Anthem's Data Breach Reminds Us Why Insurance Coverage Limits Matter

2. March 2015 07:53

empty pocket

By now, you've probably heard chatter about the massive data breach the US health insurance provider Anthem suffered (and if you haven't, you can get the facts about the breach from Anthem itself). In short, external hackers used a stolen password to break into the provider's database. There, they skimmed personal information – including Social Security numbers, medical IDs, birth data, names, and email addresses – from 80 million customers.

It's a massive attack with an equally massive price tag. According to a report by ZDNet, Anthem's data breach response efforts could reach well beyond its Cyber Liability Insurance policy's $100 million limit, which makes sense considering that amount will barely cover the cost of postage to mail out notices to 80 million people.

According to Anthem's data breach fact site, the company is doing more than just notifying affected customers by post, too. It is also offering…

  • Credit-monitoring services for 24 months.
  • Identity repair services.
  • Identity theft insurance coverage.
  • A toll-free hotline to answer questions about the breach.

Of course, all this is in addition to how much the company ends up spending to fix the security vulnerability. Plus, Anthem still has to rebuild its reputation as a trusted insurance provider once the dust settles, which could cost millions in advertising and PR expenses. Cyber Liability can cover these costs, but only up to the limits of the policy. (To learn more about what Cyber Risk coverage can do, read "Analysis Shows Less than 3% of Small Businesses Have Cyber Liability Insurance.")

Let's use Anthem's breach to learn a couple things about choosing insurance policy limits.

Choosing Insurance Limits: You'll Need More Coverage than You Think

At first glance, $100 million seems like a lot of money. When Anthem chose its policy, it probably had a slew of beautiful minds crunching numbers to determine how much coverage the insurance giant might need to cover data breach cleanup costs. Still, even with a seemingly exorbitant limit, the coverage likely won't be enough.

Though being underinsured is bad news for Anthem, it does serve as a good reminder for small-business owners:

  • What seems like "a lot" of coverage may barely cover the cost of an unexpected disaster.
  • Insurance is for the big, bad events that could close down your business. Invest accordingly.

So how do you choose the right amount of coverage? You work with an insurance agent.

Your insurance agent knows what policies address your risks and the limits that are usually adequate for small-business owners in your industry. Because insurance is their specialty, they follow cases like the Anthem one so they can help you avoid a similar fate.

Plus, an insurance agent can point you toward money-saving options that give you more coverage without breaking the bank. For example, if you want higher General Liability Insurance limits, your agent may recommend purchasing an Umbrella Insurance policy. Umbrella Liability Insurance can supplement your General Liability coverage once the policy limits have been reached. Umbrella limits come in $1 million increments and can cost as little as a couple hundred bucks a year. By contrast, raising your GL limits by just $1 million could significantly increase your premiums.

"But wait," you might be saying. "Surely Anthem worked with an insurance agent and look where that got it!" To which we'd say, "That brings us to part two of this lesson."

Updating Your Small Business Insurance Policies: Not Just for Overachievers

What may have seemed like a perfectly reasonable amount of coverage five years ago could be painfully out of step with today's risks. That is especially true for cyber risks, which seem to morph and multiply at warp speed.

That's why it's important to check in with your insurance agent when it's time to renew your policies. Your agent can review your coverage and recommend changes based on new or increased risk exposures in your field.

You should also update your policies whenever your business significantly changes (i.e., moves to a new location, hires new employees, or starts offering a new service). You don't have to wait until it's time to renew to update your policies for these kinds of changes, either. Inform your agent as soon as they happen to ensure your business doesn't get caught underinsured.

For more on that, read "When Is It Time for New Business Insurance Quotes?"

Choosing the Best Social Media Platforms for Your Business

27. February 2015 09:01

professionals on their smartphones

Choosing one social media platform on which to concentrate your marketing efforts is like trying to choose your favorite child. You love them all equally, right? But you can’t really spend all your time on social media, so you have to find the social channels that are best for your business.

There is plenty of research that can help point you toward the right platform. However, as with everything on the web, social media channels are constantly changing, and as they change, so do their followers.

Here are some social media basics to help you make your decision.

