Business Protection Bulletin

An industry seminar on fraud risk, prevention and response, found 778 internal fraud cases in 2012 (more than two a day!). These scams included fake billing, corruption, and expense reimbursement.

Although the companies affected suffered minimal losses in more than half of these cases, their headaches came from private civil claims, potential government investigations, criminal prosecutions, and bad publicity.

Fraud can be uncovered by everything from employee tip-offs and management reviews to internal audits and even “gut” feelings by an experienced observer.

If you’ve been scammed from the inside, start with a prompt and thorough internal –investigation. Gather the facts, preserve evidence, assess legal repercussions, and take corrective action – before an outside authority does. (Being the first to report the incident to the government can take the sting out of an official probe).

To correct the situation you should: 1) make amends to the victims; 2) revamp corporate-compliance programs and 3) strengthen internal controls. Make sure that these actions are tangible and specific.

Consider offering substantial financial incentives to employees who might suspect that something fishy is going on, but may not want to get involved.

Lastly, , insurance can help protect your business from the loss of money, securities, and inventory resulting from employee dishonesty. For example, Fidelity and Crime coverage usually includes property theft, losses due to forgery, and electronic wire transfer fraud.

Your insurance program should include a cyber policy. A recent court decision expands coverage of cyber losses under fidelity bonds. Damian Brew, managing director of Marsh’s FINPRO practice warns, “Having insurance coverage without cyber insurance is like playing hockey without a goalie.”

Our business insurance professionals would be happy to review your internal fraud-control program. Just give us a call.

The global market for mobile application technology should top $25 billion by 2015. If you’d like to get a piece of this action by developing and marketing an app, experts recommend that you take these steps:

1. Follow the rules. Starting any business requires following a series of steps (from registration to hiring employees). These 10 Steps to Starting a Business will help you check all the necessary boxes.
2. Expect to be monitored. Apps come under intense scrutiny. Negative reviews from consumers and experts, complaints, and horror stories can be fatal. Although regulation of the mobile market is in its infancy, online apps fall under the scrutiny of truth-in-advertising and data privacy laws regulated by the Federal Trade Commission’s (FTC) Bureau of Consumer Protection.
3. Disclose all charges up front. Developing a custom app can be costly. If you try to recoup some of this investment by charging users, state these fees clearly and completely. Full disclosure is essential if children will use your app. If parents learn their child has racked-up unauthorized fees because your policy wasn’t clear, you’ll face a customer relations nightmare.
4. Develop and communicate your privacy policy. The Future of Privacy Forum Application Developer Responsible Data Use Project found that 22 of the 30 top apps lacked any such policy. Many privacy policy generators available online give app developers options for customizing their policies. If your target market includes children, check the Children’s Online Privacy Protection Act, which governs information that online businesses (and mobile apps) collect about children 13 years or younger.
5. Consult a lawyer. Because every app start-up is unique, get advice from an attorney who specializes in privacy and consumer protection law.

Good luck!

The holidays are almost upon us and alcohol will be flowing at company parties throughout the land. Beware! If an employee or guest gets inebriated at a social function sponsored by your business and then injures another person, you could be held liable.

Consider this scenario: After polishing off four eggnogs in an hour at the company’s Christmas party, one of your workers toddles off to his car. The employee almost makes it home when he runs a red light and T-bones a car. The car is damaged and injures the driver. The driver then sues your business for negligence in allowing the employee to drive home although he was clearly “under the influence” at the company party.

What’s more, under state and local “social host” laws, your business might face a fine or even imprisonment for continuing to serve alcohol to an adult who is legally drunk.

Under your comprehensive general liability policy is a clause for host liquor liability. The insurance company will pick up the tab for property damage and bodily injuries, up to “each occurrence” or “general aggregate” limits for the CGL. This coverage will also pay for court costs, legal fees, and other expenses – and these payments will not apply to the limits.

Be sure not to confuse host liquor liability insurance with Liquor Liability coverage, which protects businesses that manufacture, serve, or sell alcoholic beverages (such as liquor stores, bars, and taverns) against claims for injuries caused by intoxicated customers. If you’re in one of these businesses, you’ll need both types of policy.

