Approximately 133.2 million children went trick-or-treating in 2023 to claim their sweet prize. And if homeowners don't prepare, these visiting goblins, ghosts and ghouls are at risk of an accident or injury. 

Keep Halloween safe and fun by taking the time to minimize risks for children and parents around your home.

Clear walkways

In the rush to knock on your door, little ones probably aren't looking for trip hazards such as electric cords, cracks in concrete or a garden hose. Clear your walkways of these trip hazards in the days leading up to Halloween. Before trick-or-treaters begin to arrive, make sure to remove debris, wet leaves or snow or even slippery leftover pumpkin carvings from your walkway and steps.

Skip the candles

Instead of creating spooky lighting inside your jack-o-lantern with real candles, try a glow stick or a battery-operated candle. A flameless candle creates the same flickering effect, but minimizes the risk of fire.

Decorate safely

More than 800 structure fires start each year with decorations, according to the National Fire Protection Association, with 47 percent of decoration fires in homes occurring because decorations are too close to a heat source. Decorations such as dried flowers, cornstalks and crepe paper all ignite easily, so make sure to keep items like these away from open flames and other heat sources. Help prevent trips, slips or falls by keeping walkways, entryways and exits clear of decorations.

Illuminate your walkway and entryway

With long costumes, masks, glasses and other costume elements, trick-or-treaters often have impaired visibility on Halloween. Make it easy for them to find your front door by turning on the outdoor lights and lighting up the walkway with solar lights or flameless candles.

Secure railings

Trick-or-treaters in the U.S. collectively climb about 56.6 million steps every year. Make sure the railings on your steps and on your porch are secure to prevent potentially harmful trips and falls.

Hand out safe candy

Make sure everything you hand out is wrapped in its original packaging and avoid treats that may pose a choking hazard. Approximately 1 in 13 children have a food allergy, so consider selecting candy without allergens. The Teal Pumpkin Project from Food Allergy Research & Education (FARE) is a fun way to create a safer Halloween for trick-or-treaters with food allergies by handing out fun non-candy items.

Restrain pets

With strangers in scary costumes coming to the door, even the most well-behaved pet might get scared and act aggressively. Keep pets away from the door and don't allow visitors to pet them.

Consider extra protection

Child pedestrian injuries are more likely on Halloween than any other night of the year. In the event a trick-or-treater gets hurt on your property and you're found liable for the injury, an umbrella insurance policy can provide the extra protection you need. Learn more about umbrella coverage or contact your independent insurance agent for more information.

Sources

Kids Health
United States Census Bureau
American Academy of Pediatrics

In a winter cold spell, water pipes may develop ice and form a blockage. If left untreated, this can lead to increased pressure, causing the pipe to burst. A burst water pipe in your home can cause more than $5,000 in damage, so it’s important to act quickly. Follow these steps to help minimize the damage.

Shut off the water. 

A burst pipe will send water flooding into your home. Locate the main water supply and shut it off to stop the flow of water, preventing additional damage. Leave the faucets on to fully drain the pipe and relieve any remaining pressure, and flush all toilets. Depending on where the leak is, you may also need to shut off the electricity.

Repair the pipe. 

Call a plumber to make sure the pipe is repaired quickly and correctly. Attempting to repair the pipe yourself may cause further damage, so it’s best to rely on the experts.

Get rid of the water. 

The longer water stays in your home, the more potential there is for damage. Remove as much standing water as possible with a wet/dry vacuum, move waterlogged items to a warm, dry place, and set up fans or a dehumidifier in the area. Make sure the entire area is fully dry to avoid future issues with mold and mildew. For professional help, find a water mitigation contractor near you, or contact your insurance agent to help you locate a contractor.

Take inventory of damage. 

Make a complete list of any damaged property and possessions. Document the damage using a digital camera or your phone, so you and your insurance claims adjuster can easily reference it later. Save any receipts for repair expenses.

Contact your insurance agent. 

Water damage and freezing account for almost 22 percent of all homeowners insurance claims, according to the Insurance Information Institute. Water damage from burst pipes is typically covered under your standard homeowner policy, so begin your homeowners insurance claim immediately by contacting your insurance agent.

Prevent it from happening again. 