  • Facebook: It’s still the biggest social network with 1.35 billion monthly active users worldwide (1 billion users access the platform on their mobile devices). Facebook's user base is dominated by those over the age of 25, but it still has over 50 million users younger than 25. Facebook is a great place to start social media marketing because your audience will generally fall within one of its age demographics. The gender of users is basically even (53 percent female and 47 percent male). Facebook is also good for businesses looking to build community.
  • Twitter: Not as large as Facebook, Twitter’s 284 million monthly active users are the young, affluent, urban influencers (predominantly male). It’s good for both B2B and B2C businesses, and it works well for offering deals and promotions and building your brand. Twitter attracts plenty of mobile users and just announced plans to roll out Group Messages and a new mobile video experience.
  • LinkedIn: With 332 million users, LinkedIn is actually more popular than Twitter among US adults. 22 percent of Internet users aged 18 and older have used it, compared to the 19 percent who have used Twitter. Its age demographics are older – most fall in the 30- to 49-year-old range. LinkedIn is also the top social media platform for 50- to 64-year-olds.
  • Pinterest: Pinterest’s visual platform has 70 million users, 80 percent of whom are women. 75 percent of daily activity on Pinterest comes through mobile apps. Because 52 percent of Pinterest users look to Pinterest before making a buying decision, this social network is great for online and physical retail stores, restaurants, and hair or beauty salons.
  • Google+: There are 300 million monthly active users on Google+, with millennials and Gen Z being the most active. Users tend to be tech-oriented and work in the engineering, software, and design industries. Users are more interested in discussions and trends than the users on other social media sites. They don’t spend a lot of time on Google+, though – only an average of about 7 minutes per month.

Tips for Choosing the Appropriate Social Media Platform

Before you start engaging on social media, be sure to…

  • Determine what you’re trying to accomplish, such as driving sales to your brick-and-mortar store or your website.
  • Secure your online identity by registering your business account with the platform.
  • Gather social media buttons and badges and put them in a prominent place on your website so customers can find your pages.

The bottom line: it’s smart to have some kind of presence on all the social media sites you can (which can be accomplished without a lot of extra effort by using a social media tool like TweetDeck or Hootsuite). Make sure you analyze your results and respond to social media changes as they happen.

Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at rieva@smallbizdaily.com, follow her on Google+ and Twitter.com/Rieva, and visit her website SmallBizDaily.com to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.

Small Business Spotlight: Business Growth Tips from CatPrint

26. February 2015 07:59

CatPrint logo

Mitch VanDuyn and Jan VanDuyn are CTO and CEO, respectively, of CatPrint in Rochester, New York. CatPrint is a boutique color printing company offering premium short-run printing services.

We talked with Mitch and Jan VanDuyn about the growth of CatPrint from its humble beginnings in a basement to its current expanded facility. Learn how small-business owners can recognize when it's time to grow. The transcript below has been lightly edited for length and clarity.

What’s the story behind CatPrint?

Our CTO, Mitch, was born in Bangkok, Thailand, and our CEO, Jan, is a Michigan native. Both attended and graduated from Michigan Technological University, then eventually moved to Rochester, New York. Mitch worked at Xerox for over 20 years, which was where the idea for CatPrint originated.

In 2004, CatPrint started in the basement of one of our old houses in Rochester. We used to own four cats and wanted to associate the beauty and cuteness of cats with printing.

What inspired you to pursue digital printing services?

At the time CatPrint was started, custom short-run printing wasn’t something you could do. You generally needed to meet minimum fixed quantities of 100, 250, 500, etc. If you lived in a small town without a local print shop, how could you get three greeting cards printed? You couldn’t. Now all you have to do is upload your designs through the web and they’ll get delivered right to your door on a pre-determined delivery date.

Who’s the typical CatPrint customer? What sets you apart from other printing services?

All types of people use CatPrint, including graphic designers, DIY brides, greeting card designers, business owners, and comic artists looking for an affordable venue to pursue various projects – whether it’s one poster or a thousand brochures that need to be printed.

The number one thing that customers are always raving about is our exceptional customer service. Every single order that is placed is checked for general quality and common file issues, and if there are any concerns, we contact the customer. We go out of our way to make sure that the customer is satisfied.

What’s it like to work at CatPrint?

