Vermont Liability & Workers' Compensation Insurance

Commercial General Liability (CGL)

Commercial General Liability insurance protects businesses from third-party bodily injury and property damage claims:

CGL Coverage Components

Coverage A - Bodily Injury & Property Damage Liability

What's Covered:

• Customer slips and falls on business premises
• Damage caused by business operations to others' property
• Products liability (injury from defective product sold)
• Completed operations (injury from completed work)

What's NOT Covered:

• Pollution (needs separate pollution policy)
• Professional services (needs E&O insurance)
• Employee injuries (covered by workers' comp)
• Auto accidents (needs commercial auto insurance)
• Intentional acts

CGL Limits Structure

Per Occurrence Limit:

• Maximum paid for any single claim/occurrence
• Typical: $1,000,000 per occurrence

General Aggregate Limit:

• Maximum paid for all claims during policy period
• Typical: $2,000,000 aggregate
• Applies to all coverages except products/completed operations

Products-Completed Operations Aggregate:

• Separate aggregate for product liability and completed operations
• Typical: $2,000,000

Standard CGL Limits:

• $1,000,000 per occurrence
• $2,000,000 general aggregate
• $2,000,000 products-completed operations aggregate
• Written as: $1M/$2M/$2M

Exam Tip: General aggregate applies to ALL claims during policy year. Once aggregate is exhausted, no more coverage for that policy year (except products-completed operations which has separate aggregate).

Vermont Business Liability Exposures

Slip and Fall Claims:

• Ice and snow on walkways (very common in Vermont)
• Businesses must maintain safe premises in winter
• Failure to salt/sand can result in liability

Vermont Retail Exposures:

• Customer injuries in stores
• Product liability for defective merchandise
• Parking lot accidents

Vermont Service Business Exposures:

• Damage to customer property while providing service
• Injury to customers on premises
• Completed operations liability

Vermont Tourism/Hospitality:

• Guest injuries at hotels, inns, B&Bs
• Food service liability
• Liquor liability (if serving alcohol)
• Ski resorts and outdoor recreation (specialized coverage needed)

Professional Liability (E&O)

Errors & Omissions (E&O) insurance covers professional service providers:

Who Needs E&O Insurance

E&O Coverage Features

What's Covered:

• Professional negligence claims
• Errors and omissions in professional services
• Failure to deliver promised services
• Breach of professional duty
• Legal defense costs

What's NOT Covered:

• Intentional wrongdoing or fraud
• Bodily injury or property damage (CGL covers this)
• Criminal acts
• Known claims (must be "claims-made" during policy period)

Claims-Made vs. Occurrence

Occurrence Form:

• Covers claims based on when incident occurred
• If incident happens during policy period, covered even if claim made years later

Claims-Made Form (most E&O policies):

• Covers claims made AND reported during policy period
• Must maintain continuous coverage
• Need "tail coverage" (Extended Reporting Period) if policy cancelled

Exam Tip: Most professional liability (E&O) policies are CLAIMS-MADE, meaning both the incident and the claim must occur while policy is in force. CGL policies are typically OCCURRENCE-based.

Vermont Workers' Compensation

Vermont requires workers' compensation insurance for nearly all employers:

Who Must Carry Workers' Comp

Workers' Comp Benefits

Vermont workers' compensation provides no-fault benefits:

Medical Benefits:

• All necessary medical treatment
• No dollar limit
• No deductible or copay
• Covers doctor visits, hospital, surgery, rehabilitation, prescriptions

Temporary Disability Benefits:

• Temporary Total Disability (TTD): Cannot work at all
• Temporary Partial Disability (TPD): Can work but at reduced capacity
• Pays percentage of average weekly wage
• Waiting period: 3 days (retroactive if disability lasts 2+ weeks)

Permanent Disability Benefits:

• Permanent Total Disability: Cannot return to any work
• Permanent Partial Disability: Permanent impairment but can work
• Based on impairment rating and wage loss
• Scheduled benefits for specific body part losses

