Ransomware Becomes Biggest Cyber Threat Facing Businesses

Ransomware is turning out to be the biggest cyber threat facing companies in 2017 after attacks more than quadrupled in 2016 from the year prior, according to a new study.

If you are not familiar with this fast-evolving cyber threat, typically the perpetrators will essentially lock down your database and/or computer system and make it unusable, then demand that you pay a ransom to unlock the system.

The “Beazley Breach Insights Report January 2017” highlights a massive and sustained increase in ransomware attacks.

Another report, the “2017 SonicWall Annual Threat Report,” found that cyber criminals are shifting their attention from malware and other types of threat to ransomware – as evidenced by a significant decline in the former types of attack and a dramatic increase in the latter.

Here’s what SonicWall saw in 2016:

  • Unique malware attacks fell to 60 million from 64 million in 2015, down 6.25%.
  • Total malware attack attempts fell to 7.87 billion from 8.2 billion, down 4%.
  • Ransomware attacks exploded to 638 million attempts in 2016 from 3.8 million in 2015, up a massive 166 times!

SonicWall’s report estimates that around $209 million in ransoms was paid in the first quarter of 2016 alone.

“It would be inaccurate to say the threat landscape either diminished or expanded in 2016 – rather, it appears to have evolved and shifted,” said Bill Conner, president and CEO of SonicWall. “Cybersecurity is not a battle of attrition; it’s an arms race, and both sides are proving exceptionally capable and innovative.”

The unprecedented growth of ransomware was likely driven as well by easier access in the underground market, the low cost of conducting a ransomware attack, the ease of distributing it and the low risk of being caught or punished.

Ransomware is also growing in both sophistication and type of attack, and the hackers are proving to be inventive in how they can cripple your business enough to elicit the ransom.

When you are most vulnerable

And there are some times that businesses are more susceptible than others in being targeted for an attack.

“Organizations appear to be particularly vulnerable to attacks during IT system freezes, at the end of financial quarters and during busy shopping periods,” the report states. “Evolving ransomware variants enable hackers to methodically investigate a company’s system, selectively lock the most critical files, and demand higher ransoms to get the more valuable files unencrypted.”

Ransomware enters a company’s system in a variety of ways.

The most common method is when an employee clicks on a link in a bogus e-mail that opens the door to malicious code to start rifling through your systems. But more often, an employee unintentionally clicks on a link or sends information.

The types of attack will vary from industry to industry.

How Ransomware Infiltrates

  • Hack or malware: 40%
  • Insider: 7%
  • Unintended disclosure 28%
  • Physical loss: 6%
  • Portable device: 6%
  • Other/unknown: 9%

Horror stories

  • Hollywood Presbyterian Medical Center in Los Angeles paid $17,000 in bitcoin to regain access to its data in February 2016.
  • Lansing Board of Water & Light paid ransomware attackers $25,000 after they had paralyzed the company’s information system in April 2016.
  • A four-star hotel in the Austrian Alps paid 1,500 euros (about $1,600) in bitcoin after ransomware had locked up the computer running the hotel’s electronic key lock system, leaving guests unable to enter their rooms.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Why You Should Consider Disability Insurance

What would happen if you were permanently injured or became too ill to work?

You might qualify for disability payments from Social Security, but would you be able to survive on the average payout of $1,171 per month? Maybe you have some savings, but would it be adequate to cover your living expenses until you’re old enough to collect retirement benefits?

If you answered “no” to either of these questions, you should consider buying disability insurance.

Disabilities are surprisingly common: One in three women and one in four men will have a disability that keeps them out of work for 90 days or more at some point during their working lifetime, according to The Life and Health Insurance Foundation for Education.

Disability insurance basically protects your income, which is especially important during your peak earning years between 40 and 55 years of age. Not only do most people earn their highest salary during this time, they actively use it to pay down debt and save for retirement.

As most insurers won’t offer disability policies to individuals over the age of 59, now is likely your best time to buy one that will carry you through to full retirement age.

As with health and life insurance, the older you are, the more expensive disability insurance becomes. If you have health problems, it may even become difficult to secure – if at all. You may still be able to purchase a policy, but it may include exclusions for health issues such as back problems or ailments related to high blood pressure for which you’ve regularly sought treatment.

