by Eddie Rodriguez, CAIB | May 27, 2014 | Research Centre
So your bags are packed and you’re ready to go.
But are you?
Vacations are a great way to relieve stress and get away for a while, but a call to your broker will ensure your trip goes smoothly and you don’t return home to unwanted surprises.
Step 1 – make sure your home is ready for vacation too.
Standard wording in a homeowner insurance policy limits coverage if you’re away over the winter months or “heating” season. The limitation relates to water in your pipes freezing, which could happen if your heating system also decides to take a few days off.
This coverage exclusion can easily be resolved in one of two ways: you can shut off the water supply to your home and drain your pipes; or you can have someone you trust enter your home every 24 hours to confirm your heating system is still operating. Make sure they can reach you, or are able to have the problem fixed on your behalf.
If you’ve chosen to turn off your water and have your pipes drained, you should be aware that toilets don’t completely drain of water. Try adding antifreeze to the bowls to prevent freezing should the temperature drop. Consider a marine antifreeze that’s ecologically friendly.
There’s no need to leave electronics plugged in while you’re away. Even if they’re attached to surge protectors, it’s still safer to unplug them.
To give your home that still lived-in look, you may want to leave a few things plugged into time-delayed sensors. But don’t stop there! Make sure your mail and newspapers are being picked up, or stop their delivery. You should also have snow removal (or lawn cutting) taken care of while you’re away.
Leave a spare key with a friend or neighbour, instead of hiding one around your front door. Same goes for the inside of the house – don’t hide your jewellery or valuables; store them in a safety deposit box.
Posting your beautiful vacation photos on social media alerts others that your home is empty. Even if the photos are intended only for friends, they can easily extend beyond this group. Share your pictures once you’re home!
Lastly, many people rent cars when they’re on vacation and needlessly pay for insurance coverage. You may be surprised to learn you’re already covered under your policy. If not, your broker can arrange it at a fraction of the cost of what rental agencies charge, and explain limits on vehicle types, values and locales.
Bon Voyage!
by Eddie Rodriguez, CAIB | Jan 28, 2013 | Featured, Research Centre
It’s a fact: as you attempt to achieve your company’s goals, you will naturally take a number of risks that may bring about accidental losses to your property, to your income, through liability to others, etc.
Perish the thought!
The harsh reality is that, unless you are properly prepared to prevent these losses – and to “transfer” them to an insurance company when they do happen – the consequences could completely destroy or cripple your business. That’s why we prefer to call “risk exposures” and their potential consequences:
“The Monsters“
Calling them “The Monsters” helps us remember that these are not simply words you find on some “risk assessment report” that lies forgotten on your company’s intranet.
So, with the goal of helping you become aware of some of the monsters you need be on the look out for, let’s take a look at 8 loss scenarios specific to technology companies.
By the way, if you’re thinking “I’m fine. I have business insurance”, just remember that a General Liability insurance policy (which is the most common type of insurance a business would carry), would NOT protect you in the scenarios listed below. That’s because General Liability is there to protect you only against claims of property damage and bodily injury .
Tip: As you read each example below, ask yourself: Could this particular Monster attack my business? What are we doing (other than insurance) to mitigate the consequences of this Monster’s attack? Do we have the proper insurance protection for this scenario?
OK, here we go:
Errors and Omissions in general:
The first monster that IT companies and IT professionals must be aware of is the infamous “E & O” monster.
‘E & O” stands for Errors and Omissions, aka Professional Liability …. or, as it is known in other fields, “Malpractice liability”.
It’s usually your clients who will wake up the “E & O” Monster and send it out to get you, when they feel that the financial loss they’ve just suffered was caused by:
– your company’s ERROR (something you did wrong) or….
– an OMISSION (something you, a as professional, should have done, but didn’t).
The “E & O” Monster also visits you when, for example, your client claims that your product failed to perform as expected.
What really sucks is that you can be sued, even if you didn’t make a mistake!
For example, let’s say you design a new invoicing system for a client and the client alleges the final system lacks the functionality they wanted. This happens, even though you delivered what you thought was required. If your client sues you (and you have the right insurance coverage) your insurance company will defend you, which protects you from having to pay the potentially huge ‘defense costs’.
