FAQ

General Insurance  

• Protects your assets against attachment as a result of a court award.
• Provides for cost of defense when you are sued.
• Allows you to purchase such high value items as a car or a home by insuring the collateral on behalf of the financial institution that lent you the money.
• Provides financial security for your family in the event of your death.
• Provides for the health care of you and your family through systematic payments.
• Allows you to save for retirement while deferring interest payments to a time when your income is lower, thus reducing your tax payments.
• Allows you to remain financially solvent when you’re ill and can’t work.
• What factors affect the insurance premiums I pay?
• Claims activity including such costs as medical care, auto body repair, construction, legal defense, jury awards, claims adjustment, and insurance fraud.
• Overhead including rent, utilities, employee salaries and benefits, office supplies, equipment, and furniture.
• Investment income

By using an agent to purchase insurance, the policyholder receives more personal service. An agent with whom there is direct contact can be vital when purchasing a product and absolutely necessary when filing a claim. A local, independent agent is able to deliver quality insurance with competitive pricing and local personalized service.

Cynosure provides consultative services in evaluating your insurance and risk management needs and recommending coverages that respond to those needs. We have relationships with several national and international insurance companies and act as your advocate in negotiating the best terms, conditions and pricing available.

Cynosure represents many insurance companies and will survey the market on your behalf.

In most cases we can quote your home and auto in less than a day. However, there may be special circumstances that will take a bit more time. We do our best to make sure you get a fast quote, and more importantly an accurate quote

In general, you should always select as high a property deductible as you can afford. If you do not intend to submit a claim for under €500, then you should elect a €500 deductible.

We treat your personal information with the highest regard, and obviously do not sell or give that information to any other party. Please read our Privacy Policy for more information.

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Commercial Insurance

Liability policies provide coverage at least for defense and settlement costs. Consider purchasing sufficient coverage to allow you to maintain your assets.

Business property insurance protects your building and the property within it, including computers, furniture, fixtures, and personal property used to conduct normal business operations. You can purchase coverage sufficient to replace your property.

Employers Liability insurance is mandatory by law for businesses and individuals that have employees. Talk with a member of our insurance team to learn about your responsibilities and examine if you should purchase more cover than the minimum required by law.

Business interruption insurance covers the loss of profits and continuing operating expenses. The purpose is to make you whole in the event of a covered loss.

A business’ insurance needs can change frequently. As you add staff or locations, your coverage needs will change as well. You want to protect your business by not being underinsured or by paying for excess coverages. At Cynosure we recommend reviewing your insurance policies and premiums at least annually to ensure they still meet your growing needs.

This type of insurance is called employment practices liability insurance. This type of business insurance protects employers when there are claims such as discrimination, harassment or wrongful termination. This type of business insurance policy is usually one you must purchase as a stand-alone policy or as part of a directors and officers liability policy

Cyber coverage protects your stored information in the event it is compromised or destroyed. Cyber liability coverage protects you in the event you are sued for being legally liable should personal information of others be compromised or destroyed.

One important way to protect yourself is to learn how hackers invade data bases. There are many risk management tools available to assist companies, including firewalls and secure websites. Specialty insurance lines have developed Cyber Liability policies to protect businesses in the event protected information is invaded and made public.

Directors and Officers insurance is a form of managerial malpractice liability insurance. It covers wrongful acts or decisions by those who run a corporation. Potential suits can come from employees, customers, or competitors.

Your coverage should insure the entire building shell (drywall and out). If property damage is caused, it is most likely the owner’s policy would respond and then the insurance carrier would subrogate against the tenant’s policy. You should review your lease to determine your responsibilities.

Yes. Not having insurance – or not having the right kind of coverage – can put your small business at serious risk. Without the adequate levels of insurance, a fire, theft, cyber security breach, employee accident, or lawsuit could cause your business to close and could possibly even consume your personal assets.

Depending on the type, your business may be legally required to carry certain kinds of insurance. For example, if you have employees, you need to have employers’ liability insurance in place. Also, business people such as landlords or suppliers may require you to have and show coverage as part of a contract.

No. Most property policies will cover direct physical loss to your computers, but not any data stored within them. Intellectual property rights are usually excluded as well.
GDPR Regulations require a breach to be reported should any personally identifiable information be leaked. Companies who fail to report that data breach are subject to large fines. For an assessment to determine if you are properly covered for cyber liability, contact the professionals at Cynosure today.

Professional liability insurance and errors and omissions insurance are essentially the same thing. People use these terms interchangeably, and they are referring to the same basic product.

You often run extremely important and complex projects for your clients that they may not fully understand. Professional liability insurance is especially important for businesses like IT/technology consultants, business consultants and marketing consultants for whom incorrect advice or a failure to perform professional services could lead to a lawsuit. Even if you haven’t made a mistake, you can still be sued. A general professional liability insurance policy will cover legal fees, protecting you and your business from potentially crippling costs.

The quote and buy process is very simple. We’ll ask you for some basic information about your business and services. You’ll also be asked what risk management practices you currently use. Why? Well, we like to give our best rates to businesses that actively try to reduce their chances of being sued.

Professional liability insurance premiums vary a lot depending on several factors, including the size of your business, your occupation, the types of activities you conduct, and the level of protection you choose.

Hiscox offers a range of professional liability limits. Our licensed advisors will guide you on what your business needs.

