Archive | January 2014

Errors & Omissions For Software Companies

oopsDevelopers and testers work together to ensure that they deliver functioning software with no errors. But in a few instances, mistakes happen especially with more complex solutions. No matter how careful your team is, bugs can slip through the cracks. Sometimes, though, the problem isn’t in the software itself, but in miscommunication from the clients’ end. If they fail to let your team know exactly what they need, but they still threaten to sue after they receive the finished product, then you should be ready to defend your company.

What Does E&O Insurance Cover?

A commercial general liability business insurance policy will not cover you if you are sued in a case such as this. When you’re working with a team — whether employees or independent contractors — you can’t oversee every little thing they do because you can’t be everywhere at once. An errors and omissions insurance policy will cover not only those mistakes you’ve made, but also those of the people you work with or who work for you.

Mismatched Expectations

It also covers discrepancies in the understanding of the term ‘obligations.’ One of the worst things that can happen is when you and your clients unknowingly have different interpretations of what your company’s obligations are. Think about it: Even when you’re in the right, unsatisfied clients can tarnish your company’s reputation with negative feedback, especially when they’re angry. You’ll need damage control, stat.

What Causes Disputes?

The typical cause of major disputes that might trigger coverage under an E&O policy are:

  • misunderstanding between you and your client
  • misrepresentation by you and/or your client
  • incompatibility with software or hardware
  • disagreement on intellectual property rights
  • errors in security
  • violations against the law
  • failure of software to perform according to how it’s represented
  • failure to perform work as stipulated in the contract
  • unforeseen delays

…and many more.

Clients intent on suing are likely to claim financial loss caused by your company’s mistakes, misrepresentation, and/or negligence. Without proper insurance, your company will not only have to contend with an embarrassing PR nightmare, but also with a budget cut. If the amount is really big, the settlement can also put your company into a bankruptcy!

Will you risk it? 

It doesn’t happen all the time, but are you prepared to lose it if it does happen? Sometimes, it takes only one lawsuit to destroy a company.

Don’t take chances on your company’s future. Getting errors and omissions insurance is worth the trouble. Hopefully, you’ll never have to need it, but once you do need it, you’ll be happy you have it.


Reducing the Cost of Your Work Comp

Reduce-IT-Operating-costsFor employers, workers compensation insurance coverage is all about controlling costs and effectively managing risks.  No secret there. As critical as reducing the cost of workers compensation coverage is, however, many employers don’t participate as actively in making that happen as they could.  In fact, many companies and organizations are either unaware of the many tools available to manage workers comp expenses or are unwilling or unable to devote the resources necessary to utilize those tools.  Paying for workers comp coverage is a necessary and unavoidable cost of doing business; paying more than you should is not.

Here are some of the more effective tools available to control workers comp costs and effectively manage risks:

  • The Prime Directive (with apologies to Star Trek).  An employer’s primary responsibility is to provide a safe working environment for employees.  Failing to do so will impact your workers compensation costs, and not in a good way.  It’s impossible to have a workplace that is 100 percent safe, of course.  However, if you take certain steps, you’ll go a long way towards coming close to that goal.  Consider these factors:
    • Choose wisely when you hire.  Faulty equipment and other unsafe circumstances cause on-the-job accidents.  So too do employees, either by injuring themselves or by creating or starting a series of unfortunate events that lead to a coworker’s injury.  When interviewing, ask candidates about their prior workplace safety records, and make sure to check their references.
    • Educate, train, coach.  All employees should be trained on such components of workplace safety as proper use of equipment and machinery, risk-averse work practices, the importance of keeping work areas clean, and other workplace safety procedures.
    • If you don’t have a formal safety program and don’t know where to start, contact your insurance agent or workers comp carrier – they’ll have all you need to develop a program that will meet your needs.  Establish an in-house continuing safety education program to ensure that your people are kept current on new developments and provided necessary reminders.
    • Distribute safety manuals. Providing employees with written guidance regarding safety practices will  not only help reduce the number of accidents that lead to injury – it will also help protect you in the event that your employees disregard those written instructions.

