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Home-Based Business Coverage

If you conduct business in your home, insuring your business properly is part of a solid risk management plan. We can help!          

What Protection Does It Offer?

Common coverages for home-based businesses include personal business property, professional liability, business income, personal and advertising injury, loss of business data, crime, theft and auto coverage. Depending on the type of options may be available.

Coverage Options

Based on your business needs, you have three basic coverage options to choose from, depending on your level of risk:

  1. Homeowners Policy Endorsement. This provides the least amount of coverage and, therefore, is not ideal for most home-based businesses (depending on the level of risk).  While it may provide enough coverage for a freelance writer with one computer and no business foot traffic, it’s not enough for someone who employs others, has clients visiting his or her home or has valuable business equipment and/or inventory.
  2. In-home Business Policy. More comprehensive than a homeowners policy endorsement, in-home business coverage is a stand-alone policy that provides higher amounts of coverage for business equipment and liability.
  3. Business Owners Policy, or BOP. A BOP bundles property and liability insurance into one policy. Created specifically for the small- to mid-size business, a BOP covers your business property and equipment, loss of income, extra expense and liability. It is the most comprehensive property and liability option. It does not include health or disability insurance, which are available as separate policies.

What’s Your Risk?

While most homeowners insurance policies do cover a limited amount of business equipment—computers, copiers and printers, to name a few—it’s likely that what you own is worth more than your policy’s limits. Also, your homeowners liability insurance probably won’t cover any injuries that may occur to the employees or clients that you have on your premises. What’s a home-based businessperson to do?

We’re Here to Help

Properly insuring your home-based business is crucial to protecting both your business and your home. At Reith & Associates Insurance and Financial Services Limited, we understand the small business owner’s personal and business needs, and can help you tailor coverage that’s as unique as the products and services you provide. Contact Reith & Associates today to learn more about how we can help you insure your livelihood.

Reith & Associates Insurance and Financial Services Limited
http://www.reithandassociates.com/
519-631-3862

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Cyber Risks & Liabilities

By: Dan Reith
Principal Broker
Reith & Associates Insurance and Financial Services Limited

COVID-19’s Impact on Cyber Threat Activity

Cybersecurity crisis emerged as a result of the 2020 global health crisis as cybercriminals posed an increased threat to the safety of individuals and organizations. Experts are seeing an uptick in cyber threat activity as workforces continue to move to the digital landscape.

Increased Individual Attacks

In 2020, cybercriminals capitalized on fear surrounding the pandemic by producing COVID-19-related scams that trick victims into opening malicious links and attachments. Cybercriminals create fake COVID-19-related content, such as local and regional health updates, or knowledge of cures and treatments. The pandemic has created an opportunity for cybercriminals to exploit human curiosity and concern, which has led to an increase in cyberattack victims.

There’s also been an increase in phishing scam campaigns where cyber threat actors craft convincing copies of government websites and official correspondence. These attacks prey upon populations who are anxious and less likely to be skeptical of emails and other links regarding COVID-19.

Increased Organizational Attacks

As cybercriminals continue to exploit human vulnerability and individual fears surrounding COVID-19, the sudden increase in organizations with employees working from home has allowed cybercriminals to capitalize on cloud-based technologies that didn’t exist before. Research has found that companies became less secure in 2020 due to hastily deployed remote work solutions.

The Canadian Centre for Cyber Security predicts that ransomware will continue to target health care and medical research facilities as the global health sector continues to mitigate the COVID-19 pandemic. Cybercriminals taking advantage of the health crisis have the ability to jeopardize patient outcomes and public health efforts.

Another ransomware trend that emerged in 2020 is known as “double extortion,” where cybercriminals maximize their chance of a profit by threatening additional abuse of the compromised data, including auctioning or selling it.

It’s more important than ever that organizations take a proactive approach to their cybersecurity measures as well as educate employees on the risks of cyber threat activity.

Human Error as a Cybersecurity Threat

The IBM Cyber Security Intelligence Index Report found that human error is a major contributing cause in 95 per cent of cybersecurity breaches. Human errors are unintentional actions or a lack of actions by employees and users that cause or allow a security breach to happen.

Human error can typically be separated into two categories:

  1. Skill-based errors—These errors occur when a user makes a small mistake when performing familiar tasks and activities. While they know what the end result is supposed to be, they make an error due to memory lapse, mistake or negligence.
  2. Decision-based errors—This type of error occurs when a user makes a faulty decision as a result of not having the necessary level of knowledge, not having enough information about the specific circumstance or not realizing inaction is a type of decision.

