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DID YOU KNOW? Prepare For Back To School With Insurance Policy Review

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A back to school insurance review is vital for anyone with children living at college or boarding school. Whether it's the first year away or the last, going away to school has several insurance implications that need to be addressed to ensure adequate coverage.

Housing

Students living away from home for the first time present new worries for their parents. What if they have friends at their dorm and someone gets hurt?  What if they forget to turn off an appliance and cause a fire?  What if their laptop is stolen?

Many schools require first-year students to live on campus, so renter’s insurance may not be necessary. Some insurance companies include student housing in their definition of a covered location, but it pays to check with your agent.  If the policy language is unclear or if the policy does not automatically include student housing, a liability extension endorsement can be added to the policy for a very modest increase in premium, usually less than $50 annually.  The endorsement changes the home insurance policy to provide liability coverage to include a student's dorm room at school.  With this extra coverage, if someone gets hurt in their dorm, there is now no question about coverage.

But what about all the stuff they brought with them to school? Most home insurance policies will provide coverage for property located outside the main residence, with some restrictions – usually 10% of the property limit on the home insurance policy. For example, if your home insurance policy provides you with $200,000 of personal property coverage, up to 10% of that limit ($20,000) may be automatically covered while at college or boarding school.

There are two drawbacks to using this approach to cover property located in a dorm. First, the deductible from your home insurance policy would apply to the loss. If you have a high deductible on your home insurance policy, a small personal property claim at the dorm may not clear your deductible. Secondly, Loss of Use coverage (or sometimes called Additional Living Expense) does not extend to other locations listed on the policy. Let’s say a pipe bursts in the dorm, causing damage that will take months to repair. There is no coverage for additional living expenses you might incur while your child is living elsewhere.

If you don’t want to accept these policy limitations, a separate renter’s insurance policy should be implemented. Renter’s insurance will provide liability insurance for the dorm, or off-campus address listed in the policy, as well as the personal property at that location. The amount of personal property coverage is usually subject to a minimum amount ($20,000 to $25,000 is common), but a separate policy will allow you to secure a lower deductible, keep any losses from showing up on your home insurance policy, and provide you with Loss of Use coverage.  Expect to pay around $200 per year for a basic renter’s policy.

Whether you choose to extend coverage or take out a renter’s policy, don’t forget to list this location on your personal umbrella policy.

Itemized personal property

If you’ve made a significant financial investment in a laptop for your student, it may make sense to itemize it on your home insurance policy – much like you would a new piece of jewelry. Some insurance companies don’t like to schedule laptops, but it pays to check.  Expect to pay between $20 and $25 per-thousand of coverage.

Paying this additional premium gives you extra coverage for misplacing the laptop and accidental damage, with no deductible applied to the claim.

Cyber Liability

Free wi-fi might be a great way to attract students to a coffee shop or a study room, but it is also a great way to become a victim of identity theft. Your son or daughter might have your credit card information or other personal data on their cell phone, exposing you to financial loss.  Many home insurance policies offer optional cyber liability coverage by endorsement.  The amounts of coverage can vary widely, and there may even be customizable limits within the endorsement, so a conversation with your agent is essential.

Vehicles

If your son or daughter does not bring a car with them to school, you may be able to get a discount on your auto insurance. Most companies will provide an “away at school” discount if the school is at least 100 miles from home.

If they bring a car with them to school, coverage will need to be amended to show a different “garaging location." Depending on the state and the insurance company, a separate auto policy may need to be written if the car is garaged in a different state.

It is also important to remind your son or daughter that the insurance follows the vehicle. If they let their roommate, a friend, or a friend of a friend borrow their car, the insurance on the car pays for the claim. By extension, this means your personal umbrella would also cover the claim if the claim was severe.  Strongly discourage your child from letting anyone use their car while it is with them at school.

And DO NOT let them sign up as a driver for Uber or Lyft while they are at school. They might think it’s a good way to make a few extra dollars, but there are absolute coverage exclusions on auto insurance policies when vehicles are used as a taxi or livery service. Uber and Lyft provide their own insurance, but there may be coverage gaps as to when their coverage applies and when it does not and how it coordinates with your own policy. The risk far outweighs the financial reward.

Have questions about a back to school insurance review? David Miller has answers. Miller, who writes the monthly, DID YOU KNOW? blog is The Plexus Groupe's Vice President, Client Executive for Private Client Solutions. Miller can be reached by calling 846-307-6141.

