Lawsuits Targeting America’s Wealthiest
A high percentage of the wealthiest Americans believe that they are more likely to be the subject of a lawsuit today than they were before the financial crisis. The issue of disparity of wealth, income and taxation has intensified these fears that their wealth can attract lawsuits. These concerns are reportedly legitimate, because under the widely accepted doctrine of joint and several liability, if more than one defendant is responsible for a plaintiff’s injury, any of the defendants may be held responsible for the entire damage award. The result is that the plaintiff may focus the attack on the deepest pocket. Much of this analysis may not come as a surprise but people of means frequently underestimate the potential cost of a lawsuit and misunderstand the affordability of effective protection.
ACE Private Risk Services concluded in its recent survey that wealthy Americans have growing concerns, justified concerns, but fail to take the appropriate precautionary steps to safe-guard their substantial assets. Of particular note, ACE concluded that many underrated the very real threat of employment practices liability, directors and officers liability, and libel lawsuits.
- Employment practices liability (EPLI) may arise through the employment of a nanny, housekeeper, cook or driver. This employment scenario could spark discrimination, sexual harassment, wrongful termination or other wrongful employment practices lawsuit. Yet, many lack the appropriate EPLI insurance protection.
- Director and office liability (D&O) exposure may arise from serving as a volunteer board member or trustee of a not-for-profit. According to the survey, more than half of America’s wealthiest are exposed to D&O risk but lack coverage to protect them in the event of a lawsuit.
- Libel, slander and defamation lawsuits are on the rise due in part to social media platforms and other means of electronic message distribution. As a result, comments and opinions are readily available to the public and thus expose the publisher to significant risk.
To protect against these risks, individuals must maintain adequate protection including professional liability insurance, general liability insurance, and an umbrella policy if appropriate. A key is to comprehend how the various policies work together to form an all-encompassing safety net.