Cyber Liability: What's at Risk?
At a 2012 Cyber & Privacy Risk conference changes in cyber risk were noted:
1. Cyber attacks have become pervasive
2. current defensive systems aren't working, and
3. Cyber risk is getting bigger and broader.
The Office of the Privacy Commissioner of Canada (OPC) has private-sector privacy legislation in place (including PIPEDA), that outlines accountability and what is expected in a privacy management program. And you can't have privacy without security. Privacy breaches and complaints can be investigated or audited, so compliance on privacy and data breach protocols is more important than ever.
Every organization needs to know what personal information it holds (and whether it really needs it at all). Organizations must protect that personal information they hold, and what is reasonable depends on the sensitivity of the information.
A senior researcher at Trend Micro reported that the "exploit kits" - "a bundle of code that lets hacker exploit the most prevalent flaws in the general user base... lets hackers cast a wide net so the don't have to be choosy about their victims". So being a small organization doesn't necessarily mean you won't be hit.
The Wall Street Journal reported that the Canadian Cyber Incident Response Centre was investigating attacks on an internet technology provider, from outside the country. And some businesses are being hacked from the inside by employees.
Social media users are experiencing identity fraud more and more. There is an identity fraud rate of 10% among Linked In users; 7% for Google Plus users, 6.3% of Twitter users and 5.7% of Facebook users.
So what can a Cyber Liability insurance policy provide to help Canadian businesses respond to a cyber attack? This is still a developing area for insurers, so the policies are not altogether consistent, but there are typically a few main areas of insurance:
A. Privacy / Content Liability to address your legal liability for the party suffering the 'damage' - which may include financial compensation, and even regulatory fines in some cases;
B. Privacy Breach / Notification expenses to comply with regulations, notify individuals affected, as well as crisis management and public relations (to restore and protect reputation);
C. Network Security / Data protection expenses to restore data and regain and control.
The Economical Insurance company also offers cyber insurance for small and mid-sized companies with a solution to address the financial impact to your customers, and address costs to your business and reputation. The frequency of a cyber attack or privacy breach for small businesses may be low - although it is growing annually; but the severity of a claim that does happen can be very costly. Cyber insurance is readily available, and offering more value as it evolves.
Insuring Business Risks
Every day business owners face a number of liabilities, many of which can be insured with that well known Commercial General Liability (CGL) insurance policy. But where are the 'gaps' and why are they there? Can you do anything about them?
Coverage limitations appear in a number of places; exclusions and definitions being the main areas. You can group all these limitations into three main categories:
(a) those that can be covered by endorsement to your policy (and may add premium);
(b) those that can be insured but require a separate policy; and
(c) those that are simply uninsurable.
Let's look at some examples:
Examples of coverage typically added by endorsement:
(i) If you have property of someone else in your care that gets damaged your CGL would exclude that as Third Party Property Damage. A Broad Form Property Damage endorsement removes of what would otherwise have been excluded.
(ii) The definition of Coverage Territory is commonly Canada and United States, requiring legal action against you to be taken there. You can expand that by endorsement.
Examples of coverage typically requiring a separate policy:
(i) Profession liability insurance is covered under a specialized policy.
(ii) Pollution liability can also be put in place using a specific policy.
Examples of risks which are typically uninsurable:
(i) Bodily Injury that is expected or intended would obviously be uninsurable.
(ii) Liability arising from a property you abandon cannot be insured.
Being aware of coverage 'gaps' is an important step towards securing the insurance you want and need.
Once you know what coverage isn't there, and why, you can make an informed decision regarding what you are willing to assume as a cost of doing business, or what you want to add to your insurance.
If you have any questions or concerns you shouldn't hesitate to contact your Staebler broker.
Automobile Insurance: Will it Apply Equally for Many Different Types of Vehicles?
If it’s a licensed vehicle, it needs to have Auto insurance before taking it out on to the road, right? Ontario’s Compulsory Automobile Insurance Act requires that all motor vehicles be insured under a policy of insurance when operated on public roads. The Highway Traffic Act considers “any other vehicle propelled or driven otherwise than by muscular power” as a motor vehicle.
