Not Quite Enough: General Liability Insufficient for Cyber Coverage

Take a look at your business’ general liability insurance policy, and you’ll probably see a reference to property damage.  To the uninitiated, that sounds like it covers a multitude of potential events – even an online hack or attack, right?

Wrong.  Seriously wrong.

Cyber liability insurance is not automatically included in a general liability policy.  Cyber liability insurance, priced and purchased as its own policy, can pay for expenses if a small business suffers a data breach or malicious software attack, including customer notification, credit monitoring, legal fees, and fines.

According to Insureon.com, when criminals infiltrate a network, steal data, or hold data hostage, the business they steal from could be held liable. A data breach at a small business can end up costing thousands of dollars in customer notification expenses, legal fees, and fines or settlements.  In fact, the average cost of a small business data breach is $86,500, according to the Internet security firm Kaspersky Labs. The coverage included in cyber liability insurance pays these costs, allowing your company to survive a breach.

And don’t assume that hackers won’t come after small businesses.  A recent report by Verizon found that 61% of all cyberattacks hit small businesses, and that those attacks often succeed because small businesses are less likely to have a strong defense.

Cyber liability insurance is key for companies that handle sensitive information, work in the cloud, operate in cybersecurity, or typically handle:.

  • Credit card or bank account information
  • Medical information
  • Social Security or driver license numbers
  • Customer names, email addresses, phone numbers, and addresses
  • Cybersecurity for other businesses

Contact the professionals at The Reschini Group to learn more about fashioning an appropriate cyber liability insurance package for your business.  Your existing general liability policy may not be quite enough.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

 

Showing Your Cards: Insisting on Pre-Employment Physicals

Poker has always been a game more reliant on intent and projection than on the actual collection of cards in a given player’s hand.  That’s what makes it a gamble.

But if a player would show his or her hand before the betting and calls began, all of the excitement and tension would immediately disappear. The gamble would be over.  The outcome would be immediately known.  Safe and predictable.

To apply this example to the operation of a business, unlike a poker game, no one wants to gamble with outcomes.  The idea of a safe, predictable set of facts and conditions sounds perfect.  So let’s not hide the cards we hold.  Let’s show them all, right up front.

One of the best ways any business can pursue this strategy comes in the form of conducting pre-employment physicals, performed by a licensed physician, to determine a candidate’s physical fitness for the job an employer wants to fill.

Sounds so obvious and logical, right?  But not every employer insists on this simple process – or they bring candidates on before the process has been completed – and in either case, the consequences can be costly, embarrassing, and damaging to short- and long-term profitability.

For example, say a company hires and places a group of new employees into its field operations before receiving the results of their physicals.  One of the new recruits suffers an injury almost immediately.  The physical may have given the employer enough information to keep this person from a job with conditions that he was not capable of safely executing.

It’s imperative to remember that you as the employer are responsible for whatever physical conditions are present among your employees.  That means in the example that the employer was on the hook for medical costs and recovery programs for the injured employee – all of which might have been easily avoided by not rushing the person into an inappropriate role.

A pre-employment physical examination helps to guarantee the employer of a lower rate of absenteeism due to sickness, injuries, or occupational hazard.  It also helps avoid workers compensation issues, lost production, and higher operational costs.

In short, the benefits far outweigh the costs.  Show all your cards right up front and take the gamble out of operating your business by conducting and abiding by pre-employment physicals for all new hires.  Contact the professionals at The Reschini Group to learn more.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Touchpoint: Preparing a Summary Plan Description (SPD)

Benefits packages represent a two-edged sword – they’re incredibly important in providing for and protecting yourself and your family, while they also can be rather challenging to read and fully understand.

That’s why the U.S. Department of Labor requires employers to provide each employee with a Summary Plan Description (SPD).  This key compliance document for virtually every Employee Retirement Income Security Act (ERISA) plan “is the primary vehicle for informing participants and beneficiaries about their rights and benefits under the employee benefit plans in which they participate,” according to the DOL.

The SPD must be written so as to be understood by the average plan participant and must be sufficiently comprehensive to inform participants about their rights and obligations under the plan. Also, ERISA and underlying DOL regulations include strict requirements for the content and delivery of SPDs.

The SPD must be automatically distributed to plan participants by certain deadlines. It also must be provided upon a participant’s request. The SPD must include specific types of information, such as the plan’s eligibility rules.  Virtually all group health plans subject to ERISA must provide participants with an SPD, regardless of size.

