Most business owners have insurance to protect buildings, vehicles and other important assets, but few consider insuring their greatest asset: their people.

How would your business manage after the death of, say, your lead salesperson, your sole design engineer or your experienced plant manager? How long would it take to fill that position or get someone else up to speed on their projects? How much damage would the loss of a key person cost you financially?

Key Person coverage is a type of life insurance designed to help your business recover from the loss of a person whose role is critical to your success. It’s particularly beneficial to small business owners.

“Many small businesses are started by one or two people and others are added over time to fill skill gaps,” said Derek Holmes, life insurance product manager at Erie Insurance. “Often, the key employees have different strengths than the owner, so replacing those skills and maintaining productivity after a sudden death puts a lot of pressure on the business owner and the business overall. Key Person life insurance can offer some relief.”

Imagine Your Business Without …

“Key persons” can be anyone in your business whose roles, knowledge or performance have a direct effect on the bottom line of the business.

To understand the magnitude of the loss of one of your key people, try this exercise:

• Make a roster of the leaders of each of your company’s departments – sales, operations, finance, information technology, engineering, etc.
• Document each person’s financial impact on your company’s monthly and annual revenue. For some roles, like sales, the financial contributions are easy to track; for others, think in terms of the financial effects of efficiency, intellectual property and other value they add. Assign dollar figures to these contributions.
• Capture the estimated time it would take to find a replacement for that position and train them to an acceptable level of performance. Is it days, weeks, months or years? Time is money.

By quantifying the value that these leaders bring to your organization, you will gain an objective view of the risks that exist and the extent of Key Person coverage you may want to consider.

Funds from a Key Person claim can help reduce some of the financial burden of a personnel loss. If the business fails as a result of the death, the Key Person funds can be used to cover other employee severance, pay outstanding bills or provide a buffer as the business owner transitions to a new endeavor.

Does Key Person Coverage Come ‘Standard?’

Because Key Person coverage is a form of life insurance, business owners have options.

Term insurance might be ideal to cover a key person who is older and may be closer to retirement. A 10-year term policy may provide adequate coverage as you work to identify a successor.

For younger key people, you may want to consider whole life insurance, which can extend for multiple decades and sometimes at higher benefit levels.

By talking to an Erie Insurance agent, you may discover additional combinations to match your business needs, such as Guaranteed Insurability Option riders, which allows for purchase of additional coverage regardless of changes in their health.

“During your next commercial insurance review with your ERIE agent, talk about business continuation and Key Person coverage,” said Derek. “You’ve worked hard to build your business – it’s important to take the necessary steps to have insurance in place to keep it going.”

Enjoy the feeling of a future that’s well-planned and protected. Speak with a local ERIE agent today to learn more about Key Person coverage and other business continuation options.

From your favorite lunch spot to that funky art gallery, our local small businesses are a beloved part of what make our hometowns feel like home. We rely on them daily – and they need us, too. If you’ve got a little extra to spare these days, here’s how you can help out your local small businesses.

How to Support Local Businesses Anytime of Year

1. Buy local whenever you can. When it comes time to stock up on pantry staples, think about supporting that mom-and-pop shop first. The American Independent Business Alliance (AMIBA) has fascinating data about how locally owned businesses generate larger “local economic multipliers.” Your support might make a bigger impact than you think.
2. Order takeout or delivery from your favorite local restaurants. Extra perk: No dishes.
3. Buy gifts for friends or family. Is it crazy to think about starting your holiday shopping in the spring? You’ll thank yourself later – and, hey, it’s something to pass the time! (Read our list of tips for safe online holiday shopping.)
4. Leave a generous tip. Servers and bartenders rely on tips. If you have it to spare, throw a few extra dollars their way. (And don’t forget to tip the delivery driver!)
5. Buy merch or other gear. We get it – you can only order so much takeout, especially if you’re not getting your usual number of steps in. Think about buying a coffee mug, T-shirt or ball cap to show some local love.
6. Buy some cool art. Websites like Etsy make it easy to search by location and find artists in your community. Some local artists might be doing “draw-alongs” or other livestreams. Add them to the list of folks who would appreciate a digital tip, too. (Keeping the kiddos occupied with art projects of their own? Read our list of 5 stylish ways to display children’s artwork.)
7. Leave a positive review. If you’re short on cash, boosting a local place’s reputation is worth its weight in gold. While you’re at home, type up a couple good comments for your favorite spots to leave on social media or search engines.
8. Check with your local chamber of commerce or small business association. Local groups might be planning events, discounts, or promotions unique to your area. Get connected and see what’s happening in your neighborhood.
9. Pay it forward. If you’re fortunate to have some steady cash flow right now, remember that others might not. Consider treating the next person in line behind you – or making a donation to a charity that helps the less fortunate in your community.
10. Buy gift cards or gift certificates. Stock up now and treat yourself to a night on the town. For places you rely on regularly – for example, your hair salon – buy an extra service or two now if you can, since you know for sure you’ll use it in the months ahead.

