Insured for that? Without an independent review of your policies, the answer could be no.
After you suffer a loss is the worst time to discover your business doesn’t have the coverage it needs.
Hack attacks, embezzlement, sexual harassment claims – every day the headlines are full of potential business nightmares. Then the real surprise happens: the coverage you thought you had wasn’t specific enough or you didn’t have the right product. Without the right insurance, just one event can blow a hole in your bottom line. Which is why periodic independent insurance reviews are critical.
An impartial reviewer looks for gaps in coverage in collaboration with a client and a representative of the current insurance company. During the review, clients are asked to consider:
- What aspect of my business is most important?
- Where should I focus my insurance spending?
- How have threats changed since I purchased my business insurance?
- With the coverage I have today, how would I recover from a catastrophic loss?
It’s not uncommon for business owners to discover they don’t have sufficient coverage in the following areas:
1. Employee issues
An employee embezzles $3 million from a law firm. In another case, a worker accuses a supervisor of making unwanted advances. Two different issues; two different kinds of coverage:
- Employee dishonesty policies provide coverage for the theft of money or property by trusted employees.
- Employment Practice Liability Insurance (EPLI) covers claims associated with human resources matters, such as sexual harassment, wrongful termination suits and hostile work environment claims. This coverage sometimes includes attorney fees and coverage for some regulatory fines.
2. Cyber attack
A hacker attacks the computer system at a physician’s office and steals patient information. Federal HIPPA (Health Insurance Portability and Accountability Act) guidelines require doctors to safeguard personal patient information. Disclosure of patient information by a hacker could expose the doctor or medical provider to fines for violating HIPPA.
- Cyber Insurance generally covers costs associated with informing those whose information was compromised and offering them credit monitoring. Depending on the policy, it may pay for the services of a public relations firm to minimize damage to your company’s reputation and provide Business Income coverage during the restoration of your data or network. Cyber Insurance should also cover your legal costs if third parties sue you because of the release of confidential information.
3. Electronic transfer of money
Similarly, today’s technology provides thieves with ever-changing methods to obtain funds earned by someone else. A traditional business policy does not cover the losses incurred by funds transferred without your authorization into another account.
This type of loss can be covered under a stand-alone Crime Coverage policy or in a Cyber Insurance policy. Coverage may also be part of standard package, which includes a Property Extension Endorsement. It is not uncommon to have some form of supplemental crime coverage as part of a standard insurance package’s property section. However, you’ll want to make sure the limits are high enough to meet your potential risk.
4. Property debris removal
When disaster strikes a business, most insureds are not aware that their Property Insurance policy may cover only repairing the damaged areas to their original state and using the same materials. Additional costs to comply with today’s codes, including changes due to the Americans with Disabilities Act (ADA), may not be covered.
- Building ordinance insurance is recommended to cover costs associated with clean-up operations, debris removal and any additional expenses to bring the property up to the minimum codes. Coverage is subject to the limits available.
A business owner discovers a decades-old underground fuel oil storage tank is leaking. The estimate to dig up the tank and remove and replace contaminated soil can exceed $100,000. A standard
policy has a $10,000 limit for this type of loss. Many insurance carriers will increase the limit if requested. However, if your business has a higher risk of exposure to a pollution loss, you may want to consider additional coverage.
- Pollution Insurance is advisable to protect a company from losses caused by pollution events. Lawsuits stemming from alleged contamination by any gas, liquid, solid, smoke, etc. is generally covered as well. Coverage may also include cleanup costs, losses from interruption to your business and damage to your business’ buildings and contents.
A recent insurance review at a large company revealed unexpected gaps in employee dishonesty coverage, cyber coverage, and employment practices liability. The reviewer’s report provided owners the information needed to purchase appropriate coverage — and peace of mind. An impartial review of your policies by an independent insurance expert will highlight any deficiencies or overlapping coverage.
As quickly as the world around us changes, so might your needs for new or specific coverages for your business. Impartial insurance reviews every three years can ensure your coverage is sufficient for current threats and that there are no unhappy insurance surprises.
Theresa A. Kane is a Certified Insurance Counselor and Director of Insurance Services with Boyer & Ritter LLC, where she provides impartial insurance reviews and cost-effective guidance for clients’ coverage needs. Boyer & Ritter does not sell any insurance products nor favor any provider. Contact Theresa at 717-761-7210 or firstname.lastname@example.org