Business Protection Bulletin

The second generation of the World Wide Web, commonly referred to as Web 2.0, is ever expanding and giving users more ability than ever to collaborate and interact with each other in a virtual community. Even if you and your clients aren’t actively involved in Web 2.0 sites such as Facebook, Blogger, YouTube, LinkedIn, Twitter, Wikis, Digg, and so forth, it’s highly likely that at least some of your employees are using them. There are actually many business benefits and opportunities to be had by using Web 2.0 portals to link your company with your clients and suppliers, such as lowering your cost to do business, increasing revenues, making marketing more cost effective, the speed and ease of access to information, and such. That said, using social media isn’t risk-free.

One way you can manage the risks associated with social media is by creating a social media policy. A comprehensive policy with the specifics on training, supervisions, and employee responsibility is especially vital if you require, or even encourage, any employee to blog or utilize social media on behalf of your business. You should also consider carrying a media liability insurance policy or a similar social media-specific coverage.

Regardless of whether you require, ask, or encourage employees to utilize social media on your behalf or not, you should still have a policy pertaining to what your employees do with their own time on social media. The following are some key areas that should be covered:

• If you don’t have bargaining agreements or employment contracts that would limit your options for termination, then you can remind your staff that their employment is at-will, meaning you retain the option to end their employment at any time for any non-discriminatory reason.
• You should make it clear that your policy on internet usage, privacy, non-competition, nondisclosure, ethics, and so forth will run concurrently with your social media policy. For example, your internet usage policy probably states that you have access to monitor the sent and received messages on your business’s communication systems. You will want to make it clear that you have the same access when the communication systems are used for social media purposes.
• Inform employees of the risks associated with online publishing, particularly their risk of disclosing information that’s confidential. Give employees a specific contact, such as their supervisor, to check with if they have any doubts about the confidentially of a topic.
• Your policy should clearly warn against displaying your business trademark or logo, as these may give viewers the false impression that the speaker is representing your business. Employees should also be aware that they’re to disclose their employment and state that their views are entirely their own if they decide to publish anything related to your business.
• Employees should understand that they’re liable for the content they publish and can be sued for incidences like copyright infringement, libel, and plagiarism. Keeping in mind that state and federal laws allow some degree of privacy for social media communications that occur outside the workplace, have disciplinary actions outlined for the publishing of content that’s damaging or embarrassing to your business. Employees should be reminded that what they post about their employer, competitors, customers, and co-workers should be respectful and that they should delete inappropriate comments from any site under their control.
• Remind your employees to fact-check, make appropriate attributions, specify all information that’s opinion, and provide a safe means of contact prior to publishing all content. Some bloggers publish anonymously, but anonymous publishing can make malice easier to prove in privacy and defamation cases.
• Remind employees of the dangers of giving out personal information or clues that could allow online predators to obtain their personal information. Suggest that they review their privacy settings on all online social media sites. Identity thieves can often access sensitive personal information with nothing more than a birthday and name.

By now, employers should all realize and understand that sexual harassment is illegal. However, what employers might not be aware of is that the U.S. Supreme Court issued two rulings in June of 1998 that expanded what is termed sexual harassment; expanded the responsibility that employers have to provide a work environment that’s non-hostile; and did away with harassed employees having to prove that their company holds some responsibility or that their career suffered from lack of promotion, firing, demotion, or such. Employers are now directly responsible for employee behavior, thereby giving harassed employees more recourse in bringing about legal actions against employers. Work-related harassment and discrimination cases have been climbing steadily since the Civil Rights Act of 1991 allowed for trial by jury, compensatory damages, and punitive damages in legal cases involving discrimination. In fact, according to the Equal Employment Opportunity Commission, the amount of annual employment harassment and discrimination cases being filed grew by more than 13% between 1997 and 2009.

