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Workplace-violence insurance: Meeting an unfortunate need

Workplace shootings emphasize that every workplace could harbor an undetected threat who could cripple a business and create emotional havoc for employees. Fortunately, there are ways to minimize your business' risk, and some insurance companies can provide remedies for businesses marred by workplace violence.

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According to the Occupational Safety & Health Administration (OSHA), there were 551 workplace homicides in 2004. The Insurance Information Network (IIN) says of these hundreds of homicides, 2 million assaults, and 6 million serious threats reported each year in the workplace, two-thirds of these are preceded by behavioral red flags.

Warning signs are numerous: dramatic behavior changes, making threats, voicing disgruntlement in a chronic fashion, blaming others, and initiating intimidation.

"The best weapons for business are awareness and prevention," says Candysse Miller, executive director of the IIN of California. "Corporate managers and personnel need training to recognize the warning signs for workplace violence."

Workplace violence researchers estimate that the cost to American business ranges from $6 billion to $36 billion each year. Negligent hiring and retention out-of-court settlements due to workplace violence lawsuits averaged more than $500,000, with jury verdicts in these cases averaging about $3 million.

Picking up the pieces

Workers compensation policies cover on-the-job injuries, but generally exclude coverage for acts of lethal force or the threat of lethal force. That means you need separate insurance coverage to protect you against the aftermath of workplace violence.

Chubb Executive Risk's Forefront Security Policy
  • In the event of workplace violence, the policy pays for a security expert to evaluate and revise your security measures to prevent other attacks.
  • If any employees die as a result of the incident, the policy pays a death benefit of $25,000 for each victim.
  • The policy pays for lost business income for up to 90 days, subject to a 72-hour waiting period.
  • The policy covers any medical or psychiatric expenses not covered by a victim's primary health insurance.
  • The policy provides security guards for 15 days after an act of violence, or if a stalker with a restraining order against him or her enters your office.

For example, the Chubb Group of Insurance Companies offers Workplace Violence Expense Insurance as an option in its ForeFront Portfolio specialty commercial insurance package for privately-held companies. Workplace Violence Expense Insurance can help privately-held companies offset the unexpected financial costs incurred as a result of a covered workplace violence incident.The ForeFront Portfolio package is available to privately-held companies with no more than 2,500 employees and no more than $1 billion in revenue.

Chubb’s Workplace Violence Expense coverage reimburses for business income expenses, security consultants, employee seminars, medical services, rehabilitation costs, independent security guards and access to a public relations firm as well as providing death benefits to employees’ families or other beneficiaries. The policy does not cover businesses against lawsuits brought by employees or other companies because of the workplace violence. This would be protected under the company’s general liability policy.Workplace Violence Expense Insurance also excludes losses due to robbery-related violence. There are separate policies for businesses that have a particular risk of being robbed, such as banks. Chubb can provide workplace violence risk management advice as part of its loss-control service.

For a smaller business, say with 100 employees, the annual premium for a Workplace Violence Expense policy runs between $1,000 and $1,500 for a policy with a $1 million per-incident limit. Larger businesses, with up to 2,500 employees, can expect to spend between $4,000 and $5,000 annually for a $1 million per-incident policy. Larger businesses have the option to increase their coverage to up to a $10 million per-incident limit, but that costs more. Most larger businesses choose limits between $1 million and $5 million.

Real-world needs

Chubb cites an instance in which the Workplace Violence Expense product kicked in: A stalker accosted his ex-girlfriend at her workplace, and as a result the Chubb policy provided $85,000 for 65 days of extra security measures.

"Workplace violence can devastate a company, destroy its bottom line and threaten its survival. But, it can be controlled and dealt with,”said Greg Bangs, vice president and product manager for crime, kidnap & ransom/extortion and workplace violence expense for Chubb Specialty Insurance. “Well-run companies can do a number of things to limit their exposure, and purchasing insurance is one of them.”Bangs notes that risk-management starts with employee training: Training supervisors to recognize warning signs early enough to mitigate any danger and establishing zero-tolerance policies regarding employee threats are vital.

OSHA calls for similar employer-employee dialogues to minimize risk, but also recommends alarm systems, panic buttons, convex mirrors, elevated vantage points, bright lighting, adequate staffing, video surveillance, and arranging furniture to avoid entrapment, among other solutions to reduce the possibility of workplace violence. These efforts might be costly, but can your business afford the alternative?

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