2013 – Page 2 – Setnor Byer Insurance & Risk

What is a Certificate of Insurance?

Certificates of Insurance are documents provided by Agents to verify the existence of insurance coverage. They are commonly used when an agreement or contract requires a party to maintain specific types of insurance. For example, a Certificate of Insurance can be used when:

A general contractor wants to verify that its subcontractor has the statutorily required workers’ compensation insurance;
A mortgage lender wants to verify that the homeowner has sufficient property insurance;
A commercial landlord wants to verify that its tenant has all the insurance coverage required by the lease; or
A homeowner wants to verify that its lawn service company has general liability insurance.

Certificates of Insurance are issued to the certificate holder—the person or entity that needs to verify insurance coverage. Though common and relatively straightforward, there is quite a bit of confusion about what Certificates of Insurance do, and more importantly, do not do.

A Certificate of Insurance provides a superficial snapshot of insurance coverage that is in place at the time it is created. Contrary to what many believe, Certificates of Insurance:

Are NOT insurance policies.
Do NOT provide certificate holders with any rights under the insured’s policies. This means certificate holders cannot file a claim or request a defense under the insured’s policies.
Do NOT amend, extend or alter the coverage provided by the insured’s policies. This can only be accomplished with an endorsement, rider or amendment to the policy.
Do NOT create a contract between the insurance company and the certificate holder.
Do NOT guarantee that insurance coverages listed on a Certificate of Insurance will continue in the future. A Certificate of Insurance issued today may not be accurate tomorrow.
Are provided for informational purposes ONLY.

Though there are various Certificate of Insurance forms, those developed by ACORD (Association for Cooperative Operations Research and Development) are widely used to provide specific information about existing insurance coverage, such as:

the insurance companies issuing the policy
the policy numbers
effective dates
types of insurance (ex. general liability, automobile, workers’ compensation, property)
policy limits

These forms also provide a space to add additional comments or conditions. This is where problems may arise if an insured or certificate holder wants to add specific language to their Certificates of Insurance. For example, a certificate holder may want to state that there is an additional insured under the policy, or an insured may want the certificate to state that any obligation to indemnify the certificate holder is covered by the policy.

If such statements happen to be true, it is not because they were typed on the certificate. Remember that Certificates of Insurance do not affect, extend, or change the insurance policy, so any incorrect or contradictory statements are meaningless to the insurance company. They can, however, be grounds for a costly lawsuit, so an experienced insurance agent should be used when issuing or receiving Certificates of Insurance.

If you would like to learn more about dealing with Certificates of Insurance or how we can help, please contact us.

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Preventing Data Security Breaches

Every business must be able to identify the likeliest source of a data security breach so that they can also identify how to prevent it. Is it an executive’s laptop computer, the copy machine or the office’s wireless network? Could it be something else? Since the first step to preventing a data security breach is understanding the risk, it’s time to learn more about your business’s sensitive data.

Effective data security starts by assessing the kind of information a business has and identifying who has access to it. Evaluating data security vulnerabilities requires an understanding of how sensitive data moves into, through, and out of a business, and who has or could have access to it. Here are some tips from the Federal Trade Commission.

Take Inventory

Take an inventory of all devices and equipment capable of storing sensitive data, such as laptop computers, mobile devices, flash drives, off-site servers, disks and digital copiers. Do employees work from home? If so, add their home computers to the list.

The type and location of sensitive data should also be inventoried. Don’t stop with the office’s filing cabinets and computer systems. Sensitive data may also be received from other sources, such as websites, contractors or call centers. Every possible source and destination for sensitive data must be considered.

Track Sensitive Data

It is important to know how the business obtains, stores, shares and disposes of sensitive data. Every department should be consulted, including sales, information technology, human resources and accounting. Don’t forget about contractors and other third-party service providers.

