Monthly Archives: May 2013

What Is Professional Indemnity Insurance?

Mistakes or omissions in the service industry are often unintentional. A doctor won’t recommend a procedure that can harm a patient in any manner. An architect won’t approve a structure if it has not been built according to the building standards or a financial planner wont recommend a strategy that doesn’t suit a client’s risk profile. However, that doesn’t mean a service provider (a doctor, architect, financial planner, consultant or a web app development firm, for example) is not exposed to claims of physical/financial damages incurred by the recipient of his/her service in addition to any legal costs involved in defending a claim. Even if you’re doing your job right and following all rules and regulations, there’s still a possibility that some of your clients may feel that you didn’t fulfill your obligations and worse still, are able to prove it in court!

Professional Indemnity (PI) Insurance – The Basics

If a customer incurs financial loss or gets injured due to the service/advice you provide, he or she can initiate legal action against you for compensation. Should a situation like this arise, a Professional Indemnity (PI) Insurance policy will protect your business, andpersonal assets. Everyone providing a service should, therefore, inquire with their business insurance provider about the PI cover they actually have!

Are you a ‘Professional’? Should you have PI Cover?

The legal definition of the word ‘professional’ or an ‘expert’ in a field was revised recently in Australia. Earlier, only people working in medical, engineering, accounting and a handful of other professions were legally defined as ‘Professionals.’ The business world over the years has evolved a great deal and so has the legal definition of the word ‘Professional.’

Today, the definition applies to dozens of specialists working in a wide range of different fields. That said, if a physical, material or financial loss is proved to be the outcome of a service or advice you offered, you’re liable to compensate for the same! There can be no escape except when you are covered by Professional Indemnity Insurance.

Also, if you fail to maintain the quality of service promised (or required by the applicable laws in your profession), you’re exposed to legal claims.

So, whether you’re a consultant, health worker, engineer, real estate agent, graphic designer or anything else, it’s advisable to consider buying Professional Indemnity Insurance in Australia.

Is it Mandatory to buy PI Insurance?

For some professions – yes, it’s mandatory in Australia to have Professional Indemnity Insurance. Accountants, medical practitioners, lawyers, insurance brokers and some contactors in Australia are required by law to do so. The minimum coverage requirements as well as the terms & conditions for PI can vary depending upon the industry you’re in.

Who is covered when I buy a PI policy?

A typical PI insurance policy not only covers your business (whether a registered business or privately owned company) but employees, and directors  too.

Professional Indemnity (PI) Insurance in Australia

Irrespective of the profession you’re in, it’s advisable to have sufficient insurance cover in order to maximise your financial and legal protection in the event of an unexpected claim at the most unanticipated hour.

General advice Disclaimer

This Blog contains general advice only. It has been prepared without taking into account your particular objectives, financial situation or needs. Before acting on the advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs.

Smart Business Insurance (this Company) and the Blog authors makes no representations or warranties with respect to this Blog or its contents.

This Company does not warrant that the information on this Blog is accurate, complete or current.

Please click here to for the complete disclaimer details.

9 Things Businesses Need To Know About Cyber Insurance

Data breaches have increased dramatically in the last few years with a growing number of Australian Businesses affected, some businesses are now choosing to cover themselves against information breach by taking out specific cover for Cyber Insurance.  This is because the general corporate insurance that businesses use do not cover loss against unauthorized access to your personal data, including that of your employees and customers.

So, if you’re operating in Australia, transact online and/or have an online presence, here are the 9 things you need to know about Cyber Insurance:

  1. Your general insurance won’t cover you against information breach
  2. No typical general corporate insurance policy will cover you for loss against information breach, virus attack, or any kind of unauthorized access to the personal data of your business. Cyber insurance fills this gap, and picks your business up from where the general insurance leaves, in terms of protection for online activities.

    The reason why general insurance policies don’t cover cyber theft or data loss is because these are not tangible assets, which is what general business insurance historically has aimed to protect.

  3. Cyber Insurance can replace risk management teams
  4. While big business corporations can invest huge resources in developing entire departments for risk management, small and medium businesses have limited resources. It’s not viable for small and medium businesses to create risk management teams or devote significant energies into risk management, when risk management via cyber insurance can be obtained fora fraction of the cost and time.

