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Property/Business Interruption and Cyber Liability (Series: Insurance for the Business Owner 101)

  1. 2 Practical and entertaining education for attorneys, accountants, business owners and executives, and investors.
  2. Disclaimer The material in this webinar is for informational purposes only. It should not be considered legal, financial or other professional advice. You should consult with an attorney or other appropriate professional to determine what may be best for your individual needs. While Financial Poise™ takes reasonable steps to ensure that information it publishes is accurate, Financial Poise™ makes no guaranty in this regard. 4
  3. Meet the Faculty MODERATOR: Eric Hampton - Rudolph Kaplan LLC PANELISTS: David Hallstrom - Willis Towers Watson Lee Lazar - Associated Agencies, Inc. Harvey Topitz - Rivers Insurance Group 5
  4. About This Series – Insurance for the Business Owner 101 There’s one type of contract that virtually every business in the United States enters into each and every year: their insurance contract(s). Despite being bound by and paying (sometimes handsomely) for these contracts, they’re not always well understood by the business. Questions as fundamental as what risks should be insured (v. self-insured or mitigated via contract) and for how much or what losses will actually be covered and at what value are simply not commonly understood. This Financial Poise webinar series teaches business owners, executives and their trusted advisors, what they should know about their property & casualty insurance so they understand how best to protect their assets and people in the most cost effective manner. Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and executives without much background in these areas, yet is of primary value to attorneys, accountants, and other seasoned professionals. Each episode brings you into engaging, sometimes humorous, conversations designed to entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes so that participants will enhance their knowledge of this area whether they attend one, some, or all episodes. 6
  5. About This Webinar – Property/Business Interruption and Cyber Liability This panel discusses key elements of a property policy such as what coverages could be essential to your business, i.e., Business Income, Contingent Property, and Professional Services (and you don’t need to be in the Professional Services business to get value from this coverage), an explanation of co-insurance v. agreed value, and different valuations like replacement cost v. cash value as well as proper valuation of assets We’ll also discuss Cyber Liability coverage, why it’s so important to so many more businesses than one might think and what could be important considerations for a policy since each policy varies from carrier to carrier. We’ll look at topics like protecting inventory with a “street value,” “Are you the insured?”, carrying a “foreign exchange” risk with your cyber policy, “Who’s going to obtain crypto currency to pay a ransom?”, “Do you have a potential bodily injury risk?”, and “Do you need business income coverage?” 7
  6. Episodes in this Series #1: Understanding Risk Management Basics for Business Owners Premiere date: 6/23/21 #2: Property/Business Interruption and Cyber Liability Premiere date: 7/21/21 #3: General Liability, Umbrella/Excess Coverage, Commercial Auto, Workers’ Compensation Premiere date: 8/18/21 #4: Executive Protection – Directors’ & Officers’, Employment Practices Liability, Crime/Employee Dishonesty & Professional Liability Premiere date: 9/29/21 #5: Personal Lines for the Business Owner/Executive Premiere date: 11/10/21 8
  7. Episode #2 Property/Business Interruption and Cyber Liability 9
  8. Insurance Coverages Crucial to your Business ✓ Contingent Property ✓ Professional liability o Professional Indemnity o Errors & Omissions ✓ Business Interruption o Loss of income after disaster ✓ Cyber Liability 10
  9. Co-Insurance vs. Agreed Value ✓ Coinsurance – percentage value of property policyholder will cover if there is a claim for damage ✓ Agreed Value – optional coverage in which property value that insured and insurer agree upon at beginning of policy period
  10. Valuation of Assets ✓ Absolute Valuation (intrinsic value) - discounted cash flow analysis. ✓ Relative Valuation – a company's value compared to its competitors or industry peers ✓ Cost v. Cash
  11. Protecting Inventory with “Street Value” ✓ Business Property Insurance o Covers losses caused by fires, explosions, theft, vandalism, and damage from vehicles o Items insured: building, office equipment, inventory, and outdoor items on the property ✓ Endorsements o Additional coverage added to provide additional protection
  12. Items Business Property Insurance Might Insure ✓ The property ✓ Office equipment (computers, phone systems, and furniture) ✓ Accounting records and important business documents ✓ Manufacturing or processing equipment ✓ Inventory ✓ Fence and landscaping ✓ Signs and satellite dishes
  13. Property Insurance Coverage ✓ Replacement Cost o Amount necessary to repair, replace, or rebuild property on the same premises, with comparable materials and quality ✓ Actual Cash Value o Cost to replace with new property of similar style and quality
  14. Commercial General Liability Insurance ✓ Usually covers the costs of legal defense and will pay all damages—up to the policy limits o Property damage, personal injury, and advertising injury ✓ Do you have a potential bodily injury risk? o Bodily injury coverage – protection against losses from the legal liability of insureds for bodily injury resulting from negligent acts or liability from premises or business operations.
