Cyber liability: What you need to know about your risk

Cyber liability remains one of the most prevalent and hottest topics in insurance — and will continue to be for some time. But many business owners still don’t correctly perceive their risk.

Small and midsize business owners tend to limit their perceived risk to a narrow set of circumstances, says Chris Zito, president of Zito Insurance Agency, Inc. For example, if they don’t take credit card information, then there’s no reason to buy cyber liability.

“The reality is the better cyber policies cover a number of internet and/or data breach-related exposures that aren’t limited to credit card information or electronic hacking,” Zito says.

The most commonly acknowledged data breach is hackers accessing a company’s server, but breaches can take place in other ways. An employee might leave a client file on a desktop; not properly shred documents; use an unencrypted phone, laptop or tablet; leave a mobile device in an airport or Starbucks; or use Wi-Fi in an unsecure environment.

In addition to potential data breaches, another example of an exposure is email liability. Companies can be exposed to liability for allegations that transitions of corrupted emails caused harm to the recipients’ networks.

Smart Business spoke with Zito about what companies need to know about cyber risk and liability.

Which companies face cyber risk?

Everybody has some level of cyber exposure. A privacy or data breach can certainly come from somewhere other than a hacker.

Nearly every organization keeps confidential or what’s called personally identifiable information. Even if your business doesn’t keep that kind of information about customers, it still may maintain and/or transmit medical records and Social Security numbers for its own employees.

Medical providers or financial institutions, for instance, have more risk because they literally have thousands of confidential records with personally identifiable information, but that doesn’t eliminate others from some kind of risk.

The more access the outside world has to your data, including employees using social media or mobile devices accessing the company’s server, the more exposure you have.

How has cyber liability insurance evolved in the marketplace?

Like any relatively new coverage, cyber constantly evolves.

Insurance carriers are consistently coming out with broader, better forms, in an effort to keep up with the changing exposure generated by advances in technology.

Generally there is no standardized cyber coverage policy language. Many carriers’ policies will look similar but very few will be identical.

Much like when employment practices liability was introduced, cyber liability started out as very expensive, requiring extensive underwriting.

As carriers have become more comfortable with the cyber exposures, they’ve begun adding cyber endorsements, with limited amounts of coverage at affordable pricing.

What’s important for employers to know about buying cyber liability insurance?

It is important for companies to understand what coverage is actually being offered by these endorsements as some may only provide coverage for reimbursement of mandated expenses, and no coverage for legal defense or settlements.

It usually comes down to affordability.

With the evolution of the cyber landscape being a near certainty, in addition to implementing internal security measures such as data encryption and firewalls, companies should buy the broadest coverage they can afford.

Insights Business Insurance is brought to you by Zito Insurance Agency, Inc.


How to restore your business with business interruption coverage

Many people buy life insurance. What they don’t think about is disability insurance — even though you’re 16 times more likely to be disabled than you are to die during your working life, says Chris Zito, president of Zito Insurance Agency, Inc. Similarly, employers understand lightning could hit their building, a tornado could blow the roof off or a fire could start. They know that they would have to fix their property, but they forget about the lack of earnings the company goes through while it gets back on its feet.

“Business interruption functions as the ‘disability insurance’ for your company. It is designed to restore your company’s financial condition to the same place it would have been if the claim hadn’t occurred,” Zito says.

Many business owners, however, underestimate the impact a business interruption claim can have and underinsure this exposure. Accordingly, inadequate business interruption limits account for a large percentage of the businesses that never reopen after a large loss.

Smart Business spoke with Zito about what employers need to know about business interruption coverage.

How does business interruption coverage work?

Business interruption coverage reimburses the business owner for ongoing expenses during the shutdown period, the profit the company would have earned during that time, and any expenses above and beyond the normal operating expenses — temporary facilities, outsourcing to friendly competitors or renting generators.

Not only can business interruption losses be caused by damage to the company’s own facilities, but also from damage to off-premises locations owned by others such as material suppliers, utility companies or key customers. You don’t want to overlook how the damage at another location can create a business interruption loss for you. A properly written policy will provide coverage for these exposures.

Both the business owner and insurance carrier should have the same interest in getting the insured back to 100 percent as fast as possible with the least amount of disruption to the business and impact to the customer base.

What mistakes do you see employers make?

The most common mistakes are business owners underestimating the amount of coverage they need or recognizing the likelihood that such a loss could happen to them.

