COVERAGE DETAILS

What is an Office Package Policy?

An Office package is a single insurance policy that combines several coverages previously sold separately. Office Policies can include general liability, property, auto, and a multitude of other coverages.  In addition to Technology Errors & Omissions insurance, an Office Package policy is considered a must-have insurance policy.  These policies are fairly easy to have quoted and bind coverage.  Please click on Apply Now to complete an application.

Why Do I Need It?

This policy provides both 3^rd party liability for bodily injury and property damage, as well as 1^st party property insurance coverage.  Your office premise lease most likely includes insurance requirements by your Landlord, and General Liability is a basic standard requirement.  The property insurance portion will cover loss to your owned property like office furniture and computer equipment as a result of fire, theft and other property perils.  Additionally, this policy can cover all of your office locations if you have more than one.

Are There Any Key Coverages a Technology Company Should Have Built Into It?

Yes! Non-Owned Auto is a key coverage that provides excess liability for your business. If an employee has an at-fault accident or a crash while operating his/her vehicle in the course of conducting business, your firm could be held liable for any liability or property damages in excess of what their personal auto policy will cover.  This policy can also provide Hired Auto coverage, which extends to your employees renting cars on company business.  This coverage only extends to cars rented in the US and Canada.

You can also include Umbrella Liability insurance under an Office Package that will allow you to purchase limits excess your General Liability, Auto Liability and Employers Liability component of Workers Compensation.  Your lease or other contracts may require limits higher than what your primary coverage policies offer.  An Umbrella insurance policy allows you to increase limits and ensure additional coverage when the primary policy limits are exhausted with one or multiple claims in a given policy period.

Does This Policy Include E&O?

No.  Technology Errors & Omissions liability insurance is obtained via a separate policy.  While the Office Package includes liability coverage, it covers physical loss a resulting in bodily injury or property damage.  An E&O policy covers financial loss in connection with rendering professional services.  Additionally, a general liability policy is written on a Per Occurrence Form, while an Errors & Omissions policy is most often written on a Claims-Made policy form.

How Much Will this Office Package Policy Cost?

An Office Package insurance policy, including both property and general liability, starts at about $1,000.  The cost of the policy will depend on the value of property your  firm owns, square footage rented, and number of employees.  We’ll work with you to ensure the best price for the most comprehensive coverage from a specialized technology insurance company.  No technology company should go without this policy.

What is a Work Comp Policy?

Workers’ compensation provides benefits to employees and independent contractors who are injured or become ill during the course of or due to employment.

Why Do I Need It?

California requires employers to carry workers’ compensation insurance to cover the cost of occupational injuries and illnesses to employees. Tech companies should provide this coverage to all salespersons and independent contractors, as well as employees.

Are There a Classification Codes Specific to Technology Companies?

Yes!

8859 covers firms specializing in Computer Programming or Software Development AND/OR Internet or Web-Based Application Development or Operation. The code is all-inclusive, which means that if your firm qualifies all California payroll (incl. clerical and sales) will be rated with this classification.

Why Do I Need to Purchase Errors & Omissions Coverage?

Errors and omissions insurance coverage is the cornerstone of a technology company’s insurance program. In addition to coverage for professional services, this policy can cover:

• Software E&O
• Internet E&O
• Network Security Liability
• Personal Injury & Privacy Liability
• Intellectual Property Liability
• Copyright, including Copyright of Software Code
• Cyber Extortion
• Network Business Interruption

We represent all the major insurance companies offering comprehensive coverage at competitive prices. We’ll work with you to quote a policy that will include all the coverages needed by your business. Click on one of the Apply Now buttons to get started with a quick and easy insurance application.

In Addition to the Coverages Listed Above, Program Features Can Include:

Coverage

• Defense Costs Outside the Limit of Liability
• Business owners’ Package Coverage on One Policy Form
• Full Prior Acts Available Even To A First Time Buyer
• Failure to Prevent Authorized Access
• Media & Intellectual Property Coverage

Additional Features

• Minimum Premiums Starting at $995
• AM Best A Rated Insurance Company
• Deductibles Starting at $0
• Premium Installment Plans Available

What is a Management Liability Insurance Policy?