  15. Do You Need Business Income Insurance Coverage? ✓ Covers a company's loss of income due to a slowdown or temporary suspension of operations, from damage to its physical property ✓ May also be extended to apply to loss suffered after completion of repairs for certain period of time
  16. Are you the Insured? Who is the Insured? ✓ Parties: 1. First Named Insured 2. Insured 3. Additional Insured
  17. Cyber Liability Insurance ✓ What is it? ✓ Why is it important? o Is it important for all types of businesses?
  18. Cyber Liability Insurance (cont’d) ✓ Important considerations for each policy o Coverage of needs for your business o How much coverage does your business need? o How policies vary from carrier to carrier
  19. Cyber Insurance Coverage Cyber Insurance covers liability for data breaches involving sensitive customer information: ✓ Social Security numbers ✓ Credit card numbers ✓ Account numbers ✓ Driver's license number ✓ Health records
  20. Cyber Insurance Coverage (cont’d) Besides legal fees and expenses, cyber insurance typically handles: o Notifying customers about a data breach o Restoring personal identities of affected customers o Recovering compromised data o Repairing damaged computer systems o Forensic investigations o Litigation expenses o Regulatory defense expenses/fines o Crisis management expenses o Business interruption o Cyber extortion
  21. Cyber Insurance Coverage: Pros and Cons ✓ Pros: o Data breach coverage o Business interruption reimbursement o Legal support o Cyber extortion coverage (if included in policy) ✓ Cons: o Possible inadequate coverage o Can get expensive o May not offer global coverage
  22. Does my Business Need Cyber Insurance? ✓ Phishing schemes, cyber threats, and attacks on the rise ✓ The value of good cybersecurity is high and growing, even more so in finance, health care, and other fields where the risks and costs of attacks are high ✓ Balance cost and need against the benefits.
  23. Where Can I Purchase Cyber Insurance? ✓ Do I approach purchasing cyber insurance the same way as other business insurance? ✓ Does each policy provide for global coverage? ✓ Are there qualifications for a company to provide cyber insurance to a business?
  24. Cyber Policy – Ransomware Risks ✓ Some cyber insurance policies exclude extortion coverage and payment coverage. ✓ Ransomware attack o Is your business prepared? ▪ Cryptocurrency payment may take more time than expected ▪ Consider having payment arrangements pre-established in your cyber incident response plan ▪ Prior arrangements can speed up and expedite recovery ▪ If issuing payment, ensure compliance with US Treasury Department’s Office of Foreign Assets Control (OFAC) or other regulatory guidance related to ransomware payments
  25. Cyber Policy – Ransomware Risks (cont’d) ✓ Notify your insurance provider ✓ A cryptocurrency transaction consists of a payer sending funds to a payee ✓ Either party is only identified by an account number or address ✓ To purchase and send bitcoin, payers use either a bitcoin wallet or bitcoin ATM
  26. Remote Working Challenges with Cyber Liability ✓ Data-security protocols of office computers o Secure network/VPN (avoid public internet) o Work only on office computers o Encrypt data in emails ✓ Create a data breach response plan
  27. Remote Working Challenges of Business Insurance ✓ Employer’s liability for employees working remote ✓ Coverage for remote business assets ✓ Business property damage ✓ Are there mental health obligations?