This process should provide a business with a thorough understanding of:

Who provides sensitive data? Does it come from customers, credit card companies, banks or other financial institutions, credit bureaus, job applicants, contractors, third-party service providers?
How is sensitive data received? Does it come via phone, fax, mail or email? Is there a website designed to request and receive sensitive data? Are there any other possible entry points?
What kind of sensitive data is collected? Do business operations require or permit collecting financial information (credit cards, bank accounts, credit reports), personally identifying information (drivers’ licenses, social security numbers) or medical information?
Where is sensitive data stored? Is it kept on disks, tapes, laptops, smartphones, tablets or other mobile devices? Employees’ personal computers or mobile devices? Where are data backups and copies stored?
Who can access sensitive data? Is access to sensitive data limited to only those who need it? Are there security measures in place? Is sensitive data protected against unauthorized access by contractors or other third-party service providers?

Throughout this process, pay particular attention to certain kinds of sensitive data. Identity thieves typically look for social security numbers, credit card and other financial information.

Organizations should also consider protecting against data security breaches with insurance.Various cyber liability products are available to protect against privacy injuries, such as identity theft, and to cover the cost of complying with various data breach notice laws. Given the complexity of the risk, an experienced insurance agent should be consulted to ensure that adequate coverage is obtained. If you would like to learn more about insuring against data security breaches, contact us.

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Understanding Auto Insurance

Whether purchasing a new policy or determining if a loss is covered under an existing policy, it helps to have a basic understanding of how auto insurance works. Here is a brief explanation of some common auto insurance concepts and coverages that you can use to determine if you have the protection you need.

Collision coverage pays for car damage caused by a collision with another car or an object. This type of coverage is typically required by finance companies.

Comprehensive coverage pays for losses caused by something other than a collision, such as theft, vandalism, falling objects, fire and weather (wind, hail, etc.). This type of insurance coverage is also known as Comp or Other-Than-Collision coverage.

Liability insurance covers damage to others for which the insured is responsible. There are two main types of auto liability coverage, both of which are generally required by state law. Bodily Injury (BI) Liability insurance covers damages resulting from injury or death, such as medical and funeral expenses, loss of income, pain and suffering. Property Damage (PD) Liability insurance covers damage to the property of others, such as cars, mailboxes, trees and fences. Liability coverage does not pay for the insured’s own bodily injury or property damage.

Personal Injury Protection (PIP or No-Fault) insurance pays for injuries sustained in an auto accident. In addition to the insured, PIP may also cover family members, passengers and household residents. PIP insurance generally provides benefits for medical expenses, loss of income, funeral expenses and other similar expenses, regardless of who is at fault. The requirement to carry PIP insurance and the benefits that must be paid by an insurance company vary by state.

Uninsured Motorist (UM) coverage pays for an insured’s bodily injury and/or property damage that is caused by an uninsured motorist. UM insurance allows an insured to collect from his or her own insurance company. Underinsured Motorist (UIM) coverage is a similar type of coverage that pays for an insured’s bodily injury and/or property damage caused by a motorist with insufficient insurance.

Stacking is a way to increase a policy’s uninsured or underinsured motorist coverage limits. If UM or UIM coverage is stacked, then the policy’s limits will be multiplied by the number of vehicles covered under the policy. For example, an insured with UM limits of 50/100 ($50,000 per person/$100,000 per accident) and three covered vehicles can essentially increase her UM limits to 150/300 by electing to stack her coverage. The manner in which an insured must accept or reject the stacking of limits is often governed by state law.

Guaranteed Auto Protection (GAP) insurance pays the difference between the current outstanding balance on a car loan or lease and the actual cash value of the car. This coverage can prove valuable when the amount owed on the car is more than the value of the car when it rendered a total loss after an accident. This would be the case, for example, when a new car is totaled the day after it was purchased and driven off the dealer’s lot.

Deductible is the amount an insurance company will deduct from the loss before paying up to the policy’s limits. Though insureds typically have options when choosing a deductible, state laws and finance agreements often have specific deductible requirements.

Coverage Limit is the amount an insurance company will pay in the event of a claim. Those who purchase only the minimum coverage limit required by their state’s law are probably underinsured. Coverage limits of $100,000/$300,000 are generally recommended.

If you would like more information about comparing and obtaining personal and commercial auto insurance coverage, please contact us.

