Social media and networking websites are extremely popular. Creating a social media presence for your company is something that should be thought through carefully, taking into account many factors. Interacting on social media just because “everyone else is doing it” is not a good enough reason when you consider the risks social media presents. However, the benefits can include the ability to help your company connect with tech bloggers, current and future clients, and potential job candidates.
Social networking has the ability to get your message across to thousands of people very quickly, which makes it a priceless public relations and viral marketing tool. However, popular social networking sites, such as Facebook, MySpace and Twitter, can present a significant hazard to your company and its reputation, depending on how you and your employees use them.
Social networking sites can help your company connect with clients and recruit job candidates. The key to social networking is to use it in a way that not only gets your name out there, but maintains a positive image of your company.
Industry leaders are constantly recommending social networking sites as places to advertise, and as tools to interact and connect with current and future customers. Although, not all publicity is good publicity. It is important to project a positive company image, which you can do through setting up your own social networking account; but it is just as imperative that you control other users’ conversations about you.
What Others Are Saying About You
Facebook, the largest social networking site today based on monthly unique visitors, has more than one billion active users. According to Facebook’s user statistics, the fastest-growing group of users is people older than 35, which means it is becoming increasingly likely that your workforce is getting involved with social networking.
While this has many potential benefits, you also want to be careful no one — whether it is a competitor, former or current employees — is tarnishing your company’s name or reputation. The same holds true for blogs, where damaging content may appear without your consent.
The key to keeping your risk low is identity management. The best way to prevent Internet buzz from becoming a hazard is to monitor the use of your company name. Set up an alert or periodically type it into a search engine to make sure that your official website is the top hit and that nothing offensive comes up in the first 20 hits, which is statistically as far as most people will dig in a search.
If you do find references to your company name in the first 20 hits that could be hazardous to your business or your reputation, you have a few options. If social networking sites are the culprit, consider enacting a policy prohibiting employees from mentioning the company name on their personal sites. Explain the negative outcomes this could have for business and help employees understand how acting as poor representation of the company through scandalous photos or negative comments on a social networking site could affect them directly.
How to Handle the Negative
If negative or derogatory comments about your company have seeped into other sites outside the control of your employees, however, the risk to your business is even greater. What’s more, this type of hazardous publicity is more difficult to manage. One approach is to try to increase the amount of positive information about your company on the Internet so that the negative write-ups are no longer within the top search results. Contacting sites and asking them to remove fictitious and defamatory material is another option.
If you have a serious public relations issue and your company’s reputation or legitimacy is on the line because of material on the Internet or social networking sites, it could cost you thousands of dollars in lost business. Consider hiring an identity management or public relations company, which will help organize, analyze and control the information about your organization that appears on the Internet.
Using Social Networks to Learn More About Candidates
The practice of using social networking sites to further research potential employees and weed out candidates based on content in these sites is risky. Not only does it cause you to dabble in issues of legality, but it also could place you in thorny situations when it comes to personal differences you become aware of via social networking tools.
A study conducted by Harris Interactive for CareerBuilder.com revealed that 45 percent of employers are already using social networking sites to screen job candidates. This is nearly double the number of employers who did this one year ago. Before you engage in this practice, know what types of hazards you face.
The most obvious problem with this practice is how difficult it is to draw lines between appropriate and inappropriate behavior. According to the Harris Interactive study, more than half the employers interviewed said provocative photos on a social networking site were the largest contributing factor when a potential employee was not hired.
But who gets to define what constitutes provocative, and does the candidate have the right to find out this is the reason he or she was not hired? Social networking is such a new trend, especially among the older workforce, that there are currently no ethical benchmarks in place.
By using social networking sites as a filtering tool, you are exposing yourself to potential lawsuits. Many users post personal information such as their religion and age. Even if you decide not to hire them for legal reasons, such as improper educational qualifications, the candidate could accuse you of basing the decision not to hire on information obtained from their social networking site.
There is no right or wrong answer regarding whether Internet research on candidates is a good idea, so it is up to your company to weigh the options. Whatever you choose, remember to examine the underlying risks and consider all feasible scenarios and outcomes to make the most informed decision possible.
Please contact Scurich Insurance for more information about this increasingly popular trend.
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Insight for business owners and risk managers.