Cyber attacks don't just affect computer systems. Your machinery may also be at risk.

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Cyber attacks threaten the financial stability of a company. The steep, monetary burden of a cyber attack isn't exclusively tied to damaged digital assets, lost records, and the price of investigating and reporting a breach. Damage to an organization’s physical assets can be just as harmful.

The physical damage of a cyber attack typically occurs when a hacker accesses a computer system that controls equipment. Examples include technology-based controls in a manufacturing plant, refinery or electric generating plant. After a hacker gains access to an organization’s machinery, they control it.

These types of events can lead to major disruptions and costly damages. To safeguard physical assets, it’s critical for organizations to understand the types of businesses and assets that are exposed to these attacks.

What’s at Risk?

Let's compare a cyber attacks to a natural disaster or other industrial accident. Following these kinds of incidents, organizations can incur costs to repair and replace damaged equipment in addition to any lost revenue caused by the disruption.

Unlike natural disasters, however, cyber attacks that result in physical damage aren’t limited to a geographic location and can impact an entire network. This means damages caused by a breach can be widespread, affecting multiple sectors of the economy depending on the target.

Because of this, cyber attacks that cause physical damage are often dynamic and extensive. When an attack on critical infrastructure occurs, it not only affects business owners and operators, but suppliers, stakeholders and customers.

Who’s at Risk?

Cyber attacks that cause physical damage — including the targets, assailants, motives and means of the attack — are constantly evolving.

Incidents can occur in a variety of ways, including: phishing scams, internet exchange point attacks, breaches of unsecured devices and plots carried out by rogue employees.

Many experts deem power and energy sector organizations the most at risk. However, vulnerabilities also exist in utilities, telecommunications, oil and gas, petrochemicals, mining and manufacturing, and any other sectors where industrial control systems (ICSs) are used.

ICSs are open computer systems used to monitor and control physical processes as well as streamline operations and repairs. ICSs are not often designed with security as a primary consideration. This leaves them susceptible to attack. And, for many automated processes, attacks don’t even need to cause physical damage to result in significant disruption and losses.

The targets of cyber attacks vary greatly by industry, and the damage can be extensive due to the interconnected nature of ICSs.

Real-World Examples

Organizations are not always required to report cyber attacks, so they largely go unreported. However, here are a number of high-profile incidents that demonstrate how important it is to consider infrastructure cyber exposures:

→ Ukrainian power grid attack. This was a multisite attack that disconnected seven 110 kilovolt (kV) and three 35 kV substations. The attack resulted in a power outage for 80,000 people and lasted for three hours. The attackers caused substantial, prolonged disruption to the economy and general public utilizing a phishing scam.

→ Saudi Arabian computer attacks. Hackers destroyed thousands of computers across six organizations in the energy, manufacturing and aviation industries. A simple virus stole data and then computers were wiped and bricked. Not only did this mean critical business data was lost forever, but all of the damaged computers had to be replaced — a substantial fee for businesses of any size.

→ Petrochemical plant attack. This attack targeted a Saudi Arabian petrochemical plant. The unique attack wasn’t designed to steal data, but rather sabotage operations and trigger an explosion. The only thing that prevented an explosion was a mistake in the attackers’ computer code. Had the attack been successful, the plant would likely have been destroyed and many employees could have died. Experts are concerned that similar attacks could happen across the globe.

→ Hospital ventilation attack. In this incident, a hacker was able to control a hospital’s HVAC system using malware. This attack put the safety of staff, patients and medical supplies in jeopardy, as the hacker could control the temperature of the facilities.

Cyber attacks will likely become increasingly common, as technology advances and hackers become more creative. Even more concerning is that these kinds of attacks not only endanger a company’s data, reputation and finances, but human lives as well.

How Do I Protect My Organization?

Insurance coverage for cyber attacks is still in its infancy, and your organization may have gaps in protection. Even if your property insurance policy includes physical or nonphysical damage overages, you may not necessarily be covered from first- or third-party losses from cyber attacks.

The level of protection your company has depends largely on the structure of your policies. Therefore, it’s critical for businesses to do their due diligence and understand if their policies do the following:

→ Impose any limits on coverage, particularly as it relates to physical damage of tangible property.

→ Cover an attack and any resulting damages.

→ Provide contingent coverage for attacks that aren’t specifically targeted at the organization.

There are a number of steps businesses can take by themselves to protect their physical assets. In addition to implementing a cyber risk management plan, businesses should consider the following:

→ Keep all software up to date.

→ Back up files regularly.

→ Train employees on common cyber risks and what they should do if they notice anything suspicious.

→ Review your exposures and speak with your insurance broker to discuss policy options for transferring risk.

Contact Us

Have questions about today's newsletter or other commercial insurance matters? Contact a property and casualty client executive at The Plexus Groupe at 847-307-6100, or reach out via the Web.

Disclaimer and publishing credit: This Risk Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2018 Zywave, Inc. All rights reserved.

Plexus Introduces 2018 Summer Internship Program

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Deer Park, IL, April 18, 2018. -- The Plexus Groupe, a national insurance brokerage, is proud to introduce its Summer Insurance Internship Program. The Insurance Internship Program allows students entering their junior or senior year in Fall 2018 to apply. Interns will gain valuable real-world business and insurance experience in a workplace environment annually honored as one of the "Best Places to Work in Insurance" by Business Insurance magazine and Best Companies Group. The firm seeks a pair of interns for its Deer Park, Ill. office. It also looks to fill one position in its Dallas office. The paid insurance internship program runs from Monday, June 11 through Friday, August 3.

"We're excited for the launch of our insurance internship program," said Stephanie Martinez, Plexus VP of Human Resources. "It's a wonderful opportunity for students pursuing a career in insurance, a fast-paced field that employs three million nationwide. Also, a field that is undergoing considerable change because of technology. These are exciting times for our firm and we are looking forward to working with these students."

Internship Qualifications

In order to qualify for a Plexus insurance internship, candidates must have a 3.0 GPA or higher. Candidates will preferably major in Risk Management, Insurance, Human Resources, Business, or Finance. Employee Benefits will have two internships open: one in Deer Park, one in Dallas. One intern will work with Plexus's Property & Casualty team in Deer Park.

The Plexus Groupe will nominate interns for the Council of Insurance Agents and Brokers' Scholarship. This will give them a chance to win $5,000 towards their college educations.

Who is The Plexus Groupe

Plexus offers expertise in employee benefits, property and casualty, corporate retirement plans, personal lines insurance, human resources administration / consulting, benefits technology services, and mergers and acquisitions. In each of the last eight years, the firm has been honored as one of the "Best Places to Work in Insurance" by Business Insurance magazine and Best Companies Group. Headquartered in suburban Chicago (Deer Park), Plexus also has offices in Chicago (Loop), Dallas and Oklahoma City.

For more information on Plexus's 2018 Summer Internship Program, please contact the firm at 847-307-6100 and ask to speak to a Human Resources team member, or visit the firm's Career Opportunities page to apply.

While a stormy 2017 was expensive for insurers, it could have been worse

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In our latest look at Property & Casualty news and notes, we dive into the subject of 2018 commerical insurance pricing for insurers after a disaster-laden 2017.

Market watch: Though plenty of roofs caved in last year, the sky isn't falling in 2018

Global weather and storm losses reached $330 billion in 2017, with insured losses at $135 billion, according to reinsurer MunichRe. However, these losses do not necessarily mean that insurance rates will significantly rise, with numerous published reports suggesting that insurers built up excess capacity before a tumultuous 2017 -- and that losses were within acceptable limits. Nevertheless, property, conmercial auto, business owners, and general liability rates were up slightly in the fourth quarter of last year, per the IVANS index, which tracks rate renewals from more than 380 insurers.

Report: Securities lawsuit filings jumped 53% in 2017

Directors and officers of publicly traded companies found themselves at the center of more lawsuits than usual in 2017. Per Business Insurance magazine, securities lawsuits increased from 271 in 2016 to 415 in 2017, according to data from Kevin LaCroix, executive vice president at RT ProExec, a division of insurance wholesaler RT Specialty. That's a 53 percent increase over the previous year. Whether your firm is publicly traded or not, having the right directors and officers is key. We can help. For more information, contact Plexus Vice President of Executive Liability Willie Lindsey at wlindsey@plexusgroupe.com or 847-307-6100.

Getting to know Plexus's Cyber Indication Form

Ever thought about getting cyber insurance for your business but didn't know where to start? Check out our quick and easy Cyber Liability Indication Form. Fill it out, and one of our client service team representatives can give you a sense of the coverage you need -- and what it could cost.