Here's an alarming sign of the times: a handful of insurance companies have decided to offer companies coverage against employee claims. The way Christine Cahill, assistant vice-president at Chubb in Warren, N.J., sees it, an increasingly litigious society, combined with a rapidly expanding body of law affecting the relationship between employers and employees, has created an urgent need for protection.

Chubb's product covers costs arising from past, present, or prospective employees' charges of wrongful termination, breach of employment contract, and other illegal practices. Other forms of insurance (general liability, umbrella coverage, and directors' and officers' insurance) may or may not protect you in an employee lawsuit.

Cahill says that the premiums for employment-practices liability insurance would be comparable with a company's directors' and officers' insurance premiums. Nearly all the large companies that have looked into Chubb's new product have been quoted six-figure annual premiums for coverage of up to $10 million. That's too expensive for many small companies, but Chubb will consider extending coverage at more reasonable rates to small and midsize companies that show financial stability and have a professional, sophisticated human-resource policy in place.

Consider the introduction of this insurance product as a giant warning sign: get your human-resources habits in good order. Chubb will send you a free 50-page booklet telling you how: Employment Practices Loss Prevention (Executive Protection Dept., Chubb and Son, 15 Mountain View Rd., Warren, NJ 07059). -- Ellyn E. Spragins