Which companies have more of a need for business interruption insurance?

Typically, organizations with facilities that can’t easily be replicated will benefit the most. If you run an accounting firm, as long as you have computers and phones, you can set up quickly in a new office space. But manufacturers with specialized equipment or custom-made machinery may face long lead-times to replace that equipment or machinery. You can’t just move into a new plant and outsourcing your product may not be feasible.

How should this coverage be set up?

Similar to direct property claims, business interruption coverage in a policy will respond (or not) based on the cause of the loss. Business interruption claims also can be very complex, and typically are the most difficult for the insurance carriers to adjust.

For this reason, it is important to work with an agent or broker that understands the insured’s business, as well as the correct method of calculating the proper business interruption coverage limit. There are worksheets that help calculate the appropriate limit by ensuring your coverage reflects a worst-case scenario.

For example, in a large loss, it might take 90 days alone to clear the site of debris, investigate the cause of the incident and get the proper construction permits before reconstruction even begins — and it’s not uncommon to take nine months or more to get to full capacity.

Another concern is the indemnity period. Standard coverage stops once you are back in business. Due to the risk of loss of market share, you may want to buy an endorsement to lengthen the time after resuming business you have to get back to pre-claim levels.

Business interruption coverage isn’t prohibitively expensive, but it will take individual tailoring to get the policy to fit your needs. So, before disaster strikes, call your agent or broker.

Insights Business Insurance is brought to you by Zito Insurance Agency, Inc.

How to prevent coverage gaps as your personal wealth increases

Not all high net worth individuals started out that way; they’ve spent years building a business and career, slowly accumulating assets and wealth. Even though they have more items to insure and face different risks, they often don’t adjust their personal insurance to reflect their changing needs.

“They are so busy building a business, they often don’t take the time to adjust their coverage as their needs and circumstances have changed,” says Kevin Franczkowski, client advisor at SeibertKeck Insurance Agency, Inc.

Most of these people would never go without necessary coverages on their business, but there can be major inadequacies with their personal insurance, he says.

Smart Business spoke with Franczkowski about where high net worth individuals need more or different types of insurance coverage.

What is the biggest area that high net worth individuals under insure?

The biggest concern is liability. While it is upsetting to lose an expensive piece of jewelry, it generally will not ruin someone financially; a liability claim, however, can. With inadequate liability and/or umbrella coverage, one incident can affect the total wealth and earnings of an individual and their family.

If the individual sits on nonprofit boards, or is involved with charity work, he or she needs to consider increasing his or her limits and supplementing coverage with an umbrella policy. If a nonprofit is sued, it is common to name all the individual board members in the suit as well. Without the proper coverage, you could be footing the defense or judgment bill yourself.

For example, a high net worth individual sat on a youth athletic league’s board of directors, and a former coach sued all board members for improper dismissal. Thankfully he had a personal umbrella policy that covered him for liability resulting from unpaid or voluntary positions and paid for his entire defense.

Auto accidents are a common source of claims and can result in financial pain if you and your estate are not adequately covered. For instance, an individual has a $1 million umbrella policy over a $250,000 per person liability limit with his automobile policy. Unfortunately, he or she had an accident in which a child was severely injured. The child’s care will more than likely exceed $5 million within 15 years; his or her estate, business and earnings will all be at risk to cover this situation.

What problems do you see with homeowners policies?

Homeowners policies come with limitations on certain items like fur, jewelry, fine arts and firearms. These provided limits are not usually adequate for high net worth individuals. As individuals gather wealth, they tend to gather expensive items that with a standard policy have a very limited amount of coverage. It is important to review these items with your insurance agent to be sure the items are properly and fully covered. Collectibles and rare or unique items often require a separate policy, known as an inland marine policy.

Make sure the values on your homeowners policy are correct, and ensure you use insurance products that are designed for higher risk. This will be extremely important in the event of a claim.

How should household help be covered?

If household help, such as a gardener, nanny, cleaner etc., doesn’t come from an established company, you need to pay workers’ compensation. This will protect you in case they are injured in your home.

If the employee comes through a service company, ask for proof of coverage with a workers’ compensation certificate. It is also important to inquire with the company about background checks for anyone coming to work in your home to make sure there’s compatibility, experience and no other issues. Your insurance agent can assist you with determining if the company’s coverage will extend to the employee, or if you need to purchase your own policy for them.

