Are You Sure Your Business Insurance Has You Covered Or Are You At Risk? | Rialto Marketing (2024)

Podcast Transcription

Tim Fitzpatrick
I think many of us view insurance as a necessary evil. We have to have it, but do we have the right coverage for our business? Do we have enough coverage? Is there anything that we may have missed. Fear not. I have got an expert on business insurance with me today, and we are going to dig into everything, business insurance to make sure that you are protected when you need it most. Hi, I am Tim Fitzpatrick with Rialto Marketing, where we believe marketing shouldn't be difficult. All you need is the right plan. I am really excited to have with me today Mike Fusco from Fusco and Associates Risk and Insurance Services. Mike, thanks for joining me, man. I appreciate it.

Mike Fusco
Thanks for having me, Tim.

Tim Fitzpatrick
Absolutely. So it's always nice to switch sides of the mic. I was on your podcast, I don't know, three, four, or five weeks ago. So thanks for doing me a solid and jumping on and chatting with me today about insurance.

Mike Fusco
You were an excellent guest, man. You are natural, Tim. You are all naturale.

Tim Fitzpatrick
I appreciate that. So before we start talking about insurance, which we all know we need to have, I think with business insurance, there are so many nuances that are easy to overlook. I want to just help our audience get to know you a little bit more, ask you some rapid-fire questions here. Are you ready to ready to rock this?

Mike Fusco
Let's Roll.

Tim Fitzpatrick
OK, when you're not working, how do you like to spend your time?

Mike Fusco
Family, I like to be with family. I like to be with my friends. I like to play and coach ice hockey.

Tim Fitzpatrick
Cool.

Mike Fusco
Watch sporting events.

Tim Fitzpatrick
What's your hidden talent?

Mike Fusco
I'd say technology. I'm much better with computers and technology than people think.

Tim Fitzpatrick
So you're not just a jock, you can get in and do the technical stuff?

Mike Fusco
I have a lot of geek behind me, man.

Tim Fitzpatrick
I love it. Uh, what's the best piece of advice that you've ever been given?

Mike Fusco
I think growing up, my dad always told me, you know, make sure you surround yourself with the right people. You know, I think I tended to lean towards troublemakers, but, you know, surround yourself with people of like minds and success. And that should follow.

Tim Fitzpatrick
I love it. I'm trying to remember who said it, but I think most of us have heard it. You're the sum of the five people you spend the most time with. So choose those five people wisely. What's the one thing about you that surprises people?

Mike Fusco
I think the hockey thing, you know, I've kind of grew up and played and I coach ice hockey in Southern California. People don't really equate the two, even though I'm from the Northeast.

Tim Fitzpatrick
OK. Yeah, I guess I grew up in Northern California. Hockey was not a real huge thing.

Mike Fusco
No. It's becoming bigger, though, man.

Tim Fitzpatrick
It is. It is. Well, you know, the other sport that's become really popular on the West Coast that wasn't at all is lacrosse.

Mike Fusco
Lacrosse. Yep.

Tim Fitzpatrick
Yeah. For whatever reason, it took forever to come to the West Coast. What does success mean to you?

Mike Fusco
You know, supporting. Supporting your family, supporting your coworkers. You know, being able to support people that you love and to help them and teach them.

Tim Fitzpatrick
Yeah, having the freedom to be able to support them. Right. When they need.

Mike Fusco
Yeah, for sure. I mean, like, it's funny because somebody posted recently on a forum that I'm part of and they said, you know, we had our big he's an agency owner. He said we had our biggest week of payroll this week and it made me proud. And I said, you know, that is success to me as a business owner is watching your employees and your team thrive.

Tim Fitzpatrick
Yeah. I love it. Where's your happy place?

Mike Fusco
Happy place? On a beach.

Tim Fitzpatrick
On a beach? OK. That doesn't surprise me. You live in Southern California, right? What qualities, yeah, what qualities do you value in the people you spend time with?

Mike Fusco
You know, I like people that like to have fun, have a good sense of humor, you know, like to laugh, like to make people laugh, I'm big on laughing and comedy.

Tim Fitzpatrick
Yeah. We can't take life too seriously, right?

Mike Fusco
No, no it's brutal.