We aspire to promote a friendly, relaxed, creative, and open atmosphere. All levels of the company are completely open, and every employee can always speak with anyone in the company, including the executives, if they have any questions, ideas, or concerns. We don’t want to be the type of company that has multiple cubicles with minimal interaction.

This open interaction has allowed most of our processes and procedures to be developed and implemented in-house based on employee suggestions and ideas from all levels, not just management.

We have a relaxed and casual dress code for the most part, and we invite individuality. We are also pet friendly, as long as the pets are also friendly! It’s not uncommon for at least three employee animals to be roaming the offices on any given day.

When did you realize it was time to expand CatPrint to a bigger workspace?

As with any business, as sales increase, the number of employees and equipment also increase. When we first moved out of our basement and into our first actual facility, we needed production stations that would never fit in a home basement. We’ve moved and expanded over five times in the past nine years. Moving is always an issue.

Since moving into our current facility, we decided to expand the second floor because we purchased new equipment. Obviously, if an area is too crowded, workflow efficiency decreases. With the extra space now available, efficiency has increased in customer service, research and development, and production.

What “growing pains” did CatPrint experience during expansion?

The first part of the expansion was probably the hardest. The original space needed significant remodeling, reconstructing, and wiring. We knocked down some old walls and added new ones. Waiting for the space to be ready felt like a long time. Everyone felt crowded and simply needed more space.

Now for the moving part: there are no elevators in our building and the doors are pretty narrow. Anything that needed to be moved upstairs was difficult, especially bulky items, like desks, because they had to fit through the doors. In the end, all of the patience and hard work was well worth it! We were definitely able to see improvement in production efficiency because of the added space and new arrangements.

Did anything surprise you about starting and expanding CatPrint?

Not that CatPrint has ever done anything wrong, but most people don’t realize that when you start a business, you have to make sure you don’t do something that could potentially break the law. It’s been a learning process for everyone with all of the rules and regulations that are in place – to actually know them and make sure that our business practices are legal.

Does CatPrint have future plans for more growth?

We probably won’t look into expanding our office space again in the near future. However, we are always working to expand our service offerings. We just launched our Template Gallery at the end of 2014, which allows customers to customize ready-to-print designs with their own details and images. It’s a very useful service for people who aren’t designers themselves but still want to CatPrint their items.

What’s your advice for small businesses struggling with the decision to grow?

Whether or not you’re a big fish in a little pond, or a little fish in a vast ocean, if you’re really good at something, then do it. There have been massive printing companies for decades, but no small shops for everyday people and small businesses that only need certain quantities printed. We stepped in with the idea that everyone can print something and have it delivered to their door by a guaranteed delivery date.

When we first started this company, we had many experts and advisers tell us that what we do is impossible. But we believe in what we do and we’re good at it, and that’s what other businesses should also do.

Tell us about CatPrint’s Foster Cats.

As mentioned earlier, CatPrint got its name from the many cats that we’ve owned over the years. Our current customer service manager, Nicole Gallo, used to work with a local animal rescue group called GRASP, Inc., so we began fostering stray cats that needed a temporary home in the office. Most people don’t understand that some stray pets that are kept caged get depressed, making their situation even worse. Animals need love and care, just as humans do, and we feel that CatPrint is a perfect environment for a pet down on its luck.

Check out previous posts in our Small Business Spotlight series for more small business stories and tips.

New England Snow and Business Interruption

25. February 2015 08:05

NYC blizzard

New England is no pushover when it comes to braving unfavorable snowy conditions. However, this winter is proving to be a formidable opponent. USA Today reports that in mid-February, a blizzard with the strength of a Category 2 hurricane hit New England. Even Boston has experienced historic snowfall for February at 58.5 inches.

Between the ice, snow, and howling winds, it's a wonder anyone is managing to get work done, and for some businesses, the extreme winter conditions are getting in the way. Businesses may be put on hold because of…

  • Downed power lines caused by ice.
  • Collapsed roofs from the snowfall.
  • Supply interruptions.

What happens when one of these events grinds a business to a halt? Are small-business owners supposed to tap their feet and wait for the thaw while their bank account dwindles?

Not if they have Business Interruption Insurance. Let's see what this coverage can do.

