man at desk with insurance building blocks

why is your commercial property premium increasing?

‘Why is my commercial property premium increasing?’ As a property owner, this is likely a question that you’ve had top of mind lately. There are many factors driving rates up right now.

Let’s discuss the reasons why your commercial premiums might be increasing, as well as what you can do to counteract these surges.

factors that are driving up commercial property premiums

What factors are driving rates?

the global pandemic and subsequent economic uncertainty

Pretty self-explanatory—and expected!

increase in natural catastrophes that occur

From rising global temperatures to cyclones, hurricanes, tornados, and tropical storms, there has been an increase in not only the frequency of natural catastrophes but also the severity of those events.

increased costs 

Second, you have to address the cost to rebuild after such a catastrophe. In most cases, the cost to rebuild often exceeds tens of billions of dollars depending on the damage done.

In addition to this, the cost to rebuild right now is sky high due to:

  • Price inflation of materials
  • Labor shortages, and
  • Supply chain issues

Companies at high risk of natural catastrophes (i.e. tornadoes, hurricanes, hailstorms, and wildfires) are seeing the highest rate increases, as well as non-renewals and difficulty securing coverage. In fact, in wildfire areas of California and wind zones of Florida, rates have increased by over 20%.

what can commercial property owners do to reduce premiums?

When it comes to battling increased commercial premiums, risk mitigation is your golden ticket.

Property owners who have been working hard to mitigate risk and decrease claims are likely to receive more favorable terms and conditions—and possibly lower rates.

So what steps can you take as a property owner to mitigate your risk and therefore lower commercial premiums?

review your policies (before they expire!)

Did you know that, according to research, commercial properties were undervalued for underwriting purposes by more than 30% in November 2021 policies annually?

The solution to undervaluation? We recommend more frequent, in-depth property risk appraisals, that take the following into account:

  • Extreme weather events
  • Potential supply chain hurdles
  • Inflation trends

take control of your insurance narrative

Don’t leave your insurance narrative to underwriters. Instead, partner with your insurance broker and/or risk representative(s) to reduce risks wherever possible.

Property owners might consider taking a look at the elements below to create the most favorable underwriting profile, which then leads to the most favorable terms, conditions, and pricing:

  • Take inventory of assets
  • Identify current exposures and cost drivers
  • Tailor contracts to the current environment
  • Revisit existing risk management techniques
  • Highlight business continuity plans and loss control measures in place
  • Build a company culture focused on safety
  • Manage claims efficiently
  • Be weather-ready

Remember, underwriters are more critical of property (now more than ever!). You should anticipate them to ask in-depth questions about what you’re doing to control your risk for employees, tenants, and visitors.

As a property owner, it’s important to ensure your property is adequately protected against water damage. (Trust us, it’s no joke!) Read on to learn ​​why water damage is a top insurance loss.

infographic of why your commercial property premium is increasing

the insurance you purchase for your business depends on your business type

how do I insure my business?

Have you recently started a business and don’t know where to start when it comes to insurance? As a business owner, you might understand the benefits of an insurance policy as it pertains to paying for damagesso you aren’t paying them out of pocketbut what policies does your unique business need?

After all, commercial insurance isn’t one size fits all. The insurance needs of a marketing agency, for example, will likely vary from those of a law office.

Watch Robert Cohen, Principal at benchmark commercial insurance, explain how to insure your business in the video below.

 

what types of insurance does my business need?

Some insurance types are required on a federal level while other are required by the state. Some insurance types, however, are required by contractual agreements or motivated by “best practices” corporate governance.

So, what types of insurance does your business need? This depends on a variety of factors, including:

  • How many employees your business has 
  • Your sales revenue
  • Your annual revenue 
  • The industry you’re in
  • Your level of expertise
  • Where your business is located
  • How much risk you’re willing to tolerate

insurance for different business types

Let’s discuss four different business insurance types: home-based business insurance, small business insurance, medium-sized business insurance, and insurance for large businesses.

home-based business insurance 

Home-based businesses account for half of the businesses in the United States. Insuring this type of business model with homeowners insurance alone won’t cut it when it comes to business property loss or liability. 

small business insurance 

The Small Business Administration (SBA) defines small businesses as businesses that are owned and operated independently, and are for-profit. Often, these businesses have fewer than 500 employees.

A common small business policy is a Business Owners Policy for businesses with fewer than 100 employees and revenues of up to about $5 million or less. 

