Cyber Crime Can Happen to Anyone. Be Prepared

Many small businesses don’t think it will happen to them, but cybercrime can happen to anyone.

There have been many recent incidents among large companies – such as Michaels and Staples – which have experienced serious security breaches. However, small businesses are just as likely to be hacked as larger ones, and as a business owner you don’t want to be one of them.

Regardless of business size, type, location, and even whether or not your business has a large online presence, commercial cyber liability insurance has become essential. Every company must protect their customers’ personal information, which is given to them in trust. But if that trust is violated in a cyberattack, your company will need protection, too.

While an up-to-date professional security system is your most important safeguard, insurance runs a very close second. Here are some things to consider when looking for cyber liability insurance:

Are you vulnerable? In assessing your risks, you should look at the following:

  • Does the company keep private information about clients, employees, or vendors?
  • What are the current rules and regulations regarding cybersecurity?
  • How big is the brand, and what is your industry?
  • What technology does the business use (e.g. mobile devices)?
  • Does the company outsource to third parties?
  • Ideally, you should hire a specialist to evaluate possible risks and find weaknesses in your company’s security.

Costs and Benefits: What is the cost/benefit of investing in cybercrime prevention? While cyber liability insurance may seem expensive in comparison to other commercial policies – averaging approximately $1500 annually – it’s nothing compared to the millions of dollars that a breach could cost your company, not to mention the loss of trust. Together they could sink your company.

Coverage: Consider your company’s potential risk to determine how much coverage you’ll need, then see how far your financial resources will go towards covering your losses, including

  • remediation costs such as client notification services and additional marketing and public relations costs
  • regulatory fines
  • legal costs
  • revenue loss
  • lawsuit expenses

Once you’ve calculated the risk and the cost/benefits, consider the appropriate level of coverage. The rule of thumb is to buy as much as you can afford; however, if you want lower premiums, you may want to consider purchasing coverage for the difference between the financial resources on hand and the estimated costs of a breach.

Exclusions and options: Although cyber liability insurance provides coverage for singular data breaches, there are limitations, depending on the insurer, the business type, and the risks. Policies may also contain sections indicating how companies should handle breaches and what a policy will specifically pay for. Other factors can include

  • coverage for third-party or contractor breaches
  • breaches occurring offline, aka “paper breaches”
  • what types of marketing/PR companies can be used for remediation services.

Product Liability Insurance Isn’t Just for Manufacturers

There are many risks involved in manufacturing and selling products. Whether you’re a small operation selling handmade soaps or candles, or a large company manufacturing auto parts, your business needs product liability insurance.

If you make, sell, or distribute a product, you are responsible for the safety of that product. If it ultimately is unsafe and someone is hurt, you could be held financially responsible, and even your personal assets could be at stake. Business size isn’t always the bottom line – even a small business growing, harvesting, and selling a crop at farmers’ markets could be liable for consumers’ injuries or illness resulting from its crop.

However, some businesses may not need as much coverage as others; it depends on the level of risk, and this usually is a function of the type of business or industry. Companies, such as those manufacturing medicine, medical equipment, toys, and sports equipment, for example, have a higher level of risk than jewelry manufacturers or tool suppliers.

It’s not just the manufacturer that is liable: Every business in a product’s supply chain can find itself liable for a defective or dangerous product. Many cases of liability have been attributed to a retailer, wholesaler, or middleman, providing they were proven negligent.

All these companies should consider product liability insurance, even if they don’t actually manufacture items directly. It just takes one recall or one lawsuit to close a company. Discuss the coverage you should have with your commercial insurance agent. You may be glad you did!

How to Handle Homeowners Policy Exclusions

Insurance is for the unexpected, but what if the unexpected is one of the exclusions on your homeowners insurance? Does that leave you up a creek without coverage? You may be able to protect yourself from these situations. Here are three scenarios based on typical homeowners insurance exclusions:

Floods: If you live by any body of water, you may be in at risk. Homeowners insurance doesn’t cover losses due to “rising surface” water. It also excludes coverage for water issues caused by things like blocked gutters. Your agent can find out if you live in a high-risk flood zone. You can also view local flood maps, which are available from city or county governments.

What to Do: Buy flood insurance; it’s issued only through the National Flood Insurance Program (NFIP), but most agents can write the policy for you. The maximum coverage is $250,000 for the home and $100,000 for personal contents.

“Wear and Tear”: What happens if your large appliances or home electronics start to wear down unexpectedly, or if kitchen tiles crack, the foundation settles or wood floors bow? Homeowners insurance doesn’t cover these eventualities. Is there something you can do?

What to Do: Consider purchasing equipment breakdown coverage, which usually covers large appliances such as refrigerators, water heaters, and HVAC systems. It’s an extra expense, but cheaper than buying new. Also check manufacturer, home, or builder warranties for possible coverage.

Water/Sewer/Drain/Backup: Damage caused by plumbing is covered by most homeowners policies, but if there’s a backup, you may be out of luck unless you have a rider for this coverage. Many backups occur in dirty water lines, so those with septic tanks should seriously consider this coverage.

What to Do: Consider a rider, but also routinely check for potential problems. Insurers can deny claims if you can’t prove you’ve been diligent about maintenance and fix problems as they happen.

Car-less But Still Need to Drive? You Need This Policy

Paying for one’s own vehicle in addition to gas and insurance is just too costly for many Americans today, according to Matt Moore, vice-president of the Highway Loss Data Institute (HLDI).