Business Interruption Insurance: A Primer

In a nutshell, Business Interruption Insurance covers your lost income when a covered Property Insurance claim puts your business on hold. Sure, your Property coverage can pay for physical repair costs, but it can't cover the income you miss out on when a covered event forces your business to a standstill. Only Business Interruption Insurance can cover your lost revenue, and that's why it's a good thing this coverage is usually included in your Business Owner's Policy as part of its Commercial Property Insurance. (More on that in our video tutorial “What is Business Interruption Insurance?”)

That's easy enough to remember, so let's get down to brass tacks. Here are the key points you need to know about this policy:

  1. Business Interruption only kicks in when a covered Property event causes the interruption. The events covered by your Property policy may vary. Some plans may cover damages caused by snowfall, so interruptions caused by that kind of damage would also be covered. If you have questions about your policy's inclusions and exclusions, ask your insurance agent.
  2. Business Interruption covers the profits you would have earned and more. For example, it can cover your lost income, normal operating expenses that accrue even when your business is closed (e.g., employee salaries, taxes, and loans), and the expense of relocating your business to a temporary location (e.g., moving and rent costs).
  3. Business Interruption Insurance usually doesn't pay for utilities. This is mostly because it would be unnecessary if you can’t use your place of business. Chances are you're not going to turn on the lights in a burned down building (nor would you be able to). Some policies that have an Extra Expense rider can cover the difference in utility costs if they are significantly more at your temporary business location. Again, policies vary from provider to provider, so be sure to check your plan.
  4. Most Business Interruption policies have a time deductible. That usually means a covered event would have had to shut your business down for 72 hours before you can make a Business Interruption claim. In other words, even with this coverage, you need to make it through the first three days on your own before your benefits kick in.
  5. Contingent Business Insurance is a rider that covers supply interruptions. If an incident causes your business's primary supplier to shut down, your business may be put on hold, too. You may be forced to find a new supplier, which could take days or weeks. This rider can help you cover lost income in the meantime.

You can learn more about the policy here: "Business Interruption Insurance: How It Works."

Preparing for Business Interruptions

There are some things you can do to make your life a little easier even when your world is filled with calamity and chaos. Having Business Interruption Insurance is one such thing, but the following tips will go a long way toward preserving your sanity and making the claims process smoother.

  • Keep your business income and expenses records stored in a secondary location. You'll need these documents so your provider can calculate payouts. You don't want to lose your only copies of these records in the same event that shut down your business, so keep a set stored off site and in the cloud.
  • Develop a disaster plan before disaster strikes. This plan should detail how your business will operate in the aftermath of a catastrophe. Outline backup suppliers, emergency contacts (e.g., your insurance provider), and how clients and employees will be notified about the changes to the business.
  • Call your insurance agent. When in doubt, turn to your agent. They can help you understand what your policy does and doesn't cover and explain any exclusions. If you want to add riders, they can help you with that, too. Just be sure you make these changes before you need the coverage.

To learn more about disaster planning, check out the post "What's Your Business Interruption Plan?"

5 Common Small-Business Misconceptions about Taxes

24. February 2015 08:06

woman doing her taxes

Tax season is here, and with it comes anxieties, confusion, terror, and misconceptions. Maybe even a little fire and brimstone. Hyperbole aside, taxes are notoriously complicated, and many small-business owners who brave their taxes on their own may rely on pieces of tax wisdom heard from friends or read online. That is to say, if you're not an accountant or a certified tax professional, chances are you may not have the background needed to separate fact from fiction.

So let's get some things straight.

Tax Myth #1: I don't have to pay quarterly taxes.

If you're a W-2 employee whose taxes are being withheld by your employer, no, you don't have to pay quarterly taxes. And if you're a W-2 who freelances on the side, you may not have to pay them if you withhold enough federal and state taxes from your regular paychecks to cover the extra you may owe.

But if you don't fall under either of those categories, you most certainly are required to pay quarterly income and self-employment taxes to both the state and federal government. Failure to do so results in underpayment penalties when you file your annual return. Your accountant can advise you on how much to set aside, but usually, 30 percent is a safe starting point.

Quarterly taxes are due by…

  • January 15.
  • April 15.
  • June 15.
  • September 15.

To learn more tips on freelance taxes, check out the post "Did You Freelance This Year? Now Is the Time to Focus on Small Business Taxes."

