Tag Archives: liability

5 Most Common Insurance Claims

Insurance claims are made every day. Looking at the most common claims made just goes to show exactly how much of what’s important to us in our everyday lives can be protected by purchasing insurance.

Wedding Insurance

A majority of wedding insurance claims are made for lost deposits. This can be a hotel closing down, a caterer failing to show or an absentee photographer. All nightmare situations, but thankfully all covered under the policy. After that it’s illness or injury, usually when it results in the wedding having to be rearranged.

Pet Insurance

A recent study has found that in a two-year period, four in ten pet insurance policy holders made a claim against their policy. The majority of these claims, 70%, are for pet illness or accident and injury.

Auto Insurance

There are a number of situations that can result in a claim against your auto insurance, but by far the most common are fender benders. Minor accidents like those that occur in parking lots or at stop signs. Usually damage is minimal and more of an inconvenience, but making a claim rather than paying for the repair yourself is a good way to test the full extent of your policy and become familiar with the claims policy.

Home Insurance

Claims against home insurance can be weather damage, theft or fire however the most popular claim is water damage. Claims for water damage make for almost 69% of claims, mainly as a result of faulty plumbing rather than flooding.

Cell Phones

Many people don’t know that they can protect their phone with a specialized policy, but as technology becomes more advanced phones are becoming more important and so many are opting to purchase insurance. A recent study has revealed an alarmingly high claim rate against these insurance policies – mainly for damage. It’s estimated that 51% of mobile devices given as Christmas presents have been damaged in some way already. In fact the overall majority of claims are made within the first four months of ownership.

So looking at the most common insurance claims, do you have the right protection for these circumstances? You never know, you may have to make one of these claims yourself.

If you have insurance questions, click here to ask an expert

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Should I Buy Coverage for HIPAA?

The final rule has been issued on the Health Insurance Portability and Accountability Act. This federal law broadly covers the privacy and security of personally identifiable health information as well as the government’s ability to enforce these rules and request reports on information breaches. The final rule is intended to enhance these privacy protections and provide them with new rights to their health information.

Personal Information

The final rule in HIPAA goes a long way in protecting individuals’ right to access their personal health information and have it protected. Under the Final Rule, individuals’ rights to receive electronic copies of their health information are expanded. The final rule also goes against a 2009 proposal and prohibits most health plans from using or disclosing genetic information for underwriting purposes. Individuals are also reassured by the fact the fact that the government’s abilities to enforce these laws are enhanced in this modification of the law.

There are also changes to authorization requirements that may be needed to gather information on cases such as child immunization proof for schools and enabling access to decedent information by family members or others.

Covered Entities

The final rule in HIPAA has modified the applications of the act to make business associates of covered entities directly liable for compliance with certain Privacy and Security requirements. As well as this it requires modification and redistribution of a covered entity’s notice of privacy practices. There are also limitations imposed on the use and disclosure of protected health information for marketing purposes and prohibits the sale of this information without individual authorization.

Do I Need to Buy Liability Protection for HIPAA Claims?

From a liability perspective, it’s going to depend on the policy itself and the allegations that are made. Some directors & officers, employment practices, and fiduciary liability policies may provide coverage for certain violations of HIPAA. Some may have exclusions specifically related to HIPAA violations. Bottom line, coverage for HIPAA violations may be available, but the key lies in what allegations are made in a claim.

This final rule has done a lot to ensure the security of protected health information while also enhancing the access for the individuals involved. Covered entities are also pushed to be more responsible and hold more accountability for the delicate information in their possession. The HIPAA Final Rule heralds many changes for both the insured individual and their provider.

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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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Smartphones and Distracted Driving

Integrated smartphone technology will soon become “all but standard” on new car and truck models, with nearly 100 million vehicles featuring the smartphone technology by 2016, according to a report by Juniper Research. The technology will integrate a driver’s smartphone with a vehicle’s computer and navigational systems, enabling the vehicle to send and receive data via the Internet.

That data could prove invaluable to employers, who could use the information to increase fleet efficiency, comply with regulations and monitor driver behavior.

The technology does not come without risks, however. Some analysts worry that the integrated smartphone technology could increase distracted driving, which is already a major safety concern for employers.

Motor vehicle crashes are the leading cause of worker fatalities, and distracted driving dramatically increases the risk of such crashes. It is important to address the issue of distracted driving with employees who drive as a part of their job.

April is National Distracted Month. Check with your insurance advisor for more information you can use to help your drivers be safe on the roads, focusing more on the task at hand rather than the technology IN their hands.

Newfirst Insurors can help with drafting a safe driving policy and developing training for your company that includes guidelines on distractions and cell phone use.

