Tag: Insurance and Retirement Plans

Vehicle Sales Can Be Risky Business for Self Storage Facilities

Dealing with delinquent tenants is an unavoidable part of operating a self storage facility. Strict legal requirements make enforcing storage liens and selling tenants’ property a risky proposition. The risk is even greater for those facilities that permit the storage of motor vehicles.

Unlike other kinds of personal property, certificates of title are used to establish ownership of motor vehicles. This means that operators of self storage facilities must take the right steps to make sure the certificate of title will reflect the transfer of ownership from the delinquent tenant to the buyer. Unfortunately, re-titling a vehicle may not be quick or easy, particularly because the process isn’t always obvious and it can vary significantly from state to state.

For example, Florida requires an Application for Certificate of Title with/without Registration, though this requirement is not found in the self storage statute. By contrast, California requires an Application for Lien Sale Authorization and Lienholder’s Certification, a Certification of Lien Sale, an Application for Title or Registration, a Notice of Pending Lien Sale, a DMV letter of authorization to conduct the sale, postal receipts of all notices sent, and a Notice of Transfer and Release of Liability.

The lack of a uniform process for re-titling motor vehicles means that operators of self storage facilities must refer to and abide by their state-specific laws and requirements. However, regardless of what the process involves, operators can still take steps to make things easier while reducing the risk. For example, operators can collect vehicle-specific information and documentation when the tenant signs the lease, such as:

  • Vehicle Identification Number (VIN)
  • Vehicle registration information
  • Copy of Certificate of Title
  • License plate/tag number
  • Lien and lienholder information
  • Name and contact information for all owners of the vehicle

Operators of self storage facilities need to understand the increased effort and risk that come from storing and disposing of motor vehicles. Various insurance options specifically designed for the self storage industry are available, such as Sale and Disposal Liability Coverage.

If you would like more information about Setnor Byer Insurance & Risk’s Self Storage Insurance Program can help protect your facility, please contact us.

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Understanding the National Flood Insurance Program

Property damage caused by flooding is not covered by standard homeowners’ insurance policies, so those facing a flood risk need a separate flood insurance policy. The National Flood Insurance Program (NFIP) provides access to affordable, federally backed flood insurance.

What is a Flood?

The NFIP defines a flood as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:

  • Overflow of inland or tidal waters;
  • Unusual and rapid accumulation or runoff of surface waters from any source;
  • Mudflow; 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 as defined above.

What is Covered?

A flood insurance policy generally covers physical damage to building or personal property directly caused by a flood. The NFIP offers coverage for Building Property and Personal Property (contents), which must be purchased separately.

Building Property coverage generally insures:

  • the building and its foundation
  • electrical and plumbing systems
  • central air conditioning equipment, furnaces and water heaters
  • refrigerators, cooking stoves and built-in appliances
  • permanently installed carpeting over an unfinished floor
  • permanently installed paneling, wallboard, bookcases and cabinets
  • window blinds
  • detached garages (up to 10 percent of Building Property coverage)
  • debris removal

Personal Property coverage generally insures:

  • personal belongings such as clothing, furniture and electronics
  • curtains
  • portable and window air conditioners
  • portable microwave ovens and portable dishwashers
  • carpets not covered by the Building Property policy
  • washers and dryers
  • food freezers and the food in them
  • certain valuable items such as original artwork and furs (up to $2,500)

What is Not Covered?

Neither type of coverage protects against:

  • damage caused by moisture, mildew or mold that could have been avoided
  • currency, precious metals and valuable papers
  • property and belongings outside of a building, such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs and swimming pools
  • living expenses, such as temporary housing
  • financial losses caused by business interruption or loss of use of insured property
  • most self-propelled vehicles such as cars, including their parts

If you would like more information about the National Flood Insurance Program or are interested in obtaining flood insurance, please contact us.

