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Sample of Claim Scenarios

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Professional Liability Insurance (Errors & Omissions)

Management Consultant

A management consultant who specializes in executive coaching is hired by a software manufacturing firm. The software firm is an anomaly in the world of technology because most of their top executives have worked there for ten years or more, including their Senior Vice President of Marketing, Chief Financial Officer, and Senior Vice President of Product Development. Ironically, the longtime President of the firm believes that, although these people are extremely valuable to the firm due to their extensive knowledge and experience, their loyalty had kept them absent from the technology boom of the nineties and caused their flow of new ideas to stop. She believes that the management consultant, who promotes a strong ethic of self-actualization, will re-energize her executives. Within the first six months of the twelve-month engagement with the management consultant, two of the three above-named executives leave the firm, citing a "new sense of purpose” and a "new desire to accomplish” as primary reasons for their departure. The President terminates the engagement with the consultant and sues. Although the case is thrown out, the management consultant must pay $25,000 in legal costs.

Marketing Consultant

A marketing consultant is hired to provide a marketing plan for a long-successful German-themed restaurant from New Jersey. The restaurant is interested in expanding and hires the consultant to identify areas of the country into which expansion would be feasible and provide a marketing plan. The consultant identifies Pennsylvania and Texas as two areas with significant German-American populations which would serve as bases of expansion. Also, the consultant's promotional strategy consists mainly of holding monthly "beer fests” featuring German beers to draw people into the restaurants. After 18 months, the expansion is deemed a failure as it is found that demand for German fare is limited in both areas in spite of the roots of the population and providing imported beer in mass quantities is found to be cost-prohibitive. The net loss for the owners is sizable and they sue the consultant for $500,000.

Human Resources Consultant

A human resources consultant who is a specialist in employment regulations, policies and procedures for East coast companies wins a contract for a company in a small Midwestern town. The state in which the company is located recently passed extremely strict legislation requiring the workplace posting of a five-step method of reporting and responding to employment discrimination to which management must be closely adhere. The human resources consultant is not aware of the change and does not inform the company about the posting requirement. Shortly after the engagement of the human resources consultant is over, five employees sue the company for discrimination. They are demanding $100,000 each and have a very strong case as the five-step method was not followed. The company sues the human resources consultant for negligence.

General Liability

A consultant is in the office of a contracted client, and inadvertently spills a cup of coffee on one of the employees' laptops, causing considerable damage to the computer. The cost to replace the damaged laptop is $3,000.

Employment Practices Liability

A minority woman was hired for an administrative position in a small, private company. Within nine years she climbed the company's corporate ladder and reached a position of junior officer. When the woman was not selected to fill an opening for a higher position for which she considered herself suitably qualified, she alleged that she was passed over in favor of a less experienced person. She filed suit against two officers and the company for breach of contract, racial discrimination, fraud, and emotion distress. After four years of litigation, the case was settled. The defendants paid the woman $75,000, and total defense costs exceeded $272,000.

This document is issued as an aid to assist you in your overall understanding of the types of claims, which may be filed under the United States Liability Insurance Group’s Consultants Package Policy. This is not part of any insurance contract and confers no right upon you. This document does not amend, extend, or alter the coverage afforded by the policy. For a complete understanding of any insurance you purchase you must read your Policy, Declarations Page, and any endorsements, and discuss them with your broker. Your actual policy terms and conditions may be amended by endorsement or affected by state laws.

SP-CLA (08/01)

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