Once everything is cleaned up from a burst pipe, the last thing you want is for it to happen again. The temperature alert threshold for frozen pipes is 20°F, so when temperatures drop, it’s time to make sure your pipes are warm and water is running. Easy steps to help prevent pipes from freezing include:

• Keep the thermostat set to at least 55°F, even if you will be leaving your home for a few days of vacation.
• Slightly turn on faucets to keep water flowing.
• Open cabinet doors under sinks to help heat reach uninsulated pipes. For a more long-term solution, consider insulating exposed pipes, particularly pipes running along outside walls.
• Caulk and seal any leaks around your home that may allow cold air to enter close to pipes.
• Pay particular attention to pipes in unheated areas like basements, attics, crawl spaces and outside walls, especially in southern-climate homes that weren’t built with potential freezing in mind.

Consider additional coverage. 

While your basic homeowners policy typically covers damage from a burst pipe, you may need coverage for additional damage. Water backup coverage offers more coverage for instances like backed up drains or failed pumps, and service line coverage can protect you if flooding affects service lines on your property. If you have valuable jewelry, antiques or collectibles in your home, you may want to consider itemized coverage. Talk to your agent to help tailor your coverage for your unique needs.

Sources

• Insurance Institute for Business & Home Safety
• Insurance Information Institute
• Red Cross

This material is provided for informational purposes only and does not provide any coverage or guarantee loss prevention. The examples in this material are provided as hypothetical and for illustration purposes only. The Hanover Insurance Company and its affiliates and subsidiaries (“The Hanover”) specifically disclaim any warranty or representation that acceptance of any recommendations contained herein will make any premises, or operation safe or in compliance with any law or regulation.  By providing this information to you, The Hanover does not assume (and specifically disclaims) any duty, undertaking or responsibility to you. The decision to accept or implement any recommendation(s) or advice contained in this material must be made by you.

LC JUL 2018-35

All businesses have some exposure to employee theft, but according to the Association of Certified Fraud Examiners (ACFE), companies with fewer than 100 employees disproportionately bear the brunt of this problem.

The consequences of employee theft can be crushing, from loss of reputation and productivity to impact on profits — and the longer a fraud scheme goes undetected, the greater the loss. The ACFE reports that the average crime scheme lasts about 18 months, while a third of all fraud schemes continue for at least two years. And the financial toll can be staggering — the average commercial crime loss costs an owner $150,000, and many losses exceed $1 million.

While most companies survive this kind of fraud, many do not. The U.S. Chamber of Commerce says one-third of all small business bankruptcies result from employee theft. Statistics from the ACFE suggest most employees who commit fraud have worked for the company for more than five years. Employees who stay for longer periods of time often take on more responsibilities and, in turn, have more opportunity to commit larger frauds.

Are you prepared to help your commercial clients mitigate potential employee theft-related losses with the right insurance and proven prevention processes?

Top four employee crime schemes

What should you tell your business-owner clients to watch out for when it comes to employee theft? Based on an in-depth study, The Hanover identified these five common employee-related crimes:

1. Billing and vendor schemes — employees set up false vendor accounts and then bill their companies for non-existent parts or services
2. Check tampering schemes — employees use company checks to pay themselves, or reissue the company's old outstanding checks and change the payee to themselves
3. Payroll schemes — employees create "ghost" employees, add them to the payroll and direct-deposit their salaries into a fraudulent account they set up; or, employees fraudulently increase their salaries within payroll or HR systems, triggering payments in excess of their actual salaries
4. Expense reimbursement schemes — employees submit reimbursement requests for expenses never incurred or not of a business nature, and are then reimbursed for those fraudulent expenses

Preventing employee theft

While most basic business policies provide some crime coverage, basic coverage may not be enough. Consider placing a standalone crime policy that offers coverage in the event that a commercial client's employee steals money, securities or property. Even an entry-level crime policy can provide affordable coverage for a potentially big problem.

Depending on the type of business, it may also make sense to also consider a third-party off-premises policy, which can provide protection in the event that an employee steals from a client while working at the client's location. Third-party off-premises coverage is crucial for technology and consulting companies, contractors, janitorial firms, health care providers and employee placement firms, along with other businesses that deliver, install or repair items at clients' locations.

