Should you add Additional Insureds?
The entry below is featured in this month’s TechAssure Newsletter.
Contributed by Noel Bertman
Chubb Group of Insurance Companies
Risk managers, CFOs and CEOs are routinely asked by their clients to obtain additional insured status under their liability policies. Too often, this request is agreed to and passed through to the insurance company without thought of the consequences to your company.
Some points to consider before you act on the next request:
- Limits of Insurance
Have all considerations been undertaken to ensure that you are not giving away the coverage you’ve purchased for your own defense? Many insurance policies will defend and indemnify your client if you agreed to do so in a written contract. The money spent on defending your client could potentially be reducing your liability limits (in policies where defense expenses reduce the limits). By accepting only the liability for exposure within your control, you can retain the most value from the coverage for yourself. An example might be limiting status to financial interest only.
- Reporting
Some policies have provisions that all insureds (includes additional insureds) have the duty to report claims in a timely manner to the insurance carrier. For example, can the additional insured prejudice my coverage by untimely reporting? - Separation of Insured Provision
If your policy contains this coverage, you may be allowing the additional insured (your client) to use your own policy to bring suit against you. - Blanket Additional Insured Wording
Most contracts require you to indemnify and hold your client harmless. Many blanket additional insured provisions are very generic, and can apply to many different situations.
Therefore, you need to make sure that the additional insured provision is tailored to comply with your contract. It is always best to review the additional insured provision and ask yourself, “Are there limitations in the policy regarding retention of defense counsel and control of a suit that require certain pre-loss agreement that is not in the contract?”
Data Breach Insurance and Prevention
Security of private and or sensitive data is an increasing issue for most of our clients. With differing statutory laws and regulations, it’s important to consider your prevention methods and how your insurance program can help. This video offered by Insurance Journal features David Garrett, managing director of Stroz Friedberg’s San Francisco office, discussing risks of a data breach and how your insurance program could provide coverage.
5 Ways to Stop a Cyber Hacker
1. Hacker: Often times a hacker is a personal friend that can guess your password.
Solution: The password you create should have multiple different characters, numbers, and symbols. Often times, people make their passwords too simple and they can be easily guessed.
2. Hacker: Hackers can click on the, “forgot password,” link on the login page. From there they will be asked a series of simple questions that YOU set the answer to. Usually, they know the answer because it is common knowledge about you.
Solution: Pick an extremely difficult security question. Almost anyone can find out your, “dog’s name.” Choose a question that only YOU know.
3. Hacker: Hackers who want to find out your username and password send out Phishing emails. These emails will ask you to login to your account in an illegitimate way.
Solution: Disregard “phishing emails.” They can often take credit card numbers, banking numbers, and social security numbers.
4. Hacker: Hackers can easily install spyware on your computer. Spyware is hidden software that records all of your keystrokes and screen shots. This is usually the result of downloading questionable files.
Solution: Avoid spyware by buying a good anti-spyware system. It will search your computer and destroy any spyware.
5. Hacker: A hacker has usually been a trusted friend that already knows your password because you told them.
Solution: Do not tell anyone your password! That is top secret information!
Social Networking Extortion, The New Threat
Just like the rest of cyberspace, cyber extortion is taking some new turns into social networking. Just last week a man in Chino, CA was charged with extortion after he allededly threatened to send millions of emails and social networking messages that maligned a large life insurance company unless he was paid almost $200,000. It seems that through a series of emails and web postings, he allegedly warned employees, executives and a board member of the insurance ompany that their reputation would be ruined if his demands were not met. According to the prosecutors in the case, the defendant threatened to spam more than 6M people with links to a website that was highly critical of the various financial products offered by the insurance company. The defendant also allegedly described himself as a “huge social networker” who would use his contacts to send more than 200,000 people messages. It seems the defendants threats were due to his unhappiness related to the performance of his life insurance.