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Does My Policy Cover Injured Volunteers?

Non-Profits thrive off of the hard work of volunteers; donations, tangible gifts, and the irreplaceable gift of time. While the question posed below specifically comes from a non-profit organization, there are issues to be considered when your employees do volunteer work on your behalf or when you yourself are the volunteer.

Question:

Our nonprofit organization depends heavily on the services provided by volunteers. Do any of our insurance policies cover medical expenses if a volunteer is injured on the job? Will our liability policies defend us if a volunteer sues the organization because of the injury? Is the organization covered if we get sued for an accident caused by the volunteer?

Answer:

These are excellent questions. Board members and staff of nonprofit organizations are right to be concerned about taking care of their volunteers and protecting the organization from liability that might arise out of the services provided by the volunteers. We are privileged to serve several organizations such as yours and this question comes up frequently.

Injuries to Volunteers

If a volunteer is injured while providing services for your organization, the first thing you need to know is that your workers’ compensation policy won’t provide benefits. Texas law doesn’t permit workers’ comp coverage on volunteers, other than those who work for government and emergency service organizations.

If a volunteer is injured while providing services at your location, your commercial general liability policy provides some coverage for his or her medical bills. The limit of coverage is very small – typically only $5,000. If the volunteer believes the organization or one of its employees is legally responsible for the injury, your insurance company will investigate the accident and offer payment if it agrees, or defend you and pay any resulting judgment if the volunteer sues, subject to the liability coverage limit.

If a volunteer is injured in an automobile accident while using a vehicle owned or leased by your organization, your business auto policy provides some coverage for medical bills and other benefits if you have purchased Medical Payments, Personal Injury Protection and/or Uninsured Motorists coverages, up to the limits purchased for those coverages. If the volunteer believes the organization or one of its employees is legally responsible for the injury, your auto insurance company will investigate the accident and offer payment if it agrees, or defend you and pay any resulting judgment if the volunteer sues, subject to the liability coverage limit.

If a volunteer is injured in an automobile accident while using his or her own vehicle, your policies won’t provide any coverage for medical bills. It might be a good idea to inform your volunteers of this fact and encourage them to review their own auto insurance policies with their agents to be sure they are adequately covered.

As you see from the information provided so far, covering medical bills incurred by volunteers while working for your organization is a hit-or-miss proposition. The best way to provide medical and other benefits to your volunteers is to purchase a special policy known as “Volunteer Accident Insurance.” This type of policy typically provides a wide range of benefits, including accidental death, accidental dismemberment, accident medical expense and occupational disability payments. High limits of coverage are available from most insurance companies offering this type of policy. Ask your agent for more information and a proposal.

Injuries to Others Caused by Volunteers

Your general and automobile liability policies cover the organization if a volunteer injures someone or damages property of others while working for you. If the accident involves an automobile owned by the volunteer, special coverage is needed, so ask your agent to be sure you have the appropriate coverage.

Your policies may or may not provide the same liability protection for the volunteer should they be sued individually for injury or damage caused by the volunteer. These policies usually provide the coverage unless the accident involves the volunteer’s own vehicle. Of course the volunteer should be able to rely on his or her own auto liability policy for this protection. It might be a good idea to encourage volunteers to review their own auto insurance policies with their agents to be sure they are adequately covered, especially if they are using their vehicles to transport clients of your organization. Special coverage is available to cover volunteers on your auto liability policy – excess over their own policies or primary if their policies don’t provide coverage for some reason.

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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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It Only Takes 3 Seconds….

Interruptions or distractions—even those lasting less than three seconds—are costing businesses a lot in lost productivity and in some cases, fatal errors. A recent study from Michigan State University found that interruptions of only 2.8 seconds doubled the likelihood that an employee would make an error.

Distractions take on many forms, from technology distractions (text messages, email alerts and phone calls) to interruptions from other co-workers and background noise. Some psychologists say it takes approximately 10 to 20 times the length of the distraction for an employee to recover and resume what he or she was doing.

While lost productivity affects the company’s bottom line, in some industries—especially those with safety-critical risks—distractions can cause work errors that put the health and safety of the worker and others at risk.

Eliminating workplace distractions or interruptions is no easy task. Consider limiting distractions by:

  • Enforcing a mobile device policy limiting when employees can use devices, and scheduling adequate breaks where employees can use their phones and devices
  • Training employees on the best times to ask their co-workers non-urgent, job-related questions
  • Optimizing work areas to minimize the possibility of interruptions and distractions

For a mobile device policy and related materials, contact Texas Associates Insurors today.

 

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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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