Any employer that’s ever been involved in a sexual harassment suit can attest that the cost to settle or defend a sexual harassment lawsuit can be jaw dropping. The average award for damages in these types of lawsuits is around $650,000, and that isn’t even including the secondary cost from workplace disruption, bad publicity, and those involved in the suit being absent from work.

What Constitutes Sexual Harassment? The first step in protection is understanding what is defined as sexual harassment. State and federal law prohibits behavior that involves an employee in authority basing professional expectations or decisions regarding a subordinate employee being willing or unwilling to exchange sexual acts. The following are examples of such behavior:

• Altering expectations of job performance when a subordinate repeatedly refuses advances for a date or sexual encounter.
• A superior demanding sexual acts in order for a subordinate to receive a raise or promotion.
• Disciplinary action, including termination, of a subordinate that refuses sexual advances or ends an existing romantic relationship.

However, sexual harassment doesn’t always involve a subordinate/authority figure relationship. An offender can be anyone from a coworker to a customer or business vendor. The offender can be male or female, as can the victim. Furthermore, the victim doesn’t even need to be the employee actually harassed. Anyone that’s affected by the harassing or offensive behavior can be termed a victim; for example, an employee that overhears two other employees discussing a taboo subject. The two employees directly involved might not be offended, but if the overhearing employee is offended, then it can constitute sexual harassment.

Verbal, visual, physical, or written behavior that causes another employee to view the work environment as hostile, are unwanted, or focus on the sexuality or gender of another person may constitute as sexual harassment. Specific examples of such would be teasing, suggestive objects or pictures being displayed, and repetitively requesting sexual acts or dates verbally or in writing.

Protection with Employment Practices Liability Insurance (EPLI). After knowing what constitutes sexual harassment, businesses can further financially protect themselves with Employment Practices Liability insurance (EPLI). This is an insurance to protect employers when an employee makes the claim that their legal rights have been violated. Although policies vary, EPLI generally doesn’t cover criminal or civil penalties and punitive damages. EPLI does generally cover settlements, judgments, and incurred legal costs arising from an array of incidences – wrongful termination, employment contract breaches, employment and promotion failures, wrongful disciplinary actions, wrongful emotional distress infliction, negligent employee evaluations, employee benefit plan mismanagement, discrimination, and sexual harassment.

Coverage is specific. So, before purchasing a policy, decide who should be covered. For example, should full and part-time employees, contracted persons, supervisors, department heads, subsidiaries, company divisions, and so forth be covered or not? One other note about EPLI is that it’s mandatory for employers to report incidents within a reasonable amount of time. Some policies might feature an ERP (extended reporting period) or prior acts. The length, cost, and availability vary by carrier.

Purchasing EPLI has been challenging for small companies in the past. However, the 2004 rate increases have somewhat plateaued. Some rates have even decreased. Keep in mind that EPLI cost is figured based on the business type, employee numbers, and past lawsuits associated with the business.

Prevention of Harassment Lawsuits. Prevention is the cornerstone in decreasing the risk of a sexual harassment lawsuit. Prevention steps include the following key elements:

• If the business has EPLI, any incident should be reported immediately.
• Create, communicate, and enforce a zero-tolerance policy for workplace sexual harassment.
• Have an effective harassment complaint process in place and take immediate, consistent, and appropriate action when a complaint is made.
• Thoroughly document all complaints and the following investigation and actions.

Owning and operating a business is a risky endeavor. Not only do business owners face general risks such as theft and fire, but also specific risks that are inherent to the operations of each individual business. For these reasons, it’s vital that you have the right type and amount of insurance for your business. To help you get the coverage you need, the Insurance Information Institute (I.I.I.) has developed the following list of questions every business owner should consider when determining their insurance needs:

1. Do I have enough insurance to rebuild my business property and replace all of my merchandise and possessions? A Building and Personal Property Coverage (BPP) policy covers any combination of the following three categories: The building, your business personal property and the personal property of others. The covered building can be owned by the insured, or it can be leased. Your business personal property coverage includes:

• Furniture and fixtures
• Machinery and equipment
• Stock
• All other personal property you own that is used in your business
• Labor, materials or services furnished or arranged by you on the personal property of others
• Improvements you have made while a tenant
• Leased personal property that you are contractually obligated to insure

2. Do I have enough insurance to protect the personal property of my employees? Adding Personal Effects and Property of Others coverage to your policy will extend up to $2,500 worth of its business personal property coverage to your personal effects, as well as that of your partners, staff, and others in your care, custody or control. The personal effects coverage does not include theft, even if theft is a covered cause of loss.

3. Do I have enough insurance to keep my business open? Closing a business down completely while needed repairs are being made could spell financial ruin. That’s why you should have Business Interruption insurance. The following types of Business Interruption insurance can be purchased individually, or in any combination that meets the needs of your business:

• Business Income Coverage – If your company has to vacate the premises because of disaster-related damage that is covered under your property insurance, Business Income Insurance will compensate you for the profits you would have earned, based on your financial records, had the damage not occurred. The policy also covers expenses that continue even though business operations are temporarily stopped.
• Extra Income Coverage – Provides reimbursement for a reasonable sum of money spent over and above normal operating expenses to avoid closing during repairs.
• Contingent Business Interruption Insurance – Protects your earnings if your suppliers or customers suffer physical loss or damage to their property.

4. Do I have enough insurance to protect my assets in the event of a lawsuit? A Commercial General Liability (CGL) policy cover claims in four categories of business liability:

• Bodily injury
• Property damage
• Personal injury (including slander or libel)
• Advertising injury

Commercial General Liability policies also cover the cost to defend or settle claims.

The federal Internet Crime Complaint Center received more than 330,000 complaints in 2009, and more than a third of them ended up in the hands of law enforcement. The damages from those referred to the authorities totaled more than a half billion dollars. The Government Accountability Office estimated that cyber crime cost U.S. organizations $67.2 billion in 2005; that number has likely increased since then. With so much of business today done electronically, organizations of all types are highly vulnerable to theft and corruption of their data. It is important for them to identify their loss exposures, possible loss scenarios, and prepare for them. Some of the questions they should ask include:

What types of property are vulnerable? The organization should consider property it owns, leases, or property of others it has in its custody. Some examples:

• Money, both the organization’s own funds and those it holds as a fiduciary for someone else
• Customer or member lists containing personally identifiable information, account numbers, cell phone numbers, and other non-public information
• Personnel records
• Medical insurance records
• Bank account information
• Confidential memos and spreadsheets
• E-mail
• Software stored on web servers

Different types of property will be susceptible to various threats, such as embezzlement, extortion, viruses, and theft. What loss scenarios could occur? The organization needs to prepare for events such as:

• A fire destroys large portions of the computer network, including the servers. Operations cease until the servers can be replaced and reloaded with data.
• A computer virus infects a workstation. The user of that computer unknowingly spreads it to everyone in his workgroup, crippling the department during one of the year’s peak periods.
• The accounting department discovers a pattern of irregular small funds transfers to an account no one has ever heard of. The transfers, which have been occurring for almost three months, were small enough to avoid attracting attention. They total more than $10,000.
• A vendor’s employee strikes up a casual conversation at a worker’s cubicle and stays long enough to memorize the worker’s computer password, written on a post-it note stuck to her monitor. Two weeks later, technology staff discovers that an offsite computer has accessed the human resources database and viewed Social Security numbers, driver’s license numbers, and other personal information.