Tim Fitzpatrick
Yeah. So tell us more about what you're doing at Fusco and Orsini. What types of clients do you typically work with? You saw all kinds of different insurance lines, right? Fill us in there.

Mike Fusco
Yeah, we do. We're. You know, we're heavy commercial agency, so our clients are mostly small to medium sized business owners or businesses, whether it's the owner themselves or maybe part of their team, you know. We work with HR people. We work with controllers and finance people within the companies. But employee benefits clients, we have a pretty solid division of employee benefits. And we recently launched a non-insurance consulting services, so we now bring to our clientele consulting services such as H.R. Consulting and this is through third parties. So we match them up with firms, vendors that do HR consulting, a 401k consulting, employee assistance programs, compliance or risk management tracking. So we want to be a true partner to our business clients and not just them think of us as the guy that sells them insurance policy. We want them we want to be a really a business consultant and an extension of their team.

Tim Fitzpatrick
Got it. So, you know, a trusted advisor for their various needs.

Mike Fusco
Correct.

Tim Fitzpatrick
Love it. So let's talk about mistakes we all make them. What are some of the biggest mistakes you're seeing business owners make when it comes to insurance?

Mike Fusco
Man, that's an easy answer. They too much price, price, price, price. They focus too much on the cost of an insurance policy. They're making a major mistake by doing that. Insurance it's not a commodity, especially business insurance. If business owners are out there buying general liability or buying professional liability, buying directors and officers liability or employment practices or cyber insurance, no two policies are the same. You know, they're designed differently. The language is different, the forms and the exclusions and the covers that are provided. And people just focus too much on the price of the policy. It's not about the price. People need to forget the price. They're going to business owners are going to make the mistake. They're going to lead themselves hanging. And they're going to wish that they made the correct decision. Or and, you know, I should have said it could be that they're not informed enough. That could be the big problem, because our industry has gone, especially in the personal lines like personal auto, the marketing and what's driven into people's minds has gone so far to the commoditization of insurance. The price, how much you can save. Youknow, call here and you'll save 15 percent or call there and you'll save. So I think people, they have that stuck in their head, that insurance is all about what's the least expensive policy out there. But that's a major mistake for business owners because they could be leaving themselves unprotected.

Tim Fitzpatrick
Because when you're focused solely on price, I think what they're doing with probably not necessarily intending to do that is encourage the agent to decrease coverage. Right? And an agent that isn't quite as scrupulous as maybe they should be or just want to make the sale was not going to bring that up. Right. But somebody that really care is going to go, hey, look, you can lower the price, but if you lower the price, you're decreasing your coverage, which is not a good idea for X, Y and Z reasons. But aren't most I mean, most policies are somewhat regulated in pricing as well, are they not?

Mike Fusco
Yes and no.

Tim Fitzpatrick
OK.

Mike Fusco
So the insurance market is so enormous, right. When you take one singular product. Now if you're talking about homeowner's insurance or personal auto. There's a lot of regulation, right? Carriers have to file with their departments of their state and they can't just go out and say, OK, you know, tomorrow your prices are going up 50 percent because we feel like it. But the insurance market, first of all, I think people need to understand there's really two markets. There's two insurance markets out there, there's your standard market, which is typically offered by the carriers that you hear about, the Hartford's, the travelers, the Liberty Mutual's, you know, the popular everyday household names. But there's a secondary market, there's an excessive surplus lines market, which in certain states is very popular, but also in certain product lines is a necessity because your standard market, your preferred market, your household carriers aren't going to provide that coverage to people. It could be above normal risk. It could be people in industries that are tend to have higher claim frequency or higher claims deverity. So you have an excess and surplus market. And that's not really I mean, it's not highly regulated. It really isn't. And carriers can structure their policies with forms and language within the policy itself that is not beneficial to the purchaser or to the consumer, and as insurance agents or brokers, what we do is we need to know we need to advise our clients that, hey, you may have insurer A, you may have insurer B. And even though the limit of the policy is the same, insurer A is offering you general liability with two million dollars coverage and so is your insurer B. What is really in the guts of the policy? That's what we call it. You know, what is inside the policy? What language, what exclusions are going to come out and rear their ugly heads, we'd like to say, you know, when you do have a claim or you have a loss? So that's what I'm talking about when it comes to making the correct buying decisions. And again, a lot of business owners just don't know. They don't know what they don't know. And, you know, there's an insurer tech revolution with people going online and purchasing insurance direct to consumer. And without an adviser, they really don't know what's in the policy. I mean, people don't read insurance policies.

