January 24, 2024  

Employment Practices Liability Insurance – Hindsight is 20/20

Today my client forwarded me a letter received in the mail from an Employment Law Firm alleging the following from a former employee:

👉 Retaliation
👉 Discrimination
👉 Harassment
👉 Failure to Provide Meal Periods
👉 Failure to Provide Rest Breaks
👉 Failure to Issue Accurate & Itemized Wage Statements
👉 Failure to Indemnify
👉 Failure to Provide Wages Due Upon Termination

-Client: “Does this fall under any insurance we have?”

-Me: “This unfortunately doesn’t fall under general liability or work comp. This would be under Employment Practices Liability Insurance which we touched on back in June.”

You see, together we went through the process of completing an application and taking it out to market for quotes seven months ago.

Pricing came in between $19k-$25k annually depending on the limits and retention/deductible chosen.

Due to the cost, my client elected to pass this time around.

Hindsight is always 20/20, but I am afraid this allegation is going to result in an expense for my client that will significantly eclipse the annual premium and retention that ultimately would have been paid for an EPL insurance policy quoted last June.

EPL is one of those coverage’s I cannot recommend enough, especially in this litigious hotbed of Southern California.

In my 16+ years in this profession, I have told this story more times than I can count with my fingers and it’s a terrible feeling to have to explain this in a time of need.

Managing people is arguably the toughest part of running an business.

I encourage you not to overlook Employment Practices Liability insurance for your organization. This area of coverage is NOT included within a Workers Compensation or General Liability insurance policy. It is a separate policy in itself.

November 16, 2023  

Second Harvest Food Bank of Orange County

Yesterday I was grateful to spend a few hours with this ProVisors crew who served a few hours during a workday to pack meals for those in need.

Thank you to the Second Harvest Food Bank of Orange County for allowing us to volunteer.

Second Harvest’s mission is to provide dignified, equitable and consistent access to nutritious food, creating a foundation for community health. I highly recommend checking them out and volunteering if possible.

Second Harvest offers volunteer opportunities for ages 13 and older with a chaperone in their Distribution Center.

Check out some of the pictures of the day:

November 3, 2023  

Why Are Commercial Property Insurance Costs So High Right Now?

The market for commercial property insurance has been getting more and more challenging over the past couple of years and it’s feeling like there’s no immediate end in sight.

Over the past 12 months, we’ve seen countless insured’s get non-renewed on their property insurance policies even with no claims. Very few markets are looking to write new business unless a risk is impeccable. Underwriting is tight and it seems like you have to go through hell and back providing loads of information to carriers for review.

In many cases, coverage is getting cut in half with limitations and endorsements and premium is doubling. It’s frustrating to be in the thick of all of it. No doubt, this is the hardest property insurance market we’ve seen in a generation.

So, why are commercial property insurance costs so high you ask?

Here are several factors contributing to premium increases for commercial property insurance coverage:

Catastrophe Losses: Hurricanes, floods, wildfires, tornadoes, winter storms. The frequency and severity of major catastrophes continue to stress the industry. In five of the past six years, these events have caused annual insured losses of more than $100B. Last year, total insured losses globally were estimated at a shocking $140B.

Reinsurance: Catastrophic events are a major factor driving up the cost of reinsurance — an expense carriers need to pass along to policyholders. Call it a perfect storm, but inflation and the economic environment has been making reinsurers more selective.

Underinsurance: High inflation has driven the cost of materials and services much higher, but not even half of business owners say they have increased their policy limits to accurately reflect what it would take to replace insured property now. Policyholders must have accurate valuations for their assets so they don’t come up short after a loss, and premiums will reflect those higher values.

Property Replacement Costs: Led by sizable increase in the cost of structural steel and the price of lumber, construction costs have jumped over the past few years. Similarly, machinery and equipment costs have increased over the same period. Also, many are still dealing with materials shortages and supply chain disruptions.

Skilled Labor Shortage: Nearly half of reconstruction costs are wages and salaries, which have increased over the past few years. Even with higher pay, contractors are struggling to find skilled labor and are delaying projects as a result. Higher rebuilding costs and longer delays may trigger an increase in business interruption losses.

