Nikki Johnson No Comments

Renting Your Property through Airbnb: Things You Need Consider

Airbnb offers individuals a unique opportunity to efficiently rent out their homes, spare bedrooms or other accommodations.

For travellers, Airbnb is a convenient platform that provides affordable and flexible alternatives to hotels. For property owners and tenants, the service easily connects various rental units with prospective occupants and makes collecting payments simple and secure. For the average homeowner, properties or spare rooms that are otherwise vacant can easily be transformed into a source of income.

Despite its convenience and the potential for profit, Airbnb is not without its risks.

Potential Insurance Gaps

If you are considering renting your property through Airbnb, your first step is to contact your insurance broker to review your current homeowners or renters insurance policy. Relying strictly on such policies while hosting guests through Airbnb can lead to significant gaps in coverage and leave you financially vulnerable.

While your homeowners or renters policy may allow you to rent your property to a guest, it is important to keep in mind that each insurer has its own restrictions and requirements. For example, some insurers may require advanced notice of any short-term rental, whereas others might insist that you purchase an endorsement to broaden your coverage.

Standard homeowners and renters insurance policies are designed for personal risks, not commercial use. If you plan to rent out your residence on a regular basis, many insurance companies will consider this commercial use. In many cases, regular Airbnb hosts will need to obtain a commercial insurance policy in order to be properly insured. It should be noted that a growing number of insurance companies now offer home-sharing liability insurance policies that can be purchased on a month-to-month basis.

Even more alarming, your homeowners or renters policy most likely won’t consider property damage caused by guests a covered peril. This means you could be left to cover the cost.

Issues with Airbnb-provided Protection 

To its credit, Airbnb does offer its hosts two forms of protection through its Host Guarantee and Host Protection Insurance. While hosts may be inclined to rely exclusively on these programs to manage their risks, there are significant gaps related to these offerings.

Host Guarantee

Airbnb backs every one of its bookings with its Host Guarantee coverage at no cost. Airbnb claims that this coverage will reimburse eligible hosts for damages up to $1 million. However, Airbnb readily admits that its Host Guarantee is not insurance and should not be considered a replacement or stand-in for homeowners or renters insurance. 

Moreover, payments through the Host Guarantee are subject to a lengthy list of terms, conditions and exclusions. Therefore, hosts should be aware of the following issues related to Airbnb’s Host Guarantee:

  • Hosts must attempt to resolve any issues with the guests involved prior to receiving any compensation. This also means that a host would have to make a claim on his or her own insurance policy before Airbnb would intervene.
  • Any sum collected from a standard policy or a security deposit would be deducted from the Host Guarantee.
  • The guarantee will only repair or replace covered property that is damaged during the time frame of an online booking.
  • This guarantee does not cover certain items, including, but not limited to, cash, collectibles, jewellery, pets, watercraft or any damage to property that is not considered a covered accommodation.

Host Protection Insurance

In addition to its Host Guarantee, Airbnb offers coverage to patrons through its Host Protection Insurance. Airbnb indicates that the program provides primary liability coverage for up to $1 million per occurrence in the event of third-party claims of bodily injury or property damage. Despite Airbnb’s claims, hosts should be wary of relying solely on this insurance program for a number of reasons:

  • Intentional acts that aren’t the result of an accident are not covered under this policy. In addition, Airbnb’s Home Protection Insurance does not cover what it refers to as property issues, which can include things like mould, asbestos and bedbugs.
  • Neither Airbnb’s Home Protection Insurance nor its fine print is readily available for review. What’s more, the policy is subject to limitations, conditions and exclusions. Together, this means that specifics around coverages are vague, and Airbnb hosts may not know what’s protected.
  • The personal property of any guest is generally not covered. Additionally, any theft or damage caused by a guest may not be covered either.

With Airbnb’s Host Protection Insurance, it’s best to assume that you aren’t equipped with the proper coverage. For full protection, it is likely that you will need to speak with an insurance professional to better understand the policy adjustments you will need in order to be fully covered.