After assessing your company’s risks, you’ve made the decision to purchase directors and officers (D&O) insurance. Now what?
It’s essential to know the ins and outs of your D&O policy, including policy limits, what’s covered, and, most importantly, what’s not. Why? Because you may assume you’re covered for a claim when policy exclusions could apply. As time-consuming as it may be, it’s critical to read the fine print in your policy, as the language in the exclusions may affect the coverage of potential claims.
Types of Exclusions in D&O Policies
Some exclusions that insurers and insureds dispute about concern incidents that happened or allegedly happened before the D&O policy went into effect. In some cases, the insurer simply won’t cover the claim; in other cases, the insurer may render the policy void:
The known circumstances exclusion: With this exclusion, the insurer will not pay for claims that arise from a negligent act, error, omission or personal injury that occurred prior to the start date of the D&O policy. The insurance carrier attests that the insured knew or could have foreseen that any of the above happened and could have been the basis for a claim.
This exclusion is found more frequently in private and nonprofit policies than in public company policies. What is especially important to note is that the premium is usually not returned to the insured if it is determined that they withheld their knowledge of circumstances that occurred prior to the start of the policy.
Rescission: The premium is returned to the insured. Rescission means that the policy is rendered void after the insurer discovers that the insured answered untruthfully to any of the warranty questions on the insurance application.
Warranty questions ask the applicant if they know of any fact, circumstance or situation that might reasonably be expected to give rise to a claim. Rescission also can occur if the applicant provided false or misleading information in the company’s financial data. These scenarios usually happen only in public company D&O policies.
Prior acts exclusion: Similar to the known circumstance exclusion, this exclusion is also concerned with pre-policy circumstances. The insurer is not responsible for wrongful acts committed or attempted before the coverage was enacted. A wrongful act is that which damages the rights of another. These acts are not only limited to criminal offenses, but can also include acts that result in civil lawsuits.
Other exclusions found in D&O policies revolve around the duty to defend and defense expenses in the event of a claim. If the insurer has the right to the duty to defend, then they are able to select the insured’s defense and have greater control over the rates and billing practices of the defense counsel:
Reasonableness of defense fees: This is more prevalent in private company and nonprofit D&O policies, as most of those policies give the insurer the right and duty to defend the insured’s claims; whereas, public companies retain the right to choose their own defense counsel. If this is written into your D&O policy, it means that the insurer will only pay for “reasonable and necessary” defense fees. Some insurers also provide detailed information on litigation guidelines.
Consent to settle and the hammer clause: If the insurance carrier has no duty to defend, such as in cases against public companies, then they have no right to settle the case when they want to settle it. As a result, the insured may elect to continue with litigation, even if that would exhaust the policy limit, because the defendants don’t want settling the case to be perceived as an admission of their wrongdoing or incompetence.
This creates a lot of tension between insurers and the insured, especially if the insured does not include the insurer in the settlement discussion. Therefore, some insurance policies have a consent to settle exclusion in the policy, prohibiting the insured from settling the claim without the insurer’s prior written consent.
The hammer clause is similar to the consent to settle exclusion, although less common. Basically, the hammer clause informs the insured that if they go against the insurer’s recommendation to settle, the insured will be responsible for any judgment won by the plaintiff plus legal fees that go beyond the settlement offer.
Most D&O insurers expect that D&O insurance is only a part of a company’s wider insurance portfolio. In some cases, however, this assumption doesn’t always prove to be true. Certain firms may go without umbrella insurance or even general liability insurance policies, making D&O one of their only forms of insurance.
Because of this, many D&O insurers write exclusions in their policies stating what claims they won’t cover because other types of insurance would potentially cover the claim:
“Other insurance” exclusions: D&O insurance is just one form of insurance in a comprehensive risk management plan for most companies. Because of this, most D&O policies have exclusions for claims that involve bodily injury, property damage and Employee Retirement Income Security Act (ERISA) claims, which could be covered by other types of insurance such as a commercial general liability policy or a fiduciary liability policy.
To protect their best interests in the event of a claim, the insured should notify all insurers from their various policies, thus allowing the insurers to determine who is liable for the claim.
Contractual liability exclusion: This exclusion is especially pertinent to private companies and nonprofits that have broad entity coverage under a D&O policy. Since contractual obligations are not liabilities imposed by law but rather an obligation that is voluntarily undertaken, many D&O policies have an exclusion that prevents insurers from having to cover contract-related claims, especially breaches of contract that arise when the company enters into a contract with another party.
When examining this exclusion in your D&O policy, make special note of the wording of this clause. This exclusion can substantially affect the extent of your coverage under the policy—the narrower the scope of the exclusion, the better for you.
D&O insurance protects directors and officers from poor business decisions, but most policies do not protect them from wrongful acts and gross misconduct. These exclusions include the following:
Conduct exclusions: Most D&O policies have exclusions that deny coverage for certain types of misconduct. There are two categories of misconduct exclusions:
- For loss relating to fraudulent or criminal conduct
- For loss relating to illegal profits or remuneration to which the insured was not legally entitled
It’s especially important to look at the wording on these exclusions in the policy; subtle wording differences can significantly affect the accessibility of the coverage.
Insured versus insured exclusion: In some D&O cases, one insured director may bring a claim against another insured director, and some insurers do not want to cover this because they don’t want to get involved in the infighting between a company’s directors and officers.
However, with recent changes to the whistleblower provision of the Dodd-Frank Act, most insurers are now agreeing to cover insured vs. insured claims if the whistleblower is also one of the insured directors.
Obtaining D&O insurance is important to protect the directors and officers of your company; but simply purchasing the policy won’t benefit you unless you know the extent of your coverage.
Do you understand your D&O insurance policy? Contact Scurich Insurance today for more information about your coverage and exclusions.
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In the event that someone is injured on your property and you are found legally responsible, you could be faced with a costly financial burden. In fact, without a personal umbrella liability insurance policy, any expenses beyond the limits of your standard policy are your responsibility. This applies to your homeowners, renters, automobile and watercraft insurance policies.
Personal umbrella liability insurance provides an extra layer of protection over your personal assets for when your standard liability coverage is exhausted.
Engaging in everyday activities can put you at risk for a lawsuit. Simple things like having a swimming pool or entertaining guests in your home can increase the chance that someone will get injured and sue you. To minimize your risk, consider a personal umbrella liability policy.
Why is a personal umbrella liability policy important? It works to fill the gaps in your coverage and provides the following benefits:
- When litigation ensues, it’s typically for a large amount. If you get into a car accident and injure several people, you could be sued for millions of dollars; well beyond the limits of your automobile policy. You can also be held responsible if your dog bites someone, if your child injures another kid in a fight at school or if a handyman hurts himself at your home.
- Umbrella policies cover legal fees because the insurance company assumes the risk, not you.
- Coverage is inexpensive and easy to obtain. Just give us a call to add it on to your current policy.
- You’ll have peace of mind knowing that you are covered in case of a fluke occurrence.
How much coverage do you need? Take into consideration your total personal assets and your potential for personal risks when determining how much coverage you need.
A wide range of factors, such as whether you have hired help, if you have teen drivers at home or if you operate your business out of your home, will determine how much coverage is appropriate for your circumstances.
What are the policy limits? A $1 million limit is typical and higher limits are available.
Contact us today to determine how much coverage is right for you.
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Inventory shrinkage—a combination of employee dishonesty, shoplifting, vendor fraud and administrative error—is costing U.S. retailers a great deal of revenue.
According to University of Florida criminologist Richard Hollinger, director of the Security Research Project, the single largest larceny category occurs in retail stores, yet employee theft can occur in any industry. The survey found that the most significant source of inventory shrinkage is employee theft.
In addition, Insurance Journal claims that the most trusted employees—the ones who have been with the company for a significant period of time and who never miss a day of work—are the most likely to steal from their employers.
Protecting Against Inventory Shrinkage: Employer-Generated Solutions
Pre-employment screenings should consist of the following:
- Past employment history
- Criminal conviction checks
- Personal reference checks
- Drug screening
- Driving history checks
Employee awareness programs can help to deter employee theft:
Typically, employees do not steal from their employer once and then never do it again. Instead, employees steal small amounts over an extended period of time. When businesses finally discover the indiscretion, they have lost a significant amount of revenue.