These mistakes and lapses in judgment can lead to cybersecurity attacks that put organizations in jeopardy. Cybercriminals know that technical security measures are only effective when humans properly utilize them.

The following are examples of how human error can be exploited:

  • Misdelivery—Misdelivery is a common threat to corporate data security and happens when a user sends something to the wrong recipient. Employees should take care to double-check all fields of information before hitting send.
  • Password issues—According to the National Centre for Cyber Security, 123456 is the most popular password in the world, and 45 per cent of people have the same password for multiple online services. Strong, unique passwords should be encouraged among employees.
  • Patching—Software developers are constantly working to detect exploits in programs and send software updates when one is discovered. Users and employees should immediately implement the update to remain protected against threats.

Addressing human error is key to reducing an organization’s chance of being successfully targeted. Educating workforces on mitigating cybersecurity threats can empower them to actively look out for and report new threats they may encounter.

What Is a Deepfake and What Is at Risk?

A deepfake refers to a doctored video or audio recording that looks and sounds like the real thing. While manipulating video is nothing new, deepfake technology could give anyone the ability to distribute misleading and false information.

As technology advances, it’s becoming harder to discern what is real or fake on the internet, and machine learning models are beginning to have trouble detecting the forgery. While there are certain signs that make it easy for the naked eye to spot a deepfake, including a lack of eye blinking or shadows that look wrong, experts predict that deepfakes will continue to advance in sophistication. Soon, the utilization of digital forensics will be the only possibility for detection.

If deepfakes become unidentifiable, it could lead to inherent mistrust and jeopardize faith in a shared, objective reality. In addition, there is the threat of those who might seek to weaponize this technology for political or malicious purposes.

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Privately Owned Company Directors & Officers Insurance – Coverage in Action

By: Dan Reith BA(Hons) CAIB
Principal Broker
Reith & Associates Insurance and Financial Services Limited

With today’s emphasis on corporate transparency and accountability, an organization’s directors and officers face a countless number of exposures. Regardless of your company’s size or mission, the legal costs associated with a lawsuit can be devastating for both the organization and your directors and officers.

Many wrongly assume that directors and officers (D&O) insurance is only necessary for publicly traded companies. However, privately held organizations can just as easily fall victim to lawsuits that can impact the company, its officers and board, marking D&O insurance a must!

Claims Scenario: Floored by a Breach of Duty Lawsuit

The company: A private flooring installation company worth approximately $20 million.

The challenge: A Manitoba-based flooring company with less than 15 employees was recently the subject of a lawsuit. A competing flooring company sued the insured, alleging purposeful contract interference.

Specifically, the competitor accused the company of diverting contracts and sought direct and consequential damages, including lost profits, punitive damages and attorney fees. As a result, the insured and its directors and officers were taken to court.

Private company D&O insurance in action: The case above alleges a wrongful act—an act that falls directly on the insured’s directors and officers. Thankfully, D&O insurance provides coverage for alleged or actual acts, which helps organizations respond to various types of litigation.

This is particularly important when you consider that the defence costs and mediation expenses for the above case reached $193,000. Without D&O insurance, the small-sized flooring company, as well as its directors and officers, would be forced to pay for the defence out of pocket.

Claims Scenario: Investing Gone Wrong

The company: A private company specializing in business process outsourcing.

The challenge: A private company works with several Fortune 500 brands and helps manage their shipping and customer care divisions. Recently, shareholders targeted the private company, alleging fraud and misrepresentation.

These shareholders claimed they were told the money they invested would be used to acquire smaller enterprises—bolstering the organization’s outsourcing capabilities. Using the shareholders’ money, the company would purchase these enterprises with the promise of doubling the original investment. However, when several of these acquisitions failed, shareholders claimed the directors and officers did not conduct the proper due diligence to ensure they were making the right decisions.

Private company D&O insurance in action: Despite their reasonable and best efforts, the directors and officers of the insured company failed in a high-risk, high-reward scenario. As a result, they were sued for negligence and possible fraud.

The company was taken to court—a process that went on for months and led to immense legal expenses. At the end of litigation, the D&O policy limits of $2 million were nearly exhausted but helped ensure the financial longevity of the company and its leadership.

Learn More About D&O Insurance for Private Companies

Many private organizations don’t believe they need D&O insurance. This can be dangerous thinking, as just one D&O claim can drain the personal assets of a company’s leadership team.