Cyber Liability and comprehensive Technology Errors & Omissions policies can include coverage for “cyber extortion” claims. This coverage is either included at the full policy limit or can be subject to a lessor sub-limit. We’ve not seen very many cyber extortion cases among our client base, however with the social networking world playing a bigger and bigger part of business reputation, we expect this type of case to be on the rise. Take a moment to consider how you might be at risk.
Earthquake Preparedness
It seems of late that places all over the world are moving and shaking and yesterday’s 7.2 earthquake in Mexico was a little too close to our own backyards for comfort. Being in one of the most active areas of the country for earthquakes, we wanted to take a moment to address this important subject.
While homeowners insurers are required to offer earthquake insurance every couple years, commercial insurers have no such duty. Commercial earthquake insurance is costly in California and the Pacific Northwest and, for many of our clients, the deductible you would have on a policy would be as high if not higher than the value of your property.
While we are happy to provide quotes for earthquake insurance if you should wish to analyze the coverage in relation to the costs, you should look first and foremost toward risk mitigation to avoid the potential for serious losses following an earthquake. There are companies in California that sell EQ safety products, such as fasteners for securing large pieces of furniture and equipment. One such company is Q-Safety products in Southern California. The vast array of products for office and home are intended to protect your property from damage, as well as your staff from injury due to falling objects.
We encourage all our clients and blog readers to embrace a pro-active, risk mitigation plan and do whatever is possible to prevent loss that at this point is not insured. For most companies, the costs involved to secure your property via products available are most certainly going to be less than purchasing an insurance policy.
The protection of your assets and safety of your employees is important to us. If you have any questions or wish to discuss earthquake disaster planning in greater detail, please contact us. We are here to serve you.
HSBC Data Breach, Worse than Originally Reported
HSBC has revealed that a former employee stole the personal details of about 24 000 clients of its private bank in Switzerland in a major security breach three years ago, reports the Financial Times. HSBC said a data theft it uncovered last year was far more serious than it first thought. Initially the bank believed that fewer than 10 customers had been affected. Europe’s biggest bank revealed that Hervé Falciani, a former computer spec ialist who fled to France, had stolen the details from its Geneva private bank three years ago. The breach, which affected 15 per cent of HSBC’s total private client base, will come as a serious blow to the reputation of the bank. They have since spent in excess of $93M on security and software upgrades to their system.
We are hearing of more and more high profile security breaches in the news. There was a report that came out a couple weeks back indicating the cost for notification and investigation of a breach is $250 per person. It’s important to stop and think about who has access to your business data, how they have access to it, and what are the possibilities? Laptops stolen out of a cars and disgruntled employees wanting to take revenge are the most likely scenarios we discuss with our clients. We constantly stress the importance of having Network Security coverage as part of your Technology Errors & Omissions policy. Theft of data is taken very seriously by the date and federal government. A solid network infrastructure protecting data could keep your business from high dollar notification costs, reputation damage and lost revenue.
The New Age of Cyber Risk
Over the past two decades, business operating efficiency has been catapulted to higher levels thanks to the rapid development and use of technology. Customer information can now be accessed from almost anywhere on the globe. Millions of transactions between consumers and businesses take place online every single day and companies now advertise on every corner of the cyber world. Unfortunately, as companies rely more and more on technology they inadvertently open themselves up to a host of new risks. And with no end in sight of technological developments, businesses must be aware of the increase in first and third party exposures as new technologies are implemented into their day-‐to-‐day operations. This article is the first of two parts and will discuss some of these new exposures that many now call cyber risks. To read the entire article, please click here.
This article is posted from and authored by INSUREtrust. www.insuretrust.com
CSI January Retreat
CSI just finished another successful January retreat last Friday. It was held at the Lodge at Tiburon in Marin County. Our fabulous team gathered for a day of programming that included presentations from different deparments in the company, coupled with discussions about The No Complaining Rule by Jon Gordon. Here are a few pictures from our day:
