Insurance is just a part of Risk Management. Initial insurance buying decisions are usually product driven and are triggered by demands from landlords, banks, investors and equipment leasing companies. As soon as you gain familiarity with the basic insurance products, it is best to adopt a broader risk management approach. This allows you to identify what your exposures to risk are and to decide what role insurance and other mechanisms can play in: (1) retaining, (2) eliminating or avoiding, (3) reducing or (4) transferring your risks.
Emerging Tech Insurance tries to foster the development of a risk management function in your firm. This is not necessarily a separate department, but instead it consists of risk management awareness and thinking in all key executives with overall coordination by a CEO and/or CFO. We rarely work with just one person at a firm; the norm is two to four.
Typically, you will begin with up to four policies to deal with risks that are not economical or practical to retain:
1. Property Insurance, with special attention to:
Property on your premises
Property off your premises (example: laptops, projectors, lab and test equipment)
Property in transit (incoming or outgoing)
Research Property (animals, plants, cultures, etc. with special recognition for insuring the value invested in them)
Tangible Property (desks, hardware, phone systems)
"Intangible" property (especially products in digital form under development)
Property losses that are not caused by physical damage--extortion, theft of your trade secrets, infringement on your patents, trademarks and copyrights.
2. Commercial General Liability Insurance, with special attention to:
Research, Development and Testing Liabilities
Products Liability/Completed Operations coverages
Personal Injury and Advertising Injury coverage
Employee Benefits Liability (not be confused with Employment Practices Liability--see below)
Policy territory--preferably world-wide
3. Automobile Liability
Whether or not you have a company vehicle that requires familiar coverages such as liability, comprehensive and collision, you need liability coverage for your firm for employees driving their own vehicles, and for incidental short-term rental of vehicles. The cost is minimal and protects your firm after the employees' personal automobile limits are exhausted.
4. Workers Compensation
Employees can be injured both in the office and while out on company business. Workers Compensation provides the coverage defined and required in Workers Compensation laws regarding medical payments and lost time payments for injured employees. Employers without Workers Compensation can find themselves in very difficult legal positions after an employee reports an on the job injury, real or alleged.
Although not part of Workers Compensation, you can purchase policies to provide Travel Accident insurance for employees who travel extensively and Kidnap and Ransom insurance for employees who travel in difficult areas.
You should also carefully consider the following areas and make an informed decision to retain these risks or transfer them to an insurance carrier.
5. Employment Practices Liability ("EPL")
Many emerging technology workers are well-educated, articulate and driven. Disagreements over remuneration plans, promotions, job assignments, internal restructuring, etc. can easily lead to allegations of discrimination, harassment and other defects in your human resources practices. There are a variety of Employment Practices Liability coverage forms available for your consideration and purchase.
6. Loss of Income
Generally considered a form of property insurance, this coverage protects you for loss of income arising from damages to your premises. Coverage is also available for contingent business interruption such as loss of services from a telecommunications provider. In your early phases, if you choose to transfer this risk, you will want to be sure that the policy will cover your ongoing expenses without adjusting for a lack of actual revenue.
7. Crime/Employee Dishonesty
Careful attention to the exact wording of the various crime policies on the market is important. At a minimum, you will want coverage for theft of money or services belonging to you or to your clients, by employees, including use of a computer, including misuse of credit cards or other means, whether they are on your premises or not.
8. Umbrella Coverage
An umbrella policy will provide higher limits of liability over your Workers Compensation Employer's Liability, Commercial General Liability, and Automobile Liability policies. Sometimes you can arrange to have it cover over a professional liability policy also (otherwise, excess limits are available separately for such policies).