The Five Things All Start-Ups Need to Know about Insurance
As a start-up, you are most likely focusing your efforts on building your new product or service, going after customers, finding great people to help you launch your business and maybe even courting investors. It’s likely that the last thing you are thinking about is purchasing insurance. You may think that you are too small or too new, but that isn’t necessarily the case. As a matter of fact, to manage the risks of your budding business, insurance should be something you are thinking about right now. You don’t want to run the risk of having your business wiped out by a claim or two before you’re even off the ground.
Here are five things you need to know about insurance as a start-up.
1) It’s never too soon to start thinking about General Liability insurance
As soon as offer your product or service, you should make sure you are covered by General Liability insurance. General Liability covers you and your employees in case of any bodily injury and property damage to third parties caused by your product/service.
2) Property insurance is important – even if you do not own a building
Property insurance includes not only a building or home. It also includes any physical property you have as well as the space you occupy. If you are renting space, your landlord is likely to insist that you have insurance against any improvements you make to the space. Tech start-ups especially need to insure computers and media storage against damage or loss. Consider additional computer or media coverage if you are in a tech business.
3) Even if you only have one employee, you may need Workers’ Compensation
The state you live in determines the minimum number of employees who are on your payroll before you are required to carry Workers’ Compensation. In most states, it is one (not including the owner). Workers’ Compensation is designed to compensate employees who suffer work related injury or illness. This insurance will pay medical expenses as well as lost wages resulting from the injury or illness of the employee.
4) Auto Liability insurance for a non-company-owned vehicle? You bet.
Contrary to popular belief, even if you are driving a non-company car, you may be liable if you are in a car accident while on business, such as driving to an appointment with your client. This is the case for your employees as well. An accident victim can sue your company in addition to suing you. Commercial auto liability insurance is likely required.
5) Obamacare has dramatically changed the health insurance landscape for start-ups
As of October 1, 2013, new state exchanges, or online marketplaces, allow you to purchase health insurance for yourself or for your business. Although you are not required to purchase healthcare for your employees (assuming you have less than 50 employees), all individuals will be required to have health insurance per the “Individual Mandate” or face fines. Helping your employees obtain health insurance is a great way to attract the best and brightest talent. And, as of 2014, favorable small business tax credits for healthcare kick in.
As you grow, so will your insurance needs. You may need errors and omissions insurance, additional network security protection, potentially IP protection, director’s and officer’s insurance or other protection. The amount, type and combination of insurance you carry will depend on the nature of your business, the size of your assets and employees and your industry. For now, you most likely are looking to keep costs down and focus on growing your start-up. Insurance premiums can be quite affordable, especially if you choose a high deductible. And compared to the alternative of facing a claim, investing in insurance to protect your start-up is a wise business decision.
Rollins Insurance wants to make sure you stay in the game and give your business the best chance of success. Contact your Rollins representative to discuss start-up insurance that is right for you.
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Trade secret theft is on the rise, thanks to our global economy. The complexity of the modern supply chain, where increasingly partners collaborate to bring products and services to market, and the increasing fluidity of the workforce, where more and more, data are stored on mobile devices or portable equipment that employees bring in and out of company offices. It’s no wonder that trade secrets “walk out the door” on a daily basis.
As cyber insurance experts, we know the cost to defend your company is not exactly cheap. According to the Intellectual Property Insurances Service Corporation, “the average patent lawsuit costs each side approximately $2.5 million in legal fees and expenses to litigate through trial, not including damages and/or settlements.”
Intellectual Property (IP) insurance as well as crime insurance and cyber crime insurance, may cover trade secret theft for your company (details below). And that’s a good thing because many businesses would not have funds to defend themselves. As with all crime, the best thing your company can do is take steps to prevent trade secrets from being stolen in the first place.
What is a trade secret?
A trade secret is a piece of information used in business that is an ingredient of a product and that is not revealed to the public. According to the World Intellectual Property Association (WIPO), trade secrets include “sales methods, distribution methods, consumer profiles, advertising strategies, lists of suppliers and clients, and manufacturing processes.”
What are the best strategies to prevent trade secret theft?
There are four important steps you can take today that will help prevent trade secret thefts from occurring in your company.
