Business Protection Bulletin

With so many demands on their time, many business owners find it difficult to learn enough about their insurance programs.

You’ve probably found yourself asking questions such as:

1. Do I have the right coverages to protect my business from financial loss?
2. Do I have any exposures to loss that aren’t covered and should be?
3. Exactly what am I buying?
4. Am I getting the best value for my premium dollar?

As insurance professionals, we help you answer these questions because we:

• Offer policies providing protection against a wide variety of risks that can threaten your business – everything from Accounts Receivable and Business Interruption through Employment Practices Liability and Glass Insurance to Theft coverage and Workers Compensation.
• Recommend an insurance company (from among the quality carriers that we represent) that will provide quality protection.
• Make it a point to learn how your business works so that we can pinpoint potential sources of loss.
• Design a program that minimizes the impact of these losses (incidentally, we don’t always recommend insurance).
• Provide comprehensive protect that’s tailored to your needs – and your pocketbook.
• Work with you to make sure that your coverage stays updated as your business grows.

In short, we take over one phase of your business for you, and work with you to accomplish your first goal – protecting your profits.

To help us help you make sure that your business insurance makes business sense, please feel free to get in touch with our agency’s professional at any time.

We’re here to serve.

How can you oversee your employees’ use of company e-mails without violating their privacy?

According to a recent nationwide survey, more than 40% of businesses monitor their workers’ e-mails. If you’re one of these companies, a disgruntled employee might well sue you for invasion of privacy (the number of privacy lawsuits has skyrocketed by 3,000% during the past decade).

The best way to protect yourself against this risk is to create a written policy warning employees that you might be monitoring their use of e-mail. Bear in mind that because your business owns the e-mail system – software, network access, and computers – you have the legal right to oversee workers for misusing it to violate company policy or break the law.

The first step in implementing this policy is to have all employees sign a disclaimer that acknowledges the company’s right to monitor their e-mail. You can do this when an employee is hired, at contract renewal, or at a company meeting – and don’t forget to circulate any updates to the policy throughout the company. Apply e-mail monitoring as uniformly as possible, because singling out an individual without a clear reason to do so could leave you vulnerable to a discrimination lawsuit. Finally, be sure to have your attorney review the policy.

A comprehensive e-mail policy can: 1) provide an effective defense against invasion of privacy litigation; and 2) educate your employees on the proper use of e-mail – which should go far to reduce potential problems from misusing the system.

If you’d like to learn more about how to balance protecting the integrity of your company’s e-mail system with your employees’ right to privacy, please get in touch with us. As always, we’re here to help.

Recent headlines about electronic spies hacking into computer networks from the Pentagon to China reinforce the dangerous reality that a “malware” (software that accesses systems to steal sensitive financial and client information) is becoming increasingly sophisticated and widespread.

According to a recent report from the NPD Group, the average U.S. household with a Web connection has 5.7 devices – desktops, laptops, tablets, and/or smart phones — which are highly vulnerable to malware attacks. The more workers who use these devices to access the Web sites of their employers, the greater the threat of cybercrime.

To help protect the security of your company’s data against intrusion from malware, experts recommend taking these precautions:

1. Identify the business processes and data you need to protect and the risks associated with them.
2. Limit access to sensitive data to authorized users. Provide them with strong passwords and don’t allow any sharing.
3. Make sure that employees use only secure wireless networks when connecting to your site.
4. Provide users with strong authentication measures and anti-malware software.
5. Know your users and their behavior. Compare details of incoming login connections with the information you have about the user. If you find anomalies, add such precautions such answering a security question.
6. Look for corrupted devices. Authenticated users might acquire malware on their devices that puts your data at risk once they log in. For example, man-in-the-browser (MitB) attacks can hijack authenticated sessions.
7. Secure high-value transactions. Identify these transactions and refuse to accept them from devices with suspicious configurations.

Our agency’s specialists can work with you in developing and implementing a comprehensive anti-malware program for your company. Please feel free to get in touch with us at any time.

A survey by the Centers for Disease Control and Prevention (CDC) found that 69% of U.S. drivers talked on their cell phones – and 31% read or sent text messages or e-mails while driving. “The cell phone can be a fatal distraction for those who use it while they drive,” warns CDC Director Thomas Frieden.

Using cell phones to text behind the wheel can increase the danger of fatal crashes by six to 23 times, and drivers using hand-held devices are four times more likely to become involved in crashes serious enough to injure themselves.

You probably have rules about employees talking on their phones and texting while driving – but are they following them?