Monster # 2: Where’s My Data? *
How did “corrupted data” create a $900,000.00 loss for a software vendor?
A communications company sues for lost revenue and expenses to recover billing files for wireless customers.
The billing files were deleted by their software vendor while updating the system.
Indemnity Paid: $750,000 / Defense Costs Paid: $150,000
Monster # 3: Software Fails to Maintain Employee Hours *
A company provides timekeeping hardware and software to its customer.
The software doesn’t function correctly; it fails to maintain employee hours worked and correctly apply the hourly and overtime rate of pay.
The failure results in over/underpaying employees and the need to replace the timekeeping clocks. The customer sues the provider of the hardware and software.
Indemnity Paid: $440,000
Monster # 4: Missed deadlines cause a breach of contract *
It’s was time for a company-wide upgrade, and a firm decided to outsource to an information technology and management services company all the replacement of hardware, software and infrastructure as well as telecommunications and related services in order to upgrade its ability to serve customers and address any problems.
The information technology and management services firm fails to meet deadlines due to a high turnover of staff and a breakdown of project management.
Indemnity Reserve: $2,000,000 / Expense Paid: $500,000
Monster # 5: Breach of Security *
A telecommunications firm is sued by customers claiming they were sold a defective system with inadequate security protections.
The customers claim the faulty system allowed individuals to access their phone system and, as a result, they incurred fraudulent overseas charges.
Indemnity Paid: $345,000
Before we move on, here a couple of interesting facts about data breach losses:
Based on a sample of 900 breaches reported to insurance companies 86% of the data breaches were discovered by third-parties (not by the companies whose systems had been breached), and 96% were avoidable with simple precautions.
Monster # 6: Defending software that performed as promised *
How about getting sued when you have not done anything wrong and your product performs as expected?
A software company was sued by a customer after he used the company’s cost estimating software.
The software itself was found to have functioned perfectly. The error was on the part of the user who later underbid a work project. The customer eventually dropped the case, but only after considerable legal expenses were incurred by the software company.
Indemnity Paid: $0 / Defense Costs Paid: $175,000
Monster # 7: Inability to deliver on marketing “promises” *
A personal computer assembler is sued by a group of consumers in a class action suit.
The suit alleges that the company’s equipment did not live up to advertised specifications. Citing issues such as lack of speed and poor upgrade capability, the consumers demand full refunds.
Indemnity Paid: $1,600,000
Monster # 8: Web design and integration services * *
Our policyholder was hired to create an e-commerce website for
trading and selling valuable collectibles. The client later alleged that our policyholder failed to deliver a working website and negligently recommended that the client purchase Web-enabling software from another company that then abandoned the project and the software.
Indemnity Paid: $180,000
Defense Costs Paid: $558,928
* Loss Scenarios (examples) marked with * provided by Chubb Insurance Company of Canada.
* * Loss Scenarios (examples) marked with ** provided by Travelers Canada.
I’ve limited this article to the brief explanation about Errors and Omissions and the other 7 loss scenarios because I know that most people won’t be naturally inclined to reading about insurance.
But when you think about it, being able to learn about real-life examples of what could happen to your business (without actually experiencing it) is a very simple way to identify potential risks ….. and that, my friend, is precisely step #1 to implementing a good risk management plan.
Insurance can help you when/if bad stuff happens. But there’s tons of stuff you can do, aside from purchasing insurance, to protect your business.
by Eddie Rodriguez, CAIB | Dec 13, 2012 | Research Centre
Let’s be honest: Even if you have a good understanding of what insurance does for you or for your business, deep inside, we all believe that peace of mind should be free, and that we shouldn’t have to pay a “premium” to enjoy it.
In reality, though, we all know that our modern society would not be able to function without the safety net provided by insurance.
As you attempt to achieve your company’s goals you will naturally take a number of risks that may bring about accidental losses (to your property, your income, through liability to others, etc.).