The Insurance Act looks at it a little differently. We appreciate that all those typical automobiles; cars, pick-ups, SUVs, trailers, trucks, RVs, vans, etc., that we’ve seen on the roads for decades can be appropriately ‘covered’ under the standard Ontario Automobile Policy.
But an Ontario arbitrator found that someone driving a golf cart on the road – illegally – fit the definition, and was therefore recognized as vehicle for insurance purposes, triggering the Statutory Accident Benefits under an Automobile Insurance policy. A similar finding in Manitoba resulted in the person injured in the golf cart being entitled to no-fault benefits.
This makes interpretation confusing. In one case, a court judge ruled that a go-kart operated on a private track was an automobile for insurance purposes. That ruling was later overturned, but it does illustrate how things are changing. Definitions in automobile policies are not strict and facts can be manipulated to suit an outcome. In B.C., licensing and insurance are required on golf carts in some situations including where they may be used around or on public highways /roads. In B.C. the public parking lots of golf courses were classified as highways, until revised last spring.
To make things more confusing, the definitions in different legislation are changing. A bicycle is now recognized as a “vehicle” under the Ontario Highway Traffic Act with respect to following the same ‘rules of the road’ as other vehicles. Enter the e-bikes. These are not required to be licensed, but are clearly picked up by the Highway Traffic Act. Again, the Automobile Insurance Act defines these differently. And when driverless-cars become popular; and they’ve already been tested and approved in California, we will have another set of issues.
From an insurance perspective, we need to recommend coverage for all your different ‘vehicles’. Talk to your broker about it.
Your Home & Auto Insurance Could be at Risk
Protect your Personal Insurance. You could be risking everything without knowing it.
We all know that a thief can break into a car in a matter of seconds. Cars are been targeted at large events, like basketball or hockey games. And, we have all heard that having something of value easily seen through the window can make your car a target. But many of us haven’t stopped to consider the GPS. With your GPS, a thief can often find your home.
Thieves will know when the event ends, and how much time they have. So if you live close enough, they can get to your home while you are still at the game! If you have a remote control for your garage it makes it even easier. Now they can break into your home without the neighbours seeing them. So you have got to keep your GPS and garage remotes in a safer place, before you leave the car. Your glove box is not the best place either, as that would be the first place they would look. But there’s another important item most people put in the glove box - your insurance pink slip. Not that a thief is going to use it as proof of their own insurance; it is another way they can get your address. That is another item you may want to keep out of the car. You could keep it with you in your wallet. That is likely where you keep your driver’s license anyway. Thieves are interested in what is quick and easy, so make it hard for them and they may move on to the next one.
Don't forget to Ask Steve your own questions! You can submit a question in the section to the right of your page and watch for the answer to be posted on our blog.
What's Co-Insurance & Why Should you Care?
One of the most common clauses in any insurance policy is co-insurance.
Who thought it up in the first place? Co-insurance goes back over 100 years, and is meant as a means to persuade people to buy insurance to the full value of their risk being insured. Let’s take property insurance as an example. Underwriters develop rates which are applied to the amount of insurance you need, to come up with the premium they will charge. A lot of people will appreciate that insurance companies collect premiums from many policy holders, to pay the losses of a few policy holders. But we all know that only a small percentage of the losses are total losses. So, if it is far more likely that you will have a partial loss, why not buy insurance for an amount less than your total property? When an underwriter considers that policyholders might only purchase ‘partial insurance’, they realise that they will not get enough total premium to pay for the losses that do happen. So they would have to charge a higher rate and this could become a slippery slope, as policyholders consider purchasing even lower limits. Or... underwriters could put a clause into their policy, so they will not pay all of a loss when the policyholder has not insured to the full value of their property. They would essentially make the policyholder a ‘co-insurer’.
If you do not have the amount of insurance you should have, the amount you will actually collect from your policy can be estimated with a formula like:
Amount of Insurance I DID buy / Amount of Insurance I SHOULD have bought
The Amount of Loss/Claim
Amount you Collect.
There are different co-insurance percentages in different policies; such as a requirement that you must insure to 80% of the actual replacement value or 90%. And, there may also be some alternatives to this straight forward co-insurance requirement. You should discuss this with your insurance broker. Click here to contact us.