1) Identify information that you consider “secret”
Mark all digital and hard copy files with a “confidential” label or designation. Maintain your confidential information in secure areas. Lock up physical artifacts.
2) Prevent unauthorized access to or transfer of electronically stored information
Create appropriate safeguards so that the security of electronic information cannot be breached.
3) Make your policies and agreements with employees explicit
As employees are often enablers of trade secret theft, it is important to take steps to make sure they are aware of their responsibilities as well as consequences for non-compliance. Ensure data is protected via employee password access. Make sure employees sign confidentiality and non-disclosure agreements. Reinforce your policies with routine and explicit personnel training. Pay special attention to departing employees. Have standard procedures and accountability for the return of equipment and data, and reinforce your company non-disclosure policy and equipment return procedures during exit interviews.
4) Establish explicit non-disclosure and confidentiality agreements with suppliers, partners, and other joint venture participants.
More and more, companies are partnering and collaborating with each other on exciting ventures. The same airtight policies and procedures, or possibly even more stringent procedures, should be established for external companies and individuals.
Of course, no method is 100% effective. For those occasions where secrets are leaked, a good complement of insurance policies may save your business from a huge financial burden. Speak with your Rollins representative to design the best cyber risk insurance program to protect your business.
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“Obamacare” is such a catchy word it could easily become a permanent part of our lexicon, much like aspirin, adrenaline, and band-aid.The nickname given to the Patient Protection and Affordable Care Act (PPACA), Obamacare presents the biggest change to health care since Medicare and Medicaidwere enacted in 1965. As proponents continue to promote and critics continue to contest its virtues, Obamacare will be rolled out over the next several years.
What does Obamacare mean for startups and small businesses? There is a potential for increased costs and new requirements. Some small businesses will need to provide health insurance or pay a penalty. On the other hand, healthcare exchanges will facilitate less expensive health care options for small businesses, which could in turn, attract more employees. It is also possible that Obamacare will spawn a whole new set of entrepreneurs among those who would otherwise stay with employers just for their health insurance benefits. As Coco Soodek writes in Crain’s Chicago Business, “For the first time in American history, your health insurance is going to get unhitched from your oversized, shuffling, bureaucratic employer.” And with disruption comes opportunity. There is a lot of room for new startups to grab a piece of the $2.8 trillion that is spent in the United States on healthcare, with innovations in the fields of data analysis, health care, and customer experience.
For those of you who have not yet memorized the 750-page Patient Protection and Affordable Care Act, here are 10 things you should know.
1) Smart “SHOP-ing” is almost here
The Small Business Health Options Program (SHOP) begins in 2014. Health insurance will be available to small businesses via state-run “exchanges.” Small businesses will be able to pool together to increase their purchasing power, allowing them to offer health insurance to employees at rates that may be comparable to large companies.
2) There’s a Tax Break for Small Businesses
The government will grant up to $20 billion in tax credits to small businesses to offset the cost of purchasing insurance on the health insurance exchange. American employers with 25 or less full-time employees may receive tax breaks up to 35% (25% for non-profits) of the cost of insurance premiums. In 2014, this number will be increased to 50% (35% for non-profits).
3) A .9% medicare increase will take effect
For those small businesses making more than $250,000 per year (this affects the top 3% of small businesses), there will be a .9% increase in Medicare payments.
4) The Employer Mandate to provide insurance will affect an additional .2% of Small Businesses
Businesses with more than 50 full-time employees will be required to provide health insurance or pay a penalty. At present, .2% of businesses do not offer health insurance. These companies will have to comply with the mandate. However…
5) Employers are off the hook until 2015
Companies now have until January 1, 2015 to provide health insurance or face fines of $2000 for each uninsured worker. This gives employers some time to implement any needed adjustments to their health insurance approach.
6) Health Plan Premiums will go to Patient Care
80% a health plan’s premium revenue needs to go directly to patient care. That leaves 20% for operational, marketing, and administrative costs. This will change the way health plans operate and change the relationship between health plan organizations and the companies and individuals they serve.
7) Small Business Owners will get insured as well
About half of the uninsured across the country are small business owners, their employees, or their dependents. Obamacare will provide subsidized healthcare to 83% of small business owners who are currently uninsured.
8) “Affordable insurance,” formerly an oxymoron, now has a definition
Employees will pay no more than 8% of their annual adjusted gross income on health insurance.
