It’s called “sleep insurance” for a reason.
Directors and officers (D&O) liability insurance helps community association board members sleep well at night without worrying that their personal assets are at risk because of a decision or action — or inaction — they make on behalf of the association.
When board members join a community association board, they are volunteering their time and effort and taking on the responsibility of making decisions for the association. Board members are required to interpret and enforce the association’s governing documents. They have a fiduciary duty to make decisions as a reasonably prudent person and to make decisions they believe to be in the best interest of the association.
Even with their best efforts, these actions can lead to potential lawsuits alleging breach of contract, breach of fiduciary duty, employment or housing discrimination, slander or libel or a host of other potential claims. Lawsuits can seek monetary or nonmonetary relief. A good D&O policy will cover both.
Most states require associations to indemnify board members for decisions they make on behalf of associations. Indemnification is an agreement to provide financial reimbursement to an individual board member or association in case of a specific type of loss.
This means that, if they are sued, the insurance company will pay legal fees or assume the defense. Should they lose the court case, it will pay any judgment or settlement. Not only state laws, but most association governing documents also require board members to be indemnified.
The “insured” in a D&O policy is typically the community association as an entity and any subsidiary of the association. “Insured persons” are commonly defined as those who act in the capacity of past, present, duly elected or appointed officers, directors, trustees, employees, volunteers or committee members. Spouses of insured persons also are covered, which is not always known. Often the community manager is covered under the policy as well.
If a board member is accused of intentionally dishonest or fraudulent acts, a majority of D&O stand-alone policies will provide a defense for the insured persons. Coverage is terminated if it is proven that the allegation is true. A good stand-alone policy will continue coverage until a court or other body makes final judgment. Any theft loss is generally covered by a fidelity or “employee dishonesty” policy, which is separate from a D&O policy.
Common Claims
Community associations face a variety of claims these days. However, there are several types of claims commonly seen. Here are some examples that illustrate why this insurance is so important.
Foreclosure and bankruptcy. One of the fastest growing areas for claims is the wrongful foreclosure of individual units. This has caused a financial burden for many associations who are now being sued for breach of fiduciary duty for failure to maintain the property and mismanagement of funds. A current claim involves a bankruptcy alleging the board conspired with the property manager to defraud the association out of thousands of dollars.
Breach of fiduciary duty. When associations hold elections problems can arise. We have seen claims where losing candidates sue over the election process. In one claim, the candidate demanded a new election, alleging the election was conducted improperly.
Insured v. insured. Another claim seen quite often is “insured vs. insured.” A good example of this is when a unit owner sends a letter to the president of the board of directors demanding that the board use “all means available” to stop improper actions of a board member. The letter alleges they are using association funds to pay personal debts and other expenses not authorized by the association. The unit owner demands that the association recover the allegedly misappropriated funds as well as fees and costs. He files a lawsuit in the name of the association and for the benefit of its members. Sometimes even board members sue other board members.
Many D&O policies specifically exclude coverage of “insured v. insured” claims. Yet it is a potentially costly liability facing associations. A board member’s legal expenses won’t be covered if such claims are excluded.
Breach of contract. When boards terminate contracts with vendors they can be sued for breach of contract. If things go wrong and board members need to break a contract, they are left vulnerable to a lawsuit.
Employment discrimination. When associations decide to terminate employees, problems can arise. Even if you have just one employee, there is a potential for litigation. Wrongful termination, sexual harassment and discrimination are seen all of the time in the community association world.
One way for clients to avoid some of these pitfalls is to hire professionals who specialize in community associations. A professional manager can help ensure board members are making day-to-day decisions in a prudent manner.
Source: http://www.insurancejournal.com/magazines/mag-features/2011/04/04/192850.htm
About Kevin Davis
Davis is president of Kevin Davis Insurance Services in Los Angeles. .
Monday, June 13, 2011
Saturday, June 11, 2011
Lawyer Malpractice Claims on the Rise
Economy, Fees Countersuits and ‘Door Law’ Changing E&O Climate
The economy has taken its toll on all businesses today and law firms are no exception. They have experienced downsizing, pressure to change specialties in order to compete for new business, and other cost cutting measures, according to industry insiders.
“It’s hard to pay bills. Firms are really having to trim employees, trim expenses,” says Kelley Heide Martin, senior claims specialist in the technical resource center of Scottsdale Insurance Co.
From an errors and omissions perspective this spells trouble for some law firms because such cost cutting measures can result in more malpractice claims.
