Category Archives: Liability

Dog Bite Liability

According to the CDC, approximately 4.7 million people are bitten by dogs every year, and around 17 percent of those victims require medical care. Sadly, between 10 and 20 of these incidents eventually result in death.

To curb dog bites, some communities around the United States have banned certain breeds that are perceived to be more dangerous or have a track record of violence. These laws most commonly apply to pit bulls and rottweilers.

Homeowners and renters insurance policies typically cover dog bites. However, if you own a breed that has been historically violent, you may have to pay an increased premium (even if your dog has not displayed any violent behavior). If your dog has passed obedience school tests, you may qualify for a premium discount.

It is difficult to determine how a dog’s breed will predict its disposition, much like it is hard to predict how nature versus nurture plays a role in the development of a child. Watch your dog’s behavior closely and contact your veterinarian if your dog exhibits any of the following behaviors: growling, snapping, biting family members, aggression towards strangers or showing signs of extreme fear. Your vet can refer you to a veterinary behavior specialist. While the dog is going through treatment, be extra cautious while in public and consider placing a basket muzzle over the dog’s mouth.

No dog breed is guaranteed to be attack-or bite-free. Let Texas Associates Insurors educate you on your insurance needs to protect you from a costly dog bite lawsuit.

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Protecting Against Online Fraud

While computers have improved the speed and efficiency of how we work, they have also allowed thieves and con artists an easier avenue by which to steal from people and businesses. One of the ways these cyber criminals use computers to steal is through online fraud, one of the fastest-growing crimes today.

Types of Online Fraud

Your company’s intangible assets could be at risk if you or your employees are not mindful of online fraud attempts. Understanding and identifying different types of online fraud could save your company thousands, or even millions of dollars in lost sales, damaged reputation, legal costs, etc.

  • Social engineering is the act of taking advantage of human behavior to commit a crime. Social engineers can gain access to buildings, computer systems and data simply by exploiting the weakest link in a security system—humans. For example, social engineers could steal sensitive documents or place key loggers on employees’ computers at a bank—all while posing as an IT consultant from a well-known company. Social engineers can be tough to spot because they are masters at blending in.
  • Phishing is attempting to acquire information such as usernames, passwords, credit card numbers and other sensitive information by pretending to be a trusted entity in an electronic communication, such as email. One of the more common phishing scams is receiving an email that asks the user to verify his or her account information. A quick check of your email’s Spam folder would likely result in a few examples of phishing.
    • Pagejacking and pharming occurs when a computer user clicks on a link that brings them to an unexpected website. This can happen when a hacker steals part of a real website and uses it in the fake site, causing it to appear on search engines. As a result, users could unknowingly enter personal information or credit card numbers into the fake site, making it easy for a hacker to commit online fraud. Pharming is the name for a hacker’s attack intended to redirect a website’s traffic to a fake site.
    • Vishing is similar to phishing and pharming, except victims of vishing attacks are solicited via telephone or another form of telecommunications. The hacker can easily pose as a representative of a bank or other institution and collect personal information that way.

 

Corporate Identity Theft

It doesn’t matter if you are a Fortune 500 company or a small “ma and pa” shop, cyber thieves are always looking for their next score. It is often assumed that smaller businesses are too small to attract attention from cyber crooks, but according to Verizon Communication’s 2012 Data Breach Investigations Report, 72 percent of the 855 data breaches analyzed were at companies with 100 or fewer employees. No company of any size is completely safe from cyber thieves.

There are many ways a cyber thief can steal a company’s identity in addition to the various types of online fraud listed above:

  • Stealing credit history – A cyber thief could steal and use a company’s credit history for his or her own financial gain, and then use it to set up a dummy corporation, racking up huge debt for the real company.
  • Dumpster diving – All too often, papers with sensitive information are recklessly tossed in the garbage instead of being properly shredded and discarded.
  • Hacking – Having proper security measures in place for your computer system is essential to keep intangible assets safe. Make sure you are using firewalls, routers and other security devices to protect your assets.

 

Prevent Online Fraud

Understanding and being able to identify potential online fraud techniques is the key to keeping your company safe. Use the following tips to protect your intangible assets and ensure protection against a data breach:

  • Never give sensitive information like social security numbers or credit card numbers out over the phone unless you know the person on the other line.
  • Shred all credit reports and other sensitive data before disposal.
  • Educate employees about phishing and pharming scams. Remind them to not click on anything that looks suspicious or seems too good to be true.
  • If your company doesn’t have an IT department, hire an outside company to set up the proper security measures for your computer network.
  • Always monitor credit reports and other financial data for the company. If you see things that don’t belong, investigate.
  • Do not allow employees to write down passwords in the office.
  • Always encrypt sensitive data.

 

If You are a Victim

It is common to have an “it will never happen to us” philosophy when it comes to fraud. Unfortunately, that thinking can lead to lax security measures and carelessness when it comes to protecting intangible assets. If you become a victim of online fraud:

  • Act quickly. Report the fraud immediately to local law enforcement. Notify important suppliers, vendors and partners.
  • Alert your customers. If there is a data breach involving customers’ personal information, activate your plan to alert them. This information could be incredibly harmful to your customers, so alert them as soon as possible.
  • Do an investigation. If you do not have the resources to do an internal investigation, consult a third party. The quicker the breach can be dealt with, the fewer negative effects your company will endure.
  • Take measures to lessen the chance of a future breach. Fortunately, cases of online fraud can be good learning tools for your company. Analyze why the breach happened and take steps to make sure it doesn’t happen again. 

Count on Our Risk Expertise

A data breach as the result of online fraud could cripple your company, costing you thousands or millions of dollars in lost sales and/or damages. Contact Texas Associates Insurors today to learn more about our resources and ensure you have the proper cyber liability coverage to protect against losses from fraud.

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Is Your Pooch Considered Dangerous?

Accidents involving dog bites cost the insurance industry over $350 million per year and are now the largest cause of Homeowners Insurance claims in the U.S. As a result, many breeds are considered “uninsurable” or may require heightened premiums.

Notoriously Dangerous Breeds

The following dog pedigrees are considered dangerous:

  • Pit Bull
  • Rottweiler
  • German Shepherd
  • Husky
  • Alaskan Malamute
  • Wolf-dog Hybrid
  • Chow Chow
  • Doberman
  • Saint Bernard
  • Great Dane
  • Doberman Pinscher
  • Siberian Husky
  • Akita
  • American Staffordshire Terrier
  • Boxer
  • Perro de Presa Canario

Owner Responsibilities

It is difficult to determine how a dog’s breed will predict its disposition, much like it is hard to predict how nature versus nurture plays a role in the development of a child.

To minimize the risk that your dog will display aggressive behavior towards other dogs or humans, you must be a responsible pet owner and do the following:

  • Restrain your dog with a strong leash when in public or fenced in while in the yard. The fence should be at least six to eight-feet tall, depending on your dog’s size.
  • Socialize your dog as a puppy with other dogs and people. Take him/her to puppy classes starting at a young age, and praise your dog when he/she behaves well with others.
  • Spay or neuter your dog, as 80 percent of all fatal attacks are caused by non-neutered male dogs. Fixing a dog alters its territorial instincts and aggression.
  • Train the dog not to bite your hands, furniture, etc. If your dog starts to growl or chew on something, clap your hands loudly to distract him/her and then provide a toy for the dog to play with. Praise the dog when he/she chews on toys only.
  • Give your dog lots of positive attention.
  • Properly identify your dog with tags and a microchip.

Watch your dog’s behavior closely and contact your veterinarian if he/she exhibits any of the following behaviors: growling, snapping, biting family members, being aggressive towards strangers or showing signs of extreme fear. Your vet can refer you to a veterinary behavior specialist. While the dog is going through treatment, be extra cautious while in public and consider placing a basket muzzle over the dog’s mouth.

Insurance can usually be obtained for most dogs; however, there are some limitations. If you own a breed that has been historically violent, you may have to pay an increased premium (even if your dog has not displayed any violent behavior). If your dog has passed obedience school tests, you may qualify for a premium discount.

Here are the Facts:

According to the Centers for Disease Control and Prevention (CDC), approximately 4.7 million people are bitten by dogs annually, and around 17 percent of those victims need medical care. There are also 10 to 20 people who do not survive the attack. The CDC claims that dog bites are an “epidemic” in America.

To curb dog bites, some communities around the U.S. have banned certain dogs as pets, as they are perceived to be more dangerous or a have track record of violence. This specifically applies to Pit Bulls and Rottweilers.

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Restaurant Workplace Accidents Are COSTLY!

We all know that safety is important, but are you aware just how costly a workplace injury can be? According to the Occupational Safety and Health Administration (OSHA), the average eye injury costs $1,463. It may not seem like much money, but the extra expense to pay for injuries has a powerfully negative effect to our restaurant’s bottom line.

Why is profitability also an important issue to you? The only way that  can stay in business is to operate at a profit, and that ability can be threatened by a serious workplace injury.

The Real Cost of Workplace Injuries

It may be surprising to hear that most companies do not have a high profit margin—3 percent is about average. Expenses take a large chunk of the income, and competition limits how much we charge our patrons.