  5. Cyber insurance covers more than you think
  6. Depending on your business needs and whom you partner with for insurance, you can get more than just first and third party coverage. Some cyber insurance policies in Australia can also provide cover against business interruption, damage repairs etc. Moreover, the most beneficial feature of the Cyber insurance is that it can help you meet business expenses till your business resumes its operations.

  7. Small and medium scale businesses are the common targets
  8. Many and small medium sized businesses that are aware of Cyber Insurance believe it is only needed for large multi-national organisations. But, according to statistics it is small and medium businesses that are targeted by hackers and data thieves most often. Further, unlike big businesses in Australia, that have multiple lines of production,most small businesses don’t have the ability to divert funds from one division to the other so the impact of cyber-crime can prove devastating.

  9. How are policy premiums determined
  10. Cyber policy premiums are largely determined by the size of your organization and the industry you operate in. For example, companies that are doing significant online business and storing huge volumes of data are considered higher risk businesses. The risk involved is high also because they need to safeguard confidential customer information. Also the greater the importance of online activities to a business the greater the impact on the business if they are affected by cyber-crime. The greater the risk, the higher is the premium and vice versa.

  11. Difference between tangible and intangible insurance
  12. What most general corporate insurance policies cover is tangible assets like property buildings, computers, laptops etc. Information is looked upon as an intangible resource, and hence is not valid to be covered under general insurance.

  13. Perform risk assessment
  14. Performing risk assessment and implementing a risk protection strategy can save you lots of money when purchasing cyber insurance cover. You can identify and minimize the gap between security and protection required and then invest in the right Cyber Insurance policy.

  15. Find a knowledgeable insurance  broker
  16. A specialist business insurance broker understands Cyber insurance and can break down its components into offerings that suit your business.  They can help you identify all the risks, and validate your seeking of a Cyber Insurance policy.

  17. Get value added service from your insurance broker
  18. Specialist insurance brokers can offer you the convenience of providing benchmarking services for your industry segment, and refer you to providers that can provide assistance for installing firewalls.

General advice Disclaimer

This Blog contains general advice only. It has been prepared without taking into account your particular objectives, financial situation or needs. Before acting on the advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs.

Smart Business Insurance (this Company) and the Blog authors makes no representations or warranties with respect to this Blog or its contents.

This Company does not warrant that the information on this Blog is accurate, complete or current.

Please click here to for the complete disclaimer details.

Cyber Insurance – Does Your Business Need It?

Back in the old days when everything was recorded manually, chances of information breach meant misplacing record books, destruction of record books due to natural calamities, and other such mishaps. Today, the breach of information is far more complicated as almost every business stores its digitized data on workstations connected to the internet or on third party servers. The advent of the cloud technology has further complicated the task of keeping confidential business data safe. We can access, store, and feed customer information, credit card details and place or process orders, payments etc. with the click of few buttons, from various devices like laptops, tablets and even cell phones but these benefits do not come without side effects. That said, cyber insurance is the emerging risk protection solution.

All important employee and customer data is stored on business networks, which are and will always be prone to cyber attacks. Hackers can access the account information of your customers, or employee passwords and pose a potential threat to your business.

Business owners and senior executives have a misconception that only high profile and high risk companies require cyber insurance, when in fact, during 2012, it was small and medium businesses that were hit hardest by information breaches as many were either completely defenseless against even small time hackers or had little funds to hire IT system security experts. According to statistics published by the Forbes Magazine, the US Secret Service and Verizon Communication Inc. estimated that 72% of all the data breached in 2012 occurred in small and medium businesses.

In today’s age of information, many businesses can get cyber insurance customized to suit their unique requirements. For example, an online retailer will need a cyber insurance policy with extensions because it needs cover against information breach of hundreds or thousands of customers that shop online and perhaps network interruption cover. If it’s a manufacturer that runs a website on the internet, a base cyber insurance cover against information breach, personal and corporate data liability, outsourcing, data security and defense costs can suffice.

If you’re looking for even more valid reasons that justify the necessity for protecting your business with cyber insurance, read on!

A General Policy Won’t Cover Information Loss

A typical general corporate insurance policy will not cover you for any loss of information due to cyber, virus or hacker attacks etc. A good cyber insurance policy protects you beyond a point where a general insurance policy leaves you.