Michele Wade, executive vice president of Lockton Cos., says downsizing the number of attorneys and staff often leads to clients falling through the cracks. “It leads to possibly having the same number of clients and a lot less number of people to help them,” she says. “It also leads to a lot of law firms hiring independent contractors rather than full time lawyers That often can lead to problems for law firms.”
Another cause for concern when it comes to E&O claims stems from what Wade and Martin refer to as “door law,” a circumstance where law firms might choose to represent any client that walks in the door, even when the case involves unfamiliar territory. The competition for new business is leading many firms to go after clients not typically within their legal specialty, Wade and Martin say.
Some of Wade’s law firm clients are moving out of their area of expertise to take a case they wouldn’t take in good economic times, she says. “That leads to mistakes and it often also can lead to putting that client on the back burner when a real case that is in their expertise comes along.”
The bad economy has led to inexperienced attorneys handling areas of law that they may not know well, Martin adds. “That leads to additional errors and admissions claims.”
Collecting Fees and E&O Risk
Another basis for rising E&O claims that has developed as a result of the bad economy are lawsuits against firms arising out of unpaid client fees.
Wade says many E&O claims today are related to fees. “In this economy law firms are not getting paid. Their collections are way down and they tend to want to sue their clients for fees more aggressively than in a good economy,” Wade says.
When clients get sued for unpaid legal fees, a countersuit tends to follow.
“Suits for fees draw counterclaims and that brings professional liability claims,” Wade says. “Often my clients seem to be getting sued just out of their clients wanting to head them off at the pass … It’s a vicious cycle.”
Trying to collect client fees in today’s economy is a huge problem, according to Martin.
“A lot of times if a firm had let their accounts receivable go past 90 days, 120 days, or a year We’re not talking about maybe a $5,000 or $10,000 bill. We’re talking about hundreds of thousands of dollars. There comes a point when the firm has to collect that money. They’ll look at suing, either filing a suit or perhaps counterclaiming for their fees,” Martin says.
While law firms must collect on past client fees, from a claims standpoint Martin believes filing a fee lawsuit again a client is never a good idea. “We see that from an insurance company perspective as just one of the worse things you can do because you are inviting the legal malpractice claim.” Martin says suing clients for fees doesn’t typically have a good outcome but instead invites a costly E&O claim for the firm.
Emerging Risks
Another potential E&O concern for law firms today involves the use of social media and how its use might invite exposures.
Wade believes the use of social media such as Facebook, LinkedIn and Twitter could potentially be a huge exposure, one many law firms have not been adequately addressing.
“I think that Facebook and Twitter and those types of media are not regulated by a law firm like a Web site would be,” Wade says. “Social media, you can say anything you want I believe that plaintiff attorneys will be using that against law firms who may be discussing cases, a big win, whatever it is, on their Facebook.”
While insurers are not addressing social media use now, Wade sees that attitude changing. “I believe that eventually and probably sooner rather than later, the insurance companies will be putting questions in their applications, possibly exclusions, for Facebook or Twitter type of communication,” Wade predicts.
Martin agrees that the danger of social media use lies in its lack of oversight. “There is no oversight,” she says.
Martin advises lawyers to forego posting anything related to their profession on social media venues. “It’s just not a good idea. It’s definitely an ethical violation. There needs to be some type of oversight by the firm or the attorney themselves. Talk about what you do in your own time. Talk about what your kids do or your latest vacation.”
But Martin says attorneys need to leave business out of social media.
“If you’re in mediation, and you say, ‘hey, they offered me X amount of money. I’m not going to take it because I’m going to get five times that,’ you’ve just blown through about five different ethical rules. That’s going to lead you to a malpractice claim.”
Source: http://www.insurancejournal.com/magazines/mag-features/2010/12/05/160566.htm
Wade and Martin were speakers on the “The First Thing We Do – Sue All Lawyers: Emerging Themes in Legal Malpractice” panel at the 2010 PLUS International Conference in San Antonio, Texas.
The economy has taken its toll on all businesses today and law firms are no exception. They have experienced downsizing, pressure to change specialties in order to compete for new business, and other cost cutting measures, according to industry insiders.
“It’s hard to pay bills. Firms are really having to trim employees, trim expenses,” says Kelley Heide Martin, senior claims specialist in the technical resource center of Scottsdale Insurance Co.
From an errors and omissions perspective this spells trouble for some law firms because such cost cutting measures can result in more malpractice claims.
