Category: Commercial Insurance

Cybersecurity Tips for Small Businesses

When it comes to data security breaches, things aren’t getting any better. According to Risk Based Security’s 2019 MidYear QuickView Data Breach Report, more than 3,800 data security breaches were reported in the first six months of 2019. More than 4.1 billion records were compromised. When compared to midyear 2018, the number of reported breaches is up 54%. The number of exposed records is up 52%.

Breaches involving big businesses make the headlines, but small businesses are at risk too. According to the Federal Communications Commission, every small business needs a cybersecurity strategy to protect their business, their customers and their data from constantly growing and evolving cybersecurity threats. The FCC has the following tips for small businesses.

Train Employees. Educate employees about data security. Establish basic security practices, policies and Internet use guidelines that include specific penalties for violations.

Protect Data, Devices and Networks. Using the latest security software, web browsers and operating systems can help defend against viruses, malware and other threats. Set antivirus software to run a scan after each update. Install other key software updates as soon as they are available.

Protect Mobile Devices. Mobile devices, particularly those with sensitive data or network access, can create significant security risks. Require employees to password-protect devices, encrypt data and install security apps to protect data on public networks. Implement and enforce reporting procedures for lost or stolen equipment.

Backup Sensitive Data. Require regular backups of critical data, including documents, spreadsheets, databases, financial files, human resources files and accounting files. Backup data automatically if possible, or at least weekly. Store backups offsite or in the cloud.

Secure Wi-Fi Networks. Make sure networks are secure, encrypted and hidden. Network names should not be broadcast. Routers should be password protected.

Limit Access and Authority. Employees should only have access to data needed to do their jobs. Employees should not be able to install any software without permission.

Passwords and Authentication. Require employees to use unique passwords and change passwords every three months. Consider implementing multi-factor authentication that requires additional information beyond a password to gain access.

Data security threats have become a constant concern for small businesses. Implementing, maintaining and updating security policies and procedures is important, but it’s not always enough. Small and medium-sized businesses should have Cyber Perils Insurance Coverage to protect against various cyber threats and liability exposures, including the cost of complying with data breach notice laws.

Please contact us if you would like more information about insurance specifically designed to protect against cyber threats and data security breaches.

Paying Less for Workers’ Compensation Insurance by Focusing More on Workplace Safety

Do you know the secret to getting cheaper workers’ compensation insurance? It’s maintaining a safe workplace. In addition to being required by law, providing a safe workplace is good for business. An effective workplace safety program can protect employees from harm and even save lives. It can reduce costly and disruptive injury-related employee absences and work restrictions. And, since fewer workplace injuries means lower premiums, it can also save money.

The first step to developing an effective workplace safety program is identifying the most common causes of the most serious workplace injuries. According to Liberty’s 2019 Workplace Safety Index, these are the top ten causes of disabling injuries at work.

  1. Overexertion involving outside sources (lifting, pushing, pulling, holding, carrying, etc.)
  2. Falls on same level (slipping on the floor)
  3. Struck by object or equipment
  4. Falls to lower level (falling from ladder, platform, etc.)
  5. Other exertions or bodily reactions (crawling, bending, reaching, twisting, kneeling, walking, etc.)
  6. Roadway incidents involving motorized vehicles
  7. Slip or trip without fall (injured while resisting a fall)
  8. Caught in or compressed by equipment or objects
  9. Repetitive motions involving microtasks
  10. Struck against object or equipment (ex. walking into an open drawer or door)

It’s important to note that the most common causes of serious workplace injuries vary by industry. For example, falls to lower levels are the most common cause of injury in the construction industry. They account for $2.5 billion in losses and represent 25% of the industry’s non-fatal injury cost. In the professional and business services industry, however, falls on the same level are the leading cause of injury. They account for $1.92 billion in losses and represent 24% of the industry’s non-fatal injury cost.

Knowing how and why workplace injuries occur puts employers in a better position to develop and implement their own safety and training programs. This is important because employers have the ability to control their workers’ compensation insurance premiums, for better or worse.

Those with an effective workplace safety program pay less. Those without pay more. Please contact us to learn more about reducing your workers’ compensation insurance premiums by implementing an effective workplace safety program.

