Archive for December, 2011

Is Our Firm Covered if Somebody Hacks Our Files?

December 7, 2011

Kelan J. Vorbach, CIC

While most professional office policies include coverage to reconstruct paper or electronic records, there are bigger risks they don’t insure. Every day there are stories in the news about a business being hacked or exposing client or personnel information through human error. Most firms don’t process credit cards or collect social security numbers; but, identity thieves can piece together seemingly innocuous information to commit fraud. Privileged and confidential information can be used for cyber extortion.

A data breach can compel the firm to report the incident to government agencies, provide notification and credit monitoring to all victims whose data may have been compromised and the firm may be required to set up a web-site and phone bank to assist those whose identities are at risk. This applies even if the records did not include credit card information or social security numbers. The cost of notification and credit monitoring is about $200 per identity. This cost does not include the firm’s liability for damages based on release of client data.

Though most insurance policies don’t cover what is referred to as data breach, cyber liability or privacy liability; it doesn’t mean you can’t secure coverage for your firm. Policies are now available at a wide variety price points to address the risk of your data falling into the wrong hands.

For more information about the coverage provided by your current policies and options that may be available, talk to your agent or give me a call at 732-223-6611 ext. 108.

Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at www.LawFirmInsuranceExpert.com.

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Why Did the Premium Go Up, Nothing Changed?

December 1, 2011

Kelan J. Vorbach, CIC

Coverage on a lawyers professional liability policy requires that the claim must be made during the policy period in which the firm was first aware of the circumstance AND the claim must be for services performed after the later of the firm’s retroactive date or the attorney’s date of hire. Because of this, the insurance carrier is liable for only one year of services during the first year of coverage. Therefore carriers discount the first year rate heavily. In the second year the carrier reduces the discount because they are insuring two years of services. The reduction in discount percentage is called a Step Level Increase. Step Level Increases continue until the full rate is charged. InNew Jersey, that is six years.

Step Level Increases apply to each individual attorney; so, a firm may have some attorneys at the full rate and some are at discounted rates due to their limited tenure with the firm. Having some understanding of Step Level Increases can help a firm in its decision making. For more information about how your particular policy works, talk to your agent or give me a call at 732-223-6611 ext. 108.     

Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at www.LawFirmInsuranceExpert.com.