Wednesday, December 11, 2013

Is filing a claim worth it if the value isn't that high?

Is filing a 

home or renters insurance claim worth it if the value isn't that high?  Items worth: ~$1500  Deductible: $1000

A few questions to ask yourself:
  • Could this turn into a larger claim down the line?
  • Am I willing to pay a higher premium if I make this claim?
  • If I'm not sure if I'm going to make a claim for $500, would I be better off at a $1,500 or $2,500 deductible?

So here's the rub.  One claim isn't going to kill you and may not affect your premium at all.  You could lose any 'claims free discount' that some companies offer. 

If you have another big claim such as a water damage claim, you now have a severe claim and have a frequency of claims (2), so you may not qualify for the best rates anymore.  
Also, keep in mind that many brokers will have to report your claim to the company even if you don't want them to because of the nature of their contractual relationship with the carrier.

Creating a spreadsheet along with when, where, and the cost of items is a great way to keep track of your household inventory.  There is also software that will do this for you and lets you scan in receipts and attach pictures (
).  By going room by room and listing everything, you will have a better case when speaking to adjustors.

Schedule any heirlooms onto the policy with a specific agreed value.  Also, you can raise the limit for jewelry by endorsement.

This blog was a combination of two questions I answered on Quora.  See my answer and others here:

Tuesday, November 5, 2013

4 Things to Think about Before Subleasing your Commercial Space

Why Subleasing Complicates Your Liability

Leasing part of your space can be a great way to make a little extra money for space you are not using.  It helps pay the rent, complimentary businesses could lead to referrals, and it could lead to great personal or professional relationships.  However, you could be putting you and your business at risk.  

Here are some liability points to consider:

Your Landlord Doesn't Care if Its the Sub-lessors' Fault
1. Your agreement between you and the landlord are between the land lord and you.  Unless the person subleasing is specifically named in the lease, the landlord is not responsible for any agreed terms to the subleased entity.

Create your own lease (with help from legal counsel) between yourself and the tenant just as if you were the landlord.  Require in the lease that the sub-lessor has at least as much insurance as you have.  A waiver of subrogation saying that you are going to take care of your stuff and they are responsible for their stuff is a great standard clause to add.  
Beware of subleasing - Picture by Josh Ulfers

Your Insurance Company Doesn't Care if its the Sub-Lessors' Fault
2. You need to tell the insurance company that you are subleasing space.  The entity you sublease to should have its own insurance and name you as an Additional Insured.  By doing that you gain protection on the sub-lessors policy if the sub-lessor has a claim that is his fault.  Without the sub-lessor having his own policy, your insurance company could even deny a claim stemming from an action from your sub-lessor.

Your Business Income Doesn't Include Rental Income
3. Making $5,000/month from leasing part of your space?  If business income from renting isn't explicitly added to your policy, then you won't be paid for that income in case of a covered loss.  It's inexpensive, but often overlooked on most business owner policies.

You Could be in Violation of your Lease
4. Make sure that your lease doesn't have a clause that prohibits sub-leasing.  In most cases it is best to talk with your landlord before making any subleasing decisions.  Violating your lease could put you in jeopardy of eviction or hefty penalties.

Talk to your landlord, commercial real estate broker, and your insurance agent before making any subleasing arrangements.

This blog article is not a substitute for professional legal advice. This answer does not create an insurance agent-client relationship, nor is it a solicitation to offer legal/insurance advice. If you ignore this warning and convey confidential information in a private message or comment, there is no duty to keep that information confidential or forego representation adverse to your interests. Seek the advice of a licensed insurance agent in the appropriate jurisdiction before taking any action that may affect your rights.  

Tuesday, May 21, 2013

Is Data Breach Covered Under My Tech E&O Policy?

Is Data Breach Covered Under My Tech Errors and Omissions Policy?

So you are the proud owner of a brand new technology errors and omissions policy. You are so excited that most of your professional services are covered and that you can go into every new contract confidently knowing that if something goes wrong and your software or app glitches that you'll be covered.  Then you stop to ask yourself:
Data Breach can happen to any company.  Are you covered?

What if my customer's data gets hacked or stolen?

There are two answers for this question.  You need to know the difference, so you don't end up owing thousands of dollars for something you could have prevented.