According to Jim Evans, president of human resources consulting firm JK Evans & Associates, some bosses turn a blind eye to cell phone use behind the wheel, while others don’t want to cut into their employees’ productivity. His advice to employers: “Dust off the old cell phone policy or unwritten practices and revisit whether employee safety and employer liability is at risk.”

To minimize this danger, your company should require employees who drive on the job to:

• Turn off personal phones or switch them to silent mode before entering a company vehicle.
• Pull over to a safe area if they need to make a cell phone call or send or answer a text message.
• Ask a helper or another passenger to make a return call.
• Contact supervisors or dispatchers when the vehicle is parked.
• Avoid smoking, eating, drinking, reading, and any other activities that distract them behind the wheel.
• Tell people who call them while driving that they’ll call back after reaching their destination.
• Not send or answer text messages, surf the Web, or read e-mails.

Your last newsletter discussed the benefits of Building Ordinance insurance. If you’re planning to build on your property or adding to an existing structure, a related policy – Builders Risk – can protect you from losses during construction, helping make sure that you finish the project.

The amount of coverage should reflect the total value of the completed structure (including the costs of material and labor, but not the value of the land). In most cases, the construction budget will be the best source for calculating this amount.

The policy is usually written for a period three months, six months, or 12 months. If needed, the term can be extended once.

Builders Risk covers damage to the insured structure(s) from a wide variety of causes, ranging from natural disasters (wind, lightning, hail, and lightning) through accidental events (fire, explosion, or vehicle accidents) to human activities (such as theft and vandalism). Coverage usually also includes:

• Fire department service charges for saving or protecting property from a covered cause of loss.
• Removal of debris from property damaged by a covered loss.
• Losses from the backup of sewer and drains.

Most policies exclude losses from earthquake, flooding employee theft, mechanical breakdown, contract penalties, war, government action, or faulty design and workmanship. You might be able to add coverage for some of these exclusions – such as earthquakes and flooding – if the building is in an area that’s prone to one or both of these natural disasters.

Bear in mind that this policy does not provide Liability coverage for accidents or injuries on your property.

We’d be happy to tailor a comprehensive Builders Risk product that fits your needs – and budget. Just give us a call.

Retail businesses are in the cross hairs of hackers, according to a recent report from Trustwave, a provider of data security and payment card compliance solutions to businesses.

Retail businesses – specifically the cardholder data they possess – were the primary target of cyber criminals in 2012, says Trustwave. About 45% of the company’s investigations were in the retail sector, followed by food and beverage (24%), and hospitality (9%).

“Cyber could very well be the largest part of the exposure picture for these retail businesses,” says John O’Connor, Vice President of Strategic Product & Platform Development for Travelers Insurance.

What makes the retail industry so appealing to cyber thieves? The sheer volume of payment cards used in these businesses make them obvious targets. Also, stores are relatively easy targets because they tend to focus primarily on customer service, rather than data security.

Widespread reporting of costly and embarrassing data breaches have made retailers increasingly aware of the exposures they face when storing customers’ data and swiping their credit cards.

Although hackers are targeting retailers of all sizes, smaller firms are particularly vulnerable because they often find it more difficult than their larger counterparts to keep their systems secure and to afford the heavy costs of notifying their customers about data breaches.

One insurance agent said, “A lot of these businesses aren’t the types that can absorb these costs. A data breach is one of those things they might not think about – but it can shutter their doors if it happens.”

The good news: our agency can help you protect you against these risks by offer a variety of comprehensive, competitively priced Cyber Liability policies. Just give us a call.

If your business suffers a severe property loss, don’t be surprised if rebuilding the damaged or destroyed structure(s) to meet the latest building codes adds 50% or more to recovery costs. With cities, states, and the federal government continually adding environmental and pollution regulations and tougher construction standards in earthquake, flood, and windstorm zones, this situation is not uncommon.

Even worse, the “Ordinance or Law” clause in your Property insurance policy will exclude payment for the repair, replacement, reconstruction, or demolition of the damaged property required by federal, state, and local regulation – even though you carry replacement coverage with no coinsurance or other limitations.

Some regulations also require a building that suffers damage beyond a specified percentage of its value (usually 50, 60 or 75%), to be demolished totally before rebuilding.

The bottom line: In a worst-case scenario, you might easily lose the total value of a damaged structure, pay for demolishing or repairing the undamaged portion, and pick up the increased cost of rebuilding the structure to code.

The solution: Building Ordinance coverage (sometimes known as Law and Ordinance insurance). A Building Ordinance policy will reimburse your business for:

• loss of the undamaged portion of a damaged building ( Coverage A)
• demolition of the structure and debris removal (Coverage B)
• Reconstruction of the structure to meet updated building codes (Coverage C)

Bear in mind that rebuilding to meet regulatory requirements might easily extend beyond the “period of restoration” during which insurance would pick up losses under your Business Interruption and Extra Expense policies. An Increased Period of Restoration endorsement will extend these coverages until repairs are completed.

