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Archive for December, 2010

It is no secret that financially successful families are often early adopters of all the new must-have home technology products rushed to market each holiday season.  What few early adopters realize is the degree to which many of these new products provide new and easy opportunities for those in the “hacking community” to run familiar scams to steal identities, credit card information, etc. In a Dec 26 article titled Gadgets Bring New Opportunities for Hackers, The New York Times provides great insights on how many new technology products are exposing consumers to this growing risk.

Love your i Phone and i Pad?  The Wall Street Journal reported Dec 18 that many popular apps for both products help to share user data widely and freely without the user’s knowledge. It seems Apple assigns a Unique Device ID to the devices it sells that enable others to track how the devices are used.  This article in the Dec 28 edition of The New York Times by Reuters summarizes the class action lawsuits Apple is facing.  

With all of this unsettling news, consumers should minimally examine the protection they are provided by their insurance program for the risks of identity theft and restoration.  Extra attention for taking prentative steps should also be considered.

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A client who had been insured by a well known carrier recently asked if there wasn’t “any other carrier out there” that could also offer broad coverage for his large home “that didn’t charge an arm and a leg”. I explained that his carrier’s rates reflected their overall loss experience, and reminded him of a claim that he had many years ago and how happy he was with the outcome. Pressing his point, he asked if there were any carriers that had “better loss experience” so that they were able to price their coverage at a lower cost.  Enter a new carrier I’ve written about frequently here – Pure High Net Worth.

This excerpt is form a recent professional journal assessing the marketplace for high valued home insurance summarizes the opportunity: “However, there is some competition out there for these big players. For instance, a relatively new company from Florida called Privilege Underwriters Reciprocal Exchange (PURE) is making a big splash on the East Coast right now.  PURE offers similar features to Chartis and Chubb, and is very open to coastal properties where others are more restrictive in coastal areas.”

When my client reviewed the terms of Pure’s offer, he asked how the costs could be appreciably lower given the very similar coverage. I explained that because Pure was just beginning to add new risks, they had not yet experienced many losses, adding that Pure’s risk selection process relies heavily on credit scoring, which they believe will help attract policyholders who better manage their finances and their homes. The client shared that he regards this as a de-facto “sale” on home insurance, and told me I should explain it in such terms to others.

Well —– although insurance carriers do not have “sales”, it is fair to observe that new carriers entering the marketplace without the burden of prior losses and who also carefully select the risks they insure are able to price their policies at rates that can give the impression they are on “sale”.  For those who find the idea of a “sale on insurance” appealing, please contact me to examine an offer from Pure.  Meanwhile, as an independent risk advisor, my advice on “who the best carrier is” remains unchanged:  it is whichever carrier best meets that particular client’s specific protection needs.

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PrivateRiskAdvisor

Families who decide to personally employ a nanny often fail to understand that their legal obligations as an employer begin the moment their new nanny walks through the front door. Even more dangerous, after years of satisfactory performance, many families regard their nanny not as an employee, but as part of the family. However, state and federal employment laws apply to all domestic employees, and many families place themselves at high risk if they do not manage their nanny and any other staff members as employees and in strict accordance with employment laws.

Failure to understand the employer – employee relationship can expose all family members to personal litigation for violations of employment related conduct towards those they employ. Even inappropriate conduct among different members of the household staff can create a legal exposure for the family. Because the household is seen as a safe and informal space and vague verbal contracts are all too common, many families either ignore or fail to comply with their legal responsibilities as employers. 

One example that frequently invites litigation: given the challenging economic climate, families with older children seeking to trim their costs may terminate the employment of a nanny whose services are no longer essential. To protect against allegations that the dismissal was a wrongful termination, or possibly motivated by age or racial bias, experts advise household employers should document performance expectations and keep a well documented human resources file on every employee. Additionally, a written agreement between the household employer and employee should contain an “employment at will” clause that allows termination without cause for any reason. Precautionary background checks that go beyond simple internet searches are also recommended for any family employing domestic staff. Meanwhile, no matter how attentive, household employers need to know that they cannot totally control the work environment. Just as in a traditional workplace, household employers can be held liable for conduct viewed by their staff as obscene, discriminatory or offensive.

Given these many risks, a select group of personal insurance carriers have developed specialized coverage solutions to address the employment practices risk exposure facing families employing household help.  Such solutions provide coverage not only for damages that may be awarded by a court, but far more importantly, both the legal costs to defend the family such allegations, and the services of a public relations firm to help the family minimize the damage to their reputation.  Often, these same carriers can assist policyholders with services that include comprehensive pre-employment background checks.  Most who learn of the broad coverage that is available agree the protection is well worth the cost.  Those facing this risk should consider securing this valuable form of protection.

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My father is adamant: each morning after the coffee has been finished, the coffeemaker must be unplugged. It seems a fireman told him 30 years ago they caused fires, lots of ‘em, and the O’Brien clan doesn’t like fire — not even in fireplaces.

Well, after paying a claim caused by a fire in one of their policyholder’s homes, Chubb has brought a lawsuit against Apple, alleging the house fire was the result of a faulty computer charger. The suit further alleges Apple had received numerous complaints alerting them to heating, burning and sparking problems with the MagSafe adapters used to charge Macintosh computers.

Unlike a Macbook, my father’s coffeemaker does not need charging, so un-plugging the coffeemaker when not in use actually IS a real option.  

A copy of the complaint is available here.

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