Show me the money!  There are factors aside from workplace accidents that can increase the cost of your workers comp coverage, some of which have nothing at all to do with how your employees work.  They include:

  • Incorrectly classifying job titles and/or job descriptions. Don’t impute high risk work to a low risk position.
  • Reporting wages accurately.  If possible, use only regular hours (not overtime) when reporting payroll.  The higher the reported payroll amount, the higher the calculated workers compensation insurance premiums.
  • Monitoring your program.  Closely.  Is your workers comp experience modifier accurate?  For example, are closed claims being reported as such?  Is the data being reported to NCCI correct?
  • Adding insult to injury.  As in, unnecessarily high workers comp costs because of improper or inadequate procedures when an injury occurs.  Require all injuries to be reported to a supervisor (no matter how minor).  Provide medical attention as required, when required (i.e., right away).  Delay can lead to complications, complications can lead to increased medical costs, and increased medical costs can lead to higher premiums.
  • Staying connected.  Much as nature abhors a vacuum, so too do injured workers hate being made to feel that they don’t matter.  If you don’t communicate information to your injured employee, their friends, family members and personal injury lawyers on TV will.  Get your employee back to work as soon as possible, with or without restrictions.  Once that worker thinks you don’t care, the window of cooperation will probably shut quickly thereafter and potentially for good, meaning the claim isn’t likely to close anytime soon, which will certainly not reduce your workers comp costs.

While there is no way to avoid paying for workers comp coverage, there are ways to control what this coverage costs you. Follow the tips listed above to gain control over your workers comp costs this year!

Top 5 Factors that Determine the Cost of Car Insurance

Most factors that influence car insurance premiums are based on statistically-proven risks posed by certain groups of drivers. The higher the risks associated with a specific group of car insurancedrivers, the higher the auto insurance rate. However, it’s important to know that some insurance companies are willing to offer you better insurance rates than others. That’s mainly because brokers consider different criteria when evaluating insurance applications. Below, we’ve compiled a list of the top five factors that contribute to auto insurance rates.

  1. Type of Vehicle: According to the Digital Journal – a global digital media network – vehicle make and model will greatly influence your auto insurance premium. Driving a trendy, pricey, new car will subject you to a higher insurance rate simply because repairing or replacing such a car costs much more than repairing or replacing an inexpensive vehicle. Besides vehicle repair and replacement costs, insurers will factor in the risk of your car being stolen, the likelihood of an accident and crash test ratings before approving your application.
  2. Driving Record: Driving record points also affect your car insurance rate. Depending on how many points have been assigned to your driving record for different traffic violations, including traffic tickets, insurance brokers may apply a surcharge for up to three years. If you’ve been ticketed for speeding, how much you were exceeding the speed limit matters a lot. One thing you can do to obtain a lower insurance quote is to attend defensive driving courses.
  3. Age: The National Highway Traffic Safety Administration’s Teen Driver Crashes: A Report to Congress documents that car crashes are the leading cause of death for 16- to 20-year-old teens. The same report specifies that the crashes caused by young drivers represent about six percent of the crashes caused by all licensed drivers. Based on this report and many other studies, young drivers are most susceptible to accidents. Thus, if you’re a young driver, you’ll most probably face high auto insurance premiums only because you belong to a group proven as “high risk.”
  4. Gender: Although teenage driver fatalities increase slowly over time, they actually continue to rise for young males and decrease for young females. Under this criterion, all male drivers from 16 to 25 years old are considered higher risk drivers compared to female drivers of the same ages. Consequently, young male drivers are offered higher insurance rates than young female drivers. This isn’t discrimination, but a fact. However, car insurance premiums usually even out as drivers get older and maintain a clean driving record.
  5. Insurers: Auto insurance quotes vary from one company to another for many different reasons. For instance, while some insurers offer a discount as high as 25 percent for good grades and provide better rates to the drivers who take formal driver training courses, others seem to prefer drivers who complement their cars with additional safety features, such as adjustable seat belts, head restraints and anti-theft devices. It’s up to you to find an insurance company that is willing to consider your strengths to the detriment of your weaknesses.

