Thursday, June 22, 2017

Cyber Insurance Basics

The WannaCry ransomware attacks last May have shown everyone that there is no such thing a complete cyber security. Hackers are among the most creative of software developers and when they go bad and use their skills to invade and cripple businesses through the internet, security agencies play a game of catch up. If large corporates with dedicated IT departments can’t protect themselves against such occurrences, needless to say about small and medium businesses. The off the shelf anti-virus programs are necessary, but will not help against a targeted attack. That is why cyber insurance is growing at a rapid pace. It cannot prevent cyber-attacks, but it can help to mitigate the often disastrous results of a system being hacked.

What Is Cyber Insurance?

Cyber Insurance (also known as “cyber risk insurance” and “cyber liability insurance”) is meant to help provide a business with the financial resources to recover from a cyber-attack. Although there is no standard policy framework as yet, in general cyber insurance will reimburse:


  • Investigation expenses: A forensic investigation into how the attack happened is essential to plug holes and prevent the same thing happening again. Often private security firms are required to help law enforcement in this and the costs can be high.
  • Business losses: A cyber-attack results in business interruption, data loss, network being down and ancillary costs of managing the crisis.
  • Third party loss: Not only do customers have to be notified of data loss that could affect them, in some cases credit monitoring of affected customers is mandated by law. These could total up to a very substantial cost.
  • Ransom and lawsuits:Cyber extortion such a ransomware can mean huge payouts. A business could also be liable for loss of confidential data, intellectual property and regulatory fines. Lawsuits from affected customers are also very common.

What to Look For In Cyber Coverage?

  • Standalone policies are typically better than extensions to an existing policy. They are usually more comprehensive.
  • Do the deductibles work for you?
  • Are third party service providers covered? This is essential if your service providers do not have coverage.
  • Does the policy cover both generalized attacks and those targeted specifically at your business?
  • Are non-malicious acts by employees covered? This may be part of E&O coverage, but it may not.
  • Are phishing and similar attacks covered?
  • Advanced persistent threats  may take place over an extended period of time. What, if any, are there time frames that limit the coverage?

Contact an Insurance Professional That Understands Cyber Insurance

Cyber insurance is a new and rapidly evolving field. The best way to get the right coverage for your business, at the right cost, is to get in touch with and insurance company that has in-depth knowledge of the issues involved. By understanding the nature of your business, the risk you face and the potential liabilities, a coverage that will protect you can be developed. This is not something that can wait. The businesses that were hit by WannaCry thought these things happen to the other guy, until they discover the other guy was them.

Tuesday, June 13, 2017

Are Drunken Cyclists Dangerous? Maybe!

The exercise benefits and environmental friendliness are among the many reasons why cycling is growing in popularity. But cycling can be dangerous, and not just for the cyclist. According to the Insurance Institute for Highway safety, deaths of intoxicated cyclists are a significant problem. While the fatalities from drunken driving have declined over the years, the same is not true in the case of drunken cyclists. Drivers are often berated for the impatience they show cyclists who they think, are getting in their way and change the flow of traffic.  While that may be true, cyclists pose a danger to motorists, especially if drink or drugs have impaired them.

A Case Study

John was a health fanatic who cycled to work every day. One Friday evening, he and some colleagues went out to celebrate the completion of a major project. After a few drinks, he got on his cycle to head home. At a crossing, he jumped the red light and rode out in front of Karen. She swerved to avoid him and in the process hit another car. Not only were both vehicles severely damaged, she sustained major injuries. She was unable to return to work for several months. Her medical bills quickly exhausted John’s meager insurance coverage leaving her with no choice but to sue him for reimbursement. The legal costs were another huge financial burden on her. Since John did not have any significant assets, he had to declare bankruptcy. Karen was left with nothing, so she too had to declare bankruptcy.

John caused the accident, but Karen paid the price! If she had taken an umbrella insurance policy to cover such situations, she would have been well protected. To put it simply, umbrella insurance is extra liability coverage, which is designed to give you additional protection from lawsuits and claims and to protect your assets. It does this in 2 ways. You get additional liability coverage over the limits of your auto, boat and homeowners policies. The protection starts when the coverage on the other policies has been exhausted. It also provides coverage against claims that may be excluded from other liability policies you may have.