A good agent will do a risk management audit, asking what you’ve got to protect and walking you through the different items you have to ensure there’s adequate coverage. By spending time with a qualified high net worth agent, you’ll know your assets and income are properly insured.

Insights Business Insurance is brought to you by SeibertKeck

It’s the day you hand over the keys to your teen driver, now what?

Obtaining a driver’s license for the first time is exciting for many teenagers, but seeing a son or daughter behind the wheel causes anxiety for many parents.

“Teen drivers have the highest crash risk per mile traveled. The problem is worst among 16 year olds, whose driving experience is the most limited and whose immaturity often results in risk-taking,” says Todd Winter, executive vice president at SeibertKeck Insurance.

Characteristics of the fatal crashes of 16- to 19-year-old drivers include driver error, speeding, single-vehicle crashes, passenger distraction, alcohol, night driving, etc.

Smart Business spoke with Winter about risk management tips for when your teen gets behind the wheel.

What can parents do to help?

Don’t rely solely on driver’s education. This may be the most convenient way to learn skills, but it doesn’t produce safer drivers. Poor skills aren’t always to blame. Teenagers’ attitudes and decision-making matter more. Young people tend to rebel, and some teens seek thrills like speeding. Training and education don’t change these tendencies. Peers are influential, but parents have more influence than typically is credited to them.

Restrict the passengers. Teenagers riding in a vehicle with a beginning driver can distract the driver and/or lead to risk taking. About six of every 10 deaths of teenage passengers occur in crashes with teen drivers. Driving at night is particularly lethal, but many fatal crashes involving teen passengers occur during the day. The best policy is to restrict passengers, especially multiple teens, all the time.

Choose vehicles for safety. Teens should drive vehicles that reduce their chances of crashing in the first place and then offer protection from injury in case they do crash. For example, small cars don’t offer the best occupant protection in a collision. Avoid vehicles with performance images that might encourage teens to speed. The best choice for your teen, and for your family, is one with the latest safety technology, such as electronic stability control and side air bags.

How do teen drivers affect insurance costs?

There is no way to avoid the price spike that accompanies adding a teen driver to your policy. Because inexperienced teens have a greater chance of being involved in an accident, the cost to insure is significantly higher. Adding a teenager could mean a premium increase of 50 to 100 percent. However, there are actions you and your teen can take to offset this increase.

A teen’s accessibility to a vehicle impacts price. If your teen has a vehicle available for his or her use at all times, the premium will be much higher than if they sometimes get to drive your car. When it’s time for college, if your teen goes more than 100 miles away to school and doesn’t take a car, your premium will decrease.

Also, take advantage of other cost-saving options, not just those for teen drivers:

  • Choose higher deductibles. You can cut your insurance costs by choosing the highest deductibles you can afford.
  • Set up electronic funds transfer payments. You can avoid extra charges with billing options that don’t include service fees.
  • Get a package policy. Packaging your home and auto insurance on a single policy provides additional discounts.

When should a new driver be added to your policy?

All youthful relatives of the named insured or spouse who are residents of the household and have a valid current driver’s license are considered operators. A valid driver’s license includes a temporary driver’s or learner’s permit when the permit allows the holder to operate a motor vehicle without in-car supervision. Therefore, drivers are NOT considered an operator and do NOT have to be added to the policy until their license/permit allows them to drive alone.

Any resident relative (related by blood, marriage or adoption) is considered an ‘insured’ and should be provided basic coverage such as bodily injury, property damage and medical payments. Physical damage coverage is also available for the use of an auto listed on the policy or a non-owned auto. This coverage is provided without stipulation of being licensed.

A newly licensed driver may be eligible for discounts such as the defensive driving course, driver training, good student, resident student or family discount. Check with your agent for details.

Insights Business Insurance is brought to you by SeibertKeck

How to stay ahead of disaster using flood insurance and these safety tips

With spring showers and summer thunderstorms that can result in an excess of surface water, it is important to talk safety and insurance coverage. In fact, flooding is the most frequently occurring natural disaster in Ohio, according to the Ohio Emergency Management Agency.

Flood coverage is not included in a home, renter, condo or rental property policy. Everyone lies in some type of flood zone and should be prepared; flood insurance is not just for high-risk areas.

Smart Business spoke with Tim Able, director of sales & marketing at SeibertKeck Insurance Agency, about flood insurance, safety and the cleanup afterwards.

In insurance, what is the definition of flood?