Before you pursue an individual disability insurance policy, check with your employer about group policies. If the company you work for offers one, you may be able to obtain coverage without submitting to a medical examination. This can make the process easier and save you money.

If your employer does not offer supplemental disability insurance, we can work with you to find an insurance company that offers guaranteed renewable policies with fixed costs and terms.

In general, experts recommend a disability insurance policy that will replace 60 to 70% of your salary.

 

Two types of coverage

Short-term disability insurance. A short-term policy typically is designed to replace 80% or more of your gross income for a short duration of time, like 60 to 180 days.

Long-term disability insurance. These policies typically kick in after you’ve been out of work for an extended period of time, such as 180 days.

Long-term policies typically cover only about 60% of your salary. The coverage can last for years and even through the rest of your life, depending on the design of the policy.

 

How it works

The car accident

Bob suffered extensive injuries in a car accident and was unable to return to work for three years.

Typically, after six months, long-term disability insurance would begin to replace a portion of his income. Once he returns to work, the disability coverage will end.

Long term disability

Elizabeth was diagnosed with Parkinson’s disease, and as she deteriorated she was unable to work. Her insurance will continue to pay a portion of her salary for a set amount of time, typically until age 65 or through the end of her life, depending on the policy.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Why You Can’t Afford to Not Have Professional Liability Insurance

At some point, most businesses are involved in some type of legal dispute, be it over an alleged physical or property damage to a third party or financial injury to a competitor, client or vendor.

And you’d surely want an insurance backstop in case you are targeted, to help pay for legal costs and any settlements or judgments. The type of liability that your business is going to face will depend on the type of work that you do.

If you’re in a service trade, the chances of your work causing someone physical damage or harm are remote, but you could still be sued for not living up to your part of a contract or if your services caused a client to lose money.

The costs of defending against a lawsuit of that type could quickly mount, even if you come out victorious in the end. Those costs would have to be borne out of pocket if you didn’t have the appropriate insurance.

The costs of not carrying professional liability insurance in many services trades can be a disaster to your finances as a lawsuit can catch you by surprise, even for work that you may have done years ago.

 

The unfunded lawsuit

Here’s a scenario that could leave you scrambling for funds. You run an engineering firm and a manufacturer sues your business after one of the machine parts that you designed failed, causing one of the client’s machines to seize up, resulting in $58,000 in damage to the machine and production downtime.

The lawsuit accuses your firm of negligence. Your business could be facing serious financial hardship as the suit asks for the cost of repairs and the lost production.

Here’s what you’re looking at:

  • Attorneys’ fees – Depending on where you live, these can range from $150 to $400 an hour, or more if you go with a topflight law firm.
  • Court expenses – Fees for copying, filing and other miscellaneous tasks all add up.
  • Other legal fees – You may need to call expert witnesses, as well.
  • Damages or settlements – Even if you try to reach a settlement with your client, they may opt to take the case to trial in hope of winning the full amount of the damages they are claiming.

 

You can see how the costs can quickly mount and if it gets to a damages or settlements stage, the costs will increase significantly.

You should know too that even if the case was frivolous, you’d still have to pay attorneys to defend it and file motions to have it tossed out of court. That alone could run you at least $5,000 in legal fees – a lot of money to pay out of pocket.

In fact, the U.S. Small Business Administration estimated in a recent study that legal costs for litigation ranged from $3,000 to $150,000, and only one-third of small business owners reported spending less than $10,000.

And there can be other fallout, as well. Perhaps word has gotten out about the lawsuit, damaging your reputation and ability to attract new clients and retaining existing ones.

And if one client has sued, others who may have held off and had similar experiences could also file suit.

 

Professional liability insurance

Insurance could have saved you from these significant expenses. The coverage, which is relatively inexpensive, is what’s known as “claims-made” coverage.

That means your policy must be active when the alleged incident occurred and when the claim is filed, in order to receive your benefits.

Client allegations that your work caused them a financial loss are often covered by a professional liability policy.