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Shopping for Insurance: Quality versus Cost

People typically purchase insurance because they have to, not because they want to. For the most part, consumers are happy to obtain the minimum required insurance coverage at the lowest price they can find. That is, until a claim comes along. Only then do they discover that buying the cheapest insurance available wasn’t such a bargain after all.

The quality versus cost argument is nothing new especially when it comes to insurance. Consumers who pay less tend to get less, whether in the form of coverages, limits or financial security. And, when people choose cost over quality, it usually means they are uninformed about what they really need.

As a full-service independent insurance agency, it is our job to help our clients understand their insurance needs. We evaluate, compare and quote various options from multiple insurance companies so that our clients have the right information before making a decision. Though many still choose cost over quality, it is important that they understand what they may be sacrificing.

Low Premiums

Would you rather have automobile insurance that protects you from damage caused by someone who is uninsured or underinsured? Uninsured Motorist Coverage is commonly excluded from a policy to reduce the premium. Rejecting GAP coverage or electing non-stacked coverage are other ways to save money. But these choices come with a risk. When shopping for insurance it’s better to determine what coverage is desired, see how much that coverage would cost, and work with an independent insurance agent to help get the coverage you need at a cost you can afford.

Financial Stability

Although cost is important, the financial strength of an insurance company may be more important. Financially weak insurance companies are more likely to become insolvent or go bankrupt, which means that their policyholders are less likely to get their claims paid. Though purchasing insurance from a financially weak company may be cheaper, how valuable is the money saved on premium if there is no money to pay a claim? An independent insurance agent can help you evaluate the financial stability of the insurance companies you are considering.

Customer Service

Insurance companies don’t typically assign an agent to their customers. Each time you call you speak to a different person which means you have to explain your situation over and over. Look for an agent that offers personalized service. Those are the agents who are willing to go the extra mile to get you what you need. For example, at Setnor Byer Insurance & Risk, our commercial clients enjoy complimentary access to our risk management services to help them manage the risks associated with owning a business.

A solid understanding of your insurance needs is the key to overcoming the quality versus cost argument. An experienced and reputable independent insurance agent can help you purchase insurance that is both economical and effective.

If you would like more information about our insurance products, please contact us.

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Getting Rid of Consumer Report Information with the Disposal Rule

Businesses commonly use consumer reports when deciding whether to make a job offer or extend a line of credit. In the wrong hands, consumer reports may also be used to commit fraud and identity theft. This is why the Federal Trade Commission (FTC) enacted the Disposal Rule.

The authority for the Disposal Rule comes from the Fair and Accurate Credit Transactions Act (FACTA), which requires proper disposal methods by those who use consumer information from consumer reports for business purposes. As required by FACTA, the FTC’s Disposal Rule requires the use of reasonable disposal measures to protect against unauthorized access to or use of consumer information. Individuals and businesses of any size that use consumer reports for business purposes must comply with this rule

The Disposal Rule applies to consumer reports or information that comes from consumer reports. Under the Fair Credit Reporting Act, consumer reports include information obtained from a consumer reporting company that is used or expected to be used for various reasons, such as establishing a consumer’s eligibility for credit, employment or insurance. Credit reports and credit scores are consumer reports. Reports with information relating to employment, check writing history, insurance claims, residential or tenant history and medical history are also consumer reports.

The Disposal Rule, which simply requires reasonable disposal measures to prevent unauthorized access to or use of consumer information, is designed to be flexible. The rule allows organizations and individuals to determine what measures are reasonable by considering the sensitivity of the information, the costs and benefits of different disposal methods and changes in technology.

Under the rule, reasonable measures may include:

  • burning, pulverizing or shredding of papers containing consumer information so that the information cannot practicably be read or reconstructed.
  • destroying or erasing electronic media containing consumer information so that the information cannot practicably be read or reconstructed.
  • after due diligence, hiring a third party to properly dispose the consumer information. Due diligence could include reviewing an independent audit of the disposal company’s operations and/or its compliance with this rule, checking references, requiring certification by a recognized trade association or taking other appropriate measures to determine the competency and integrity of the disposal company.

