The Liabilities All Around
The Liabilities All Around
As a business, the risk you face every day is immense. There are liabilities all around you, and there simply isn’t enough page space to explore them all and – let’s face it – no one except me likes insurance quite that much. So, let’s just walk through a high-level review of some risks you face in your day to day operations.
When we talk about risk, we aren’t talking about the risk you face simply by choosing to invest in your business; we are talking about the risk that can affect the ability to limit your financial risk – risk arising from the possibility of liability. From a high-level perspective, I like to break down your risk into three main categories:
The risk you face when it comes to customers is from the services you render, whether that be maintenance, consultancy, installation, monitoring or other aspects of alarm work. You generally carry two types of coverage to address these risks – General Liability and Professional Liability. These coverages are similar but both are necessary. Both are designed to protect you against liabilities and they both are usually required by contracts. But where are they different?
General Liability is intended to cover damages arising from physical damage or a physical condition at your location or your customer’s location. Professional Liability, on the other hand, is more about damages arising from negligence. You can see how these two items may get confusing – is your employee negligent when they drill through a waterline? You can see how there could be a bit of a gray area. Without going full insurance nerd on you, let me explain.
Within a General Liability policy is an exclusion which states that it will not cover damages arising from Professional Services. General Liability is intended to protect against physical injury to people or property damage arising from your daily operations. The example of your employee drilling through a waterline or stepping through a ceiling in an attic or dropping a tool on a customer – these are all examples of claims that would be addressed under General Liability. That’s the easiest part.
When it comes to Professional Liability, this is more complex. There is a key component to your work as an alarm industry professional. You are being held to a higher standard of duty. You are being engaged by your customer because you are an expert in your field. Examples of claims would be failing to input the correct settings into an alarm system, damage happens (generally at a later date) and then a demand is made against you. You didn’t cause immediate damage. It wasn’t a matter of physical work causing the damage. Another example – you set up a camera system and a break in occurs. Camera angles do not catch it, the alarm doesn’t signal and valuables are lost. Again, no physical damage, but there is economic damage.
When it comes to your employees, there is some exposure which you are readily familiar with and almost anticipate having to deal with on at least an annual basis. You more than likely carry Worker’s Compensation coverage to address the risk related to employee injuries. You have a duty as an employer to provide your employees with safe working conditions and provide them with tools they need to do their job safely. With your Worker’s Compensation, there should be two parts of coverage in place:
- Coverage to address your statutory liabilities to your employees. Simply put – employee gets injured, medical bills get paid
- Coverage to address liabilities arising from negligence in the event you fail to meet your duties of providing a safe working environment
A lesser thought of coverage, but certainly an important one to mention is Employment Practices Liability (EPLI). It is not thought of as often because you are generally not required to purchase it. EPLI covers you for claims arising from allegations of discrimination, harassment, wage & hour violations and inappropriate employment conduct. The best policies will also include third-party coverage – discrimination & harassment of non-employees. Employment practice claims are on the rise as issues related to employment practices are ever evolving.
The last exposure I like to cover with companies is the risk related to the technology they use every day. Time and time again I hear companies say “that won’t happen to me,” “my company is not large enough” or “I don’t hold customer data.” The excuses for not purchasing an affordable coverage are endless.
I’m here to say – if your Facebook can get hacked with one click, so can your business. You have liabilities to not only your customers but to yourself. Gone are the days when hackers were only interested in your customer data; that stuff isn’t lucrative for them anymore. It is still a very real exposure, but it is secondary to hackers’ other efforts.
We have to quit thinking of it in simple terms of customer data. Cyber-attacks are now the number one crime against organizations – even more so than physical theft. In 2018, there were reportedly over 130 million types of malware introduced – that’s 130 million NEW ways to hack your systems. These malwares can change their code on a dime, making the ability to find a solution about as tough as finding the right strain of flu vaccine because the virus is ever evolving.
This exposure is as simple as an employee clicking a link or opening an attachment. It means that your systems could be shut down, or your data could be exposed. It could mean someone navigating your system in the background without your knowledge to harness your processing power for their financial gain.
Cyber is a complex exposure. Honestly, at less than $500 for most insureds, there is NO EXCUSE to not carry coverage.
Every business faces their own set of unique exposures and liabilities. Every business is different in the value they put on protecting themselves in the various areas. Insurance is complex, but it is a solution to many issues you could face. My job is to provide you with the knowledge you need to make informed decisions on how to protect yourself. I’m an insurance nerd so you don’t have to be.
Call Rhett Butler or Crystal Jacobs at 866-315-3838 for more information on the Security America Insurance Programs and to get a free no-obligation quote. Also, don’t forget to reach out to Sophia Dominquez at ESA to learn more about how you can get a member discount too! You can reach her at 972-807-6800.