Business Protection Bulletin

A rogue employee embezzles $50,000 from your company’s bank account. A visitor to your office slips and falls on a wet floor, suffering a broken elbow. A competitor sues you for allegedly libeling their product.

Believe it or not, a single insurance policy could pick up the tab for any of these instances.

The Business Owners Policy (BOP) can provide “package” protection against these risks — and a wide variety of others — for a premium that’s significantly lower than the cost of the individual Property and Liability policies that you would need to cover all of these perils.

As a rule, BOP packages are available to Main Street businesses (those with revenues of $5 million or less and 100 or fewer employees).

Property coverage under a typical BOP includes:

• Property Damage to your premises, contents, inventory, office equipment, and computers, as well as the property of others that’s temporarily in your care — such as clothing being cleaned. Most BOPs will pay for the cost of replacing lost or damaged property, rather than its actual cash value.
• Business Interruption covers loss of income to your business caused by lost or damaged property.

BOP Liability coverage includes, but is not limited to:

• Bodily Injury covers losses due to physical or mental injury, disease, and death that occurs on your premises or is caused by your products.
• Medical Payments picks up the cost of health care treatment for customers, vendors, or suppliers injured on your property.
• Personal and Advertising Liability protects your business against lawsuits alleging slander, libel, or invasion of privacy.
• Crime covers loss of money or securities from burglary, theft, and embezzlement.

Bear in mind that because the amounts of insurance (limits) under your BOP are fixed, you might need to increase your limits. You might also need to add coverages, such as Fleet Auto. We’d be happy to help provide you with a BOP that’s tailored to the needs — and pocketbook — of your business. Please feel free to get in touch with us.

Many companies buy Business Income insurance to help reduce the devastating effect of a loss on their ongoing operations. Although this coverage is extremely valuable and can help keep your business afloat after a loss, bear in mind that it has a number of exclusions.

For example, coverage usually excludes lost income associated with a contract. If the covered loss affects your ability to meet a contract with a third party, the resulting lost income won’t be covered beyond the “period of restoration.” This period usually begins 72 hours after the loss and ends as soon as your property is restored and/or operational.

Let’s say that you sign a contract with customer ABC to supply materials for a year. A month later, your business suffers a major loss to property, including the materials that ABC agreed to buy from you. Because you’ll now be unable to offer these materials for an indefinite term, ABC has no choice but to find the materials elsewhere. Your property is repaired and operational five months later, ending the “period of restoration.” However, because of the exclusion, your policy won’t cover the remaining six months of lost income from losing the contract.

Review your Business Income policy today to learn its period of restoration. There might be an endorsement available to extend the amount of time that your policy will provide coverage. We can help you determine the period that’s right for you. Just give us a call.

Although you’re aware of the Americans with Disabilities Act (ADA), you might not understand how to implement it in your small business. The Equal Employment Opportunity Commission (EEOC) can help. The Americans with Disabilities Act: A Primer for Small Business outlines the provisions of the ADA and provides valuable examples, tips, and caveats:

This EEOC publication covers:

• Who’s protected by Title I of the ADA.
• How to make ADA services accessible.
• The use of tax credits and deductions to offset specific costs.
• How to avoid mistakes when interviewing applicants with disabilities.
• What questions you’re permitted to ask employees about a medical condition.
• What to do if safety issues arise.
• Various aspects of reasonable accommodations requirements.
• Tax incentives for businesses that hire and retain people with disabilities.

If you provide goods and services to the public, check out the ADA Guide for Small Businesses, a 15-page illustrated guide that presents an overview of some basic requirements for small businesses. It provides guidance on how to make these services accessible and use tax credits and deductions to offset specific costs. You can access the guide at ADA Guide for Small Businesses (HTML) or ADA Guide for Small Businesses (PDF). Spanish, Cambodian, Chinese, Hmong, Japanese, Korean, Laotian, Tagalog and Vietnamese editions are available from the ADA Information Line: (800) 514 -0301 (voice) or (800) 514-0383 (TTY).

