Insurance Policy Types

In an all too common scenario, someone in your organization’s finance department receives an email that purports to be from a supplier informing your organization of the supplier’s supposedly changed bank account and a request for you to make all future payments to the new account. Even after some likely back and forth via phone and/or email with the “supplier,” your employee ultimately changes the payment information in your systems, and future invoices are paid to the new pay-to account. Everything seems fine for a while, and then the problems begin.

Eventually, your company receives an email from the supplier asking why it hasn’t received payment of its recent invoices. When the supplier insists that it has not received payment, in spite of your company’s assurances that all invoices have been paid, your IT department investigates. The IT team figures out that the emails with the new payment information and the phone calls were fraudulent—they were not from your supplier but from a bad actor. It is, of course, too late to recover the fraudulently obtained payments, and in the interest of keeping the supplier, your company pays again.
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Many contracts require that parties be added as “additional insureds,” but few contain specifics on what type of coverage should be provided. The gambit of additional insured provisions is far-ranging. Being proactive and ensuring that the additional insured coverage you are expecting is actually provided on the front end will eliminate a host of issues should you need to invoke coverage under the provision.

Additional insured coverage is normally provided by endorsement, at times listing specific entities or individuals and at other times providing blanket coverage for all that require it via contract. In theory, being included as an additional insured provides protection as if your company was a named insured on another’s policy. In reality, however, there are many variations of additional insured coverage that often contain restrictions on the rights of additional insureds under the policies. 
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Thinking about including an unmanned aerial vehicle as part of your business? What could be cooler than having a UAV deliver your product to customers? Many companies are already using UAVs or drones not only for delivery but also for video surveillance, property surveying for agriculture or unique promotional videos. Your business will want to consider the basic rules for drone operation—like having an experienced pilot and a well-maintained drone— as well as other ways to manage potential risks.

Possible Risks

There are a number of risks if your business has a connection to drones. What happens if a drone crashes or if a bystander shoots it down? In the evolving high-tech world, there are also real threats of someone hacking into your remote system and interfering with your controls. If there is a crash, there is a possibility you might be liable for the property of others. Drones can be a significant investment, and you will want to protect your asset and yourself if someone blames you for some loss.
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Cryptocurrencies, including bitcoin, may be the wave of the future, as more and more companies and countries accept them as valid forms of currency. As with any new technology, however, the potential for risk and error is prevalent. Although cryptocurrencies are backed by various blockchains designed to reduce risk, a certain amount of risk is unavoidable. And where there is risk, insurance follows.

For example, the Mt. Gox scandal, which is speculated to involve a bitcoin insider taking bitcoins from the exchange, is estimated to result in losses of more than $400 million. Traditionally, insureds attempted to find coverage for risks related to cryptocurrencies by finding novel constructions of provisions in extant insurance policies. Often, the insured was simply left without any coverage. But certain insurers have begun taking the bull by the horns and marketing a new kind of product—cryptocurrency insurance.
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Some estimates calculate that over 23 billion “things” were connected through the internet in 2016. This number is projected to rise to over 50 billion by 2020. The broad category is known as the Internet of Things (IoT), and the new technology connects everything, from household devices to cars to industrial machinery, to the internet via enhanced sensors. The exponential growth in connectivity and new product development carry additional risks for companies investing in IoT technology. We offer some ways to protect your interests.
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Directors’ and Officers’ liability (D&O) coverage is important for any organization as it provides coverage for directors and officers who may be personally liable for suits brought against the company. However, all D&O policies are not created equal. Paying attention to nuances in your D&O policy when placing or renewing coverage can have huge implications if a claim is later brought against directors, officers or the company.

All D&O policies contain exclusions that deny coverage for liability arising from bad acts of the insured such as fraud, dishonesty, criminal acts or intentional misconduct. These exclusions are often invoked by insurers when directors and officers are charged with claims alleging fraud and self-dealing, sometimes prohibiting coverage. Insurance policies with these “bad act” exclusions frequently contain final adjudication language, meaning that the exclusions are only triggered if there is an actual finding of the bad act by either the trial court or by a court in separate coverage litigation. Ensuring that this final adjudication language is in your policy will prevent you from forfeiting your right to millions in potential coverage. Without final adjudication language, an insurer could disclaim coverage for a settlement if the underlying complaint alleged fraudulent conduct.   
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In the fast-paced world of tech startups and business planning, you might not even consider whether your insurance policies could be yanked out from under you. After you have secured basic insurance to protect yourself and your assets against loss and liability, can your insurance company cancel your coverage at any time? Surprisingly, under some circumstances, the answer is yes. But you can protect against this with some advance preparation.

For some forms of insurance—like health, life, auto or homeowner’s insurance—there are statutory limitations on an insurance company’s right to cancel. But, it’s a different story for commercial insurance, purchased to protect your business assets and executives. 
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