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What is a Third Party Over Action?

Assume an employee suffers an accidental workplace injury. After collecting benefits under his employer’s workers’ compensation insurance policy, the employee tries to get more money by filing a negligence lawsuit. Can the employer be required to pay the employee for his negligence damages? Maybe. Would the employer’s commercial general liability insurance policy cover this? Maybe not.

Workers’ compensation laws are basically a trade-off. On one hand, employees enjoy the benefit of what is essentially a no-fault compensation system that provides benefits for workplace injuries. In exchange, employees generally give up the right to sue their employers for negligence. So, if our employer is immune from the employee’s negligence lawsuit, what is there to worry about? A Third Party Over action.

A Third Party Over action is a type of action in which an injured employee collects workers’ compensation benefits from the employer and also sues a third party for causing or contributing to the employee’s injury. Then, because of some type of contractual relationship between the third party and the employer, the liability for the employee’s lawsuit is passed back to the employer. Here is an example of a typical Third Party Over action.

John, an employee of Acme, trips on a broken floor tile while at work. Despite collecting benefits under Acme’s workers’ compensation insurance policy, John also sues the owner of the building where Acme’s offices are located because it negligently failed to repair the broken tile. Under Acme’s lease, Acme is contractually required to indemnify the building owner for any claims brought by Acme’s employees. Upon being sued by John, the building owner demands indemnification from Acme pursuant to the lease, and essentially passes the liability for John’s negligence lawsuit back to Acme.

Though state statutes and judicial decisions may provide employers with limited protection in certain situations, Third Party Over actions still pose a significant risk. Employers that have agreed to indemnify a third party for its employees’ lawsuits must find out whether they are insured against the risk. This can be very difficult.

Claims involving injured employees are typically not covered by commercial general liability (CGL) insurance policies. However, a Third Party Over action may be covered by some CGL policies if the employer’s indemnification agreement with the third party meets the policy’s requirements. Other CGL policies may exclude Third Party Over actions altogether. This is why it is important to read both the policy form and the third party indemnification contract very carefully.

Given the complexity of Third Party Over actions, a reputable insurance agent with substantial experience in evaluating and insuring against Third Party Over actions should be consulted.

If you would like to learn more about protecting your organization against Third Party Over actions, please contact us.

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Condominium Association 2013 Legislative Update

The 2013 legislative session saw relatively little activity involving Florida’s Condominium Act. Nevertheless, laws have changed, and that’s always important. Here is a brief summary of some of the statutory amendments.

Insurance

The Condominium Act identifies property that must be insured by the association and property that is the responsibility of each unit owner. Unfortunately, the statute was not clear in distinguishing insurance obligations from regular maintenance and repair obligations. As a result, unit owners often believed that their association had an obligation to repair property (usually air conditioning units) because it was covered by the association’s insurance.

The 2013 amendment clarifies that the association is responsible for property covered by the association’s insurance policy if it was damaged by an insurable event, as opposed to regular wear and tear.

Financial Reporting

Condominium associations have annual financial reporting requirements. The type of financial statement an association must prepare depends on its total annual revenues. The 2013 amendment made the following changes to the statutory revenue thresholds used to determine an association’s financial reporting requirement:

Report of Cash Receipts and Expenditures: total annual revenues are less than $150,000 (was $100,000)
Compiled Financial Statement: total annual revenues are $150,000 or more, but less than $300,000 (was $100,000 – $200,000)
Reviewed Financial Statement: total annual revenues are $300,000 or more, but less than $500,000 (was $200,000 – $400,000)
Audited Financial Statement: total annual revenues are $500,000 or more (was $400,000)

Associations operating fewer than 50 units, regardless of annual revenues, must prepare a report of cash receipts and expenditures. Under the old law, this requirement applied to associations operating fewer than 75 units.

Official Records

Unit owners have a right to inspect and copy the association’s official records. Associations are now required to let unit owners make electronic copies of these records with portable devices, including smartphones, tablets, portable scanners or any other technology capable of scanning or taking photographs.