Considerations for Condo Owners and Renters

While Airbnb opens its services to condo owners and renters, multi-unit buildings often have restrictive bylaws, homeowner association rules or lease terms that could impact one’s ability to host guests through Airbnb.

In many instances, commercial activities like renting out accommodations—even for a short period of time—are forbidden by lease or condo board policies. In some cases, hosts will need to contact their landlord or condo board before subletting or renting any accommodations out. Failure to do this can result in eviction or other forms of legal action. 

Even if you are allowed to rent out your condo or apartment through Airbnb, hosts should be aware that doing so can cause tension with neighbours. There’s the potential that your guests may be disrespectful to property in common areas, act inappropriately or noisily, or make other tenants feel uncomfortable.

Local and Provincial Laws Considerations

In response to the rising popularity of Airbnb, many provinces, cities and towns are moving to regulate short-term property rentals through their municipal codes or zoning regulations. In some cases, home rental services like Airbnb could be prohibited altogether.

If you break these local regulations, purposely or otherwise, you could face thousands of dollars in fines. What’s more, Airbnb says alignment with laws and regulations is the responsibility of those renting out accommodations. Accordingly, it is imperative to review local laws and regulations before you commit to using Airbnb to rent out accommodations.

Tax Considerations

Income from all sources is taxable in Canada, including internet-sourced rental income. Consequently, any income derived from Airbnb rentals must be reported to the Canadian Revenue Agency (CRA).

Depending on the number and nature of the services provided to guests, the CRA will consider money earned through Airbnb as either rental or business income. Furthermore, if the income you make from Airbnb exceeds $30,000 per year, you will most likely have to register for a harmonized sales tax (HST)/goods and services tax (GST) account through the CRA and will be subject to the applicable taxes. Provincial sales taxes (PST) will vary from province to province.

For those who have already earned unfiled income through Airbnb, coming forward through Canada’s Voluntary Disclosures Program (VDP) is recommended. Through the VDP, penalties for unfiled back taxes will be forgiven.

For more information on the tax implications of Airbnb and to ensure compliance, hosts are encouraged to contact a tax professional or the CRA.

The Bottom Line

While Airbnb offers a unique and potentially profitable service to users, it’s not without its faults. Before you decide to try it for yourself, be sure to consider all of the risks.

Again, you’ll want to minimize potential financial fallout by purchasing the appropriate insurance coverage. To discuss your options further, contact Reith & Associates Insurance and Financial Services Limited today.

Dan Reith, Principal Broker
Dan Reith, Principal Broker

Dan Reith

Principal Broker
Reith & Associates Insurance and Financial Services Limited
https://reithandassociates.com/
Nikki Johnson No Comments

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/


Nikki Johnson No Comments

Non-Profits: Employment Practices Liability & Donated Funds

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

No employer wants to believe that their employees or volunteers would take legal action against them, especially in a non-profit organization. Unfortunately, over the past decade, Employment Practice Liability (EPL) has become one of the largest risks faced by organizations in both the non-profit and for-profit sectors. While these types of claims hurt any organization’s bottom line, they can be especially detrimental to non-profits that rely on donations to make up a large portion of their revenue stream. Donors want their money to be used to help your organization’s cause, not to pay off mistreated employees. In some cases, donors have actually sued non-profits over how their donations were used. To protect your organization against potential liability, it is important that you minimize EPL claims while accurately documenting the use of donated funds.

Donated Funds

A large number of non-profits rely heavily on donations to support their mission. To continue to receive this kind of support, non-profits need to be careful how they spend donated funds, as donors have become more and more scrutinizing of the organizations they give to. Recently, there has been an increasing trend of donors taking legal action against non-profits for misusing donations. Not only is the legal aspect of this expensive, but it can also hamper the ability to build relationships with new donors in the future, further costing an organization. It is extremely important that you record how donated funds are used in case your spending practices are ever called into question.