Professional liability insurance can cover errors and oversights with your work, as well as legal fees and the cost of settlements or judgments.

Cost: The average yearly cost of professional liability insurance for a small business, regardless of the limits chosen or the industry of the business, was $985.49 in 2015, according to the Insurance Information Institute. The median was $758.00.

A Strong Crisis Management Plan Can Save Your Firm

You should hope it never happens to your organization, but unfortunately, a crisis can strike any company at any time.

But if your business suddenly became embroiled in a crisis, would you be prepared to handle it? If you were putting out fires, or a major conflagration, and you didn’t have a crisis management plan in place, how would you respond?

Crises can take many forms, like the death of an owner, one of your products causing death or injury, or if historic flooding suddenly inundates your town, forcing you to cease operations.

To prepare and ensure resiliency, you should think about how a disaster would affect your operations, clients, suppliers, employees and the value and goodwill you’ve built up over the years. And you need to put together a plan for communications during this time.

In a recent article, Inc. magazine recommended the following crisis management steps every company should have in place:

 

  1. Have a plan – Put in place clear objectives that you would want to pursue during a crisis. Objectives should include protecting human life, ensuring that the organization survives and that your stakeholders (clients, suppliers, employees, the public) are kept informed. Include specific actions that you would take in a crisis.
  2. Different responses to different crises – Have plans in place for various crises that could strike your organization.

If it’s the sudden loss of a key employee or owner, you should prearrange a succession plan and transfers of responsibility.

If it’s a natural disaster that disrupts operations, have plans in place to ensure that you can continue operating, such as arranging for alternate suppliers, or arranging for an alternative location if you are unable to function in your current facilities.

  1. Be transparent – Being as open and transparent as possible can help stop rumors and head off any negative fallout among the public and media. You can do this by reaching out to the media with press releases and interviews, as well as on social media.
  2. Keep employees informed – It’s extremely important that you keep your employees informed, to keep morale up and so that they can help you keep your operations afloat. This also stops the rumor mill from circulating out of control.
  3. Reach out to clients and suppliers – Head off any misunderstandings by communicating with your customers and suppliers before they learn it from another source. Keep them informed of what’s happened, how it has affected your operations and how it might affect them during this period.
  4. Update early and often – Thanks to smartphones and the Internet, we now live in a 24-hour news cycle. That means you should make updates regularly and as needed, in order to keep all stakeholders informed.

Do it now

You should create your crisis management plan when your business is running smoothly and you have time to devote to thinking out a successful strategy.

This also gives you a chance to involve key employees in the process and open it up for brainstorming on how you would handle different crises.

You may want to include in this process advice and input from

  • Members of your leadership team
  • Employees
  • Customers
  • Communications experts
  • Lawyers
  • If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Employers Rethink HDHPs as More People Struggle with Medical Bills

As the number of employers offering high-deductible health plans continues growing, the spotlight recently has highlighted an inconvenient truth: some employees are going broke and filing bankruptcy because they cannot afford all of the out-of-pocket expenses and deductibles they must pay in these plans – just like the bad old days in the 1990s and 2000s.

Besides being in plans with high deductibles, many employees are also paying more for coverage as employers have shifted more and more of the premium burden to their staff.

Making matters worse, studies are showing that many people with HDHPs are forgoing necessary treatment and not taking the recommended dosages of medicines because they can’t afford the extra costs.

Consider:

  • Enrollment in HDHP plans grew to 21.8 million in 2017, up from 20.2 million the year prior, and 5.4 million in 2007, according to a report by America’s Health Insurance Plans.
  • Nearly 40% of large employers offered only high-deductible plans in 2018, up from 7% in 2009, according to a survey by the National Business Group on Health.
  • 50% of all workers had health insurance with a deductible of at least $1,000 for an individual in 2018, up from 22% in 2009, according to the Kaiser Family Foundation.

 

Despite that, a 2017 report by the Centers for Disease Control and Prevention found that 15.4% of adults in HDHPs in 2016 had issues paying bills, compared to 9% of those with other types of insurance. And there have been a number of news reports about the deep financial toll on HDHP enrollees that have suddenly been hit by serious maladies.