Professional liability insurance only provides protection only as long as your policy is in force. This means that only the claims made and reported in the policy period will be covered. When you cancel your policy you may not have protection in place, even if a claim later arises from work completed during a period in which you had insurance. So it’s wise to keep coverage in place even after you have completed a project. However, if you must cancel your coverage, you can opt to purchase an extended reporting period

You can cancel a policy at any time and we will refund any amount due to you on a pro-rated basis. However, should your business then be subject to a claim, it will not be covered unless an extended reporting period is in effect.

If you cancel your policy, we recommend that you purchase an extended reporting period endorsement. This means that although your business has no protection for claims arising from future work, it is still covered in case you are sued for work previously completed.

A retroactive date shows how far back the insurer will pay valid claims, even if they may relate to work you completed before you took out a policy through Cynosure.
Frequently Asked Questions About Professional Liability Insurance for Architects, Engineers and Environmental Professionals

Directors and Officers Liability Insurance protects company directors and officers against claims arising from their wrongful acts whilst managing their business.
Back to the top.

An officer can be any individual within a company who makes decisions which affect the company. The title “officer” depends on what an individual does rather than what he is called.

The limit of indemnity chosen by your client should be a combination of what they perceive their exposure to be and how much they are prepared to spend. Remember that this insurance protects your client’s personal assets.

No, Corporate reimbursement reimburses the company when the company has paid indemnity or defence expenses on behalf of one of its directors or officers; it is included in most directors and officers policies as standard. Corporate Liability cover extends the policy to include protection for the company’s own liability and defence expenses

There are many differences; a D&O policy will include cover for compensation awards and settlements as well as the cost of the defence whereas a legal expenses policy will only usually cover the cost of defence.
Most legal expenses policies include a “prospect of success clause”, this says that, if in the opinion of the insurer the likelihood of winning the case is less than 50% they will not offer cover. Your D&O policy has no such clause and will respond regardless of likely outcome.
Legal expenses insurers will insist upon use of their own in house counsel and the Insured is required to immediately notify the Insurer of any potential claims without taking any action whatsoever. If the Insured deviates from these rules or responds in any way to the claimant, cover may again be denied with the Insurer claiming that any possible defence has been prejudiced. Whilst your D&O insurer will still require notice as soon as possible, any contact prior to such notice will be considered and any potential resulting prejudice will be assessed prior to a coverage position being determined.
Investigation costs and expenses are covered by both legal expenses and D&O policies although a legal expenses policy will specify for which organisations investigation expenses are included whereas an Angel D&O policy does not limit this.
A D&O policy will not cover any prosecution costs.

Our Directors & Officers Policies provide employment practices liability for individual Directors and Officers as standard, however, this only extends to claims made against Directors or Officers personally. In order for the company to be protected against employment practices claims they will need to purchase our Employment Practices Liability Extension. Nearly all employment practices claims are brought against the company but very few will specifically name a director or officer.

Our Corporate Liability Extension has an additional limit for unindemnifiable loss which applies solely to claims made against individual directors or officers should the policy limit be completely eroded. The limit available for this extension is 50% of the policy limit subject to a maximum aggregate limit of £250,000

Our D&O policy covers the defence costs involved in any “formal” investigations initiated by any organisation. It is important to note that this does not extend to the internal investigations initiated by the company itself.

Where the policy has been extended to include corporate liability the policy will respond to allegations of Corporate Manslaughter.

The policy is intended to protect directors and officers against allegations of wrongful conduct when they are acting as company executives.

Typically, most policies cover alleged wrongful acts that have taken place prior to or during the policy period. However, some policies are negotiated to expressly exclude “past acts” coverage, so the actual language of the policy must be closely reviewed.
D&O insurance is not intended to be “burning building” insurance. If a potential insured is aware of an impending claim, it may be too late to go out and get insurance to cover it, unless the potential claim is disclosed and the carrier expressly agrees to take it on. First time D&O purchasers must reveal any information they have regarding known claims or related circumstances in the application process itself. Matters disclosed in the application process will usually be excluded from coverage.

The simple answer is that directors and officers are covered under a Directors & Officers Liability policy, but this is not a complete answer.

While traditionally only the directors and officers themselves were covered under a D&O policy, today this may be expanded to include managers and other non-executive directors, employees and the company itself.

What about the company itself, since it may be a defendant in many claims that could be asserted against directors and officers? Today, most D&O policies for publicly traded companies also insure the company itself but only for securities claims. Most D&O policies for privately held or not-for-profit organizations include coverage for the company for an array of claims (not limited to securities claims).

Claims can be brought by the company’s stakeholders (owners, investors, lenders, employees and securities holders, including bondholders).
Claims can also be brought by customers, consumer groups, competitors, business partners (venders and suppliers) and government enforcement/regulatory groups.

Companies generally do indemnify their directors and officers. However, sometimes companies are financially unable to provide this monetary protection or are unwilling to do so for economic or political reasons. Without corporate indemnity or insurance, directors and officers would be reduced to relying on their own personal assets to pay for the costs of defense and any resulting settlement or judgment against them. Outside directors (those that are not also employed by the company) are usually very vocal about requiring D&O coverage before agreeing to sit on a corporate board.

Usually, there is a single aggregate limit of liability that applies for all claims that fall within the terms of the policy. This means that the aggregate limit is the entire amount that the carrier is willing to pay under the policy, and is not changed because of the number of claims, the number of insureds, or the accumulation of defense costs. Once this limit is exhausted, there is no more coverage available under the policy for any current or future claims. To the extent that the limit is exhausted (the carrier has made payments totaling the limit of liability) prior to resolution of one or more claims, the carrier has no further obligation with respect to those pending claims. This also means that the carrier has no further obligation in connection with defense costs that may continue to be incurred.

