As we start a new year, there is no time like the present to evaluate your company’s insurance and risk management program and plan for the year. Here is a brief checklist of steps to take and things to consider as you move into 2016.

1. Take inventory of all of your coverages

• Do you have all the coverage you need?
  • General liability insurance
  • Errors & Omissions liability insurance
  • Directors' & Officers' liability insurance
  • Employment Practices liability insurance
  • Employee Benefits liability insurance
  • Fiduciary liability insurance
  • Cyberliability and Data Privacy insurance
  • Property and Business Interruption insurance
  • Fidelity & Crime insurance
  • Terrorism insurance
• Are your coverage limits adequate to protect the business?
• Are you comfortable with your deductibles or self-insured retentions?
• Are all of your affiliates insured?
• Are your officers, directors and employees adequately insured?
• Do you anticipate any upcoming purchases, sales, and/or mergers or acquisitions?
• Do emerging risks such as global climate change, terrorism, and data and systems security need to be addressed in your planning?

2. Plan for your policy renewals

• When do each of your policies expire?
• Plan ahead for renewals—don’t wait for the last minute
• What are you trying to accomplish with your renewals?
  • Increase coverage limits
  • Broaden coverage
  • Obtain better pricing
  • Change insurance carriers
• Review policies that afford the right to provide a notice of circumstances that may lead to a claim to assess pros/cons of providing such notice in the current policy period

3. Analyze the substantive terms of your policies

• Do they really cover what you think they cover?
  • Carefully review coverage provisions, endorsements and exclusions
• Has your coverage grown with your business?
  • Don’t rely on just carrying over your coverage from one year to the next
  • When your business changes and expands, your coverage must change and expand with it

4. Put systems in place for administering your policies

• Know what the notice requirements are in each of your policies and have systems in place for providing notice
• Know what constitutes a claim that must be reported under the terms of your policies
• Know what your policies require regarding submitting proofs of loss and the timing of such submissions
• Know what your policies require regarding cooperation and insurance company consent before incurring expenses and settling claims
• Do you have systems in place so that those responsible for providing notice to insurers are aware of claims or potential claims that must be reported?

5. Review your broker agreements

• Are they one-sided boilerplate agreements provided by the broker?
• Do they clearly spell out each side’s respective responsibilities?
• Do they clearly spell out the compensation to be paid to the broker and for what services?
  • Do they permit the broker to obtain contingent compensation from insurance companies?
• Are the termination provisions clear and sufficient?
• What will you owe the broker if the agreement is terminated?
• Do they contain provisions regarding data protection, data breaches, and protection of private information and trade secrets?
• Are there provisions limiting the broker’s liability and addressing how disputes are to be resolved?

6. Review your vendor agreements

• Do they contain sufficient indemnification provisions?
• Do they contain adequate insurance requirements?
  • Are vendor policies primary and non-contributory with respect to your own insurance policies?
  • Do you have systems in place to ensure compliance with insurance requirements?
• Do they contain provisions regarding data protection, data breaches, and protection of private information and trade secrets?
• How are disputes to be resolved?

Reed Smith’s Insurance Recovery Group is uniquely equipped to assist clients in performing coverage reviews designed to identify significant potential coverage issues or exposures under all forms of insurance policies, and to obtain the broadest commercially available coverage to avoid such issues and reduce risk. We work with our clients to determine which risks are most important and are most in need of insurance coverage, and then review the potentially applicable policies with an eye toward maximizing coverage availability for those risks. We will work with our clients and our clients' insurance brokers to help maximize coverage and develop appropriate policy wording. If you would like assistance with reviewing your current insurance program, or purchasing or renewing insurance, or if you need assistance submitting a claim for insurance coverage, please contact the authors of this Alert; the Reed Smith Insurance Recovery Group’s Global Practice Group Leader, Douglas E. Cameron; or any of the Reed Smith attorneys with whom you routinely work.

Client Alert 2016-003