Tim Fitzpatrick
Yeah. Unless they want to put themselves to sleep. Right?

Mike Fusco
Put themselves to sleep and really not even understand the language. So, I mean, it's written by attorneys and legal teams.

Tim Fitzpatrick
Yeah. So one of the benefits in working with a broker like Fusco & Rosini, is you guys can consult with the client, find out what they're doing and what their needs are, and then go out and shop the best policy for them. Is that right?

Mike Fusco
That's correct. That's correct. And I think not just our agency, but the independent channel. Has done a really, really good job of I mean, the independent channel, I think, and I might be biased. Right. But I think that we've done a very good job of educating ourselves to be truly knowledgeable of the insurance products that we deliver and to be able to deliver that to offer our clients different options. And when I say price-driven or price-focused, we do not we don't ever sell the lease, we don't ever sell the least expensive policy here.

Tim Fitzpatrick
OK, got it.

Mike Fusco
We just don't do it. I mean. And we're constantly kind of fighting that fighting that trend of people wanting to go to what's the least expensive, what's the least expensive, but we'd rather just not even gain a client. Then sell them something that's just dirt cheap, you know, because they think that's the right move for their business. If that makes sense, If I makes sense.

Tim Fitzpatrick
It makes perfect sense. So what are there's all kinds of different insurance lines, but what are the main insurance products that the vast majority of business owners need to consider?

Mike Fusco
OK, so you have general liability, which is almost all businesses are going to have some form or need some form of general liability, worker's compensation, if you have employees also known as employers liability. Certain states mandate it. You have to have it. Other states it's not. But you're seeing more and more businesses understand the value of that protection, professional lines, professional liability errors and omissions, you might call it. It's important for certain segments of businesses, people that are more in kind of the white-collar type industries that are giving advice or providing, you know, professional services. Medical malpractise for doctors, of course, and attorneys for attorneys. Business auto insurance for people that have fleets or use their commercial autos. More and more we hear about nowadays are employment practices, liability insurance. Which protects a business against employee-driven lawsuits. So if a business gets sued for wrongful termination, harassment, discrimination, failure to pay properly. EPLI is becoming more popular. Directors and officers liability and cyber insurance now is a real hot button. Cyber insurance has become a real hot button. It's been around for a while, but, you know, we're getting more and more questions about it. We're trying to educate. We've actually tried to educate our clients on it for quite some time because we had a feeling that these days we're coming.

Tim Fitzpatrick
Yeah. So let's dig into that. We were going to talk about that. I'm just going to jump right to that. What is cyber insurance and why is it important for the vast majority of us not to overlook it?

Mike Fusco
OK, so cyber insurance people think of it in different ways. OK, so. A lot of business owner policies or BOPs B-O-P, which are fairly mainstream insurance policies for your everyday type business, might include some form of cyber insurance. It might include some form of cyber endorsem*nt or cyber liability. But really, that's not what I think of and that's not what our staff thinks of for cyber insurance. To us, cyber insurance is a standalone product. It's a cyber policy that's its own insurance policy outside of any other package or any other coverage, and it protects a business for all cyber-related incidences. And what I mean by that is, if your business gets breached, if your business suffers some sort of cyber attack or cybercrime against it, we look at cyber insurance as what's going to make that business whole to come back to normal activity, so or normal operation.

Tim Fitzpatrick
Got it.

Mike Fusco
So let's think about that for a second. OK. What could happen to your business if you suffer a cyber breach?

Tim Fitzpatrick
So it could be a data breach, right? They steal data. It could be they lock data and it's ransomware and they say if you want your data back, you need to pay us a million bucks or whatever it is. Right. Those are the two main ones. Right. Am I missing anything?

Mike Fusco
Those are definitely what we hear about and what we think about. So let's think about it. So we could suffer a data breach. Like you said, we could suffer someone stealing our data. Well, whose information? What kind of privacy information could get stolen? Your client's information, right? I mean, that could be a major detriment to your business. Your employees information. People's payment information. Sensitive data or files. So when you think of cyber policy, well, we have to make sure there's protection against third-party lawsuits. If your data gets stolen and the cyber criminal breaches your client's personal data, their medical records or their date of birth, their Social Security numbers, their payment info, you're going to have major issues on your hands with not only regulatory fines, notification costs, credit monitoring costs, notifications to all those credit card companies, but you're also going to seeing lawsuits coming from those people, that information was stolen. Guaranteed. Next thing people don't think about, first party coverage, OK, not just third party liability. So what does it take to get your business systems back up and running? What are the hardware costs to replace your servers or the hardware that was damaged in the breach that can't be used anymore? How about your business interruption? How long were you down where you can earn revenue? What's your reputational harm? You know what's circulating about your business, that now people don't want to do business with you anymore? How do you get that back to a halt? Ransomware is a huge one. What if you have to pay ransomware? Who's going to pay that on your behalf to unlock the data that the criminal has locked up? And by the way, there's double extortion, ransomware now, which you're not just going to be extorted once, but you'll be extorted twice. The first one is what Tim said, locking up the data and having to pay to regain access to it or in your files. But the second one is, how about all that data that they take and now they sell over the dark web or put online and say, hey, you owe us a second payment for us to take that information down. You know, we're going to take all your client's private information and post it somewhere online for people to see it. Double extortion, ransomware.

Tim Fitzpatrick
Oh, man. Dude, I haven't heard of that. So that's starting to pop up as well.

Mike Fusco
Oh yeah. Oh yeah. Oh yeah.

Tim Fitzpatrick
Yeah. So, um, so I'm going to give you an example here to and I'm sure you have some, but I know a gentleman who used to work for a company, used to being the important word here that they were an IT company, they were doing managed I.T. services and they were actually selling cyber insurance to their clients. They got hacked and they got a ransomware attack. The hackers asked for a million bucks. They had I don't know how many clients they had, but they had a lot of clients that were in the health care space. And they didn't have insurance themselves. So, they did not have the money to pay the million dollars, so, I don't know, honestly, I don't even know if they're still in business, but literally I don't, the owner had spent 10, 12 years building his business, and overnight it was literally hanging by the thread. And I know that some of their clients actually negotiated with the hackers directly to get their data. So some of their clients were paying 10, 20, 30 grand a pop to get their data back. So, man, even if you're a small company, there's still risks there. And I think if you look at the average cost of a cyber policy for most companies, man, it's not a lot of money for the coverage that it provides.

Mike Fusco
It's a no brainer, man. I just got to tell people, like, make sure you understand what type of cyber policy you have, because the whole endorsem*nt thing or the whole attachment to a business owner policy really is to me, it's almost creating false hope for people like they have false sense of security where they see maybe cyber liability listed on their declaration page and they think, OK, I'm good. Well, you're not good because a true cyber policy has seven or eight insuring agreements. Ensuring one through eight with 10 different sections of coverage in every single ensuring agreement. OK, so I'm talking 40 to 50 line items and a minimum of insurance coverage on a real cyber policy, not just, you know, to make sure your whole. So people don't realize, like, if my client gets hacked or gets something happens to them, I want to make sure that the carrier comes in, does a forensic investigation for them so they understand where the breach infiltrated, what the brief infiltrated. That could cost, four hundred five hundred dollars an hour. If you go out and buy that on your own or have to get your own. I want to make sure that their hardware systems are brought back, their business interruption is paid. The reputational harm to taking care of. All their notification costs are handled, their ransomware is paid. Their funds transfer fraud is paid. Their lawsuits are covered. I mean, the whole nine yards, they have attorneys on their side. So just if you're out there and you think just make sure you read it, make sure you understand what you have, you know? That's all I have to say to the viewers who might be watching.

Tim Fitzpatrick
Are most standalone cyber policies going to be sufficient, right? Or is it are most people with cyber making the mistake that they see something cyber mentioned in their general liability and they think they're covered?

