Understanding Your Insurance Coverage

Understanding Your Insurance Coverage What to Look For

Presenters Dawn Martin, AVP Underwriting Irwin Siegel Agency, Inc. Brad Storey, MSW – Director, RM Division Irwin Siegel Agency, Inc. John McKeon, Esq Hardin Kundla McKeon & Poletto

House Keeping • Emergency Exits • Bathrooms • Break • Cell Phones • Presentation Structure • Lunch/Individual Questions • Presentation/Resources on website • Questions

Learning Objectives • Business Income Extra Expense • Understanding Flood Coverage • Cyber Liability – What to look for • Director’s & Officer’s Coverage • How it interacts with general liability • Risk Management Latest Trends • Right to risk- current litigation topics

Business Income & Extra Expense • Business Income – Net income you would have earned if a loss had not occurred • Waiting Period – 24 to 72 hours • Extra Expense – Operating expenses incurred to continue normal operations • Be sure to save all receipts & proof of expenses • Coverage Triggered 3 ways • Direct Physical Loss • Off Premise Utility Failure • Civil Authority

Emergency Vacating • Different policies will vary in what’s covered • Broadest Coverage “imminent danger” • Not required to wait for mandatory evacuation

Flood • Most Property policies exclude flood • Can be purchased separately (or endorsed on) • Flood Zones • Standard Market or National Flood Policy • NFIP Zones • A, AE, V, B, D, X500 • Find Zones at • http://www.floodsmart.gov/floodsmart/pages/index.jsp

Flood Overflow of Inland or Tidal waters Runoff of surface water from any source Water Damage Back up of sewers and drains Underground water that causes damage to a structure Flood vs. Water Damage

Cyber Liability & ID Theft • What does ID theft take? • Name, Date of Birth, Phone #, & Address • 1 bank statement can give someone all they need • Statistics (Healthcare ID Theft) • 2007 – 200,00 cases of ID theft • 2011 – 1.5 million • 800% increase over 5 years

Exposures • System Breach (Hacking) • Paper records • Electronic Health Records • Accepting donations or selling products on-line • Operations • Shredding Operations, Computer Recycling Programs • Removable Storage • Flash drives, laptops, smart phones

The ID Theft/Cyber Products • There is something for everyone • Not a one-size fits all type of coverage • Cost can range from $1,000 to over $30,000 • GL and D&O Policies offer little • These policies may offer a little coverage but it is often narrow and limits are small. • As a stand alone, this is inadequate for most agencies

ID Theft Must be fraudulent use of personal info (info must be breached AND used) Attorney fees and notification costs are often limited with a smaller sublimit Cyber Liability Coverage is more broad Be sure to get coverage for removable media storage, lost or stolen. Paper products may also be included Key Differences

Additional Coverage to Look For • On & Off Premises • Some only cover breaches on your premises • Security & Privacy Liability • Pays damages to 3rd parties for breach • Event Management • Covers cost of notification, public relations, and other services to mitigate damage of cyber incident • Regulatory Action • Defense for Civil Proceeding by or on behalf of a Gov agency

D&O and EPLI • Directors and Officers • 3 Different types of claims • Claim against an individual NOT indemnified by the organization • Claim against an individual indemnified by the organization • Claim against the organization • Employment Practices Liability • Examples of Claims • Wrongful termination • Discrimination • Sexual Harassment

What to Look for • Limits • Separate limits for D&O and EPL are ideal • Frequency of EPL – Severity with D&O • Defense Costs • Inside vs. Outside the limits • Outside limits is the best option • Hammer Clauses • Company ceases defense of claim and turns it over to insured • Split provisions are available on hammer clauses

D&O Claims • D&O policies are written “claims made” • The carrier at the time of a filed suit/report to carrier will respond to the claim • Full Prior Acts Coverage • Requires full disclosure of incidents that may result in a claim • Extended Reporting Period (Tail) • Provides extended time to report a claim • 12, 24, or 36 months are typical extensions

D&O Non bodily injury claims Sexual Harassment covered General Liability Bodily injury claims Sexual Abuse is typically covered here D&O vs. General Liability

Risk Management • Not just safety • Art or Science? • Protecting your assets while enhancing operational efficiencies • Assets • People you serve, property, employees

Classes Economic Marketplace Legal Compliance Political Law/Policy Social PR – Reputation Physical Juridical Jury Attitudes/Venue Process Identification Analysis Control Finance Administration Continuous process: Mitigating one exposure may bring about exposures in other areas Risk Management

Cyber Liability • Technology changes faster than we can adapt • Original Iphone 2007 • Human Service Providers targets of hacking? • Value in Medicaid/Medicare numbers • Medical Identity Theft (fastest growing form of ID theft) • Electronic Health Records • Not all vendors are created equal

Cyber Liability • Controls • Encryption is key, password changes, capacity to remotely wipe data • Limit access to flash drives, BAA agreements w/ vendors • Recent Case • Hospice of Northern Idaho • Stolen unencrypted laptop w/ 441 records breached • HHS found numerous violations (no policies) assessed $50k fine • 1st fine assessed for < 500 record breach

Flood & Water Damage • Flood • Widespread & will impact employees • Rain & wind trajectory will impact the flood potential and severity • Water Damage • Can be detected early with a quality self inspection program

Protecting Assets • Storage 18 inches from floor & ceiling • Computers mounted under desks • Protects from rising water and water from ceiling • Shutting off electrical power to prevent damage • Computer servers located on higher floors • Pictures and inventory • Perhaps the most important

Clean Up & Mold • Take extreme caution and contract out when necessary (Risk Transfer) • Mold can create significant issues for people w/ respiratory problems • Many mold spores are airborne – particularly when area is disturbed • Be cognizant of HVAC systems – can impact entire building • Smaller areas (< 10 sq ft.) – contain and handle internally w/ Proper PPE • N-95 Respirator (NIOSH)

Trends in RM Practices • On-line Training • Cost effective, but training requires a blended approach • Important to conduct an analysis of what you are spending in all areas (direct and indirect costs) • On-line training provides for greater efficiencies • Internet based – can be taken anywhere • Not paying for travel costs or for trainers • Can be more topic focused (driver training)

Benefits Logistical Location Eye in the Sky Route Optimization Savings Fuel Time/Prodctivity Insurance Not immediate (investment) GPS

Business Continuity & Emergency Planning • Lessons Learned from Sandy • 253 deaths in 7 Countries • Over $20 billion insured losses • Communications Systems • Phones/Emails failed (planning for this) • IT Systems • Cloud & back-up systems • Redirection of Workforce • Working from home or other facilities • All adding to cyber exposure

Business Continuity & Emergency Planning • Don’t Wait – if there is “imminent danger” start the evacuation process • Reminder of what Dawn discussed earlier • Property Damage • Civil Authority • Off Premise Utility Failure • Be cognizant of shelter in place practices • Each situation requires evaluation for this • Lessons learned from the Audience

Proactive Risk Assessment • Process based solution • These are crucial as we move forward in a changing environment • Proactive vs. Reactive (Investigation Process) • This is a long term investment, but one that is worth it

Conducting a PRA • Failure Mode & Effects Analysis • Identify an area to be assessed • Describe System and Function • Create a block or process flow diagram indicating relationships within the process • Worksheet containing information about the system (relative to the diagram) • Development of Risk Priority Numbers • Templates/Samples available

Asset Protection • Greatest asset is the people you serve • Without them, there is not business • Remember RM activity is an investment that does not end. • John McKeon

Understanding Your Insurance Coverage