Why You Need Cyber Liability Insurance

No matter what line of business you’re in, you probably have one thing in common with other businesses: Most businesses benefit from information databases, communicate via email, and handle other tasks on a computer – online or offline.

Technology allows businesses to communicate with customers as never before and to work more efficiently than ever. But that efficiency comes with a price – major security issues. Even the U.S. government is taking new measures due to an increase in cyber attacks; between 2006 and 2010, computer security breaches increased by a whopping 650 percent, and they have increased since.

Risks include

  • damages from unauthorized access to computer systems by third parties
  • disclosing or misusing private information, whether this is committed by the business or because the business failed to protect against unauthorized individuals obtaining this information
  • transmitting a computer virus or sending an email that causes a crash
  • defense and damage costs from alleged copyright, trademark, title or slogan infringement
  • defense and damage costs from charges of defamation, libel or slander caused by emails, website or blog content, or postings in online forums

While this is scary, you have options: cyber liability insurance (also called technology errors and omissions insurance).

What does cyber liability insurance cover? Like all insurance policies, options vary, and each business’ requirements are different. The important thing is that you get the right coverage for your needs. Cyber liability insurance typically provides coverage in six main areas:

  • Business interruption – If your company is the victim of a cyber crime, this covers revenue losses whether you experience a temporary shut-down or a long-term interruption.
  • Notification expenses – Most states have notification requirements dictating how and when a business must notify parties whose private information was possibly compromised or obtained by someone without authorization. In some cases, a business must provide ongoing credit monitoring or identity-theft insurance. This covers that.
  • Content liability – Like homeowners insurance, which protects your personal property, content liability helps pay for anything related to your online content and provides protection from copyright claims, slander, invasion of privacy and other IT claims.
  • PR and crisis management – If your company experiences a security breach, the company image is tarnished. This coverage would help pay for subsequent public relations and marketing efforts required to restore the damage done to your company’s brand.
  • Data loss and system damage – If you’ve always assumed your current commercial liability policy includes computers under personal property coverage, you may be surprised to find it that it only covers the computer itself – not what’s inside. Computer data isn’t protected under other insurance products, so this coverage is vital to the functioning of the company and its systems.

Don’t Risk a Lifetime of Paying for a Mistake or Omission

Congratulations! You’ve taken the courageous step of starting your own business. You’ve got your business cards, website and an “open” sign on your door. But have you got the right protection for your investment? Here’s some essential information about commercial coverage known as errors and omissions insurance (E&O insurance):

What is E&O Insurance? Often referred to as professional indemnity insurance, an E&O policy offers different coverage from commercial general liability (CGL) insurance. You need both. Commercial general liability protects against financial loss if you’re sued for death, injuries or property damage caused by your business or employees. Similar to malpractice insurance for doctors, E&O insurance covers damages incurred as a result of mistakes such as errors, professional liability incidents, and contract performance disputes.

Who Needs E&O Insurance? Those who most need this coverage include: brokers, consultants, and accounting and financial service providers. Contractors, plumbers, and electricians often face similar risks and also should obtain it.

What Does It Pay For? E&O insurance policies are used to pay for legal costs arising from mistakes. But it’s also important to remember that even if you didn’t make an error, you’ll still need to defend yourself if a lawsuit is brought against you. Why? If a claim is brought against you for negligence in the service or advice you provide, and the judge rules in favor of the plaintiff, although you aren’t “guilty,” you still could be facing a lifetime of paying off the judgment ” and even have your assets seized.

To Claim or Not to Claim: That is the Question…

Although you buy homeowners insurance to protect against losses, many people are still hesitant to file a claim; they don’t want to their premiums to go up. And while filing claims doesn’t always mean increased premiums, often it does. It’s important to know what triggers an increase.

For those claimants who file multiple claims annually, rates definitely will increase – usually significantly. Depending on claim amount and type, insurers may even cancel policies.

Most homeowners don’t fall into this category; however, even you could face a premium increase, and you should be aware of why, how much, and for how long.