To learn more, feel free to get in touch with our agency at any time.

The American Management Association recently reported that only half of the corporations it surveyed had a disaster plan. What’s more, many respondents felt that the time spent preparing a plan was too costly or that they had just never thought about it.

As insurance professionals, we find such news disappointing. After all, a disaster management plan should be a top priority for every company.

The safety of your employees and the future of your business depend on drafting a disaster management plan now. From the loss of key personnel to physical property damage, everything that can go wrong in a serious situation might very well do so. Are you prepared?

Your plan should also include comprehensive insurance coverage. For example,

Once a disaster happens, if you don’t carry a business income policy with, “Extra Expense,” coverage, you will lose money. Maybe even enough to put your business under for good. This coverage kicks in to help you replace lost revenue and expenses to get up and running fast.

For more information on adding Business Income insurance with Extra Expense coverage to your protection package, call our service team today.

The fire-protection systems in many of the nation’s assisted living facilities are dismal, says a recent report. Many lack such basic safeguards as smoke alarms and sprinklers. As a result, these facilities have suffered an average of one fatal fire per month during the past five years. In a huge industry with deep emotional implications, this matter will continue to receive nationwide press coverage.

The media attention should help businesses in all industries understand the importance of adequate fire protection. The cost of updating these systems pales in comparison to the huge emotional, physical, and economic damages that a single fire can cause.

As a business owner, you need to ask yourself these questions:

• Is your structure capable of withstanding a blaze?
• Is your staff aware of safety measures to both prevent and combat a fire?
• What about your surroundings? Are the businesses near or next to you prepared?
• If the worst were to happen, how long would it take your business to bounce back?

Although it might take intensive effort to protect your building against fire, carrying the proper insurance is one decision you can make immediately. Invest in comprehensive property and business income coverages today!

Contact us for more information on how these policies can help your business bounce back after a fire or other disaster.

The National Insurance Crime Bureau (NICB) released its list of U.S. metropolitan areas plagued with the highest stolen-vehicle rates in 2011. California cities took seven of the top ten spots, with Washington and South Carolina filling out the list.

What does this mean for you, the business owner? It reinforces the threat of vehicle theft. If your company vehicle is stolen, it could take some time to replace that vehicle, which could impact your business. Although it seems that those in sunny California get the short end of the stick, the bottom line is that thieves wreak havoc on business parking lots and jobsites nationwide.

The NICB recommends three levels of security:

1. Warning devices, such as alarms.
2. Immobilizing devices, such as a smart key or kill switch.
3. Tracking devices that help police locate the vehicle.

The NICB also advises owners and users of vehicles to exercise such common sense precautions such as not leaving the car unlocked.

Although NICB’s recommendations provide viable risk-management techniques, a commercial auto policy that includes theft coverage will also help.

If we haven’t discussed your coverage in a while, now’s the time. Please give us call us today.

If you want to manage risk within your firm, you need to familiarize yourself with risk-management language. Here are some basic definitions, provided by the National Alliance for Insurance Education & Research, which you can use to build your knowledge base:

• Exposure: A situation, practice or condition that might lead to a loss; an activity or resource (assets, people).
• Peril: A “cause” of loss; an event that might cause a loss.
• Hazard: A condition within an exposure that might lead to an incident; “a peril about to happen.”
• Incident: An event that disrupts normal activities and might become a loss or claim; “a near miss.” Lifecycle of an incident: Pre-incident, incident, immediate post-incident, post incident, rehabilitation (repair, recovery).
• Accident: An incident resulting in injury or damage to person or property which has, or will become, a loss or claim; “an unplanned event definite as to time and place that causes bodily injury or property damage.”
• Occurrence. An accident with the limitation of time removed.
• Loss: A reduction in value.
• Claim: A demand or obligation for payment as a result of a loss.
• Frequency: The number of times an incident occurs.
• Severity: The monetary impact of a loss.
• Expected losses: Loss projections (“loss pics”) based on probability distributions and statistics; frequently developed using actuarial techniques.