Tax Myth #2: Affordable Care Act penalties aren't that expensive.

That depends on how you look at it. It's true that your penalty for not having health insurance by tax time this year is probably less than what you'd pay for a whole year of coverage. But here's the thing: you're going to pay the penalty and still not have insurance. That means if you have an unexpected injury or illness, you'd have to pay all your medical bills out of pocket and you'd still be out the money you paid in fines.

Doesn't seem like a good gamble, does it? You essentially get a double-whammy hit when your health takes a turn for the worst.

By now you know that you're required to buy your own health insurance if you don't have coverage through an employer or a spouse. Failure to obtain that coverage means you will pay Obamacare penalties, and those fines will increase each year. For 2015, your penalty will be the greater of the following two amounts:

  • 2 percent of your income.
  • $325 per uncovered adult in your household and $162.50 for each child under 18; the penalty maximum is $975.

For example, if you're a freelancer who lives alone and makes $40,000, you'd owe $800 (i.e., 2 percent of your income) for not having insurance. When you file your 2015 taxes, your penalty will be deducted from your return or added on to the amount you owe.

Tax Myth #3: I can deduct whatever I spend on my business.

You can deduct quite a few business expenses, but don't get carried away. It's important to work with a tax professional to ensure you take every deduction you're entitled to but don't take too many and set yourself up for an audit.

Here are some common small business deductions:

  • Home office: The IRS recently simplified the home office deduction so that you can deduct $5 per square foot of your home that's used for business (up to 300 square feet).
  • Insurance: If you purchase your own health and small business insurance, you may be able to deduct your premiums. It's best to work with an accountant if you offer health insurance benefits to your employees and want to write off those expenses – some rules apply.
  • Communication: If you use your Internet and phone for business, you may be able to deduct these expenses.
  • Advertising: The money you spend on ways to promote your business may be deductible. For example, you may be able to write off what you spend on social media ads or premium LinkedIn accounts.
  • Meals and entertainment: Wining and dining potential clients can get expensive, so save your receipts from these outings. You can deduct 50 percent of your meals and entertainment costs so long as they are for business purposes. Again, work with a CPA because extravagant entertainment expenses can be red flags for auditors.

For more pointers on deductible business expenses, check out this guide by Nolo.com.

Tax Myth #4: I can just put everything in a shoebox and my accountant will know what to do.

Now that's just mean. Don't make your accountant's job harder than it already is. Help them make sense on the heap of expenses you've amassed over the year by…

  • Scanning your receipts. Printed receipts fade over time and some are as long as your arm. Scanning receipts ensures you don't lose them.
  • Logging expenses into an Excel spreadsheet. This will help you make notes of the amount you spent and why you spent it. That can help your accountant quickly sort through what you can and can't deduct.
  • Tracking your income. You can use many online tools to track your business income. The important thing is to find a system that works for you and stick with it. Ask your accountant for good recommendations.

Remember, the more you organize your expenses and income, the less time you'll have to spend away from your work explaining what it all means to your accountant. Plus, the little forethought helps your accountant file your taxes quicker.

Tax Myth #5: CPAs and tax pros only fill out forms that I can do myself.

Unless you're a financial wizard and study tax laws for fun, chances are licensed preparers know way more than you do about taxes and how to save your business the most money. Licensed preparers must receive IRS-approved training each year to ensure they are current on the latest tax code changes. Also, enrolled agents can represent you to the IRS if you're audited. To find a tax expert in your area, you can search the National Association of Enrolled Agent's directory.

Report Suggests It's a Good (Cheap) Time to Buy Insurance

23. February 2015 08:50

woman in glasses on the phone

If you've been dragging your feet on purchasing small business insurance, now may be the time to get moving. According to a report by Insurance Journal, the influx of competition in the commercial lines market means that the market is "softening." In other words, there are lots of people selling insurance right now, and they’re competing for buyers. Because of this, prices are dropping and are projected to stay down in 2015.

This trend isn't true for every type of commercial insurance policy. Cyber Liability Insurance, for example, is still pretty volatile because it's a relatively new product (more on that here: "Analysis Shows Less than 3% of Small Businesses Have Cyber Liability Insurance").