Defense costs apply first to the deductible or retention of the policy, and then serve to exhaust the available limit of coverage. It is possible that the entire policy could be spent in the defense of a claim, with no coverage remaining for any possible settlement or court award.

Standard exclusions include fraud, personal profiting, accounting of profits, and other illegal compensation exclusions, pending and prior litigation, prior (late) claim notice, bodily injury/property damage, pollution, insured versus insured claims and ERISA (the Employee Retirement Income Security Act of 1974). Insurers may also include other exclusions based on their own claims payment experience, such as hostile takeover or captive insurance company exclusions.

Some exclusions pertain to areas usually covered under some other type of insurance. ERISA violations are usually covered under a Fiduciary Liability policy, property damage may be covered under a General Liability policy, etc.

While a large percentage of D&O claims include allegations of fraud or illegal personal profiting (or both), the simple allegation is not enough to trigger the exclusion. Most, if not all, such exclusions require something like a court determination of guilt or an admission of guilt before the exclusion can apply. Either the words “final adjudication” or “in fact” will be used in the exclusion to indicate how high the hurdle is for the carrier to apply these exclusions.

Defense costs incurred for such a claim are typically covered by the policy until such time as the wrongful conduct is determined to have “in fact” occurred, or until there is a final adjudication. This means that a settlement without an admission of wrongdoing usually does not trigger the exclusions. In the event there actually is a finding of fraud or personal profiting, those directors and officers who are not found guilty continue to be covered even after others may have confessed or been adjudged guilty.

A D&O policy is intended to function as third-party coverage or to insure claims made against the directors and officers by outsiders or third parties. It is not intended to respond to claims by the insureds themselves. (These are viewed as either insider fighting or collusive suits – things that the insurance carriers want to avoid).

There are some exceptions to the application of this exclusion. The first makes an exception for shareholder derivative suits as long as no insured (including the company) assisted in bringing the suit in any way. The second typical exception is for wrongful termination suits by officers. More recent exceptions may apply to cross-claims or claims for indemnity. Each of these exceptions means that the exclusion does not apply in those circumstances – so there is coverage.

It varies, but typically, the claim has to be first asserted or “made” against the insured during the policy period. This is why D&O insurance is generally referred to as “claims made” coverage. Some D&O policies also require that the claim be reported to the carrier during the same policy period. This is referred to as “claims made and reported” coverage. Many carriers provide some degree of a reporting “tail” to allow a short period of time after the policy expiration in which to provide notice of claims that came in during the policy period.

Courts have upheld the claims-reporting requirements of D&O policies, finding such requirements to be a condition of coverage. Since the reporting of claims is solely within the control of the insured, it is an obligation of the insured to act in a timely manner. Exactly what is “timely” may vary slightly among carriers, however. Many policies require notice as soon as practicable, as long as it is still within the policy period. Carriers and courts differ on what length of time is practicable. In any event, failure to provide timely notice can and will result in loss of coverage. What would be a covered claim can become uncovered if the reporting provisions of the policy are not strictly adhered to.

The definition of a claim varies from policy to policy, and some do not define it at all. Generally, a claim includes any written demand alleging a wrongful act by a director or officer in his or her capacity as a director or officer, seeking monetary or nonmonetary damages. This may be expanded to include investigative orders, grand jury subpoenas in actions that seek to hold the individual liable and other more esoteric events.

A D&O policy will generally either pay or reimburse the company the costs associated with the defense, investigation, negotiation and settlement (by way of a court determination or otherwise) of a covered claim. This includes attorneys’ fees, court costs and filing fees. It may also include expert or other specialist fees that are consented to in advance by the carrier. Most policies include the phrase “reasonable defense costs.” Therefore, some carriers may object to some element of expenses as being unreasonable (either because the amount charged is excessive, the work is duplicative, or the services rendered were unnecessary). In all events, the carrier only pays for or reimburses those expenses that are consented to in advance. In addition to expenses, D&O policies cover judgments/verdicts and settlements. Although the actual term used may differ (some carriers cover “loss” while others cover “damages”), all typically cover any court award or settlement, plus defense expenses.

Covered loss will usually specifically exclude civil, criminal or punitive fines or penalties; exemplary or multiplied damages; amounts that are without legal recourse to an insured; or amounts that are uninsurable under the law. As with many other aspects on D&O policies, this can be modified by insurers. Many now agree to pick up certain fines and penalties and agree to provide coverage for punitive damages where insurable by law, especially for securities claims.

It depends: for securities claims involving public companies many D&O carrier have a pre-set list of law firms that they require the Insured to use (with pre-set, usually advantageous, rates). For non-securities claims for publicly traded companies, the insureds can usually select their own defense counsel. Carriers without pre-set lists still retain the right to consent to the counsel chosen by the insured and look for counsel that can demonstrate experience in the type of litigation at issue.

Under most D&O policies issued to privately held or nonprofit companies, the insurance carrier has both the right and duty to defend claims brought against the directors and officers in their official capacity. This usually means that the insurance carrier gets to select counsel.

Most D&O policies have what are generally referred to as “change in control” provisions. Most, but not all, policies state that in the event of a change in control, the policy will remain in force for the remainder of the policy period, but, and this is a big caveat: coverage will only be provided for claims involving wrongful acts occurring prior to the change in control.

Please note that some policies actually terminate coverage altogether at the time of the change in control. It is very important to know precisely how a specific policy would respond in such a situation.

Under the majority of policies, a change in voting control is the trigger for a change in control. Some also include sale of all or substantially all assets as a trigger. A filing for bankruptcy typically does not trigger the change in control clause, nor does a substantial change in the composition of the board.