Property Rate Need: For years, rising loss trends have outpaced rate increases, primarily because of the costs of catastrophes. Carriers need to continue to raise rates to try to close the gap.

In a nutshell, it’s a “perfect storm” of these variables that have really put the commercial property insurance market in a tough spot. And in talking to many professionals in the industry, this doesn’t seem to be ending any time soon. Maybe by way of a miracle we can get a year with [much] lower than average catastrophe loss? That would be a good start. And we definitely need inflation to level out too. Maybe we can get the perfect storm to happen the opposite way to get us back on track for a more stabilized commercial property insurance market. Fingers crossed.

Source: Travelers

October 16, 2023  

Homeless Encampment Affecting Business Insurance Coverage

Only in California.

I have a clothing importer/distributor client in Los Angeles where we have seven different insurance policies/coverages spread out between six carriers.

We’ve been working on trying to find a standard carrier that would be willing to write their business auto, general/products liability, excess liability, property, and workers compensation insurance policies so that they’re packaged together with a single carrier.

Given the state of the hard insurance market, primarily the commercial auto and commercial property, I haven’t been having much luck getting underwriters to consider.

But there was a carrier that was willing to consider this one subject to loss control visit prior to offering quote terms.

Well the loss control inspection was formally done and lo and behold, the carrier declined to quote this for us. One of the primary reasons, because of the homeless encampment behind their building which sits off the train tracks.

Only in California.

If the property insurance market wasn’t tough enough already, a homeless encampment is preventing us from getting a carrier to offer coverage for my insured. Oh, they don’t even own the building. They’re a tenant. But it doesn’t matter with millions of dollars of contents sitting within the building.

This video encapsulates the carrier’s reasoning for declining to quote.

These homeless encampments notoriously burn. You see it all the time. As you can see in this video, the adjacent building is very exposed to the out of control fire and can easily catch fire as a result.

Super frustrating. Hard to believe the world we’re living in sometimes in California. This was a first for me in terms of getting declined by a carrier for this reason.

That’s it, that’s the post.

Thanks for reading.

October 11, 2023  

75% of Small Businesses Are Underinsured According to New Survey

According to the 2023 Hiscox Underinsurance in Small Business Report, which surveyed 1,000 small businesses last July, just about half of small businesses’ revenues are on the rise.

47% of small businesses surveyed have experienced a revenue increase since 2021. 32% have had a decrease in revenue.

Those businesses that have expanded in the past two years may now be underinsured, while those that have seen revenues drop may be paying more than they need to.

The 2023 Hiscox Underinsurance in Small Business Report “gauges US businesses’ protection against potential lawsuits and claims, as well as testing their understanding of insurance policies.”

The survey found widespread insurance illiteracy and a nationwide underinsurance crisis, leaving small businesses open to loss risks ranging from property damage to lawsuits.

Of the small businesses participating in the survey, 75% of small businesses in the U.S. do not possess sufficient insurance.

The type of coverage most businesses have is also important. When asked what kind of coverage businesses had, this is what Hiscox found:

  • 65% had general liability coverage
  • 45% had property insurance
  • 35% had worker’s compensation insurance
  • 32% had professional liability insurance

Of those businesses that had coverage, 68% of those with coverage purchased it because they were concerned about the consequences of a potential claim. Only 20% noted they purchased insurance because a vendor or partner mandated it.

A growing business is a good thing but it’s important to be sure your insurance coverage keeps up. The importance of working with a knowledgeable insurance broker is paramount. And not only a broker that is knowledgeable, but one who is proactive and continuously working with your business as it grows to ensure coverage is tailored to meet the risk exposures that come with expansion.

Have questions about your business insurance?

See: 2023 Hiscox Underinsurance in Small Business Report

September 29, 2023  

Cyber Risks Remain a Top Business Concern

The 2023 Travelers Risk Index reveals that in an ever-changing world filled with fluctuating and emerging threats, cyber risks remain a top overall business concern.