If you’re having trouble deciding whether to file or not, analyze your coverage, noting limits and exclusions. If your loss is covered, take the next step, which is to get repair estimates and talk to your agent. If damage is minor, err on the side of caution and pay for repairs out of pocket if possible, especially if costs are under or close to your deductible.

Be aware that most claims affect premiums for five to seven years. Even if you only file one claim in a five-year period, ultimately your rates may still increase. Many factors, not just your claims history, affect rate changes.

Don’t forget that you buy insurance to protect your possessions. If you have a serious loss, you may need to file a claim; that’s what it’s there for. Assess your options, discuss them with your agent and make a judgment call: Your home and possessions deserve the best protection.

Your Credit Rating Can Affect Your Premiums

What factors do you believe determine insurance rates? If your answer is: At-fault accidents, violations, where you live, property value, and what you drive, you’re right.

You’d also be right if you mentioned other factors such as age, experience, claims history, and prior insurance coverage. But here’s one you may not have guessed: Your credit history. And this is something – unlike age – that you can control.

The credit link

Research firms have found a link between bad credit and increased claim-filing. They also found that individuals with better credit have fewer traffic violations and accidents than those with bad credit.

After looking at data from roughly 1.4 million policies, the Federal Trade Commission (FTC) found insurers paid out almost twice as much for claims made by those with poor credit compared to people with higher scores.

The FTC said that credit scores are predictive of the number and cost of claims filed, and are effective at assessing risk and rates.

Good credit equals lower risk

Customers who pose less risk in all the factors used to calculate premium rates pay lower premiums. The corollary is that high-risk customers pay higher rates. The “credit” factor is similar to any other factor, such as make of car, at-fault accidents, your neighborhood, and your claims history. It will impact your rate.

While it’s unlikely you’ll start making financial decisions based on how they might affect your insurance premiums, it’s important to know how insurance companies establish premium rates.

What you can do

Understanding why credit affects rates can make you more aware of those things that affect your credit score – missed payments, high credit card debt, and even closing a credit card or an account. Controlling these factors can make a difference.

Make your good credit work for you. Not just when you apply for a mortgage, but also when you purchase homeowners insurance.


Three Key Facts About COBRA Health Insurance

If you’ve ever been laid off, you’ve probably received information about COBRA health insurance. It may just seem like more paperwork, but in certain situations, it’s well worth considering. Here are three key things you need to know about COBRA:

What is COBRA insurance?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) was created to enable laid-off employees to choose to continue receiving benefits through their employers’ health insurance plan. However, they are required to pay the premiums themselves. COBRA coverage usually lasts about 18 months, so it’s not a permanent option.

Do you qualify?

If you work for a company employing 20 or more workers, you’re eligible for COBRA coverage when you’re laid off. In most circumstances, you’re also eligible if you quit your job.

However, there are other instances when you also may be eligible for COBRA coverage: Qualified dependents are eligible for COBRA; so is a divorced spouse, providing he or she is unemployed and hasn’t re-married. Another qualifying event is the death of the spouse with COBRA coverage. If you’re completely disabled or eligible for Medicare, you’d also be eligible for COBRA.

If, instead of a layoff, your employer reduces your work hours below the minimum level for group coverage, the company will no longer pay for your health insurance. You would, however, be eligible for COBRA.

How much does COBRA cost?

Employers pay for your health insurance through group plans, but once laid off, you become responsible for your COBRA premiums yourself. You’re still getting the group rate, but the coverage is expensive. Consequently, many people opt to obtain coverage in other ways.

Your health insurance plan’s premiums depend upon how much coverage you had previously, and COBRA typically defaults to the exact coverage of your former policy. Single coverage plans often range from $300 to $500 monthly, and family plans can easily cost $1,000 monthly.

It’s Our Money: Help Combat Medicare and Medicaid Fraud

More than 50 million people were covered under Medicare in 2012, and large numbers are covered by Medicaid, including 31 million children who receive coverage with the help of the Children’s Health Insurance Program.

Unfortunately, there are also large numbers of people who abuse these programs through insurance frauds and scams. Here are three Medicare and Medicaid scams – some committed by those you’d least expect:

For rent: Those online bulletin boards that advertise a Medicaid/Medicare number for rent aren’t joking. There are people who rent out their policy numbers to others – including doctors: These providers rent their numbers then bill Medicare/Medicaid for services the policyholder never received or needed. He or she bills for “services rendered,” and the policyholder waits for a cut.