Management Liability can include several lines of insurance specifically designed to protect management in their day-to-day business decisions. Coverages intended to respond to claims arising from the numerous threats to companies and their management includes: Employment Practices, Directors & Officers, Fiduciary Liability and Crime coverage.

• Employment Practices Liability Insurance – provides coverage for a broad range of employment-related actions, including discrimination, harassment and wrongful termination.
• Directors & Officers Liability Insurance – provides coverage for your directors & officers for defense costs, settlements and judgments related to errors and/or omissions in conducting their duties for the company.  also provides coverage for the company, if it indemnifies the directors & officers, and the company itself if it is named in a suit.
• Fiduciary Liability Insurance – policies provide coverage for an actual or alleged breach of fiduciary duty and wrongful administration of employee benefit plans or violation of ERISA regulations.  Claims often arise from allegations breach of duty by the Plan Administrators/Trustees and include: ERISA Violations, Conflict of Interest in Investment of Plan Assets, Imprudent Investment Decisions and Mishandling of Plan Funds.
• Crime Insurance – covers claims related to the actual destruction, disappearance, wrongful abstraction or computer theft of money and securities and other property.  This includes employee theft/forgery, employee benefit plan dishonesty, computer and funds transfer fraud and depositors’ forgery coverage.

What Insurance Limits Should my Technology Company Carry?

There is no firm answer about how much management liability insurance coverage a technology company should purchase. It is very difficult to buy enough insurance to adequately cover all possible losses. The goal is to try to purchase a reasonable amount of insurance based upon operations and perceived risks. Two major factors contribute to a company’s level of risk:

• The general size of the organization. The bigger the technology company the bigger the target.
• The number of employees and the potential for employment liability claims.

Why Should My Technology Company Consider Buying This Insurance?

There is often a misconception among directors and officers of privately held technology companies that they are somewhat insulated from management-related litigation because they are not as visible as their counterparts in publicly-owned technology companies are. But based on recent surveys and court decisions, the likelihood of a director or officer of a privately held corporation being sued has increased substantially. Additionally, widespread media coverage of employment-related litigation, increased merger and acquisition activity, a still uncertain economy and regulators’ enhanced scrutiny are among the reasons for the heightened exposures directors and officers face.
Here are a few important reasons to consider each insurance coverage part:

• Directors & Officers insurance coverage will protect the assets of Directors and Officers, since they can be held personally liable for their wrongful acts committed on behalf of the corporation.  And Management must spend a great deal of time in depositions and other court hearings, and not focused on the needs of the organization.
• Companies have Employment Practices exposure at all times including when you interview, hire, employ, promote, discipline, pay and terminate prospective, current and past employees.  Start-ups are especially vulnerable because they can’t afford a person dedicated to human resources until they reach a certain size level.
• With respect to Fiduciary insurance coverage, Plan fiduciaries cannot protect themselves completely from personal liability under ERISA. Even with a participant directed 401(k), plan fiduciaries can be held liable for a variety of reasons including the selection of plan investment options, monitoring those investments, and educating employees on those options.
• Most Businesses, particularly those with employees, should have some form of Commercial Crime insurance coverage. Statistics have shown that Crime claims occur frequently – not quite as high as workers compensation insurance issues but on par with employment practices claims. While claim amounts are not typically catastrophic in size, the frequency of these claims is a significant problem most employers face.

What is a 401(k)?

A 401(k) is company-sponsored retirement plan that allows employees to save for retirement by taking a portion of their wages and investing them in a tax advantaged account containing various investment vehicles like stocks, bonds, mutual and index funds. The employee can typically choose to either 1) defer income taxes on the contributions and growth until withdrawn at 59 1/2 (Traditional), or 2) pay taxes and contribute the net amount which grows tax free and is withdrawn tax free at age 59 1/2 (Roth).  Employees who participate in a 401(k) choose the amount they wish to contribute and a portion is withheld from their paycheck until the total desired annual contribution is attained.

