Kamis, 03 Juli 2014
Selasa, 17 Juni 2014
What Your Agent Isn't Telling You About Your Tech E&O Insurance Policy
Everyone is wary of the small print of the insurance policy. The devil is in the details, right?
Most general liability forms are standard and written by the Insurance Services Office (ISO), so even though they are wordy and in an insurance language the policies have at least been vetted by countless court cases, decisions, and attorneys over the last 50 years.
However, E&O forms are all written by individual companies and each one is different. The policiy forms are constantly changing to keep up with new technologies. The internet only started around 30 years, Facebook started 10 years ago, now we have Snapchat and Tinder and who knows what is next.
My point is that as soon as a company creates a form, it must rewrite the policy form in order to exclude new tech that they didn't foresee when they created the product. These exclusions could be far reaching in their wording and exclude other things that you may assume were covered.
I recently spoke to a technology insurance underwriter for the biggest tech carrier in the US. Besides going over the regularly included Tech E&O coverages such as:
Breach of Contract
According to my source at the company, 92% of claims came from breach of contract. Breach of contract coverage, sometimes called breach of warranty or representation, provides protection for your software or website company if your customer sues you for a number of reasons, but the main categories are:
Many major US carriers exclude breach of warranty all together or have additional exclusions that can strip coverage in the event of a claim.
Not having this coverage can cost you big money. For example, a recent claim involved a software developer who created a software to conduct risk modeling. The customer relied on the software in order to make financial decisions. The company went bankrupt and blamed the software company because the client's decisions were based on the software risk modeling.
The claim expenses alone cost over a $1,000,000 and the payout in the end was over $4,000,000. - This claim scenario came from The Hartford (see disclaimer below)
For a small software company, a lawsuit can bankrupt the company or force it to make hard decisions such as laying off workers that the company wouldn't have had to make if it had the correct coverage.
Have you been involved in a tech related lawsuit related to breach of contract?
I'd love to hear your comments.
My Disclaimer - This post is not a substitute for professional legal advice. This post does not create an insurance agent-client relationship, nor is it a solicitation to offer legal/insurance advice. If you ignore this warning and convey confidential information in a private message or comment, there is no duty to keep that information confidential or forego representation adverse to your interests. Seek the advice of a licensed insurance agent in the appropriate jurisdiction before taking any action that may affect your rights.
Hartford's Disclaimer - The scenarios summarized herein are offered only as examples. Coverage depends on the actual facts of each case and the terms, conditions, and exclusions of each
individual policy. Please refer to the policy to determine all terms, conditions, exclusions and limitations of coverage. Coverage is provided by the property and casualty
companies of The Hartford Financial Services Group Inc. and may not be available in all states. All information and representations herein are as of January 2013.
018993 Rev Printed in U.S.A. © January 2013 The Hartford Financial Services Group Inc., Hartford, CT 06155 All Rights Reserved
This post was originally posted on LinkedIn on 6-16-14 https://www.linkedin.com/today/post/article/20140616214826-23362016-is-your-tech-company-missing-its-most-important-coverage?trk=prof-post
Most general liability forms are standard and written by the Insurance Services Office (ISO), so even though they are wordy and in an insurance language the policies have at least been vetted by countless court cases, decisions, and attorneys over the last 50 years.
However, E&O forms are all written by individual companies and each one is different. The policiy forms are constantly changing to keep up with new technologies. The internet only started around 30 years, Facebook started 10 years ago, now we have Snapchat and Tinder and who knows what is next.
My point is that as soon as a company creates a form, it must rewrite the policy form in order to exclude new tech that they didn't foresee when they created the product. These exclusions could be far reaching in their wording and exclude other things that you may assume were covered.
I recently spoke to a technology insurance underwriter for the biggest tech carrier in the US. Besides going over the regularly included Tech E&O coverages such as:
- Denial of Service (DOS) attacks
- Losses from malicious hackers
- Copywrite or trademark infringement
- Failure to prevent disclosure of private information
- Failure to prevent the introduction of malicious code
Breach of Contract
According to my source at the company, 92% of claims came from breach of contract. Breach of contract coverage, sometimes called breach of warranty or representation, provides protection for your software or website company if your customer sues you for a number of reasons, but the main categories are:
- Negligence
- Failure to perform
Many major US carriers exclude breach of warranty all together or have additional exclusions that can strip coverage in the event of a claim.
- Exclusion for contractual liability - liabilities that you agree to by contract but may or may not have to do with the work you are specifically doing
- Exclusion for breaches of contract that stem from a payment/fee dispute
- Exclusion for any breach of warranty
Not having this coverage can cost you big money. For example, a recent claim involved a software developer who created a software to conduct risk modeling. The customer relied on the software in order to make financial decisions. The company went bankrupt and blamed the software company because the client's decisions were based on the software risk modeling.