9) People with pre-existing conditions will be insurable
Americans cannot be denied health insurance due to pre-existing conditions. This policy affects 1 in 2 Americans.
10) Preventive services are free
All insurance plans must cover preventive services, with no out-of-pocket costs to patients.
At least some good news has rolled in. J. D. Harrison reported in the July 26, 2013 Washington Post that “Obamacare is starting to have some of its intended effects on the price of insurance for small businesses, particularly in the city in which it was conceived. District officials last week announced that, for the third time since they started posting proposed plans on a new health insurance marketplace for small businesses, an insurer has lowered its initial prices for coverage. It is a sign, they say, that the marketplace will help bring down health costs for businesses…”
We are all on a long, bumpy road through healthcare reform. Call us at Rollins Insurance with questions you have.
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The Obama administration announced on July 2, 2013 that it is delaying the requirement for companies with more than 50 employees to provide health insurance to their employees. Under the Affordable Care Act (ACA), companies now have until January 1, 2015 to provide health insurance or face fines of $2000 for each uninsured worker.
In a blog post on the U.S. Department of the Treasury website, Mark J. Mazur, Assistant Secretary for Tax Policy at the U.S. Department of the Treasury, explained that, due to concerns about the complexity of the regulations, the extra year would help organizations implement the requirements more effectively. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so,” wrote Mazur. “We have listened to your feedback. And we are taking action.”
According to Mazur, the extra year will allow the government to simplify the new reporting requirements while allowing employers time to adapt to the systems. The Administration intends to work with early adopters on “real-world testing” of these reporting systems to help provide a smoother transition in 2015.
It is important to note that this does not delay the other components of the ACA, including online marketplaces, where individuals can purchase their own health insurance, subsidies for low-to-middle income individuals, and premium tax credits.
There have been many discussions as to whether the ACA affects the hiring practices of companies. Have some deliberately kept their roster to less than 50 employees? “Full-time employee” for the purposes of the ACA requirement, is 30 hours. Some businesses may be increasing their part-time employee base to avoid having to pay the employer premium. On the other hand, most employers impacted by the delay already offer coverage or have begun making changes to healthcare benefits, as workers typically enroll in plans in the fall. More than half of Americans, or 160 million people, get their health insurance through an employer.
As reported by NBC News on nbcnews.com, “In 2009, the Kaiser Family Foundation and the Health Research and Educational Trust found that 98 percent of firms with 200 or more employees offered health insurance. But just 59 percent of companies with three to 199 workers did, and just 46 percent of employers who had fewer than 10 staff.” Kaiser cited soaring health insurance premiums as a major reason why smaller employers do not fund health insurance for their employees. Health insurance premiums have soared, from an average $2,196 in 1999 to $5,615 in 2012 for a single person – far faster than wages or inflation have grown.
The Obama administration hopes that the ACA will shrink this percentage. If your business is affected by the Affordable Care Act and you have not yet gotten your ducks in a row, you can breathe a bit easier—you now have another year to figure it out.
Rollins is working to help you navigate the complex landscape. Call us if you have questions.
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If you are reading this blog online, you may be at risk for a cyber attack. In our increasingly interconnected world, any business using the internet—that is to say—just about any business, anywhere, is at risk. Small and mid-sized businesses are particularly vulnerable, as they may not have the security infrastructure in place to keep up with the growing sophistication of cyber incidents. As a matter of fact, according to a recent study, as reported in the Wall Street Journal, 72% of data breaches worldwide occurred at companies with 100 or fewer employees. If you operate a cash-only lemonade stand, you can breathe easy. For everyone else, it is important to protect yourself from cyber exposure and take proper steps to mitigate risk.
What is Cyber Exposure?
Cyber exposure refers to the risk associated with your electronic information being compromised or misused. Types of misuse include security breaches of you or your clients’ data, intellectual property infringement, or any personal injury sustained as a result of a cyber incident. Such incidents may include computer viruses, identify theft, data theft, domain name or copyright infringements, or accidental or willful misuse of the company internet or data by employees. Add to this, incidents of lost or stolen laptops and smart phones, poor passwords, and improper disposal of obsolete data, and you see that cyber risk is everywhere. Whether or not your company data is in the cloud, you may be at risk. Even email communications or your company website can leave you exposed.