Michele Wade, executive vice president of Lockton Cos., says downsizing the number of attorneys and staff often leads to clients falling through the cracks. “It leads to possibly having the same number of clients and a lot less number of people to help them,” she says. “It also leads to a lot of law firms hiring independent contractors rather than full time lawyers That often can lead to problems for law firms.”
Another cause for concern when it comes to E&O claims stems from what Wade and Martin refer to as “door law,” a circumstance where law firms might choose to represent any client that walks in the door, even when the case involves unfamiliar territory. The competition for new business is leading many firms to go after clients not typically within their legal specialty, Wade and Martin say.
Some of Wade’s law firm clients are moving out of their area of expertise to take a case they wouldn’t take in good economic times, she says. “That leads to mistakes and it often also can lead to putting that client on the back burner when a real case that is in their expertise comes along.”
The bad economy has led to inexperienced attorneys handling areas of law that they may not know well, Martin adds. “That leads to additional errors and admissions claims.”
Collecting Fees and E&O Risk
Another basis for rising E&O claims that has developed as a result of the bad economy are lawsuits against firms arising out of unpaid client fees.
Wade says many E&O claims today are related to fees. “In this economy law firms are not getting paid. Their collections are way down and they tend to want to sue their clients for fees more aggressively than in a good economy,” Wade says.
When clients get sued for unpaid legal fees, a countersuit tends to follow.
“Suits for fees draw counterclaims and that brings professional liability claims,” Wade says. “Often my clients seem to be getting sued just out of their clients wanting to head them off at the pass … It’s a vicious cycle.”
Trying to collect client fees in today’s economy is a huge problem, according to Martin.
“A lot of times if a firm had let their accounts receivable go past 90 days, 120 days, or a year We’re not talking about maybe a $5,000 or $10,000 bill. We’re talking about hundreds of thousands of dollars. There comes a point when the firm has to collect that money. They’ll look at suing, either filing a suit or perhaps counterclaiming for their fees,” Martin says.
While law firms must collect on past client fees, from a claims standpoint Martin believes filing a fee lawsuit again a client is never a good idea. “We see that from an insurance company perspective as just one of the worse things you can do because you are inviting the legal malpractice claim.” Martin says suing clients for fees doesn’t typically have a good outcome but instead invites a costly E&O claim for the firm.
Emerging Risks
Another potential E&O concern for law firms today involves the use of social media and how its use might invite exposures.
Wade believes the use of social media such as Facebook, LinkedIn and Twitter could potentially be a huge exposure, one many law firms have not been adequately addressing.
“I think that Facebook and Twitter and those types of media are not regulated by a law firm like a Web site would be,” Wade says. “Social media, you can say anything you want I believe that plaintiff attorneys will be using that against law firms who may be discussing cases, a big win, whatever it is, on their Facebook.”
While insurers are not addressing social media use now, Wade sees that attitude changing. “I believe that eventually and probably sooner rather than later, the insurance companies will be putting questions in their applications, possibly exclusions, for Facebook or Twitter type of communication,” Wade predicts.
Martin agrees that the danger of social media use lies in its lack of oversight. “There is no oversight,” she says.
Martin advises lawyers to forego posting anything related to their profession on social media venues. “It’s just not a good idea. It’s definitely an ethical violation. There needs to be some type of oversight by the firm or the attorney themselves. Talk about what you do in your own time. Talk about what your kids do or your latest vacation.”
But Martin says attorneys need to leave business out of social media.
“If you’re in mediation, and you say, ‘hey, they offered me X amount of money. I’m not going to take it because I’m going to get five times that,’ you’ve just blown through about five different ethical rules. That’s going to lead you to a malpractice claim.”
Source: http://www.insurancejournal.com/magazines/mag-features/2010/12/05/160566.htm
Wade and Martin were speakers on the “The First Thing We Do – Sue All Lawyers: Emerging Themes in Legal Malpractice” panel at the 2010 PLUS International Conference in San Antonio, Texas.
Thursday, June 9, 2011
5 Ways to Feel Less Pain at the Pump
Don’t let rising gas prices keep you idle this summer. Sticking to your maintenance schedule and following these simple tips will help you get the most fuel efficiency out of your vehicle.
Use the right oil. Come to us for service and you’ll know your vehicle will always get the manufacturer’s recommended grade of motor oil. The wrong oil could reduce your gas mileage by 1 to 2 percent!
