Not having enough insurance in the event of a lawsuit is a serious risk for any business. To learn more about the importance of Excess Liability Insurance, Crain’s Content Studio recently spoke with Joe Suda, Senior Director, Excess Casualty, Burns & Wilcox Excess Liability Facility, Detroit/Farmington Hills, Michigan.
What are some of the greatest Excess Liability risks companies face today?
J.S.: Social inflation has made a lot of companies, especially small businesses, cut back and try to cut corners where they can. Unfortunately, the insurance products they have purchased are sometimes not getting a second glance. Often, businesses think that their full range of operations are being covered, but there might be forms and endorsements within an Excess Liability Insurance policy that create a gap in coverage. They think things are covered that are not covered, which is a major concern. On top of that, many businesses are only purchasing Excess Liability Insurance to meet contractual agreements in order to win a job, but we are seeing a lot of claims come through that exceed the limits they purchased that aren’t related to the contract they purchased them for.
What should business owners be aware of relative to these risks?
J.S.: We are in a time of massive social inflation and nuclear verdicts, where one car accident could be a multi-million-dollar payout. As a business owner, you need to make sure you have adequate insurance and that you are preparing for the worst. The more protection you have, the better.
How does Excess Liability Insurance help them respond to these threats?
J.S.: Excess Liability Insurance is very protective from the worst-case scenarios when those do arise. They are rare, but they can be very damaging to your business. When business operations cause harm to third parties — which could be due to product defects, slip-and-fall accidents, or auto accidents — that is when we are seeing these claims come out. That is when this policy becomes the most important insurance product in their arsenal of products.
Are there special considerations or additional coverages available for certain scenarios?
J.S.: Excess Liability Insurance carriers are getting creative so that their products appear more enticing than their competitors. We are seeing some carriers offer business response enhancements, which can cover things like crisis management costs — that can be helpful for businesses trying to get everything back to its original state before their large loss occurred.
What steps should businesses take to complement their insurance coverage from a prevention standpoint?
J.S.: I would highly recommend businesses look into hiring a risk manager, either as a consultant or a full-time hire. Risk managers can identify potential weaknesses as they develop, and they can create policies, procedure manuals and safety guidelines for your employees to follow.
Can you provide an example of a scenario you have dealt with that would be illustrative of the types of risks we have been discussing?
J.S.: A big one is liquor liability claims, which are a prime example of why you should make sure you have adequate coverage over your Liquor Liability Insurance policy if you own a restaurant or hotel. You also want to have additional layers of limits over your Commercial Auto Insurance policy.
What are the greatest opportunities for brokers to get into Excess Liability Insurance?
J.S.: Verdicts are not getting any smaller. Inflation and the litigious environment continue to grow throughout the country. Ten to 15 years ago, Excess Liability Insurance was considered a luxury policy for a small business. Now, going into 2024, I consider it a necessity.
What services of Excess Liability Insurance are specific to Burns & Wilcox, and what are the advantages of these?
J.S.: My team is an advantage other wholesale brokers do not have. Our team specializes in this one product line and works on the back end for our brokers across the country. We are hyper-focused on the product line and operate a full underwriting facility on behalf of a major carrier in the marketplace. Having full underwriting authority here gives us a lot of flexibility to complete on complex accounts and produce quotes faster than working direct with a carrier.
EXCESS LIABILITY INSURANCE
Why your clients might need it: Excess Liability can protect businesses from worst-case scenarios, such as harm to third parties.
Protects against: Product defects, slip-and-falls and auto accidents, and more.
Expert opinion: “Inflation and the litigious environment continue to grow throughout the country. Ten to 15 years ago, Excess Liability Insurance was considered a luxury policy for a small business. Now, going into 2024, I consider it a necessity.”