How Can I Avoid Losses?
1) Know Your Cyber Risk
Conduct a risk assessment to reveal hardware, software or website vulnerabilities. Maintain careful accounting of what is online, including your ecommerce activity, information that is stored on your network, and any subcontractor or third-party information. It is also a good idea to have a data security risk assessment by a qualified IT professional.
2) Establish an IT Security Policy
Regardless of the size of your organization, an IT security policy is essential. Identify the critical assets of your business, and ensure that you have procedures in place for physical security, account management, employee activity, data backups, secure data storage, and data recovery. Make sure you have strong password protection! Many breaches in security are simply due to weak password policies, included lax password restrictions, unencrypted passwords, and no requirement for periodic password changes.
3) Secure Your Network and Your Mobile Devices
Of course you need the latest anti-virus software. In addition, make sure your firewalls are secure, and that your mobile devices have adequate password protection.
4) Protect Yourself with Cyber Liability Insurance
Traditional business liability insurance policies do not address internet exposure. However, if you have taken appropriate security measures, you may be able to qualify for cyber insurance at a reduced cost.
Cyber insurance generally covers two categories of exposure: first party risk – expenses your company incurs as a result of cyber incident, and third party liability – claims against your company by a third party.
Rollins Insurance can help you find the optimal cyber liability insurance for your business needs. Contact us to discuss your options. Happy surfing!
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We live in a hyper-connected world, where the ability to innovate quickly and inexpensively is often the key to success. It’s no wonder then that the popularity of crowdsourcing has soared in this entrepreneurial economy.
“Crowdsourcing” means tapping the expertise, the knowledge, or the work of the public, or the “crowds,” in order to “source” work or input to your business. From the early stages of your business to actual production work, you can crowdsource almost anything.
Here are four ways to make crowdsourcing work for you.
Create Your Brand
Have an idea for a business? All you need to do is describe who you are and what you want your business to do in a creative brief, and you can have the “crowd” help you name your business, create a logo, and design your website. You can have 100,000+ creatives take a shot at naming your business at a place like Crowdspring. You pay $200-300 or so (more if you want more people to try to get the award), and you get an average of 130 possible names. You can work with creative people to tweak their entries, you can ask people to restrict their choices to names that have good URLs, and you can select one or more winners. Need a logo? 99 Designs boasts 230,134 designers who can create dozens of designs for you. It is not uncommon to have more than 100 designs to choose from. 99 Designs can also build your web app and create all your marketing collateral. Quick tip: the more feedback you give to designers the better results you get. You will also be able to build relationships with your favorite designer(s).
Brainstorming takes on a whole new meaning, thanks to crowdsourcing. Beyond your internal team, you can create a brainstorming challenge that anyone in the world can enter. Mega companies, like Starbucks and Dell have their own sites dedicated to collecting ideas from the crowd. But companies of any size can do the same. With a site like Idea Bounty, any company can source ideas. You only need to pay for the ideas you use. Crowdsourcing can greatly increase your pool of great ideas. You still have to sift through and evaluate them.
Have the inspiration but not the cash? Crowdfunding platforms allow you to raise money from friends, family, and a network of likeminded strangers. The two giants are Kickstarter and Indiegogo, although there are a lot of others. Kickstarter is an all-or-nothing funding site, used for a single creative project: a film or a book, for example. The all-or-nothing model, where if the founder does not raise all of the requested money, he/she gets none, creates a sense of urgency and excitement. Kickstarter is by far the most popular, with $500 million pledged by more than 3 million people for more than 35,000 creative projects. Indiegogo is more flexible and takes multiple forms of payment from funding sources.
Support Your Work
Now that your business is branded, designed, and funded, you need to get the work done. There are many, many sites that help you crowdsource tasks. Amazon’s Mechanical Turk is a popular alternative, where you have people across the world work on any individual, repeatable task, and you only pay for results that satisfy you. Elance and oDesk allow you to choose from thousands of freelancers to perform all sorts of work at comparatively low rates. You get to see their portfolios and compare them in an easy to use way, and you can hire people to work remotely on the spot. With oDesk, you can monitor your freelancers’ hourly progress and interim deliverables.