While you can purchase customized insurance to cover your specific type of business, insurers offer standardized small business policies that enable you to protect your company against the most common risks at an affordable rate.

medium business insurance 

Medium businesses usually range between 50 to 1,000 employees and have annual revenues between $10 million and $1 billion. Typically, there are specialized insurance policies designed for medium-sized businesses.

Here, policies become more flexible based on the needs of the company. For instance, if your business owns expensive equipment or has multiple locations, you can seek out customized policy options to address these elements.

large business insurance

A large business is considered such if they have over 500 employees. There aren’t linear revenue requirements for a business to be considered “large.”

Since these businesses employ hundreds of people and more than likely have multi-million-dollar revenue risks, their commercial insurance policies must be tailored to the business’s unique needs.

types of insurance to insure my business

Understanding your insurance needs for your unique business is essential to your success.

At benchmark commercial insurance, we often find business owners who are either under-insured or even over-insured at times. Your policy supports your business operations and gives you peace of mind that if something occurs, you are covered financially.

So, what type of insurance do you need for your business? There are many insurance policies to choose from to support your unique business. A few to consider include:

how to properly insure my business

The number one thing to consider as you invest in insurance for your business is: Do any of my current policy forms have coverage restrictions or exclusions that limit my coverage for the business I am in?

When insuring your business, at the highest level, transfer the risk of financial loss to the insurance company from your balance sheet in as many ways possible.

Doing so, however, comes with a cost. Sometimes that cost is too much to bear.

A key component of insuring your business is your relationship with your risk management/insurance services service provider. How will they help you structure your policies to be the most effective in coverage and cost? It takes time.

Your insurance professional should be sitting with you periodically to make sure that both parties are up to speed on all of the moving parts of your business operation.

Moreover, your insurance professional should make sure they’re offering you every commercially available tool to transfer the risk from your balance sheet to the insurance company (again, in as many ways possible). Once organized, it’s up to you to determine what may or may not fit into your budget or what policies best protect your business.

If you’re not having these conversations with your insurance services provider, reach out to our team at benchmark insurance. Here, we thrive on creating a boutique insurance experience for our clients.

Now that you understand how to insure your business, read our article on how much you should pay to insure your business.

bik

e-bike insurance coverage: what you need to know

The use of e-bikes has grown immensely over the last few years. In 2019, the industry was estimated to be valued at $15.42 billion, and it has only grown since then—especially with rising gas prices! In fact, experts predict that the e-bike market is expected to reach $54.48 billion by 2027.

So, let’s talk about e-bikes; more specifically, do you need a standalone excess insurance policy for this fun gadget? Let’s find out.

what is an e-bike?

If you’ve been outside at all in the past few years, chances are you’ve seen a large number of e-bikes whiz past you. But what is an e-bike? An e-bike, or electric bike, is a bicycle equipped with battery power motors to aid with pedaling (either partially or completely depending on the bike).

Bosch describes the three categories of electric bikes in the United States:

  • “Class 1: eBikes that are pedal-assist only, with no throttle, and have a maximum assisted speed of 20 mph.
  • Class 2: eBikes that also have a maximum speed of 20 mph, but are throttle-assisted.
  • Class 3: eBikes that are pedal-assist only, with no throttle, and a maximum assisted speed of 28 mph.”

are e-bikes covered by homeowners insurance?

The short answer? It depends.

E-bike coverage largely depends on your:

  • State
  • Insurance company
  • And claim type

Even if you are covered by your homeowners policy, that coverage is likely capped at a limited dollar amount.

what do we recommend?

We know – The extent to which homeowners policies provide coverage for the physical damage and operations liability to e-bikes is clear as mud. 

Owning and operating an e-bike can create additional risk exposure, with limited to no coverage under your homeowners policy.

This is why, at benchmark commercial insurance, we recommend a standalone policy for your e-bike.

Why? Every single insurance carrier has different e-bike parameters. By getting a standalone policy, it reduces the worry about liability if an accident were to occur. Moreover, homeowners policies have exclusions, and are specific to the particular wattage of your e-bike.  

Coverage for a standalone policy can be ​​as low as $100 annually; however, the cost of insurance varies for everyone.

Unsure if your homeowners policy covers your e-bike? Get in touch with our professionals at benchmark commercial insurance today. Then, since we’re already speaking of moving vehicles, check out our article on why auto insurance premiums are increasing.

infographic about e-bike insurance coverage

california wildfire flames sunset

california’s fire zones: what they mean for commercial insurance

Fire, especially in California, is a natural disaster that commercial property owners must factor into their insurance costs. In fact, research shows that “California is the most wildfire-prone state in the United States… account[ing] for roughly 31% of all acres burned due to wildland fires in the U.S.”