In addition to securing proper insurance protection, encourage your business clients to review their internal processes and procedures and implement the following best practices:

• Perform background checks. In accordance with law, perform thorough background checks of all potential hires. Do not take shortcuts or make assumptions.
• Set up a system of checks and balances. Make sure there is clear accountability for every position and that no position has broad enough power to authorize payments without the consent of another individual.
• Set up an anonymous tip line. Having a line where employees can report suspicious activity or business practices is a top way for business owners to be alerted to fraud.
• Have a clear employee conduct policy. Communicate often and clearly about the company’s employee conduct policy.
• Establish clear vendor processes. Set processes for vendor acceptance and setup, inventory control, and expense reimbursement can help avoid potential theft.

From inventory theft to falsified expenses, payroll fraud and more, no business is immune to employee theft. But independent agents can identify effective crime insurance solutions, putting their business clients in a better position to withstand and prevent employee theft.

Learn more about fidelity and crime insurance

If you have a small business, then chances are you are protecting it with either a business owner's policy (BOP) or a commercial package policy (CPP), which offers basic coverages and protection from loss and liability. So why should you consider additional excess liability — or an umbrella — policy?

Simply put, an umbrella policy kicks in after your other policies (like commercial auto liability, general liability or other liability coverages) have been exhausted due to an unusually expensive claim. Think of it as an extra layer of protection for the most serious and potentially devastating liability claims your business could face. And the rates for an umbrella policy are very reasonable. Just remember that umbrella is a supplemental policy, not a standalone policy.

Small businesses still have big liability

So if your small business does any of the following, it's a sure sign that you should consider adding umbrella coverage to your standard business owner's policy:

Does your small business:

1. Have customers or vendors visit your office?
2. Operate machinery that can cause injury?
3. Use social media to promote your business or practice?
4. Contract with outside contractors like cleaning, plowing or landscaping companies?
5. Deliver products to other business or homes?
6. Provide company vehicles to employees (or allow use of personal cars for business)?
7. Advertise your business in newspapers, TV, radio or billboards?
8. Share office space with other businesses?
9. Serve food or beverages?
10. Have packages delivered to your office?
11. Rent office space to others?

About the author
Chip Hamann serves as The Hanover's Small Commercial chief underwriting officer. In this role, he partners with actuarial, product, technology, corporate underwriting and marketing to help small businesses establish their appetite, determine the competitiveness of form and rate, and decide how to present The Hanover offering to Hanover's agents.

 

*Thomson Reuters

The recommendation(s), advice and contents of this material are provided for informational purposes only and do not purport to address every possible legal obligation, hazard, code violation, loss potential or exception to good practice. The Hanover Insurance Company and its affiliates and subsidiaries ("The Hanover") specifically disclaim any warranty or representation that acceptance of any recommendations or advice contained herein will make any premises, property or operation safe or in compliance with any law or regulation. Under no circumstances should this material or your acceptance of any recommendations or advice contained herein be construed as establishing the existence or availability of any insurance coverage with The Hanover. By providing this information to you, The Hanover does not assume (and specifically disclaims) any duty, undertaking or responsibility to you. The decision to accept or implement any recommendation(s) or advice contained in this material must be made by you.

LC 2018-045

The life sciences industry is constantly evolving. With evolution comes innovation and advancements to the field, but it also brings new risks and new exposures. For most life sciences customers, a claims-made policy may better meet their needs as it is triggered by a claim being asserted against the policyholder.

Why claims-made?

A claims-made policy applies to bodily injury and property damage which did not occur before the policy’s retroactive date, if any, shown in the declarations or after the end of the policy period, and a claim is first made against the insured during the policy period or any extended reporting period.

Claims-made policies often have negotiated policy dates, providing coverage that may extend beyond the policy period. These policies cover incidents that are reported during the policy period or extended reporting period and which occur after the policy’s retro date.

A strong foundation with claims-made policies

With a claims-made policy, customers can be insured for risks resulting from past services under their present policy as long as the claim occurs after the policy’s retroactive date. This provides added peace of mind to customers in the fast-progressing life sciences industry.

In addition, with a claims-made policy, recently-increased limits and broadening endorsements may apply to past incidents that occur after the retroactive date and are reported under the current policy.