According to the FTC, these examples are illustrative only and are not exclusive or exhaustive methods for complying with the Disposal Rule.

The Disposal Rule is but one aspect of protecting against a data security breach. Organizational protective measures should cover everything from the wireless network to the copy machine, and should also include 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 their complexity, 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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Final Rules Issued for Mental Health Parity and Addiction Equity Act

The Departments of Labor, Health and Human Services and the Treasury issued final rules implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (Act). Though interim final rules implementing the Act were published and became effective in 2010, these final rules will become effective 60 days after their November 13, 2013 publication date.

Under the Act, group health plans and group and individual health insurance coverage are required to treat mental health and substance use disorder benefits on par with medical/surgical benefits. Though the Act does not require group health plans to provide mental health benefits or substance use disorder benefits, if they are provided, financial requirements and treatment limitations cannot be more restrictive for mental health and substance use disorders than they are for medical/surgical benefits.

Financial requirements include deductibles, copayments, coinsurance and out-of-pocket maximums, but do not include aggregate lifetime or annual dollar limits. Treatment limitations include limits on the frequency of treatment, number of visits, days of coverage, days in a waiting period, and other similar limits on the scope or duration of treatment.

According to a press release issued by the administration, the final rules include specific consumer protections, such as:

  • Ensuring that parity applies to intermediate levels of care received in residential treatment or intensive outpatient settings;
  • Clarifying the scope of transparency required by health plans, including the disclosure rights of plan participants, to ensure compliance with the law;
  • Clarifying that parity applies to all plan standards, including geographic limits, facility-type limits and network adequacy; and
  • Eliminating an exception to the existing parity rule that was determined to be confusing, unnecessary and open to abuse.

Health and Human Services Secretary Kathleen Sebelius said, “This final rule breaks down barriers that stand in the way of treatment and recovery services for millions of Americans. Building on these rules, the Affordable Care Act is expanding mental health and substance use disorder benefits and parity protections to 62 million Americans. This historic expansion will help make treatment more affordable and accessible.”

The final rules generally apply to group health plans and health insurance issuers offering group health insurance coverage for plan years beginning on or after July 1, 2014; however, they do not apply to small employers with between 2 and 50 employees. Since the Affordable Care Act extended the Act to grandfathered and non-grandfathered individual health insurance coverage, the final rules apply to individual coverage with policy years beginning on or after July 1, 2014.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the constantly changing health care reform landscape. Check back with us periodically for future informational updates.

If you have specific questions about the Mental Health Parity and Addiction Equity Act or the Affordable Care 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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Data Security Breaches Can Happen to You

When it comes to data security breaches, many organizations say, “That could never happen to us.” Unfortunately, the increasing frequency of data security breaches means that many of these organizations are wrong. Don’t believe it? Let’s take a look at a few recent security breaches.

Hacking

In October 2013, the multi-billion dollar company, Adobe Systems, Inc., suffered a data security breach that compromised nearly 3 million records. Hackers were able to access customers’ IDs, encrypted passwords, names, encrypted credit or debit card numbers, expiration dates and other information related to their orders.

Laptop Computer

In October 2013, a Wisconsin hospital suffered a data breach when a laptop computer with unencrypted data was stolen out of an employee’s car. As a result, patients may have had their names, dates of birth, medical record and account numbers, providers, departments of service, bed and room numbers, dates and times of services, visit histories, complaints, diagnoses, procedures, test results, vaccines and medications exposed.

Employee Theft

In September 2013, a dishonest hospital employee in Florida accessed patient names, social security numbers, dates of birth and addresses. Even though the employee was fired and will be facing criminal prosecution, this information may have been used to file fraudulent tax returns.

Email Error

In September 2013, Columbia University Medical Center suffered a data security breach when an Excel file containing sensitive medical student information was accidentally attached to an email that was sent to students, faculty and staff.