But if you're in the market for Property Insurance, General Liability Insurance, E&O Insurance, Workers' Compensation Insurance, or Commercial Auto Insurance (to name a few), you're in luck. You may qualify rates averaging 5 to 15 percent lower if…

  • Your business has a clean claims history. 
  • Your business has a low risk profile.

And if you work in a high-risk industry (e.g., construction), you can also expect rates to be about 10 to 15 percent lower than they have been. Your business location and claims history still play a key role in determining your rates, though.

This is all well and good if you don't have commercial insurance yet, but what about the small-business owners who do? Are you missing out on the savings just because your type-A personality wouldn't allow you to delay getting coverage? Let's take a look.

One More Time, with Feeling: How to Get Better Rates on Your Insurance Policies

If you've had your small business insurance policies for a while, maybe it's not a bad idea to talk to your agent and see if you can get a better rate elsewhere. Your agent can send you small business insurance quotes so you can see if you might be able to save some money by switching policies.

Worth noting: you don't want to make a habit of constantly switching policies – it can be a red flag to insurers and increase your premiums down the road. (You can learn more about that in the post, "4 Things to Check before Canceling a Small Business Insurance Policy.") But if you've been hanging on to the same policies for a while, there's no harm in shopping around for a better deal.

Having said that, it may make sense to look for new coverage when…

  • Your business experiences a significant change. For example, if you move your business to a new location, you'd need to update your Property Insurance policy anyway. Might as well see if you can get a better deal on your coverage while you're at it!
  • It's time to renew your policy. Your agent should send you a renewal notice when your current policy is nearing its expiration date. You can use this document to compare coverages and rates from other carriers.
  • You want to see what's out there. As we mentioned earlier, there's no harm in shopping around. Even if you don't decide to purchase a new policy, checking out the other fish in the sea may make you happier with your current plan.

To learn more, read, "When Is It Time for New Business Insurance Quotes?"

Demand for Cyber Liability Insurance Spiking

20. February 2015 08:07

woman drinking coffee with laptop

Given the hullabaloo about data breaches these days, it may come as no surprise to learn that there's a correlation between major hacks and increased demand for Cyber Liability Insurance, according to a report by Fortune. After all, when you keep seeing headlines about major retailers being sued over their data breaches, you take notice.

And by Fortune's account, that's good news. The businesses that purchase Cyber Risk coverage are best prepared for hacks. That kind of foresight can cut down data breach costs considerably, according to Ponemon Institute's 2014 Cost of Data Breach Study [PDF], which found that when an organization has a formal incident response plan (which includes having Cyber Liability Insurance) in place prior to an attack, the average cost of the data breach was reduced by $17 per record. That may not seem like much, but when you consider that each breached record comes with a $201 price tag, the savings add up.

So the good news is that businesses are learning from the data mistakes others have made, and with that knowledge, they're arming themselves with the appropriate insurance protection:

  • Last year, the insurance industry took in $2.5 billion in premiums for data breach policies.
  • About 90 percent of Cyber Risk Insurance is being purchased by American businesses.

But wait, didn't that Advisen report recently show that 97 percent of small businesses don't have Cyber Liability coverage? (Read more about that here: "Analysis Shows Less than 3% of Small Businesses Have Cyber Liability Insurance.") Although we're ahead of the curve on the international scale (about 25 percent of US companies that generate $1 billion or more in revenue have cyber liability coverage), American businesses on the whole still having some catching up to do.

Let's learn why no business is safe from the high cost of data breaches unless it has adequate Cyber Liability coverage.

Data Breaches: The Equal Opportunity Disaster

It doesn't matter if you run a small business or a billion-dollar corporation. In the digital age, all's fair in data breaches and war. (Related reading: "Top 8 Data Breach Misconceptions.")

A big corporate company is a lucrative mark for hackers because of the vast amount of information it has. But then again, such a hit takes tons of planning, expert evasion of high-grade security barriers, and sometimes, insider knowledge.

A small business usually won't have the financial muscle to invest in top-level IT security, which means it's easier to attack. According to Forbes, this is why small businesses bear the brunt of 71 percent of all cyber attacks. To learn more, read the post, "'No Business Too Small' to Be Hacked, Says Security Expert."