Uncertain occurrences

Some of your clients may still have occurrence-based coverage. Because a claim can sometimes be latently filed 10 years or more after a products liability incident, an occurrence-based policy may have the following uncertainties:

• Which prior occurrence policy will respond to the claim?
• Is the prior policy’s insurance company still solvent?
• Does the prior policy have adequate limits for the current claim?
• Did the prior policy include exclusions for this type of claim?

Relying on prior policies to cover today’s claims is precarious in the ever-changing life sciences industry. Because risks are not the same as they were years ago, exclusions may leave the occurrence-based policyholder with an unstable foundation.

Claims-made policy in action

For example, your medical device manufacturer customer purchased a “products – completed operations” policy on a claims-made basis. Their policy is effective from January 1, 2019, through December 31, 2019, and has a retro date of October 1, 2018. They report a claim in March of 2019 for a loss that occurred on November 10, 2018.

Since the incident was reported during the policy period and occurred after the retroactive date, the claim should be covered.

The advantage of Hanover Fusion

With the Hanover Fusion claims-made form, customers get access to key coverages, including products and completed operations, errors and omissions, information security, privacy and personal injury, media and content coverage and more.

While other carriers may try to put a box around the life sciences industry, The Hanover’s form provides coverage for both life sciences and non-life sciences risk. By writing blended risks for both medical and non-medical exposures, The Hanover supports the growth and change that’s constant within the life sciences industry.

With a Hanover claims-made policy, a life sciences policyholder enjoys access to robust insurance solutions, claim and risk management expertise, expert underwriters and invaluable peace of mind.For more information on Hanover Fusion, contact your Hanover life sciences underwriter.

This material is provided for informational purposes only and does not provide any coverage or guarantee loss prevention. The examples or circumstances included in the material are provided as hypotheticals and for illustrations purposes only. The Hanover Insurance Company and its affiliates and subsidiaries (“The Hanover”) makes no warranty on the accuracy of the information contained in the material and specifically disclaim any warranty that acceptance of any recommendations, advice or suggestions provided creates an obligation, guarantee loss prevention or compliance with any laws or regulations. By providing this information, The Hanover does not assume and specifically disclaims any duty, undertaking or responsibility to you. The decision to accept any recommendations, advice or suggestions must be made by you.

Coverage may not be available in all jurisdictions and is subject to The Hanover underwriting guidelines and the issued policy. Refer to the issued policy for the coverage provided.

Public and private schools across the country, from elementary schools to major universities, face many of the same risks, exposing the schools to financial and reputational loss, and leaving school administrators with the daunting task of mitigating those risks. The right insurance protection is essential when it comes to significantly reducing exposures. 

With this in mind, The Hanover offers tips to help administrators manage five common risks that schools face.

Employment practices risks

With educators frequently involved in employment-related decisions, common causes for concern are wrongful termination, discrimination and retaliation. To help alleviate possible risks, it is crucial that schools include a human resources professional and legal counsel in their process, in addition to educators. Similarly, ensuring proper documentation of hiring processes, terminations, disputes and performance reviews can help protect schools from possible employment practices issues. Schools may have all the proper protocols in place, but additional training and enforcement of protocols often can provide an added layer of protection.

Sexual assault and abuse risks

Most schools have some form of insurance coverage for assault and abuse, but standard coverages are not always enough. “It’s important to review insurance limits with an independent agent to assess coverage and ensure the limits are adequate,” said Scott Grieco, president of Middle Market at The Hanover. “Often, schools benefit from increased limits and added protection.” Sexual assault and abuse is a significant concern for schools, and particularly for colleges and schools hosting summer camp programs. It’s always a good idea to make sure all school employees are trained on how to recognize the signs of abuse, actions they can take to prevent abuse and the proper procedures for reporting abuse. This is especially true for school employees and volunteers who are mandated reporters, legally responsible for reporting possible abuse. The Hanover offers free online training courses addressing student protection so that employees and volunteers are familiar with the best practices for managing the risks related to assault and abuse. “When it comes to protecting schools from possible risks, specialized independent insurance agents truly understand schools’ exposures and can serve as valuable advisors, offering expert advice and complete insurance protection,” stated Grieco.

Security risks

Whether it’s dorm exposures on a college campus or access in primary schools, security is a major concern. Developing a proper response to an event is an important part of safety, but prevention is also crucial. Things like key card security on doors, video monitoring systems and ensuring exterior doors are not being propped open, can help schools address some top security concerns.