For a complimentary review of the risks your business faces, please feel free to contact us at any time.

Unfortunately, we live in a litigious society. If you think your company is unlikely to face a claim for thousands, if not millions, of dollars , think again. Even if you won your case, you’d lose time, money, and resources that would be better spent on growing the business.

General Liability Insurance to the rescue. This coverage (also known as Commercial General Business Liability) will protect your company’s assets and pay for obligations – medical costs, for example – incurred if someone gets hurt on your property or if you or your employees cause property damage or injury. In case you’re sued, the policy will cover legal defense costs, as well as any settlement (non-monetary losses by the plaintiff, compensatory damages, and/or punitive damages).

A General Liability policy can also protect you against liability as a tenant if you damage rented property by fire or other covered loss. Finally, it can also cover claims of false or misleading advertising, including libel, slander, and copyright infringement.

You can buy this coverage on its own, or include it in a Business Owner’s Policy (BOP), which bundles Liability and Property coverage into a single package.

The amount of coverage you need depends on the type of business you’re in and the perceived risk associated with it. For example, a building contractor will need more coverage than a web designer or consultant. Your business location also comes into play; some states tend to award higher damages than others to plaintiffs in personal injury cases.

To learn more, just give us a call.

Home-based businesses offer entrepreneurs significant cost savings, such as eliminating the expense of commercial space and commuting. However, when it comes to buying insurance, too many of these owners are short-changing themselves – and putting their investment at risk.

A recent survey by the Independent Insurance Agents & Brokers of America (IIABA) found that nearly 60% of the nation’s 11 million home-based businesses don’t have insurance. Of those entrepreneurs, nearly 40% thought that their Homeowners policy protects them from business-related risks, while almost 30% said their businesses were too small to insure.

According to IIABA Vice President of Education and Research Madelyn Flannagan, home-based business owners face significant financial losses from theft, accidental damage, natural disasters, vehicle accidents, and liability (for example, if an employee is injured on the job). Homeowners insurance usually does not cover these risks, warns Flanagan.

To protect your home-based business, IIABA offers these guidelines:

Review your Homeowners policy. Coverage for certain business items is limited and does not provide Liability insurance for home-based businesses. What’s more, the standard Homeowners policy does not include Business Interruption coverage, which reimburses you if a loss causes your home business to cease operations. However, you might be able to add these coverages to your policy by endorsement.

Consider business insurance. You have several options including an Incidental Business Endorsement, a business owners package (BOP) or an In-Home Business Owners policy.

Protect yourself. If your home-based business is a full-time occupation, you need Life, Health, and Disability insurance, as well as Workers Compensation.

The bottom line: An investment in insurance can provide security and peace of mind as your home-based business grows.

For more information, feel free to get in touch with us at any time.

How secure are your business assets? According to the Association of Certified Fraud Examiners (ACFE), companies with less than 100 employees lose an average of $155,000 a year to fraud. Small businesses also have a higher fraud rate than larger firms and non-business owners.

Don’t be a victim! To help protect your business against losses from scam artists and cybercriminals, security experts recommend taking these precautions.

1. 1. Separate personal banking and credit cards from your business accounts to ensure that scam artists don’t get their hands on all your money; this will also make it easier to track business expenses and tax deductions. Pay bills online or make sure to store paper bills securely.
2. Invest in a firewall as well as anti-virus protection, and spyware- malware detection software Provide offsite backup to keep your business up and running after a cyberattack.
3. Secure your IT infrastructure by using a dedicated computer for all online financial transactions. If possible, avoid using it for other online activities (such as social media, email and web-surfing) which can open the system to cyberthieves.
4. Make sure that passwords are complex (with one upper-case letter, one number and at least eight characters), have them changed regularly, and assign different passwords for separate accounts.
5. Hold regular training sessions for all staff on basic security threats and prevention measures.
6. Use background checks for all employees who handle cash or high-value merchandise or have access to sensitive data.
7. Buy insurance to protect your small business against losses from fraud or cybercrime.

We’d be happy to tailor coverage to your needs – at a price you can afford. Just give us a call.