In addition to taking steps to prevent these things from happening, the organization should consider buying a Cyber insurance policy. Several insurance companies now offer this coverage; although no standard policy exists yet, the policies share some common features. They usually cover property or data damage or destruction, data protection and recovery, loss of income when a business must suspend operations due to data loss, extra expenses necessary to maintain operations following a data event, data theft, and extortion. However, each company might define these coverages differently, so reviewing the terms and conditions of a particular policy is crucial. Choosing an appropriate amount of insurance is difficult because there is no easy way to measure the exposure in advance. Consultation with the organization’s technology department, insurance agent and insurance company might be helpful. Finally, all policies will carry a deductible; the organization should select a deductible level that it can afford to pay and that will provide it with a meaningful discount on the premium. Once management has a thorough understanding of the coverages various policies provide in relation to the organization’s exposures, it can fairly compare the costs of the policies and make an informed choice.

Computer networks are a necessary part of any organization’s environment today. Loss prevention and reduction techniques, coupled with sound insurance protection at a reasonable cost, will enable an organization to get through a cyber loss event.

In 1999, a California plumbing company hired a man who had once been convicted of domestic violence against his ex-wife. In 2003, the man made a house call that sparked a friendship with the woman living there, a relationship that eventually grew romantic. That same year, the plumbing company fired him for a variety of offenses, including drug and alcohol use and alleged physical threats against a co-worker. Two years later, the woman he was with ended the relationship and sought a restraining order against him. He responded by shooting her to death, a crime for which he was convicted.

The victim’s daughter sued the plumbing company, alleging that it was negligent in hiring the man. Although that suit was unsuccessful, the case illustrates the vulnerability businesses have to claims of injury caused by their employees. Courts may find an employer guilty of negligent hiring if all of the following factors are present in the case:

• When the employer hired the person, it knew or reasonably should have known that he was unfit for the job and dangerous. For example, if an accounting firm knowingly hired a person who has served time in prison for embezzlement, a client who suffered a theft loss because of him could plausibly claim that the employer should have known that he was unfit for the job.
• The employer should have foreseen that the employee would harm someone. The accounting firm should have anticipated that a convicted embezzler left in charge of clients’ assets would feel tempted to pocket some of them. In the California case, the victim’s daughter argued that the plumbing company should have foreseen that its employee could injure or kill a female customer. The court rejected that argument, saying that no reasonable person could foresee that the man would turn violent two years after being fired.
• The employer’s act caused the victim’s injury or harm. A client of the accounting firm could argue that, if the firm had not hired the convicted embezzler, he would still have $1 million in the bank. The California court said that the plumbing company’s act of hiring the woman’s killer did not cause her death because the relationship developed outside of his work duties and did not turn into romance until after the company fired him.

There are two ways businesses can obtain Liability insurance to protect themselves against claims like these. In cases of bodily injury or property damage, the Commercial General Liability insurance policy might provide coverage. Businesses should review their policies carefully with an insurance agent, however, because some policies might contain endorsements that remove coverage for liability resulting from employment practices. Also, the CGL policy would not cover a loss such as the embezzlement claim against the accounting firm because there is no bodily injury or property damage. Employee Dishonesty insurance might cover incidents such as this. Also, some Employment Practices Liability insurance policies might provide coverage, but they must have special endorsements adding coverage for liability to non-employees. Again, businesses should work with their insurance agents to verify that they have the proper coverage.

Insurance is no substitute for an employer doing a thorough background check on job applicants before hiring them. Taking steps to reduce the likelihood of a negligent hiring claim will save the business costs that insurance doesn’t cover, such as those arising from poor workplace morale, harm to the business’s reputation, and difficulty attracting skilled employees. A new employee is a significant investment for any business; making careful hiring decisions will save it long-term trouble and expense.