Meanwhile, the average deductible for a family had risen to an average of $4,500 in 2017 from $3,500 in 2006, according to the Kaiser-HRET 2017 survey of employer-sponsored health plans.

As a result, some employers are rethinking their use of these HDHPs and trying to reduce the burden on their workers, according to news reports.


Skimping on care

Studies show that many put off routine care or skip medication to save money. That can mean illnesses that might have been caught early can go undiagnosed, becoming potentially life-threatening and enormously costly for the medical system.

 

A study by economists at University of California, Berkeley and Harvard Research, published in the Journal of Clinical Oncology

Findings:  When one large employer switched all its employees to high-deductible plans, medical spending dropped by about 13%. That was not because the workers were shopping around for less expensive treatments, but rather because they had reduced the amount of medical care they used, including preventative care.

The study found that women in HDHPs were more likely to delay follow-up tests after mammograms, including imaging, biopsies and early-stage diagnoses that could detect tumors when they’re easiest to treat.


A report by the Robert Graham Center for Policy Studies in Family Medicine and Primary Care, published in
Translational Behavioral Medicine

Findings:  People with HDHPs but no health savings accounts are less likely to see primary care physicians, receive preventive care or seek subspecialty services. Compared to individuals with no deductibles, those enrolled in HDHPs without HSAs were 7% less likely to be screened for breast cancer and 4% less likely to be screened for hypertension, and had 8% lower rates of flu vaccination.

The study authors noted that although more individuals have health insurance under the Affordable Care Act, premiums and deductibles have increased, leaving many Americans unable to afford these costs.

Oddly, many people in HDHPs are also forgoing preventative care services, even though they are exempted from out-of-pocket charges, including the deductible under the ACA. This is likely because most people don’t know that the ACA covers preventive care office visits, screening tests, immunizations and counseling with no out-of-pocket charges. As a result, they do not benefit from preventive care services and recommendations.

Companies with second thoughts

A few large employers – including JPMorgan Chase & Co. and CVS Health Corp. – recently announced that they would reduce deductibles in the health plans they offer their employees or cover more care before workers are exposed to costs.

CVS Pharmacy, part of CVS Health Corp., in 2013 had moved all of its 200,000 employees and families into HDHPs. During routine questionnaires, CVS later found that that some of its employees had stopped taking their medications because of costs. The company, in response, expanded the list of generic drugs its employees could buy for free to include some brand name medications, as well as insulins.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Five Ways to Reduce Accidents among Your Driving Employees

We’ve often discussed the scourge of distracted driving in America, brought on in large part due to the use of smartphones and leading to a significant spike in vehicle accidents, injuries and deaths. That in turn has led to a jump in both commercial and personal auto insurance pricing.

The risk for businesses is even greater as a careless driving employee can result in a substantial liability claim, particularly if a third party is injured. If one of your drivers is found to have been engaged in distracted driving, any judgment or settlement for a personal injury could easily cost more than $1 million.

While you can hold meetings about the dangers of distracted driving and what your driving employees can do to reduce the chances of crashing, in the end it comes down to trusting that they will do the right thing.

So what can you do? We suggest a holistic approach to the issue.

 

  1. Understand distracted driving

Just how bad is the distracted driving problem? In 2015 alone, 3,477 people were killed and 391,000 were injured in motor vehicle crashes involving distracted drivers. During daylight hours, an estimated 660,000 drivers are using cell phones while driving. That creates enormous potential for deaths and injuries on U.S. roads.

But smartphones are not the only source of distraction. Road safety experts say there are three types of distraction for drivers:

  • Manual – This can include looking around for a lost object in the car, reaching under the seat or behind to the back seat.
  • Cognitive – This can include a driver who is lost in thought and not paying full attention to driving.
  • Visual – Anything that makes a driver takes their eyes off the road, like looking at the GPS or searching for a song on an iPod.

 

Some distractions actually are a combination of two or all the above, like texting or posting stuff on Facebook.

All of your training for your driving employees must emphasize the need to address all types of distracted driving, and should include scenarios to help them make proper decisions when behind the wheel.