Stay properly pumped. Keeping your tires inflated to the proper pressure can improve your gas mileage by up to 3.3 percent. You can find the correct tire pressure for your vehicle on a decal on the driver’s side door jamb. Stop by any time and we will be glad to check the tire pressure in your tires. Any car – any time!
Lose weight for summer. Remove anything from your trunk that you don’t need. An extra 100 pounds in your vehicle could reduce your miles per gallon by as much as 2 percent.
Go cruising. Using cruise control on the highway helps you maintain a constant speed, which can help you save gas in most cases.
Keep cool. Speeding, punching the gas and sudden braking are all definite fuel wasters. On the highway they can lower your gas mileage by as much as 33 percent. So slow down and save. You’ll help make the road safer too.
Stay informed. Visit us often for money saving tips on fuel savings, gas savings and saving you that car care head ache. We are here to help you through the rough spots.
Source: www.fueleconomy.gov
Use the right oil. Come to us for service and you’ll know your vehicle will always get the manufacturer’s recommended grade of motor oil. The wrong oil could reduce your gas mileage by 1 to 2 percent!
Stay properly pumped. Keeping your tires inflated to the proper pressure can improve your gas mileage by up to 3.3 percent. You can find the correct tire pressure for your vehicle on a decal on the driver’s side door jamb. Stop by any time and we will be glad to check the tire pressure in your tires. Any car – any time!
Lose weight for summer. Remove anything from your trunk that you don’t need. An extra 100 pounds in your vehicle could reduce your miles per gallon by as much as 2 percent.
Go cruising. Using cruise control on the highway helps you maintain a constant speed, which can help you save gas in most cases.
Keep cool. Speeding, punching the gas and sudden braking are all definite fuel wasters. On the highway they can lower your gas mileage by as much as 33 percent. So slow down and save. You’ll help make the road safer too.
Stay informed. Visit us often for money saving tips on fuel savings, gas savings and saving you that car care head ache. We are here to help you through the rough spots.
Source: www.fueleconomy.gov
Monday, April 18, 2011
Tuesday, March 1, 2011
Ways to Lower Your Small Business Insurance Premiums
In an effort to pay lower insurance premiums, you can safeguard your business
in many practical ways. Below are some suggestions:
If you make every effort to keep your employees (and yourself) safe from
physical injury, and if you have your employees read and sign well-crafted
conduct and behavior policies, you can lower your risks of accidents and/or
lawsuits, and in turn, lower your insurance premiums.
Source: http://www.allbusiness.com/human-resources/benefits-insurance-benefits/2606-1.html
in many practical ways. Below are some suggestions:
- Install sprinkler systems and make sure they're maintained;
- Have all electrical wiring properly installed and insulated by a
professional; - Maintain adequate and updated files of business transactions and
personnel information, including all signed agreements; - Adhere to proper industry-specific safety precautions;
- Have all employees trained in the proper use of equipment — keep manuals
readily available; - Make sure there is adequate lighting;
- Have all vehicles regularly maintained, registered, and inspected;
- Allow only employees with good driving records to operate company
vehicles; - Have clearly marked emergency exits, and hold regular safety drills;
- Limit access and the number of distributed keys to your primary facility
and/or vehicles, warehouses, or other facilities; - Have an arbitration provision in all your contracts for settling
disputes, and to reduce the costs and hassles associated with those
disputes; - Promptly repair any damages, unsafe conditions, or broken equipment.
If you make every effort to keep your employees (and yourself) safe from
physical injury, and if you have your employees read and sign well-crafted
conduct and behavior policies, you can lower your risks of accidents and/or
lawsuits, and in turn, lower your insurance premiums.
Source: http://www.allbusiness.com/human-resources/benefits-insurance-benefits/2606-1.html
Wednesday, November 24, 2010
Monday, November 8, 2010
The B&G Group - History
The B & G Group, Inc. is one of the largest and most well established insurance agencies in the Metropolitan area. With over thirty years of continuous service, we have built a reputation as one of the most professional and progressive insurance brokerages. Our staff is over 100 strong and is comprised of competent and dedicated professionals of diversified insurance and business backgrounds who stand ready to serve our clients' needs.
We take a more progressive approach to underwriting and marketing for our clients rather than simply tracking down the easiest or quickest company willing to quote. Forecasting the ever-changing insurance market has become an integral part of maintaining a solid insurance portfolio and our expert marketing team is constantly searching out new programs to suit our clients' needs, as opposed to placing your firm with a company and moving on. New and more comprehensive policies are emerging every year presenting coverage not previously available.
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