Each time an accident occurs, the cost of the injury must be subtracted from profits. Consider the following two examples:

  • At a 5 percent profit margin, an extra $20,000 in sales is needed to compensate for a $1,000 injury.
  • If the profit margin is nearer to 1 percent, an additional $100,000 worth of new income is necessary to maintain that profit level for the same injury.

As you can see, that adds up to a lot of extra income just to compensate for a single injury. And we all know that we can’t just find more customers because we need the extra income. Thus, every time a worker gets hurt on the job, other employees are affected, too. The company may be forced to make difficult budget decisions such as cutting hours or jobs, plus some employees will need to work extra hours to make up for the injured employee’s lost time.

Also, recovering from an injury can mean time away from work, reduced compensation, painful rehabilitation and frustrating adjustments to daily life.

Practice Prevention

Though operating at a profit is essential to our success, our top priority is to keep our employees safe and healthy. That’s why we are counting on you to help practice good safety principles, including following all safety procedures, even if they seem unnecessary or slow you down. Safe work behavior will contribute directly to our bottom line as well as to everyone’s job security. By observing safety precautions, we can limit accidents.

It is always wiser to spend a bit more time doing the job safely than to risk getting a serious injury. Be sure to always follow all safety guidelines and stay alert for unsafe conditions

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Heat Related Illness: Stay Cool When Working in the Heat

If your job requires you to spend time working outside, it is important to take the weather into account for safety purposes. When it is hot outside, your body temperature can rise to dangerous levels. Normally your body cools itself through sweating, but in hot weather, sweating is not enough and the result can be a heat illness.

Staying Cool

Follow the suggestions below to stay cool when working in hot weather:

  • Wear loose, light-colored clothing and some type of hat.
  • Adapt to working in hot conditions gradually, especially if you must do any strenuous physical work.
  • Take breaks indoors or in the shade when possible.
  • Avoid overexerting yourself during peak temperature periods (midday).
  • Drink liquids frequently, even if you don’t feel thirsty – at least eight ounces every 20 to 30 minutes. Choose water, fruit juice or sports drinks and stay away from liquids containing caffeine, which can dehydrate you.

Recognizing the Symptoms

There are three forms of heat illness, each with its own distinct symptoms:

  • Heat Cramps – severe muscle spasms in the back, stomach, arms and legs, which are attributed to the loss of body salt and water during periods of heavy perspiration
  • Heat Exhaustion – heavy sweating, cool or pale skin, nausea, headache, weakness, vomiting and fast pulse
  • Heat Stroke – high body temperature, sweating stops, red and often dry skin, rapid breathing and pulse, headache, nausea, vomiting, diarrhea, seizures, confusion or unconsciousness

Providing Treatment

It is essential to treat heat illness as soon as possible. If you are feeling any of the above symptoms, inform a co-worker and ask for help. If you suspect that a fellow worker has a heat condition, follow these first-aid tips:

  • Heat Cramps – Move the victim to a cooler area and allow them to drink approximately six ounces of water every 15 minutes. Follow up with a medical examination.
  • Heat Exhaustion – Move the victim to a cooler area and keep them lying down with their legs slightly elevated. Cool their body by fanning and applying cool, wet towels. If conscious, allow the victim to drink approximately six ounces of water every 15 minutes. Follow up with a medical examination.
  • Heat Stroke – You or a bystander should immediately call an ambulance. Meanwhile, move the victim to a cooler area, remove their outer clothing, immerse them in cool water or apply cool, wet towels or cloths to the body. Do NOT give them liquids. If medical help is delayed, call the hospital for further instructions while waiting. Heat stroke is life-threatening, so it’s important to move quickly!

Safety Reminder

The risk of heat illness increases with age, poor diet, being overweight, insufficient liquid intake, poor physical condition and/or when taking medication. Never take salt tablets without your doctor’s approval.

Be aware of weather conditions when you will be working outside so that you can be prepared with appropriate clothing and beverages. If you are working outside and start to feel any adverse symptoms, inform your supervisor and take a break.

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Pollution Liability Insurance – Managing Your Changing Exposures

Pollution and environmental conditions are growing exposures for many businesses, exposures that are not covered under standard insurance policies. A steadily increasing focus on the environment paired with an expanding list of known pollution sources have led to many recent costly law suits that companies never saw coming. Due to the unknown nature of many environmental conditions, a pollution claim can arise at any time, for nearly any type of company, and the cost could prove devastating.

Luckily, pollution insurance is available as a separate policy to protect companies from the risk of environmental conditions and cover the many potential costs of those exposures.