Most employers know that they can be held legally liable for sexual harassment occurring in their workplace. However, many may not know that there’s a way to considerably reduce their exposure to liability. The courts have actually laid out a road map of sorts when it comes to reducing employer risk for sexual harassment liability. In 1998, the U.S. Supreme Court made it quite clear that laws related to sexual harassment weren’t made in an effort to enable employer vs. employee lawsuits, but rather as a motivation for employers to take reasonable and responsible action in preventing sexual harassment. Employers that have demonstrated this reasonable and responsible action are less likely to be held legally liable for damages. Here are the practices and policies every employer should abide to fulfill their obligation in preventing workplace sexual harassment, thereby reducing their liability risk:

• A comprehensively written policy against sexual harassment should be in place to demonstrate the concern, stance, and dedication to the prevention of sexual harassment on the part of the employer. This policy should clearly define sexual harassment and give examples of what constitutes sexual harassment. After the policy is read, the employee should know that either gender may be victim; either gender may perpetrator; and that sexual harassment is dictated by victim perception, not whether or not the perpetrator intended the behavior as harassing.
• Legal terminology and otherwise obtuse language should be avoided when composing a sexual harassment policy. It should be written in a manner that an average employee would comprehend. In most cases, if the wording is such that a high school senior would have difficulty comprehending it, then it’s too complex. Employers should also be mindful of non-English speaking employees and publish translations accordingly.
• Make sure that the sexual harassment policy identifies which employees or department should be contacted to initiate the complaint process; outlines the complaint and investigation process from start to finish, including any appeal process; and identifies what the penalties are for sexual harassment. Retaliation should also be addressed. It should be clear that retaliation against a complainant will not be tolerated and that retaliation is a form of harassment too.
• More often than not, an employer isn’t held liable because of the actual harassment, but rather because they failed to have or apprise their employees of the complaint procedure or failed to respond when the complaint procedure was utilized. So, never write a complaint off or disregard it. Each and every complaint should be viewed as a serious matter and investigated with a process that’s consistent and that’s reasonable for all involved.
• Although many employers feel that their policy is adequate, the best policy in the world is useless if an employee can claim that they’ve never laid eyes on it. Therefore, orientation of new employees should include a signature that the new employee has received, read, and understood the sexual harassment policy.
• Of course, there must be ongoing exposure to the policy for employees to realize that their employer is actually serious about sexual harassment and the enforcement of consequences. Sources of exposure may include periodic sexual harassment summaries through brochures or educational pamphlets, newsletter articles, in-service training, and employee meetings.
• It’s also crucial that any employee in a supervisory position be trained not only to enforce the sexual harassment policy, but as someone that could be a harasser themselves. Often, especially in medium to larger businesses, the employer will not be the one to first receive a complaint. Yet, employers are strictly liable if supervisors engage in subordinate harassment or fail to enforce the harassment policy. Keep in mind that many people engage in behaviors that are overlooked by individuals they come across in their personal life and thereby feel that the same behaviors will be overlooked at work too.

The most often used excuse when an employee is accused of sexual harassment is that they weren’t the only employee that has acted in such a way. Sadly, although the above statement in no way excuses the behavior, it’s often true. And, it’s this type of environment that tolerates or overlooks sexual harassment that substantially increases the liability risk of the employer. Simply having a policy will not hold weight in court. It must be comprehensive and there must be employee exposure and employer enforcement. These steps require a time and resource commitment for the policy to be applied in a manner that will reduce sexual harassment liability risks for employers and reduce the frequency of sexual harassment incidences for employees.

Every business owner who has ever received a bill for an insurance premium has wondered how the insurance company came up with the price, especially if the premium has gone up since the last renewal. Although the insurance pricing mechanism can seem mysterious, and might involve a certain amount of discretion by underwriters, the starting point is always the same: The underwriter must answer the question, “What type of business is this?”

That might appear to be a simple question, but it does not always have a simple answer. When the underwriter answers the question, they assign the business to one or more classifications; more than any other factor, these classifications determine how much premium the business will pay. Classifying a business can be straightforward or it can be more art than science. Most state Workers Compensation insurance manuals contain roughly 700 classifications; the Commercial General Liability insurance manual has a little less than double that. Compare those numbers to the thousands of business types that exist today and the new ones that will exist five years from now, and you get a sense for why classifying a business can be tricky.

