As construction booms in the Southeast US, and through much of the country, Chattanooga insurance brokerage finds that cyber coverage is trending up, but still a tough sell.
Trae Vaughan, a partner and vice president of commercial lines at Brock Insurance in Chattanooga, TN and Rossville, GA, said he is seeing a number of insurance trends in the construction space.
Pollution coverage is becoming mandatory for most contractors, he said, with professional liability not far behind. Cyber, he said, is one of those things people want to talk about, but not necessarily buy.
“Environmental or pollution coverage is being discussed more and more and is being required on more and more projects,” Vaughan said. “It is something we have to present to every client, not that they need it necessarily in every situation. But from a contract standpoint, it seems like everyone has to provide that,” he said. “We’ve had a lot of success selling pollution coverage. It is easy to put the risk into terms that everyone understands.”
He said a lot of contractors have a hard time getting their heads around their cyber exposure, though.
“On cyber it is rare that we get a contractor to buy that, but we are presenting it to them just to start the conversation. The example I use is Target. Their big data breach that everyone talks about started with their HVAC service company, so we use that as an example. I don’t know if it hits home. Most still feel they don’t have much exposure, but some say “well for the money it is an outside chance we’ll need it, but it is relatively inexpensive so I will go ahead a buy it and have some coverage.’”
He said a lot of contractors tell him they outsource payroll and so don’t think they have any cyber exposure in that area. “But if you really look at their agreements, it is still their data and they aren’t covered if it is breached even while in the hands of a third party.”
Smaller specialty contractors who accept credit cards, such as electrical and plumbing companies often understand the need for cyber insurance, but Vaughan said most of their clients are of a size where credit card payments are rare.
