Every business, no matter what the size, has a D&O exposure.  Some people may mistakenly think that D&O risks are just for large firms, but actual court cases tell a different story.  D&O claims come about because of decisions made by the firm’s officers and employees.  Claims can come from employees, competitors, investors, and the government.  Most of these kinds of claims are not covered under a standard commercial insurance policy.

Here are some interesting facts brought to you by the Insurance Information Institute:

• Over 53% of privately held firms have had D&O related claims.
• Twenty-five percent of companies have had an employment related claim.
• The average defense cost for a D&O claim is around $75,000.
• Firms with less than 50 employees have the same percentage of claims as larger firms.

Here are some of the kinds of claims to which your business is exposed:

Misrepresentation
If you misrepresent your company’s services, financials or other information, third parties may sue you for your actions.  This can include services you say you provide on your webpage or financial information you provide to a lender.

Breach of Duty
Your firm’s officers and employees are required to carry out their duties with a standard of honesty and professionalism.  If these legal duties are breached, you are subject to litigation by the injured party.

Employment Issues
Your employees can sue the business for a variety of employment issues that can be covered under employment practices liability policy which can be included in a Management Liability/D&O policy (make sure to verify EPL is included and know our limits).

Landlord Insurance or Lessors Risk Only (LRO) can be complex. Owning commercial property can definitely yield a sizeable ROI, however, there are some things you need to keep top of mind when it comes to your investment properties. With the explosion of commercial growth in Austin, I've had the privilege of spending a lot of time with building owners and investors. Here are some tips that will help you navigate the waters of Business Insurance when it comes to Lessors Risk Insurance (LRO), also known as Landlord Insurance. 

1. Tenant Insurance Requirements
Make sure to check with your insurance company on this requirement. Typically, at the very minimum, your tenants should carry liability limits equal to or greater than yours and also list you as an Additional Insured on their policy. Bottom line, it should be in the lease and followed up on. 

2. Keep an Eye on Vacancy
Insurance companies do not like vacant spaces. If you are at less than 70% occupancy, it could have an impact on how your policy will respond should there be a claim/loss, especially a vandalism, theft or water claim. 

3. Business Income
Being able to pay banks and taxes if a covered peril were to happen could make or break your investment. Don't skimp on this coverage. Also make sure your tenants carry it. 

4. Building Limit (Property value)
Inflation is inevitable. As we've seen recently, labor and material costs can increase quite rapidly, makes sure you review your policy limits. Also make sure you insure at Replacement Cost. It might cost more than Actual Cash Value, but come claim/loss time, you'll be glad you did. This limit does not include land. 

5. Deductible
Review your property deductible and your wind/hail deductible. Sometimes they are the same, sometimes they are not. Make sure you are comfortable with your deductible. 

6. Building Updates
Insurance companies love updates. Make sure you let your insurance agent know if you update any of the following:

- Roof
- Plumbing
- Electrical
- HVAC

It could save you money, enhance coverage or prevent a nonrenewal. 

These are just 6 tips or suggestions. If you want to discuss in more detail or have questions about Business Insurance please feel free to contact me. I am local and would love to work with you. 

Jason Matison
Commercial Insurance Agent
Austin, Texas

When it comes to Business Insurance a lot of companies have some level of risk when it comes to professional liability. This kind of coverage is not just for lawyers, accountants or doctors. Your business might have a risk in this area and you’re not even aware. Depending on the exposure, we recommend Professional Liability Insurance to many of our clients.

If you perform any of these services, you should consider Professional Liability Insurance sooner rather than later:
 

• Consulting of any kind
• Market research
• Accounting
• Advising
• Designing
• Advertising
• Technology related business
• Healthcare
• Professional services

 
How to Reduce the Likelihood of a Claim
 

1. Keep and maintain a professional code of conduct at all times (even on social media).
2. Consider Hold Harmless Agreements.
3. Make sure clients understand what their business does and doesn’t do, as well as all moving parts, fees and expenses, and any underlying risks and guarantees. You can never overeducate a client.
4. Have written procedures relating to client communication and follow-up. Most importantly, make sure it’s documented.
5. Do not provide advice if you are not qualified to do so.
6. Make sure to disclose all required information and be very upfront about your record of accomplishment and business practices

Most companies purchase general liability insurance to protect their business against certain kinds of claims. These claims could include bodily injury and property damage. It is very important for businesses to understand the difference between professional liability and general liability. As much as we want to run a perfect business, at the end of the day, mistakes (errors) can happen. If the mistake financially harms a client, you could be sued. Being prepared can go a long way to not only save your business, but give you peace of mind.
 
Lastly, just because Professional Liability isn’t required for a client/contract doesn’t mean you don’t need it or you’re off the hook. Being in Austin, TX, I work with a lot of tech startups. Some of these tech firms just want General Liability, and say, “that’s all I need right now”. Maybe they are waiting on funding, or it’s not required, or they’re just trying to save money. Some will go as far as getting an Umbrella because they think it will protect them. I’m not against Umbrella Insurance, just don’t think an Umbrella is going to pick up a professional liability risk when you don't have a Professional Liability Insurance policy for it to go over. If you have any questions about Professional Liability Insurance or any other Business Insurance, please feel free to contact me.
 
Jason Matison
Commercial Insurance Agent
Austin, Texas