Reading up on the ADA can help you avoid costly lawsuits. Get smart on the law — and call us to make sure you have the coverage you need to protect your business against this risk.

In today’s high-tech world, individuals can carry thousands of client files on flash drives in their pockets or purses. People are conducting business on the go and sensitive information is accessible at the click of a button. Managers are using their laptops or tablets through “hot spots” at local coffee shops to access customer databases. Healthcare professionals shopping at supermarkets can get patient files on their smartphones.

If you think of information security breaches primarily in terms of malicious hackers cracking the networks of big corporations from thousands of miles away, think again.

The hacking of such corporate giants as Global Payments, Epsilon, and Sony prove that size and sophistication can’t stop data thieves. However any company that stores customer information in electronic format is vulnerable to cyber privacy liability exposures than can cost megabucks – or even put a firm out of business – which means they need insurance against these risks.

Cyber Liability coverage can protect your business against breaches of privacy from unauthorized access, physical taking, or the mysterious disappearance of confidential information that leads to third-party losses resulting from identity theft. Depending on your needs, the policy can also provide a variety of coverages, such as Business Interruption, Cyber Extortion, and Systems and Data Recovery. Other options can cover the cost of contacting those affected by the data breach, computer forensics to analyze the breach, fines and penalties, potential HIPAA (client medical records) exposures, and online activities on your company site.

The development and expansion of Cyber Liability coverage during the past two decades has paralleled the explosive growth of computer technology: Today’s policies are increasingly comprehensive – and inexpensive.

CYBER LIABILITY: SEVEN KEY ISSUES

Before writing Cyber Liability coverage on your company, insurance underwriters will need to know:

1. Your type of business.
2. Your annual revenues.
3. The number of payment card transactions you process each year.
4. The number of records with sensitive client information stored on your database(s).
5. Your compliance with payment card industry (PCI) standards.
6. Whether, and to what extent, you have encrypted your company’s mobile devices.
7. Whether you have suffered losses from cyber data violations during the past five years.

Contact us for a complimentary review of the cyber liability risks your business faces — and a coverage program tailored to deal with these exposures.

If your business property is lost, damaged or destroyed, insurance will pay the fair value of the item. Usually, this is relatively straightforward: You determine the replacement cost or current actual cash value, and the adjuster approves a settlement.

However, for certain types of property, the valuation process gets a bit murkier, especially for computers and other electronic devices (such as smartphones). These sophisticated high-tech items are portable and at high risk for loss or damage. For years, the cliche about buying a new car was that it lost a fourth of its value as soon as you drove it off the lot. High-tech devices can make new cars seem like wise investments. When you replace a laptop, tablet, or smartphone, it’s hard to calculate the value of a similar device bought two years ago because a more powerful, less expensive version has probably replaced it.

To value such items accurately for insurance purposes if they’re lost, severely damaged or destroyed, you have three main choices: In the unlikely event that you want to replace the insured property with exactly the same equipment, the cost would be far less than you paid originally. The cost to replace the devices with new equipment of equal capacity, speed, etc. would be higher, but still far less than the original cost of the old devices, due to advances in technology. You might decide you want the best equipment you can buy for the same price you paid originally. Although the “replacement” values remain the same, the new devices would be far more powerful and advanced.

Depending on your decision, the amount of coverage you need will vary and your policy(ies) might require modification.

Our business property specialists offer a valuable resource. They can help you value your current stock of high-tech devices, plan for replacing lost, damaged, or destroyed devices, and guide you in choosing the right policy and coverages – to make sure that your insurance doesn’t become obsolete as fast as your computers.

The “Social Media Revolution” is transforming how Americans connect with their families and friends – and the ways in which companies hire, manage, and fire their most valuable asset: Their workers.