In addition to these factors, insurance brokers take into account experience, personal driving habits, driving distances, place of residence, occupation, uses of vehicle, parking facilities, current insurance status, other insurance policies and even marital status and abstention from drinking and smoking. Now that you know the top factors that affect your car insurance rate, you can make a more informed decision when purchasing auto insurance.

Risk Management: Lessons for Middle Market Businesses

When you are a middle market company, it might seem like risk management is less of a concern, but even smaller businesses can learn from the mistakes of big boys like Goldman Sachs riskand Toyota. Emerging companies needs to embed risk management practices into the core of their business so that as they grow, there is a foundation to build on. Here are a few basic steps that middle market companies can take to more effectively manage their risks:

1. Proper Continuity Planning

A common practice for large businesses, but sometimes overlooked in smaller arenas, continuity planning helps identify potential risks, both internal and external, and then looks for solutions. Businesses must pinpoint the hard and soft assets necessary to protect the company from risks and allow for swift recovery while still maintaining a competitive edge. For example, crisis management schematics and off-site backup storage are tools for continuity planning.

2. Creating a Crisis Plan

A crisis plan gives direction should a problem occur. The goal is to target the decision-making process and ensure that decision makers have the resources they need to act quickly in a crisis situation. Once the plan is complete, test it thoroughly and often. Without proper testing, a crisis plan can lose validity as the business changes.

3. Focus on Supply Chain Issues

A business is only as strong as its supply chain. In an attempt to create a more cost-effective process, many companies allow the supply chain to narrow. If a key supplier fails unexpectedly, this can put the entire business at risk.

4. Understanding Risk Appetite Levels

Risk appetite is the level of risk the business is willing to accept before taking action. A business must assign risk appetite levels for each project and understand some short-term failures may lead to long-term success in the right situation.

5. Benchmark the Quality of the Risk Management Strategy

Benchmarks tell a business how well their risk management effort is working. It measures progress in areas like:

  • Risk identification
  • Risk Assessment
  • Risk Tolerance and Evaluation

These all require regular scaling to ensure they remain effective. Benchmarking looks at risk models and evaluates the infrastructure.

6. The Use of Captive Insurance

Captives are effective tools for covering certain lines of business – such as worker’s compensation – that have predictable claim rates. This allows the middle market company more leeway in other ventures and helps them maintain risk in other areas.

7. Understand Cyber Risks

In today’s high-tech environment, cyber risk is even more prevalent in businesses of all sizes. Enterprises must produce cyber risk polices and define online behavior rules to improve virtual security, especially when dealing with personal mobile devices and social media sites.

8. Establish Return-to-Work Standards

Return-to-work programs can lower workers compensation costs by establishing protocols for employees coming back after injury. Return-to-work programs allow these individuals to participate in modified work assignments that get them back on the job safely to reduce disability payouts.

9. Provide Ongoing Risk Education

Companies of any size can benefit from ongoing risk management education. This can include sending key staff to continuing education classes and seminars or helping them network through conferences and professional organizations. Ongoing education exposes them to the latest trends in risk management.

Middle market businesses that establish risk management practices are already ahead of the curve. As the business grows, they will have the core necessary to identify and handle crises as they happen and set up protocols to avoid them.

Denial of Service Attacks Amongst Top Cyber Risks Facing Businesses in 2014

cyber risk2014 is already off to a great start for cyber risk pundits. Last year, experts at large firms like Booz Allen Hamilton and small firms like the UK-based Stack Group predicted that distributed denial of service (DDoS) attacks would become an even bigger problem in 2014. By January 3, hackers had already launched DDoS attacks on major gaming servers. With 362 days remaining in the year, you might see them get around to attacking your company, as well.

