Month: August 2015

Waiver of Subrogation-Landlord and Tenant Lease Relationships

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Waiver of Subrogation-Landlord and Tenant Lease Relationships

A waiver of subrogation is used in a commercial lease for the protection of one or both, the landlord and the tenant, to avoid duplicate payments made through the other party’s insurance policy, for the same negligible loss.

The Landlord maintains property insurance on the building. The Tenant maintains property insurance on the tenant’s business personal property. If the tenant pays a portion of the building premium to the landlord, and the tenant causes negligence to the building, the landlord’s insurance carrier can file suit against the tenant for building damages without the appropriate waiver of subrogation in place. The landlord has already collected premium from the tenant, as well as received payment from the landlord’s insurance policy, and can now recover the damages through subrogation of the tenant’s policy.

A waiver of subrogation will prevent the landlord’s insurance company from filing a claim and collecting against the tenant. The landlord and tenant should negotiate the terms of the waiver, and as to whether the waiver will be mutual, or only to benefit one party, and the extent of the coverage under the waivers.

Waivers can be negotiated against the two parties and must be a requested clause on the property insurance policy. Limits can be negotiated and stated on the waivers to the extent of the amount of insurance required to be carried on that property under the lease. Mutual waivers of subrogation can benefit and protect both the landlord and the tenant. Confirm with the insurance carriers if the waivers are allowed by each of the respective insurers and to be sure they are in compliance with the landlord and tenant lease.

Insurance requirements in your lease should be reviewed by your agent to be sure the coverage is in compliance and can be indicated on the certificate of insurance provided to both parties.

Roseanne Gedman, CPCU, CRM, CIC

Schechner Lifson Corporation

Renting a Car

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Renting a Car

Business entity automobile liability exposures – what is hired and non-owned auto liability?

Hired automobile coverage – when an owner or an employee drives a rented, hired, or borrowed vehicle.

Non-owned auto coverage – when an employee drives their own personal vehicle on company time for company business.

If the business entity does not own vehicles in the entity name, the hired and non-owned auto liability coverage can be added to the business entity’s business package or general liability policy.

As a businessowner, you can become legally liable for the actions of your employees.  If you are held accountable, it is important to understand your exposures to loss and to be sure you are adequately protected.

Employees who operate their own vehicle present potential loss exposures to you while they are driving their own vehicles. Exposures to loss you may not think of such as employees running bank errands,  post office drop off, picking up a client, picking up office supplies and any other errands the employee is instructed to perform while on company time, using their own vehicle.

Although the employee would maintain their own personal automobile insurance, it is hard to force the employee to maintain adequate limits that are affordable to them.  It is likely that the loss to another as a result of an employee-related automobile accident would exceed the employee’s personal auto liability limits.  The claimant and their attorney will be smart enough to bring suit against the employer organization for the limits in excess of the limits they have exhausted under the employee’s personal auto policy.

The hired and non-owned auto liability endorsement will help to defend and protect the entity when the suit arises out of bodily injury or property damage caused by an employee while using their vehicle for company business. The hired auto liability will replace the liability coverage offered at the rental car company when an employee is renting a vehicle on company time.

The cost associated with this coverage is minimal and should be added to all business auto or general liability policies to protect and defend the entity for employee related personal auto lawsuits while the employee is using their vehicle for company business, or renting a vehicle on company time.

Roseanne Gedman, CPCU, CRM, CIC

Schechner Lifson Corporation

Cyber/Crime/Social Engineering Fraud… We are all at risk, but what does it all mean?

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Cyber/Crime/Social Engineering Fraud. . . We are all at risk, but what does it all mean?

While Cyber and Crime coverage are separate, they can be written together with one carrier.  These carriers also provide risk management services, web-based training for executives, managers and human resource personnel, model employee handbooks, and weekly articles on current issues.

To help simplify the key areas of concern, outlined below are very basic definitions to help understand the exposures that can adversely impact the assets of your organization.  These exposures highlighted below are not addressing employee related acts of dishonesty. 

Cyber liability

Network and Information security wrongful act:  The failure to prevent unauthorized access to or use of electronic or non-electronic data containing identity information.  Failure to provide notification of any potential unauthorized access to or use of data containing private or confidential information of others if such notification is required by any Security Breach Notification law. Failure to prevent the transmission of a computer virus to a computer network not owned, leased or under the control of your organization.

Cyber and privacy policies cover a business’ liability for a data breach in which the firm’s customers’ personal information, such as Social Security or credit card numbers, health and medical information, is exposed or stolen by a hacker or other criminal who has gained access to the firm’s electronic network. The policies cover a variety of expenses associated with data breaches, including: notification costs, credit monitoring, costs to defend claims by state regulators, fines and penalties, and loss resulting from identity theft.

Costs to consider: Cost to determine scope of the breach, costs paid as compensation to the individual(s) or entity as a result of the breach, fees, and expenses to comply with law or any regulation, taxes, fines, penalties, expense to replace, upgrade or maintain a computer system.

Crime

Computer fraud means an intentional and unauthorized/fraudulent entry of data or computer instructions by someone other than an employee or individual under the direct supervision of the insured, and changes made via the internet that cause money or other property to be transferred, paid or delivered.  An unauthorized or fictitious amount to be debited or credited.  Direct loss of money, securities or other property caused by computer fraud.

Funds Transfer

An intentional, unauthorized and fraudulent instruction transmitted by electronic means, voice, electronic mail, electronic text, to a financial institution directing such institution to debit an account and to transfer, pay or deliver money from such account and was submitted by someone other than an employee without the insured’s knowledge or consent.

EMPLOYEE:  Any Natural person whose labor or service is engaged by and directed by the insured organization, including full-time, part-time, seasonal or temporary workers, volunteers, students, interns or leased employees to the insured organization.

Social Engineering Fraud/Funds Transfer

When an employee is intentionally misled into sending money or diverting a payment based on fraudulent information that is provided to them in a written or verbal communication such as an email, fax, letter or even a phone call.

How does this happen? This surprisingly successful fraud happens every day to unsuspecting employees when receive a message that appears to be from a legitimate vendor, client or supplier that contains a variety of requests and information. In many cases, the fraudster has infiltrated an email conversation and has been able to obtain the client, vendor or suppliers signature section to make it appear even more legitimate. Some even amend phone numbers in the email panel, so a call back to a phone number would be directed to the fraudster, who would of course verify the information.

Examples of Chubb claims are attached. Chubb and Travelers are both quoting this coverage as an additional endorsement under the crime policy.  Please complete the application so we may test the market and provide you with a quote.

Let’s discuss the coverage in more detail once we receive your completed applications and quotes from the carriers.

Download Applications

Click here for Cyber Liability application

Click here for Social Engineering application and samples

 

Roseanne Gedman, CPCU, CRM, CIC

Schechner Lifson Corporation