As a result, the number of people who are using other methods of getting from place to place – such as car shares or rentals – is on the rise.

But if you don’t own your own vehicle, you don’t need auto insurance – right? Wrong. In some states, you aren’t allowed to drive anyone else’s vehicle without your own insurance. But fortunately, “named non-owners insurance” is available for those who don’t own vehicles, but may rent or drive others’ cars.

Named non-owners insurance provides bodily injury and property damage coverage, and is attached not to a vehicle, but to the “named” policyholder. It covers you in any vehicle you drive. Without it, you could be sued if you cause an accident driving someone else’s vehicle. For example, you borrow your friend’s car and cause an accident. If he or she has minimum liability on the car, and the liability coverage maxes out, your named non-owner policy will kick in to cover what’s left.

This coverage works for those who regularly rent cars or drive others’ vehicles, car-share participants, and those who are required to file an SR-22. Generally, named non-owners insurance is a great option for many people.

If you plan to own a car sometime in the future, it maintains your good-driver status, but more importantly, it offers peace of mind.

Disability Insurance Can Save Your Savings

What would you do if you couldn’t work due to a serious injury or illness? How would you handle your financial responsibilities? For most, dipping into savings is not the answer; your savings are finite, and you’re putting your future at risk.

What’s the answer? For many, it’s disability insurance, available in short-and long-term forms. And given the following stats, you may want to discuss this with your insurance agent sooner rather than later.

  • The average worker has a 30 percent chance of becoming disabled.
  • 12 percent of the population receives disability benefits.
  • 1 in 8 workers will be disabled for at least five years.

Short-Term Disability: Short-term disability insurance (STD) provides coverage for a limited amount of time. This is for less severe illnesses or injuries, including temporarily disabling injuries, such as a fall, and for the birth of a child. You’ll wait for up to 14 days before receiving benefits, and there’s a maximum coverage amount. Coverage (specified in the policy) can range from several months to one year, and benefits continue until your policy’s time or maximum limit is reached, or until you’ve recovered.

Long-Term Disability: Long-term disability insurance (LTD) provides coverage over longer periods of time, covering injuries and illnesses preventing you from working. Unlike STD is doesn’t cover childbirth. The most common LTD claims include

  • musculoskeletal/connective tissue disorders (back pain, osteoarthritis)
  • cancer
  • injuries/poisoning
  • cardiovascular/circulatory disorders

LTD claims usually take up to 90 days to be approved, but if you have some form of a debilitating injury, the waiting period before you receive your benefits could be longer. Upon approval, you can receive benefits for several years, until age 65, or until recovery. Some policies pay life-long benefits, but this varies by policy and insurance company.

Illnesses and injuries happen; avoid potential financial problems, and ensure your family is protected. Discuss disability insurance with your advisor.

Have an HDHP? Here Are Five Tips to Help You Manage Costs

These days many employers are passing on portions of employee benefit-plan costs, and as a result, many individuals may find themselves with high deductible healthcare plans (HDHP). These can be beneficial, as you pay lower premiums in return for choosing a higher deductible.

It’s estimated that in 2015, four of five large employers will offer HDHPs as a choice, and one of three will only offer HDHPs. However, deductible amounts have been increasing; in 2014, the average deductible was $1,217 for a single employee with group insurance, almost double the 2006 figure. That means higher out-of-pocket costs require cost management. Here are five tips for managing your costs:

  • Practice preventive care: Use policy-covered preventive services even if deductibles haven’t been met, and improve overall health to help future health problems.
  • Know when you’re close to meeting deductibles: Regularly examine your healthcare receipts.
  • Plan ahead for upcoming healthcare expenses you may have to pay if your deductible isn’t met; get price estimates for services you may need.
  • Individuals enrolled in an HDHP have available to them a Health Savings Account (HSA). You also may have access to an employer-funded Health Reimbursement Account (HRA) to accompany HDHPs or standard health plans. Both offer tax advantages. If you have questions about your tax situations, your advisor or the Internal Revenue Service (IRS) website can help.

Review Your Policy: Things May Have Changed

Life insurance can be seen as a type of investment, but of all your investments and life-insurance policies may be the least monitored.

Indeed, you may not have reviewed your life-insurance policy since it was originally purchased.

Keep your policy up-to-date

It may not seem as if you’d need to review your life-insurance policy periodically, but like all investments, they need to be monitored and adjusted to keep pace with your needs and conditions in the market environment.

Simple changes could save you money

The changes could be simple. For example, you may have a policy that was issued when you were a smoker, but you stopped smoking more than 10 years ago. Premiums will still reflect the smoker classification, but they should be lower. Or you may have a policy issued when your children were young, but now they’re self-supporting adults, and you no longer have a living spouse, so you don’t need life insurance at all. Imagine how much you could save.

But some problems are complex

However, the problems could also be complex. For example, you’re a 75-year-old business owner with a “key-man” policy on your own life (which protects your business if you die, because it relies heavily on you, as a “key” employee). The policy is more than 20 years old, and the cash value exceeds the contract basis by a significant margin. As a result, there could be a significant amount of income tax due if the policy is cashed in.

Consult your advisor

The solution is simple: Work with your agent to review your life-insurance policies. Why were they purchased? Are they still meeting the original needs? If the policies you have aren’t right for your current circumstances, he or she will work with you to either replace the policies that aren’t working for you or change their structure so they better meet your needs.