Historically, all D&O policies could be readily canceled by either the insurer or the insured. Many state insurance commissioners believed that this ability presented a significant hazard to the insured. As a result, many states limit the situations under which an insurance carrier can cancel a D&O policy and require these specific situations to be clearly identified and detailed in each policy. Today, D&O carriers are often willing to make their policies non-cancelable as long as premiums are paid. In these cases, the insured does not need to worry about being deserted when prospects are bleak.

In addition to setting out the specific circumstances and timeframes in which an insurance carrier can cancel or non-renew a D&O policy, most states provide the insureds with special protected rights in these situations. These rights can often be found in the D&O policy itself.

One such provision is the right to purchase an extended period in which to report claims that would have been covered by the policy before it was cancelled or non-renewed. When these claims are first asserted and reported during this extended period, they are then covered under the policy terms and limits in effect prior to the policy’s termination. This extended reporting period (ERP) is often referred to as a discovery period. Some D&O insurers make discovery available when either the insurer or the insured cancels or non-renews.

Cyber Insurance

Cyber coverage protects your stored information in the event it is compromised or destroyed. Cyber liability coverage protects you in the event you are sued for being legally liable should personal information of others be compromised or destroyed.

One important way to protect yourself is to learn how hackers invade data bases. There are many risk management tools available to assist companies, including firewalls and secure websites. Specialty insurance lines have developed Cyber Liability policies to protect businesses in the event protected information is invaded and made public.

Directors and Officers insurance is a form of managerial malpractice liability insurance. It covers wrongful acts or decisions by those who run a corporation. Potential suits can come from employees, customers, or competitors.

Your coverage should insure the entire building shell (drywall and out). If property damage is caused, it is most likely the owner’s policy would respond and then the insurance carrier would subrogate against the tenant’s policy. You should review your lease to determine your responsibilities.

Yes. Not having insurance – or not having the right kind of coverage – can put your small business at serious risk. Without the adequate levels of insurance, a fire, theft, cyber security breach, employee accident, or lawsuit could cause your business to close and could possibly even consume your personal assets.

Depending on the type, your business may be legally required to carry certain kinds of insurance. For example, if you have employees, you need to have employers’ liability insurance in place. Also, business people such as landlords or suppliers may require you to have and show coverage as part of a contract.

No. Most property policies will cover direct physical loss to your computers, but not any data stored within them. Intellectual property rights are usually excluded as well.
GDPR Regulations require a breach to be reported should any personally identifiable information be leaked. Companies who fail to report that data breach are subject to large fines. For an assessment to determine if you are properly covered for cyber liability, contact the professionals at Cynosure today.

Directors Officers Insurance

Directors and Officers Liability Insurance protects company directors and officers against claims arising from their wrongful acts whilst managing their business.
Back to the top.

An officer can be any individual within a company who makes decisions which affect the company. The title “officer” depends on what an individual does rather than what he is called.

The limit of indemnity chosen by your client should be a combination of what they perceive their exposure to be and how much they are prepared to spend. Remember that this insurance protects your client’s personal assets.

No, Corporate reimbursement reimburses the company when the company has paid indemnity or defence expenses on behalf of one of its directors or officers; it is included in most directors and officers policies as standard. Corporate Liability cover extends the policy to include protection for the company’s own liability and defence expenses

There are many differences; a D&O policy will include cover for compensation awards and settlements as well as the cost of the defence whereas a legal expenses policy will only usually cover the cost of defence.
Most legal expenses policies include a “prospect of success clause”, this says that, if in the opinion of the insurer the likelihood of winning the case is less than 50% they will not offer cover. Your D&O policy has no such clause and will respond regardless of likely outcome.
Legal expenses insurers will insist upon use of their own in house counsel and the Insured is required to immediately notify the Insurer of any potential claims without taking any action whatsoever. If the Insured deviates from these rules or responds in any way to the claimant, cover may again be denied with the Insurer claiming that any possible defence has been prejudiced. Whilst your D&O insurer will still require notice as soon as possible, any contact prior to such notice will be considered and any potential resulting prejudice will be assessed prior to a coverage position being determined.
Investigation costs and expenses are covered by both legal expenses and D&O policies although a legal expenses policy will specify for which organisations investigation expenses are included whereas an Angel D&O policy does not limit this.
A D&O policy will not cover any prosecution costs.

Our Directors & Officers Policies provide employment practices liability for individual Directors and Officers as standard, however, this only extends to claims made against Directors or Officers personally. In order for the company to be protected against employment practices claims they will need to purchase our Employment Practices Liability Extension. Nearly all employment practices claims are brought against the company but very few will specifically name a director or officer.

Our Corporate Liability Extension has an additional limit for unindemnifiable loss which applies solely to claims made against individual directors or officers should the policy limit be completely eroded. The limit available for this extension is 50% of the policy limit subject to a maximum aggregate limit of £250,000

Our D&O policy covers the defence costs involved in any “formal” investigations initiated by any organisation. It is important to note that this does not extend to the internal investigations initiated by the company itself.

Where the policy has been extended to include corporate liability the policy will respond to allegations of Corporate Manslaughter.

The policy is intended to protect directors and officers against allegations of wrongful conduct when they are acting as company executives.

Typically, most policies cover alleged wrongful acts that have taken place prior to or during the policy period. However, some policies are negotiated to expressly exclude “past acts” coverage, so the actual language of the policy must be closely reviewed.
D&O insurance is not intended to be “burning building” insurance. If a potential insured is aware of an impending claim, it may be too late to go out and get insurance to cover it, unless the potential claim is disclosed and the carrier expressly agrees to take it on. First time D&O purchasers must reveal any information they have regarding known claims or related circumstances in the application process itself. Matters disclosed in the application process will usually be excluded from coverage.