  1. Hire good drivers

When hiring personnel who drive, consider what their primary responsibility is. For example, if you own a plumbing operation, your drivers are not necessarily going to be professional drivers, since their primary duty is fixing plumbing issues.

But if you are hiring any workers who will be driving as part of their job, even if it’s not their primary responsibility, you should still make sure they are good drivers by checking their driving records.

Hiring safe drivers is one of the best ways for you to ensure you are putting safe drivers behind the wheel. After all, past driving behavior is the best indication of future performance.

If you think any prospect will be driving as part of their job, you should pull their DMV records. Look for anything serious like DUIs or frequent citations for moving violations. You should decide what your level of tolerance is for driving histories.

In addition, check their resumes to see whether they were driving as part of any of their prior jobs, and if they have experience driving the same type of vehicle they would be driving for you.

Also ask about any medications the applicant may be taking, as some can affect their driving.

Finally, consider requiring candidates that would be driving to take a road test as part of the recruitment process.

  1. Coach current employees to be safe drivers

You should hold regular training for all of your current employees that may drive as part of their job, even if they are only running to the office supply store or on an occasional errand.

You should attack this in a three-pronged approach:

  • Pull their DMV driving records annually.
  • Subject them to road tests where they are graded on their safe driving.
  • Hold an annual meeting to go over safe driving policies; reinforce the dangers of distracted driving and stress the need to always focus on the task at hand.

 

You should also have safe driving policies in writing that are enforceable. Your policies should list all the behaviors your workers are prohibited from engaging in while driving.

Some rules you can include:

  • Never answer the phone while driving, even if you have a hands-free device.
  • Bar programming a GPS while on the move and require that they pull over when safe to do so.
  • Never hold your smartphone in your hand while driving.

 

Your policy should also specify the consequences and any disciplinary action for breaking the rules.

You should maintain records of these policies. This is of utmost importance if one of your employees is in an accident and accused of negligence. Your policy and proof of training can protect your organization.

 

  1. Take advantage of technology

Many companies are installing GPS tracking devices in their vehicles so they can receive real-time information about a vehicle’s location and rate of speed. This gives you valuable insight into any dangerous habits your drivers may be engaging in.

You can also install technologies that will block cell phone signals while the vehicle is moving.

 

  1. Have procedures for dealing with accidents

Despite your best efforts, your driving employees may still have accidents. They should be trained in the procedures they should follow after an accident.

Some companies include accident kits in their vehicles. They are typically a small bag or box that’s kept in the glove compartment.

The kit should explain what they should do, including:

  • Taking photos from all angles after an accident.
  • Completing a form on which to record details of the accident, including where it took place, how it occurred, the damage to third parties, the other driver’s insurance information, road conditions, and more. Require your drivers to take down all the details at the scene of the accident.
  • Calling the police in the event of an accident.

Employees should not discuss who was at fault with the police, but they can work with them to document the accident. Plus, a police officer can provide a calm, outside perspective on a stressful situation.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Protecting Your Firm as an Additional Insured

In the course of doing business, you may sometimes find yourself entering into contracts requiring that your firm be named as an additional insured on another party’s insurance policies.

This is often done to make sure that your own insurance is not depleted by defense and indemnification costs for losses for which you may be legally liable as a result of the business relationship you have with the other party, but that are not due to your own firm’s direct negligence.

Definition: An individual or entity that is not automatically included as an insured under the policy of another, but for whom the named insured’s policy provides a certain degree of protection.

 

When to Be an Additional Insured

There are many times when you may want your firm included as an additional insured on another’s policy. Here are just a few examples:

  • If you are a building owner, you want to be an additional insured on the property and general liability insurance of your tenants in case one of them damages your building or in case a visitor to the property is injured.
  • If you are the owner or a contractor on a construction project, you want to be an additional insured on the general liability insurance of your contractors and subcontractors in case there is an injury to one of their employees.
  • If you are a distributor or a retailer, you may want to be an additional insured on the insurance programs of the manufacturers of the products that you sell.
  • If a contractor comes onto your property to perform work of any type, including erecting displays or maintenance or structural work, you will want to be named as an additional insured on their policy in case the display falls on someone, or someone is injured due to the work they are performing. You don’t want to be held responsible for any dangers or injuries created by their work.