Flood is an excess of water on land that is normally dry, including inland tidal waters; unusual and rapid accumulation or runoff of surface waters from any source; or collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood.

What should homeowners know about flood insurance?

The average cost of a flood policy is around $600 — this will vary based on your flood zone. Your insurance agent can determine your zone. Special flood hazard areas and costal areas typically have a higher chance of flooding, resulting in higher premiums.

According to the National Flood Insurance Program, the average flood claim for U.S. homeowners is about $30,000 and does not always result in a total loss.

It is important to note that flood damage from wind-driven rain is not covered. Rain or wind-driven rain, and hail damage are not in the same damage category as floods. Wind-driven rain damage, regardless of the cause, is a covered peril like wind or lightning, which may have caused an opening in which rain has entered and caused water damage to the home or personal property. The National Flood Insurance Program considers the resulting puddles and damage to be windstorm-related, not flood-related.

How should you respond after a flood?

Your home has been flooded. Although floodwaters may be down in some areas, many dangers still exist. Here are some things to remember in the days ahead:

  • Play it safe. Additional flooding or flash floods can occur. If your car stalls in rapidly rising waters, get out immediately and climb to higher ground. Use local alerts and warning systems to stay up to date on information and expert advice.
  • Stay away from damaged areas unless your assistance has been specifically requested by police, fire or relief organization.
  • Emergency workers will be assisting people in flooded areas. Help them by staying off the roads and out of the way.
  • Stay out of any building if it is surrounded by floodwaters.
  • Use extreme caution when entering buildings; there may be hidden damage, particularly in foundations.

What are some tips for cleaning up and repairing your home?

Turn off the electricity at the main breaker or fuse box, even if the power is off in your community. That way, you can decide when your home is dry enough to turn it back on.

The American Red Cross can provide you with information on safely entering and cleaning your house, as well as cleanup kits with a mop, broom, bucket and cleaning supplies. Listen to your radio for information on assistance that may be provided by the state or federal government or other organizations.
Contact your insurance agent to discuss claims.

If you hire cleanup or repair contractors, check references and be sure they are qualified to do the job. Be wary of people who drive through your neighborhood offering to help with clean up or repairs.

How can you get started on getting flood coverage?

A flood policy, unlike a typical home policy, has a 30-day waiting period, so call your insurance agent early and get the process started. He or she will walk you through the entire process, including your risks, your insurance options, the flood zone of your home and a quote for flood insurance.

Insights Business Insurance is brought to you by SeibertKeck

Before you sell your company, make sure the liabilities are all wrapped up

Your EBIDTA looks great. The venture capital money is flowing freely. It’s finally time to sell your company. But you can’t forget to wrap up your insurance coverage.

“People tend to put the insurance on the back burner during a sale, because they think they can cancel their policy and walk away,” says Parker Berry II, CIC, executive vice president of SeibertKeck Insurance Agency. “That’s not always the case.”

When two companies tried to merge, he watched the deal get held up for 30 days because of an insurance issue. One company was ready to go, but the other couldn’t get the insurance wrapped up in the time frame that was available.

Business owners may have been protecting their company from a variety of exposures for years; now that it’s time to sell, they need to take steps to wrap everything up with their insurance. One of the last things someone wants to see after they have sold their business is an uncovered lawsuit against their former company and themselves.

To help with the closing of the business, the owner needs to seek the counsel of their agent or broker in a timely manner before the closing. This does not mean the week of the sale. The more time the business owner can provide the agent, the better.

In addition, potential buyers should take a multi-pronged due diligence approach, and one of those prongs should be insurance. They need to review current policies, make sure the coverage is appropriate, the limits for the buildings and the limits of liability are adequate, etc., at the same time they’re reviewing the financials.

Smart Business spoke with Berry about how to wrap up your insurance before you hand over the keys to your organization.

What do owners need to understand about their insurance before a deal is made?

There are two general types of liability insurance policy forms, and when it comes to selling a business or being acquired, owners should not just cancel their policies and walk away if the organization has claims-made policies. The types of policies that are written on a claims-made policy are professional liability, errors and omissions, executive liability and sometimes employee benefits and tough product liability exposures.

The process to wrap up the claims-made policies is relatively simple, but can be costly depending on the exposures. The first step is notifying your broker that you’re selling. Your broker will contact your various insurance companies to request extended report period (ERP) options or tail coverage. Depending on the type of policies the ERP may be for 12, 36, 60 or unlimited months. This time frame is how long you have to report a claim to your insurance company after you have sold. If you choose not to purchase the ERP, insurance companies typically provide a free tail that is anywhere from 30 to 60 days, depending on the carrier. After the specified time period, the insurance company will deny any claim pertaining to the claims-made policy that you did not purchase the ERP option.