However, failure to provide effective management of social media as an employee relations tool can pose serious financial risks to your business. Read on.

Hiring
More and more employers begin the hiring process by using Facebook or LinkedIn to garner information about an applicant’s background, associates, and social behavior. Some companies reject candidates based on such behavior as inappropriate photos, references to substance abuse, slanderous comments or opinions, or trashing a previous employer.

‘These activities raise legitimate concerns and companies have an obligation to hire responsibly. However, if you access social media sites that have “protected class” information not usually privileged in the hiring process, you could be putting your business at risk for a discrimination claim. To avoid this problem, outsource hiring to third parties (such as background-verification companies and/or recruiters who document content from social-media sites during the selection process).

Managing
Be sure to create, and enforce, a comprehensive social-media policy for employees that: 1) Defines inappropriate use of social media in the workplace (including personal use during work hours, type of content posted, and defamatory statements about the company, managers, and fellow employees; 2) sets penalties for disclosing trade secrets outside the company; and 3) imposes disciplinary action (including termination) for violating the social media policy.

Use caution in developing these guidelines. It’s not uncommon for employees to claim that a company’s social media rules are overly restrictive. To make sure that your policy is in compliance with the National Labor Relations Board standards for protected behavior, consider consulting an attorney with expertise in employment practices law.

Firing: The EPLI Factor
Before you fire an employee for misusing social media on the job, make sure that you have strong documentation for your action.

To help protect your business against losses stemming from allegations of employment discrimination or wrongful termination, it makes sense to buy Employment-Practices Liability Insurance coverage (EPLI). For a relatively small premium, an EPLI policy can save you from litigation expenses that can top six figures — not to mention the danger of financial devastation from an adverse judgment. For more information, please contact us.

Do you have the information you need to make an informed decision on buying Business Interruption (BI) insurance?

Unfortunately, some companies only discover that they don’t have enough BI coverage to stay in business after they suffer a major loss. On the other hand, other firms over-insure, shelling out excessive premiums for protection they might not need. We’d recommend that you review your Business Interruption policy. Check out the insured or reported values for your coverage, as well as the extensions that apply to the specific needs and operations of your business. For example, you might consider adding:

• Claims Preparation Fees
• Contingent Business Interruption
• Expediting Expense
• Extended Period of Indemnity
• Ingress/Egress
• Ordinary Payroll Coverage
• Selling Price of Finished Goods Inventory
• Service Interruption Power Outage

To help make sure that you’re getting the Business Interruption protection you need at the right price, we’d be happy to do a comprehensive evaluation of your coverage. Just give us a call.

To help you make sure make sure that your business has the right Commercial Auto policy at the right price, we’d recommend following these guidelines:

Make sure to cover all vehicles that your employees drive on company business. This could include vehicles that employees own, lease, or rent – as well as those that the company owns.

Determine whether you need Personal or Commercial Auto insurance. You might be able to save money by covering vehicles with a less expensive Personal Auto policy in some situations — for example, by registering title to a vehicle in your name. However, if the company owns the vehicle, you’ll need Commercial Auto coverage. Bear in mind that a Personal Auto policy should include the contents of the vehicle, as well as medical costs if a driver suffers an injury on company business.

Be sure to comparison shop. Because every insurance company sets Commercial Auto premiums and coverages in its own way, prices (and values) can vary significantly. Because we represent a variety of companies, we can offer professional advice on finding a policy that’s tailored to your needs — and pocketbook. Just give us a call.

When accidents happen on construction sites, the result usually involves property damage. Faulty wires cause fires, which burn the walls. Collisions often put dents in expensive equipment, and paint can be inadvertently sprayed onto nearby cars. If such incidents occur, the contractor must look to their General Liability policy to compensate for damages. Although the CGL policy covers several types of incidents, not every situation is covered.