The key success factor for crowdsourcing is your own ability to organize your business activity. You need to be able to articulate your goals, create a vision that motivates and inspires others to help you succeed, and break down the activities of your business into discrete tasks.
Rollins Insurance wants you to succeed in this rapidly changing, worldwide economy. Tell us how we can help.
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You may enjoy strolling around with a fake Fendi bag or a ripoff Rolex watch, but what if someone is inappropriately copying your product? Your business may be protected against patent, copyright, and trademark infringement in the United States, but are you protected abroad? In this increasingly global economy, the risks of intellectual property theft are growing. Thankfully, the World Intellectual Property Organization (WIPO) exists to provide an international framework for protection. Knowing that this organization exists and understanding what it can do for you will help you protect your valuable intellectual property. And once you are protected, IP insurance provides the funding to defend yourself against infringement.
What falls into the category of Intellectual Property?
Intellectual property falls into two categories: Industrial property, which includes inventions (patents), trademarks, industrial designs, and geographic indications of source; and Copyright, which includes literary and artistic works.
What is WIPO?
The WIPO, established in 1970 and headquartered in Geneva, Switzerland , is a worldwide organization with 186 member states—representing more than 90% of the world’s countries. The mission of the WIPO is to “promote innovation and creativity for the economic, social and cultural development of all countries, through a balanced and effective international intellectual property system.” In other words, they help you fight imposters across the globe. International applications allow you to file in multiple countries using a single application, even though you receive a separate patent, trademark, or copyright registration in each country. Think of it as the “Common App” for patents.
Why would I want to file an International protection?
Not only is it less expensive to file a single application vs. filing one in each country. You have up to 30 months from your filing date to decide in which countries you choose to receive a patent. This gives you a lot of flexibility and allows you to work on growing your business and your markets before you choose where to expand your presence or operations.
So I’ve filed my patents, trademarks, and copyrights. Why do I need IP Insurance?
Simply and frankly, a single lawsuit can wipe out your company if you do not have the funds to pay an attorney to defend your property. More than ever before, in our global, high-tech economy, there are intellectual property claims involving patent, copyright, and trademark infringements. However, it is important to note that IP Insurance does not typically cover patent claims. While it is available, it is also quite difficult to place and is therefore rarely purchased. Commercial general liability insurance may not sufficiently cover all your expenses. In this sense, IP insurance is like fire insurance. Just as you don’t want to wait until your house is on fire to purchase fire insurance, you don’t want to wait until you want to sue someone else—or until someone is suing you—to purchase IP insurance.
If you are pulling all-nighters, it should be because you are furiously building your next great invention, not because you are tearing your hair out trying figure out how you can afford to defend yourself against copycats. Rollins can help you understand which IP insurance policy works best for you. Call us.
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Directors & Officers Liability (D&O) insurance is one of the fastest growing yet least understood forms of insurance. In our increasingly litigious society, headlines abound with stories of class-action lawsuits and major claims against company managers.
Not just for mega-corporations, D&O insurance can protect directors and officers of small-to-medium enterprises, volunteer board members and non-executive directors as well.
What is Directors & Officers (D&O) insurance?
D&O insurance is designed to protect personnel from claims that arise due to actions they have taken within the scope of their duties as officers, directors, or company individuals. There are actually three parts or “sides” to D&O insurance:
Side A: protects directors and officers when the company cannot indemnify them as individuals;
Side B: reimburses the organization when it indemnifies individuals;
Side C: eliminates disputes of coverage allocation when directors, officers and the insured organization itself are named as co-defendants in securities and class-action lawsuits.
D&O insurance can cover all current, future, and past directors and officers of a company and its subsidiaries.
What types of claims are covered?
D&O insurance covers most employment practices and HR issues, shareholder actions, reporting errors, inaccurate disclosures of company accounts, misrepresentations, inappropriate decisions made by company officers, and failure to comply with regulations or laws.
What types of D&O insurance claims are typically made?
More than 50% of claims against a company are related to employment practices, including discrimination, wage disputes, sexual harassment, and wrongful termination. Shareholder suits are common as well. Lawsuits are not only initiated by employees. They can be brought by competitors, customers, creditors, investors, government agencies and vendors.
Why should you have D&O insurance?