The simple answer is that directors and officers are covered under a Directors & Officers Liability policy, but this is not a complete answer.

While traditionally only the directors and officers themselves were covered under a D&O policy, today this may be expanded to include managers and other non-executive directors, employees and the company itself.

What about the company itself, since it may be a defendant in many claims that could be asserted against directors and officers? Today, most D&O policies for publicly traded companies also insure the company itself but only for securities claims. Most D&O policies for privately held or not-for-profit organizations include coverage for the company for an array of claims (not limited to securities claims).

Claims can be brought by the company’s stakeholders (owners, investors, lenders, employees and securities holders, including bondholders).
Claims can also be brought by customers, consumer groups, competitors, business partners (venders and suppliers) and government enforcement/regulatory groups.

Companies generally do indemnify their directors and officers. However, sometimes companies are financially unable to provide this monetary protection or are unwilling to do so for economic or political reasons. Without corporate indemnity or insurance, directors and officers would be reduced to relying on their own personal assets to pay for the costs of defense and any resulting settlement or judgment against them. Outside directors (those that are not also employed by the company) are usually very vocal about requiring D&O coverage before agreeing to sit on a corporate board.

Usually, there is a single aggregate limit of liability that applies for all claims that fall within the terms of the policy. This means that the aggregate limit is the entire amount that the carrier is willing to pay under the policy, and is not changed because of the number of claims, the number of insureds, or the accumulation of defense costs. Once this limit is exhausted, there is no more coverage available under the policy for any current or future claims. To the extent that the limit is exhausted (the carrier has made payments totaling the limit of liability) prior to resolution of one or more claims, the carrier has no further obligation with respect to those pending claims. This also means that the carrier has no further obligation in connection with defense costs that may continue to be incurred.

Defense costs apply first to the deductible or retention of the policy, and then serve to exhaust the available limit of coverage. It is possible that the entire policy could be spent in the defense of a claim, with no coverage remaining for any possible settlement or court award.

Standard exclusions include fraud, personal profiting, accounting of profits, and other illegal compensation exclusions, pending and prior litigation, prior (late) claim notice, bodily injury/property damage, pollution, insured versus insured claims and ERISA (the Employee Retirement Income Security Act of 1974). Insurers may also include other exclusions based on their own claims payment experience, such as hostile takeover or captive insurance company exclusions.

Some exclusions pertain to areas usually covered under some other type of insurance. ERISA violations are usually covered under a Fiduciary Liability policy, property damage may be covered under a General Liability policy, etc.

While a large percentage of D&O claims include allegations of fraud or illegal personal profiting (or both), the simple allegation is not enough to trigger the exclusion. Most, if not all, such exclusions require something like a court determination of guilt or an admission of guilt before the exclusion can apply. Either the words “final adjudication” or “in fact” will be used in the exclusion to indicate how high the hurdle is for the carrier to apply these exclusions.

Defense costs incurred for such a claim are typically covered by the policy until such time as the wrongful conduct is determined to have “in fact” occurred, or until there is a final adjudication. This means that a settlement without an admission of wrongdoing usually does not trigger the exclusions. In the event there actually is a finding of fraud or personal profiting, those directors and officers who are not found guilty continue to be covered even after others may have confessed or been adjudged guilty.

A D&O policy is intended to function as third-party coverage or to insure claims made against the directors and officers by outsiders or third parties. It is not intended to respond to claims by the insureds themselves. (These are viewed as either insider fighting or collusive suits – things that the insurance carriers want to avoid).

There are some exceptions to the application of this exclusion. The first makes an exception for shareholder derivative suits as long as no insured (including the company) assisted in bringing the suit in any way. The second typical exception is for wrongful termination suits by officers. More recent exceptions may apply to cross-claims or claims for indemnity. Each of these exceptions means that the exclusion does not apply in those circumstances – so there is coverage.

It varies, but typically, the claim has to be first asserted or “made” against the insured during the policy period. This is why D&O insurance is generally referred to as “claims made” coverage. Some D&O policies also require that the claim be reported to the carrier during the same policy period. This is referred to as “claims made and reported” coverage. Many carriers provide some degree of a reporting “tail” to allow a short period of time after the policy expiration in which to provide notice of claims that came in during the policy period.

Courts have upheld the claims-reporting requirements of D&O policies, finding such requirements to be a condition of coverage. Since the reporting of claims is solely within the control of the insured, it is an obligation of the insured to act in a timely manner. Exactly what is “timely” may vary slightly among carriers, however. Many policies require notice as soon as practicable, as long as it is still within the policy period. Carriers and courts differ on what length of time is practicable. In any event, failure to provide timely notice can and will result in loss of coverage. What would be a covered claim can become uncovered if the reporting provisions of the policy are not strictly adhered to.

The definition of a claim varies from policy to policy, and some do not define it at all. Generally, a claim includes any written demand alleging a wrongful act by a director or officer in his or her capacity as a director or officer, seeking monetary or nonmonetary damages. This may be expanded to include investigative orders, grand jury subpoenas in actions that seek to hold the individual liable and other more esoteric events.