Why do I need it?

According to the Retirement Benefit Research Institute, 43% of American workers indicated they have less than $10K in retirement savings, 27% said they had less than $1,000, and only 16% said they have confidence in their ability to save enough for a comfortable retirement.  Your financial future and retirement security depends on what you save for yourself today.  This is more challenging than ever in an environment where the Social Security system is cash flow negative, federal monetary and fiscal policy is creating the potential for hyper-inflation, and entitlement programs such as Medicare and Medicaid are becoming increasingly expensive and may not be available when you need them.  A 401(K) plan allows workers to systematically save for retirement and take advantage of tax deferred or tax free compound growth over a significant period of time.

How does it work?

Your employer works with CSI to establish a 401(k) plan and then enlists the aid of retirement plan specialists and investment professionals to help guide you through the process of setting up your individual account and choosing investment vehicles that map to your personal retirement goals and objectives.  Ultimately, 401(k0) plans are self-directed, which means you have control over how you invest your contributions pursuant to the investment options available to you in your particular plan.  You will have ongoing access to these investment professionals throughout the year.

Why CSI?

CSI has partnered with premier boutique investment advisory firm Three Bell Capital LLC to provide ongoing support and investment advice to CSI 401(k) plan sponsors and participants.  The Three Bell team has extensive experience working with companies to establish a retirement plan that reflects the goals and objectives of each individual organization.  Three Bell structures and administers 401(k) plans at the corporate level, and then provides ongoing personalized individual retirement counseling, investment advice, enrollment support, and educational workshops to ensure plan participants are maximizing their 401(k) benefits.

For more information about our 401(k) plans, please visit our website and contact Jon Porter at 650-485-2338, or jon@three-bell.com.

What Benefit Products Do You Offer?

We offer Medical (Domestic & International), Dental, Optical, Employee Assistance Plans (EAP), and Voluntary Benefits

Do You Offer Any Supplemental Services?

Yes! We offer benefit consulting, cafeteria plan administration, COBRA administration, benefits administration outsourcing, and the ability to go PAPERLESS! Please click on Benefit Services in the panel to the right for more information.

Who are your primary carriers?

Medical

Aetna
Blue Cross of California
Blue Shield
Guardian
Health Net
United Healthcare

Dental

Aetna
Blue Cross
Delta Dental
Guardian
Met Life
Reliance Standard

Vision

VSP
CoPower
Guardian
MES

To request Plan information for Group Health Plans please contact
Jeff High at 415.257.2127 or at jhigh@costelloandsons.com

What is Key Man Life Insurance?

Key Person Insurance is a type of business insurance taken out to indemnify either an employer or a lender against the financial loss that could result from the premature death or extended incapacity of a company’s most essential employees. Depending on the type of business, this might be a company founder, a top salesperson, a lead researcher, or a project manager. These individuals are considered key employees because they either have valuable expertise specific to the business or are, in one way or another, responsible for the bulk of the company’s revenue. Their loss could significantly impact the profitability and stability of the business. Start-up companies are especially vulnerable in this area and, as such, it is not uncommon for banks, venture capitalists, and other lenders to require this type of coverage be implemented as a condition of providing funding.

Insurance Solutions

Individual life insurance policies and disability insurance policies are the products of choice to address this type of need. They are owned by the company with the company typically being named the beneficiary as well. The life insurance policy would provide the funds to guarantee business loans, offset lost income resulting from project cancellations or lost sales based on customer’s lack of faith in the ongoing viability of the company. The Key Person disability policy is a specialty product designed to provide the funds to enable a company to recruit, hire, and train a replacement for the incapacitated employee.

Want More Information?