In order for a situation to be covered, three requirements must be met. First, there must be a legal obligation for the contractor to pay the damages. The contractor’s tort liability is covered by insurance, so most negligent acts are covered. However, if the contractor fails to complete the work he or she agrees to, there is no coverage.

The second requirement is that the damage must happen out of an occurrence, which the policy defines. In a CGL policy, an occurrence is an accident that includes repeated or continuous exposure to the same harmful conditions. In order to qualify for coverage, the damage must be accidental. The insurance company will decide if the incident was accidental.

The third requirement is that an accident must result in damage to the property. Such damage is defined as a physical injury to the property. This may include loss of use of the damaged property and loss of use of any other accompanying property that the incident affects. Since computer data is not tangible property, it is one of the exclusions in this type of coverage.

Unfortunately, if a contractor is legally liable for a damage claim, the policy might not cover it if the claim is categorized as faulty workmanship. If damage results from work performed by the contractor or a hired subcontractor to “the particular part” of property being fixed, the damage might not be covered. For example, assume a contractor is fixing a wiring system for an old light fixture. If the fixture falls and damages the floor during the process, the fixture itself would not be covered. This is because the fixture was the particular part of property that the contractor was working on. However, the contractor was not working on the floor, so the damaged flooring would be covered.

In some cases “that particular part” might be difficult to define. For example, if a contractor accidentally starts a fire and burns a multi-level roof, only a portion of the roof might be covered. The language in the policy is not clear enough for a definite answer to such a situation, so outcomes can vary. However, one provision in the policy is very clear. It states that coverage does not apply to any particular part that must be repaired because of incorrect work performed by the contractor. In the previous scenario, if the light fixture did not work after the contractor repaired it, the policy would not cover a replacement.

Inland Marine policies might help for some types of losses that a regular policy does not cover. There are also other types of losses that contractors must pay for upfront. However, it is important to know what to expect before entering the job site. Discuss coverage options with our agents.

For most companies, Business Interruption insurance might be as important for survival as Fire coverage. It is difficult to find a business that did not obtain insurance for windstorm and fire damage. However, too many business owners do not consider how they would continue functioning if a windstorm or fire actually did damage their property. This is especially true with small business owners. Business Interruption insurance is not sold independently. It is an additional type of coverage for a property insurance policy. In some cases, it may be included in a package policy for business owners.

Businesses that must cease operations completely while the premises are repaired often lose money to their competitors. Quickly resuming business after a disaster is essential for survival. If a company must vacate the premises because of damages from a disaster, Business Interruption coverage extends protection for lost income. It also provides coverage for the profits that would have been earned if the business had not sustained damage. The profit reimbursement is based on an average of financial records, so it is imperative to keep them up-to-date and accurate. These beneficial policies also cover operating expenses that may not be halted due to the damage. For example, electricity would still be needed for most businesses, so the insurer would provide money for electricity bills.

It is important to make sure the policy limits are generous enough to cover the business for more than a week. Keep in mind that it might take much longer than most people anticipate to resume operations. If a major disaster happens, it can take several weeks to resume operations. The waiting period for Business Interruption coverage to start is usually about 48 hours. Policy pricing is based on the risks a particular business faces. Businesses in some locations are more likely to sustain certain types of damage than others. In addition to this, the nature of the business plays a major part in determining policy pricing. For example, a restaurant would be more expensive to insure than a travel agency. This is due to the restaurant’s heated appliances and grease creating a higher risk for fires. Although a restaurant would have a hard time operating out of an alternate location, the travel agency would easily be able to do this. These are just examples of some of the issues determining premium amounts. To get a clearer price estimate for a specific business, discuss individual business details with one of our agents.

Another type of protection to consider with Business Interruption coverage is extra expense insurance. This type of addition reimburses companies for slightly more than the amount of regular operating expenses. By receiving extra money, the business is less likely to have to shut down for restoration. If any extra expenses decrease business interruption costs, they will usually be covered. Extra expense coverage alone might be enough to compensate some businesses.