  28. About the Faculty 30
  29. About The Faculty Eric Hampton, Rudolph Kaplan, LLC – Eric is an associate attorney with Rudolph Kaplan, LLC and focuses his practice on commercial and residential real estate transactional matters; real estate disputes involving condominium associations, unit owners, developers, and contractors; and related litigation matters. Eric has experience representing a variety of entities in all stages of commercial litigation and construction law cases. Eric received his Bachelor of Arts degree from Kansas State University in 2014. Eric earned his Juris Doctorate degree from The University of Iowa College of Law in 2018, where he was a writer on the Journal of Corporation Law, worked on estate planning matters in The University of Iowa Clinical Law Program, and worked as a research assistant. During the summer following his second year of law school, Eric worked as a summer associate at a boutique corporate restructuring law firm in Chicago. Eric is admitted to practice law in the State of Illinois and the Northern District of Illinois. 31
  30. About The Faculty David Hallstrom, Willis Towers Watson – David is a Senior Risk Placement Specialist in the FINEX Cyber and Technology practice. David has more than 25 years’ experience building successful technology E&O, professional liability and cyber insurance books of business at the carrier, broker, wholesale and MGA level. David consults companies across varied industries on Cyber, Media and Tech E&O risk. David works with clients to determine their renewal strategy, the placement of insurance programs and provides client service throughout the course of the year. Immediately prior to joining Willis Towers Watson, David worked for Symantec Corporation, on the development of risk control tools for the cyber insurance market. David served for eight years as Assistant Vice President, Cyber Line of Business Leader for CNA Financial Corporation, where he was responsible for worldwide Cyber underwriting strategy, appetite and profitability. David has previously served in leadership roles at Risk Placement Services, Zurich North America, and Aon. David earned his B.A. in English from the University of Alabama and his M.A in English from the University of Iowa. 32
  31. About The Faculty Lee Lazar, Associated Agencies, Inc. – Lee is a Vice President at Associated Insurance and Risk Management Advisors. He has been in the insurance industry for twelve years and focuses on Cyber and health care technology business. Lee earned an MBA in financial analysis from DePaul University and once worked at the largest Macintosh computer lab on the planet. He brings these experiences to bear on behalf of his clients to translate between the languages of finance, technology, and insurance. 33
  32. About The Faculty Harvey Topitz, Rivers Insurance Group – Harvey is the founder and principal of Rivers Insurance Group. Harvey is a graduate of City University of New York with a Bachelor of Science degree in economics/accounting. He is a non-practicing NYS Certified Public Accountant. Harvey has more than 39 years of experience in the insurance industry, placing property casualty insurance for all industries and specializing in providing coverage for those businesses hardest to insure. He began his insurance career at Liberty Mutual, where he was awarded Top Producers designation and was a member of the prestigious Millionaires Club.At BRI Insurance Brokerage he introduced innovating programs such as an asbestos abatement contractor’s program.While with Tanenbaum Harber, now Alliant/T&H Brokers, he excelled in the hard-to-insure employee leasing industry (PEO) and the entertainment sector insuring celebrities like EMINEM and 50 Cent. Harvey founded Rivers Insurance Group in 2005. Harvey saw a void in the difficult to place coverage area for companies that were in distress or working through a Chapter 11 Reorganization. Trustees, Bankruptcy Lawyers and Turnaround professionals know that Topitz and his team at Rivers Insurance can get the coverage that most brokers run away from. He has been on the Board of Directors of the New Jersey Turnaround Management Association for almost 10 years and is known as the Go-To Insurance Guru. 34
  33. Questions or Comments? If you have any questions about this webinar that you did not get to ask during the live premiere, or if you are watching this webinar On Demand, please do not hesitate to email us at with any questions or comments you may have. Please include the name of the webinar in your email and we will do our best to provide a timely response. IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education. 35
  34. About Financial Poise 36 DailyDAC LLC, d/b/a Financial Poise™ provides continuing education to attorneys, accountants, business owners and executives, and investors. It’s websites, webinars, and books provide Plain English, entertaining, explanations about legal, financial, and other subjects of interest to these audiences. Visit us at Our free weekly newsletter, Financial Poise Weekly, updates you on new articles published on our website and Upcoming Webinars you may be interested in. To join our email list, please visit: