Professional Underwriters Agency offers a broad, “pay on behalf of” employment practices liability policy to commercial, industrial, municipal, and professional employers. Underwritten by American Equity Insurance Company, the policy contains broad definitions of “claim,” “wrongful employment termination,” and “wrongful employment practice.” It also covers actual or alleged sexual harassment.

Written on a claims-made form, the policy covers “prior acts” for eligible employers and offers an extended reporting period. Legal, investigative, and defense costs are included within the limit of liability.

2. CONTACT

Mr. Ram Chandarana, President Professional Underwriters Agency, Inc. Two Trans-Am Plaza Dr., Suite 330 Oakbrook Terrace  IL  60181-0555 630/916-0500 FAX: 630/916-0555

3. UNDERWRITING GUIDELINES

This coverage is available to commercial, industrial, and professional employers with more than 11 employees. The guidelines actually set up two classes of eligible employer: those with 11 to 500 employees and those with 501 or more.

4. AVAILABILITY OF COVERAGE

The coverage is available on an admitted basis in California ; as surplus lines in all other states. The guidelines remind the reader that “brokers are responsible for filing appropriate forms and collection and payment of surplus lines tax in the state.”

5. LIABILITY

LIMITS AND DEDUCTIBLES AVAILABLE. Limits of $500,000 and $1 million each claim and in the annual aggregate for all claims. The limit includes legal, investigative, and defense costs. Higher limits are available for qualified insureds. The minimum annual premium is $2,500. The minimum deductible is $2,500 per claim.

INSURING AGREEMENT. The policy promises to pay — on behalf of the insured — sums due from claims made during the policy period or during the extended reporting period. The covered claims must arise out of a “wrongful employment practice” (a defined term).

DEFINITIONS. The following terms are defined:

A.     Insured — includes the named insured; an individual's spouse; past or present corporate officers and directors; past or present partners or joint venturers; past or present employees, but only while acting in the scope of their employment.

     ”Insured” also includes any subsidiary where the named insured owns 51 percent or more. It also includes newly acquired or formed organizations, with the same 51 percent ownership requirement. Coverage for newly acquired or formed organizations begins on the day of their acquisition and is limited to thirty days or the remainder of the policy period, whichever is less. New acquisitions or formations may require an additional premium on the policy.

B.     Claim — any written notice that a person is bringing an action against the insured for a “wrongful employment practice.” Such notice may come from the individual, the Equal Employment Opportunity Commission (EEOC), or any other similar state or local agency.

     ”Claim” can also mean a “written demand for damages” suffered by the claimant as a result of a “wrongful employment practice” by an insured. Finally, the term “claim” also includes a demand for an injunction that arises out of a “wrongful employment practice.” Such injunctions typically seek job reinstatement. Note that “claim” does not include grievances or arbitration subject to collective bargaining.

C.     Claim Expenses — legal and other expenses; premiums on appeal bonds; other reasonable expenses incurred by the insured at the insurer's request.

     Not included as “claim expenses” are the following: lost earnings or salaries; and the cost of investigations performed by the insured's employees, officers, or directors, when those investigations are intended to “assist the insured or defense counsel” in defense of a claim.

D.     Damages — loss, judgments, settlements, pre and post-judgment interest, and claim expenses. It also includes the award of attorney fees to the person or persons bringing the action.

     The definition goes on to list several items not included as damages:

     1. Civil and criminal fines — items that the policy describes as “uninsurable pursuant to the law.”

     2. Insurance plan benefits, including those payable under COBRA or ERISA.

     3. Money spent by the insured to make physical changes to the workplace as an accommodation to a disabled worker under the terms of the Americans With Disabilities Act (ADA).

     4.     As with the term “claim,” awards under arbitration or grievances are not included as damages.

E.     Policy Period.

F.     Wrongful Employment Practice — this term includes several sub-definitions (discussed below): actual or alleged: employment termination; discrimination; sexual harassment; discipline of an employee; deprivation of a career opportunity; failure to grant tenure; negligent evaluation of an employee; defamation or libel of an employee; harassment of an employee that violates any law; retaliation against an employee; and any other basis prohibited by law.

G.     Employment Termination — includes current or future notice and actual or “alleged constructive discharge.” This term does not mean damages that are owed under an “express contract of employment.”

H.     Discrimination — failure to hire, employ, or promote an employee based on any one of many “protected categories” as defined by statute. Such categories include race, creed, national origin, gender, disability (as defined by the ADA ), handicap, pregnancy, etc. In addition to failure to hire, employ, or promote, “discrimination” also includes the demotion of an employee based on any of these categories.