History of pollution insurance

Environmental insurance products date back to the mid- to late-1980s, and have evolved since then to keep pace with changing trends, new exposures and greater coverage needs. The first policies, known as pollution legal liability insurance, covered third-party bodily injury, property damage and cleanup cost claims that resulted from the offsite release of environmental contaminants from the insured’s property. These policies, though better than nothing, had obvious shortcomings: they didn’t cover any claims resulting in onsite contamination and they didn’t cover any first-party cleanup costs.

The early 1990s brought expansions to pollution policies, as they began to cover claims for onsite contaminant releases and claims for first-party cleanup costs due to a newly discovered environmental condition. Most carriers did limit this first-party coverage to cleanup costs that the site owner was legally obligated to pay, such as to stay in compliance with local, state or federal standards.

In addition, newer pollution policies cover site owners for the entire lifespan of a property – from “cradle to grave” (as long as the owner has coverage throughout this entire period). This lifespan begins when the property is acquired, lasts throughout its useful purpose and ends when the property is abandoned or sold – because the property owner could be liable for environmental exposures during any phase of the property’s lifespan.

Many of the recent pollution policies also include previously known exposures, such as asbestos, lead-based paint, or specific contaminant levels that were previously below legal standards. Such known exposures used to be widely excluded.

Pollution policies today

Currently, there are several types of pollution coverage available, and most policies are customizable to fit a company’s unique risks and exposures. They often offer ancillary coverage options too, such as contamination during the transportation of goods.

The pollution insurance sector will likely continue to evolve and expand as environmental trends and expectations change.

Who is covered?

Traditional pollution policies covered only the site owner, but today, many parties could be liable for environmental conditions. During the sale of a property, both the seller and purchaser could have potential liability. They could address this shared liability somehow in their contractual arrangements, but both could protect themselves with a type of pollution coverage.

Lenders whose loans are backed up by actual real estate also face a potential liability if they foreclose on a property and then an environmental condition is discovered. Not only will this make the value of the property plummet, but the lender would then be responsible for the costs of the pollution. Lender liability coverage was created to protect lenders from this unique environmental risk.

The tenant of a property, whether the owner or renter, also faces liability for pollution claims, particularly if their business operations or personnel caused the pollution.

Why purchase pollution insurance?

The risk of pollution may seem like somewhat of an obscure one, but it is one that could arise at any time. New forms of pollution and contamination are frequently being discovered, often with the result of a large (and generally successful) lawsuit due to third-party bodily injury or property damage.

In addition, due to the widely variable and uncertain nature of environmental and pollution factors, this risk is an economically uncertain liability – but one that could be financially disastrous. Costs could exceed even the value of the property itself. Many risk managers feel more comfortable paying a fixed amount in premium than gambling with potentially catastrophic costs in the future.

Potential costs are so high because there are many aspects to pollution exposures. For instance, a third-party claim could include bodily injury, property damage and/or hefty cleanup costs, both for contaminants that traveled offsite or were released onsite. Plus, the company would be responsible for the court costs associated with defending itself. A first-party situation arises when a company experiences a spill or contamination situation that that requires cleanup, often due to a violation of local, state or federal environmental standards. In both of these instances, business interruption is also a consideration, as any cleanup could be quite time-consuming as well. Pollution insurance can cover all of those exposures.

In addition, pollution insurance can help a property transaction go quicker. If an environmental condition exists prior to or during the sale of a property, the process can be dragged out while the condition is cleaned up. Even if no known condition exists, environmental tests and investigations to find potential pollution sources can be lengthy. A pollution insurance policy can help the sale move because the buyer knows an existing environmental condition would be taken care of, without needing to hold off the sale until that point.

Pollution policies tend to be flexible, making it easier for businesses to tailor their coverage to fit their company’s particular exposures. The experts at NewFirst Insurors can help you find the right policy for your company.

What qualifies as a pollution source?

There are countless possible pollutants, environmental conditions and contaminants in any building or property, and more could be discovered at any time. Many claims that insurance companies classify as pollution-related are ones that you may think would be covered under your commercial general liability (CGL) policy. Due to the sweeping pollution exclusion on these standard policies, you may find yourself surprised when a claim is classified as pollution and not covered.