In situations involving EPL claims, donated funds must be properly managed to avoid backlash from donors. It should come as no surprise that donors may not be happy if their donations are used to cover part of a payout that results from your organization’s poor internal practices. The last thing you want is for an employee’s legal action to spark litigation from donors. The problem is, non-profits that rely heavily on donations may have no other means to cover damages awarded to an employee. To avoid these complications, it is important to stop EPL claims with good employee practices before they have the chance to turn into lawsuits.

Employment Practices

More and more employees are taking legal action against their employers for what they see as discriminatory practices in the workplace. With the potential costs they may bring, an EPL claim can be incredibly damaging to a non-profit organization, especially a small one. Implementing appropriate employment practice standards to stop harassment and discrimination will reduce the chances that an employee can make a successful claim, while also creating a positive atmosphere throughout your organization.

Start by outlining the kinds of behaviours that will not be tolerated so they are clear to all employees. Define what will constitute harassment and discrimination so it cannot be left up to interpretation after the fact. The standards you develop should apply to every level of employee no matter what position he or she holds. Equal enforcement means that every employee will be treated the same way, reducing the chance that an individual can claim they were singled out. The program should also encourage communication. Many times, employees who are having problems take legal action because they do not know what other routes to take. Having a program in place to handle employee concerns can help rectify a situation before it becomes a legal issue. Most importantly, make sure the guidelines you establish are followed. If they are in place but it is widely known that they are not enforced, they will be less effective in preventing claims.

It is important to extend these same policies to any volunteers you have working at your organization. EPL claims made by volunteers exist in a legal grey area largely defined by the extent of the volunteer’s involvement with the organization. While most of the time, volunteers have no legal base for a claim, it is still important to treat them with the same respect as any other employee. This not only protects your organization, but it also provides a positive work environment for those donating their time.

Retaliation

It is also important to note that retaliation comes into play in more than 25 percent of EPL claims. Retaliation can enter when an employee who has brought a claim against the employer feels that he or she has been punished in the workplace for his or her actions. This could take the form of position reassignment, failure to promote or even termination. An employee who originally may not have had a strong case could gain ground by showing that his or her employer retaliated against the initial claim. The addition of a retaliatory claim can increase both the potential payout to the employee and his or her chance for success.

To protect yourself from further legal action, you must be very careful when dealing with employees who have filed EPL claims. Do not make any rash decisions regarding the employee’s state in your organization. If the employee must receive disciplinary action for other work issues that are not related to his or her EPL claim, make sure to accurately document the reasons for the discipline. It is important that you can prove that you were not acting in retaliation for the earlier claim. When in doubt, contact your legal counsel for help in handling the situation in a way that does not invite additional liability.

Nikki Johnson No Comments

Insurance Tips for a Merry Christmas Season

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

2020 has given us much to remember. With the Christmas holiday season fast approaching it will be important to experience it with as many warm and positive memories as we can. To that end, let us not lose sight of some simple tactics that will prevent you from adding holiday misfortune to your 2020 memory wall.

With respect to your automobile consider:

  • When shopping, place valuables in the trunk keeping seats, drink holders and open trays clear of anything of value. In the absence of a trunk, hatch-backs and mini vans, place items in a covered container or cover with a blanket.
  • Lock your car! Whether at home, in the lane or garage, or any public parking lot, this will reduce the risk of it being stolen and the loss of any personal property stored in your car.
  • Drive with due care and control no matter the weather or how rushed you are! Black ice, too much snow, not enough salt on the road or the driver in front of you who suddenly slammed on their brakes are not excuses for you to avoid being charged for an at fault loss. We suggest giving yourself extra time to get to your destination to ensure your safe arrival.
  • Be alert! Just because you are obeying the rules of the road does not mean everyone else around you is.
  • Stop texting, stop talking on the phone, and set that coffee cup down and put your snack away! Driving requires attention, especially more so in the winter adverse conditions. More than ample studies have proved driver distraction is the root cause of many fatal accidents.
  • Take a moment, and ensure your vehicle is prepared for winter driving before the snow hits. Ensure it is mechanically ready for winter, you have equipped your vehicle with a winter safety kit and the snow tires that you have installed are in sound condition.
  • While it should go without saying, but too many still forget, holiday season or not DO NOT DRINK AND DRIVE! If you drink; take a cab, stay over-night or find a ride home with a sober driver.