October is Cyber Security Awareness Month, so now is the perfect time to examine and refine your business’s cyber security precautions, things like password policies and employee training. It’s also the perfect time to make sure you have a cyber insurance policy.

If you operate a small or midsize business (SMB), this domain of criminal enterprise increasingly has you in its crosshairs.

Why Are SMBs Targeted?

If you’re a small business owner, it may seem odd to imagine criminals targeting you rather than bigger names with bigger revenues. But, with small businesses constituting 44% of American gross domestic product, according to the Small Business Administration, there are logical reasons for the bad guys to pick on the little guys including:

• Low security budget. Smaller companies tend to have smaller security budgets. Often without a dedicated security team or lacking the most up-to-date countermeasures, they can be seen as easier targets than bigger companies with beefier budgets.
• Weak security protocols. Smaller companies are also more likely to have less sophisticated security policies and protocols than their larger counterparts, leaving sensitive information unaddressed and unprotected.
• Gateway to bigger prey. By committing supply chain attacks — exploiting vulnerabilities in small companies that service numerous larger clients — attackers can often get more bang for their cyber-crime buck by gaining illicit access to several victims at once.

Once it’s understood that a smaller market footprint offers no real protection from cyber crime, it’s important to know the ways your business can be targeted. And, given the trends highlighted in the FBI’s March 10, 2023 release of its annual Internet Crime Report, there’s at least one threat everyone should pay attention to: Social Engineering Fraud.

What Is Social Engineering Fraud?

While traditional “hacking” relies on vulnerabilities in software or hardware to gain unauthorized access to networks and computer systems, social engineering fraud relies on people and emotions.

According to the Cybersecurity and Infrastructure Security Agency, socially engineered attacks are those that use “human interaction (social skills) to obtain or compromise information about an organization or its computer systems.”

Such exchanges can take the form of convincing text messages, email and voice interaction capable of duping even cautious employees into disclosing sensitive information — especially when combined with powerful emotions like fear, love and urgency.

Social Engineering: 10 Types of Fraud

As criminals attempt to leverage technology, trust and emotion against you and your team, familiarity with their techniques can help you avoid becoming a victim. Popular techniques for this ever-evolving type of fraud include:

• Baiting. Baiting attacks tempt victims into reusing passwords with offers of quick or easy access to goods and materials or by luring them into inserting USB flash drives to install malware.
• Business Email Compromise (BEC). Among the most costly and difficult-to-detect social engineering attacks, BEC uses executive impersonation to direct subordinates to perform fraudulent funds transfers.
• Diversion Theft. An old tactic adapted for contemporary use, victims of diversion theft attacks are tricked into sending or obtaining sensitive information to/from a spoofed location or person.
• Honeytrap. Often used with romantic overtones, the honeytrap uses a counterfeit online profile to deceive a victim into disclosing information to what she or he believes is a real person.
• Phishing. These attacks use email or a counterfeit website from a seemingly trustworthy source about topics of broad interest to solicit personal information from a large pool of people.
• Pretexting. Impersonating an authoritative or trustworthy source, a pretexting attack will ask for personal information that can be used either to directly gain unauthorized access or further impersonate its initial victim in a subsequent attack on the intended target.
• Quid Pro Quo. Usually posed as a bogus offer for a valuable service (like improved network speed or updated software), a quid pro quo attacker asks for login credentials as a precondition.
• Smishing. Easy and cheap to set up and perform, smishing uses malicious links sent as text messages in order to lure victims to fraudulent websites for malware installation.
• Tailgating. Sometimes referred to as “piggybacking,” the tailgate attack is an in-person exploit that solicits seemingly trivial courtesies (e.g. “I forgot my laptop. Can I borrow yours?”) as a means of gaining access to otherwise restricted areas and resources.
• Whaling. These attacks are specialized phishing attacks that target a powerful stakeholder such as a CEO using highly developed personal information rather than general interests.