Staying Prepared During the Peak of Hurricane Season

The Atlantic Hurricane Season officially begins June 1st, but the unofficial peak of hurricane season doesn’t begin until August. According to the National Oceanic and Atmospheric Administration, tropical activity spikes from mid-August through mid-October. In other words, the unofficial peak of the 2019 hurricane season is officially underway.

Before hurricane season began, NOAA predicted a 40 percent chance of a near-normal hurricane season and a 30 percent chance of an above-normal season. On August 8, 2019, NOAA increased the likelihood of an above-normal hurricane season from 30 percent to 45 percent. The number of predicted storms increased too. NOAA forecasters are now expecting:

  • 10-17 Named Storms (winds of 39 mph or higher)
  • 5-9 Hurricanes (winds of 74 mph or higher)
  • 2-4 Major Hurricanes (winds of 111 mph or higher)

NOAA’s initial forecast was for 9-15 named storms, 4-8 hurricanes and 2-4 major hurricanes. On average, the Atlantic hurricane season produces 12 named storms, of which six become hurricanes, including three major hurricanes.

Forecasters say conditions have become more favorable for tropical activity now that El Niño has ended and neutral conditions have returned. According to NOAA’s lead hurricane forecaster, “El Niño typically suppresses Atlantic hurricane activity but now that it’s gone, we could see a busier season ahead.”

Hurricane season is long and maintaining preparations is hard, but the peak of tropical activity is not the time to let things slide. NOAA’s updated forecast should provide all the motivation you need to remain alert, prepared and ready to act if your home and business is in the path of a storm. Remember, it only takes one hurricane making landfall to make it an active season for you. It’s better to be safe than sorry.

Please contact us if you would like more information about protecting your personal and business property during the 2019 Hurricane Season.

Assignment of Insurance Benefits: Non-Assignable Policies Provide New Way to Save on Property Insurance

In a previous article we introduced you to the sweeping statutory reform of Florida’s assignment of insurance benefits (AOB) laws. This reform was designed to limit the use of post-loss AOB agreements by insureds to assign their rights under an insurance policy to a third party. Home and business owners commonly used AOBs after a property loss to authorize a vendor, like a water remediation company, to collect payment for services rendered directly from the property insurance company rather than from the insured. But that was before various statutory reforms regulating the use of post-loss AOBs went into effect on July 1, 2019.

According to Office of Insurance Regulation, Florida’s property insurance market is being harmed by the abuse of post-loss AOBs. Individual policyholders, on the other hand, often benefit to some degree from having the freedom to enter into an AOB agreement. A homeowner with an overflowing toilet, for example, can sign an AOB agreement to get urgent water remediation services without going out-of-pocket instead of paying the bill upfront and waiting to be reimbursed later.

Though a collective approach to fixing the problem sounds good in theory, it’s hard to worry about the overall property insurance market when three inches of standing water is in your living room. Fortunately, those who are not willing to “take one for the team” may be able to keep the right to enter into post-loss AOB agreements…for a price.

As of July 1, 2019, Florida insurers have the option of offering residential and commercial property insurance policies that preserve, partially restrict or completely eliminate an insured’s right to enter into a post-loss AOB agreement. However, an insurance company may only offer polices that restrict the right to execute a post-loss AOB agreement in whole or in part IF:

  • The insurer also offers coverage under a policy that does not restrict the insured’s right to execute a post-loss AOB agreement.
  • Each restricted policy is available at a lower cost than the unrestricted policy.
  • Policies prohibiting post-loss AOBs in whole are available at a lower cost than policies that prohibit them in part.

Each restricted policy must also include the following notice in boldfaced type: THIS POLICY DOES NOT ALLOW THE UNRESTRICTED ASSIGNMENT OF POST-LOSS INSURANCE BENEFITS. BY SELECTING THIS POLICY, YOU WAIVE YOUR RIGHT TO FREELY ASSIGN OR TRANSFER THE POST-LOSS PROPERTY INSURANCE BENEFITS AVAILABLE UNDER THIS POLICY TO A THIRD PARTY OR TO OTHERWISE FREELY ENTER INTO AN ASSIGNMENT AGREEMENT AS THE TERM IS DEFINED IN SECTION 627.7152 OF THE FLORIDA STATUTES.