The Hanover shares insight on the top 10 reasons to adopt a threat assessment team, supporting the need for schools to develop a threat assessment process to identify, assess, and manage threatening situations. The U.S. Department of Homeland Security also provides an informational guide on how to use a threat assessment model to enhance school safety. 

Sports injury risks

The safety of student athletes is a key concern for coaches and administrators. With frequent practices and games, requiring high energy, heat exhaustion and illness can pose a significant threat, especially during the warmer months of the year. Ensure coaches are prepared to recognize signs of heat-related illnesses and have a management plan in place. A concussion prevention and management plan is another necessity to help protect student athletes. Certain insurance policies help schools develop these plans by connecting them to providers that offer concussion management training and educational programs. The Hanover has resources to help evaluate concussions, track recovery, communicate with involved parties and make educated decisions about post-concussion needs.

Slip and fall risks

Claims related to slips and falls remain among the most common for schools. Creating a slip, trip and fall prevention plan and investing a good portion of a yearly budget to update facilities can help prevent injuries and reduce this risk. While slip and fall claims may not be the most costly of these common risks, they are often the most frequent claim scenario that school administrators face.

Read more about The Hanover’s comprehensive insurance program for schools.

About the author
Scott Grieco has served as senior vice president of Middle Market at The Hanover since 2012. As an experienced insurance professional, he is responsible for the profit and loss for Middle Market business, which includes accounts with premiums greater than $50,000 in specialized industries relevant to our distributors.

Real estate agents are frequent targets for lawsuits. A common lawsuit scenario involves a buyer of property suing the seller and the seller's agent for failure to disclose defects in the property. In some cases, the buyer also sues his or her own agent to the transaction. The lawsuit alleges not just negligence, but also alleges that the seller and the agent conspired to keep defects hidden to facilitate the sale at a higher price and earn a higher commission.

The buyer may also file a disciplinary grievance against the agent. The grievance threatens not just monetary risk for the agent, but the risk of also losing their professional license. The agent may be forced to defend him or herself in two forums simultaneously.

Most times the lawsuit and grievance are highly defensible. Typically, there was absolutely no collusion or conspiracy with the seller to fail to disclose defects existing on the property. The agent likely had no knowledge of any hidden undisclosed defects. At best, the seller may be at fault.

Nevertheless, a public lawsuit alleging fraud and conspiracy by the agent is unsettling at best for the accused agent. Reputation is extremely important in a referral business like real estate brokerage. In addition, defending lawsuits is expensive and time consuming for the agent. Every day working with defense counsel, reviewing documents and providing testimony is another day lost from practicing as a real estate agent.

Unfortunately, in today's litigious society, lawsuits and grievances against real estate agents are very common. There are no guarantees to completely eliminate the risk of being sued – other than not practicing as a real estate agent. To be frank, lawsuits and grievances are a professional hazard. However, employing a few simple precautions can minimize that hazard. Or, when the suit or grievance cannot be avoided, those same precautions can eliminate or minimize professional liability.

10 ways to prevent real estate lawsuits

1. Maintain good communications
   Let your clients know they are your top priority by keeping them informed of all significant developments in a bid, contract, or purchase, and responding promptly — within 24 hours — to clients' messages. In this age of email, there simply is no excuse for not keeping a client informed of all significant developments during the representation. After each telephone call, agents should immediately send an email confirming what the call discussed and the agreement and plan going forward.

   Of equal importance, keep well organized records, whether copies of letters and emails, or dated notes of telephone calls, of all substantive communications with clients. Keeping all email communications with the client is paramount in order to properly defend a lawsuit.

   A client, who knows he or she can get in contact with you, and that you are committed to advocating for his or her interests in purchasing or selling real estate, is less likely to pursue a lawsuit or grievance even in the event a problem with the transaction arises. On the other hand, if a lawsuit or grievance does occur, complete and accurate records of your communications with the complaining client are crucial to any defense.

2. Avoid giving false expectations
   Do not try to protect your clients from bad news. If obstacles, foreseen or unforeseen, arise at any time in the course of a transaction, your client will rely on you to inform him or her promptly, to provide a complete explanation, and to give your honest assessment of the risks and benefits of the clients' options going forward. The client may be unhappy to learn of the obstacle, but not as unhappy as a client who proceeds unaware, only to question, down the road, why you did not inform him or her more promptly.