A D&O policy will generally either pay or reimburse the company the costs associated with the defense, investigation, negotiation and settlement (by way of a court determination or otherwise) of a covered claim. This includes attorneys’ fees, court costs and filing fees. It may also include expert or other specialist fees that are consented to in advance by the carrier. Most policies include the phrase “reasonable defense costs.” Therefore, some carriers may object to some element of expenses as being unreasonable (either because the amount charged is excessive, the work is duplicative, or the services rendered were unnecessary). In all events, the carrier only pays for or reimburses those expenses that are consented to in advance. In addition to expenses, D&O policies cover judgments/verdicts and settlements. Although the actual term used may differ (some carriers cover “loss” while others cover “damages”), all typically cover any court award or settlement, plus defense expenses.

Covered loss will usually specifically exclude civil, criminal or punitive fines or penalties; exemplary or multiplied damages; amounts that are without legal recourse to an insured; or amounts that are uninsurable under the law. As with many other aspects on D&O policies, this can be modified by insurers. Many now agree to pick up certain fines and penalties and agree to provide coverage for punitive damages where insurable by law, especially for securities claims.

It depends: for securities claims involving public companies many D&O carrier have a pre-set list of law firms that they require the Insured to use (with pre-set, usually advantageous, rates). For non-securities claims for publicly traded companies, the insureds can usually select their own defense counsel. Carriers without pre-set lists still retain the right to consent to the counsel chosen by the insured and look for counsel that can demonstrate experience in the type of litigation at issue.

Under most D&O policies issued to privately held or nonprofit companies, the insurance carrier has both the right and duty to defend claims brought against the directors and officers in their official capacity. This usually means that the insurance carrier gets to select counsel.

Most D&O policies have what are generally referred to as “change in control” provisions. Most, but not all, policies state that in the event of a change in control, the policy will remain in force for the remainder of the policy period, but, and this is a big caveat: coverage will only be provided for claims involving wrongful acts occurring prior to the change in control.

Please note that some policies actually terminate coverage altogether at the time of the change in control. It is very important to know precisely how a specific policy would respond in such a situation.

Under the majority of policies, a change in voting control is the trigger for a change in control. Some also include sale of all or substantially all assets as a trigger. A filing for bankruptcy typically does not trigger the change in control clause, nor does a substantial change in the composition of the board.

Historically, all D&O policies could be readily canceled by either the insurer or the insured. Many state insurance commissioners believed that this ability presented a significant hazard to the insured. As a result, many states limit the situations under which an insurance carrier can cancel a D&O policy and require these specific situations to be clearly identified and detailed in each policy. Today, D&O carriers are often willing to make their policies non-cancelable as long as premiums are paid. In these cases, the insured does not need to worry about being deserted when prospects are bleak.

In addition to setting out the specific circumstances and timeframes in which an insurance carrier can cancel or non-renew a D&O policy, most states provide the insureds with special protected rights in these situations. These rights can often be found in the D&O policy itself.

One such provision is the right to purchase an extended period in which to report claims that would have been covered by the policy before it was cancelled or non-renewed. When these claims are first asserted and reported during this extended period, they are then covered under the policy terms and limits in effect prior to the policy’s termination. This extended reporting period (ERP) is often referred to as a discovery period. Some D&O insurers make discovery available when either the insurer or the insured cancels or non-renews.

Employers Liability Insurance

Employers Liability insurance is mandatory by law for businesses and individuals that have employees. Talk with a member of our insurance team to learn about your responsibilities and examine if you should purchase more cover than the minimum required by law.

Business interruption insurance covers the loss of profits and continuing operating expenses. The purpose is to make you whole in the event of a covered loss.

A business’ insurance needs can change frequently. As you add staff or locations, your coverage needs will change as well. You want to protect your business by not being underinsured or by paying for excess coverages. At Cynosure we recommend reviewing your insurance policies and premiums at least annually to ensure they still meet your growing needs.

This type of insurance is called employment practices liability insurance. This type of business insurance protects employers when there are claims such as discrimination, harassment or wrongful termination. This type of business insurance policy is usually one you must purchase as a stand-alone policy or as part of a directors and officers liability policy

Professional Liability Insurance

Professional liability insurance and errors and omissions insurance are essentially the same thing. People use these terms interchangeably, and they are referring to the same basic product.

You often run extremely important and complex projects for your clients that they may not fully understand. Professional liability insurance is especially important for businesses like IT/technology consultants, business consultants and marketing consultants for whom incorrect advice or a failure to perform professional services could lead to a lawsuit. Even if you haven’t made a mistake, you can still be sued. A general professional liability insurance policy will cover legal fees, protecting you and your business from potentially crippling costs.

The quote and buy process is very simple. We’ll ask you for some basic information about your business and services. You’ll also be asked what risk management practices you currently use. Why? Well, we like to give our best rates to businesses that actively try to reduce their chances of being sued.

Professional liability insurance premiums vary a lot depending on several factors, including the size of your business, your occupation, the types of activities you conduct, and the level of protection you choose.

Hiscox offers a range of professional liability limits. Our licensed advisors will guide you on what your business needs.

Professional liability insurance only provides protection only as long as your policy is in force. This means that only the claims made and reported in the policy period will be covered. When you cancel your policy you may not have protection in place, even if a claim later arises from work completed during a period in which you had insurance. So it’s wise to keep coverage in place even after you have completed a project. However, if you must cancel your coverage, you can opt to purchase an extended reporting period

You can cancel a policy at any time and we will refund any amount due to you on a pro-rated basis. However, should your business then be subject to a claim, it will not be covered unless an extended reporting period is in effect.

If you cancel your policy, we recommend that you purchase an extended reporting period endorsement. This means that although your business has no protection for claims arising from future work, it is still covered in case you are sued for work previously completed.