An occurrence policy will respond to a covered cause of loss that occurred during the time period of coverage — it doesn’t matter when the claim is turned in. With this type of policy, a business owner can cancel at the time of sale and can walk away not having to pay additional premium.

How do you recommend business owners best handle matters like these?

Even if you paid your premium at the beginning of the year, you may still have bills when you wrap up the insurance coverage. It’s good to know upfront, before you negotiate your sale price, what your out-of-pocket expense could be.

Again, if you’re going to sell your business, the more time you can give your agent the better. Start that conversation as soon as you can, asking, ‘What do I need to do to close everything up, and make sure I can walk way on X date, knowing what costs I will have, if any?’

Ideally, both the buyer and seller should put time and effort into addressing the insurance for the acquisition or the sale of the company. You want to make sure all loose ends are tied up, in order to give a fresh start to the new owner and take care of the previous owner.

Insights Business Insurance is brought to you by SeibertKeck

The ins and outs of your fiduciary exposure and what you can do about it

Employers who maintain qualified benefits plans that are subject to the Employee Retirement Income Security Act (ERISA) assume a fiduciary responsibility for the participants of those plans. More importantly, one of the caveats of ERISA is it allows participants to pursue personal liability for individuals that were involved in the sponsorship or administration of those qualified plans.

So, in theory, the HR administrator, CFO, CEO, owner/shareholder — potentially anyone who played a role in the selection and administration of those qualified plans — can be held personally liable, says Chris Zito, president of Zito Insurance Agency, Inc.

The greater degree they are involved in those decisions, the greater the level of fiduciary exposure.

“Fiduciary claims aren’t as frequent as other types of claims that may be filed against your organization. But unlike the claims that are protected under the corporate shield, fiduciary liability is one area where participants may pierce the corporate shield and go after personal assets,” Zito says.

“Not that protecting the corporation’s assets isn’t important, but if your house could be at risk you should at least be aware of that.”

Smart Business spoke with Zito about misconceptions employers have about fiduciary liability and how you can protect yourself — and your personal assets.

What misconceptions do you see from plan trustees?

Most commonly, plan sponsors confuse their fiduciary exposure with the ERISA bond. They are entirely different — one is a form of employee dishonesty coverage and one is liability coverage. The ERISA bond protects employee investment assets from theft of their retirement funds by trustees. It’s not liability coverage; it’s a requirement the IRS imposes on qualified plans.

In addition, some retirement plans aren’t subject to ERISA. People generally lump retirement plans into one bucket, but they are different, in terms of their legal and compliance requirements.

Do plan sponsors only need to worry about their fiduciary liability for retirement plans?

Traditionally retirement plans are the largest driver of these types of claims because they’re the most visible. But legally, any qualified benefit plan — all of which are subject to the ERISA law — could trigger a fiduciary claim.

How can plan trustees best mitigate their fiduciary liability exposure?

Quantity and diversity of investment selection, along with plan education, are key to minimizing the exposure of retirement plan-related liability.

Defined benefit plans used to impose a significant fiduciary responsibility on employers because they had the actuarial responsibility of making sure the plan was funded properly. Today’s 401(k)s and profit-sharing plans have migrated to a self-directed model, where employees choose from different mutual funds, varying from low risk to high risk. The more control and direction the employees have, the lower the fiduciary exposure, but it doesn’t eliminate it entirely.

Plan trustees want to make sure they’re providing ample education about how any qualified benefit plan works — retirement or otherwise. Education is a requirement under ERISA.

You also can buy trustee and fiduciary liability (TFL) coverage. A key consideration in buying a TFL policy is coverage for defense costs, regardless of whether negligence exists.

Fiduciary liability is fairly generic in terms of what the coverage does, but the breadth of the policy varies by company. You can get pricing from multiple companies, and the coverage limits and deductibles may be identical but that doesn’t mean you’re getting the same policy. It is important to review the policy language to determine how or if coverage applies to Affordable Care Act compliance.

The right agent will be familiar with the policy language in terms of what types of fiduciary claims and allegations it will cover and defend, like regulatory expenses.

Insights Business Insurance is brought to you by Zito Insurance Agency, Inc.