The claim expenses alone cost over a $1,000,000 and the payout in the end was over $4,000,000. - This claim scenario came from The Hartford (see disclaimer below)
For a small software company, a lawsuit can bankrupt the company or force it to make hard decisions such as laying off workers that the company wouldn't have had to make if it had the correct coverage.
Have you been involved in a tech related lawsuit related to breach of contract?
I'd love to hear your comments.
My Disclaimer - This post is not a substitute for professional legal advice. This post does not create an insurance agent-client relationship, nor is it a solicitation to offer legal/insurance advice. If you ignore this warning and convey confidential information in a private message or comment, there is no duty to keep that information confidential or forego representation adverse to your interests. Seek the advice of a licensed insurance agent in the appropriate jurisdiction before taking any action that may affect your rights.
Hartford's Disclaimer - The scenarios summarized herein are offered only as examples. Coverage depends on the actual facts of each case and the terms, conditions, and exclusions of each
individual policy. Please refer to the policy to determine all terms, conditions, exclusions and limitations of coverage. Coverage is provided by the property and casualty
companies of The Hartford Financial Services Group Inc. and may not be available in all states. All information and representations herein are as of January 2013.
018993 Rev Printed in U.S.A. © January 2013 The Hartford Financial Services Group Inc., Hartford, CT 06155 All Rights Reserved
This post was originally posted on LinkedIn on 6-16-14 https://www.linkedin.com/today/post/article/20140616214826-23362016-is-your-tech-company-missing-its-most-important-coverage?trk=prof-post
Jumat, 04 April 2014
Kamis, 03 April 2014
Offers in Compromise (IRS settlements)
Offers in Compromise (IRS settlements) are very difficult to get, but the IRS does grant them.
I put together this short questionnaire for taxpayers to use to determine whether or not they qualify for an IRS settlement.
Form 656 is the Offer in Compromise (Offer) form. On its face the form seems simple enough, but if you read the instructions carefully you will soon see that most of the work is in assembling and presenting detailed financial information in support of the Offer.
Far too many taxpayers have tried to file an Offer themselves only to get rejected for failure to comply with the instructions.
The IRS receives hundreds of thousands of Offers in Compromise each year, most of which do not comply with the instructions or are incomplete. A thorough Offer filed in compliance with the instructions stands out.
The proper initial filing of an Offer greatly increases the chances of IRS acceptance.
The Questionnaire
In deciding whether or not to pursue the Offer in Compromise option, you should ask yourself the following questions:
1. Are you in bankruptcy proceedings?
If so, the IRS cannot consider and will not accept your offer.
2. Are you current with all your tax returns?
The IRS will not consider an Offer in Compromise unless you are completely current with all of your tax filing requirements.
3. Are you paying taxes on your current income?
A condition of the Offer is that you are now complying with the tax laws. This means you must have the proper amount of taxes withheld from your paycheck and remitted to the IRS or, if you are self-employed, you must make your quarterly estimated tax payments.
4. Do you own assets having a value (after deducting encumbrances mortgages and secured loans) that is exceeds the amount you owe the IRS (including penalties and interest)?
If the answer is “yes”, you do not qualify for an Offer in Compromise based on doubt as to collectability.
Points to Remember
If after answering the above questions, you believe an Offer in Compromise might be right for you, remember the following:
The IRS Will Ask for Additional Financial Information after the Offer is Filed
You can count on the IRS making several requests for additional information and clarification of the information already provided. You must respond to these requests thoroughly and on a timely basis or the IRS will reject the offer.
You Must Pay a 20% Non-Refundable Down Payment on the Offer at the Time of Filing
Remember, when you first submit your Offer in Compromise (if it is based on doubt as to collectability) you must include 20% of the amount offered and the $150 dollar application fee. If your offer rejected, your money will not be refunded but the 20% will be applied to reduce your liability.
If an Offer is Worth Filing, it’s Worth Filing Properly: Seek the Advice of Experienced Tax Counsel
The Offer in Compromise is a complex document that must be completed carefully and thoroughly.
The IRS is not going to give up something for nothing. You have to prove that it is in the government’s best interest to accept your offer.
Use a CPA who was with the IRS, or a tax lawyer CPA.
I put together this short questionnaire for taxpayers to use to determine whether or not they qualify for an IRS settlement.
Form 656 is the Offer in Compromise (Offer) form. On its face the form seems simple enough, but if you read the instructions carefully you will soon see that most of the work is in assembling and presenting detailed financial information in support of the Offer.
Far too many taxpayers have tried to file an Offer themselves only to get rejected for failure to comply with the instructions.
The IRS receives hundreds of thousands of Offers in Compromise each year, most of which do not comply with the instructions or are incomplete. A thorough Offer filed in compliance with the instructions stands out.
