iSurePro.com - We Insure Professionals

The GL Policy as Swiss Cheese

admin — Sun, 27 Mar 2011 17:12:59 +0000

The need for Professional Liability and other specialized liability coverage stems from the fact that the General Liability Policy has a number of significant coverage “holes”. You could think about the GL policy as Swiss Cheese – it’s great cheese, but it’s got holes in it!

I’ve created a primer on the GL policy for you to see what specific gaps in coverage your business will need to fill.

NOTE: In order to keep the size of the file small, I made the slide transitions fairly quick. Click on the slides to pause if needed.

Don’t be a Hot Dog! Website Boasting and Liability

admin — Thu, 24 Mar 2011 01:19:09 +0000

My grandfather called it being a “showboat”. My father called it being a “hot dog”. Different terms, but each conveyed a sentiment that is decidedly “old-fashioned” in our world of relentless self-promotion. My grandfather used the word to express his disdain with athletes who didn’t conduct themselves with humility. My father used the word, well… to keep my adolescent ego in check when I got a bit too exuberant as well.

What does this sentiment have to do with websites and liability?

The answer is easy when you realize a simple truth: almost every insurance application asks you for your website URL. And the first thing an underwriter does when trying to understand your risk is plug in your URL and read everything you have written on your company site.

Now, what happens if your website makes a few claims about your services that are a bit, um… exaggerated? Or what if, in an attempt to market yourself far and wide, you offer services that you currently don’t really provide? My Dad would call you a “hot dog”, but an underwriter may decline coverage, or rate your premium through the roof because they have no idea how to distinguish the truth from the self-promotion. See the problem?

A few years ago a non-profit that really only taught yoga and meditation, ran into trouble with an underwriter because their website offered counseling services to children who were victims of trauma. They had never done it, they just wanted to distinguish themselves from other yoga and meditation options in town. In making statements on their site that were more based on “vision” than “fact”, they ended up being initially declined for liability coverage.

It’s tough to rein it in when Facebook, Twitter, websites and blogs all offer the option to create an “online” persona for your business. But it’s even tougher to call the underwriter and say “Just kidding!” Keep the “About Us” page on your site to the specifics about what services you offer and your legitimate area of practice or expertise. Being a “showboat” can get you into trouble with underwriters, potential clients and end up costing you extra money along the way.

1 Simple Step – Digital Documentation of Your Property

admin — Thu, 20 Jan 2011 19:13:24 +0000

A step by step instructional video for professionals and homeowners alike. How to digitally document your property BEFORE a loss.
Do this once a year — in January for example — and you’ll be amazed at how much it will help you. There’s no such thing as being “too prepared” for a potential property insurance claim!

Our New YouTube Channel

admin — Wed, 18 Aug 2010 02:04:24 +0000

Welcome to the first video on our YouTube channel. We will be updating it frequently with helpful advice about Management Liability Insurance issues.

“Mini” White Paper on Information/Data Risk

admin — Mon, 05 Jul 2010 21:29:40 +0000

Reproduced with permission from Chris Christian, Vice President of US Risk

Background:

An insured may have control over three kinds of information, the misuse or loss of which can cause harm.

Private information (social security numbers, drivers licenses, bank account, credit card, address, familial connections, etc.)
Medical information (illnesses, prescriptions, physician relationships, prognoses, genetic predisposition)
Mission critical information (client-specific data used to deliver services, file documentation, billing information)

Loss or impairment of the first two types of data can result in third party liability. Loss or impairment of the third type can result in business interruption.

From whence does liability arise?

Inherent in an insured’s relationship with its clientele is faith on the clientele’s part that it will be no worse for dealing with the insured than if it had not done so. When a client puts its private, sensitive information in the insured’s hands, it has a right to expect that information will not be intentionally, accidentally, or negligently used to harm the client.

This basic presumption has been bolstered by legislation in many states, and in some federal acts. Requirements for proper caretaking of private information are specifically codified for medical information, and are addressed in various legislative acts pertinent to certain industries, and in some cases, general business. These legislative acts require not only the proper securing of data, but also the notification of clients whose data has been compromised, among other actions.