Sasha specht, our Life, Disability and Long-Term Care Specialist can assist with this type of insurance. He can work with you to match you with the right product and ensure compliance with IRS code Section 101(j). He can be reached at 415.257.2109 or at sspecht@costelloandsons.com.

Why Do I Need Buy Sell Insurance?

When you executed your articles of incorporation, LLC documents, or your partnership agreement, you started your company on the road to success. The business has done well and you have many front- burner activities vying for your time and attention. Most likely, you’ve not given much attention to what your documents say since the day they were executed. So, when the unthinkable happens and your business partner meets an untimely death, aside from the staggering realization that your business life has changed substantially, you will now be forced into becoming intimately familiar with what those documents require in order to ensure the future financial viability of the business.

Assuming the attorney that originally drafted the documents did a thorough job, there will be a section that will lay out the required actions and financial responsibilities of the remaining principals. This is commonly referred to as a buy-sell arrangement or a corporate stock redemption plan and will stipulate what happens in the event of the death or disability of a principal of a firm. Under the terms of the agreement, the remaining partners or shareholders will typically have agreed to purchase the business interest from the decedent’s heirs for a stipulated price or a price derived from a previously agreed upon valuation formula.

After reviewing the documents, the next task is to write a check to the heirs. Where is the money going to come from? Will it come from retained earnings paid out over time on an installment basis? Will the company have to borrow the funds or mortgage assets to come up with the money? Will these methods have an adverse effect on the economic viability of the business? In order to cause the least drain on the business, the majority of buy-sell or stock redemption plans are funded with life insurance. Life insurance is considered the method of choice because implementation is straight forward, cost effective, and will deliver the appropriate amount of capital at the exact time it is required. It is, of course, important to make certain that the policy death benefits are kept consistent with the current valuation of the business so that the liability is not underfunded.

The incapacity of a principal is also addressed in a comprehensive buy-sell and disability buy-sell policies are available specifically designed to address this need. Because it takes three years of an entity’s earnings history be available before an insurance carrier will issue disability buy out policies, many times this coverage simply never gets implemented even though the life policies have been put in place.

Questions for Thought

1. Is there a written buy-sell or corporate stock redemption plan in place?
2. What events trigger offers or sales?
3. What is the business valuation or formula?
4. When was the last time the business was valued?
5. Is the agreement funded? Life? Disability?
6. Is the funding level sufficient?

Want More Information?

Sasha Specht, our Life, Disability and Long-Term Care Specialist can assist with this type of insurance. He can work with you to match you with the right product and ensure your business is protected. He can be reached at 415.257.2109 or at sspecht@costelloandsons.com.

What is an Office Policy?

An Office policy is a single insurance policy that combines several coverages previously sold separately. Office Policies can include general liability, property, auto, and a multitude of other coverages.

Why Do I Need It?

From a Liability standpoint, your Landlord will require it. From a property standpoint, this will protect your office contents from fire, theft and other property perils.

Are There Any Key Coverages a Venture Capitol or Private Equity Company Should Have Built Into It?

Yes! Non-Owned Auto is a key coverage that provides excess liability for your Venture Capitol or Private Equity company. If an employee has an at-fault accident or a crash while operating his/her vehicle in the course of conducting business, you could be held liable for any liability or property damages.

What is a Work Comp Policy?

Workers’ compensation provides benefits to employees and independent contractors who are injured or become ill during the course of or due to employment.

Why Do I Need It?

California requires employers to carry workers’ compensation insurance to cover the cost of occupational injuries and illnesses to employees. Tech companies should provide this coverage to all salespersons and independent contractors, as well as employees.

Are There a Classification Codes Specific to Venture Capital Firms?

Generally the payroll of Venture Capital Firms will call into one of two classifications:

8810 – Clerical/Administrative – For employees office-based
8742 – Outside Salesperson – For salespersons out of the office a significant portion of the work week.

What is a Venture Capital Liability Policy?