In addition, while Workers Compensation, General Liability and Property classification descriptions are similar in some cases; in many others they bear no resemblance to each other. The underwriter who knows that they’ve correctly classified the business for one type of policy might find that classification to be of no help for the others.

Although it might appear that determining the correct classification is only the underwriter’s problem, it also has short- and long-term effects on the insurance buyer.

The correct classification ensures that the buyer pays the appropriate rate and that all buyers in that classification receive fair treatment. If the classification is incorrect, the buyer will pay a rate that is either too high or too low for that type of operation. For example, compare two contractors — one installs plumbing systems in commercial buildings, the other installs automatic sprinkler systems in them. If the plumber’s work is faulty, a pipe might leak and cause water damage to furniture and equipment in one or more rooms. If the sprinkler contractor’s work is faulty, the sprinklers might not work when a fire breaks out and the fire might destroy the entire building. The risk of a severe loss resulting from completed operations is much higher for the sprinkler contractor than it is for the plumber. If the underwriter classifies the sprinkler contractor as a plumber, the sprinkler contractor pays a much lower rate for completed operations coverage than it should. In the long term, loss experience will cause the rates for plumbers to increase. This is unfair to plumbers and to sprinkler contractors whose underwriters classified them properly.

Also, charging an inadequate premium might cause the business’s experience modification to be higher than it should have been. The experience rating formula compares actual losses to the losses a typical business in that classification with that level of payroll or sales would have. If the classification is wrong, the formula will understate the level of expected losses, resulting in a higher debit or lower credit.

The rating manual rules require that policies issued to businesses in some classifications carry specific endorsements (policy changes). For example, the rules for restaurants require the company to attach an endorsement that changes the definition of the products-completed operations hazard. Use of the wrong classification can result in the wrong policy terms for the business. A business owner should work closely with one of our professional insurance agents to ensure that insurance companies are using appropriate classifications. Although the wrong classification might appear to save the business money in the short run, it can prove to be costly in the long run.

National Tragedy Affects The Workplace – Many national tragedies are first learned about while people are at work. Just imagine how many people learned of the September 11th attacks or the assassination of President Kennedy while going about their workday. When such events occur, employees gather around computer screens and televisions to watch the events unfold. They share information, sorrow, and concern; look out for each other; and try to empathize or understand how the tragedy affects fellow co-workers and associates. Workers might simply be at a complete loss about what to do.

Personal Tragedy Affects the Workplace – Personal tragedy, such as an employee, co-worker, or family member’s death or illness; an employee filing bankruptcy, or incidences of home or workplace violence, also commonly have an effect in the workplace. These personal tragedies are typically less public than national tragedies, but there’s still the same sense of wanting to help and not being sure what to do.

Regardless of the type of tragedy, it usually has a substantial impact on workers. There are organizations that provide a support system to help people cope with tragedy and the helplessness and grief that often follows. There are also actions that employers can take to help employees as they experience tragedy in the workplace:

Ensure Safety. In cases where the incident occurs in the workplace, safety is the primary concern. The disaster plan should be implemented immediately. Be sure that the disaster plan includes emergency evacuation routes and a designated meet-up location. Be sure to account for the safety of all employees with an attendance call at the designated meet area.

Assess For Personal Involvement. Offer time off, transportation, moral support, assistance getting more information, and such if the tragedy affects a worker on a personal level. There might also be a need for shelter, compensation, or relocation if the tragedy is something that impacts the workplace on a widespread level, such as a local natural disaster.

Be Understanding. Naturally workers can’t instantly return to everyday work after hearing about a tragedy, or at least not in a productive and safe manner. Distracted and distraught workers are very likely to make errors and poor decisions. So, be understanding and tell the workers that it’s okay to focus their attention on what’s happening. In doing so, workers can resume work safely once their need for information is met.