   In addition, do not "oversell" and raise the expectations of your client. If it is unlikely a client will be able to sell a house at given price, the client will be unhappy later when the house doesn't sell at that price. It is better to give a client reasonable and sage advice and to manage their expectations.

3. Have the client make the hard decisions
   Clients rely on their real estate agents to provide a complete and accurate assessment of all risks and benefits of any transaction, but the client must decide how to proceed in light of your assessment. Do not allow a client to say, "It is up to you," because if your decision does not yield the result your client wants or expects, the client may hold you responsible.

   Decisions such as whether to get a home inspection or list at a certain price are best made by the client. You can provide them an assessment of the risks and possible choices, but ultimately, the decision is up to the client. A client who is empowered to direct the deal (with your advice) is less likely to cast blame if things do not go as planned.

4. Document your advice and the client's decisions
   Whatever decision a client makes, be certain there is a written record of the advice you provided the client to inform his or her decision. It is easy to follow up nearly every telephone call with a quick email documenting the communication with the client. Should a client take a course you advise against, follow his or her instructions (whenever possible), but state in writing that you would recommend against that approach. If you simply cannot follow the course of action requested from the client (for example, because it would be illegal, unethical or dishonest), advise the client immediately and explain why. If the client insists in that instance, you may need to withdraw as the client's agent.

5. Avoid filing fee disputes against the client
   Pursuing an arbitration or mediation over a commission or filing a fee suit against a client can often lead to a client filing a lawsuit or ethical grievance against you. Even if your client has wronged you, and even if you are, indisputably, entitled to relief, take a moment to evaluate whether that relief would outweigh the cost of defending against the lawsuit or grievance that is likely to ensue. Do not consider only the financial cost, e.g., your deductible and insurance premium, but also the time you would have to invest in your defense and the risk to your reputation, whatever the result. In all but the most egregious circumstances, writing off a loss or walking away from a dispute is often the more cost-effective path.

6. Avoid the extremely difficult client
   Consider carefully whether to retain or stay with clients: who make unreasonable demands; who constantly question your analysis or advice; who refuse to communicate effectively; and/ or who have fired or speak badly of your peers. Remember, a client prone to angry or irrational behavior may, eventually, direct his or her ire at you, regardless how careful you have been to provide the utmost service.

7. Avoid the unethical, discriminatory and/or fraudulent client
   Even worse than the extremely difficult client is the client who asks that you engage in unethical, discriminatory or fraudulent conduct. Deceptive, unethical or inappropriate conduct which benefits a client to a non-client's detriment can expose real estate agents to lawsuits by non-clients. Unethical clients can expose you to more than a civil action or a grievance proceeding. Any fraudulent activity the client performs with your knowledge can expose you to criminal actions as well . If a client insists you take some unethical, discriminatory or dishonest action, even after you counsel against it, terminate that relationship immediately.

8. Do not favor your interests over your client's Interests, or one client's interests over another client's interests
   Always be mindful of, and avoid at all costs, actual or potential conflicts of interest. You have a fiduciary duty to your client. Courts have held that a seller's agent has a fiduciary duty to act with utmost good faith, fidelity, and loyalty in all dealings with the seller. There is no quicker way to embroil yourself in a lawsuit or grievance than acting in your own best interest to the detriment of your client (or in one client's best interest to the detriment of another client's interests).

   Sometimes, the appearance of a conflict of interest is enough to instigate an adverse action. Thus, it is necessary to be vigilant about any potential conflicts which may arise and tell your client immediately in the event a conflict of interest arises. If the conflict of interest cannot be waived, withdraw promptly in the manner least detrimental to your client.

9. Be proactive in addressing client complaints
   Even the best of relationships can quickly turn sour if the client perceives that you are not responsive to concerns he or she voices to you. It may not be enough to simply acknowledge a complaint. You most likely need to respond with information pertaining to the client's concerns and a plan to address them. Whether or not you believe you are at fault, take responsibility for remedying the situation, including presenting the client with options and your proposals for how to avoid the issue going forward.

10. Don't forget liability insurance
    Although having an insurance policy will not keep you out of a lawsuit, it can certainly give you comfort and some protection from personal liability. The real estate agent business is a frequent area for disputes. In addition, insurance may be mandatory in some jurisdictions. It is the biggest purchase most clients will ever make and the stakes are high. Be sure to speak to your agent on what type of coverage that you will need to operate as a real estate agent.