This considered, it’s important to discuss California’s fire zones and what they mean for commercial insurance. Let’s dive in.

what are fire zones?

First off, what is a fire zone? According to the Office of the State Fire Marshal (OSFM), “California law requires CAL FIRE to identify areas [fire zones] based on the severity of fire hazard that is expected to prevail there.”

These fire zones are ranked based on increasing fire hazard as either:

  • Medium
  • High
  • Or, very high

The way in which each area is ranked is based on a number of factors, including fire history, vegetation, flame length, blowing embers, terrain, and weather.

california fire zones

California is known for being prone to fire, which is not good if you’re a commercial property owner.

Luckily, you can assess your risk by using the California Fire Hazard Zones map, courtesy of OSFM.

when is fire season?

Peak fire season in California differs based on your location, for example, if you’re in NorCal or SoCal.

Northern California: Peak fire season begins in the early summer (June to July) and ends in late fall.

Southern California: Peak fire season begins in late spring (May to June) and ends in fall.

fire season is getting longer

Fire season is typically deemed “over” after the first rainfall of fall or winter. Interestingly, however, the season is longer than it used to be due to rising global temperatures. In fact, the United States Forest Service (USFS) estimated in 2015 that fire season had already gotten about two-and-a-half months longer than in the 1970s due to climate change.

what do I need to look at to stay protected?

There are two things you need to take a look at to ensure your commercial property is protected during fire season.

your fire insurance policy!

Fire insurance is very important for any commercial property owner or investor—especially considering the consequences of not having adequate coverage.

Fire insurance is “a form of property insurance that covers damage and losses caused by fire.” While most homeowners’ policies come with some form of fire protection, additional coverage is often required. You must be sure these investments are fully insured without umbrellas so that the total limits of liability exceed your property assets.

Fire insurance is especially important for individuals who own investment properties. The number of investment properties you own could determine whether or not you’re able to use personal lines of insurance to cover fire-related issues.

your risk mitigation strategy

Today, insurers are sticklers about whom they will cover (and rightfully so considering the damage fire can have on commercial property).

Underwriters often now require businesses in high-risk areas to ​​take certain measures to protect their property against fire. These measures might include:

  • Creating defensible space by carefully selecting your landscaping vegetation
  • Building with only non-combustible building materials
  • Routine cleaning and maintenance of dried vegetation
  • Ensuring you have clear access to a reliable water supply

For business owners who are interested, read on to find out how much you should pay to insure your business.

infographic about california’s fire zones what they mean for commercial insurance

all businesses need to mitigate risk with cyber insurance

I don’t have an online business, do I need cyber insurance?

The insurance policies a business chooses is based on their specific business model. What works for one business may not work for another. One policy, however, lives as a baseline policy all businesses should have- cyber insurance

 

This rings true, especially in light of today’s tech-reliant world. Even businesses that do not operate online are not free from the dangers of a cyber attack. 

 

Furthermore, recent events regarding the ongoing Russian-Ukrainian War have the potential to impact all businesses and their cyber security in the United States. Cyber security risks are escalating, so let’s discuss more why even non-online businesses should invest in cyber insurance.

do all businesses need cyber insurance? 

Yes. All businesses need cyber insurance regardless of business type—especially in today’s digital environment. 

 

Even if your business is not an online business, cyber insurance helps mitigate risk. Cyber-attacks occur regularly (every 11 seconds in 2021), and can target individuals and businesses alike. No one is safe from the threat of a cyber attack – no matter the business model. 

 

Typically, attackers use the following tactics in a cyberattack:

  • Phishing 
  • Compromised/stolen devices
  • Credential theft 

 

General and professional liabilities may include basic cyber liability coverage, however, businesses that store personally identifiable information or any sensitive information for employees and customers should seek out further coverage. 

 

Data your business has (i.e. phone numbers, credit card numbers, social security numbers, and more) puts any business at risk for an attack.  

 

A report by Nerdwallet, “​​Among small businesses with fewer than 250 employees, the average reported cyberattack cost was about $25,600.”

 

Consider the following cyber attack statistics below before dismissing a cyber security policy for your business. 

 

  • Cybercriminals can penetrate 93% of company networks
  • In 2021, businesses suffered 50% more cyberattack attempts per week
  • Corporate cyber attacks increased by 50%
  • Small to medium-sized businesses are most commonly targetted   
  • 43% of cyber-attacks are targeted against small businesses 
  • 83% of small businesses are not financially prepared for a cyber attack

 

The threat of a data breach is here to stay. We here at benchmark have first-hand experience with what cyber attacks look like, and what to do to keep your business safe. Read on to learn how we mitigated a cyber attack against our vendor’s business. 