The current litigation climate for private companies presents an unending and potentially devastating challenge. Following a financial crisis, error, business interruption or similar incident, management can be held liable. Without the proper coverage, directors and officers would have to face claims brought on by competitors, customers, business partners and regulators on their own, likely with minimal success.

The Benefits of D&O Insurance for Private Companies

  • Legal Cost reimbursement—D&O polices can provide legal cost coverage for a variety of claims.  Specifically, D&O insurance can provide companies following allegation of wrongful acts, financial mismanagement, errors in judgement and negligence.  D&O lawsuits can occur without warning, it is critical that private company leaders arm themselves with the right policy.
  • Peace of Mind—D&O claims can come from a variety of courses including employees, clients, contractors and government bodies.  For private companies, claims from creditors and competitors are particularly common.  D&O insurance ensures that private company leaders are protected regardless of where claims originate, providing timely and effective coverage.
  • An improved ability to attract new leaders—Simply put, having a strong D&O policy in place makes board seats more attractive.  This is because purchasing insurance shows prospective leaders that you take D&O risks seriously and are prepared to protect them.
  • Coverage for regulatory exposures—Regulator agencies are increasing their scrutiny of private companies, making D&O insurance all the more important.  Paying the cost of a lawyer to defend a director or officer against a government enforcement action is expensive, and private company D&O insurance policies can help with these types of expenses.

To learn more about D&O insurance and other ways to keep your organization’s leadership team safe from litigation, contact your insurance broker today.

Talk to an Expert!

Reith & Associates Insurance and Financial Services Limited

519.631.3862

http://www.reithandassociates.com/


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Crime Prevention Tips During COVID-19 Shutdown – Making your business less of a target

If it isn’t bad enough, that the Covid-19 pandemic has caused many small businesses to close their doors, our local police services report of a significant spike in calls for break and enters, property theft and vandalism to business properties. 
If your business has been forced to close, here are some key crime prevention steps you can take to be less of a target:

  • Remove all valuables from storefront displays to reduce smash-and-grab thefts
  • Remove all valuables such as cash from the till and leave it open. Place the empty cash tray in plain view on the counter to signal there’s no money in the till
  • Remove signage from front windows so police can see the inside unobstructed during patrols
  • Remove any items of value away from window displays, place in the back of the store so they are not visible 
  • Consider installing an alarm monitoring system. If you already have one, ensure the contact list is up-to-date, responders are aware of their duties and process should they get a call, and it is activated when the building is not occupied
  • Consider installing a surveillance camera system that can be monitored online by owner/management
  • Clearly post signage on the door/window to indicate that the premises are monitored by an alarm company; that no money is kept on the premises and contact information for police and the business owner in case a member of the public sees damage to the property or suspicious activity
  • If the premises are closed for an extended period of time clean all glass surfaces and create a tracking log of when cleaning was completed. This may help investigators with suspect fingerprints in the event of a break-in
  • Consider applying a laminate on all windows and glass doors to prevent the glass from being broken from blunt force thereby preventing entry during attempted break-in
  • Install latch guards on doors to protect against prying including on secondary doors such as employee and loading entrances
  • Keep some lighting on inside for surveillance opportunities during the evening
  • Ensure all doors are properly secured and regularly check all exterior lighting is functioning
  • Remove material around the exterior of the property that may be used to gain entry
  • Check on your business daily, both in and out, at different times each day and report any suspicious activity to your local police as soon as possible 
  • Prevent and reduce the opportunity for crime to occur.  Be a good business neighbour, when checking on your property, check on neighbours’ property too
  • For more info http://www.stps.on.ca/crime-prevention-tips-for-business-owners/

Taking these steps will make your business less of a target and will ensure you meet the requirements of your insurance policy.  Our team is available to assist with any questions or concerns you may have about your coverage during a shut-down. We welcome your call or email inquiry. Stay safe, stay healthy.

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Business Risk Advisory for 2020

By:  Dan Reith  BA(Hons) CAIB
President/Principal

Biggest Risks to Watch in 2020

The most relevant risks to Canadian businesses are constantly in flux. Only by observing trends and planning appropriately is it possible to reduce these risks and prevent being caught unprepared. According to experts, the following are the biggest risks for Canadian businesses to watch out for in 2020. 