- New hire orientation discussions
- Bulletin/poster board notices
- Anonymous phone hotlines
- Follow-up education
- Newsletters
- Payroll stuffers
Use asset control policies to safeguard inventory:
- Refund control structures
- “Void” receipt procedure
- Employee package checks
- Trash removal controls
- Inter-store transfer policy
- Exit door controls
Loss prevention systems can help secure your business:
- Burglar alarms
- Closed circuit TVs
- Armored car pickups
- Cables/locks/chains
- Secured display fixtures
- Electronic security tags
- Shoplifting signs posted
- Silent alarms
- Observation mirrors
Criminal Patterns
In addition, businesses generally do not discover that funds are lost until the economy enters a downturn and the company examines why their revenue is not as they had expected. Only then, after questioning where the money went, do they notice that funds are missing.
Smaller companies with fewer employees tend to be victimized more than larger companies. Not only are these smaller businesses uninsured to cover their losses, they’ve built up trust and developed relationships with their employees. So, they often are unsuspecting of the criminal activity and trust their employees too much. Larger companies also have the budget for audit committees and risk managers to assess any indiscretions immediately.
Insurance Options
Employee dishonesty insurance, also known as crime coverage, employee dishonesty bond, fidelity bond and crime fidelity insurance, offers employers protection from fraudulent acts committed by their employees. By purchasing this type of insurance, you are able to recover financial losses as a result of employee theft and robbery of the following:
- Money
- Securities
- Computer fraud
- Forgery
- Funds transfer fraud
- Credit card fraud
- Money order and counterfeit fraud
- Other valuable property
Third Party Coverage
If your company is doing business for another organization, employee dishonesty insurance may also cover the losses of that business as your client, depending on your plan.
If you elect coverage that protects your client’s property, the policy will cover the loss of money, securities and other property lost while working for that client.
Exclusions
There are several exclusions to these types of policies that employers must be aware of:
- Accounting errors
- Income lost in the event that the theft had not occurred
- Vandalism
- Governmental seizure of property
- Restatement or lost statement of profit
- Theft by yourself–coverage does extend to partners, trustees and directors
Don’t become a victim of employee theft or shoplifting. Protect your business, your assets and your profits by obtaining employee dishonesty insurance. Contact us today at 831-661-5697 to learn more about our value-added services.
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Knowing what to expect from an OSHA inspection can make the experience less stressful. Here is a brief overview:
Arrival
An inspector arrives at your facility during normal business hours, unless you are contacted prior to the visit. The inspector shows you his or her credentials issued by the U.S. Department of Labor, which authorize the inspection.
Preliminary Conference
The inspector tells you why OSHA selected your company, explains why the inspection is taking place, and reviews with you the standards which apply to your industry. You must then select an employee to accompany the officer during the inspection. Having an assigned guide selected prior to an inspection will help make the inspection process more efficient and will also help avoid unnecessary delays.
Tour
The officer will then inspect your workplace. The agenda for the inspection and its length is at the discretion of the officer, although most compliance officers cause as little interruption to your workday as possible.
During the inspection: The officer will investigate working conditions and ask questions of employees. He or she may take photographs or record instrument readings relating to safety and health hazards, take environmental samples, request files recording deaths, injuries, and illnesses, or instances of possible exposure to toxic solutions or harmful agents.
If the officer points out an easily correctable hazard—like a puddle of oil on a walkway—correct it right away to demonstrate your concern and your cooperation. Your action may or may not avoid an official notation.
Closing Conference
The officer will discuss findings, identifying any possible violations. Penalties cannot be discussed at this conference since only the OSHA area director sets penalties. Later, the officer will file a report with the area director. Any citations or penalties will be delivered to you via certified mail.
Inspections are stressful situations. But if you have done your homework, inspected your company regularly and taken steps to eliminate hazards, you have greatly increased the possibility of a good review.
Even if you never are officially inspected, self-evaluations may prevent accidents that will save you frustrating downtime, costly overtime, workers’ compensation claim costs, or even a potential lawsuit.
Are you prepared for an OSHA visit? If not, call Tony Scurich at 831-661-5697 to learn more about self-inspections and OSHA inspection criteria.
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A hot topic today in the manufacturing industry is nanotechnology, which is the control of matter on a molecular scale between one and 100 nanometers. This intricate methodology involves processing tiny materials to produce nanoparticles or nanomaterials.