Additionally, an insured may assume liability through commitments made in its contracts with clientele.

What kind of loss may occur?

A client whose data is compromised may become the victim of identity theft or other fraud. Fraud has long been an issue in an environment where the client may not be fully in charge of his or her faculties, or may be dependent upon others to take care of his or her estate or business and private affairs. This historical exposure has now been complicated by the rampant abuse of private information in establishing false identities, false accounts, false medical identities (to steal medical care), and false working credentials.

Any of these breaches of a client’s identity could cause not only financial harm to the client, but also to his or her estate and/or beneficiaries, as well as untold amounts of stress, emotional distress, mental anguish, time and money spent repairing damage, getting records corrected, and so on.

Loss or impairment of mission-critical information also can compromise the insured’s day-to-day operations and require costly data reconstruction or extra expense to operate emergency backup systems. As a side note, if the entity is not properly protected against loss of data, or does not have a plan to quickly replace lost data that is mission-critical, there could be liability to the directors and officers for failing to have such a plan, especially if the loss of the data negatively impacts the delivery of services or has other long-term detrimental effects.

Impairment, loss or misuse of data can occur through malicious actions of intruders, or can be perpetrated by employees. It can also occur accidentally, such as through transmission of data to an unintended recipient, or failure to shred sensitive documentation.

In addition to third party liability and business interruption exposures, the insured is at risk for a reputational loss. Due to requirements to disclose data breaches, it is no longer possible to keep such an event completely quiet. Add to the required disclosure the inevitable “word of mouth” publication of the event, and the insured can easily be harmed by common knowledge of its inability to safeguard sensitive information.

What coverages can be found?

Many policies today can provide coverage for third party liability for private and medical information. The scope of coverage can vary from web or network-based exposures to physical forms of data, and from solely outsider actions, to those perpetrated by an employee. Most policies will cover not only identify theft outcomes to data breaches, but also personal injury damages. Some will provide sublimits for notification costs, and for credit repair costs, as providing credit repair to breach clients mitigates the potential liability loss.

Some of these policies will also extend coverage to first party exposures. The causes of loss revolve around hacking, denial of service attacks, viruses, and other technology-driven actions. Many insureds rely upon their backup systems as protection from business interruption due to information loss. However, backup tapes may not be as current as expected, duplicate systems can be expensive, and technology-driven loss of data does not trigger an EDP policy or the business interruption provision of a property policy. Therefore, most insureds are bare on this exposure.

Time is EVERYTHING for the Agent and the Insured

admin — Mon, 05 Jul 2010 20:44:44 +0000

As the Rolling Stones used to sing “Time is on my side, yes it is.”

Well, it is on the Insured’s side as well as the Agent’s side. In fact, quoting your new or renewal policy with plenty of time is of benefit to everyone involved!

One Friday at 6:15pm a Condo Association Board Member called me to say that the Association insurance policy expired that day and she needed “just the basics – Commercial Property, General Liability, Directors & Officers, Crime Policy…” I tried, tactfully, to explain that I would need a little bit of information to quote it, and that the carriers were closed until Monday. When I asked if she had any information about upgrades to the property, Wind Mitigation Reports, maybe a copy of the expiring policy, she informed me that all the information I was asking for was in the custody of the Property Manager they were suing and they didn’t have access to any of it. But she still needed the coverage now.

I’m a problem solver. I LOVE helping people – even in extreme situations – but an insurance agent on Krypton can’t help someone in this situation. Even if I were able to put something together in record time, the potential for overlooking a critical element of coverage would be very great.