If your for-profit or non-profit operation has a board of directors and/or corporate officers, you should consider D&O insurance. Your director and officers are at risk of losing their life savings from legal actions filed by customers, stockholders, or disgruntled employees. When you consider the cost of defending your company from claims as well as the risk of a major settlement against your firm, you can appreciate the importance of a D&O insurance policy. If you sit on the board of directors of an organization, especially if that board is occasionally faced with making unpopular decisions, you should make sure that organization has D&O insurance. If you are looking to attract board members and officers, you want to be able to assure candidates that you have appropriate D&O insurance in place.
D&O insurance can be quite complex to procure. Rollins Insurance is here to help you navigate the complexities and challenges of adequate and appropriate D&O coverage for your organization. Call us for a comprehensive review of your needs and specific recommendations.
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Once the ball drops in Times Square on January 1, 2014, your business is likely to have new requirements for employee health insurance, thanks to the Health Care Reform Bill. How do the new regulations affect your business, and does it make sense for you to take advantage of the new Small Business Health Options Program (SHOP)?
Depending on the size of your business, rules regarding employer-provided health insurance vary. The size of your employee population has implications not only for the health insurance provision but for tax credits, penalties for non-compliance, and government-sponsored programs as well.
How small are we talking about?
If you have less than 50 “full-time equivalent” employees, each of them will be required to have his or her own health insurance. “Full-time equivalents” refers to the total equivalent of full-time and part-time employees. (In other words, if you have 100 half-time employees, you have 50 full-time equivalents). Even though you are not required to pay insurance, you may choose to provide this benefit in order to attract your best employees. Luckily, you may be able to find competitive rates through SHOP.
What is the SHOP?
Beginning in 2014, health insurance will be available to small businesses via state-run “exchanges” through a program known as the Small Business Health Options Program (SHOP). Small businesses will be able to pool together to increase their purchasing power, allowing them to offer health insurance to employees at rates that may be comparable to large corporations.
In addition, small businesses that purchase health insurance for employees through SHOP will receive business tax credits up to a percentage of the premiums. Tax credits are on a sliding scale based on the number of employees and average annual wages, and may be impacted by the sequestration.
More than 50 employees
If you have more than 50 employees, you are required to provide insurance to your employees. Moreover, you may need to pay penalties if that insurance is “too expensive.” Depending on the state where your business resides, you may be eligible for the SHOP if you have up to 100 employees.
Be aware that the rules change in 2016 and 2017. Rollins is here to help you navigate these changes. We will keep you up to date on the latest developments so that your business and your employees can greet the New Year with good health and happiness!
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In previous posts we discussed how an E&O policy can provide your company with a shield for various liability claims. As with all liability policies, E&O claims that are paid out will always go to a third party: the law firm providing your defense or the claimant if there should be a settlement or judgment made against you. The insurer will never make out a check with your name on it, right? Wrong. Here’s how you can get paid by your own E&O policy:
With the adoption of technology platforms (the Internet) as a source of income and the proliferation of new regulatory guidelines, businesses face many new financial risks. Most of these have, to date, gone unaddressed by traditional insurance policies. For example if your company is selling its products or services either partially or entirely over the Internet, and that channel is compromised by a hacker you will lose revenue. Even if you have business interruption coverage on your company’s standard policy, it will not respond to the loss as there needs to be physical damage to tangible property. Some errors and omissions policies now offer business interruption/lost revenue protection for security breach and other internet related losses. Another example that highlights this gap in 1st party insurance coverage (meaning the policy holder is paid by the insurer, not a third party claimant) has to do with privacy. Suppose you collect data from your clients or users and have a security incident. Almost every State now requires that you notify these users that their personal data may be at risk as a result of your security failure. Some requirements go as far as to require ongoing credit monitoring for several years. For a company with thousands of clients/users this could pose a huge financial burden. Breach notification coverage, available on some E&O policies, will provide you with the necessary funds to cover these expenses.
Errors and Omissions insurance has morphed in recent years to address risks such as those cited in the examples above. This insurance often goes by other names such as “cyber insurance” as the intent is to cover the losses associated with doing business on the Internet. As a Tech company you would be wise to have a hybrid policy that provides the liability protection of an errors and omissions policy along with the first party coverage that is found in cyber insurance. This way you transfer the risk of defense and indemnity (liability) to the insurance company – while also protecting the top line of your balance sheet.