ERISA does not require that a plan document be in any particular format. However, the plan document must address:

  • Benefits and eligibility;
  • Funding of benefits;
  • Procedures for allocating and delegating plan responsibilities;
  • Plan amendment and termination procedures;
  • Designation of named fiduciary; and
  • Required provisions for group health plans, such as COBRA rights and HIPAA compliance.

ERISA does not require plan administrators to provide a new SPD booklet every year. An updated SPD must be provided every five years if material modifications are made to the SPD’s information during that time period. If no changes are made, then an updated SPD must be provided every 10 years.  It is typical, however, for plan design changes to be made each year, particularly for group health plans.

A “wrap” document supplements existing documentation to fill in the missing ERISA-required provisions. When a wrap document is used, the ERISA plan document comprises two pieces: 1) the insurance certificate or benefits booklet; and 2) the wrap document itself.

Employers who fail to prepare an SPD may face serious penalties.  Contact the Benefits team at The Reschini Group to learn more and to set up a meeting.

Copyright 2020 The Reschini Group


The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

A La Carte: The Need to Customize Cyber Insurance

“You can’t propose that something be a universal space and at the same time keep control of it.”

So said Tim Berners-Lee, the man credited with inventing the World Wide Web.  And who would know better?

In that same spirit of seeing the Internet as a loose conglomeration of ideas and innovation, with billions of people passing through at any given time, no wonder the world of cyber insurance can be so difficult to pin down.

As a result, most cyber insurance is sold a la carte.  Because each business owner has a distinct set of needs, employee variables, interactions with other entities in the supply chain and customer channels, and other factors to consider, assembling an insurance plan to meet all of those needs – each of which remains fluid and subject to adjustment at all times – can require a lot of homework and planning.

Policies in this sphere are highly customized collections of modular coverage terms.  Premiums and payouts can depend on a company’s history, data risks and exposures, current practices, financial health, and more.  The wise business owner does not select a cyber protection policy based on cost, but rather on need.

When it works well, the premium for a cyber policy matches the business’ risk profile.  To save on premium costs, in other words, make your cybersecurity systems stronger and tighter.  Regardless of how well your cyber operations function, though, making sure you’re protected remains a paramount goal.

Contact the professionals at The Reschini Group for guidance on building a cyber insurance policy tailored to your precise business needs.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Short-Changed: Insuring the True Value of Your Business

The short-cut.  The close-shave.  The cut-corner.  Those tiny “cheats” and little white lies people think can save a few bucks – but that can cost dearly in the long-run sometimes.

Business insurance may present just such a temptation.  How easy would it appear to short-change the true cost of your business and all of its components, if it meant a lower premium to protect them?  But just as something that sounds too good to be true, usually is – taking that tempting path will only lead to a tougher financial patch when a claim is filed.

When securing coverage for a business, make sure you take everything into consideration and assign the proper value to it.  It’s more than physical property.  It also includes your equipment, buildings, contracts, business recovery and lost income, the cost to rebuild, and more.

Business owners may check the current market value of their property when arranging for insurance coverage, forgetting that the valuations used in claim adjustment aren’t dependent on “market value.”  You need to always remember that you’re insuring for the actual cash value or the replacement cost value of your property, depending on the coverage selected.  Additionally, blanket coverage can help in protecting all elements of a business’ property, as long as the values used are adequate at the time of a loss.

By knowingly undervaluing property to achieve savings on premiums, the only person you’re fooling is yourself.  By not anticipating the full brunt of a potential claim when the policy is written, the full cost of that claim cannot be covered should something happen and the policy is enforced.

Contact the professionals at The Reschini Group for guidance on business insurance that won’t leave you short-changed when you need it most.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Striking a Balance: Is a Section 125 Cafeteria Benefits Plan Right for You?

Balancing an employer’s desire to provide benefits with an employee’s need to secure them can be a challenge.  Factor in cost, tax obligations, and other variables, and the task becomes more daunting.

Enter Section 125 plans, more commonly known as cafeteria plans. While different types of these plans exist, each provides the opportunity to save money by reducing both the employer’s and employees’ tax liability.

A Section 125 plan may be established pursuant to rules found in the Internal Revenue Code (IRC) Section 125, which provides an exception to what is generally called the “constructive receipt doctrine.” Under the constructive receipt doctrine, offering an employee a choice between cash and an employee benefit requires that the amount that could have been received be included in the employee’s gross income.