 

benchmark case story

A few years ago, our data vendor’s cloud server was hacked.  All of the vendor’s “mission-critical” information stored in the Cloud was breached (i.e. email servers, client databases, and more)- that included our sensitive information and the information of their other clients. 

 

The hacker asked for a ransom to not share all of the data and to return the data back to our vendor. 

 

Luckily, because the vendor had benchmark’s cyber insurance coverage, our office and all of the vendor’s clients came out unscathed. The cyber insurance covered the entire ransom the hacker was asking for– which meant our vendor was able to keep their data safe and unharmed. 

 

Our cyber insurance policy coverage protected our vendor, our business, and their clients from leaking private information. It also kept the vendor in business so they wouldn’t go bankrupt from paying the hacker’s ransom out of pocket. 

 

Read our next blog post for a complete guide to cyber insurance and why you need it. 

 

all businesses need cyber insurance

use our three tips to avoid an employee practice issue

three tips to avoid employment practices issues

The most common risk businesses face are employment practice issues. Research found that businesses are five times more likely to be sued over employee-related issues than for any other issue. With a rapidly evolving workforce, let’s discuss the three strategies businesses can effectively implement to avoid running into any employment practice issues. 

1. Communication 

The age-old saying “communication is key” has stuck around for a reason- because it’s true. Effective communication helps keep businesses running smoothly and helps teams feel engaged, and included.  

 

If your business doesn’t communicate upcoming changes to the business model or structure, it may build distrust among your workforce. People don’t like change, especially in the workplace.  Regardless of the reasons why change is met with resistance, when your business makes decisions, communicate those changes to your teams quickly and clearly.  

 

Insurance journal says it best, “Policies and procedures that aren’t communicated don’t exist.” 

 

Communicate company policies clearly and often to your entire team. As policies change, let your entire business know:

 

  • What changes you are implementing
  • The expectations of each employee
  • The expectations of the business 
  • Precautions for violation of new changes 
  • The duration of the changes (i.e. until further notice, permanently, for two months, etc.)

 

As your leadership implements new business policies, continue communicating each step throughout your business. While you, as a business owner, are aware of conversations surrounding changes, this is still new to your workforce. 

 

Tell your teams when policies are begin considered, when they are changed, and continue talking about the change well after its implementation. The goal here is to lead with transparency to avoid confused and discontented employees. 

 

What are the benefits of clear, consistent communication? It encourages team buy-in, increases productivity, boosts employee engagement and belonging, reduces conflict, and increases retention. 

 

Use Asana’s tips on effective communication in the workplace:

  1. Know when and how to best communicate change 
  2. Stick to the facts 
  3. Prioritize collaboration 2. Consistency  

 

2. Consistency

Change can be a challenge in and of itself. Consistent communication of the changes can help the team feel engaged and excited about what’s to come. The more your team hears about upcoming changes, new requirements, and expectations, the easier it is for your team to execute on them. 

 

Consistency also means that your business makes decisions based on a specific criteria across the organization, typically this criteria includes:

  • What’s best for the team 
  • What’s best for the business 
  • What’s best for the customers 

3. Compassion

Finally, understand that implementing change in your business requires compassion. Your team is made up of individuals who are impacted by the new decisions you make. 

 

Remember that required changes may require individual evaluation to consider include:

 

Not every request for exemption can be granted, but it’s important to review requests and allow the opportunity for discussion.  

A final note

Businesses that support their workforce through communication, consistency, and compassion set themselves up for success. These change management strategies also help mitigate the risk of employment practice issues. 

 

When it comes to protecting your company from employee-related claims, an employment practices liability insurance (EPLI) policy is essential.  This policy covers the costs if an employee claims wrongful action during their employment. Learn more about EPLI and why your business may need it in our article here

 

communicate with your staff

property and casualty insurance

P&C insurers see $5.6 billion in underwriting losses

What is P&C insurance? In this article review, let’s discuss what it is, why your business needs it, and why the industry lost billions in 2021.

what is property and casualty insurance?

Property and casualty (P&C) insurance protects you and your property (i.e. your home). P&C insurance covers the cost of damage or aftermath of an incident should it occur—up to what your policy covers.

 

Property insurance specifically covers the physical property that you own, like a car or company office space. Casualty insurance, on the other hand, covers you if an accident, injury, or damage to belongings occurs.