Protect Yourself

A drunken cyclist or other factors beyond your control could get you into an accident to result in serious injury and loss. Your auto insurance coverage may not be adequate to protect you. This is where a personal umbrella policy will fill the gap and give you the coverage you need to take care of medical bills, lost wages and legal expenses. An insurance professional will be able to work with you to determine if there are gaps in your insurance that need to be filled and provide you with the options that best suit your needs and budget.

Sunday, May 21, 2017

Is Your Home Under-Insured?

Recent research shows that 60% of the respondents never shopped around or checked on the adequacy of their homeowner’s insurance when the policy was up for renewal. 75% of them said that cost was a major influence on the amount and type of coverage they had. While the cost of insurance cannot be ignored, it should not be the deciding factor in the amount of coverage that is taken. The coverage should be based on what it will cost to rebuild a home that has been destroyed by natural calamity.

Market Value vs. Replacement Cost

The real estate market is yet to recover from the mortgage crisis of a few years ago. Many homeowner’s look at the current market value of their home and, on finding that the value has dropped over the last few years, reduce their insurance accordingly. However, that is a major mistake. A home’s value may have come down by 30% but if it is destroyed, the cost of rebuilding it may be 30% higher. That is the kind of gap that could ruin a family financially. What you need to do is base your coverage on what it will cost you to rebuild a home that has been lost. There are 2 types of insurance options to consider.


  • Actual Cost Value (ACV):This is the less expensive of the options. It covers the “as is” or depreciated cost of the house. Coverage is limited to what is known as “like kind and like quality.” In other words, if a roof of a 12 year old house has to be replaced, the insurance payout will be for the cost of a 12 year old roof. The difference(the current market cost of a new roof) will have to be paid by the homeowner. Since depreciation happens quickly, it is easy to miscalculate the coverage that is available and find that a major part of the repair or replacement cost is not covered by the policy.
  • Replacement Cost: These policies cover the actual repair or replacement cost at the time the work is to be done. In other words, if the 12 year old roof is to be replaced, the policy will cover the cost that is prevalent today. Obviously, this is more expensive than the ACV coverage, but it offers complete protection.

Finding the Right Coverage

Thinking about worst case scenarios can be depressing. Finding your way through the complexities of insurance can be dull and boring. The cost of insurance can lead to efforts to reduce the premiums.  All these factors conspire to create a situation where it is easy to use ballpark estimates to decide on a policy without considering what you really need. You cannot afford to make mistakes or take risks when it comes to protecting your biggest investment. Balancing the cost of insurance and the coverage that is required requires professional expertise. An insurance broker will be able to guide you to the right choices – those that will not waste money on excessive premiums but at the same time give your family and your home the protection it needs. Procrastinate no longer and contact the insurance broker, today.

Monday, May 15, 2017

Why Don’t Californians Have Enough Earthquake Insurance?

One of the reasons why disaster movies are so popular is that watching something terrible happen while sitting safe and comfortable in a movie theater is that it allows people to see what could happen while they remain secure. The movie San Andreas showed how a massive series of earthquakes wiped out most of California. Yes, there was a lot of exaggeration in the storyline and some questionable science. But it was not complete fiction. The 800 mile long San Andreas Fault runs through the state and is one of the most dangerous fault lines in the world.

The Next Major Earthquake Could Happen Soon

Scientists say that the general rule of plate tectonic movement is that 16 feet of accumulated plate movement is relieved by a quake every 100 years. There has been no stress relief on the San Andreas Fault for over a century. The director of the Southern California Earthquake Center says that the fault is “locked, loaded and ready to roll.”

The science of earthquake is improving but it is still in its infancy. Even if a quake could be predicted, the benefit would be in terms of getting people out of the danger zone, not in saving property. A house cannot be moved overnight. The Bay area has 3 major fault lines – the San Andreas, the Hayward and the Calaveras. The U.S. Geological Survey predicts that a major quake will hit the Bay Area in the next 30 years along any of these faults.