A retroactive date shows how far back the insurer will pay valid claims, even if they may relate to work you completed before you took out a policy through Cynosure.
Frequently Asked Questions About Professional Liability Insurance for Architects, Engineers and Environmental Professionals

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Home Insurance

Most property policies cover for flood and earthquake, depending on the location of the insured property. However, we recommend that you sit with one of our expect consultants and review your policies to make sure that this is explicitly written in your insurance contract.

The typical homeowners policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage for the insured. Almost anyone who owns or leases property has a need for this type of insurance. Usually, homeowners insurance is required by the lender to obtain a mortgage.

Strongly consider a higher deductible. You are best served by absorbing small claims. In the current insurance market, many insurers now refuse to renew polices or accept new customers with a history of several small claims. View your homeowners insurance as catastrophic coverage and set aside your premium savings to cover minor repairs.

Property coverage limits are based on the cost to replace or repair damaged structures. Replacement cost policies give you “new” in exchange for damaged “old”. The insurance values are based on construction costs in your region. There is no correlation between an insurance valuation appraisal and a market appraisal done for real estate sales or financing.

Replacement cost is the amount necessary to replace or rebuild your home or repair damages with materials of similar kind and quality without deducting for depreciation. You receive new materials that replace old, damaged items or property.
I have replacement coverage for contents under a homeowner’s policy. Some of my property has been stolen.

The company will usually pay the actual cash value, which is replacement cost minus depreciation, for the loss or damage- until the property is replaced. Once the insured replaces the damaged property and provides receipts to the company, the company should reimburse the difference.

Motor Insurance

The premium you pay is a direct reflection of your driving record for the past three to five years, depending on the insurance company’s underwriting rules. Statistics show that drivers with tickets and past accidents are more likely to have accidents than drivers with clean records.

If you lie about your driving history the insurance company can deny you services and cancel your coverage.

Auto insurance covers you, your car and others involved in a vehicular accident.

Auto insurance is relatively inexpensive, but this depends on your driving history, the vehicle and coverage obtained.

For your first offense, your insurance company will mail you a warning notice. If it happens again, they will issue a late charge or cancel your policy.

An insurance deductible is the amount of money you pay after an accident before your insurance company pays for the remaining amount.

Yes, auto insurance is mandatory

This depends entirely on the insurance coverage you have. Comprehensive coverage will protect you in this type of event.

Yes. Auto insurance companies will share your insurance claims history with each other.

Yes! Each insurance company has different requirements, but in most cases we are able to fit every driving record to a policy.

Yes! Again, each insurance company has different requirements, but in most cases we can fit every accident and/or home claim to a policy.

Personal Insurance

The premium you pay is a direct reflection of your driving record for the past three to five years, depending on the insurance company’s underwriting rules. Statistics show that drivers with tickets and past accidents are more likely to have accidents than drivers with clean records.

If you lie about your driving history the insurance company can deny you services and cancel your coverage.

Auto insurance covers you, your car and others involved in a vehicular accident.

Auto insurance is relatively inexpensive, but this depends on your driving history, the vehicle and coverage obtained.

For your first offense, your insurance company will mail you a warning notice. If it happens again, they will issue a late charge or cancel your policy.

An insurance deductible is the amount of money you pay after an accident before your insurance company pays for the remaining amount.

Yes, auto insurance is mandatory

This depends entirely on the insurance coverage you have. Comprehensive coverage will protect you in this type of event.

Yes. Auto insurance companies will share your insurance claims history with each other.

Yes! Each insurance company has different requirements, but in most cases we are able to fit every driving record to a policy.

Yes! Again, each insurance company has different requirements, but in most cases we can fit every accident and/or home claim to a policy.

Most property policies cover for flood and earthquake, depending on the location of the insured property. However, we recommend that you sit with one of our expect consultants and review your policies to make sure that this is explicitly written in your insurance contract.

The typical homeowners policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage for the insured. Almost anyone who owns or leases property has a need for this type of insurance. Usually, homeowners insurance is required by the lender to obtain a mortgage.

Strongly consider a higher deductible. You are best served by absorbing small claims. In the current insurance market, many insurers now refuse to renew polices or accept new customers with a history of several small claims. View your homeowners insurance as catastrophic coverage and set aside your premium savings to cover minor repairs.

Property coverage limits are based on the cost to replace or repair damaged structures. Replacement cost policies give you “new” in exchange for damaged “old”. The insurance values are based on construction costs in your region. There is no correlation between an insurance valuation appraisal and a market appraisal done for real estate sales or financing.

Replacement cost is the amount necessary to replace or rebuild your home or repair damages with materials of similar kind and quality without deducting for depreciation. You receive new materials that replace old, damaged items or property.
I have replacement coverage for contents under a homeowner’s policy. Some of my property has been stolen.

The company will usually pay the actual cash value, which is replacement cost minus depreciation, for the loss or damage- until the property is replaced. Once the insured replaces the damaged property and provides receipts to the company, the company should reimburse the difference.

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Claims

Customarily, to open a claim file, the facts required are as simple as your policy number, contact info and details of the loss in order to open a claim file. However, if you have more information, it is important to include it.

The coverage determination cycle varies. Even so, insurers require a formal claim submitted before they are able to assert whether or not there is coverage for your claim.

In the event of loss or damage to your property, you should report a claim immediately. In addition, you should take steps to protect it from further damage. After a covered loss, we reimburse the reasonable expenses you incur to protect your property from further covered damage. Some ways you can mitigate damage include:
• Shutting off the water after a plumbing leak
• Securing your home after a burglary
• Calling the police after a burglary
• Calling the fire department
• Moving or protecting property to prevent further damage
Check your policy for additional details and speak to your claim adjuster once you file your claim.