 

Different types of P&C insurance include:

 

  • Homeowners Insurance 
  • Renters’ Insurance
  • General Liability Insurance 
  • Workers’ Compensation 
  • Employment Practices Liability Insurance (EPLI)
  • And more

why do you need P&C insurance?

So, why do you need P&C insurance? Property and casualty insurance helps small business owners protect themselves from financial liability and loss from accidents, threats, and loss of belongings and property.

 

Here are a few other reasons your business might need P&C insurance:

 

  1. The law requires business insurance
  2. P&C protects your business, your employees, and your customers
  3. Having insurance builds your business’s credibility
  4. Your business is protected from natural disasters
  5. P&C provides support in the face of a lawsuit
  6. Business insurance gives you peace of mind

p&C stands for property and casualty insurance

Read on for more information on what to expect from your commercial insurance in 2022.

 

Anyway, P&C is clearly a booming industry, so why have insurers seen a $5.6 billion dollar loss in the last year? A few factors include supply chain issues, extreme weather, and cyber security threats.

 

Keep reading for the full article by Insurance Business Magazine on why the industry was financially impacted. 

“Private US property and casualty (P&C) insurers saw a net underwriting loss of $5.6 billion in the first nine months of 2021, according to global data analytics provider, Verisk, and the American Property Casualty Insurance Association (APCIA).

 

Non-catastrophe losses returned to pre-pandemic levels, as illustrated by direct losses for personal auto liability, which increased by 14.1% in the nine-month period, pushing the industry’s combined ratio from 98.8% in the first nine months of 2020 to 99.5% in the same period last year.

 

At the same time, insured catastrophe-related losses remained high, with estimated nine-months net loss and loss adjustment expenses from catastrophes exceeding $48 billion in both 2020 and 2021.

 

“While catastrophes, including hurricane Ida in September 2021, brought major insured losses, it was an increase in non-catastrophic losses, especially in personal auto, that contributed the most to the worsening of underwriting results in 2021,” said Neil Spector, president of underwriting solutions at Verisk.

 

“As the economy continued to recover, insurers saw incurred losses return to more typical levels, additionally pushed up by inflation and supply chain issues. Going into 2022, the insurance industry continues to face a wide range of challenges, from climate change to evolving cyber threats. Those insurers with access to robust data from across the industry will be the best equipped for the constantly changing risk landscape.”

 

Despite the $5.6 billion underwriting loss, the P&C insurance industry’s net income after taxes increased to $42.1 billion in the first nine months of 2021, up from $35.2 billion a year earlier. Verisk and the PCIA attributed this increase partly to premium growth and investment gains.

 

Net written premium grew 9.4% in the nine-month period, hitting $541.6 billion, up from $495.3 billion in the prior-year period. P&C insurers’ overall profitability – a measurement of their annualized rate of return on average policyholders’ surplus — rose to 6.0% in nine months 2021 from 5.5% a year earlier.

 

“Insurers are facing an extreme escalation in inflationary pressures that increasingly strained rate adequacy last year,” said Robert Gordon, senior vice president policy, research, and international, for the American Property Casualty Insurance Association (APCIA). “While both net written and net earned premiums increased during the third quarter, incurred losses and loss adjustment expenses increased even more (by 17.8%).

 

“Net underwriting losses worsened in the third quarter, driving insurers’ combined ratio to 104.5 and contributing to a 57% plunge in net income after taxes. Hurricane Ida contributed to continuing severe levels of catastrophe losses while increased auto accident frequency and severity spiked auto loss ratios.”

 

water damage is one of the top insurance losses for businesses

why water damage is a top insurance loss 

Last year, over 500,000 water damage claims were made after Texas experienced a paralyzing winter storm that burst pipes and caused water damage.

 

Water damage is the second most common insurance claim, trailing closely behind wind and hail damage claims. Last year, over 500,000 water damage claims were made after Texas experienced a paralyzing winter storm that burst pipes and caused water damage. Let’s discuss why water damage is a top insurance loss, and what this means for you. 

what is commercial water damage?

Commercial water damage is water damage that impacts your commercial building. It’s one of the most frequent and expensive claims small businesses face. According to The Hartford, about 75% of insurance losses come from water leaks. 

 

Losses due to a high volume of water damage claims are thought to be contributing to the rise in insurance premiums. A recent Forbes statistic found that one in fifty insured property structures will submit a water-related incident each year. These claims cost on average $11,098. 

top causes of commercial water damage

Commercial water damage can come from a variety of sources. Make sure you monitor your building and know the places where water damage can occur so you are prepared if it does. Here are a few things to look for when inspecting your building:

1. damaged roofs 

Damage from the elements or lack of maintenance to replace missing shingles can allow water to cause further damage to your building. 