Companies should do their homework before sending expatriate employees

Global mobility is a must for growing businesses that want to be competitive in their respective industries, but there are other factors that come into play when your company expands overseas, says Medha Rishi, GPHR, vice president, Global Benefits at Woodruff-Sawyer & Co.

The use of expatriate employees, individuals who are sent to work and live abroad for a defined period of time, can play a key role in helping to quickly get a new international business unit up and running.

At the same time, companies need to consider the expenses involved. For example, expatriate employees, along with any family members joining them, require the same health care coverage and other benefits that an employee at the home office would expect to receive.

These factors must be considered as companies draft plans to expand overseas.

“You need to look at what will be required to launch this business unit and which personnel are the best fit for the job,” Rishi says. “Then it’s a matter of coming up with a cost-effective plan to make it all work.”

Smart Business spoke about best practices to consider when sending employees to work in another country.

What are some initial considerations when looking at the use of expatriate employees?

If you’re going to ask employees to uproot their families and move to another country to help open up a new business unit, you need to be sure you have a solid plan in place to do it effectively, and also consider the nature of the business unit itself.

Traditionally, when a company wants to open a new office overseas, it will send talent already familiar with its product or service offerings so they can train the new local employees to follow the same culture and business model.

In some cases, these assignments require a great deal of work and can extend for as long as four to five years or lead to multiple assignments.

This has been an increasing trend in the last several years. Other assignments may not require as much time and the work can be completed using short-term assignees. This can be beneficial so that the assignment is not as life-altering or disruptive for the employee taking the assignment.

Another consideration is the professional opportunity for international work and overall employee enthusiasm.

Global mobility itself can serve to define an employee’s career. Surveys have shown the majority of expatriate would agree to future international assignments with current employers.

Just as important to finding the right people who are familiar with a company’s product or service offering is finding those who are enthusiastic about personal and professional development in this way.

How do you determine the cost of benefits for employees working overseas?
Once you’ve determined personnel requirements, you need to look at the personnel cost in terms of salary and benefits. In addition to the basic salary and medical coverage, there are other needs that typically come into play.

Will there be an allowance for a car and/or a driver? What if there is a medical or evacuation emergency in which the employee will need to get out of the country quickly?

Access to local medical coverage still remains the predominant concern among expatriate, with almost two-thirds of expatriate households accessing medical care while on international assignment.

Tax consequences on the payroll side and whether there will be a host country or a home country tax equalization agreement are other important factors. So in addition to identifying the right personnel, seek an adviser in critical areas such as taxes, payroll, compensation and benefits to help shape the expansion plan. ●

Insights Business Insurance is brought to you by Woodruff-Sawyer & Co.

Be aware of the warning signs to potential violence in the workplace

Nobody ever thinks that they will be the victim of an act of violence or terrorism in the workplace, even as these tragic events become more and more common in our society, says Matthew D. Gauen, CPCU, CIC, Senior Vice President and Partner at Woodruff-Sawyer & Co.

As a result, little is done to prepare for or be aware of the potential warning signs that may offer evidence that something really bad is about to happen.

“Your job is not just to look at what is happening today,” Gauen says. “You have to be looking out into the future. Let’s say you’re on a dark, windy road and the headlights are the only light you have to show what’s ahead. You have to be thinking past the headlights to that hairpin turn that could be coming. It’s the hairpin turn that you hope you never have to take. But you better be prepared in case you do.”

An increasing number of workplace tragedies in recent years have involved an active shooter. Those who acknowledge this threat tend to focus on things like securing their entrance with key cards or installing security cameras. While these are good steps to take, they don’t always address the biggest gap in preparedness.

Smart Business spoke with Gauen about the value of listening to and training your employees and how it could help you prevent a tragedy.

How can awareness be a tool to protect against an active shooter threat?
In most cases, it is important that employees be able to maintain privacy when it comes to their personal lives.

However, in cases in which an employee is exhibiting behavior or making statements that indicate they could be a potential threat to the safety of their fellow co-workers, you and your employees need to feel empowered to speak to their human resources department or appropriate supervisor about it.

So often, people keep to themselves and don’t think it’s their responsibility or their place to get involved in someone else’s business.

This does not apply when it comes to workplace safety. If you see or hear something that doesn’t feel right, neither you nor your employees can afford to ignore it.