While some losses you may be able to absorb (pay for) yourself, in many cases you will want to ‘transfer the risk’ and costs associated with those loses to someone else: an insurance company.
Click here to see some some scenarios where you would be happy that the risk was transferred to an insurance company, and that the loss did not directly impact your company’s ability to survive and grow.
By the way, risk management is not merely about insurance.
Insurance is simply one of many ‘risk management techniques’ you’ll need to implement in order to achieve your growth and profitability goals.
Still, a day doesn’t go by without someone telling me that they really don’t enjoy – OK, they hate – paying for something they can’t see or touch, and hope they never have to use.
So, what could possibly be worse than paying for insurance?
Paying for it month after month, year after year … believing that “you’re covered”, only to find out – when the unexpected happens – that you are NOT.
Ouch!
How do you prevent that from happening to you?
Here’s the most important message I want to share with you in this article: Traditional ‘business insurance’ and traditional “Commercial General Liability” (CGL) policies are not sufficient to protect technology businesses against what I call “The Monsters” (risks).
In fact, as an IT consultant, software developer, game developer, web designer, owner/executive in charge of a data centre or other type of tech business you face risks that are usually excluded from coverage in regular business insurance policies.
Regardless of how mysterious, complex, or boring you find insurance, you must make sure that your policy provides coverage for the types of risks your technology business is exposed to.
Some of the coverages that you may need include:
- Technology-Specific Errors & Omissions
- Copyright or Trademark Infringement Liability Protection
- Property – Including, as needed, EDP Property and R & D Property
- Network and Information Security Liability
- Reputation Injury and Communication Liability
- Business Interruption
- Commercial General Liability
- Equipment breakdown coverage
- Media Liability Protection
Also, ask your broker to show you that the policy definitions of “business activities” actually match what your business does, and if not, ask if the policy allows for inclusion of your own definitions.
It’s true that properly insuring an IT business can be tricky. Our industry has product managers at insurance companies struggling to figure out ways of covering you from “social-media risks” and other Monsters that didn’t exist a few years ago.
The good news is leading insurance companies are finally paying attention. They’ve developed quality insurance products designed specifically to protect tech companies.
By the way, I know that some smaller tech firms try to get by without proper “risk transfer” (insurance) plans.
If you know anyone operating without an insurance safety net, please remind them that one of the truly sad realities of today’s business world is that you can be sued … even when you didn’t do anything wrong … and even after your software or service performed as expected.
Sure, you might win the lawsuit … after trading a big chunk of your hard-earned money for legal defense fees.
In fact, legal costs generally represent a large portion of the overall Professional Liability claims cost. That’s due to the need for expert (read: more expensive) witnesses and lawyers.
Bottom line – given the complexities of a technical business it makes sense to seek out well-designed, technology-specific insurance coverage from insurance companies – and brokers – who specialize in technology. That is the first step in eliminating any looming doubts about whether or not you are covered.
by Eddie Rodriguez, CAIB | Jul 20, 2011 | Research Centre
You’ll be happy to know that we work with several insurance companies who offer specialized insurance policies and coverages for the IT industry.
Because not all insurance companies (or their IT products) are the same, we’ve done the homework for you and have sourced out leading insurers that cater to various sub-segments of the the IT industry … from one-person firms to large multi-national companies.
Here’s are the types of IT businesses we work with – Is yours listed?
- I.T. Consultants
- Software and game developers
- Computer Training
- Data processors
- Data Storage/Retrieval Services
- Website Developers
- Web hosting and design facilities
- Access providers and co-location facilities
- Systems integrators, value-added resellers, and consultants
- Hardware, equipment & component manufacturer / assemblers
- Hardware Sales & Support
- Medical technology companies
- Internet, networking and other communications services.
and also:
- Telephone operations
- Telegraph operations
- Personal communications services
- Cable system operations
- Telecommunications component and equipment manufacturers
- Information service providers
- Interactive media services
- Telecommunications infrastructure development projects.
If you’re not sure if your type of IT business fits into one of the above categories, go ahead and contact us, using this brief online form.
The key thing to remember is that we can custom-tailor an Insurance Protection Plan that fits your needs.