With respect to your home:

  • If you are celebrating the season with a real tree, ensure they are kept well watered and not placed in front of a heat source. Shut off the lights and electronic ornaments when not at home or out of the room for a prolonged period. Drying trees can lead to a total fire loss of your home in less than 3 minutes!
  • While candles do lend a seasonal scent to air and help to remove cooking odors, they are still a leading cause of house fires. Do not leave candles unattended or place them close to flammable fabrics. Always extinguish them when leaving a room for a prolonged period or leaving the house.
  • Do not leave items on the stove or in the oven unattended. It is common to find yourself short of an ingredient and make a quick trip to the grocery store without properly turning off your appliances. Keep a residential fire extinguisher near the stove, along with baking soda. Either can be used to quickly should a small fire flare up on the element.
  • Lock your home. When not at home ensure all doors and windows are locked. Do not display wrapped or unwrapped gifts near open windows. When goods are visible the home can be a greater target. Use your alarm if your home is equipped with one. Over 58% of all home robberies occur through the front door.  
  • Take steps to secure windows and doors so they cannot be pried open from the outside.
  • Ensure exterior lights are working, and on a timer, so that doorways and large windows are lit at night. Do not sacrifice safety for home decoration. Build safety into your decorating plan.
  • If traveling, have your driveway and pathways shoveled to appear someone is home. Place your lights on timers; rotate throughout the house to mimic your usual pattern of light usage throughout the day and evening. This includes festive outdoor light displays. Be sure to cancel newspaper subscriptions, to avoid build up of papers at the front doors, a clear sign that no one is home. Maintain the heat of your home at a minimum and drain water from all lines/pipes before you leave. Have a neighbor, friend or family member collect mail on a daily basis again to prevent build up during your absence. Whoever is checking in on your home leave them with your contact information but also the contact numbers for your insurance provider should a claim need to be reported. It is best it be reported sooner rather than later. This will allow for any damage to be taken care of immediately mitigating the possibility of further loss.

With respect to shopping consider:

  • Christmas shopping season is ideal for identity theft. Keep track of all credit card and debit card receipts, and shred. To maintain control of your personal information, restrict all gift purchases to only one credit card and reconcile your charges against your receipts. Ensure that your anti-virus and malware is current and up to date before you do your on-line shopping.
  • Doing your holiday shopping on-line? Expecting packages to be delivered to your home? Do not leave them unattended. Only use home delivery when someone is there to receive the package. Track your shipments and plan your absence from home accordingly. Alternatively, use an address where there is someone available throughout the business day such as your office or a post-box facility or another family member.
  • If buying goods on-line and taking delivery from private individuals, do NOT attend their homes for pick up and DO NOT invite them to your home for delivery. Meet in a well-attended public place such as the parking lot of a coffee shop. Better still, St. Thomas Police Services offers a public area for just this purpose in their parking lot. Plan to make exchanges there during the day. 
  • Lastly, protect yourself! When shopping ladies, make certain your handbag is zipped closed and cell phones secured within. Gentlemen, if you must carry a wallet put it in your front pant pocket not your back pocket. It is much easier for someone to steal it from the back.

These tips are just a few things you and your family can employ to make your holiday experiences safe, happy, and memorable, and reduce your chance for loss. For more detailed information and specific tactics contact your insurance provider, St. Thomas Police Services, OPP and/or your local fire department.

Nikki Johnson No Comments

Managing Your Post-Covid-19 Reputation

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

There’s no denying that the COVID-19 pandemic has been disrupting businesses, both small and large, across the globe. Businesses have had to drastically adjust their operations.