Filing multiple times: If you received two bills for the same item, it wouldn’t take you long to notice. However, with its growing piles of paperwork, our government can miss things, and paying the same bill twice has happened more than once. Why did they receive two bills? Healthcare providers knowingly send the same claim through multiple times and count on it not being caught.

Major malfunctions: Some people rely on wheelchairs, walkers, canes, or oxygen tanks. For others, medical equipment looks like a payday. Over a five-year period to 2012, more than half of medical equipment paid for by Medicare was believed to have been paid out by mistake, much to fraudsters.

Be aware. Don’t allow this kind of fraud to continue. After all, it’s our money.

Three Key Facts About COBRA Health Insurance

If you’ve ever been laid off, you’ve probably received information about COBRA health insurance. It may just seem like more paperwork, but in certain situations, it’s well worth considering. Here are three key things you need to know about COBRA:

What is COBRA insurance?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) was created to enable laid-off employees to choose to continue receiving benefits through their employers’ health insurance plan. However, they are required to pay the premiums themselves. COBRA coverage usually lasts about 18 months, so it’s not a permanent option.

Do you qualify?

If you work for a company employing 20 or more workers, you’re eligible for COBRA coverage when you’re laid off. In most circumstances, you’re also eligible if you quit your job.

However, there are other instances when you also may be eligible for COBRA coverage: Qualified dependents are eligible for COBRA; so is a divorced spouse, providing he or she is unemployed and hasn’t re-married. Another qualifying event is the death of the spouse with COBRA coverage. If you’re completely disabled or eligible for Medicare, you’d also be eligible for COBRA.

If, instead of a layoff, your employer reduces your work hours below the minimum level for group coverage, the company will no longer pay for your health insurance. You would, however, be eligible for COBRA.

How much does COBRA cost?

Employers pay for your health insurance through group plans, but once laid off, you become responsible for your COBRA premiums yourself. You’re still getting the group rate, but the coverage is expensive. Consequently, many people opt to obtain coverage in other ways.

Your health insurance plan’s premiums depend upon how much coverage you had previously, and COBRA typically defaults to the exact coverage of your former policy. Single coverage plans often range from $300 to $500 monthly, and family plans can easily cost $1,000 monthly.

Unmet Life Insurance Needs Total $15.3 Trillion

Most Americans don’t have enough life insurance – and many don’t have any at all. For the majority of us, this is a shocking reality that could come back to haunt us at a time when we – and our loved ones – need it most.

The problem isn’t that we’re unaware. We know we need life insurance: 85 percent of Americans agree that the majority of people need life insurance, according to Life Insurance Barometer Study 2013, conducted by financial services consultant LIMRA.

Here’s why: In 2010, the LIMRA Household Trends in U.S. Life Insurance Ownership study found that if the primary wage earner died, 40 percent of U.S. households with children under 18 would immediately have difficulty paying for daily living expenses, and 70 percent would have difficulty within a few months.

No insurance or not enough

And all this information is readily available. Yet the percentage of Americans who own life insurance has declined significantly over the last 50 years, as evidenced in LIMRA’s Trends in Life Insurance Ownership study: In 1960, 72 percent of Americans owned individual life insurance. In 1992, it declined to 55 percent, and in 2010, just 44 percent of U.S. households had individual life insurance – a 50-year low.

As well, of those Americans who had life insurance in 2011, 40 percent believed they didn’t have enough, according to Genworth’s LifeJacket Study. And while a turnaround may be occurring, it’s not happening fast enough or extensively enough to help almost 40 percent of the population, who still haven’t purchased insurance. All told, the unmet life insurance needs in the U.S. has been estimated by LIMRA at $15.3 trillion.

Credibility gap over costs

Why are Americans underinsured? LIMRA cites the most common reason given by 83 percent of Americans as the cost. Interestingly, LIMRA also found that consumers believe life insurance costs nearly three times its actual price. It just may be time for you to find out the facts for yourself.