By Francis M. Walley III, CIC, CPCU | F. M. Walley Insurance, A Division of C&S Insurance
Each new year brings forth new resolutions. Most often, these are the goals we set for self-improvement and personal health. But as 2019 draws to a close and we open the door to a brand-new decade, I’d like to urge fellow Chamber members to focus on the wellbeing of their businesses. Specifically, I’d like to remind people about the coverage gaps that often exist in the areas of cyber liability and employment practices liability.
If you don’t know very much about these growing business risks, you’re not alone. Without totally boring you, here’s a quick look at both issues:
These days, cyber liability events can come in many different forms: phishing scams, malware attacks, a company-use cell phone lost or stolen at the airport. And the targets aren’t just mega corporations any more—far from it. According to a 2018 report, 58% of all cyber attacks targeted small businesses. Which begs the question:
What would happen if someone gained access to all your clients’ contact details and payment information? What is someone shut down your operating system for ransom? Between the cost of the business interruption itself and the cost of your legal fees, potential fines and penalties, forensic investigation, required customer notification and credit reparation services… experts estimate that recovery from even a “small” business data breach can cost between $36,000 and $50,000.
The good news is that cyber liability insurance can help you offset these costs, and protect your business from being victimized in the first place.
Employment Practices Liability
Now let’s talk about what’s happening inside your organization. You probably have insurance to protect your business in the event of a fire, right? But did you know: in today’s work environment, you’re more likely to be sued by an employee than experience a fire? It’s true. Employee lawsuits are on the rise. In 2015, in Massachusetts alone, small companies (those employing between six and fourteen workers) paid more than $1,400,000 in compensation for claimants’ lost wages and emotional distress.
The most common claims? Discrimination. Discrimination can mean denying a promotion, withholding a job offer, or firing an employee on the basis of race, religion, age, sex (including pregnancy), disability, citizenship, marital status, arrest record, gender identity, or military service. What’s more, in Massachusetts, you (the business owner) can be held liable for discriminatory actions made by your managers or supervisors.
For these reasons and many more, we believe it’s worth asking your agent for an EPLI (employment practices liability insurance) quote. EPLI helps companies pay to defend employee allegations (which can be pretty steep, even if you’re 100% in the right) and also address any settlements awarded.
Bottom line: we know there’s a lot of catch-up work to do after the year-end holiday break. And maybe your insurance program isn’t exactly top of mind this January. But if you have a free moment—in the coming weeks—we’re always here to help you review and reassess your Massachusetts business insurance program.
Meanwhile, we wish you all the best for a happy and prosperous new year. Cheers!