How Cyber Liability Insurance Can Help

As we discussed earlier, having a plan to address cyber attacks can save your business an average of $17 per breached record. When you have Cyber Risk Insurance, your policy can insulate you from the high costs of responding to a breach. For example, your policy can help cover the cost of…

  • Notifying affected parties. Most state laws require you to notify customers that their data has been compromised if the breach affects enough people. Each state has different laws.
  • Offering credit-monitoring services. California's new data breach laws require 12 months of credit monitoring if you offer the service to breached parties. Again, each state has different laws governing how businesses should respond to data breaches.
  • Negotiating with cyber extortionists. If a hacker demands a ransom from your ecommerce business lest they persist with their DDoS attack (where they essentially overwhelm your servers and force your business to a halt), your policy may cover negotiation costs.
  • Fixing your security. When your small business suffers a data breach, it should be a learning experience. Chances are you'll need the experts to step in and determine how the breach happened and how you can prevent them from happening in the future.

The best part? Cyber Liability Insurance can be pretty affordable for very small-business owners, especially if you add the coverage to your Business Owner's Policy (which starts at about $500 per year). Rates inevitably vary depending on what your business does, but be sure to check out your options.

Should You Attend Local Small Business Networking Events?

19. February 2015 08:48

handshake

Can’t seem to get your busy entrepreneurial self to local networking events? You’re missing out on great opportunities to gain visibility for your business, forge partnerships, and find prospective customers.

Here are the top five reasons you should attend local networking events.

  1. No business is an island. It’s obvious you can’t have a business without customers, but it’s also true you can’t have a successful business without other businesses. Visibility in your community means being known by all, and attending networking events is a great way to meet other business owners who could partner with you for marketing events and help spread the word about your business.
  2. You don’t know what you need until you need it. Isn’t it preferable to know people who can help your business before you actually need the help? You can meet many different kinds of business owners at networking meetings, so when you need website design expertise or someone to print your business’s brochures, you’ll have trusted connections to call on.
  3. You need to keep up with the Joneses. Networking events are also a great place to learn what new industry or small business trends are working (and which aren’t) from the trenches instead of trying to keep up by only reading about it on the Internet. Do businesses still send direct mail? What are the latest social media marketing trends? Which social platform works best for which business owners? What do people think of your new idea? Use a networking event as your own focus group, but be sure and repay the favor by contributing to others’ conversations.
  4. Get expert advice. Check the listings of local networking events and you’ll most likely see a comprehensive list of knowledgeable speakers. Use each networking event as an opportunity to learn something new about your industry from the experts, and you’ll move your business ahead.
  5. Fine-tune your message. Probably the best skill you can learn from attending networking events is, well, how to network effectively. When do you notice others’ attention drifting off? How do you describe your business in a way that gets people interested and excited? Practice your elevator pitch over and over until you have it down cold. Likewise, be sure to listen and observe how others present themselves, both verbally and non-verbally, and learn what works and what doesn’t.

To find networking events in your area, start with your city’s business development office, local SCORE chapter, and even your local community college.

Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at rieva@smallbizdaily.com, follow her on Google+ and Twitter.com/Rieva, and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.

Why Lawyers Help: Language vs. Common Sense in General Liability Coverage

18. February 2015 08:10

woman at a farmers' market

By now, you're probably used to hearing about worker misclassification affecting Workers' Compensation Insurance. After all, most state laws require employers to cover all their employees with this policy, so if you're sued over misclassifying an employee as an independent contractor, you can be fined for neglecting to offer them Workers' Comp benefits (in addition to a host of other penalties – more on that here: "Labor Department Helping States Crack Down on Worker Misclassification").

What we don't often hear about is how worker classification can affect other insurance policies your business has. To illustrate that, let's look at a recent example.

A Hayride Gone Haywire: On General Liability Insurance and Worker Classification

According to a report by Claims Journal, a worker hired to give hayrides at a farmers’ market during peak season suffered a serious injury while working. She sued her employers and their insurer to receive benefits through their Commercial General Liability Insurance policy.

Now wait a second, you might be saying. Isn't that a job for Workers' Comp Insurance? Typically, yes. It's third parties – the people who don't work for your business – who usually collect on General Liability's coverage for bodily injuries. Employees have to use Workers' Comp as recourse for their injuries.