Insurance companies must notify insureds of their restricted policy options at least annually. Insureds must reject fully assignable policies in writing or electronically using an approved form with the following boldfaced type heading: YOU ARE ELECTING TO PURCHASE AN INSURANCE POLICY THAT RESTRICTS THE ASSIGNMENT OF BENEFITS UNDER THE POLICY IN WHOLE OR IN PART. PLEASE READ CAREFULLY.

We don’t yet know which insurance companies may begin offering policies with restricted post-loss AOB rights, how these policies will read or how Florida’s property insurance market will react. We’ll let you know when we find out. Please contact us if you have any questions about Florida’s AOB reform.

Did You Know…Your Payroll Software May Be Rounding Employees’ Work Hours Illegally?

On July 1, 2019, the Department of Labor’s Wage and Hour Division (WHD) issued an Opinion Letter addressing permissible rounding practices for calculating hours worked under the Fair Labor Standards Act. Opinion Letters represent the WHD’s official, written opinion on how a particular law applies in specific circumstances presented by the person or entity requesting the letter.

Hours worked under the FLSA ordinarily include all the time during which an employee is required to be on the employer’s premises, on duty or at a prescribed workplace. Though FLSA regulations recognize that minor differences between time clock records and actual hours worked cannot ordinarily be avoided, they caution against major discrepancies that can raise doubts as to the accuracy of the records of hours actually worked. An employer’s rounding practices can create the kinds of discrepancies that should be avoided.

The regulations acknowledge that employers have a history of recording start- and stop-times to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour. The presumption is that this arrangement averages out so that employees are fully compensated for all the time they actually work. For enforcement purposes, rounding practices will only be accepted if they do not result, over a period of time, in failure to compensate employees properly for all the time they actually worked.

The rounding practices at issue in the Opinion Letter involved payroll / time clock software that converts recorded work time into a number that is extended out to six decimal points. For example, 7 hours and 30 minutes is converted into 7.500000 hours. The software then rounds these numbers to two decimal points. If the third decimal is less than .005, the second decimal stays the same (ex. 6.784999 hours rounds down to 6.78 hours). If the third decimal is .005 or greater, the second decimal rounds up by 0.01 (ex. 6.865000 hours rounds up to 6.87 hours). Finally, the software calculates pay by multiplying the rounded hours number by the prevailing wage.

The Opinion Letter notes that the software’s rounding function may result in downward rounding of no more than 0.29994 minutes per day and upward rounding by as much as 0.3 minutes per day, which is consistent with the WHD’s policy of accepting rounding practices that average out so that employees are compensated for all the time they actually work. The employer’s policy was characterized as neutral on its face and as applied. Accordingly, the WHD concluded that this rounding practice does not violate FLSA regulations. Wage and hour violations pose a substantial risk to most employers, but Employment Practices Liability Insurance can protect against various employment-related claims, including limited coverage for various wage and hour claims. Please contact us if you would like to learn more about employment practices liability insurance

Assignment of Insurance Benefits: How Will Florida’s AOB Reform Affect Floridians?

An assignment of insurance benefits (AOB) allows a vendor to collect insurance proceeds directly from the insurance company instead of the insured. Many are surprised to discover that AOBs are quite common. In fact, if you ever had property damage that required a construction contractor or water remediation company, you probably signed an AOB. Surprised?

In recent years, AOBs have become common in property insurance claims. A typical example involves a property owner (the “Assignor”) assigning benefits under a property insurance policy to a contractor, water remediation company or other vendor (the “Assignee”) who repairs the damaged property and bills the insurer for the work.

According to the Florida Office of Insurance Regulation (OIR), the increasing use and abuse of AOBs are negatively impacting Florida’s property insurance market. Property insurance claims have significantly increased in frequency and severity. Claims that involve an AOB are also more likely to end up in litigation. Why is this significant? In 2018, the average cost of litigated water claims was nearly $20,000 higher than non-litigated claims.

This year, when the OIR testified that continuing post-loss AOB abuse will result in higher premiums and fewer options as insurers exit the market, the Florida Legislature was listening. The result was sweeping statutory reform that should substantially change the future AOBs in Florida. This reform includes new laws designed to address the abuse of post-loss AOBs for property insurance claims by:

  • establishing requirements for AOB contracts (execution, validity, rescission, etc.);
  • capping the amount an Assignee (contractor, water remediation company, etc.) can receive under an AOB for emergency residential property insurance claims;
  • allowing insurance policies to limit or prohibit AOBs under certain conditions;
  • transferring certain pre-lawsuit duties under an insurance policy to the Assignee;
  • restructuring the statutory entitlement to attorney’s fees in litigated AOB claims; and
  • requiring insurance companies to report specific AOB claim data annually.