The following are just a sampling of possible pollution exposures that may affect your company:

  • Chinese drywall (defective drywall containing unsafe levels of sulfur that has been released into the air)
  • Toxic mold, fungus or other bacterial contamination
  • Silt runoff from construction sites into public water sources (liability for both contractor and property owner)
  • Certain green construction techniques that can cause unforeseen pollutants
  • Nanotechnology
  • Asbestos
  • Lead-based paint
  • Any contaminants or chemicals that could be released into the air or public water supply (this list could be endless, including solvents, degreasers, paints, cleaning products, fuels, pesticides, herbicides, etc.)
  • Aboveground or underground storage tanks
  • Improper waste disposal (including medical waste)
  • Building or car exhaust/fumes
  • Malfunctioning of HVAC or ventilation equipment
  • Malfunctioning, crumbling or leaking of older buildings and pipes, causing contamination

Pollution is an unpredictable, costly exposure that your business needs to consider as part of its risk management program. While a lot of pollution-related incidents can be prevented, there is always the possibility for an unexpected spill, contamination or environmental condition to occur or surface. That is why pollution insurance is absolutely vital to protect your company. Contact NewFirst Insurors to learn more about pollution coverage today.

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Responding to a Data Breach

No company, big or small, is immune to a data breach. Many small employers falsely believe they can elude the attention of a hacker, yet studies have shown the opposite is true. According to Verizon Communication’s 2012 Data Breach Investigations Report, 72 percent of the 855 data breaches analyzed were at companies with 100 or fewer employees.

Data breach response policies are essential for organizations of any size.  A response policy should outline how your company will respond in the event of a data breach, and lay out an action plan that will be used to investigate potential breaches to mitigate damage should a breach occur.

Defining a Data Breach

A data breach is an incident where Personal Identifying Information (PII) is accessed and/or stolen by an unauthorized individual. Examples of PII include:

  • Social Security numbers
  • Credit card information (credit card numbers – whole or part; credit card expiration dates; cardholder names; cardholder addresses)
  • Tax identification information numbers (Social Security numbers; business identification numbers; employer identification numbers)
    • Biometric records (fingerprints; DNA; or retinal patterns and other measurements of physical characteristics for use in verifying the identity of individuals)
  • Payroll information (paychecks; paystubs)
  • Medical information for any employee or customer (doctor names and claims; insurance claims; prescriptions; any related personal medical information)
  • Other personal information of a customer, employee or contractor (dates of birth; addresses; phone numbers; maiden names; names; customer numbers)

Data breaches can be costly. According to the Ponemon Institute’s Cost of a Data Breach Survey, the average per record cost of a data breach was $194 in 2011; the average organizational cost of a data breach was $5.5 million.

Internal Responsibilities upon Learning of a Breach

A breach or a suspected breach of PII must be immediately investigated. Since all PII is of a highly confidential nature, only personnel necessary for the data breach investigation should be informed of the breach. The following information must be reported to appropriate management personnel:

  • When (date and time) did the breach happen?
  • How did the breach happen?
  • What types of PII were possibly compromised? (Detailed as possible: name; name and social security; name, account and password; etc.)
  • How many customers may be affected?

Once basic information about the breach has been established, management should make a record of events and people involved, as well as any discoveries made over the course of the investigation to determine whether or not a breach has occurred.

Once a breach has been verified and contained, perform a risk assessment that rates the:

  • Sensitivity of the PII lost (customer contact information alone may present much less of a threat than financial information)
  • Amount of PII lost and number of individuals affected
  • Likelihood PII is usable or may cause harm
  • Likelihood the PII was intentionally targeted (increases chance for fraudulent use)
  • Strength and effectiveness of security technologies protecting PII (e.g. encrypted PII on a stolen laptop, which is technically stolen PII, will be much more difficult for a criminal to access.)
  • Ability of your company to mitigate the risk of harm

Government Regulation

There aren’t many federal regulations regarding cybersecurity, and the few that exist largely cover specific industries. The 1996 Health Insurance Portability and Accountability Act (HIPAA), the 1999 Gramm-Leach-Bliley (GLB) Act and the 2002 Homeland Security Act, which includes the Federal Information Security Management Act (FISMA) mandate that health care organizations, financial institutions and federal agencies, respectively, protect their computer systems and information. The language is generally vague,  so individual states have attempted to create more targeted laws regarding cybersecurity.

California led the way in 2003 by mandating that any company that suffers a data breach must notify its customers of the details of the breach. Today, 46 states and the District of Columbia have data breach notification laws in place. Only Alabama, Kentucky, New Mexico and South Dakota have yet to enact such a law.

While notification laws vary from state to state, all include four basic provisions:

  1. All notification laws put a number on how long companies have to notify customers of a data breach and by what medium the notice will be given (written, email, press release, etc.).
  2. Laws set forth a penalty system (that differs from state-to-state) for failure to notify customers in a timely manner.
  3. Depending on the specifics of the breach, customers can sue the company for its part in the data breach.
  4. All notification laws have exceptions in a range of situations.