 

If you are to become an additional insured on another company’s policy, confirm that the other party has indeed named your company as such with their insurance company.

You should ask for a copy of the policy that explicitly lists your company as an additional insured. You want to see a copy of the policy and the certificate of insurance, although the latter is not sufficient proof that your company has been added.

Additional insured status is effectively conferred through an additional insured endorsement to the other party’s original insurance policy.

An endorsement serves as an amendment to the terms of the policy that is incorporated into the relevant insurance policy. These amendments can take the form of an endorsement that specifically names a particular additional insured, or a general endorsement that identifies some class of parties as additional insureds.

If there is a dispute about your company’s status as an additional insured, you will want to have in hand not only the other party’s certificate of insurance, but also a copy of the policy itself and the endorsement that makes your company an additional insured.

There are a few best practices that you can implement to help make certain your firm’s status as an additional insured has been properly secured:

  • At a minimum, always insist on receiving a copy of the relevant additional insured endorsement, as this is the instrument that establishes additional insured status;
  • An additional insured endorsement does not, however, state an insurance policy’s terms and conditions. In order to avoid being surprised by unexpected policy terms (such as strict notice requirement or unfavorable notice of cancellation provisions), you should ask for and receive a copy of the entire insurance policy under which you are an additional insured, and be sure to read it;
  • Retain additional insured endorsements and the relevant insurance policies for as long as there is any potential that claims triggering those policies might be made.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

A New Health Care Model Tackles Costs, Quality Care

As group health insurance costs continue rising every year, more employers are embracing a new plan model that aims to both cut costs and improve outcomes for patients.

This trend, known as value-based primary care, is a bit of an umbrella term for various models that involve direct financial relationships between individuals, employers, their insurers and primary care practitioners. Insurers are experimenting with different model hybrids to find better care delivery methods that reward quality outcomes and reduce costs.

This new approach was made possible by the Affordable Care Act and the Medicare Access and Child Health Plan Reauthorization Act. And as the future of the ACA remains in doubt, the enabling parts that allowed for this system of payment reform that rewards health care providers that produce better quality outcomes for lower costs will likely remain intact.

And now more health plans are adopting this model. The 2016 “Health Care Transformation Task Force Report” found that the share of its provider and health plan members’ business that used value-based payment arrangements had increased from 30% in 2014 to 41% at the end of 2015.

In a McKesson white paper, payers reported that 58% of their business has already shifted to some form of value-based reimbursement.

 

How does it work?

First, let’s look at what the value-based primary care model is not: it’s not a fee-for-service system, under which when doctors see a patient and deliver care, they then bill the insurer a fee that is directly tied to the service they provided.

Fee-for-service arrangements have a fee schedule that lists the usual and customary charges for thousands of different procedures. The payment amounts will vary also based on the

reimbursement rate negotiated between the insurer and health care provider.

The part of the equation that’s missing is that the there is no direct link between the payment and the outcomes of the care. The insurer does not look at if a person was cured or has recovered successfully. There is only a link between the service provided and the payment.

Many value-based models provide a payment bonus to doctors and hospitals that produce better quality outcomes, like if they have more patients who don’t relapse or who recover at a slower pace and require more doctor visits.

Providers of value-based primary care typically charge the health plan a monthly, quarterly or annual membership fee, which covers all or most primary care services, including acute and preventive care.

The main goal is to get away from the fee-for-service system which puts pressure on doctors to only provide very short primary care visits with their patients, who will often send the patient out for unnecessary high-margin services such as scans and specialists and/or write excessive prescriptions. By eliminating this billing structure, doctors are able to practice more proactive care, which can reduce or eliminate certain future health care costs.

But just because the model is patient-focused, it does not mean that costs are higher. Proponents of value-based care say the focus on patients, and focusing on preventative and forward looking care rather than reactive care, reduces overall costs, which should be reflected in premiums.