2. broken or damaged pipes

Broken or damaged pipes are one of the main ways commercial properties experience water damage. Pipes can burst or become damaged causing a leak from freezing temperatures, poor building, or old age. Signs there is water damage from broken pipes are noticing water stains on the walls, floors, ceilings, or through musty smells. 

3. damaged windows 

Windows that are not properly sealed let moisture into the building which can cause mold, warmed or damaged wood, and more. Continued building maintenance can check your windows to make sure they are properly sealed and maintained.

4. damaged HVAC system 

Over time, the HVAC system can become weathered or damaged, causing a leak. Frequent maintenance of your HVAC system can keep your building safe from this type of water damage. 

5. weather or natural disasters 

Water damage often occurs from weather or natural disaster, which is more challenging to control. Weather can cause damage to your building, even with the proper precautionary steps in place. Having a building with sufficient drainage systems and a disaster plan is one of the best ways to help prevent water damage. 

6. leaking sprinkler 

Like damaged pipes, your sprinkler system can freeze, leak or break– causing water damage. Signs of a leaking sprinkler could be wet walls, carpets, mold, or musty smells. Be sure to keep up with regular maintenance and inspection schedules for your sprinklers to prevent accidents like this from occurring. 

how can you protect your business from water damage?

Water damage is not always unavoidable, however, you can take steps to make sure your building is fully equipped to avoid damage. One of the best ways to protect your business from water damage is with your water damage insurance policy. A policy that covers water damage helps with the financial liability costs. Be sure you understand the terms and conditions within this policy to better understand where you may be liable for costs.

 

Another way you can proactively protect your building from water damage is by implementing routine maintenance of your building so you’re not caught with a costly leak in the future. 

 

Ways to do so are: 

  • Replace traditional hot water heaters every 10 years – (this is a major cause of water losses)
  • Use an antifreeze fire sprinkler system 
  • Perform precautionary risk management to protect structures and BPP
  • Wrap/insulate outdoor and indoor pipes in unheated areas
  • Seal building cracks around water pipes where they enter structures
  • Check areas requiring building insulation and repair
  • Increase insulation where needed
  • Maintain heat at a minimum of 55 degrees Fahrenheit during colder months
  • Drain and winterize plumbing lines during the off-season (seasonal risks)
  • Install heat monitoring devices alerting a central station if the temperature in a building falls below 55 degrees
  • Install an automatic leak detection or automatic water shut off system
  • Use stainless steel braided hoses instead of rubber
  • Have a qualified plumbing contractor evaluate plumbing annually and repair as needed
  • Provide detailed instructions for employees or tenants on what to do if they see a water leak
  • Require regular offseason checks in each unit (Condominium Buildings)

 

The risks of water damage are high, which means it’s important to take the proper steps to mitigate that risk.  According to Kelly Greene at Chubb, “commercial buildings are six times more likely to be damaged by water versus theft, and water damage is seven times more likely than fire.”

 

If your business already has a water damage insurance policy, the best practice is to review and understand that coverage. Sometimes to coverage you have does not align with the coverage you need for your specific business. Trust us, being prepared now will have the future you saying “thank you.”

 

For more resources on water damage insurance and property insurance, read our article here.  

water damage is a top insurance loss. protect your business

cyber liability insurance protects your business in case of a cyber attack

your guide to cyber insurance: why do you need it?

The cyber insurance industry is a rapidly growing market that can be difficult to navigate for those seeking or renewing insurance. With underwriting and renewal processes taking longer to complete, read on our full guide on why you need cyber insurance.

why should you invest in cyber insurance?

Cyber insurance covers expenses from data breaches, viruses, or other cyber-attacks and fraud. It can also cover legal claims that come from a security breach. As companies utilize cloud software, personal computers and laptops, and other technology-based means to store their sensitive data, their risk for a security breach grows exponentially.

The Identity Theft Resource Center claims that in 2018, businesses experienced 571 breaches in security, which exposed 415 million employee and customer records.

In 2021, a cyber-attack incident occurred every 11 seconds.

If your company experiences a breach, federal law requires you to perform an extensive list of tasks. If you have cyber insurance coverage, however, your carrier will take on that responsibility.

Investing in cyber insurance helps protect your business from financial losses that can come with a cyber attack, and help keep reputation damage at bay.

is your business vulnerable to cyber-attacks?