The general policies and business packs typically cover tangible assets, and ironic as it will sound ‘information’ in the age of information is not considered as a tangible asset.

Not Many Businesses Can Afford Risk Management Teams

Large corporations have the resources to invest in an entire department for risk management. But, when it comes to small and medium businesses, they’d rather hire a good insurer, who can perform complementary functions in order to protect interests of an organization, but at a much lesser price.

In fact, the process of placing cyber insurance will not only help you bridge the insurance gap, but also encourage businesses to review their security protocols in relation to their online activities. For example, cyber insurers will require that your firewalls are in place to protect your network.

Cyber Insurance Can Cover More Than You Think

The cost of cyber breach is not limited to first party coverage, but it includes many other expenses like business interruption, hiring of a public relations firm for damage repair etc. In many cases, the compensation money will be needed by a company hit hard by data loss or legal cases to survive till it resumes its natural cash flow.

All the above becomes even more valid for small companies that are limited to a single business. Bigger businesses can compensate the loss by adjusting money from various lines they run, but if you have a single line of business, your company will have to shut down due to information breach.

General advice Disclaimer

This Blog contains general advice only. It has been prepared without taking into account your particular objectives, financial situation or needs. Before acting on the advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs.

Smart Business Insurance (this Company) and the Blog authors makes no representations or warranties with respect to this Blog or its contents.

This Company does not warrant that the information on this Blog is accurate, complete or current.

Please click here to for the complete disclaimer details.

What is Cyber Insurance?

As vast amount of business information is stored on standalone work stations, internet and now the cloud, businesses from across the globe are exposed to high risk of information breach. In the past, many mid-sized and even large scale companies have suffered losses amounting to millions of dollars due to planned cyber crimes or system malfunctions, where confidential information was accessed or worst, destroyed by hackers, competitors and others. Many businesses have been left handicapped for many days at a stretch, unable to operate or lost accountability among their customers due to virus attacks that are usually written and directed at certain targets with just one goal – to hurt companies and mock their IT security systems. This is where Cyber insurance can help businesses to protect their interests against information and data loss.

Basics of Cyber Insurance

Cyber Insurance is the coverage for liability resulting from unauthorized access and use of electronic data and software from the network of the business. This insurance also covers liability claims for spreading malicious virus, computer theft, or any other ‘unintentional’ act that may originate from the business network.

Very few businesses, with active online operations or multiple works stations and servers connected to the internet are aware of the fact that a typical business insurance policy covers only tangible assets; electronic data is not covered under such policies. As businesses are increasingly relying on networked systems, cloud services, external data centers etc., they are also exposing themselves to the unavoidable evil of online threats.

The concept of Cyber Insurance takes into account both the first party and the third party risks. It covers various possible hazards including privacy risks, infringement of intellectual rights, virus transmissions and any other problem that has been passed on from the systems or networks owned and operated by the first party to a third party, risking their data and information and hence making the former legally responsible for compensating the latter for the loss, theft or distortion of data.

When Does A Business Need Cyber Liability Insurance?

Any business that communicates to clients and/or transacts online should investigate whether they require cyber insurance.

Businesses with an e-commerce website are in particular need of Cyber Insurance.

Cyber insurance  policies are built around the needs of specific businesses. For different businesses varied cyber insurance policies are needed. For example, an online retailer will need a cyber insurance with extensions  to safeguard the personal information of the customers, who shop products online by using their debit/credit cards and perhaps also network interruption insurance and cyber insurance.

At the same time, companies such as brick and mortar retailers for example, may  require base  cyber insurance to cover personal and corporate data liability, outsourcing, data security and defense costs.

Before signing on the dotted line for a Cyber Insurance Policy, you must consider factors such as size of the business, type of data stored, type of records maintained (medical records, employee records, school records etc.), estimated number of customers and several other economical pointers.

With the number of businesses investing heavily to build a strong online presence, communicating and transacting online  going up at a steady rate, hackers, data thieves and others writing malicious codes and programs are working overtime too! With the advent of the cloud technology and its large scale adoption by the businesses for consolidated IT infrastructure, risks of security breach have also increased manifold.