A Section 125 plan allows employers to provide their employees with a choice between cash and certain qualified benefits without adverse tax consequences. Without a Section 125 plan, employee contributions can only be made with after-tax dollars.  The three basic forms of Section 125 plans are:

  • Premium Only Plan – The most basic and most popular. This plan allows employees to pay their portion of insurance premiums with pre-tax dollars, which in turn reduces both the employer’s and employees’ tax liability. Benefits that are typically offered within a Premium Only Plan include: health, dental, vision, accidental death and dismemberment and group term life insurance.
  • Flexible Spending Account – Employees may make pre-tax contributions to these accounts, from which an employee may seek reimbursement for expenses paid for child care, health plan deductibles and eligible medical expenses not otherwise covered under a health plan. A Flexible Spending Account allows an employee to increase his or her spendable income while also reducing the employer’s tax liability.
  • Full Cafeteria Plan – This permits the employer to make a non-elective contribution for every eligible employee. The employees may spend the employer contribution to purchase any of the benefits offered within the plan. In addition, the employee may contribute pre-tax dollars to purchase additional benefits beyond what he or she can purchase with the employer’s contribution.

Of course, many additional variables impact Section 125 plans, such as: offering employees a choice between cash and benefits; limitations on changing employee benefit selections during the plan year; access to any unused Flexible Spending Account funds; impact on other benefits such as Social Security or retirement benefits; administrative costs; and special considerations related to the Affordable Care Act.

It can be a difficult balance to strike, but the Benefits team at The Reschini Group can help determine the best course of action for your specific circumstances.  Contact us today to learn more and to set up a meeting.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Making Sure: When Is Third-Party Cyber Insurance Needed?

It’s a natural impulse, especially perhaps when it comes to purchasing insurance coverage.

And even more especially when the insurance coverage is for something as intimidating as cyber security – a vague, nondescript, fuzzy and murky world that many people don’t truly understand, whether they would admit it or not.

The natural impulse in question comes in the form of “making sure.”  Is my policy loaded up sufficiently to safeguard my organization?  Hmm, I can’t be certain.  Let’s load it up, just to “make sure.”  That is not necessarily a bad thing or a wrong decision.  Getting all the facts, of course, can provide greater clarity.

One area of cyber security insurance presents an option between first-party and third-party coverage, and the choice in this segment, at least, can be pretty easily understood and acted upon appropriately.

First-party cyber insurance covers the costs associated with being the victim of a hack.  That includes everything from notifying clients of the breach, to weathering the storm of lost revenue that typically follows.  Third-party cyber insurance helps cover the risks of being blamed for a breach, particularly if the company in question does assessments of digital security – a fairly narrow area of specialty – or when a gap in one’s own security is responsible for passing on a virus to another organization.

Policies have evolved to cover first-party exposures more extensively, but third-party exposures and coverage grants are still present and quite possibly required to be purchased.

But think of “third-party” as being the same as a lawsuit.  In that case, if a business is not providing media services for a fee or IT services, its third-party exposures probably revolve around the following typical coverages:

  • A Media clause offering coverage for claims alleging liability resulting from the dissemination of online or offline media material, including claims alleging copyright/trademark infringement, libel, slander, plagiarism or personal injury. This could include websites, social media sites, and chat rooms. 
  • A Privacy & Network Security clause would involve third party actions or lawsuits involving customer information, vendor information, or employee information.

Do you want to “make sure” when it comes to cyber coverage?  Contact the team of professionals at the Reschini Group for more information on cyber security options that make sense for your organization.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Candid Camera: The Use of Surveillance in Workers Compensation Claims

Ask anyone over the age of 40, and they can complete this old TV theme song:  “When you least expect it, you’re elected, you’re the star today!  Smile, you’re on…”

“Candid Camera!”  The program secretly filmed ordinary people put in intentionally silly or embarrassing situations, all for laughs.  It remained one of the most popular TV shows of the ‘60s and ‘70s, thanks largely to the hook of catching people in the act of being their real selves.

In the world of workers compensation insurance, catching people in the act of being their real selves happens too.  But it’s rarely, if ever, for laughs.  The use of surveillance has been and remains a central tool in identifying and minimizing insurance fraud.

Workers comp providers press for surveillance when a claim warrants additional proof of injury or disability pertaining to a claimant.  Obtaining proof of what an individual does in his or her off-hours can have direct implications on whether their claim is valid, and if so, to what degree.