Your Notification Responsibilities

Responsibility to notify is based both on the number of individuals affected and the nature of the PII that was accessed. Any information found in the initial risk assessment should be turned over to the legal counsel of your company who will review the situation to determine if, and to what extent, notification is required.  Notification should occur in a manner that ensures the affected individuals will receive actual notice of the incident. Notification should be made in a timely manner, but make sure the facts of the breach are well established before proceeding

In the case that notification must be made:

  • Only those that are legally required to be notified should be informed of the breach. Notifying a broad base when it is not required could cause raise unnecessary concern in those who have not been affected.
  • A physical copy should always be mailed to the affected parties no matter what other notification methods are used (e.g. phone or email).
  • A help line should be established as a resource for those who have additional questions about how the breach will affect them.

The notification letter should include:

  • A brief description of the incident, the nature of the breach and the approximate date it occurred.
  • A description of the type(s) of PII that were involved in the breach (the general types of PII, not an individual’s specific information).
  • Explanation of what your company is doing to investigate the breach, mitigate its negative effects and prevent future incidences.
  • Steps the individual can take to mitigate any potential side effects from the breach.
  • Contact information for a representative from your company who can answer additional questions.

We Can Help You Recover from a Data Breach

At Texas Associates Insurors, we understand the negative effects a data breach can have at your company. Contact us today so we can show you how to recover from a breach and get your company back on its feet.

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Employee Cellphone Use While Driving

Cellphone use has become commonplace, and text messaging, e-mailing and conducting business via cellphone have become routine. While the convenience of cellphones can be enormous, problems arise when using a one while driving.

A Nationwide Insurance poll found that 81 percent of cellphone owners admitted to talking on a cellphone while driving.1 While employers may be aware of the obvious benefits of allowing employees to use cellphones to conduct business while driving, they may be unaware of the significant liability risks associated with cellphone use while driving. A National Safety Council survey found that of employers who had a cellphone driving policy, 70 percent saw no decrease in productivity and over 20 percent saw decreases in employee vehicle crashes.2

Currently, there is mounting evidence supporting the dangerous link between cellphone usage and car accidents. According to Johns Hopkins University, as individuals focus on listening and engaging in conversation, the activity in the visual part of the brain decreases, even when using a hands-free device.3 In addition, the University of Utah found that drivers are as impaired on a cellphone as they are while driving under the influence of alcohol.4 The National Highway Traffic Safety Administration found that estimated that 3,000 fatal traffic accidents in 2011 were the result of distracted driving.5

As a result, if you have employees driving on company time, you need to be aware of your cellphone use exposure and take the appropriate steps to mitigate your risks.

Case Studies

In 2004, a Georgia employee making a business call while driving hit and caused serious injury to another driver. The employee’s company agreed to pay $5 million in damages after the court found that the company was liable since the employee was making a business-related call. In a different case, $2 million in damages were awarded to a child’s family after an employee hit and killed her in 2004. The family also sued the employee’s company after phone records revealed that the employee was talking to a client at the time of the crash.

In addition to third-party claims resulting from accidents, employers increasingly face claims by employees for health problems allegedly stemming from cellphone use. Although the science appears contradictory and inconclusive, some employees contend that the radio frequency radiation emitted during cellphone usage may lead to various forms of brain cancer or other illnesses. Employees who use cellphones while on the job have begun to file workers’ compensation claims and lawsuits based on this theory.

Minimizing Employer Liability

While there is no guaranteed defense to liability, developing an appropriate employee cellphone use policy, training employees about the dangers of talking on a cellphone while driving, and enforcing policies with signed written acknowledgments from employees can all help to limit an employer’s potential liability.

In the policy, beyond setting clear-cut rules limiting cellphone use while driving, offer suggestions such as informing clients of driving schedules to avoid calls while on the road, pulling over to place or receive an important call or asking a passenger to handle cellphone usage. Be sure to emphasize that while productivity is certainly important, more important is their safety and the safety of others on the road – safety that is neglected when using a cellphone.

Even with a comprehensive cellphone use policy, courts may still hold employers responsible for any harm caused by employees while on company business, so it is important to ensure that your policy is being upheld and enforced. Be clear about the importance of following the policy, and follow through with consequences if employees are found to be disobeying it.

State Laws

Several states currently ban the use of hand held cellphones while driving, and many states have taken an increasingly active role in addressing the relationship between driver cellphone use and traffic safety (see Texas’ stance on distracted driving laws). These laws are changing frequently, so employers should always be cognizant of their state’s laws and require employees to observe those regulations regarding cellphone use while driving (include the current state law in your policy, and require employees to review and re-sign it whenever the law changes). While state laws do not directly address employer liability, they have the potential to increase employer exposure for cellphone-related accidents. For more information about state requirements, access the Governor’s Highway Safety Association website at: http://www.statehighwaysafety.org.