The proper initial filing of an Offer greatly increases the chances of IRS acceptance.
The Questionnaire
In deciding whether or not to pursue the Offer in Compromise option, you should ask yourself the following questions:
1. Are you in bankruptcy proceedings?
If so, the IRS cannot consider and will not accept your offer.
2. Are you current with all your tax returns?
The IRS will not consider an Offer in Compromise unless you are completely current with all of your tax filing requirements.
3. Are you paying taxes on your current income?
A condition of the Offer is that you are now complying with the tax laws. This means you must have the proper amount of taxes withheld from your paycheck and remitted to the IRS or, if you are self-employed, you must make your quarterly estimated tax payments.
4. Do you own assets having a value (after deducting encumbrances mortgages and secured loans) that is exceeds the amount you owe the IRS (including penalties and interest)?
If the answer is “yes”, you do not qualify for an Offer in Compromise based on doubt as to collectability.
Points to Remember
If after answering the above questions, you believe an Offer in Compromise might be right for you, remember the following:
The IRS Will Ask for Additional Financial Information after the Offer is Filed
You can count on the IRS making several requests for additional information and clarification of the information already provided. You must respond to these requests thoroughly and on a timely basis or the IRS will reject the offer.
You Must Pay a 20% Non-Refundable Down Payment on the Offer at the Time of Filing
Remember, when you first submit your Offer in Compromise (if it is based on doubt as to collectability) you must include 20% of the amount offered and the $150 dollar application fee. If your offer rejected, your money will not be refunded but the 20% will be applied to reduce your liability.
If an Offer is Worth Filing, it’s Worth Filing Properly: Seek the Advice of Experienced Tax Counsel
The Offer in Compromise is a complex document that must be completed carefully and thoroughly.
The IRS is not going to give up something for nothing. You have to prove that it is in the government’s best interest to accept your offer.
Use a CPA who was with the IRS, or a tax lawyer CPA.
Rabu, 11 Desember 2013
Is filing a claim worth it if the value isn't that high?
Is filing a
home or renters insurance claim worth it if the value isn't that high? Items worth: ~$1500 Deductible: $1000
A few questions to ask yourself:
So here's the rub. One claim isn't going to kill you and may not affect your premium at all. You could lose any 'claims free discount' that some companies offer.
If you have another big claim such as a water damage claim, you now have a severe claim and have a frequency of claims (2), so you may not qualify for the best rates anymore.
.
Also, keep in mind that many brokers will have to report your claim to the company even if you don't want them to because of the nature of their contractual relationship with the carrier.
- Could this turn into a larger claim down the line?
- Am I willing to pay a higher premium if I make this claim?
- If I'm not sure if I'm going to make a claim for $500, would I be better off at a $1,500 or $2,500 deductible?
So here's the rub. One claim isn't going to kill you and may not affect your premium at all. You could lose any 'claims free discount' that some companies offer.
If you have another big claim such as a water damage claim, you now have a severe claim and have a frequency of claims (2), so you may not qualify for the best rates anymore.
.
Also, keep in mind that many brokers will have to report your claim to the company even if you don't want them to because of the nature of their contractual relationship with the carrier.
Prevention:
Creating a spreadsheet along with when, where, and the cost of items is a great way to keep track of your household inventory. There is also software that will do this for you and lets you scan in receipts and attach pictures (knowyourstuff.org). By going room by room and listing everything, you will have a better case when speaking to adjustors.
Creating a spreadsheet along with when, where, and the cost of items is a great way to keep track of your household inventory. There is also software that will do this for you and lets you scan in receipts and attach pictures (knowyourstuff.org). By going room by room and listing everything, you will have a better case when speaking to adjustors.
Schedule any heirlooms onto the policy with a specific agreed value. Also, you can raise the limit for jewelry by endorsement.
Also, here's 10 ways to discourage break-ins.
This blog was a combination of two questions I answered on Quora. See my answer and others here:
Sabtu, 30 November 2013
Tax Crimes - Is the IRS Coming to Get You? Lance Wallach, expert witness.
People who have money in other countries are a target of the IRS. I get a lot of phone calls with people who have these problems. 419, 412i, hiding money offshore etc. The IRS may be looking for you if you had anything to do with this. Tax crime attacks by the IRS are up almost 50% so you need to be careful. Last year IRS raided the offices of Benistar, Grist Mill Trust, Nova with about 50 agents and took all the files. If you did business with them the IRS will probably come to you.
The numbers are out and they aren’t good for people convicted of tax crimes. While the U.S. Department of Justice Tax Division has always enjoyed a very high conviction rate, many people convicted of tax crimes never went to jail. Not anymore. In 2001, the average tax offender received a sentence of 18 months. Now those sentences average 25 months.