Mike Fusco
That's the problem. Most stand alone, so the cyber carriers out there that do cyber and really do only cyber, are very, very good, they're excellent. In fact, they have their own in-house forensic people to have their own in-house attorneys. I mean, the whole nine yards, that's what they're dedicated to. They're dedicated to cyber insurance. And that's what you need to look for. If you have, like you just mentioned in your business owner policy, you know. Your business owner policy, let's say you're a retail store and you have general liability on that policy, maybe you have some property covered reach for your inventory and you have a cyber endorsem*nt, we call it, or a section of that policy that has cyber insurance, you may have a false sense of security because that cyber policy is not what you think, that cyber coverage is not what you think it is. It's not the same. That's what I was saying about before with like business owners, it's not real. You know, you need to understand your risk and your coverage. I mean, in business alone, people don't want to deal with their insurance or read their policy, right? But you need to know how you're protected. It's so important. And if you don't, then you need to hire an insurance agency that does it for you. Tthat's all I said. That's all I got to say. It could be any insurance agency, but it's a professional service. That's where people miss, you know, the whole commoditization of the insurance industry that kills me, you know, where people think, oh, I'm just going to go buy the cheapest thing or the easiest thing or the fastest thing. It's a professional service, you need to understand what your protection is.

Tim Fitzpatrick
Yeah, most of us don't even think about that until you actually need the policy. And then when you're going through the claims process and you're like, well, what about this? What about that? You know, and that's when you really find out whether your insurance agent or broker was actually either one, knew what they were doing or two was looking out for your best interest.

Mike Fusco
And it's too late then.

Tim Fitzpatrick
Yes, it is. Yeah, so I mean.

Mike Fusco
I've got to tell you one thing that I'm very proud of and I'm not going to talk about her agency at all besides this, but we track metrics very closely here and we have a weekly leadership team meeting every single Monday morning and we go over a spreadsheet of data. And one of the items on our spreadsheet, we don't talk about this for our clients or we don't advertise this, but we track the percent of claims that come into the agency every week that are accepted by the insurance company. OK. And when I mean accepted, I mean, that doesn't necessarily mean that there's an indemnity payout. That doesn't necessarily mean that the insurance company paid on their behalf, but accepted means that they provide a defense. They provided legal counsel. They're on the side of our client to help them with the lawsuit or the claims that came against them. Ninety two percent. Ninety two percent of the claims that come into our agency are accepted by the insurance company on behalf of our clients. So and I promise you that. Most independent agencies that dedicate their time, the education of their profession. So when I hear out there, oh insurance companies don't pay. Insurance companies aren't on your side or insurance companies, all they do is take. That irks me because. Ninety two percent of the claims that we see in our office, and that's because we know how to write insurance policies. That's because we understand what we're doing and what we're providing our clients. I can't say the same for insurance companies that write direct to consumer. I don't know. I don't know what their numbers are. They might be high. Who knows, but. It's a misnomer, I mean, it's a big misnomer that everything is decline, decline, decline, that's not true. Anyway, sorry, Tim.

Tim Fitzpatrick
No, that's OK. I can tell you're passionate about it. It's you know, I mean, look, it's like we said, it's insurance is super important and we don't realize how important it is until we actually need it, because most of us really don't think about it until it's like, oh, my gosh, I've got a claim. Now, what the hell do I do?

Mike Fusco
People back themselves into a corner with that because they take the cheap route.

Tim Fitzpatrick
Yeah. So well. And so part of that, it sounds like part of what you have to overcome when you're working with potential clients is, is just that educational process of look, this isn't just about the price, these are the things that you need in your policies and why. And if people if business owners don't understand that, then they're probably not a good fit for you, am I right?

Mike Fusco
Absolutely. Absolutely. We don't we choose very wisely who we work with. And it's to me, it's a two-way street. It's not just one-sided. And really, I mean, the education. We have a tiresome approach to the way that we educate people. I mean, that's what. Like we constantly are trying to find ways to better educate people. That's what keeps me up at night. That's what we do. And we don't short on that. We don't there's no shortfalls. There's no shortcomings. And like, I'd be shocked if all of our clients haven't heard or seen or read or watched a video from us about cyber insurance over the last three or four years. I'd be shocked. I mean, just as I don't care if you buy the policy or not. I mean, I want you to buy a policy because I want you to be protected. But I just want people to know. I just want people to know what's available to them and what's out there that could harm their business or put them out of business, you know.

