Does Your Bail Agency Have Adequate Insurance Coverage?
Business cycles, competition, changes in laws, the economy and the internet have made business owners more savvy in finding new revenue sources. Like real estate agents, who have expanded their revenue stream to include property managers, appraisers, leasing agents, and title escrow services, bail agents too can offer multiple services, such as private investigation and process service in addition to writing bail bonds. As they say, "business is business".
This is the American way for ambitious entrepreneurs to provide and offer a mix of services to their customer base. Through my 30 years in the insurance industry, business professionals have truly evolved and have a new brand name now referred to as "blended service providers". Business entrepreneurs have had to find more than one niche, giving them a broader range of services to offer their clients from one single shop.
Though many bail agencies have evolved, has your property and casualty insurance policy evolved as well? When you purchased it years ago, you had one product service to offer and now you are the new "blended service provider". This makes your exposure different. Does your property insurance cover only business furniture and fixtures? What about the different property taken in as collateral such as cars, art, antiques, precious metals and precious stones, houses, musical instruments, and electronics? Make sure your property insurance covers all aspects of your business.
Will your comprehensive general liability policy provide sufficient coverage for a business with business professional liability exposure? Should you believe the misconception that it will, you are leaving your livelihood dangerously exposed. As a business owner, the comprehensive general liability policy is important to have, but remember - this coverage is triggered by a bodily injury and property damage exposure or claim. Nowhere in the comprehensive general liability policy does it state coverage is triggered by a client who alleges that he has suffered a financial loss absent any bodily injury or property damage having occurred. As a business professional adding more services, such as process servers, private investigators and even electronic monitoring devices, you have become vulnerable to service breakdowns and lawsuits if you have not kept your insurance coverage up to date and reflective of your company.
Unfortunately, doing your due diligence and having years of experience does not shield you from being sued by a client (right or wrong) for an alleged act error or omission on you or your employees. You also need Professional Liability Insurance. The insurance definition is as follows:
"In which coverage is to pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as Damages resulting from any Claim or Claims first made against the Insured which first arise and are reported to the Underwriters during the policy period: by reason of any negligent act, error or omission, by the Insured or by any person for whom the Insured is legally liable, in the rendering of Professional Services as designated in policy wording."
Professional liability was originally designed for doctors, attorneys, architects and engineers. However, with the new breed of "blended service providers" professional liability (E&O) coverage is essential.
As a "blended service provider" make sure that your comprehensive general liability and professional liability policies have no gaps. I have seen that most comprehensive general liability policies have endorsements excluding professional liability as well as professional liability policies having endorsements excluding bodily injury, property damage and personal injury.
In my professional opinion, having the same insurance carrier for your comprehensive general liability and professional liability would better provide a seamless coverage gaps. If your primary insurance company does not offer adequate coverage, however, it is better to have the coverage you need from different companies than inadequate coverage from one.
In this increasing litigious environment all are vulnerable to comprehensive general liability and professional liability law suits, whether you were in the right or not. The out of pocket expense just defending your position alone does not only become a financial burden, but an emotional and mental burden as well, let alone affording the costs of a judgment or a settlement. Could you afford the cost to your business for the loss of your time away from it meeting with attorneys, gathering evidence and in depositions?
Shand Morahan & Company Inc., a wholesale- dedicated surplus lines insurer based in Deerfield, Illinois, did a study on the cost of lawsuits entitled. "Suits Can Be Steep". Their finding show that lawsuits can often be expensive. Shand Morahan's data file for the period 1990-1999, as of Dec. 31, 2001, reflect the following hard facts about the cost of defending an E&O lawsuit:
- 35.9 percent of claims result in some cost to the defendant.
- $22,649 is the average amount for defending a claim that closes with just legal expenses.
- $119,170 is the average loss amount paid per claim.
- $163,123 is the average combined loss and expense amount paid per claim when the defendant is found guilty.
Exposure to risks can come from anyone, anywhere and at anytime. Make sure you have comprehensive insurance coverage to protect your livelihood.
Rose M. Cain is the Chairman of the Board of International Casualty Writers. With over 30 years in the insurance business, Ms. Cain has seen how companies' insurance needs have changed over the year. Email Ms. Cain at [email protected] or call her at 480-457-1838.