I.     Sexual Harassment — allegations of unwelcome sexual advances; requests for sexual favors; and other conduct of a sexual nature. In addition to sexual harassment made to effect employment decisions regarding an employee, the term also includes the creation of “an intimidating, hostile, or offensive work environment.”

WHO IS INSURED. See definition of insured, above.

WHAT IS INSURED. The policy covers actual or alleged wrongful employment practices, employment termination, discrimination, and sexual harassment.

PERILS. The perils covered are defined by the exclusions.

EXCLUSIONS. The following exclusions apply to this policy:

A.     Any “wrongful employment practice” that the insured commits with “criminal purpose or intent.”

B.     Liability of others that the insured assumes in any contract.

C.     Claims that seek damages for bodily injury or death arising out of a claim for a wrongful employment practice. The policy also excludes claims for “loss of consortium.” This exclusion does not apply to damages for emotional distress, mental anguish, or humiliation.

D.     Property damage or loss of use of property.

E.     Violations of laws such as ERISA, the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, or any other similar law.

F.     Actual or alleged violation of any workers compensation act. The exclusion does not apply to a claim of retaliation or other wrongful employment practice as a result of the filing of a workers compensation claim.

G.     Any claim that seeks continuation of benefits.

H.     Claims for consequential damages brought by a claimants spouse or children.

I.     Claims for damages other than money, except when such damages are sought in conjunction with a wrongful employment practice.

J.     Claims that allege breach of contract other than those alleging breach of the insured's employment manual.

K.     Any claim arising out of a labor dispute.

CONDITIONS. Specific coverage “conditions” are spread throughout the policy. There is also a section of general policy conditions.

A.     Territory, Certificate Period, and Claims Made Provision — the territory is anywhere in the world; however, the claim must be brought in the United States . In order for a claim to be covered the wrongful act must have occurred and the claim must be made during the certificate period or the extended reporting period.

     If the wrongful act was committed prior to the inception of the policy, it may be covered if the insured had no knowledge of the act and no evidence exists that a “reasonable person” might believe that such a claim would be made.

B.     Limits of Liability — the policy is subject to per claim and aggregate limits. The stated limit includes all expenses.

C.     Deductible — applies to any sums paid as damages. If the insurer elects to pay part of a deductible, the insured must “promptly reimburse” the insurer.

D.     Awareness Provision — the insured must notify the insurer of any circumstance which may “subsequently give rise to a claim” for wrongful employment practices.

E.     Defense, Settlement, and Cooperation — the insurer must defend any suit to which the coverage applies and has “absolute right” to choose defense counsel. The insured must fully cooperate in the investigation and not admit liability. However, the insurer may not settle without the consent of the insured. If the insured does not consent, the insurer's liability for further payments stops.

F.     Extended Reporting Period — if the insurer terminates the policy, the insured may purchase an extended reporting period of 365 days at a price equal to 100 percent of the annual premium.

6. POLICY CONDITIONS

A.     Insured's Duties in the Event of a Claim — give written notice of the claim; forward all demands, summons, etc. to the insurer; and cooperate with the insurer.

B.     Cancellation — the insurer may cancel at any time with a thirty-day written notice. An offer to renew that contains a different premium or conditions than the existing policy is not a non-renewal.

C.     Subrogation.

D.     Audit — the insurer may examine the insured's books and records during the policy period.

E.     Action Against the Insurer — may not be taken unless the insured has complied with all terms and conditions of the policy. No person or organization may join the insurer as a co-defendant in an action against the insured.

F.     Other Insurance — the American Equity policy is primary unless the insured has another policy that was effective prior to this one or covers a temporary or leased employee. If the policy is excess — and if the other policy permits it — American Equity will share payment by “contribution of equal shares.”

G.     Assignment — the policy is void if assigned.

H.     Application.

I.     False or Fraudulent Claims — void the policy.

J.     Changes.

K.     The named insured is the agent for all insureds under the policy.

L.     Service of Suit — if the insurer does not pay any amount due (and the insured makes the request), the insurer must submit the claim to a court of competent jurisdiction.

7. OTHER COMMENTS

The insurers participating in this program are:

1.     American Equity Insurance Company.

2.     American Equity Specialty Insurance Company.

If the agent wishes a non-binding quote, a short-form application is available. Policy issuance and claims handling are provided by Professional Underwriters Agency's office in Oakbrook Terrace, Illinois .