As many businesses moved to a work-from-home model, cyber-attacks have increased. With most company communication through e-mail, Slack, and other online platforms, the risk of a breach increases. This could cause a company to experience massive monetary losses as well as reputation damage.

who needs cyber liability insurance?

While some general liability and professional liability policies include some basic cyber liability coverage, some additional coverage may be needed. Businesses that store personally identifiable information (PII) for both employees and customers should have additional coverage.

Cyber breaches can occur in a multitude of ways. They can be executed through phishing emails, viruses, ransomware, or other malicious attempts to corrupt your data. The best way to begin protecting your data is to establish internal safeguards with cyber security. This includes using strong passwords and monitoring electronic device access and access to software tools.

This form of coverage is growing in demand as we shift towards a cyber-reliant world. The National Associate of Insurance Commissioners found that the U.S. cyber insurance market “expanded to $4.1 billion in direct premium in 2020, representing an increase of over 29% from 2019.”

what does cyber liability insurance cover?

There are a few types of coverage within a cyber liability policy. First-party and third-party coverage help ensure you’re protected for whatever comes your way.

first-party coverage

First-party coverage includes coverage for immediate expenses related to the cyber breach. These expenses typically include:

  • The cost of notifying employees and the public
  • Marketing and public relations response that protect the company’s reputation
  • Extortion money
  • Repairing the damage to software and hardware
  • The cost of business interruption and missed income while operations are suspended
  • Other ancillary costs

third party coverage

On the other hand, third-party coverage helps a company defend against lawsuits and legal claims. There are a few lawsuits that may occur. Privacy lawsuits are covered under this coverage in case you have breached the privacy of customers and employees.

Regulatory body fines are covered as well as media liability claims (copyright infringement, libel, or slander). Lastly, breach of contract and negligence claims are covered under third-party coverage.

what does cyber liability insurance not cover?

It’s important to understand what your insurance coverage does not cover. When you review your cyber security protections, you may be able to identify where your vulnerabilities lie. Some common exclusions from cyber liability insurance include:

  • Bodily injury and property damage claims: Any claims of bodily injury or property damage will not be included in your cyber liability insurance policy. However, a general liability policy will cover these claims.
  • Criminal activity: Cyber liability insurance policies do not cover fraud, robbery, employee theft, and other crimes. However commercial crime insurance will cover these claims.
  • Social engineering: A cyber liability insurance policy will not cover when employees are tricked into transferring company funds. This can be an additional add-on with some cyber liability plans.
  • Loss of property: When an employee loses a piece of property, like a phone or computer, cyber liability will not cover the cost. However, a commercial property insurance policy will.

Like many businesses, you likely utilize computers, and other electronic devices to send, receive, and store electronic data. Data is one of your most valuable assets. It’s important to ensure that you protect that data and consider the cost of losing it.

signs you’re at risk of experiencing a cyber-attack

Cyber-attacks occur without forewarning. Sometimes, businesses don’t initially realize that they’re under a cyber attack. Review the following signs that your business is experiencing a cyber attack.

  • You’re receiving requests for transactions, like direct deposits or electronic fund transfers.
  • Unsolicited communications are coming through from unknown companies or people.
  • Links within emails do not match—check links by rolling your cursor over the link to see if the two match with the content and the email address!
  • Requests with a high sense of urgency, asking you to complete documentation immediately.
  • Requests for usernames, passwords, and other personal details like banking information.

If you realize you’re under a cyber attack, act immediately. First, disconnect your device from the internet, restore your system, and report the attack to your IT department.

After the attack, make sure you file a report with the police and your insurance.

how to mitigate risk

There are ways to decrease your business’s risk of falling prey to a cyber-attack. Being proactive about cybersecurity, and having cyber insurance helps keep your business information secure. Other ways to mitigate risk include:

  • Limit your use of large email attachments and programs that put pressure on your company’s bandwidth ecosystems.
  • Do not forward emails with attachments that contain highly restricted or company confidential information to personal accounts.
  • Avoid reading, talking about, or leaving confidential information in unsecured work-from-home areas.
  • Log off of work devices when you’re not using them.
  • Shred sensitive documents.
  • Restart your computer regularly.
  • Be aware of third-party risk because 59% of companies experience a cyber breach because of a third party.

cyber claim tips

When submitting a claim, use our tips to make sure you have the most successful outcome.