The employer paying for workers comp coverage has or wants this additional, objective information on a claimant, and approaches the insurance carrier, who typically makes the decision on whether to pursue surveillance.  Third-party private investigators may be used.  Social media, thanks to its ubiquitous presence and its ability to share information and images immediately, also comes into play.

A workers comp claimant looking for a large settlement because of an inability to work due to a back injury should not be photographed or videotaped participating in a bowling league, or lifting large heavy packages into a friend’s pickup truck, for instance.  Capturing evidence like this, which contradicts a claim’s baseline argument, can frame mediation or a settlement in short order.

Surveillance can shorten the life of a claim, leading to settlements of lower, many times fairer, value.  Of course, if no evidence of fraud is discovered via surveillance, the settlement will be every bit as fair, based on the proven and justified accuracy of the claim.

It’s worth always keeping in mind, though, that the workers comp provider’s “candid camera” is ever at the ready, and that it is up to the claimant to file claims accordingly.

Contact the team of professionals at the Reschini Group for more information on surveillance and other tools to safeguard your organization’s workers comp coverage.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Do-It-Yourself?: The Pros and Cons of Self-Insurance

The concept of providing self-insurance sounds attractive, considering the potential cost savings and service upgrades.  But, as with any other important purchase, it’s always wise to remember the timeworn advice and “let the buyer beware,” or well-informed, at least.

The Self-Insurance Institute of America Inc. defines this option as follows:  “A self-insured group health plan (or a self-funded plan, as it is also called) is one in which the employer assumes the financial risk for providing health care benefits to its employees.  In practical terms, self-insured employers pay for each out-of-pocket expense as incurred instead of paying a fixed premium to an insurance carrier, which is known as a fully insured plan.  Typically, self-insured employers will set up a special trust fund to earmark money (corporate and employee contributions) to pay incurred claims.”

Pretty straightforward stuff, but those considering going the self-insured route also need to be aware of all of the factors involved, such as:

  • A variety of federal laws, including ERISA, HIPAA, COBRA, U.S. tax laws, and federal anti-discrimination laws (including the ADA), govern these plans.
  • Assuming greater risk means just that – the company must have the financial resources to weather years that bring large unexpected medical claim volumes.
  • These plans also require strong administrative skills to keep up with the continuous flow of claims, payment processing, accounting for employee contributions, and much more.

Advantages of self-insurance include:

  • Reduced insurance overhead costs
  • Reduced state premium taxes
  • Avoidance of state-mandated benefits
  • Employer control
  • Improved cash flow from not having to pre-pay for coverage
  • Choice of claim administrator

Most self-insured employers purchase stop-loss insurance on their self-insured health care benefit plans to reduce the risk of large individual claims or high claims for the entire plan.  There are two types of stop-loss insurance: 1) Individual/Specific – this shifts responsibility for a claim to the insurer once it exceeds a certain dollar amount; and 2) Aggregate – this means the insurer assumes responsibility once the total amount of claims for all employees reaches a specific threshold.

The most important step in making this decision would be to work with an experienced benefits professional.  Contact the Benefits team of professionals at The Reschini Group to assist in examining possible plan designs and making recommendations for your specific needs.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Protecting Sensitive Data: Cyber Insurance for Real Estate Businesses

The process of selling and purchasing real estate can be arduous enough.  Think about all of the highly sensitive and personal data that gets revealed and transferred – financial statements, tax returns, Social Security numbers, and more.

Then think of the bonanza a cyber criminal would reap from tapping into that cornucopia of information.  Cyber insurance quickly becomes a vital component of the real estate business’ arsenal.

According to insurance industry sources, cyber liability insurance helps real estate agents, commercial landlords, and other real estate professionals pay for expenses associated with data breaches.  If a cybersecurity breach would occur, a cyber liability policy could provide coverage for:

  • Notifying clients or customers about the breach.
  • Good-faith advertising or public relations campaigns to restore reputation.
  • Credit monitoring services for affected clients.
  • Cyber extortion demands.
  • Attorney’s fees.
  • Court costs.
  • Settlements or judgments.

Real estate businesses regularly handle sensitive customer data and perform sizeable transactions.  Should any of this electronically transmitted data get stolen or otherwise compromised, customers are immediately placed at risk of theft – including identity theft – and could file suit against the real estate business.

There is absolutely no reason to remain open to such exposure.  Contact the team of professionals at The Reschini Group for information on how we can fashion a cyber liability package for your organization.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.