The statistics are a bit misleading because a decade ago, half the people convicted never went to jail. The average sentence may have been 18 months but many folks got house arrest while others received sentences of several years. Now, those convicted are probably going to jail. In other words, not only has the average sentence increased but also so has the likelihood of receiving a prison sentence.
Sentences in federal criminal cases are governed by the United States Sentencing Guidelines. Although no longer binding on judges, they are the court’s starting point and most judges’ stay within guidelines.
The sentencing guidelines attempt to account for a wide range of factors including one’s criminal history, whether the defendant used “sophisticated means” to carry out the crime and whether the defendant took early acceptance of responsibility for his or her actions. For tax cases, the guidelines also look at “relevant conduct” tax loss. The higher the tax loss, the longer the recommended sentence.
The current guidelines impose suggest stiff penalties for tax crimes and many judges now believe that house arrest is not a strong enough deterrent to insure voluntary compliance.
What does this mean for people with tax problems? Plenty.
First, if you know you have a problem, don’t bury your hand in the sand. The IRS operates on a “first contact” basis. That means if you come clean before you are caught, criminal penalties can generally be avoided.
Second, if you are indicted and convicted, it pays to have a lawyer with extensive federal criminal tax appearance. Adjustments to the sentencing guideline calculations often can mean the difference between prison and freedom. Although there are many good lawyers that can negotiate a fair plea agreement, the final sentence is up to the court. Mastery of the federal sentencing guidelines and the thousands of court cases interpreting those guidelines separates great criminal tax lawyers from the rest of the pack.
As an expert witness Lance Wallach's side has never lost a case. People need to be careful of 419 Welfare Benefit Plans, 412i plans, Section 79 plans and Captive Insurance Plans. Most of these plans are sold by insurance agents. If you are in an abusive, listed or similar transaction plan you need to file under IRS 6707a. The participant files form 8886, and the salesmen or accountant who signs the tax returns files form 8918 if they got paid over $10,000. They are called Material Advisors and face a minimum $100,000 fine. Some plans are offshore which could involve FBAR or OVDI filings. If you have money overseas you probably need to file for IRS tax amnesty. If you want to reduce the tax we suggest that you first file and then opt out. For more information Google Lance Wallach.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
The numbers are out and they aren’t good for people convicted of tax crimes. While the U.S. Department of Justice Tax Division has always enjoyed a very high conviction rate, many people convicted of tax crimes never went to jail. Not anymore. In 2001, the average tax offender received a sentence of 18 months. Now those sentences average 25 months.
The statistics are a bit misleading because a decade ago, half the people convicted never went to jail. The average sentence may have been 18 months but many folks got house arrest while others received sentences of several years. Now, those convicted are probably going to jail. In other words, not only has the average sentence increased but also so has the likelihood of receiving a prison sentence.
Sentences in federal criminal cases are governed by the United States Sentencing Guidelines. Although no longer binding on judges, they are the court’s starting point and most judges’ stay within guidelines.
The sentencing guidelines attempt to account for a wide range of factors including one’s criminal history, whether the defendant used “sophisticated means” to carry out the crime and whether the defendant took early acceptance of responsibility for his or her actions. For tax cases, the guidelines also look at “relevant conduct” tax loss. The higher the tax loss, the longer the recommended sentence.
The current guidelines impose suggest stiff penalties for tax crimes and many judges now believe that house arrest is not a strong enough deterrent to insure voluntary compliance.
What does this mean for people with tax problems? Plenty.
First, if you know you have a problem, don’t bury your hand in the sand. The IRS operates on a “first contact” basis. That means if you come clean before you are caught, criminal penalties can generally be avoided.
Second, if you are indicted and convicted, it pays to have a lawyer with extensive federal criminal tax appearance. Adjustments to the sentencing guideline calculations often can mean the difference between prison and freedom. Although there are many good lawyers that can negotiate a fair plea agreement, the final sentence is up to the court. Mastery of the federal sentencing guidelines and the thousands of court cases interpreting those guidelines separates great criminal tax lawyers from the rest of the pack.
As an expert witness Lance Wallach's side has never lost a case. People need to be careful of 419 Welfare Benefit Plans, 412i plans, Section 79 plans and Captive Insurance Plans. Most of these plans are sold by insurance agents. If you are in an abusive, listed or similar transaction plan you need to file under IRS 6707a. The participant files form 8886, and the salesmen or accountant who signs the tax returns files form 8918 if they got paid over $10,000. They are called Material Advisors and face a minimum $100,000 fine. Some plans are offshore which could involve FBAR or OVDI filings. If you have money overseas you probably need to file for IRS tax amnesty. If you want to reduce the tax we suggest that you first file and then opt out. For more information Google Lance Wallach.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
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