Once the threat of the coronavirus declines, your business may be ready to open up and return to normal operations. Whether your business had to close its doors or you had to set up your employees to work remotely, it’s important to recognize the global pandemic and continue protecting your company’s reputation.

Why Is Your Reputation Important?

Many companies focus on handling reputation threats that have already happened. That is not reputation management. That is crisis management, a reactive approach to limit the damage that’s already been done. It’s important to focus on a proactive approach to mitigate reputational risks before they become a problem.

Simply put, your brand reputation is how the general public—including customers and employees—sees you, thinks of you and talks about you. It’s word of mouth.

How your business has previously responded to the coronavirus and how you move forward can play a big role in public perception and employee recruitment. As much as a good reputation is vital in driving business, it can also reinforce employees’ commitment to the company. That commitment leads to confidence and trust in the company. Employees are the face of the company, and engaged employees can be your best promoters.

How Can Your Reputation Be Affected?

There’s no denying that this global pandemic is changing how people think, behave and consume information. Since we live in a digital age, customers and prospective employees have many channels available to them as they search for and discover information about companies. A good reputation means that a business is more credible than its competitors. Reputation is all about public perception—even if it’s not factual.

There’s a need to be proactive, as reputational risk often strikes without warning. Here are some common online channels to monitor:

  • Business review websites
  • Social media
  • News releases and articles
  • Blog posts
  • Forums
  • Competitor websites

People will talk about your company regardless of whether you have an online presence. But, if you’re not online or monitoring channels, there’s no way for you to discover what’s being said, and you may risk even bigger reputation problems.

Best Practices

As everyone is coming out of lockdown and business slowly returns to normal, consider the following best practices to keep staff motivated and your reputation unharmed:

  • Put your employees first—First and foremost, keep in mind the health, safety and well-being of employees when making business decisions. The coronavirus pandemic has led to a collective loss of normalcy. Returning to work may be part of the normal that people are longing for, so continue supporting them and checking in to see how things are going. As you protect your company brand from COVID-19 implications, current employees can be the main drivers of your reputation.
  • Follow government advice—If your team has been working remotely due to shelter-at-home orders, the first topic your company needs to address is when to reopen the office. Employers should be looking to their local health departments and government for guidance on when to return to the office.
  • Prioritize safety—Along with ethical reasons, employers have a legal duty to make sure they provide a safe workplace. Considerations include testing, social distancing, personal protective equipment, sick leave policies and business travel guidelines.
  • Keep communication open and honest—Internal communications can help keep employees calm and reduce stress levels. Everyone’s been dealing with much uncertainty. There’s a need to communicate with employees openly, honestly and frequently. The same goes for external audiences like customers and partners. Go with what’s authentic for your company, whether that’s regular updates, or tips and tricks to stay safe. This is a good time to reinforce transparency. Keep communication accurate by leaning on credible sources.
  • Ask for feedback and answer questions—People may be scared and have a lot of questions. Create an open channel or a way for stakeholders to submit questions. Answer them as soon as you can, and provide the responses to everyone. If one person asked it, there are probably more who are wondering the same thing. An open line of communication is key to establishing trust.
  • Reach out to industry partners—Chances are your industry partners are in similar situations. Share information and work together with your industry regulators and influencers to move forward. Consider partnerships that could help your customers or employees.
  • Be a thought leader—While reputation may be defined by what others say about you, it is also defined by what a brand says. If it’s appropriate and authentic for your company, identify a business leader who can publicly address impacts of COVID-19 on your industry or customers.
  • Give back—On a similar note, give back to your community if you’re able to. A little bit of kindness can go a long way during these times.

Be Prepared

As everyone moves into life on the other side of the coronavirus pandemic, it’s important for companies to come out of it with their positive reputation intact and be known for being caring. Businesses seen responding positively to the COVID-19 pandemic are more likely to survive and thrive.

If an issue or crisis does arise, the quicker you respond to and fix any problems within your control, the better off you’ll be. For more information on managing your reputation after the coronavirus pandemic, contact Reith & Associates Insurance and Financial Services Limited today.