Data Protection

The number of reported cyber threats targeting data, such as ransomware, continues to rise, indicating an increased need for data protection and privacy. This risk is further underscored by the growing amount of data being collected and number of devices being connected to each other, each representing a new potential avenue to exploit.

Third-party Liability

Risks increase as organizations become more interconnected, sharing data, systems and technology. Organizations need to not only worry about their own security and risk management, but also about every other organization that they share resources with, as each one represents a new potential vulnerability for cyber attacks. In fact, 24 per cent of ransomware incidents reported in the third quarter of 2019 were caused by a vendor or managed service provider.

Reputation

Employees, business partners, stakeholders, consumers and the public are increasingly holding organizations accountable for unacceptable behaviour or conduct. High-profile cyber breaches and social movements such as #MeToo have shown that damaging news travels faster than ever through major media and social network channels. Organizations must closely examine and refine their approach to dealing with risks, and emphasize crisis and contingency planning.

Benefits of Mental Health Days

Mental health is an increasingly popular subject these days, with many studies and organizations drawing attention to the fact that mental health issues are more prevalent and harmful than was previously believed. In many ways, mental health is just as important as physical health in that it has a significant effect on one’s ability to perform to the best of their abilities while at the workplace.

As such, it’s important for organizations to recognize the importance of mental health in the workplace, and adjust policies and expectations accordingly. This can be done through offering greater flexibility in the workplace, such as by offering flexible hours, the ability to work from home and greater autonomy. Additionally, it’s also important to encourage employees to take mental health days if they are feeling mentally burdened.

While there is no need to create a separate form of time off specifically for mental health days, being candid with employees about the importance of their mental health and highlighting the ability to take time off or adjust hours worked to focus on mental health can go a long way toward improving morale, employee satisfaction and productivity.

To help encourage the use of time off for mental health at your organization, consider adopting the following practices:

  • Encourage conversations about mental health—Speak candidly to your employees about the topic, underscoring the fact that you understand and support decisions made in the interest of maintaining or improving mental health. Provide resources and education about mental health to increase awareness and communicate any related policy changes to employees.
  • Adopt a policy of confidentiality—Employees may not feel comfortable disclosing the use or purpose of a mental health day, whether it’s a full day off to rest or a few hours off to see a therapist. Make it known that requests for mental health days will not need a stated reason for approval.
  • Follow up after time off—While respecting their privacy, check in with employees after they have taken time off to find out if they are doing alright and if they require any additional support on your end, such as a temporarily lighter workload.

Your group benefits provider can provide a number of tools to assist in tracking these sorts of issues to ensure you a healthy and productive workplace.

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Insuring Your Intellectual Property

intellectual property concept

By:  Dan Reith BA(Hons) CAIB

        Principal Broker

        Reith & Associates Insurance and Financial Services Limited

As intellectual property becomes a vital part of more firms’ assets, businesses must consider the additional exposures they face. There are several types of intellectual property protected under federal law:  trademarks, copyrights, patents, trade dress and trade

secrets. To help protect your business, there are two types of intellectual property coverage available: the first protects a company sued for infringement by paying for legal defence, and the second helps pay the legal expenses of suing an alleged infringer.

If your company could be sued by a competitor for infringement or intellectual property theft, or you do not have the funds to cover legal fees associated with defending your patent or trademark, it is vital that you purchase coverage. Defending infringement litigation can cost hundreds of thousands of dollars, not including the cost of damages and prejudgment interest. In patent

infringement cases, attorney’s fees can easily top $1million.  Budgeting and planning for the protection of intellectual property rights may not only save your company a significant amount of capital; it may also help keep your business viable when legal bills accumulate rapidly. There are several options to cover these exposures: the “advertising injury” provision in the standard Commercial General Liability policy, endorsements to Errors and Omissions policies and specialized policies offered by

certain insurers specifically designed for the protection of intellectual property rights.

Commercial General Liability Policy – Advertising Injury

The Commercial General Liability Policy, or CGL, is a standard liability policy offering broad coverage. Coverage for an advertising injury often falls under Coverage B in a CGL. Any act by the insured that somehow violates or infringes on the rights of others

(referred to in the policy as an offence) is the subject of personal and advertising injury liability coverage, although only those acts that are specifically listed in the policy are covered. The coverage under the “advertising injury” provision is limited to those injuries that are directly related to the advertisement. Therefore, the policy covers debts owed by the insured party due to claims filed against it. Coverage B policyholders are sometimes covered in cases relating to trademark infringement; however, copyright

claims are only successful where they are directly related to advertising, and patent claims are rarely covered under the “advertising injury” provision. The cases which allow for coverage in a patent infringement case are generally limited to instances in which a court finds contributory infringement or inducement to infringe through an advertising medium. Since the “advertising injury” provision in a standard CGL is rather limited, many businesses consider additional coverage.

