid overtime for the five years they had worked this schedule.
Unfortunately, the insured did not have a separate employers’ liability policy. They did have an office insurance policy that offered up to $10,000 in coverage and filed a claim. The claim is still pending, but the insured had to hire their own labor attorney and will be responsible for defending the claim and any additional costs.
Total paid: $10,000 lump sum paid out by carrier to insured. This might cover the cost of legal fees, but that will depend on the outcome of the suit.
Professional tip: HR360 is a great resource for state labor laws and other employee resources. If you are insured with The Zenith (workers' comp company), you get this service for free.