Will these reforms be effective? Will they stop the bad actors from abusing AOBs? Will they stop the good actors from providing critical services to Floridians who suffered property damage? It’s too soon to know, but time will tell.

In the coming weeks, we will be covering some of the more substantial changes made by the new AOB laws. Stay tuned!

FLSA Update: DOL Proposes Salary Increase for White-Collar Overtime Exemptions

It’s not déjà vu. The Department of Labor is trying to change the white-collar overtime exemptions …again. On March 22, 2019, the DOL published a proposed rule that would increase the minimum salary requirements for the Fair Labor Standards Act’s executive, administrative and professional overtime exemptions.

The DOL estimates that 1.3 million currently exempt employees would become nonexempt under the proposed rule. Without some form of intervention, employers will have to start paying overtime to these newly-nonexempt employees.

The proposed rule does not change the standard duties tests for exempt white-collar employees. Instead, the DOL focused primarily on updating the minimum salary and compensation levels needed to qualify for the executive, administrative and professional overtime exemptions.

Proposed Salary Level [Current Salary Level]

Weekly:               $679       [$455]

Bi-weekly:           $1,358   [$910]

Semi-Monthly:  $1,471   [$985.83]

Monthly:             $2,942   [$1,971.66]

Annually:             $35,308 [$23,660]

The proposed rule also increases the total annual compensation needed to exempt “highly compensated employees” from $100,000 to $147,414 per year. It also allows employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level, but payments must be made on an annual or more frequent basis.

According to the DOL, salary levels needed to be updated to reflect growth in wages and salaries. The proposed salary levels, however, are lower than the salary levels required under the 2016 final rule, which was blocked by a federal court. The minimum salary needed to qualify for white-collar exemptions under the 2016 final rule was $913 per week ($47,476 per year).

The period for public comment on the proposed rule opened March 22nd and closes May 21, 2019. The DOL anticipates that the proposed rule, once finalized, will become effective in 2020. This gives employers some time to prepare, but not a lot.

Employers are once again facing uncertainty and confusion surrounding the white-collar overtime exemptions. The result is an increased risk exposure. Employment Practices Liability Insurance can protect against various employment-related claims. Limited coverage for wage and hour claims may be available.

Please contact us if you would like to learn more about employment practices liability insurance.

Does the Americans with Disabilities Act Apply to Your Website?

A surge in lawsuits has businesses asking about website accessibility requirements under the Americans with Disabilities Act, but there are few answers. Figuring out how websites fit into a law that predates the Internet has proved challenging. Courts are divided and specific regulations don’t exist. However, businesses can use the rapidly developing body of case law as a tool to better understand which websites may be subject to Title III of the ADA.

Is your business a “public accommodation” under Title III of the ADA?

Title III generally prohibits places of public accommodation from discriminating on the basis of disability. Public accommodations include various private entities that affect commerce, like restaurants, bars, hotels, theaters, retail and grocery stores, banks, doctors’ offices and shopping centers. Businesses should consult an attorney to determine Title III’s applicability.

Does the ADA apply to your website?

For web-based businesses, it could depend on your location. Courts are split on whether the ADA applies to websites that are not connected to a physical place. Some apply the ADA regardless of any physical location, while others require a sufficient connection (nexus) between the website and an actual physical place. An attorney should be consulted to determine how the law is interpreted in a specific jurisdiction.

For brick-and-mortar businesses, the Title III of ADA may apply if there is a sufficient connection between a business’s website and its physical location. What is a sufficient connection? Instead of applying a well-established, universal test (there isn’t one), courts consider various factors to find a connection.

  • Does the website provide more than basic information about a physical location?
  • Is the website heavily integrated with a physical location?
  • Does the website operate as a gateway to a physical location?
  • Does the website offer services relative to a physical location?
  • Are consumers required to use the website to access a physical location?

Providing basic information online may not be enough, but case law suggests that as integration, functionality and interactivity increase, so too does the likelihood of finding a sufficient connection under the ADA. For example, can consumers use the website to:

  • find locations?
  • view inventory (information, descriptions, images, etc.)?
  • place orders or pre-orders?
  • fill prescriptions?
  • purchase gift cards?
  • learn about sales or promotions?
  • obtain discount codes?
  • sign-up for member rewards programs?
  • manage store accounts?