Why Do Businesses Need Cyber Insurance?

If high profile organisations  on the internet, such as LinkedIn, eHarmony, and Yahoo can get hit hard by cyber attacks, businesses with no world class firewalls or logical security barriers are certainly not immune to such attacks. When companies with worldwide operations and millions of users were at the receiving end, personal information of millionsof users was stolen away by hackers, and it cost them millions of dollars in compensation. To make it worse, they also lost the credibility to protect the sensitive user data.

As larger organisations improve their defenses against cyber attack it leaves small and medium business as vulnerable targets.

Imagine what would happen if your business had to suffer such huge losses due to information breach? The worse news is that liability for the loss of employee and customer data are not covered under typical general business insurance policies. Sometimes, liability policies may offer to cover such losses, but there is big gap between what policies cover and what you finally get for the loss incurred.

A myth that is quite prevalent among business owners is that cyber insurance is only needed by ostensibly high profile and high risk companies, while small and medium size businesses can afford not to investin it. In 2012, 72% of the data breachesthat took place affected small, medium businesses and such stats should provide some food for thought to everyone.

Bigger companies may appoint entire departments for analyzing all kinds of risks their business in susceptible to, but for smaller companies a necessary precaution is to invest in Cyber Insurance.

General advice Disclaimer

This Blog contains general advice only. It has been prepared without taking into account your particular objectives, financial situation or needs. Before acting on the advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs.

Smart Business Insurance (this Company) and the Blog authors makes no representations or warranties with respect to this Blog or its contents.

This Company does not warrant that the information on this Blog is accurate, complete or current.

Please click here to for the complete disclaimer details.

The Need for Business Insurance in Australia

Businesses in any part of world need insurance to protect themselves from negligence or chance accidents. Not that a business does it deliberately, but business means risk, and this risk is brought about by the actions of your workers, sometimes because of your own policies, and at other times because of the products and services you sell. The end result can be that your business owes some compensation to the aggrieved parties, which can create financial problems at your end.

This is when business insurance comes to your rescue and saves your business’s hard earned funds being paid out as liability compensation. Before you choose an insurance policy, you’ll need to evaluate your business’s insurance needs. Different businesses will have varying requirements, depending on their operations. This is where an insurance broker can help.

There are a number of categories of business insurance that businesses can avail themselves of in Australia. Read ahead about two types of business insurance to find out the one(s) that may fit your business requirements:

Commercial insurance

In order to protect your business assets and livelihood, you can use commercial Insurance. It has basic two components- Compulsory Insurance and General Insurance.

When we talk about Compulsory insurance, it covers motor vehicles and fleet as it is compulsory for businesses to insure their vehicles against third party injury liability. It protects you against the payment of injuries caused to others from your vehicles, cost of property damage caused by your vehicles, and the cost incurred in case of accident of the vehicles. The policy also covers business vehicles against theft and fire.

General insurance is not compulsory for all businesses; however it is still advisable to opt for these as well. This includes insurance against burglary, deterioration of stock, machinery breakdown, employee disloyalty, and also for property in transit, goods in transit, electrical equipment, and many other types of losses.

Liability and Professional Risk Insurance

Although not a compulsory form of insurance, Professional Risk and Liability Insurance comes in handy in case of damage to another person or his/her property. If you think your business is unpredictable and has the potential of being sued due to negligence, this insurance is a must for you. It can be sub categorized as – Product liability insurance, Public Liability insurance and Professional indemnity insurance.

Product liability covers the cost of damage caused to people and property by the use of your products. In such cases product liability claims may be higher; therefore insurance is the best bet for dealing with compensation.

Public liability insurance covers the cost of compensation that business may incur to third parties in case of death, injury to people and property damage through negligence.

Professional indemnity insurance protects the business from legal action in case of loss incurred due to professional negligence. It covers material, financial as well as physical loss.

General advice Disclaimer

This Blog contains general advice only. It has been prepared without taking into account your particular objectives, financial situation or needs. Before acting on the advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs.

Smart Business Insurance (this Company) and the Blog authors makes no representations or warranties with respect to this Blog or its contents.

This Company does not warrant that the information on this Blog is accurate, complete or current.

Please click here to for the complete disclaimer details.