There are many principles that guide me as an agent, but three in particular are important in cases like this:

Claims happen. I started in the insurance industry as a claims adjuster which means that I KNOW claims happen. No matter how well-built your structure is, nothing stands up to a Cat 3 (and above) storm. No matter how hands-on and detail-oriented a professional you are, those qualities will not protect you from a frivolous lawsuit.
This is Florida. You have a good chance to use your Property Insurance because we have a high incidence of hurricanes, floods and sinkholes. If you are an employer you should know that 28% of the Employment Practices Liability claims in the nation occurred in South Florida in 2008. What employees overlooked in a strong economy is not being overlooked now. Employment Practices Liability coverage is something you want to discuss with your agent.
I want clients for Life. I am not interested in writing a policy one year only to lose it at renewal. I want to insure my clients for the life of their businesses, and then I want my son to take over my business and to insure your children in their pursuits. I want to be able to advise my clients as their lives change and as their needs change.

As an agent, here’s why having enough time to discuss your policy is crucial for both of us:

Communication Creates a Comfort Level

I need time to clearly understand your business. You need time to think about your business from a risk management perspective. As a business owner, you know what it takes to make your business profitable, but you may not understand the risks you are exposed to or how to keep it running after a loss. An underwriter has access to the statistical data of what risks businesses like yours are susceptible to. You might be surprised at the incidence of claims of a certain type that you haven’t given much thought to. On the other hand, I may understand some basic elements of your business, but even if I insure business similar to yours, I can’t understand the unique elements of yours without plenty of time to ask questions. Are you ready to be asked and answer a lot of questions about what you do and how you do it? Are you ready to take the time to explain what you do thoroughly? Nothing is riskier than a prospective client who calls an agent and needs coverage, but doesn’t want to spend time on the phone to discuss it, muchtheless meet in person. Even worse is a business owner who wants to delegate the business insurance needs to an employee who doesn’t have the Big Picture. Good coverage takes time and communication. With that kind of two-way communication you will have a comfort level about the coverage you are purchasing and I will have the same comfort level about what you really need. The best policies are written when we work as a team.

It Is OK to Say “No”

It is best to say “no” as long as it is an informed “no”. You may not want to purchase all of the optional coverages available to you or business, but it would behoove you review them. When you go out to eat, don’t you like to see more than one option on the menu? With insurance coverage – especially complex Professional Liability policies – it is my responsibility to provide you with more than one option. I want to prepare quotes from a number of carriers, with a variety of coverage limits, deductibles and optional additional coverages. I don’t expect that every client will choose every option, but I do expect to be able to explain what the options are. We all have an aversion to feeling “up-sold” , but many times my clients are astonished by how affordable it is to get very important coverage such as Kidnap & Ransom or Employment Practices Liability. On the property side, Flood Insurance is one of the most affordable insurance products available and there is no substitute for it. Again, time is the key element in the process. I need time to be able to put the whole package together and you need time to review and discuss it.

The Cement Has Not Dried Yet

In this ever-changing, ever-evolving world, each year gives rise to a whole host of new threats to your property and business. No other coverage area illustrates this concept more clearly than the still evolving world of Technology coverage. When a client has a technology insurance need, it’s important for both agent and insured to understand that this is a risk that the insurance industry isn’t even defined on yet! Coverage exists – and every year there are more robust options – but the cement is still wet on the foundational pieces. Of the evolving tech insurance landscape, Chris Christian of US Risk Brokers recently wrote,

“Over time, I believe we’ll see some standardization in descriptive terms used in these policies, if for no other reason than that as terms and their definitions are litigated, carriers will tend to migrate toward terms for which they can anticipate the results.”

The insurance available to (but not exclusive to) Tech firms includes Technology E&O, Cyberliability Coverage, Internet Liability Coverage, Network Security Coverage and Privacy Liability Insurance. Can you imagine the potentially disastrous results of not having enough time to describe each of the options and review claim scenarios? On risks like this, as an agent, I need to draw on the collective expertise in my industry to put together the right coverage for my clients. That takes time.