This type of policy offers venture capital and private equity firms an effective, comprehensive way to transfer and mitigate many of
their most significant liabilities by combining four coverages into one policy:

• Management Liability Insurance
• Management Indemnification Insurance
• Outside Directorship Liability Insurance
• Professional Services Liability (Errors and Omissions)   Insurance

What Limits should I buy?

There is no firm answer about how much venture capital liability coverage a company should purchase. It is very difficult to buy enough insurance to adequately cover all possible losses. The goal is to try to purchase a reasonable amount of coverage based upon operations and perceived risks. Two major factors contribute to a company’s level of risk:

• The general size of the organization. The bigger the
  company the bigger the target.
• The number of employees and the potential for
  employment liability claims.

Why should I buy it?

The Venture Capital Liability policy effectively addresses the needs of many types of private investment firms that manage other types of funds, including:

• Small business investment company funds
• Corporate-sponsored funds
• Fund of private equity/venture capital funds
• Distressed debt funds
• Mezzanine debt funds
• Government-sponsored funds

Why is Cyber Liability Insurance important today?

The number of Data Breaches and Hacking Attacks have skyrocketed in the last five years. This is no longer an “optional” coverage that applies to specific industries – Cyber Liability Coverage is now a crucial element to ALL business’s risk management strategies.

• Amount of Losses Businesses report in 2015: $40B
• Average Cost per record Lost: $201
• Percentage of Phishing Links Clicked within the first Hour: 50%
• Number of Malware Events That Occure Every Second: 5

These numbers are staggering which is why at Costello & Sons, we have access to one of the leading cyber carriers in the United States, Evolve MGA. This access allows us to bring you one of the broadest cyber forms available while also administering one of the simplest application processes in the market which can be found on our VC/PE page.

What are some of the coverage’s included?

• Social Engineering – Unauthorized Funds Transfer
• Cyber Extortion
• Forensics
• PCI Fines, Penalties, & Assessment Costs
• Notification Costs
• Business Interruption
• System Damage
• Reputational Harm
• Regulatory Fines & Penalties
• Cloud Coverage
• 24/7 Data Breach Hotline
• and More

What is Crime Insurance?

Crime Insurance covers claims related to the actual destruction, disappearance, wrongful abstraction or computer theft of money and securities and other property.  This includes employee theft/forgery, employee benefit plan dishonesty, computer and funds transfer fraud and depositors’ forgery coverage.

Why should you have Crime Coverage?

Statistics have shown that Crime claims occur frequently – not quite as high as workers compensation insurance issues but on par with employment practices claims. While claim amounts are not typically catastrophic in size, the frequency of these claims is a significant problem most employers face.

What is Key Man Life Insurance?

Key Person Insurance is a type of business insurance taken out to indemnify either an employer or a lender against the financial loss that could result from the premature death or extended incapacity of a company’s most essential employees. Depending on the type of business, this might be a company founder, a top salesperson, a lead researcher, or a project manager. These individuals are considered key employees because they either have valuable expertise specific to the business or are, in one way or another, responsible for the bulk of the company’s revenue. Their loss could significantly impact the profitability and stability of the business. Start-up companies are especially vulnerable in this area and, as such, it is not uncommon for banks, venture capitalists, and other lenders to require this type of coverage be implemented as a condition of providing funding.

Insurance Solutions

Individual life insurance policies and disability insurance policies are the products of choice to address this type of need. They are owned by the company with the company typically being named the beneficiary as well. The life insurance policy would provide the funds to guarantee business loans, offset lost income resulting from project cancellations or lost sales based on customer’s lack of faith in the ongoing viability of the company. The Key Person disability policy is a specialty product designed to provide the funds to enable a company to recruit, hire, and train a replacement for the incapacitated employee.

Want More Information?

Sasha Specht, our Life, Disability and Long-Term Care Specialist can assist with this type of insurance. He can work with you to match you with the right product and ensure compliance with IRS code Section 101(j). He can be reached at 415.257.2109 or at sspecht@costelloandsons.com.