Understanding the DoS / DDoS Cyber Risk

A denial of service attack happens when a hacker uses a computer to send enough traffic to another computer to tie it up and interrupt its operations. Distributed denial of service attacks happen when hackers use multiple computers to clog up the one computer. Frequently, they do this by creating a “botnet” of computers that are compromised by malware and can be used to attack on demand.

DDoS attacks might not seem that damaging compared to other types of cyber risk. In a DDoS attack, the criminals attacking your systems aren’t directly breaking in, aren’t copying your data, aren’t deleting it and aren’t changing their computer. They’re just overwhelming it so that no one can get to it.

However, being denied service is a real problem. It means that your employees can’t get into the server to access the information that they need to do their jobs. Prospects can’t get into your systems to research what you offer and can’t complete transactions to buy your products and services. Existing customers can’t access support or, if you sell an online service, can’t access the services they paid for. Furthermore, the DDoS attack can burn up your bandwidth and make it hard for you to use systems that aren’t being attacked but that share bandwidth with the compromised ones.

DDoS attacks were once the purview of hackers that did them as pranks or personal project. Then, they became tools of hacktivists that used them to protest against companies or government agencies that met their ire. Next, a cyber risk tied to terror came into play as groups like the Izz ad-Din al-Qassam Cyber Fighters, who were linked to Iran, started to attack financial services companies. Now, DDoS attacks can be bought and sold on the black-market, making them available for commercial applications as well.


Defending Against the DoS/DDoS Cyber Risk

Once, good network security was enough to protect your company against DDoS attacks. Having a strong firewall and intrusion protection system coupled with having extra bandwidth coming in and out of your data center just in case was enough to either repel denial of service attacks or reduce their impact to a point where it was not damaging to the business. However, the larger scale of today’s attacks is changing the environment.

New network technologies, such as cloud-based filtering, can help to reduce the chance that a DDoS attack gets through and affects your company’s data and operations. Adding cyber risk coverage to your company’s business insurance policy can also ensure that you have the financial backing to limit the harm that you suffer if an attack gets through. While it might be hard to predict whether or not any given company will be the victim of a devastating DDoS attack in 2014, you can be sure that 2014 will see multiple attacks across the Internet and that the rate will continue increasing as it has done in the past.

What Kind Of Insurance Do You Need When Travelling Internationally?

international-travelWhether you frequently go out of the country on business trips, or you are just planning an international vacation, you still need to know how to protect yourself and your property when you go overseas. There are many different precautions that you can take to keep yourself safe, and purchasing travel insurance is just one of the many steps involved. How do you purchase travel insurance, and what will it cover? In this guide, we will review the answer to these questions and more.

Benefits of International Travel Insurance

When you purchase international travel insurance, you will be provided with a wide array of benefits that can keep you safe in a variety of circumstances. These benefits are designed to make sure that you don’t lose any money, that you have the transportation that you need, and that your trip is a safe and memorable experience. Here are a few of the benefits that are typically offered on most of these policies:

  • Trip Cancellation/Interruption—If for any reason you have to cancel or interrupt your trip, you should be covered from having to pay any additional fees, and you may even be entitled to a partial refund of your expenses, depending on the circumstances. Most providers will accept a claim of cancellation or interruption if you change your mind about the trip, have a business conflict, get called into work, if you become sick or injured while on your trip, or if bad weather creates the need to leave early.
  • Travel Medical Insurance—In the event that you become sick or injured and need the assistance of emergency services, travel medical insurance will cover your expenses for this. If you make several long trips a year, you can also get a major medical insurance policy that will pay all or most of the international medical expenses that you may incur.
  • Rental Car Coverage—When you have a rental car in another country and you get into an accident, your international insurance provider may pay for the loss of the vehicle or any collision damage that may result from the accident.
  • Lost or Stolen Baggage—You can also expect to get coverage or reimbursement from a travel insurance company if your bags are lost or stolen, since you will have to purchase all new luggage, clothing, and whatever other articles may have been in the misplaced bags.