Conclusion

These 10 tips cannot guarantee that a lawsuit or grievance will never be filed against a real estate professional; however, they can help manage the risks of practice and mitigate any damage from potential disputes.

i. We would like to thank the contributions from Daniel R. McCune and Kimberly Perdue of Childs McCune LLC in Denver, Colorado in preparing this article.
ii. Note, that there may not be coverage for fraudulent, intentional or criminal activity. Check your policy language and with your agent with any questions on coverage.

The Hanover is the marketing name for the property-casualty and general insurance operations of The Hanover Insurance Group, Inc. All products are underwritten by The Hanover Insurance Company, Citizens Insurance Company of America or one of their insurance company subsidiaries or affiliates. Coverage may not be available in all jurisdictions and is subject to the company underwriting guidelines and the issued policy. This material is provided for informational purposes only and does not provide any coverage. For more information about The Hanover visit our website at www.hanover.com.

No manufacturer, large or small, can be completely immune from a product recall and the business disruption that may result. While some of the most publicized product recall cases are from well-known brands, one-third of product recalls are from companies with five or fewer employees. Just one recall could mean financial ruin for a small manufacturer that may not have a well-rounded insurance policy in place.

Recall basics

The right insurance protection can offer peace of mind and help protect a business for years to come from a wide range of risks, including product recalls. The following is a sample of additional coverages recommended for manufacturers that may be at risk of a product recall:

• Repair, replacement or repurchasing costs. This covers costs incurred to repair a defective product, replace a product with a similar one and repurchase a product or reimburse customers for payments. It can also cover costs to redistribute and install replacement products or parts sold to customers.
• Customer's lost profit. This coverage protects manufacturers when a product recall affects customers' abilities to deliver their goods. For example, a customer may lose profits from the sale of a manufacturer's products when they are returned or incur additional costs from processing the recall.
• Good faith advertising. After a product recall, there may be costs incurred to help repair the manufacturer's damaged reputation in the marketplace. Often, paid advertising, social media and public relations services are covered for a period of time after a recall.
• Product recall liability coverage. Different from general liability insurance, product recall liability coverage addresses lawsuits brought by a customer over costs associated with a recall.

Beyond financial implications

A product recall can cause serious damage to a company's reputation. However, when a detailed plan is promptly put into action, a product recall can demonstrate a commitment to customer safety, and may ultimately enhance reputation and customer loyalty.

A business' product recall plan can help ensure there is an action plan ready to go in the event of a recall. There are three keys to an effective product recall plan:

1. Have a written plan in place. Operating under the stress and time constraints of product recall is not the time to ask, "How are we going to handle this?"
2. Designate a team of employees who will be charged with coordinating all aspects of the product recall team. Think of them as a rapid response team, who will help the company get out in front of a potentially very disruptive situation.
3. Have a strategy in place for dealing with media; both outgoing news releases and incoming media inquiries.

The best way to protect against the costs and broad impact of a product recall is to avoid it in the first place. For this reason, it's wise to work with an insurance carrier that provides robust risk solutions services, works closely with businesses to identify potential risks and helps implement focused solutions and best practices to reduce the likelihood of a product recall. These value-add services can make a major difference in the success of a manufacturer.

LC OCT 2018-456

Social engineering scams mislead unsuspecting employees into sending money or diverting payments to fraudsters who are impersonating vendors, clients, customers and even senior executives or business owners.

One of the most common, and most costly, forms of these scams is the business email compromise (BEC) scam, which involves a compromised or spoofed email account, from a scammer pretending to be a vendor, senior executive, or business partner.

Lawyers who work with real estate clients and/or wire funds as part of their practice are particularly vulnerable to these sorts of scams. Here’s an illustration of how such a scam works, and what you can do to help prevent this from happening at your firm.

An example of a BEC scam

During closing proceedings on a real estate transaction, a scammer assumes the online identity of a party in the transaction. The email they use appears to be the legitimate sender’s address, but in fact it has been subtly altered in such a way that it often avoids immediate detection. Examples of this include changing the suffix of the domain naming (“.com” to “.us”) or changing a letter “o” to a number “0.”