Member Directories

The Condominium Act prohibits associations from disclosing unit owners’ personally identifying information. However, associations are now allowed to publish and distribute to unit owners a directory containing the name, address and telephone number of each unit owner. Unit owners can exclude their telephone number from the directory by making a written request to the association.

Elevator Safety

Condominiums covered by Florida’s Elevator Safety Act were exempt from having to comply with Elevator Safety Code updates until either July 1, 2015 or until the elevator is replaced or requires major modification, whichever occurs first. The 2013 amendment removed the July 1, 2015 deadline. Accordingly, covered condominiums will not have to comply with all updated provisions of the Elevator Safety Code until their elevators require major modification or are replaced.

Some of the other 2013 amendments address board member terms, suspensions from using common elements and board member recalls. It is important for those serving on their condominium board to become familiar with all of the 2013 statutory amendments.

To learn more about your obligations as a board member, take our affiliate’s recently updated online course Condominium Operations: A Primer for Board Members, which has been approved by the Division of Florida Condominiums, Timeshares, and Mobile Homes.

If you would like to discuss how Setnor Byer Insurance & Risk can serve you and your association, please contact us. Clients of Setnor Byer’s Condominium Program enjoy access to various risk management services, such as Setnor Byer’s Risk Management Group and Unit Owners’ Report Line, as well as our affiliate’s Board Member Education Certification,

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Affordable Care Act’s Employer Mandate Delayed Until 2015

Shortly before the July 4th holiday, the U.S. Department of the Treasury announced that enforcement of the Employer Shared Responsibility requirement under the Affordable Care Act (Act) will be delayed until 2015. The employer mandate, which generally requires employers with at least 50 full-time or full-time equivalent employees to offer health care benefits or pay a penalty, was scheduled to go into effect on January 1, 2014.

Through a dialogue with businesses about the Act’s employer and insurer reporting requirements, the administration learned of concerns about the complexity of the requirements and the need for more time to implement them effectively. As a result, the administration decided to delay the Act’s mandatory employer and insurer reporting requirements.

According to the announcement, this delay is designed to:

Provide the administration more time to consider ways to simplify the new reporting requirements consistent with the law.
Provide more time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.

The administration recognized that delaying the Act’s mandatory employer and insurer reporting requirements will make it impractical to determine which employers owe shared responsibility payments for 2014. As a result, the administration decided to also delay enforcement of the employer mandate, stating that “these payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.”

The Treasury says it will be publishing formal guidance regarding the delayed enforcement soon and that proposed rules will be published this summer. Once these rules have been issued, the administration says it will work with employers, insurers and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015.

So what should employers be doing now? The Employer Shared Responsibility provision is still the law, it just isn’t being enforced. Not surprisingly, talking heads are making predictions and debating whether it’s really speeding if nobody can pull you over. Unfortunately, the manner in which employer’s will be affected by the delay will not be known until additional guidance is issued.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the changing health care reform landscape. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

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Protecting Sensitive Data: How Secure is Your Wireless Network?

In previous articles we discussed how laptop computers and the office copy machine increase the risk of data security breaches. Another significant risk to an organization’s sensitive data is the wireless network. Since today’s workplaces are increasingly “going wireless,” the Federal Trade Commission recommends taking the following steps to protect wireless networks.

Understand how a wireless network works. Going wireless generally requires connecting an internet access point to a wireless router, which sends a signal through the air, sometimes as far as several hundred feet. Any computer within range can pull the signal from the air and access the internet. Unless precautions are taken, others can “piggyback” on the network or access information on the computer.

Use encryption. Encryption encodes the information so that it’s not accessible to others. It is the most effective way to secure a network. Two main types of encryption are available: Wi-Fi Protected Access (WPA) and Wired Equivalent Privacy (WEP). WPA2 is strongest so it should be used whenever possible. Since some older routers use the less secure WEP encryption, consider upgrading to a newer, more secure router. Note that wireless routers often come with the encryption feature turned off, so be sure to turn it on.

Use anti-virus and anti-spyware software. Since hackers are constantly developing new ways to attack computers and networks, security software is necessary. This software needs to be updated periodically so systems should be set to update automatically whenever possible.