In addition to updating your company Cellphone/Hand Held Use Policy and training program, employers should also review their insurance policies. For help assessing your company’s risk regarding employee cellphone use or for assistance in developing a Cellphone Use Policy, contact Texas Associates Insurors.

Sources

1 Distracted While Driving Survey, Nationwide Insurance, May 2008

2 National Safety Council membership survey report, September 2009

3 Multitasking: You Can’t Pay Full Attention to Sights, Sounds, John Hopkins University, June 2005

4 Drivers on Cellphones Are as Bad as Drunks, University of Utah, June 2006

5 National Phone Survey on Distracted Driving Attitudes and Behaviors, National Highway Traffic Safety Administration, December 2011

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Cyber Liability CGL versus Specialized Cyber Liability Coverage

Let’s face it….we live in a world of technology. GOOD technology. The only way to effectively protect the assets of your business is to carry adequate Commercial General Liability (CGL) Insurance coverage. A CGL policy protects your business from damages caused by bodily injury or property damage for which your business is found to be legally liable. CGL is usually triggered first in the event of a loss, so many business owners don’t feel an additional endorsement or stand alone policy is necessary.

A typical CGL policy contains three coverages:

  1. A.    Bodily Injury and Property Damage Liability (BI/PD) – the duty to indemnify and defend the insured for claims made due to bodily injury or property damage.
  2. B.    Personal and Advertising Liability (AI/PI) – same framework as Coverage A, except it insures claims for personal injury and advertising injury.
  3. C.    Medical Payments – insurer promises to pay emergency medical expenses for bodily injury for the uninsured or its employees as a result of an accident on the insured’s premises. It pays regardless of who is at fault.

Coverage B for Intangible Assets

If the threat exists that a) your company could be sued by a competitor for infringement or intellectual property theft, or b) you do not have the funds to cover legal fees associated with defending your patent or trademark, it is vital that you purchase this coverage. Defending infringement litigation can cost hundreds of thousands of dollars, not including the cost of damages and prejudgment interest. In patent infringement cases, attorney’s fees can easily top $1 million. Budgeting and planning for the protection of intellectual property rights may not only save your company a significant amount of capital, it may also help keep your business viable when legal bills accumulate rapidly.

Any act by the insured that somehow violates or infringes on the rights of others (referred to in the policy as an offense) is the subject of personal and advertising injury liability coverage, although only those acts that are specifically listed in the policy are covered. The coverage under the “advertising injury” provision is limited to those injuries that are directly related to the advertisement. Therefore, the policy covers debts owed by the insured party due to claims filed against it.

Coverage B policyholders are sometimes covered in cases relating to trademark infringement; however, copyright claims are only successful where they are directly related to advertising, and patent claims are rarely covered under the “advertising injury” provision. The cases which allow for coverage in a patent infringement case are generally limited to instances in which a court finds contributory infringement or inducement to infringe through an advertising medium. Since the “advertising injury” provision in a standard CGL is rather limited, many businesses consider additional coverage to protect their intangible assets.

There are three important exclusions in the AI/PI coverage that outline the need for additional intangible asset coverage:

  1. Excludes AI/PI arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights.
  2. Excludes AI/PI committed by an insured whose business is: (1) Advertising, broadcasting, publishing or telecasting; (2) Designing or determining content of websites for others; or (3) An Internet search, access, content or service provider (ISP).
  3. Excludes AI/PI arising out of an electronic chat room or bulletin board the insured hosts, owns, or over which the insured exercises control.

There will be a large coverage gap in a traditional CGL policy if you are a media company, technology company or any other company that does business predominantly on the Internet.

Specialized Cyber Liability Coverages

Because of the increase in the number of a) intangible assets companies possess and b) the number of companies doing business on the Internet, new types of liability coverages have emerged to meet specific needs.

Errors & Omissions (E&O)

E&O insurance, also known as professional liability insurance (PLI), helps fill gaps in traditional CGL policies by protecting professional advice- and service-providing companies from having to bear the full cost of defending against a negligence claim that a service the company provided did not have the expected or promised results.

An E&O policy can cover intellectual property losses due to copyright infringement and plagiarism while also protecting a business in case of a data breach or identity theft. For example, if an IT specialist at a company makes a mistake with the company firewall and allows malware to spread through the company’s network, an E&O policy would help cover the company’s losses from the exposure.