In some cases, the scammer may even have control over the person's real email address, and is therefore able to obtain knowledge specific to the transaction, and is able to include details relevant to the recipient in the email to the attorney receiving the email (e.g., "I hope the home inspection went well yesterday").

The scammer provides wire instructions or specifies changes to a previous wire transfer request, such as a new account number, or a new requirement to pay via wire transfer (as opposed to check).

The scammer may create a false sense of urgency around the request, in hopes that the reader will bypass channels that might normally uncover a fraud. This may include language along the lines of “time is of the essence” or “this needs to go out today.”

Acting in haste, the reader then sends money for the closing to the scammer's account. The money is quickly transferred by the scammer to an overseas bank before the scam can be uncovered and stopped.

The real party then calls late in the day or early the next morning, asking about the anticipated wired funds.

Potential damages

At that point, the attorney realizes that he or she has been scammed. The closing cannot take place, and various claims for damages accrue as a result of the failed sale, as well as a claim for the loss of the client's funds. Thus, there are usually at least one or more aggrieved parties looking to the attorney for their actual damages, plus any additional attorney's fees and costs incurred by all the aggrieved parties in trying to rectify the situation.

Even worse, the attorney may now be exposed to professional liability claims regarding the missing funds, and may also face potential disciplinary action for the misuse or misappropriation of those funds.

Avoiding and managing the risks

The weakest link in the security chain is the employee who accepts a scenario at face value and doesn't check its legitimacy. That's why it is imperative to provide anti-fraud training that includes educating employees on how to recognize and avoid BEC and similar social engineering scams.

Proactive steps

• Provide employees with information about recent scam tactics.
• Have a written policy outlining what is considered confidential, sensitive or proprietary information that should never be released without approval or authorization.
• Develop reporting and tracking programs that document attempts of social engineering/false pretense fraud.
• Consult with computer safety and information technology experts, who can help you:
  • Install cyber security software and keep it up to date
  • Secure Wi-Fi networks and use mobile device security procedures
  • Use two-factor authentication to make it difficult for hackers to enter business computer platforms
• Install an intrusion detection system (IDS) to flag emails with extensions that are similar to your company's email.
• Teach employees to never click on embedded links in suspicious or "out of the ordinary" emails.
• Never let the urgency of the message, intimidation or high-pressure tactics influence your careful review and assessment.

Before you pay

• Identify which employees have access to bank account information, or have authority to make payments or transfer funds — they are many times a primary target.
• Limit wire-transfer authority to specific employees, and require supervisor sign-off on any changes to vendor and client information, and all "internally" requested wire transfers.
• Validate funds transfer and payment requests with a "call back" procedure to an individual authorized to make such requests and to a previously established number.

Stay alert

• Be wary of last minute changes in business practices. Business owners should stress to their employees that they will never deviate from normal transfer protocol by calling or emailing an employee with an urgent request to transfer funds outside of documented procedures.
• Be suspicious when someone refuses to provide contact information.
• Randomly test employees with company created fictitious emails and/or phony phone calls.
• Review your insurance:
  • Talk to your independent agent to make sure your fidelity and crime coverage is up to date. The Hanover created its false pretense coverage offering to help law firms avoid these risks, and a wide variety of social engineering scams.
  • Some insurers – including The Hanover – have resources dedicated to protecting data, and raising awareness of BEC and other social engineering scams.

Real estate transactions can be fraught with tension and stress for both buyer and seller. So as the representing attorney for either party, this is where you really earn your salary — by making sure all i's are dotted, and all t's are crossed. Because until the final agreement is signed, there is no deal. And if there is an error or holdup due to an inaccurate legal agreement, you could be held liable.

Five tips to keep in mind for every transaction:

1. Proofread – Don't overly rely on forms — be sure to proofread contract language to eliminate vague language.
2. Double check details – Double- and triple-check all details — and make sure your employees focus on details.
3. Require transparency – Require full disclosure of all elements of transactions. Do not proceed with transactions if the settlement statement doesn't include the true value of the home.
4. Zip it – Do not answer questions for the party you do not represent. Refer them to their own attorney.
5. Escrow management – Use the title company for escrow. If you must hold funds, never let the balance fall below the full amount held and make sure you can release funds if consent is unreasonably withheld.