Automatic Errors

To a busy client, the “automatic renewal” policy may seem like a time-saver, but it could create an avoidable and costly error. Automation is wonderful. In certain contexts a policy that automatically renews is a great thing for both agent and insured. But what happens when that auto-renewal is predicated on the concept that your business hasn’t changed from year to year. Take a Professional Liability policy that calculated the annual premium based on your firm’s annual revenue. If I polled 100 insurance adjusting firms – for example – how many of them are expecting the same revenue in 2010 as they had in 2009? What about if your homeowner’s policy auto-renews but you have made extensive upgrades to your kitchen or bathrooms and the total insurable value of your home is now significantly higher than it was when the policy was first written? How often do you need to discuss your insurance needs? I am sure you do not want to meet your insurance agent for a weekly discussion for the rest of your life, but think about it like going to the doctor’s office for a yearly check-up. Take the time every year to make sure that your coverage stays in shape.

Time to Recover vs. Time to Blame

On average, an attorney will pull out his Attorney Malpractice (E&O) policy three times in the life of his/her career. It is inevitable: a policy will always gets scrutinized when there is a claim or litigation. God forbid you experience a claim only to find that the policy you rushed into has avoidable gaps in coverage. The time we should have spent discussing it will now be spent stewing over it – pointing fingers at who is to blame and who is going to pay for the avoidable situation. As I stated earlier, claims happen. They don’t happen to stupid people or irresponsible people (only). They happen to everyone. Today’s newspaper is full of people who are accessing their insurance coverage and never would have predicted it yesterday. If we work together, take the time to discuss the options and craft an insurance package that fits your needs, then you will have time to recover and the accompanying peace of mind to move forward. Time will continue to be “on your side”.

Starting At the Beginning

admin — Mon, 05 Jul 2010 20:40:52 +0000

There are a lot of ways to fill in the following blank:

“I need a certificate of insurance _________.”

For my landlord.
So that Mr. or Mrs. Right will sit on our Board of Directors.
So that I can compete for a potential client.
To qualify for a county, city, state or federal grant.
For this big event we are planning as a fundraiser.

And there are so many more. Many people “back into” insurance coverage this way; not because they have planned it, but because something or someone else is making it a requirement.

If that is how your search for coverage begins, then chances are you will be “satisfied” with whatever policy gets the requirement checked off, or the grant qualified for, or the landlord’s management company off your back. That is not the way to go about this process.

Read through the following definitions to help you think about what types of coverage your organization needs:

General Liability: “A standard insurance policy issued to business organizations to protect them against liability claims for bodily injury and property damage arising out of premises, operations, products, and completed operations; and advertising and personal injury liability.”

Note: at times your “products” will be excluded from a basic General Liability policy. Many times the subcontractors you use in your business can be excluded. There are many items like this that need to be discussed with an insurance professional who will take the time to understand your specific business exposures.

Professional Liability: “Coverage designed to protect traditional professionals (e.g., physicians) and quasi-professionals (e.g., real estate brokers) against liability incurred as a result of errors and omissions in performing professional services. Although there are a few exceptions, most professional liability policies cover economic losses suffered by third parties, as opposed to bodily injury and property damage (which is typically covered under commercial general liability policies).”

Whereas the Commercial General Liability policy will protect your business if someone slips and falls in your shop, it won’t protect you from the myriad of potential “errors and omissions” you could make in the exercise of your profession. The examples are near endless – but here is a good rule: if you, or your website, or your printed materials make any promises about your level of “expertise”, then you need to look into Professional Liability Insurance. It makes sense that your exposure to being sued is proportional to the claims you make about the services you provide.