To give a measure as to how small the building blocks are in these materials, a nanometer is about 50,000 times smaller than the width of a human hair and 10 times smaller than the size of a typical, single germ.
Today, the National Institute for Occupational Safety and Health (NIOSH) reports that new consumer products manufactured using nanotechnology are coming on the market at the rate of about three or four per week.
While nanotechnology is an exciting new field, it also may pose potentially serious for workers who handle nanoparticles. Keep safety and prevention in mind to protect your workers and your company.
Nanoparticles are already used in paints, car parts, eyeglasses, cosmetics, tennis racquets and clothing, and their use is expected to increase in the near future.
However, researchers and employers are not without doubts about this revolutionary technology. Concerns about the impact of nanomaterials and nanoparticles on the environment and on workers’ and consumers’ health have surfaced in the past five years.
Nanotechnology Hazards in the Workplace
The biggest risk in using nanotechnology in the production of materials is that nanoparticles are so small that they can assume different physical, electrical or magnetic properties than they normally would as larger particles. According to the American Society of Safety Engineers, nanoparticles also have a greater ratio of surface area to mass, and thus they have a higher level of reactivity, combustibility and absorption capacity.
The concern in all these areas is that when ingested, inhaled or even exposed to skin, scientists are not sure how the tiny particles will react with the body systems. What is known is that if they get into the body in any way, the particles are small enough to permeate through tissue.
Some evidence suggests that nanoparticles in the body create free oxygen radicals, which are atoms, molecules or ions with unpaired electrons and an open shell configuration. These particles are more likely to bond in unwanted side reactions, leading to cell damage and possibly cancer.
Situations that present significant (and potentially very harmful) exposures to your employees include:
- Working with nanomaterials without proper protection
- Pouring or mixing nanomaterials
- Working with nanomaterials when there is a high degree of agitation, like in extreme heat
- Generating nanoparticles in the gas phase
- Handling nanoparticles that are powders
- Maintenance of equipment used to produce or fabricate nanomaterials
- Cleaning of any dust collection systems.
Protect Your Employees
Researchers are also unsure if the current standards of ventilation and filtration systems will be 100 percent effective when working with nanoparticles because of their extremely small size. Because of the tremendous usefulness and prevalence of nanotechnology, combined with scientists’ uncertainty of its effects, many compare this development to asbestos and the government control of its use in the 1980s. The European Union’s Occupational Health and Safety agency issued a report citing nanoparticles as the number one emerging risk to workers. So what can your business do to protect workers from harm?
- Require special protective clothing for your employees. Research indicates that nanoparticles can probably penetrate traditional knit clothing. Ironically, clothing weaved using nanotechnology to prevent the entrance of minute particles could prove to be the most effective.
- Require all employees to wear eye protection even when not working directly with nanoparticles or nanomaterials. The particles tend to behave like gasses, settling more slowly than other particles and dispersing widely while also re-suspending easily.
- Restrict consumption of food and drinks to non-work areas. Nanoparticles could be just as harmful if ingested as if they are inhaled due to their ability to permeate through organs and into the bloodstream.
- Provide shower and locker room facilities for all employees, and require workers to shower and change clothing when leaving their work area. Be active in preventing the spread of nanoparticles outside the workplace.
- Educate your employees. Give them the latest information on nanotechnology news and trends so they are aware of the dangers and are sure to use extra precautions.
- Reduce unnecessary exposure. Limit the number of employees working with or around nanoparticles by using safe handling procedures or a closed system when working with high volumes of nanoparticles.
Looking Ahead
Nanotechnology could be a huge opportunity for growth in your industry. The American Society of Safety Engineers predicts that by 2019, 50 percent of all products produced will be influenced by nanotechnology, which will provide jobs for more than 1 million workers. In the future, nanotechnology will likely give rise to items that help prevent risk or danger in the workplace, such as noise absorption materials, fire retardants, advanced ventilation control and quick, efficient cleanup of pollutants and hazards.
However, the future could also hold health problems for workers exposed to nanotechnology, and lawsuits for companies who did not do enough to protect employees. Because the health hazards are so uncertain, you should create your safety and protective policies on the side of extra caution to protect both your employees and your company.
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