Offer Information. Information can help workers process whatever is going on. If possible turn a radio, television, or computer into an information portal for the employees to stay informed. This might be confined to a break room only, but it’ll still be an information source. Keep employees as up-to-date as possible, without divulging confidential information. Do recognize that employees might want to call friends and family to gain or share information.

Offer a Talking and Gathering Location. Some find comfort in being close to others during a tragedy. A quiet conference room can provide just such a gathering point. It might also be helpful to provide employees an opportunity for interaction, sharing of grief, encouragement, and support by bringing a lunch for employees to eat in a central location. Encourage a brown bag or potluck lunch for the next few days, as some might take longer than others to share their suffering.

Have a Meeting to Share Information. Regarding personal tragedy, it’s crucial that confidentiality isn’t compromised. Keeping that in mind, it’s important to offer as much factual information as permitted. This will not only keep the rumors down, it’ll also mean that employees will spend less time seeking information from other sources. The meeting might also include how employees or the company can help those involved in the tragedy.

Offer Ways to Help. As evidenced by the overwhelming amount of people that volunteered after Hurricane Katrina and 9/11, many take comfort in easing the pain of others and helping to solve issues. Depending on the context of the tragedy, a company fundraiser event, blood drive, charitable donation, offering of flowers or food, and such might be applicable.

Encourage Employees to Utilize Resources. Make sure that employees are aware if there’s an Employee Assistance Program or counseling through the company health plan available.

Have HR Staff and Managers Available. These staff members are critical during a tragedy and should be visible and available. It’s helpful for key staff members to be seen in all work areas and stop to listen and support those that need it.

Be Prepared. All companies should have a disaster plan that includes plans for any disaster that could occur in the area – fire, earthquake, tornado, hurricane, etc. Every employee should be trained to know appropriate disaster and personal injury actions. It’s too late to make the plan once the disaster has occurred!

Include Grief Training As Part the Training Program. Many are unsure what actions to take after a tragedy; for example, employees might be unsure what to say or do once a widowed worker returns to work. Employees should have grief training that includes such points as the stages of grief, dealing with self-grief, and grief of others. Having this training will help support positive workplace morale and decrease the long-term effects of tragedy.

Everyone will experience some sort of tragedy at some point in life, and those tragedies are very likely to find their way into the workplace. Hopefully, these tips will offer an effective starting point for employers to address tragedy as it unfolds in the workplace.

The September 11 terrorist attacks caused immense loss of life, human suffering, and property destruction, particularly at the World Trade Center in New York City. The insurance losses from injuries and property damage were very large. However, the losses resulting from businesses in the area having to shut down for extended periods of time were huge. Businesses filed nearly 5,500 business interruption claims for more than $12 billion following 9/11. For many organizations, the loss of income coupled with continuing expenses after a fire or other disaster can be even more devastating than the damage itself. To increase the chances that a loss will not shut operations down permanently, organizations must assess their exposures accurately by asking some questions.