Change the name of the router. The name of the router (often called the service set identifier or SSID) is likely to be a standard, default ID assigned by the manufacturer. Change the name to something private and unique.

Change the router’s pre-set password. Manufacturers typically assign a standard default password to a wireless router. Default passwords should be changed. Visit the manufacturer’s website to learn how to change the password.

Limit access to the wireless network. Every computer that is able to communicate with a network is assigned a unique Media Access Control (MAC) address. Wireless routers usually have a mechanism to allow only devices with particular MAC addresses to access the network. However, since MAC addresses can be mimicked, don’t rely on this step alone.

Turn off wireless network when it’s not being used. A wireless network cannot be accessed when it is turned off.

Be cautious when using a public wireless network. Many cafés, hotels, airports and other public places offer wireless networks for their customers to use. These “hot spots” are convenient, but they may not be secure.

Organizations should also consider protecting against data security breaches with insurance. Various cyber liability products are available to protect against privacy injuries, such as identity theft, and to cover the cost of complying with various data breach notice laws. Given the complexity of the risk, an experienced insurance agent should be consulted to ensure that adequate coverage is obtained. If you would like to learn more about insuring against data security breaches, contact us.

If you would like to learn more about preventing data security breaches, take our online course Information Risk Management: Strategies for Preventing and Mitigating Information Security Breaches.

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Are You Ready for the 2013 Hurricane Season?

For those living or working in areas at risk of experiencing a tropical storm or hurricane, June 1st rarely passes unnoticed. At Setnor Byer Insurance & Risk, we understand that preparing for Hurricane Season is rarely easy and often stressful. We also understand that a lack of awareness and preparation can make a bad situation worse, and that the best way to limit the risk is to take preventative steps now.

The National Oceanic and Atmospheric Administration (NOAA) estimates a 70 percent probability that the 2013 Hurricane Season will bring:

12 – 18 Named Storms (winds of 39 mph or higher)
6 – 10 Hurricanes (winds of 74 mph or higher)
3 – 6 Major Hurricanes (winds of 111 mph or higher)

These estimates indicate that activity will exceed the seasonal average of 11 named storms, six hurricanes and two major hurricanes.

According to NOAA administrator Jane Lubchenco, Ph.D., “the United States was fortunate last year. Winds steered most of the season’s tropical storms and all hurricanes away from our coastlines…However we can’t count on luck to get us through this season. We need to be prepared, especially with this above-normal outlook.”

Though different situations call for different measures, the following tips can assist you in developing your own plan for dealing with the 2013 Hurricane Season.

Before the Storm

Monitor the news to allow time to prepare.
Identify all tools and equipment that will be needed to secure property before a storm and limit the damage after the storm (flashlights, batteries, caulking, tarpaulins, sandbags, cutting and fastening equipment, etc.).
Clear drains and downspouts to minimize the risk of flooding.
Move items inside.
Unplug electrical equipment and move property away from windows.
Check and secure all documents and records.
Take or update photographs of real and personal property.
Gather insurance policies and agent/insurer contact information.

After the Storm

Only after it has been declared safe to do so, look for any property damage and take reasonably necessary steps to protect against any further damage.
Report fallen power lines to power company immediately–stay away from them!
Check exterior walls and roof for damage from wind, rain, flying objects and rising waters (flood insurance).
Check all interior perimeter walls, floors, and roof for leaks and water damage.
Document all damage with photographs and video.
Prepare detailed damage reports.
Call your insurer or agent as soon as possible to report damage.

While preparing for Hurricane Season is never easy, our team of experienced and responsive professionals can work with you to make sure that your home, cars and property are protected.

For over 30 years, Setnor Byer Insurance & Risk has been helping our clients prepare before the storm and rebuild after. Our clients benefit from a Hurricane Insurance Program that includes an emergency and after hours claims service hotline in addition to guidance for disaster planning.

If you would like more information about how Setnor Byer Insurance & Risk can help you prepare for the 2013 Hurricane Season, contact us.

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