Death Benefits:

• Paid to surviving dependents
• Covers funeral expenses (up to $10,000)
• Weekly benefits to spouse and children
• Based on employee's average weekly wage

Vermont Workers' Comp Premiums

Premiums based on:

Experience Modification Factor (Mod):

• 1.00 = Average claims for industry
• <1.00 = Better than average (premium credit)

• 1.00 = Worse than average (premium surcharge)

• Example: 1.25 mod = 25% premium surcharge

Vermont Workers' Comp No-Fault System

Employee Rights:

• Medical treatment for work injuries
• Wage replacement benefits
• No need to prove employer negligence
• Protected from retaliation

Employer Protections:

• Exclusive Remedy: Workers' comp is employee's sole remedy (generally can't sue employer)
• Predictable costs
• Protection from unlimited liability
• No punitive damages

Exceptions to Exclusive Remedy:

• Intentional employer acts
• Injuries outside employment
• Third-party liability (can still sue third parties)

Vermont Workers' Comp Assigned Risk

If employer cannot get coverage in standard market:

Vermont Workers' Compensation Assigned Risk Pool:

• Insurer of last resort
• Employers with poor claims history
• New businesses without experience
• High-hazard industries
• Higher premiums than standard market
• Coverage provided by participating insurers on rotating basis

Vermont Liquor Liability

Businesses serving alcohol face dramshop liability:

Dramshop Laws

Vermont law allows third parties to sue establishments that:

• Serve alcohol to visibly intoxicated persons
• Serve alcohol to minors
• When intoxicated person causes injury to third party

Who's Liable:

• Bars and taverns
• Restaurants serving alcohol
• Hotels and inns
• Event venues
• Ski resorts

Liquor Liability Insurance:

• Covers claims arising from serving alcohol
• Not covered under standard CGL
• Requires separate liquor liability coverage or endorsement
• Vermont has strict dramshop law

Vermont Umbrella/Excess Liability

Umbrella liability provides additional limits above underlying policies:

How Umbrella Works

Provides:

• Additional limits above CGL, auto, employers' liability
• Broader coverage (may cover some things underlying policies exclude)
• Drop-down coverage if underlying aggregate exhausted

Typical Structure:

• $1,000,000 to $10,000,000+ umbrella limit
• Sits above primary policies
• Requires minimum underlying limits (e.g., $1M CGL, $1M auto)
• Self-insured retention (SIR) for claims not covered by underlying

Vermont Business Considerations:

• Recommended for businesses with significant liability exposure
• Required by some contracts
• Relatively inexpensive for additional protection

Vermont Employment Practices Liability (EPL)

Employment Practices Liability Insurance covers employment-related claims:

What EPL Covers

Covered Claims:

• Wrongful termination
• Discrimination (age, gender, race, disability, etc.)
• Sexual harassment
• Retaliation
• Wage and hour violations
• Failure to promote

Not Covered by CGL:

• Employment claims not covered by standard CGL
• Separate EPL policy or endorsement needed

Vermont Considerations:

• Small Vermont businesses face employment claims
• Defense costs can exceed $50,000 even for meritless claims
• Recommended for businesses with 5+ employees

Summary

Vermont casualty insurance coverage needs:

Commercial General Liability:

• Covers third-party bodily injury and property damage
• $1M per occurrence / $2M aggregate typical minimums
• Critical for slip-and-fall claims in Vermont winters

Workers' Compensation:

• Mandatory for employers with 1+ employees
• No-fault coverage for workplace injuries
• Premiums based on payroll, classification, experience mod

Professional Liability (E&O):

• Covers professional service errors and omissions
• Claims-made coverage typical
• Needed by agents, accountants, consultants, etc.

Additional Coverages:

• Liquor liability for alcohol-serving establishments
• Umbrella/excess for additional limits
• Employment practices liability for employment claims

Vermont businesses must carefully assess their liability exposures and obtain appropriate coverage to protect against claims.