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

The ammonium nitrate fertilizer plant in West, Texas that exploded last April had only $1 million in Liability insurance, which could cover as little as one percent of the estimated damage from the blast.

What’s more, according to an attorney for Adair Grain, Inc., which owns the West Fertilizer Co. the company did not carry Excess or Umbrella coverage.

The explosion occurred on April 17, killing 15 people (including 10 first responders), and injuring more than 200 others The blast, which left a 90-foot wide crater and registered on the Richter earthquake scale,, damaged or destroyed more than 150 buildings up to nearly 40 blocks away. A spokeswoman from the state insurance department estimated that damage could cost tens of millions of dollars, adding that other sources have pegged potential losses as high as $100 million.

At least six lawsuits representing hundreds of plaintiffs have been filed against the company and its owner. One of the plaintiffs’ attorneys, Randy Roberts, says that even though he was “floored” by the low level of West Fertilizer’s Liability coverage, “It’s not uncommon to see very serious operations [in Texas] conducted with minimum insurance or, in fact, no insurance.”

He expects that Adair will ask a judge to divide the $1 million in Liability coverage among the plaintiffs, and then file for bankruptcy – after which attorneys will look to see if other companies can be held liable for the explosion. “I don’t see the million taking care of even my three clients, much less the hundreds of people that need to be taken of,” says Roberts.

This disaster reinforces the need to make sure that you carry enough Liability coverage to protect your business against a worst-case scenario. As always, our agency stands ready to help.

If your business rents an office, store, warehouse, or other commercial premises, you’re responsible for any property you use or store there, as well any damage you cause to the rented property. Commercial Renters insurance (also known as Business or Commercial Property coverage) will repay you if your equipment or stock is stolen or damaged, or if you damage the premises inadvertently.

Some Commercial Renters policies also provide limited protection for possessions of your employees on premises. You might also want to buy additional coverage for flood damage, and/or glass windows and displays, as well as Business Interruption insurance (which will reimburse you if fire or theft keeps you from operating).

The premium depends on the risk factors facing your business. For example, the risk of fire depends upon how the premises you’re renting is constructed, whether it has a sprinkler system, and its distance from the nearest fire station. If you rent in a high-crime area or have particularly valuable or desirable inventory or equipment, you’ll pay a higher premium.

You can reduce the premium by increasing your deductible and/or installing fire and theft alarms and other safety devices.

When insuring equipment and inventory, you can choose either replacement cost or present value coverage. Replacement cost, which is more expensive, will reimburse you for the full cost of buying new items. Present value reduces your reimbursement by calculating depreciation based on the age of the property.

If you run a home business from a rented dwelling, see if your Renters insurance covers property and liability for business activities. Although most policies don’t include this, you can obtain coverage through a policy rider.

To learn more, just give us a call at any time.

Fraud and embezzlement in the workplace has become an epidemic, costing American businesses an estimated $400 billion a year (6% of total revenues), according to The Association of Certified Fraud Examiners. Smaller firms are particularly vulnerable, because they’re less able than their larger counterparts to afford extensive safeguard or to absorb the losses. What’s more, one in four workers who rip off their employers have been with the company more than ten years.

Employee Dishonesty insurance can protect your business from financial loss due to the fraudulent activities of an employee or group of employees. This coverage is also called Crime Coverage, Employee Dishonesty Bond, Fidelity Bond, or Crime Fidelity insurance.

The policy applies to acts by all current and former employees, as well as partners, trustees, and directors, together with volunteers, seasonal employees, and temporary workers under your control. Covered losses can include: 1) theft, robbery, burglary or embezzlement of money, securities, or physical property of the business; 2) forgery or alteration; 3) fraudulent transfer of funds; 4) computer fraud; and 5) counterfeiting cash or money orders.

The amount of coverage you’ll need varies with the loss exposures your business faces. As a rule of thumb, companies that handle cash and securities, need at least 20% of their annual revenue in Minimum coverage for fraud and theft losses is usually $100,000 and many policies will cover $500,000 without significant additional premiums. You can also set specific coverage levels for depositor’s forgery, computer, and funds transfers.

Depending on your situation, you can buy Employee Dishonesty either on a stand-alone basis or as an add-on (endorsement) to your Business Owners policy or other Commercial insurance coverage.

For more information on protecting your business against light-fingered employees, just give us a call.