Westland Insurance Group Ltd. is Western Canada's largest independent insurance brokerage, established in 1980 to meet the insurance needs of individuals, businesses and non-profit organizations. Westland provides personalized insurance services through over 130 offices throughout British Columbia, Alberta and Saskatchewan.
With COVID-19 changing the way we do almost everything, many organizations have been forced to innovate, practically overnight. And while employers are going to great lengths to ensure the safety of their employees and customers, they should also be keeping a close eye on their insurance coverage.
As with any change to your business activities or assets, employees currently in a remote work situation should be discussed with your insurance broker so proper coverage amendments can be made.
In this blog, we will outline some important areas to consider.
Look into Off-Premises Property Coverage
Most property policies limit coverage for items that stay on premises but can be somewhat easily moved, such as office equipment or stock, “while at the scheduled risk locations”. This means that if the property leaves that location, coverage may be limited, or even terminated.
Ask your insurance broker to add your employees’ locations to your policy and the value of the property located there. If there are more than a handful of employees, however, that may be cumbersome. Instead, inquire with your broker about adding property coverage on a blanket basis (ie. not limited to a specific location) with a limit that reflects the maximum value of the property at any one location.
Kent Ratke, Westland’s Claims Advocate, also suggests that if employees are using their own office equipment, they will want to ensure their Homeowners, Condo, or Tenants Policy covers property used for business.It’s also important that their insurer is aware of the new business operations on premises, especially if client visits are involved, or they are receiving business deliveries at home.
If the property located at your employee’s premises is damaged by an insured peril, it may result in an interruption to your business operations. It’s important to make sure your policy includes Business Interruption coverage, that the policy limits are adequate, and that the length of time for which this coverage will compensate you is sufficient. If you can remain operational at another location, Extra Expense coverage will take care of additional costs that allow you to do so. Ask your broker for a Business Interruption or Extra Expense Worksheet to assist with calculating limits that will meet your needs.
What to do if your Commercial Space is Unoccupied
Your property insurer expects that your business space will be occupied frequently, but if that is no longer the case, it puts your property at a higher risk of theft, vandalism, and water damage.
Most property policies will have an exclusion for property that has been vacant or unoccupied for more than 30 consecutive days, as well as conditions you are required to maintain to keep your water damage coverage in place. Review these requirements with your broker to make sure you are complying and avoiding the dreaded denied claim.
Cyber and Privacy Expenses and Liability
The ability for so many organizations to quickly transition such large numbers of employees to working from home should be viewed as a great achievement, but it also adds to the growing cybersecurity risks all businesses these days are facing. According to a recent report by cyber insurance and security firm, Coalition, 54% of their cyberattacks this year were a result of email compromise and phishing scams. Part of this can be attributed to hackers preying on the insecurities of first-time telecommuters and tricking them into clicking seemingly legitimate links, attachments, or divulging sensitive information in an attempt to gain access to the organization’s computer system, data, or funds. Another way hackers have been exploiting businesses working remotely is by taking advantage of a not-so-secure remote access point.
Cyber attacks are quickly becoming the new breaking and entering as claims grow in both frequency and severity. Cybercriminals are not picky about the industry or the size of business they target. Some of the more popular methods of this modern-day thievery include:
- Cyber Extortion- hackers holding data, computer systems, a website, or other sensitive information hostage until payment demands are met. Common forms include ransomware and distributed denial-of-service (DDoS) attacks.
- Social Engineering- fraudsters dupe innocent businesses and individuals into transferring what they believe are legitimate payments to fraudulent bank accounts by impersonating the CEO, senior executive, or a member of the finance department.
- Funds Transfer Fraud - hackers gain access to a business’ system and fraudulently transfer funds from the company’s bank account
- Cyber Crime including Funds Transfer Fraud and Social Engineering
- Ransomware and Cyber Extortion
- Business Interruption
- Computer Replacement – in the event hardware is damaged because of a cyber attack
- Will your insurer pay claims and expenses on your behalf, or is the policy set up on a reimbursement basis?
- Does your coverage allow for employees using their own devices?
Additionally, Joshua Motta of Coalition warns that, “some policies require policyholders to backup and/or encrypt all computer systems as a condition of coverage. This is especially problematic as organizations introduce employee devices into their operations that they don't control. This is bad without a pandemic and even worse in the midst of one”
There are many ways to take control of your cybersecurity to ensure your business is well protected. A recent blog by Coalition’s Jen McPhillips outlines some valuable practices and tools to consider:
- Use Remote Desktop Software combined with Virtual Private Networks (prevents hackers from seeing your remote desktop on the internet), and Multi-Factor Authentication (using a device separate from the main system as another way of verifying a user).
- Back up data often
- Don’t use weak passwords
- Don’t connect to public or unsecured WiFi
However, with such a large percentage of data breaches coming from human error, one of the best practices your organization can implement is employee cybersecurity training. This can include monthly mandatory seminars with quizzes and simulated phishing attacks. Connect with your broker to see if your cyber insurance provider offers this service to help employees recognize and properly handle a potential attack from the comfort of their home office.
Commercial General Liability
This coverage protects your business against allegations made by a third party for unfortunate events such as bodily injury or property damage they may have sustained at your business, or because of your business operations. Since the liability exposures for many businesses can take place at multiple locations (for example, a passerby trips on some material you unintentionally left out at a job site, or an employee accidentally knocks over an expensive piece of art while your company is catering an event offsite), your Commercial General Liability coverage is not typically limited to any one location. Unless, however, a Premises Restriction, Limitation to Designated Premises, or a similar wording has been added to your policy. If this is the case and you have employees working remotely, you will want to add the additional locations or see if the restriction or limitation can be removed.
In any event, if you are unsure whether your Commercial Liability will extend to your e-working employees, it is important to check with your broker and confirm your insurer is aware of, and ok with, your new method of operation.
Employers Liability and Employee Benefits
Most Commercial Liability policies contain an exclusion for injury to employees occurring while they are performing duties related to their employment (unless coverage under workers’ compensation benefits has been declined), as well as injury to their spouse, child, or other members of their immediate family. This should be a concern for employers of a remote workforce who no longer have control of their employee’s workspace. According to the Canadian Centre for Occupational Health and Safety (CCOHS), employees working from home may also face issues such as burnout from the amalgamation of their home and work spaces, isolation, and family distractions.
To ensure your employees' physical and mental well-being, businesses should consider implementing health and safety standards including home office setup tips, safety and security checklists, well-defined work hours/ responsibilities/expectations, and more frequent check-ins. Further details and resources can be found on the CCOHS website.
Additionally, if you did any hiring during the COVID chaos, it is important to ensure your workers' compensation coverage and employee benefits plans are up to date and all new employees have been added.