Tim Fitzpatrick
So let's talk about contractors specifically. What's the biggest misnomer when it comes to general liability insurance for contractors?

Mike Fusco
OK, so there's a couple of. Again, the whole thing with two general liability policies being the same thing and the lower cost wins, I could name five exclusions off the top of my head that I guarantee you more than 50 percent of contractors don't know what they are, the subsidence exclusion, the third-party action over exclusion. The prior work exclusion, the manifestation clause and the sunset clause, if you don't know what those are in your construction, then right there alone, I answered my own question about misnomers of what's the best insurance policy? What's the best general liability policy for you?

Tim Fitzpatrick
So some policies will exclude those, some will not.

Mike Fusco
Correct.

Tim Fitzpatrick
Got it.

Mike Fusco
So the policies that we write here, for example, will not have any of those exclusions or clauses in them unless it's absolutely necessary, because we cannot find a policy for them without it. And usually that's because of the contractor's claim history. They may have had a bad history of claims or suffered previous losses and we those decisions just have to be on there for some reason, that's very rare that that happens. But again, a misnomer. Also the occurrence form the occurence foreign policy and how it triggers and how it covers a construction business. People just don't understand. And it creates a misnomer and a huge gap of knowledge in the industry or in the marketplace for general liability. I don't want to go too far into it. And for the heck out of you guys.

Tim Fitzpatrick
No, no, no, that's OK. So it's if you had to say that there's, if you were to choose one part of an insurance policy for a business owner to actually to pay the most attention to, would you say that they should be paying the most attention to the exclusions part of the policy? Or can you even can you say.

Mike Fusco
Yes, yes, yes, yes, yes.

Tim Fitzpatrick
OK.

Mike Fusco
Like, people think it's all about the coverage limit and the deductible. I mean, that means nothing. That's the easy part. Anyone can write a policy with the limits and the deductible you want. It's the exclusion. It's what's in the policy is the forms that are listed that make up that policy. The policy is a contract. OK, it's an 80, 100, 150 page contract. And what the contract is, is it's different sections and it's the forms that go into the contract. The exclusions, the limitations, the endorsem*nts and the additions to the contract, that is really what people need to to pay attention to.

Tim Fitzpatrick
Got it. This has been fantastic. Insurance is not one of those things I typically talk about, but it's important, you know, and I don't I know you don't want any business owner to find that out the hard way and not have coverage when they really need it. So I know folks are going to take some value from what we've been talking about today. Do you want to leave us with any last-minute words of wisdom or guidance when it comes to insurance, Mike? What do you want to leave us with? You there?

Mike Fusco
All I would say, man, as I say this whenever, read your insurance policy, understand. But.

Tim Fitzpatrick
Yeah, you're breaking up, just a little bit.

Mike Fusco
Can you hear me, Tim?

Tim Fitzpatrick
Yeah, I can hear you now.

Mike Fusco
OK, how about now?

Tim Fitzpatrick
Yeah.

Mike Fusco
OK, somehow we lost each other. So I would just say read your insurance policies. Yeah, read your policies, spend an hour once a year reading your for a business owner is not that much time dedicated to making sure that your business is protected, you understand what risks are covered by your policies and what aren't.

Tim Fitzpatrick
Awesome, and I know we've got your website here, FOAgency dot com. Anywhere else people want more information, please head on over to FOAgency.com.They can also find you personally on LinkedIn. Is that right, Mike?

Mike Fusco
Please, yeah, LinkedIn, I love LinkedIn.

Tim Fitzpatrick
Cool. So search Mike up, it's Mike Fusco, F-U-S-C-O. Mike, thanks so much for taking the time. I've learned something. I know people that are watching or listening will as well. And thank you so much for tuning in again. I am Tim Fitzpatrick with Rialto Marketing. If you want to gain clarity on where to focus your marketing right now, hop on over to our website. Rialto marketing dot com. That's R-I-A-L-T-O marketing dot com.

Tim Fitzpatrick
Click on the get a free consult button. I guarantee you will walk away having some clarity on where you need to focus right now to get to where you want to be. Thanks so much for tuning in. Until next time. Take care.