The Pitfalls of the Small Business Owner Protect Your Assets!

The Pitfalls of the Small Business Owner

Protect Your Assets!

As “trusted advisors” we need to assist our clients and work in teams to help them grow and

protect their assets.Team Building Trust

Where does the process begin?The process begins with

someone being a detective!

Risk Management Process What are my exposures? Identify frequency and Severity. List alternatives.

A. Separation.B. Avoidance.C. Retention.D. Insurance.E. Transfer.F. Self-insurance. Regulated at the higher level.

Decide which solution. Implement. Monitor!!!!

It takes time and paperwork!

Think of a bank closing. Does a bank provide you with money with no

questions or paperwork. Think of the closing. Carriers may be providing

millions of dollars!

What to expect in a submission

Applications.Supplements.

Photos.Financials(?).

Be specific, clear on concise on your operation…Predictive Modeling!

Additional Considerations Size of the risk & needs. Complexity…Highly specialized? Global – Foreign, Repatriation. Operating multiple states – Statutorily Regulated. Services – Loss Control, Audit, Claims, Reviews!

• Trends

Employment Practice LiabilityCyber LiabilityEnvironmental

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Pollution: What Can Happen?

Fines & PenaltiesSuitsRemediationListed on Hazardous Waste & EPAUnable to Transfer the Asset!

What can cause pollutionSewageOrganic MatierialsSpecific waste materialsFuels and oilsChemicals

NB: Property Owners, Portfolios, Mfg., Retail,Schools, Colleges, Sports facilities…Pass the cost through triple net lease!

Types of Policies

I. Pollution Legal Liability-coverage for site liability to 3rd parties.

II. Site Cleanup and Legal Liability- Covers remediation and 3rd party liability.

III. Contractors Pollution – Provides coverage for contractors for their operations.

Employment Practice Liability

Generally cover issues in the following areas: Gender & Age. Sexual Harassment. Wrongful termination. Breach of contract. Invasion of Privacy. Libel & Slander. Mental Anguish.

Statistics• Employee lawsuits have risen 400% in 20

years.• Wrongful termination suits have risen 260% in

the same time period.• 41.5% of these claims have arisen at

companies with fewer than 100 employees. • At trial, employees have won 63% of the time.• Jury trials award around $217,000.• To settle before trial they average $75,000.

– Per the independent insurance agents of America.

EPLI Fast Tips

• Limits from $1M to $25M• Watch for 3rd Party Coverage• Wage & Hour Act –Sublimit not all provide.• Defense Cost Inside or Outside the Limit• Watch the BOP free coverage with regard to

limits and terms and conditions.• Application forms part of the contract!

Concealment, Misrepresentation…

Cyber Liability• First Party – Many non-IT firms obtain. Notify

clients of compromised information, purchase credit monitoring for client, public relation to regain confidence.

• Third Party – provides the “responsible” party with liability protection for the systems that allowed the breach to occur.

Cyber Facts

• In 2008, 50% of business said they had 1 to 5 cyber risks.

• The most expensive threats involve fraud, which averages a loss amount of $500,000.

• Many of the threats include viruses, abuse, data breach and laptop or pad thefts.

• By 2012, as many as 36% of all businesses had some real issue.

Considerations• Do a risk analysis. Do you collect credit card

payments, secure e-mails, secure sites?• Read your policy language. Be sure, if it is a

throw in your policy you understand your exposure and the coverage.

• Have a WISP (Written Information Security Program

• Utilize proper T&C’s on your website and set up management controls.

In conclusion, everyone is susceptible to issues!

What just happened?We didn’t solve your insurance

issues. We helped identify some key things to look for and trends in the industry to help you and/or your

clients to be better prepared.

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