  1. Prepare and understand your insurance policy beforehand. Before a breach occurs, understand and review your policy, and what it covers. Make sure the structure of the claim fits your business needs.
  2. File your claim correctly. Most cyber insurance claims are first-party claims because the most common types of cyber-attacks are ransomware, malware, and social engineering fraud. However, file a third-party claim if you experience the need for defense in a lawsuit. Once assigned, insurer claim adjusters quickly help mitigate losses and help the legal and forensic response.
  3. Do not wait to report your claim. Once you become aware that there is a breach in your cyber security, the first step is to report and file the claim as soon as possible. No matter what type of breach, do not wait to file a report because it’s easier to give assistance early on during a breach.
  4. Obtain insurer consent. Once the claim is filed, the insurer must give their consent to onboard attorneys, IT professionals, and investigators for the breach.

At benchmark commercial insurance, we offer global capacities with a boutique experience. What we do best is look at your company holistically and use our knowledge of changing policy to give you the security of knowing you’re covered.  It’s true, anyone can get you cheap insurance, but not anyone can be there for you like we can when structuring your policy and filing a cyber security claim.

Curious about what other areas of your company may be putting you at risk for a cyber security breach? Read our article about why email may be your biggest cyber risk here.

 

your business needs cyber liability insurance to protect against cyber attacks

how to insure intellectual property

When we’re talking about IP, we’re not talking about your computer’s IP address. IP stands for Intellectual Property. Today, protecting your IP has never been more important. As the need to differentiate your business from other businesses becomes more prevalent, protecting your intellectual property has become a point of focus for most business owners. 

So, how do I insure my intellectual property? Let’s dive in. 

what is intellectual property?

Intellectual property is any form of creative ideas and assets like a product design, symbol, or manuscript unique to your business. Think of it as a trade secret. It can be an idea with tangible factors you use within your business model. 

Investopedia explains IP as “an umbrella term for a set of intangible assets that are not physical in nature.” 

For example, if you’re a marketing company and you have a specific model for onboarding clients that’s repeatable and builds your business– this model is your company’s IP. Your process helps clients fine-tune who their brand is, what their brand voice is, and what their client market is. The idea has tangible deliverables. 

Unless the IP is trademarked, legal patents or protection will expire on IP. The rights to IP are divided into different areas including copyrights, related to copyrights, and industrial property

Copyrights cover the arts, like literature pieces and musical compositions for at least 50 years whereas industrial property protects patents, trademarks, and industrial design.

Insuring your IP helps keep others, like competitors or even employees, from stealing your brilliant ideas and processes.

Different types of IP include:

  • Patents 
  • Trademarks 
  • Franchises 
  • Copyrights 
  • Trade secrets 

what is intellectual property insurance?

IP insurance is specific insurance for companies looking to cover any legal costs that may arise if another entity tries to steal your IP. 

The two types of IP insurance are: 

  1. Infringement defense 
  2. Abatement enforcement coverage 

Infringement defense is the most used IP insurance coverage. This insurance covers policyholders who have infringement claims against them because they used the asset without authorization. 

On the other hand, abatement coverage protects the IP owner when they pursue an infringement claim against another entity because the other entity used the asset without authorization. 

why do i need intellectual property insurance?

Insuring your IP protects what is arguably your company’s most valuable asset. In the end, it helps defend against lawsuits, protect your market share, and discourage lawsuits against you. 

intellectual property litigation costs

The costs of litigation can cause a business to go bankrupt. Having the right insurance that covers your business in the case of a lawsuit, or in case you need to pursue a suit against someone using your IP. 

To put costs into perspective, large infringement cases like Stac Electronics v. Microsoft and Fonar v. General Electric cost over $120 million. These are large corporate litigations, but the average cost of an IP litigation case can range from $50,000 to $3 million. Depending on your company, the costs may not mean you will go out of business, but it can cause a significant financial burden. 

The costs add up in the form of:

  • Attorney fees
  • Royalties 
  • Punitive enhancement 
  • Lost profits 
  • Interest assessments

At the end of the day, purchasing IP insurance is cheaper than undergoing or pursuing a lawsuit. 

how to protect your property

IP can be difficult to prove and insure because it is an idea, however, this idea can be an invaluable addition to the company. Guarding your IP gives your business a competitive advantage in your field. So, how do you protect IP?

Various ways include 

  • Patenting  
  • Copyrights 
  • Trademarking it 

Speaking with a well-versed IP attorney can help your business clearly define your IP and find how to legally structure it as such. Once your IP is clearly defined, obtaining IP insurance can help you stand up against any potential infringement on your processes. 

Do you know if you have the proper coverage to meet your business’ needs? Take a look at one of our articles discussing if your insurance coverage matches your business size here

insure your intellectual property to keep your business ideas protected