Special Endorsements and Policies

Beyond the CGL, specialized policies can be better suited to a business’s unique exposures. These are Errors and Omissions liability policy endorsements that can vary in focus from media and communications to patent infringement. Note that these policies have not been the subject of much litigation, and therefore, judicial guidance on coverage determinations is comparatively limited. It is important to consider multiple carriers, since available coverage varies widely from carrier to carrier.

Infringement Defence and Abatement Insurance

A third option relates primarily to patents, though riders for copyrights and trademarks may be available. Carriers have developed policies specific to intellectual property, generally with patents in mind. In relation to patents, there are three basic policy types: defence and indemnity, defence only and offensive, or infringement, abatement insurance. A defence and indemnity policy provides defence coverage in a patent infringement suit and, if the party in question is found liable, pays for damages, including prejudgment interest. A defence only policy, much like it sounds, covers only the cost of defence and does not cover damages awarded to the successful party. In addition, an offensive policy covers only the costs of pursuing an infringer. Certain carriers will amend some of

the above-mentioned policies to include endorsements for trademark and copyright infringement for an additional premium.

Exclusions to Coverage

In addition to special exclusions, there is a general exclusion to the CGL stating that there is no coverage “for an offence committed by an insured whose business is advertising, broadcasting, publishing or telecasting.” With the increase in claims, many carriers are drafting exclusions that specifically omit coverage for copyrights that fall outside of infringement of copyrighted

advertising materials, patents, trademarks and the like.

It is important to be aware of the exclusions to any policy

that you purchase. The most common exclusions

specified in intellectual property policies are for wilful infringement, anti-trust violations, infringement existing or known on the effective date of the policy and criminal acts.

Asserting Coverage

To maximize coverage, there are a number of steps that your company should follow. Failure to investigate the existence of overage in a timely manner can absolve a carrier of liability and create grounds for a malpractice case against the intellectual property legal counsel. While courts have held outside intellectual property counsel liable for failure to pursue coverage determinations, companies should still proactively recognize and review the potential for insurance coverage for protection of their intellectual property assets.

1. If a claim has been asserted against your company, you have a duty to notify your carrier. In fact, notifying your carrier immediately is in your best interest because a delay could be grounds for denying coverage. In the case where a formal complaint has been served on the company, the following six steps are recommended.

2. The policy or policies should be analyzed by counsel to determine under which policies the claim may be covered. In this step, the complaint should be closely examined for types of issues raised and should be compared to the relevant policy clauses.

3. The company should promptly tender defence to the carrier. In the tender, all policies that may provide coverage should be identified, including the specific clauses.

4. Demand a prompt response to the tender. If a sufficient extension of the time to answer is not granted, it is possible that a response to the complaint will be due prior to the issue of coverage being resolved. If that is the case, then defence counsel should

be retained until the issue of coverage is determined.

5. Review the carrier’s response to the company’s tender. The carrier may accept defence; it may defend under a reservation of rights; the carrier or the policyholder may seek a declaratory judgment for a coverage determination; or it can reject tender.

6. If there is a conflict in the interests of the carrier and the policyholder, the policyholder should insist on the right to control the litigation and should further insist upon independent counsel.

7. Be diligent about which documents are shared with the carrier, especially in cases where the carrier has reserved its rights to deny coverage. While the policyholder has a duty to cooperate with the carrier, in a case where a reservation of rights to deny coverage

has been tendered, the production of certain documents to the carrier could result in the waiver of the attorney client privilege as to the subject matter of the produced documents.

Comparing Policies

Insuring your company’s intangible assets and its liability is a vital part of risk management. Insurance for both infringement of ntellectual property and for an assertion of infringement against your company can provide financial security and peace of mind.

Reith & Associates Insurance and Financial Services Limited will compare your desired coverage to the specifically named offences in policies based upon enumerated risks and will examine any exclusions that may weaken the coverage you seek. We are skilled at

identifying the perils associated with intellectual property and high-technology companies, and we can assist you in selecting the right policy. Let us help you protect your most precious assets. Contact us today to ensure that the coverage you buy meets your needs in today’s marketplace.