Answer 1:

Yes, you are covered!

On most technology E and O forms, the data you work with in order to perform your professional service would be covered in case it was hacked, stolen, or destroyed.

For example, a software company that creates a database system for medical records may need access to the files in order to create the enterprise software.  While creating the software, the main software programmer's laptop is stolen along with access to 1000s of his client's medical records.  Because the programmer was performing a professional service, it would covered.

Answer 2:

No, you are NOT covered!

If you keep digital or paper records of customer's credit cards and company information and your company's computers get hacked and that information is stolen, there is no coverage under the technology E and O form.

I could write an entire post on data breach, but here are a few of your responsibilities:

  • You would be responsible in notifying every customer that could have lost data (PR Nightmare)
  • Offer to monitor credit for at least a year
  • Validating addresses
  • Hiring a data breach response company
  • If not done in 30-45 days there can be hefty fines and penalties
  • Here's a guide for data breaches from Experian: 

The difference is that the information is not being stored as part of your professional service.

So, where can you get coverage for customers' sensitive information?

You need to buy a separate data breach policy or add data breach coverage to your general liability.  If you buy a combo general liability/tech E and O package policy, you most likely have the option to add this coverage.  One insurance company that does a great job of this is The Hartford (

Usually, this coverage only costs an additional $400-$1,000 per year, but can save you a lot in the back end if there is ever a breach.

According to the cited Experian article above, 76% of companies who had experienced a breach of customer data believed the incident had a moderate or significant impact on the organization’s reputation.   

Make sure you can bounce back quickly and effectively if you ever have a breach.

Besides insurance, what are ways you safe guard your customers' sensitive data?  

Thursday, January 17, 2013

What Insurance Should a Technology Start-Up Consider?

Is your tech company protected properly?

At different stages of the Start-Up process, you may want to consider different policies. 

In the beginning stages you may want to pick one or two of the following policies because of limited resources. 

Once you procure funding and are trying to attract the best of the best, you may want to purchase all of the policies below.

Here are the policies you may want to consider in no particular order:

Technology Errors & Omissions (Tech E&O) – Insurance for failures in your technology service that could cause customers damages. Tech E&O is most likely your most important policy because most everything you do would be considered a professional service and is excluded from the General Liability policy.

•Data Breach/Privacy Coverage – In case you lose sensitive employee or customer data, this policy pays to notify, monitor credit, and anything else you need to do in case of a breach.

•Media Coverage – If you are doing any kind of media/social networking. Some of these coverages are added automatically to the Personal & Advertising injury section of the General Liability policy, but are explicitly excluded for companies with a media focus. Examples of these exposures include: unintentional copyright violations, libel, slander, etc.

•International Coverage – If you have operations outside the coverage area (US, US Territories, and Canada)

•General Liability Coverage – This is your most basic insurance that most contracts will require: covers basic trip and fall. You can also add supplementary auto coverage for rented and non-owned (including employee) vehicles. If you have company vehicles, you should consider purchasing a Business Auto Policy.

•Property – Cover your computers, servers, tenant improvements. In addition, business income is added to this policy; look for coverage including business income for Denial Of Service attacks, etc.

•Directors & Officers – Insurance if you have investors or stakeholders. Directors and Officers can be held personally liable for decisions of the company, so this coverage can be crucial in securing high profile board members.

•Disability – Insurance for the owners if they are in an accident and no longer able to work.

•Key Man Life – Insurance policy in case something happens to your partner. Both partners buy life insurance policies on each other, so they can buy out the partner’s share. This way you avoid becoming partners with that person’s significant other.

•Health Insurance – Great way to keep your employees on board and attract great talent.

•Workers’ Compensation – Mandated by CA state law even if you just have one part time employee. Good news is that rates for most technology workers are very inexpensive.

•Employee Practices Liability – Protect yourself from employment related lawsuits: wage & hour, wrongful termination, discrimination, etc.

Some of these policies are offered in packages, while others are sold separately. Most large companies that contract smaller technology services companies will require you to have General Liability, Technology E&O, Workers’ Compensation, and Business Auto.

Talk to an independent agent to see which of these coverages would be a best fit for your business.

This article was originally published on the Co-Merge website on Jan 11, 2013.