Business Insurance to Cover the Risk of Workplace Violence
Yesterday, a 17-year old student opened fire on his classmates in a high school not far from where I live. Sadly, as I write this, the news has reported the death of a second victim in that shooting.
It is a shock to us that live in this area. Perhaps it is such a shock because Chardon High School is considered a "good" school in a "good" neighborhood where violence - allegedly - does not happen.
But the truth is that violence in public places is not so uncommon and, additionally, not limited in scope to particular neighborhoods or groups.
Employers must consider the risk of workplace violence. The workplace can be a stressful environment. Especially in economic downturns where the possibility of employment terminations and personal financial strains can lead to additional stress.
Shortly after the shooting in Tucson, I wrote a blog post about workplace violence and possible business insurance to cover the risk. I decided today in the wake of the tragedy near my place of business to expand on that brief post and incorporate it.
As these tragedies illustrate, violence at a place of business or business open to the public, is always a potential threat. While not a common occurrence, violence in the workplace is probably more common than most businesses believe.
In a long-term study, the Centers for Disease Control found:
An average of 1.7 million people were victims of violent crime while working or on duty in the United States, according to a report published by the Bureau of Justice Statistics (BJS), each year from 1993 through 1999.
The weapon of choice is the gun. 80 percent of workplace homicides in 2008 were shooting deaths. Between 2004 and 2008 there was an average of 564 people killed at work each year. In 2009, the Bureau of Labor Statistics reported 521 workplace homicides, accounting for 12% of the total fatal work injuries in the U.S.
Employers may ask themselves why they would need insurance coverage to insure against a criminal act for which they are not responsible. However, under Occupational Health and Safety Administration regulations, some state laws and federal laws, employers owe a "general duty" to maintain a safe work environment. In some instances (depending on the law of the jurisdiction) the employer or owner of a property can be held liable for the damages caused by the violence where the claim is the employer or land owner did not do enough to protect the employees or public.
In other words, a risk causing 12% of fatal work injuries is a risk that employers must take seriously.
Is it Covered?
Most traditional commercial general liability policies will exclude coverage for workplace violence. The exclusion may be either through application of the "expected and intended" exclusion or the "assault and battery" exclusion. The business can review those exclusions with their insurance professional to determine if the exclusions apply. State law and case law may also exclude or limit coverage. Without over complicating the issue, as a general principle, your typical casualty and liability policies will not cover a workplace violence loss. Also, most workers' compensation programs exclude such losses.
Obtaining Coverage and Updating Safety
Businesses can insure against the risk of workplace violence. Typically, this is a niche policy in addition to workers' compensation and property-casualty insurance. Chartis and Chubb are insurers who offer workplace violence business insurance policies. Businesses at high-risk that may consider this insurance are those dealing with the public, retail outlets, late night businesses, and those with little control over entry by the public (theaters, parks, etc.).
Most insurers that offer this type of business insurance will require basic security precautions and suggest workplace changes to facilitate a safer work environment. Often this is in the form of educational materials. But, larger companies could benefit from full reviews by the insurer's experts and some insurers offer full programs on workplace violence as a package to reduce premiums.
What Does the Coverage do?
This coverage can provide after event counseling, liability defense, and indemnity for employees. For example, the Chartis product provides a death benefit, punitive damage and employer liability coverage as well as a defense in the event of a lawsuit stemming from a violent event. Policies differ from one insurer to another. Also, some companies offering this coverage add a number of exclusions and exceptions that render the coverage useless. A good policy from a top company, reviewed with your insurance professional is a must for this kind of coverage.
It is unfortunate that this product has evolved over the last ten to fifteen years to become an almost necessary consideration for businesses.