When reporting a claim, it’s helpful if you have the following:
• Your policy number
• The date the loss occurred
• The address of the loss
• A brief description of the loss
• The contact information for any other parties involved, including any contractors and experts
The earlier you contact Chubb to report your loss, the sooner we can help you

Because your mortgagee has a financial interest in the property, they are included as a payee on larger claims involving building damages. We suggest you contact them prior to the payment being issued to understand what their endorsement requirements are.

Any payments for your personal property or non-building damages will be paid by separate check to you directly.

Insurers offer you a range of payment options. You can also choose to pay the full amount in one lump sum each year, or to pay on a monthly basis (with no fees added). We’re very flexible.

Professional liability insurance is also known as errors and omissions insurance or malpractice insurance. It is purchased by architects and engineers as well as doctors, lawyers, accountants, real estate brokers and other licensed professionals to address business liability risks that arise from rendering professional services.

The policy pays other parties for damages which you are legally liable to pay as a result of negligent acts, errors or omissions in the performance of your professional services. Damages can include property damage, bodily injury, economic loss and legal expenses. The insurance company has an obligation to defend you against such claims, even if the allegations ultimately are determined to be false or groundless.

Policies are generally written for a term of one year on a “claims- made” or “claims-made and reported” basis. These policies cover only those claims made against you and reported to the insurance company during the policy term, and any extended reporting period subject to the retroactive date on your policy.
The retroactive date is the date after which the professional activities of your firm are considered to be covered by the policy. This may be the date on which you first purchased and have since maintained continuous coverage, the inception date of your firm, or some other date offered by your insurer.
Remember, the insurance company covering you at the time the claim is made is the one to look to for protection, not the company covering you at the time of the alleged error.
The amount of coverage available depends upon the policy limit you choose, your deductible, and any payments from claims in the same policy period.

There are many factors involved in premium determination: the limit and deductible you choose, your discipline, and your firm’s size, projects, services and clients. Of course, claims history counts a great deal, as well as your firm’s professional track record and business practices.
An average-sized firm (20 employees) with a decent loss history should pay about 1.5% to 2.5% of its gross fees for professional liability insurance.

A professional liability policy for design and environmental professionals covers their negligent acts, errors or omissions in performing professional services (such as mistakes in the preparation of plans or specifications, surveying errors, or failure to provide services in accordance with the normal standard of care).

A commercial general liability (CGL) policy covers non-professional activities, both inside and outside their office premises (such as when a visitor to their office slips and falls).

Professional liability insurance is written on a “claims-made” or “claims-made and reported” basis subject to the policy retroactive date. Claims-made professional liability policies cover only those claims made against consultants and reported to the carrier during the policy period.
Commercial general liability (CGL) insurance policies are written on an occurrence basis because the date of accident or occurrence is readily ascertainable. The occurrence is covered by the policy in force on the date of the event (bodily injury or property damage) no matter how long thereafter the claim or suit is brought.

That depends on the firm’s risk threshold, what assets it needs to protect, what it can afford and what its clients require. Other factors affecting this decision may include:

  • The number and size of projects the firm has performed since the policy’s retroactive date.
  • The risk level of services provided. For example, if the firm’s work is a study, a survey or a preliminary design, less risk is involved.
  • The frequency and type of subconsultants used by the firm. The more subconsultants used, the more exposure to vicarious liability, that is, liability for the losses of any uninsured or underinsured subconsultant.

It is important to note that the total construction value of a project is not the measure of risk.

Yes, some carriers offer project-specific insurance. Project insurance usually provides non-cancelable coverage for a pre-selected number of years for the design and construction period as well as a discovery period after construction is complete.
Coverage can begin with design or just before construction begins.
Limits are dedicated to the project and cannot be reduced by claims from other projects. Usually the entire design team is named on a project policy. Project insurance premiums are typically between .25% and .50% of construction costs.

Project-specific policies are usually written for projects with construction values of $1 million or more.

By asking these questions:

  • Does the insurance company specialize in design and environmental consultants’ coverage?
  • How long has the insurer been consecutively writing professional liability for design and environmental professionals?
  • Does the company have claim supervisors who specialize in handling professional liability claims against design and environmental consultants?
  • Does the company offer loss prevention programs and other services to help firms avoid potential disputes?
  • Does the company use dispute resolution methods to avoid the high costs of litigation?

It depends on the wording of the specific contract – how fair is it? Discussion should take place between the client and the consultant to ensure that the client’s project objectives are met and that the consultant’s insurance is not compromised or voided.
If the contract language voids the consultant’s insurance coverage, all parties will lose in the event of a claim.
Business terms regarding payment, termination, insurance requirements, dispute resolution, indemnity and standard of care must be reasonable and fair to both parties. All contract terms should be carefully reviewed and negotiated to fit the specific circumstances of the project.
Contract language should not be onerous, one-sided or attempt to shift undue risk to either party. The allocation of the risks of a project should be equitable and be relative to the rewards/profits to be received by both parties.

Yes and no. Professional liability insurance includes limited contractual coverage. Such indemnities are insurable if they are limited to indemnifying only for the negligence of the consultant and they do not include responsibility for the negligence of any other party.
If, however, you agree to be responsible for not only your negligence, but the negligence of your client as well, then the portion of liability that extends beyond your own negligence is not covered.

No, This is normally opposed by professional liability underwriters. However, the client can be named as an additional insured under most commercial general liability policies.

Very few claims are made during the design phase of a project. Studies have shown that roughly a quarter of claims are made during the design and construction periods.

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