1. What is the most the organization could lose from a shutdown? Commercial Property insurance policies define “loss of income” as the sum of the expected pre-tax profit or loss and necessary continuing expenses. For example, if the expected profit is $300,000 and necessary continuing expenses are $100,000, the potential loss of income is $400,000. To calculate their exposure to business interruption losses, organizations should refer to their balance sheets, profit and loss statements, and cash flow statements. Insurance companies also have worksheets available to assist with the calculation.
2. How much insurance should be carried? Once the organization knows the dollar amount of its exposure, it must decide how much Business Interruption insurance to buy. The key considerations are the length of time the insurance is likely to apply and the coinsurance percentage the organization must meet. Coverage usually begins 72 hours following the damage to the property and ends when business resumes at another location or when the building should be repaired with reasonable speed, whichever occurs first. If the organization decided that the coverage period would be around six months, it could buy an amount of insurance that would satisfy a 50% coinsurance requirement. If the interruption would last longer, higher coinsurance percentage and limits would be necessary.
3. How long will it take business to return to normal? Even after operations resume, it could be some time before revenue returns to normal levels. Customers who had gone elsewhere during the shutdown might be slow to return. The standard insurance policy extends coverage for 30 days after operations resume, but some businesses might need more time than that, especially if their businesses are seasonal. For example, a seaside restaurant in New Jersey that makes most of its profits during the summer will need additional coverage even if it can re-open in November.
4. How much of the normal payroll expense will continue during the shutdown? The organization will need the continuing services of some employees while it attempts to re-open, but other employees might not be necessary. For example, accounting staff will be needed to pay mandatory expenses such as property taxes and collect receivables earned before the shutdown. Employees who stock shelves will not be needed if there are no shelves to stock.
5. Does the business depend on other businesses for revenue? A business can suffer a loss even if its own building is untouched. A loss that shuts down a key customer or supplier or damage to nearby property that causes authorities to close off access to the street can devastate a business’s bottom line (this happened to many businesses affected by 9/11). Special insurance coverage is available to protect against this possibility.

Our professional insurance agents can help you answer these questions and identify insurance companies that can meet coverage needs. With some effort and planning before a loss happens, an organization can emerge from a shut down and return to profitability.

According to the FBI, there were 221,009 laptops reported stolen from 2008 through 2009. As an increasing number of business people are traveling with laptops in tow each year, this already high number is likely to keep rising. Statistics show that the most popular targets for laptop thieves are office buildings, airports, hotel rooms and cars.

Although some laptop snatchers are simply looking to make a quick buck by selling your computer, others are much more malicious. These higher-level laptop thieves are more interested in the valuable information stored within your computer-from business plans and customer contact information to Social Security numbers and passwords. Once they get a hold of your laptop, these cyber criminals might be able to gain access to your company’s server. One FBI study found that 57% of computer crimes were linked to stolen laptops. Plus, research suggests that the theft of just one laptop can cost a company up to $90,000 or more!

Unfortunately, many laptop owners forget just how much their computer and personal information is worth — and how much they stand to lose if their computer is stolen. That’s precisely why experts say you should guard your laptop as closely as you would your wallet.

Here are a few steps you can take to protect your laptop from these spiteful computer crooks:

Travel incognito. Whether you’re traveling by plane, train or automobile, be sure to carry your laptop in a protective, inconspicuous case. With thousands of laptop case styles available, you should be able to find one that looks more like a backpack, handbag, or briefcase — which decreases your risk of being targeted by a laptop thief.

Use protective software. Take advantage of password protection programs, anti-virus software, encryption software and other robust programs that will protect the information stored on your laptop.

Keep unused laptops out-of-sight. If your company has extra, unassigned laptops, keep them locked safely away in fully enclosed, secure closets. Never leave them in a cubicle or unlocked cabinet.

Lock it up. Never leave your laptop out in your office, even if you’re just leaving for a few minutes. Either lock it into your docking station or lock it away in a secure desk drawer. Don’t ever leave your laptop in plain view next to an office, house or car window.

Guard it in the airport. When traveling through an airport, be sure to keep your laptop within reach and in sight all the time. Never check a laptop with your baggage, and be extremely careful when you’re passing through security checkpoints. Hold onto your laptop as you wait in the security line, and do not set it on the belt until you’re getting ready to pass through the X-ray machine.

Protect it in the car. If you have to leave your laptop in the car, lock it up in the trunk where it’s out of view. If you drive a truck or SUV with a window looking into the trunk, lock it in your glove box or conceal it under a seat. You should also keep your laptop in a weatherproof case. Avoid storing your laptop in the car in extremely hot or cold temperatures.

Keep track of it. Make sure your name or company’s name and ID is engraved on your laptop. Also, be sure to write down your laptop’s identification number and store it in a safe place. Ask the laptop manufacturer or your local police department if they offer an asset identification or registry program.