A major quake in the Bay Area sometime in the not too distant future appears to be inevitable. The right insurance coverage is the only way to secure a family’s financial future when (not if) it happens.

Earthquake Insurance Is Not Cheap

A 2016 survey found that less than 15% of Bay Area homes have earthquake coverage. It’s not that people are unaware of the danger – everyone knows that this is an earthquake hot zone. The problem is the high premiums and deductibles that can make the cost of insurance appear to be excessively high. Premiums are determined by a home’s replacement value and how high the risk of quakes are in a specific area. Both of these conspire to push up Bay Area insurance costs. According to the California Earthquake Authority(CEA), the average premium for earthquake insurance in San Francisco County was $2,156 in 2014. That is a major reason why less than only 1 million of the almost 7 million single-family homes in the state have earthquake insurance. The issue that homeowners seem to miss is that the premiums are high because the risk is high. If a home is seriously damaged or destroyed in a quake, the cost of restoring it, could wipe out a family financially. Federal and state emergency assistance is only for survival, not for rebuilding lives. Earthquake insurance is the only way to protect a home and a family’s future.

Contacting an insurance broker to find the right coverage, as that is also essential. An insurance professional can help you to work out the coverage you need within the budget you have. It may not, afterall be as expensive as you think it is.

Friday, April 28, 2017

Floods - California’s Uncertain Future

According to a state report, California is at increasing danger of severe flooding in the future. What happened in San Jose recently could be just a taste of things to come. A report from the nonpartisan Legislative Analyst’s Office (LAO) says that 1 in 5 Californians live in a flood plain. The structures at risk of flood damage are estimated to be $575 billion. The current expenditure on flood reduction is far less than the tens of billions of dollars that will be required to increase the level of protection. In San Jose, 14,000 people had to be evacuated and the damage is estimated to be about $100 million.

Inadequate Funding – A Huge Challenge

According to the LAO, the funding for flood control is both limited and inconsistent. The Public Policy Institute of California estimates that between 2008 and 20011 the state spent $2.2 billion a year on flood control measures. Most of the dams and weirs in the state are a minimum of 60 years old and many of the levees were built 100 or more years ago. These are not to modern design and structural standards. The Department of Water Resources and the U.S. Army Corps of Engineers, in a study released in 2013, says that there are 836 flood management projects in the state that will require $52 billion and an additional $100 billion is required to address the problem of future flood risk.

Climate Change and New Developments Add To the Problem

The effects of climate change are well known and even if the trend is reversed in the foreseeable future, undoing the damage already caused will take decades. Expecting the scope of the problem to increase is not scaremongering – it is scientific fact. Added to this is the population growth that is pushing development into new and often unsafe areas and compounding the problem. One example is the approval given for the construction of apartments in Nordale Avenue in San Jose. This is an area that was inundated by the recent flood.

Flood Insurance Is No Longer Optional
 
The dangers to homes and property are obvious and there is no immediate solution in sight. Flood insurance is no longer an issue that Californians can afford to just think about. It is essential and needed now. Many homeowners think that their homeowner's insurance will cover such calamities and that state and federal flood assistance programs will offer them the additional protection they need. Standard homeowner’s insurance policies do not cover damage and loss caused by floods. State and federal programs are intended to offer immediate relief from the havoc that floods cause, not to help in recovery and rebuilding lives. If you do not have flood insurance, you should contact an insurance broker without delay to get the coverage you need to protect your family’s future. If you do have coverage, are you sure it is enough? Why not talk to an insurance professional to see what kind of protection you really have and if you should increase it?

Sunday, April 16, 2017

Life Insurance - Do Your Children Have The Right Coverage?

According to some estimates, about 30 million Generation X and Y people in the country do not have adequate life insurance coverage. In their younger years the thoughts of family, responsibilities and death are not serious concerns. However, time passes quickly and responsibilities grow faster than they think are possible. With so many competing financial obligations and life insurance options available, finding the right coverage is not easy.If you are the parent of a young person starting an independent life, talking to them about life insurance is not interference, it is parental guidance. Here are the 3 basics of life insurance that you should discuss with them.