The Travelers Risk Index provides an annual snapshot of risk viewpoints from over 1,200 business decision makers across the country. The 2023 survey looks at the top concerns of U.S. businesses and how companies are dealing with the risks they face every day. The survey participants represent small, mid-sized and large businesses from a variety of industries including construction, real estate, healthcare, technology, retail, transportation, wholesalers, professional services, manufacturing, banking/financial services, publicly traded, nonprofit and public sector.

Notably, 58% of survey participants say they worry about cyber risks.

The cyber concerns facing organizations include unauthorized access to financial accounts, a security breach/someone hacking into a system, system glitches, ransomware and someone using a phishing email to fool employees into transferring funds out of an organization.

See the results of the 2023 Travelers Risk Index and tips HERE.

September 13, 2023  

MGM Cyber Hack Has its Las Vegas Hotels Resorting to Cash Bars, Paper Vouchers

MGM Resorts International is a large publicly traded company with billions of dollars of annual revenues. So, reading the news about the cyber attack they’re currently facing might have you thinking that something like this only happens to those large, multi-billion publicly traded companies.

The reality, however, is that ALL businesses in today’s world, large and small, are exposed to cyber attacks in some way, shape of form.

First, a quick update to what’s going on here:

News like this takes center stage do to the notoriety of MGM Resorts International. However, let this be a lesson that the issues that MGM is facing are the same issues everyday main street businesses face from a cyber attack, just on a smaller scale.

Think about the repercussions of this cyber attack. Here’s a list to get you thinking:

First Party Damages

  • Loss of electronic data: the cost to repair damaged software or replace lost or stolen data from the cyber attack.
  • Cyber extortion: cyber criminals holding data and/or information hostage for a ransom; cost to help pay for the ransom.
  • Business interruption/loss of income: a data breach or cyber attack leaves you unable to operate your business. The lost income and expenses add up fast here.
  • Security fixes and cyber forensics: Costs of upgrading your security and investigating the data breach.
  • Notification and identity protection for affected customers: Cost of notifying customers impacted by data breaches and paying for identity protection.
  • Fraud and credit monitoring services: Cost of credit monitoring for any customers impacted by a data breach.
  • The impact on your business reputation: Costs of handling public relations and repairing the damage to your business reputation. Libel, copyright infringement, defamation.

Third-Party Liability

  • Damage to a third-party system (in case of an accidental virus transmission, for example)
  • Network Security and Privacy Liability: Liability for alleged negligence or that you failed to properly protect customer information.
  • Media Liability Claims: This includes accusations of libel, slander, fraud, etc.
  • Regulatory proceedings and or fines form regulatory bodies
  • Legal costs, settlements, and damage awards

So, what if this happened to your business tomorrow? You come to work in the morning and realize that you’re locked out of your entire network and not a single employee can get a single task done.

You have a ransom demand of $400,000 from a hacker.

Where do you start? Are you capable of doing this all alone? To pay the costs out of pocket? To deal with the IT forensics and loss of data? The network fixes and trying to get back to where you were before you shut down the night before?

If this reality hits you hard in the face, cyber liability/data breach insurance coverage is something you should consider to address these very circumstances.

Cyber insurance programs can team up with your managed IT provider to help with the list of costs and expenses to navigate through the mess caused by a cyber attack. And carriers have deep resources to help fix the mess and get you back to business much faster and more efficiently than trying to deal with this sort of mess alone.

There are many cyber insurance options out there. No two are the same. It’s important to work with a provider who knows the ins and outs of cyber insurance coverage.

Contact me today if you have questions about cyber insurance or would like to look at coverage and cost options.

Let’s hope that MGM gets this settled as quickly as possible for all involved.

September 4, 2023  

What is the Terrorism Risk Insurance Act (TRIA)?

Terrorism is often an excluded peril on property and casualty insurance policies because the losses could prove to be too catastrophic for private insurers to underwrite coverage or because the inclusion of terrorism coverage would make policy premiums unaffordable for consumers. This uninsurability makes government assistance necessary.

The Terrorism Risk Insurance Act (TRIA) was enacted in direct response to the terrorist attacks on September 11, 2001. The act created a reinsurance facility allowing the federal government to share in losses with private insurers in the event a certified act of terrorism took place.