So, at what point does a website become sufficiently connected for the ADA to apply? It’s too soon to know where the final line will be drawn, but it’s probably safe to assume that each “Yes” brings you one step closer.

Most People Should Have Personal Umbrella Insurance …Including You!

A personal umbrella insurance policy can protect you and your family against catastrophic losses by providing an extra layer of coverage. “Everyone should have an umbrella policy,” says Ralph Byer, Merrill Lynch Managing Director and Wealth Management Advisor. “It doesn’t take much to exceed the limits of your homeowners or auto insurance policy. A serious car accident or slip-and-fall on your property can be more than enough.”

Personal umbrella (excess liability) policies provide liability and defense cost coverage on top of standard homeowners, renters and auto policies. These policies can:

Umbrella policies are rarely required but often necessary, particularly for those who:

  • own property (personal, rental, investment);
  • have or use cars, boats or other vehicles;
  • travel abroad;
  • own items likely to cause injury (pets, pools, trampolines);
  • volunteer (nonprofit boards, youth sports); or
  • engage in activities that could injure others (high-risk sports, hunting).

If you’re thinking that you don’t make enough money to need umbrella insurance, stop. “That’s a myth,” says Byer. “There is a common misperception that umbrella policies are only needed to protect extra money. In reality, most people need umbrellas to protect their essential money. Those with less often benefit more from an umbrella policy.”

Umbrellas are secondary policies, so you must have underlying insurance coverage that meets the insurance company’s underwriting requirements. Personal umbrella policies are relatively quick and easy to get. They are also surprisingly affordable. “Aggressive pricing and the ability to effectively reduce personal asset exposure,” says Byer, “have combined to make umbrella insurance an essential financial planning and risk management tool.”

Please contact us if you have any questions about umbrella insurance or would like a price quote.

Did You Know…. the Americans with Disabilities Act Applies to Websites?

Businesses are increasingly being sued under the Americans with Disabilities Act for operating websites that are not accessible to people with disabilities. Website accessibility case filings nearly tripled from 2017 to 2018. What started as a spike is now looking like a trend. And, since most businesses have websites, most businesses should be concerned.

Title III of the ADA generally prohibits places of public accommodation from discriminating on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations they provide. The ADA defines “public accommodation” to include various private entities that affect commerce, like restaurants, bars, hotels, theaters, banks, doctors’ offices, pharmacies, retail stores, grocery stores and shopping centers.

The ADA does not specifically address website accessibility because the Internet was in its infancy when the law was enacted in 1990. Nevertheless, the Department of Justice Civil Rights Division, which enforces Title III, has repeatedly taken the position that Title III applies to websites of public accommodations. Courts, however, are split on when a website is considered a place of public accommodation that is subject to Title III.

Some courts hold that Title III can apply to websites regardless of any connection to a physical place. Others, however, will not apply Title III without some connection between the website and a physical place. A connection that exists when a website is heavily integrated with and operates as a gateway to physical place.

Domino’s Pizza, for example, let people place orders for pick-up and delivery through its website and app. This was a sufficient connection to apply Title III because the website and app connected customers and facilitated access to the good and services available at Domino’s physical restaurants. The required connection may also be found if a website lets users:

  • locate stores;
  • view inventories (information, descriptions, images, etc.);
  • place orders or pre-orders;
  • purchase gift cards;
  • learn about sales or promotions;
  • obtain discount codes;
  • sign-up for member rewards programs;
  • manage store accounts; or
  • interact with pharmacist or fill prescriptions.

It’s difficult to predict what other factors or features courts may consider when deciding whether a website must comply with the ADA because the law is still evolving. If the ADA does apply, how do businesses comply? Courts often refer to the Web Content Accessibility Guidelines (WCAG), which are private industry standards for website accessibility that have been adopted by other federal agencies. Unfortunately, the DOJ has yet to adopt these or any other guidelines for website and app accessibility under Title III of the ADA.

As a result, businesses have been left to navigate the ADA’s website accessibility requirements with little guidance. A lack of clarity has left many businesses exposed to a surge in lawsuits that is no doubt fueled by the current state of uncertainty.