How Do You Purchase Travel Insurance?

You can find a company that specializes in this type of insurance and sign up for a policy up to one full day before your departure. However, if you need to ensure that special coverages and protections go through prior to your trip, you may want to purchase your policy at least two weeks in advance.

In some cases, you can get international coverage automatically with your homeowner’s or medical insurance companies, but you need to check your current policies and see if they will provide coverage for you if you go overseas, as many of them do not.

If you are planning on going out of the country soon, then you should definitely invest in a travel insurance policy. Although you may not think that you will need to use any of its benefits, it is definitely wiser to be safe than sorry.

Business Use of My Personal Auto – Will My Insurance Work?

There are over 240 million registered motor vehicles in the U.S., according to the Census Bureau. At a given time, as many as a third of those clutter American roadways, and it is estimated that one-fourth of those are being used in the course of work.

Running errands, making deliveries, visiting customers. Even for those whose employment is not based on driving, it’s fair to say that your vehicle is an essential part of your employment. This presents an important question: If you are involved in an accident in the course of employment, are you covered by your personal auto insurance policy (PAP)?

Like most insurance questions, the answer depends on circumstance. For example, what kind of car are you driving? Does the car belong to you or someone else? What type of business are you in?

Consider the language found in the typical PAP. At a glance, many policyholders are shocked to see that the PAP appears to exclude coverage for the use of any vehicle in the course of business other than farming or ranching. However, a very broad exception to this exclusion allows coverage for the business use of a vehicle provided it is one of three types: 1) a private passenger auto, 2) a pickup or van, or 3) trailer while used with the aforementioned. This exception suggests that as long as the vehicle is one of these three types, coverage remains intact after the accident.

But policyholders should proceed with caution, since some PAPs are not as generous. For example, some versions may be more restrictive towards pickups or vans, possibly including a gross vehicle weight (GVW) limitation or a clause that restricts coverage to owned pickups or vans only. Be sure to consult your policy before driving any pickup or van for work.

Further, policyholders should understand that any coverage permitted for business use of personal vehicles by the PAP is not intended for these three vehicle categories:

Commercial-type vehicles. The PAP restricts business use to private passenger autos, pickups and vans. While they can be purchased personally, box trucks, tractor trailers, shuttle busses and other commercial-type vehicles do not fit this description; such vehicles require a commercial auto policy.

Furnished or available for regular use. Often called the “company car” exclusion, this provision is dangerous and must be remedied if the exposure exists. The reason is that a typical PAP will exclude coverage for a vehicle that is regularly available to the policyholder but is not specifically insured under the PAP. For example, if you are furnished a company car as a benefit to your employment, make certain that you are covered by your employer’s auto insurance policy. If not, specific action is required to extend coverage under your PAP; it will not do so automatically. The good news is that this coverage change is usually inexpensive and can be done easily; just be sure to request the change now, before the accident happens. While the definition of furnished or available for regular use varies by case, err on the side of caution. Don’t assume that because you don’t take it home with you each night or that you only drive it occasionally you’re in the clear. Regardless, a vehicle owned by your employer could be considered available for your regular use. This exclusion presents a potential gap that is too risky to ignore; your Trusted Choice® independent insurance agent can help you take the appropriate steps to close it.

Vehicles that are the business. A PAP will not cover your vehicle if you use it to carry people for a fee, such as a taxi, limo or shuttle. The only exception is a share-the-expense car pool. And if you’re planning to make a few extra bucks delivering pizzas, auto parts, newspapers or other goods, proceed with caution. Many PAPs also remove coverage for vehicles that are used to deliver food or other types of property for a fee.

While in most cases the PAP will cover you for business use of a personal vehicle, there are situations where it will not. Such situations are not uncommon and, if not remedied, could result in significant financial detriment for you and your family. Consult your Trusted  insurance agent for advice on how to close potentially devastating gaps in your PAP today.