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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The Virginia Graeme Baker Pool and Spa Safety Act addresses dangers related to pool and spa drains, which can cause severe injury or death by trapping swimmers under the water when blocked. The Act is designed to improve pool and spa safety through new federal requirements for drain covers and anti-entrapment systems as well as by establishing educational programs.
Federal Requirements
The Act contains the following federal standards for swimming pool and spa drain covers:
Your business should follow all pool and spa safety requirements to lower risk.
- All covers manufactured, distributed or sold in the United States must conform to the specified entrapment protection standards.
- All must be equipped with anti-entrapment devices or systems that comply with the same federal standards.
- Each public pool and spa in the country with a single main drain (other than an unblockable drain) must be equipped with at least one device or system designed to prevent entrapment, such as a safety vacuum release system, suction limiting vent system or gravity drainage system, that meets appropriate performance standards.
The requirements contained in the act are intended to be minimum standards; many states have more rigorous safety rules. Violations of the act’s requirements will be treated as violations of the Consumer Product Safety Act.
State Swimming Pool Safety Grant Program
A grant program exists that provides financial assistance to states that have minimum safety requirements for pools and spas that meet the standards contained in the Act. The state statute must require pool and spa owners to:
- Enclose all outdoor, residential pools and spas with barriers to prevent small children from gaining unsupervised access to the area
- Equip all pools and spas with anti-entrapment devices
- Equip all pools and spas built after Dec. 19, 2008 with more than one drain, one or more unblockable drains, or no main drain with anti-entrapment devices
- Equip every swimming pool and spa that has a main drain with a drain cover that meets standards
In addition to imposing these safety requirements, the state law must require periodic notification to owners about compliance with the entrapment protection standards. States can use the grants for the following purposes:
- Hiring and training enforcement personnel for implementation and enforcement of the state laws
- Educating pool construction, installation and service companies about the safety standards
- Educating pool owners, pool operators and other members of the public about the safety standards
Education Program
The act also established an education program to inform the public of methods to prevent drowning and entrapment in swimming pools and spas. The educational materials are designed for pool owners and operators to promote safety.
Please contact Scurich Insurance at (831) 661-5697 with any questions regarding risks and liabilities associated with your business’ pool or spa.
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Even though farm machinery manufacturers try to ensure that their products are safe by equipping them with safety guards, agricultural work presents many hazards. Many times, workers suffer injuries because of human error from taking a shortcut, ignoring warning signs, not paying attention or not following safety rules.
Here are some of the most common farm machinery hazards, as well as several safety recommendations to reduce your risk of injury:
Shear Points and Cutting Points
- Shear points occur when the edges of two objects move close together and can cut soft material (example: auger).
- Cutting points occur when an object moves forcefully and is able to cut (example: sickle blade).
To avoid injuries, remain alert while operating machines with shear and cutting points. Also, advise others to watch out because some cutting machinery can throw objects while in use.
Pinch Points
- Pinch points are created when two rotating objects move closely together, one moving in a circle.
- Hands and feet can get caught in pinch points, or other body parts can get pulled into pinch points when loose clothing becomes entangled in the machine.
To avoid injuries, wear tight-fitting clothing and never reach over or work near rotating parts. Also, identify places where pinch points can occur and avoid these areas.
Wrap Points
- When exposed machine parts rotate, they create wrap points. Loose clothing can get caught in the moving parts, and consequently pull workers into the machine.
To avoid injuries, shield potential wrap points before beginning your work. If wrap points cannot be shielded, paint them a bright color to remind yourself that they are there.
Crush Points
- Crush points occur when objects move toward one another, or one object moves toward a stationary object. Workers can be crushed in between.
Block equipment securely to avoid fatal crushing injuries.
Free-wheeling Parts
- Some equipment with moving parts continues to spin after being shut off.
To avoid injuries, wait until the machinery has completely stopped before touching it. This can take several minutes.
Hydraulic Systems
- When servicing, adjusting or replacing parts on machines with hydraulic systems, workers can face high-pressure blasts of hydraulic oil. This can cause injury and/or burns to the skin.
To avoid injuries, do not inspect hydraulic hoses with your hands because the hydraulic fluids can puncture the skin.
Take time to become familiar with the potential hazards of the machinery you work with and remember to always put safety first!
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In today’s high-tech world, individuals can carry thousands of client files on flash drives in their pockets or purses. People are conducting business on the go and sensitive information is accessible at the click of a button. Managers are using their laptops or tablets through “hot spots” at local coffee shops to access customer databases. Healthcare professionals shopping at supermarkets can get patient files on their smartphones.
If you think of information security breaches primarily in terms of malicious hackers cracking the networks of big corporations from thousands of miles away, think again.
The hacking of such corporate giants as Global Payments, Epsilon, and Sony prove that size and sophistication can’t stop data thieves. However any company that stores customer information in electronic format is vulnerable to cyber privacy liability exposures than can cost megabucks – or even put a firm out of business – which means they need insurance against these risks.
Cyber Liability coverage can protect your business against breaches of privacy from unauthorized access, physical taking, or the mysterious disappearance of confidential information that leads to third-party losses resulting from identity theft.
Depending on your needs, the policy can also provide a variety of coverages, such as:
- Business Interruption
- Cyber Extortion
- Systems and Data Recovery
Other options can cover the cost of contacting those affected by the data breach, computer forensics to analyze the breach, fines and penalties, potential HIPAA (client medical records) exposures, and online activities on your company site.
The development and expansion of Cyber Liability coverage during the past two decades has paralleled the explosive growth of computer technology: Today’s policies are increasingly comprehensive – and inexpensive. Contact us today to discuss your Cyber Liability Insurance needs.
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