Do You Need Life Insurance?

If you are single and have no dependents, you may not need life insurance. If you are working, you may qualify for a small policy through your employer which will cover the basic funeral expenses if you die. However, if you are married, or have taken on guardianship of siblings or have people who are dependent on you, then life insurance is no longer an option. You need to ensure that those who depend on you are taken care of if you should die. The younger the age at which a policy is taken out, the less expensive it is. Beneficiaries can always be changed as circumstances alter.

How Much Do You Need?

This is difficult to decide. Millennials will not be able to appreciate the financial liabilities that are placed on them as they progress through life. As a parent, you can use your own example of where you were 20 years ago and where you are now. That will provide a framework for what they have to plan for. They need to look at where they will be 10, 20, 30 and 40 years from now and what their responsibilities will be. In general, the coverage should be enough so that their dependents can live off the interest. This will include paying off any debts and paying for children’s education. These may be difficult to determine so much in advance, but by planning for the future in 5 or 10 year blocks, getting the right coverage will be easier.

What Type Of Life Insurance Is Right For You?

Term life insurance, as the name implies, is a coverage that is taken for a fixed period of time. If the policyholder dies during the validity of the policy, the beneficiaries will be paid the policy value. A whole life policy provides for lifelong coverage and contains a tax deferred investment component called the “cash value.” Money can be borrowed against the policy or it can be surrendered for cash. Both options have their pros and cons.

Professional Guidance Is the Best Option

Once the need for life insurance has been understood and accepted, an insurance broker should be consulted. An insurance professional will be able to explain the intricacies of life insurance, the various options and how the coverage can be changed to meet the demands of different stages of life. Insurance is a constantly evolving business and the coverage you, as a parent have had over the years, may not be the best for your children.

Wednesday, March 29, 2017

Earthquakes - The Increasing Risk in California

Nature can be a cruel mistress. The wet winter we have experienced has been seen as a blessing – it has refilled the reservoirs and ended the drought that had affected over 75% of the state. But while the rain has been welcomed, it has also brought with it an increased risk of earthquakes. Californians are no strangers to quakes and accept the tremors in the ground as part of life. But the record amount of rain over the last few months may have created such a large amount of pressure in the groundwater system to be a trigger for major disasters.

Frightening Research

A recent study by Durham University says that “"earthquakes are triggered by a tiny additional increment of stress added to a fault already loaded almost to breaking point.” Itgoes on to say that hydrological changes do not need to be either large or sudden to cause changes in the water pressure at geological fault zones. It concludes that "It is thus unsurprising that extreme rainfall events might also encourage earthquakes. A number of instances of this have been flagged by scientists."

California’s History of Natural Disasters

Once again the Governor has had to ask for federal help to combat the flood conditions. That will help the state to cope with the damage. However, such help is always post facto. Help cannot be requested for a disaster that is in the future such as the increased probability of earthquakes due to the flooding. Federal and state relief programs are meant to tide over the immediate aftermath of disasters. They are not insurance against them and do not help in rebuilding lives that have been affected by them. However, as a homeowner you can get the flood and earthquake insurance you need to protect your family and your future.

Studies show that the majority of Californians are under-insured when it comes to protection from natural disasters. Your homeowner’s insurance policy may look good on paper and the coverage may seem to be adequate to protect your home, but does it cover flood and earthquakes? A major flooding incident or a massive earthquake could not just damage your home, it could destroy it along with all its contents. Recovering from that kind of loss requires a huge amount of resources. It is not just a matter of rebuilding the house and replacing everything in it. You will need a roof over your head during the months or more that it could take to move back home. Your living expenses will increase during this time. Are you sure your homeowner’s coverage will compensate you for all of this? You cannot hope that you are covered – you must be sure. The best way to do that is by contacting an insurance broker to help you review your existing coverage and supplement it with flood and earthquake insurance to give your family the protection it needs. Paying more for insurance may seem to be a needless expense but the odds of being affected by a natural disaster are not in your favor and they are getting worse. Balancing out your natural disaster protection may be less expensive than you think and an insurance professional will be able to help you find the optimum balance.