Some benefits to patients include:

  • More time with their doctor
  • Same-day appointments
  • Short or no wait times in the office
  • Better technology, e.g., e-mail, texting, video chats, and other digital-based interactions
  • 24/7 coverage by a professional with access to their electronic health record
  • More coordinated care.

 

Vale-based care also improves provider experience and professional satisfaction, which, in turn, is known to improve the quality of care.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

As Risks Rise, You Need a Commercial Umbrella

As a responsible business owner you no doubt make sure that you are properly insured for any liabilities resulting from damage to other parties.

Imagine some of the following scenarios:

  • What if a visitor trips and falls at your business, breaking a leg and are unable to work for a few months while they recover?
  • What if a customer suspected of stealing later proves his innocence and sues for defamation of character?
  • What if one of your employees, driving a company truck, rams into a passenger car severely injuring some of the occupants?

 

The costs of a large financial settlement could surpass the primary liability limits of your existing insurance policies, leaving your business responsible for the rest of those costs. And a high-cost accident or lawsuit could potentially put your company out of business.

To avoid any of these scenarios, it’s wise to carry a commercial umbrella policy, which will essentially pick up where your primary insurance leaves off – or runs out.

All of your policies have limits. Once those limits have been breached, the other party can sue and go after your firm’s assets. Breaching those limits is getting easier due to the increasing prices of vehicles as well as health care costs, should the other party suffer physical injuries.

An umbrella policy will also cover you for liability for which there is no primary insurance, or when a primary policy includes an exclusion that the umbrella policy doesn’t.

 

Unfurling the umbrella

An umbrella policy will kick after limits are breached for:

  • Commercial general liability (bodily injury, property damage, personal injury, defense costs and attorney’s fees, limited contractual liability).
  • Business owners liability
  • Business auto liability
  • Employer’s liability

 

Most umbrella insurers require you to purchase primary insurance coverage before selling you an umbrella policy – for example, general liability insurance, auto liability insurance, workers compensation or employers liability insurance.

Umbrella policy limits may range from $1 million to $10 million, depending on the policy and the insurance company underwriting the policy.

 

Excess liability

For companies in business that have potentially higher liabilities, can secure an excess liability policy that kicks in after the umbrella policy is breached.

This coverage provides extra liability limits over an umbrella policy. This coverage typically follows the terms of the first underlying insurance policy.

Higher limits may be necessary for businesses with high loss potential, high profile, sizable sales, numerous assets, large auto fleets, worldwide presence, and/or significant public exposure.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Are You Covered for Personal Use of Company Vehicle?

Getting a company car is a coveted perk for employees, but it can also cause some coverage issues with your personal auto policy.

The standard auto policy excludes coverage for non-owned vehicles furnished or available for your regular use.

This means you are relying solely on the company’s insurance for protection. If for any reason the company’s policy does not respond if you are in a traffic accident, you have no coverage.

The company’s business auto coverage will also not provide you protection if you use the vehicle outside the scope of the employer’s permission. This can leave a big gap if you or a family member use the vehicle in a way that wasn’t part of the original agreement.

 

Nightmare scenario

Your company gave you permission to use the car, but you are the only one allowed to drive it. Your spouse takes the company car to the grocery store and on the way she crashes into another vehicle.

Unfortunately, you have no coverage on either your policy or the company’s policy. In other words, you would be on the hook for damage to the vehicle and possibly the other vehicle, as well as for medical costs for any injuries sustained by either party in the accident.

 

The solution

If you are given a company car, you should consider adding an “extended non-owned coverage for named individuals” endorsement to your policy. You should name each member of your family of driving age.

This endorsement will fix the gap in coverage when an employee is furnished an auto for their regular use (or even has one available for their regular use out of a pool of vehicles). But, note that this is only for liability coverage and there is not going to be any physical damage coverage for the vehicle.

This endorsement is inexpensive and can provide peace of mind. It is a good idea anytime you have regular access to a vehicle you do not own.

If the insurance company won’t add the extended non-owned endorsement (or a similar one) to the personal auto policy, or can’t add it, the next option would be to buy a named non-owned policy to fill the gap in coverage.

In effect, this accomplishes the same thing as the extended non-owned coverage for a named individual, but may be more expensive.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.