TRIA protects consumers by addressing market disruptions and ensuring continued widespread availability and affordability of commercial property and casualty insurance for terrorism risk.

TRIA is a temporary program that has been extended by a number of reauthorization acts. The program is set to expire December 31, 2027.

Authority

The act allowed the Department of the Treasury to establish the Terrorism Risk Insurance Program, administered by the Secretary of the Treasury. The legislation defined an act of terrorism as any act certified by the Secretary of Treasury, in cooperation with the Secretary of Homeland Security and Attorney General, to be an act of terrorism that endangered human life, property, or infrastructure and that was committed by an individual or group of people acting on behalf of any foreign person or interest.

The 2007 reauthorization act amended this definition to include acts committed by persons with no foreign affiliation to also be treated as acts of terrorism.

An act must result in at least $5 million in property and casualty insurance losses to be certified as an act of terrorism.

Insurance Limits

The program has a trigger applying to certified acts of terrorism.

In 2015, this trigger was insurance losses exceeding $100 million, and this amount increases incrementally by $20 million per year until reaching $200 million in 2020 (meaning the trigger amount for any year after 2020 is also $200 million). Private insurers and the government will share losses greater than the coverage trigger and less than the program cap, which is $100 billion.

The insurer deductible is 20% of all covered losses. Once the deductible is met, the insurance companies have a coshare, or share of the loss. This coshare amount started at 15% in 2015, meaning the government paid for 85% of covered losses, and incrementally increased until reaching 20% in 2020 (and thereafter), meaning the government pays for 80% of covered losses.

August 10, 2023  

Hired and Non-Owned Auto Liability Best Practices

As a business you may rely on your employees to run errands on your behalf, visit customers or clients, or even rent vehicles for business purposes.

Consider this, a business has outside sales reps driving their own personal vehicles to make sales calls and visit customers.

One salesperson was driving their vehicle to visit a customer when she hit the stopped car in front of her at an intersection. The sales rep was cited for the accident. A lawsuit was filed by the injured party naming both the salesperson and her employer as defendants.

The salesperson’s personal auto carrier provided defense for her and the businesses hired and non owned auto insurance coverage provided defense on behalf of the business/her employer.

Now consider this, before you sent the salesperson out to the sales appointment on behalf of your company, you did not take the time to make sure that your employee had adequate personal auto insurance.

The driver of the vehicle your employee struck suffers major injuries and will require significant medical and therapeutic treatment and your employee driver does not have the personal auto liability limits to help cover the injured parties medical expenses.

Many states have requirements when it comes to having personal auto insurance but what practices and requirements should your organization have in place to adequately protect you from financial and reputational loss?

Here are four ways to make this safe play to help protect your organization and your drivers:

1- Create a plan for running motor vehicle records or MVR’s. The plans should require that you:

  • Run MVR’s at the time of hire or before you allow an employee to drive on your company’s behalf.
  • Run MVR’s at least annually for employees that drive regularly.
  • If your organization participates in a monitored driver safety program MVRs should also be obtained on drivers who exhibit repeat driving offenses.

2- Determine MVR acceptability. In general, drivers with more than two minor moving violations in the last three years or drivers with any major moving violations in the last five years should be considered ineligible.

3- Verify adequate personal insurance limits at least annually. All drivers who drive their vehicles on your behalf should maintain the insurance limits of at least 100/300 thousand personal auto liability limits.

4- Train your staff on appropriate driving behaviors. Your specific training needs depend on vehicle type, use, and frequency but all drivers that drive on your behalf should receive annual distracted driving training at a very minimum.

Help make your employee drivers safer on the road so you can maintain focus on your businesses primary mission. A simple company errand or routine driving by employees on behalf of your company can be a major risk exposure for your business.

Need help developing a Hired and Non-Owned Auto Liability Best Practices plan for your business? Contact me today for resources.

July 4, 2023  

Happy 4th of July!

Happy Fourth of July! This Independence Day, let freedom ring & let the celebrations soar! Join me in honoring our nation & enjoy a day filled with family, friends & all things red, white & blue! From my family to yours…

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