However, the hayride operator contended that the General Liability policy only excluded bodily injury coverage for…

  • Temp workers.
  • Independent contractors.
  • Employees.

Because the policy didn't define "employee," and "temporary worker" was defined as someone who is furnished to the employer through a third party, she claimed none of the exclusions in the policy addressed her. No temp agency placed her in that particular job, and she claimed "temporary seasonal worker" would be the only term to properly encompass her work for the farmers' market. Therefore, she argued, the General Liability policy should cover her injury.

But the court disagreed. It opted to use the "commonly used meaning" of the undefined terms in the policy and held that under those common definitions, the hayride operator was excluded from the GL policy's coverage. In making that ruling, it also reaffirmed the standard application of General Liability Insurance: to protect the public at large – not people who work for a business – from bodily injuries.

To learn more about what General Liability Insurance can and can't do, read the post, "Why Your General Liability Insurance Doesn't Cover Data Breaches."

What's the Final Word on This Worker Classification Case?

The good news about this case: the farmers' market dodged a General Liability claim. As you may know, the fewer claims you make on your small business insurance policies, the lower your rates may be. (For more on that, check out our insurance savings tips blog series.)

But the case is still a reminder about how important worker classification is for small businesses. Just because the worker was treated as an employee for the purposes of the General Liability policy doesn't necessarily mean she's entitled to Workers' Comp benefits. Then again, if the hayride worker sued the farmers' market to claim she is an employee and is entitled to Workers' Comp benefits, the case could have turned out differently.

This all just goes to show you that it's important to understand…

  • Worker classification rules. Properly classifying workers can help you avoid lawsuits and fines down the road.
  • Your small business insurance policies. If there's language you don't understand, talk to your insurance agent. For help with terms that can be misinterpreted (and lead to subsequent lawsuits), consult a lawyer.

That second point is especially true when you're not sure which employees your Workers' Comp should cover. Don't be shy about asking your legal advisor questions – it's your business that could pay the price if there's an oversight.

To learn more about worker misclassification, read the post, "NJ Ruling on Independent Contractors Maintains Tough Standards."

Enter America’s Small Business Hero Contest and Your Business Could Win $5,000!

17. February 2015 07:45

contest photo

Small-business owners know that little things can make a big difference. They know that the most important factor in determining their success is the support of their network – customers, friends, fans, and followers. Insureon’s newest contest, America’s Small Business Hero, gives businesses a chance to win money by winning the votes of their fans.

Here are the details so you can enter your business to win.

America’s Small Business Hero: Contest Details

Who: Owners of small businesses in the United States.

What: A contest with a grand prize of $5,000, plus three runner-up prizes of $1,000 each.

When: Entries are accepted between February 16, 2015 and March 8, 2015.

  • Voting Round 1: March 11 – March 22
  • Voting Round 2: March 23 – March 29
  • Semi-Final Voting Round: March 30 – April 5
  • Final Voting Round: April 6 – April 12
  • Winner Announced: April 13

Where: Sign up to enter at contest.insureon.com. You can also vote here starting March 11.

How: The instructions for entering your business to win are outlined on the contest entry page, but here’s a preview of what to expect:

  1. Create a profile on the insureon network (network.insureon.com). This is a social network designed to help small businesses find new clients, potential partners, and more.
  2. Paste the URL of your profile into the box provided on the contest entry form.
  3. Fill out the entry form with the information requested (including your name, your business name, and your state).
  4. Submit.

That’s it. In just a few minutes, you’ll be entered to win cash prizes to help your business grow.

How the Winner Is Determined

Once you’ve entered the contest, you’ll be put in a pool with other entrants from your region of the country for bracket-style voting. In the first round of voting, the top two vote getters from each of the four regions will move on to the next round. The top four vote getters from Round Two move on to the Semifinalist Round and the top two semifinalists move on to the Finalist Round.

The winner of the Finalist Round will receive $5,000 and each of the remaining semifinalists will receive $1,000.

Anyone is eligible to vote, and everyone is allowed to vote once per day. To maximize your odds of winning, be sure to spread the word about the contest to your network by posting on Facebook or tweeting with the hashtag #iongives5k.

Ready to get started? Fill out your entry form today at contest.insureon.com!

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