Doctors need medical malpractice insurance because we entrust them with our very lives and health decisions. Attorneys need liability insurance because their performance can affect our freedom. Architects and Engineers need to carry professional liability insurance because their expertise keeps our buildings and bridges safe. Accountants need Errors & Omissions insurance because one slip of the calculator can make the difference between a refund and a penalty. Here is a list of some more professions you might not have thought of: Actuaries, Advertising Agencies, Alarm Installers, Asset Managers, Bankers, Beauticians, Billing Services, Bookkeepers, Broadcasters & Publishers, Caterers, Collection Agencies, Computer & EDP Consultants, Consultants (in General), Contractors, Counselors, Court Reporters, Computer-related Services, Environmental Consultants, Escrow Agents, Executive Recruiters & Employment Agencies, Financial Institutions, Financial Planners, Firearm Instructors, Funeral Directors, Home Inspectors, Homeowner Associations, Insurance Adjusters, Insurance Agents & Brokers, Interior Designers, Internet Providers, Investment Advisors, Land Surveyors, Landscape Architects, Landscapers, Media Professionals, Meeting Planners, Mortgage Brokers, Paging and Answering Services, Party Coordinators, Photographers, Police/Law Enforcement Officers, Private Investigators, Property Managers, Real Estate Agents & Appraisers, Registered Investment Advisors, School Boards & Public Officials, Security Guards & Detective Agencies, Stock Brokers, Tax Preparers, Technology Professionals, Temporary Personnel Agencies, Third Party Administrators, Title Agents, Travel Agents, Truck Drivers/Operators, Website Designers.

Employment Practices Liability (EPLI): “A form of liability insurance covering wrongful acts arising from the employment process. The most frequent types of claims alleged under such policies include: wrongful termination, discrimination, and sexual harassment.”

Your company doesn’t have to have dozens of employees to have employment issues that can result in lawsuits. Hiring and firing, establishing salaries and other compensation, choosing health insurance coverage – all of these items start to be concerns once you move past a sole proprietorship.

Directors & Officers Liability Insurance: “Insures corporate directors and officers against claims, most often by stockholders and employees, alleging financial loss arising from mismanagement. The policies contain two coverages: the first reimburses the insured organization when it is legally obligated (typically by corporate charter or state statute) to indemnify corporate directors and officers for their acts; the second provides direct coverage to directors and officers when the organization is not legally obligated to indemnify them. In addition, a third type of coverage, known as entity securities liability insurance is usually available on an optional basis, for additional premium. Such coverage insures the corporate organization in connection with securities it has issued.”

D&O liability insurance is just as important for non-profits as it is for publicly traded companies or private companies that are looking for respected members of the community to serve on their Board. As prestigious as it is to sit on a Board of Directors, few professionals will these days without there being a solid D&O policy in place.

This has simply been a short introduction to some of the coverages you may not be familiar with – but your company may need. When budgeting for your expenses, you should take this type of protection into consideration. Even a frivolous lawsuit can cost you thousands of dollars in defense costs alone. In this economy – those lawsuits are on the rise.

We believe that insurance policies are extremely worthwhile – when they are part of a comprehensive plan that has been discussed with an insurance professional – and they FIT your needs. By the time you need a Certificate – to satisfy someone else’s requirements – you’re starting at the end of the process.

Give us a call. Whether we review your existing coverage to see how it can be improved, or building it for your company from the start, we want to be you Professional Liability Advisors.

*all definitions are courtesy of IRMI.com’s Glossary of Insurance Terms

What Grows In A Recession?

admin — Sat, 03 Jul 2010 10:54:53 +0000

In this era of shrinking bottom lines, smaller paychecks and diminishing investment returns, there IS something that is growing at an alarming rate: Employment Related Liability Claims. In just ONE year:

Age-Discrimination claims grew 29%.
Charges of harassment increased by 20%.
Charges of retaliatory treatment were up over 20%

The reasons for the increase in claims are many – and fairly intuitive. Perhaps the stress that employees are under causes them to react to things that they would have overlooked before. Regardless of the motives – or even the veracity of the claim – there is one thing that is crystal clear:

There has never been a more important time to have robust Employment Practices Liability Policy in place.

Here in Florida, we watch the radar for storms in the Tropics and we take some solace in the fact that we have time to prepare for a hurricane. With employment-related claims, many employers miss the warning signs and the proactive steps they could take to avoid possible litigation. Having a good EPLI policy in place is not the antidote, but it is a good set of hurricane shutters.

Want to learn more? Call one of our Insurance Advisors or send us an email. We would love to discuss the various products we have to help protect you.