A common theme in all of these attacks is the use of emotion — for example, the desire to help another person or the fear of being responsible for a costly mistake — as a means of encouraging the victim to grant the attacker access.

What Can I Do About Social Engineering Fraud?

As always, encourage employees to use best practices like creating a strong password and using a VPN when possible to help protect your business data. And, while it’s always a good idea to make sure your security policies and systems are current, there are some important non-technical steps you can take to promote cyber security:

• Understand the threat environment. Dedicate time throughout the year to stay current with authorities like the FBI or the Cybersecurity & Infrastructure Security Agency Knowing about an attack before it’s used on you can make a big difference.
• Communicate with your team. Make sure your team knows about these threats and how to call them out. A quarterly update of the latest scams and threats will keep everyone informed. Encourage your team to question and verify rather than act on fear or urgency. Most cyber crimes are easily preventable with rationality and diligence.
• Get cyber insurance. Review and update your commercial insurance policy to ensure proper coverage. Business owners are discovering that they are either uninsured or underinsured for cyber crime since many insurance companies’ cyber insurance policies don’t cover social engineering claims.However, ERIE offers a cyber insurance coverage that may cover claims arising out of social engineering. As Commercial Lines Product Development Consultant Kristen Stevanus explains, “ERIE’s Cyber Suite coverage addresses a variety of cyber-crime consequences — including things like data breach, misdirected payments and malware — where a policyholder’s employee unwittingly grants access to the attacker.” Cyber Suite coverage with ERIE includes access to additional resources to help business owners protect themselves against cyber threats. With Cyber Suite, customers gets Cyber Safety, a risk management service that provides employee training, cyber security policy templates, website scanning and more.  

  This kind of cyber crime protection addresses more than just the direct effects of the attack itself. Covered claims also include protection for downstream consequences like forensics, compliance and recovery.

Stay Current, Stay Safe

Cyber security is an evolving concern, and keeping up to date with the latest threats is one way to avoid them. But even when you take precautions, cyber fraud can still occur. That’s why it’s so important to make sure you protect your business by having the right insurance protection.

With Cyber Suite from ERIE¹, you’re covered for losses arising from a host of cybercrimes, including data breaches, computer fraud and attacks, cyber extortion, misdirected payment fraud and telecommunications fraud. Cyber Suite also includes third-party liability coverages for privacy incident liability, network security liability and electronic media liability. And as an added bonus, you’ll have access to a team of cyber professionals experienced in handling these types of claims.

A local agent can help you understand the benefits of this important coverage, which is just one reason why it’s beneficial to have a knowledgeable Erie Insurance agent.

¹Cyber Suite is only available to Customers with an ErieSecure Business® policy (not available in NY). Cyber Suite coverage and associated services reinsured under an arrangement with the Hartford Steam Boiler (Home Office: Hartford, Connecticut). © 2021 The Hartford Steam Boiler Inspection and Insurance Company (“HSB”). All rights reserved. This document is intended for informational purposes only and does not modify or invalidate any of the terms or conditions of the policy and endorsements. For specific terms and conditions, please refer to the coverage form.

The insurance products and rates, if applicable, described in this blog are in effect as of September 2023 and may be changed at any time. 

Insurance products are subject to terms, conditions and exclusions not described in this blog. The policy contains the specific details of the coverages, terms, conditions and exclusions. 

The insurance products and services described in this blog are not offered in all states.  ERIE life insurance and annuity products are not available in New York.  ERIE Medicare supplement products are not available in the District of Columbia or New York.  ERIE long-term care products are not available in the District of Columbia and New York. 

Eligibility will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time.