Programming Error

In September 2013, a financial services firm suffered a data breach when a programming error allowed customers’ names, social security numbers and addresses to be viewed on the firm’s unrestricted website.

These recent incidents show that data security breaches can happen to any organization. This means that every organization must be proactive in protecting against data security breaches. Though protective measures should cover everything from the wireless network to the copy machine, 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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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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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.

If you’d like to subscribe to our weekly newsletters please click here.

The Affordable Care Act’s Individual Mandate

The Affordable Care Act’s Individual Shared Responsibility provision requires nonexempt individuals to obtain minimum essential coverage for themselves and any nonexempt dependents. Starting January 1, 2014, those failing to get the required health insurance will have to pay a monthly penalty.

Who is subject to the penalty?

The penalty, which is calculated monthly, applies to individuals of all ages, including senior citizens and children. An individual is liable for the penalty assessed against any other individual who can be claimed as a dependent for federal income tax purposes. If an individual files a joint return, that individual and their spouse are jointly liable for the penalty. Penalties will be paid by including them with an individual’s tax return.

What is Minimum Essential Coverage?

Minimum essential coverage generally includes:

  • Employer-sponsored coverage (including COBRA coverage and retiree coverage)
  • Coverage purchased in the individual market
  • Grandfathered health plans
  • Medicare and Medicaid coverage
  • Children’s Health Insurance Program (CHIP) coverage
  • Certain types of Veterans’ health coverage
  • TRICARE (Department of Defense health care program)

How much is the penalty?

The Individual Shared Responsibility penalty is calculated monthly by using a flat dollar amount or a percentage of household income, whichever is greater. Under the flat dollar amount method, each nonexempt individual is penalized a fixed amount. For individuals under the age of 18, the penalty is one-half the fixed amount. If an individual is responsible for multiple dependents, the total penalty cannot be more than 300% of the applicable fixed amount.

The fixed amounts used to calculate the penalty are:

  • $95 in 2014 ($7.92 per month)
  • $325 in 2015 ($27.08 per month)
  • $695 in 2016 ($57.92 per month)
  • $695 + cost-of-living increase in 2017 and beyond.

Under the percentage of income method, the penalty is a percentage of an individual’s household income, less specific deductions. To calculate household income, add the individual’s modified adjusted gross income to the modified adjusted gross incomes of the individual’s family members.

The percentages used to calculate the penalty are:

  • 1% in 2014
  • 2% in 2015
  • 2.5% in 2016 and beyond.

For example, in 2014, the annual penalty will be $95 per adult and $47.50 per child, but no more than $285 (300% of $95) or 1% of the household income, whichever is greater.

Is there a maximum limit for the penalty?

Yes. The Individual Shared Responsibility penalty cannot be more than the national average premium for bronze-level (covering 60% of costs) qualified health plans offered through Affordable Insurance Exchanges. The Congressional Budget Office estimates that in 2016, the national average will be approximately $5,000 for individuals and $12,500 for families of four.

Are there any exemptions from the Minimum Essential Coverage requirement?

Yes. The following individuals are not required to obtain Minimum Essential Coverage:

  • Members of a religious sect that is legally recognized as being conscientiously opposed to accepting any insurance benefits.
  • Members of a recognized health care sharing ministry.
  • Individuals who are not U.S. Citizens, U.S. Nationals or lawfully present aliens.
  • Individuals incarcerated following disposition of criminal charges.
  • Members of a recognized Indian tribe.
  • Individuals with income below the threshold for filing a tax return.
  • Individuals whose required contribution for coverage exceeds 8% of their household income.
  • Individuals who have been certified as suffering a hardship.
  • Individuals with a gap in health insurance coverage of less than three consecutive months during the year.

Though proposed regulations explaining the Individual Shared Responsibility penalty have been published by the Internal Revenue Service and the Department of Health and Human Services, they are not final and may change.

At Setnor Byer Insurance & Risk, we are committed to guiding you through Health Care Reform. 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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