Nikki Johnson No Comments

Social Engineering Scams and Remote Workers

By:  Dan Reith  BA(Hons) CAIB

Principal Broker

Reith & Associates Insurance and Financial Services Limited

When the global covid-19 pandemic sent our country into lock-down many workers were sent to work remotely from home.  For many the notion of cyber threats may not have been a concern, given the locked down and office displacement was only originally intended to be a short-term need.  Many months later, while most of our province is in Phase 3 of re-opening, despite the threat of a second waive and a possible return to lockdowns, many are still working remotely and here is where the problem lies.

According to the Canadian Centre for Cyber Security (CCCS), cybercriminals have increased their attempts to identify and exploit individuals working from home since the COVID-19 pandemic began. Cybercriminals view remote workers as ripe for exploit due to the fact that many individuals are relatively inexperienced with remote working. What’s more, home networks are generally less secure than those at the workplace.

Many cybercriminals are using social engineering strategies to exploit vulnerabilities in remote workers. Social engineering is the act of accessing information, physical places, systems, data, property or money by using psychological methods, rather than technical methods or brute force. Social engineering scams rely on exploiting psychological weaknesses and blind spots in order to convince victims to give social engineers what they want. These scams are common and are especially dangerous as remote work becomes more widespread.

Common Social Engineering Scams

There are many different types of social engineering scams, each utilizing different strategies to prey on people’s curiosity and trust. Some of the most common social engineering scams include:

  • Phishing is when a cybercriminal attempts to obtain valuable information by tricking people into visiting a fake website or clicking a link that installs malware. This is typically done via email or text message. While phishing may be used to target specific individuals, such as a person of authority at an organization, it is often a mass untargeted attack.
  • Baiting is the offer of a reward (e.g., a monetary prize or discount) for taking a course of action, such as clicking on a link. Baiting can also be a physical attack. For instance, a malicious party might leave a USB marked “confidential” in public, hoping someone will find it and plug it into their computer. Once plugged in, the USB could install malware or other malicious software.
  • Quid pro quo involves a seemingly legitimate exchange wherein the targeted person believes they are receiving a good deal. For example, a malicious party may identify themselves as an IT consultant offering a technical service in exchange for login details.
  • Pretexting is when someone impersonates a known co-worker or authority figure in an attempt to gain access to secure information.

How to Reduce the Risk of Social Engineering Scams

Fortunately, many social engineering scams can be prevented through these simple cybersecurity practices:

  • Training—Train your employees to watch out for messages with odd text formatting from unknown or unusual sources. Something that seems legitimate at a glance often fails to hold up under scrutiny.
  • Reinforce security—Stress the importance of never giving out logins or other valuable company information to an unidentified third party. Employees should never click links or visit web pages that they are unfamiliar with.
  • Update software—Keep all software updated with the latest security features.
  • Encourage teamwork—Encourage employees to contact the IT department if they receive a message that they believe might be a scam.
  • Review insurance—Review your cyber insurance policy to ensure that your organization is covered in the event of a cyberattack.  A sad reality is the majority of Canadian SME’s do not carry sufficient cyber insurance and rely merely on the basic limited extensions available under their general property and liability policy.  Like any form of cover, cyber can restrictive or robust.  No 2 policies provide identical coverage and price does reflect quality and depth of coverage.  It is a fools errand to think you got “the same coverage” for less money.  Have a knowledgeable cyber insurance professional review and help you select the right cover for your business.

To assess your exposure to cyber crime, check out our Cyber Risk Exposure Score card, available on through our website–www.ReithAndAssociates.com and from the Why Choose Us drop down menu, click on “REITH TOOLS” and download our Cyber Risk Exposure Score card.  It is an ideal tool when completed to review with your IT provider and your cyber insurance provider to determine where holes can be filled with existing technology and them insurance.    

Contact Reith & Associates Insurance and Financial Services Limited today at 519-631-3862 to learn more about how you can protect yourself from cyber threats and to discuss your current coverage.