An E&O policy can be customized with several other coverages, such as:

  • Electronic Data Loss – A fire or virus could lead to a business losing all of its data. An electronic data loss policy covers against this data loss and helps replace any income a business loses as a result of the loss.
  • Data Breach – This coverage is becoming more popular as the number of expensive data breaches increases around the globe. Data breach coverage can help a business cover the costs of customer notifications and any defense costs associated with the breach.
  • Media Liability – This coverage protects media-related firms from claims arising from defamation, invasion of privacy, plagiarism, copyright infringement, etc.

Directors & Officers (D&O)

A D&O policy insures upper management against claims of securities fraud, breach of fiduciary and other types of liability. For example, shareholders of a company could sue a company’s directors and officers for not putting the proper measures in place to stop a data breach.

Claims Made vs. Occurrence Policies

When purchasing CGL and cyber liability coverage, businesses have two primary policy types to choose from—claims made and occurrence. A claims made policy covers claims while the policy is in force, while an occurrence policy provides coverage for when the act occurred. Both types offer distinct advantages and disadvantages, so it is wise to do research to determine the best type of policy for your business.

  • Cost – Claims made policies are generally cheaper than occurrence policies. Premiums for claims made policies start low but increase each year to reflect the increased likelihood for claims in the future. While occurrence policies are generally more expensive, there is only a one-time cost with no additional fees.
  • Selecting coverage – With a claims made policy, coverage limits are easier to choose because they can be increased annually. You run the risk of being underinsured with an occurrence policy because the coverage you selected 10 years ago might not be able to cover expenses from a claim made today.
  • Pre- and post-coverage options – You will need to purchase “nose” and “tail” coverage with a claims made policy because if you are sued in 2006 for services provided in 2004, you will only be covered if your policy has an Extended Reporting Period (ERP), or “tail” coverage. Tail coverage can be expensive, but it is often included for free if you have been insured with the same company for a certain amount of time or it can also be offered as an incentive for switching to another company. Similarly, a “prior acts” endorsement, or “nose” coverage is needed when switching insurers to cover claims that occurred before the new policy was purchased. With an occurrence policy, no nose or tail is needed. It is easier to change insurance companies with an occurrence policy because no pre- or post-coverage endorsements are necessary.
  • Long-term protection – An occurrence policy will give you better long-term protection because you are insured from a claim no matter how long after the event the claim was made. For example, if a software company was sued for a security problem in one of its programs that led to a customer suffering a data breach 5 years after the product was released, the software company would be covered by the occurrence policy in place at the time of the breach.

 

Trust Us to Protect Your Intangibles

Here at Texas Associates Insurors, we know insurance can be complicated and confusing. Contact us today. We can help you navigate the complex cyber liability insurance world and discuss the coverages you need to protect your business from cyber risks.

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Grand Kids and ATV’s

Spring is almost here and that means it’s “back to normal” for our Texas outdoor activities. We received a question from an insured that served as a reminder: our fun times can be risky times!

The question was: Am I liable if my grandkids and their friends are injured while riding our ATV’s (All-Terrain Vehicles) on our property?

The answer: You can be. It’s important to carry on-premises and off-premises liability if an accident occurs using your ATVs. Not all insurance carriers will respond the same in every circumstance, so it’s important that you check with your advisor to make sure your exposure in this area is covered under your insurance policies.

Also, some safety guidelines to consider while using your ATV’s:

  • Attend ATV instruction courses to learn more about operating your vehicle.
  • Read the owner’s manual carefully before attempting to ride, and assure that all riders understand how to remain safe.
  • Never allow others to ride on an ATV with you.
  • Do not carry attachments or loads unless you are trained on how to effectively drive the vehicle while carrying cargo.
  • Never operate an ATV while under the influence of drugs and/or alcohol.
  • Do not ride on a public road or at night when motorists cannot see you as well.
  • Wear a helmet that is designed specifically for riding an ATV. Helmets designed for cycling, skateboarding or rollerblading will not provide the necessary protection from falls because they cannot absorb enough energy upon impact when you hit the ground. A proper helmet should also resist blows from sharp objects, stay in place as you ride and should provide minimal peripheral vision. Also wear the appropriate eye protection if your helmet does not have a face shield.
  • Wear gloves to improve your grip on the controls and reduce the pressure from holding onto the handle bars.
  • Wear boots to protect your feet and legs from debris and to maintain your footing. This will also help maintain your balance and control.
  • Wear long-sleeved shirts and long pants to protect your skin from cuts and scrapes.
  • Scan ahead of you to identify hazards such as rocks, fallen branches, fences, wires and unstable surfaces.
  • Be on guard for unexpected hazards such as wildlife and other riders.
  • Drive at a moderate speed while taking weather conditions and the terrain into account.
  • Shift your weight when making turns and riding up and down hills.

We want you to be safe on and off the road. Contact us today to learn about all the ways we help you to protect what matters most.

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