How do you create an environment in which people are willing to address these concerns?
Reinforce your open-door policy. Make sure employees know that you value them not just as your workforce, but as valued men and women who you want to support and keep safe.

If you put out the message that you want people to take advantage of your open-door policy, it may not resonate today.

But when an employee does have a major issue, he or she will be more likely to bring up either to their immediate supervisor or to HR that something is going on.

If that happens, it’s critical that you take the concern seriously to show that the employee did the right thing by bringing it to your attention.

What role can training play in protecting against an active shooter threat?
An active shooter is counting on people in the building to be incapacitated with fear.

Expert training can help people view the situation differently and take steps to not only protect themselves, but find ways to stop the perpetrator.

It’s the fight or flight mentality. When something happens and your instinct goes to flight, you will automatically start running. But with training, you can help people to focus on the fight when they need to.

The goal is to make them more aware of their surroundings and, for example, think to flip a table as protection or search for everyday items that can be used as weapons to defend themselves.

It’s critical for all employees to be trained, not just management.

There’s no question about the value of educating your employees.

It’s an important part of an overall plan for preparedness that includes pre- and post-crisis procedures, and is well worth losing an afternoon’s productivity to get training that could save their lives. ●

Insights Business Insurance is brought to you by Woodruff-Sawyer & Co.

Woodruff-Sawyer is sponsoring Active Shooter Awareness Training, a workshop for employers to learn about how to be more prepared for this type of workplace crisis. The workshop will take place on March 24, 2016. For details, click here:

A ‘menu’ of coverage considerations to meet your needs

The high failure rates of restaurants are generally thought to be around 60 percent — that’s new businesses that either go out of business or change ownership within the first three years. But why are the rates so high?

A claim paid that doesn’t indemnify a restaurant can be the first step in a hole from which a business cannot recover.

Smart Business spoke with Moe Lami, business risk advisor at SeibertKeck Insurance Agency, about minimizing the risks to your restaurant, using the scenario that there is a fire that causes a partial loss of $500,000 to a million dollar restaurant.

‘The appetizer’ — Risks for those in the restaurant industry

The biggest risk is not properly insuring your business in order to keep it open.

The likelihood of a total loss is less than that of a partial loss. So as a business owner, why not insure that one million dollar restaurant for $500,000? The problem is that insurers require a business to insure to value.

Simply put, a business will not receive full payment for that partial loss. If not properly insured to value, or an agreed amount, that restaurant will receive $250,000, minus the deductible.

Half of the money required to build that restaurant back to its previous state is now solely the responsibility of the owner. Can he or she keep the doors open?

‘The main course’ — Coverage restaurant owners often do not think about, until it’s too late

One easily overlooked coverage is business income and extra expense. The business income portion provides for income lost if the restaurant has to close its doors, in this case because of fire.

Every day your restaurant is closed you are losing revenue. Bills don’t stop because the doors are closed. Can your business afford the possibility of losing key personnel like a manager or a head chef? Can you afford to pay them while the restaurant is being repaired?

Extra expense is often included with business income and includes the expenses incurred to reopen your doors. This covers moving to a new location, new leases for equipment or the overtime associated with getting the business back on its feet.

An important part of this coverage is time. The repairs for this fire take three months. So, when the restaurant opens its doors on day 91, it will not likely be back to doing normal business volume. It takes time for the restaurant to recover to a reasonable sales volume.

A typical policy is 12 months actual loss sustained. Ideally, 12 months would give the owner the time needed to make repairs, retain staff and get the restaurant back to regular operations with an acceptable sales volume.

‘The dessert’ — Preventative steps

Restaurant owners may not come from a business background, so it can be hard to develop the right protocols. That’s where a good adviser plays a key role. He or she should have a thorough understanding of the perils owners face. Then, he or she can help you come up with a plan that looks at all of the risks and includes coverage limits that adequately reflect the situation.

While it is never possible to completely eliminate all risk, a proper program can mitigate risk to a level near zero. Common sense takes a front row seat here.

Cleanliness can lend a lot toward managing risk, such as regular cleaning of hoods and filters above cooking equipment to reduce the chance of fire. Fire extinguishers and wet suppression systems need to be checked on a regular basis. There should be employee handbooks and set processes and training, especially in an industry with high turnover in staff. A business income worksheet should be filled out before a loss happens, so there is no delay.

The restaurant business is demanding. By effectively identifying your exposures and closing those coverage gaps, restaurateurs can concentrate on the main goal — a great experience through a great meal.

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