Risk Notes

Have an "Umbrella" to protect you from the liability rain!

2011-03-04T14:19:00.000-05:00

What amount of money will you be required to pay out when you are found negligent? There is no easy answer to this question, and whether for your business or your personal needs, you should have Umbrella or Excess liability coverage in addition to your standard liability policies to prepare for this possibility.

We all know that the today we live in is very litigious. Everyday we can read, hear or see a story about how someone recently won a verdict in which the defendant would be required to pay for their mistake. Often that is what it was too, a horrible, tragic mistake. Some unintentional defect in manufacture, a tool left where it shouldn't be, eye averted checking that last text while driving. We are all guilty of some type of brief lapse in judgment or sheer bad luck. Very often we catch the mistake before something bad happens, but unfortunately the odds catch up with us at the worst possible time.

When that storm happens, that is when you want to know you have an Umbrella or Excess liability insurance policy. These are in fact 2 kinds of coverage, with some of the same features, but also with some important differences. Both the Umbrellaand Excess liability polices provide an additional layer of liability protection in excess of you primary underlying insurance polices, such as your automobile, homeowners, general liability, etc. However, an Excess policy is only that, excess over the policies named in the schedule. It does not enhance or broaden any coverage, just follows as more liability coverage over the named policies.

An Umbrella policy on the other hand, does all the same things as the Excess policy AND can drop down to be a Primary coverage under certain circumstances where there is no underlying liability coverage. For example for you liability assumed as the member of a Not for profit board, or for personal injury(libel, slander, false arrest, etc.) liability.

The distinction between the 2 types is very important and applies whether you are buying for your business or personal insurance needs. It is very important when comparing Excess or Umbrella policies. Though some standardization amongst carriers has begun, there is still significant variance between insurance carriers in their unique policy language. The most important area to look at in the policy language is the Definitions and the Exclusions. There is where you will find the meat of the coverage.

Most insurance companies today only offer the Excess form of the extra coverage. They may call it and umbrella policy, but in fact it is only an extra layer of coverage intend to "follow form" over the polices it names.

Regardless of whether or not you can get an Excess or Umbrella policy, it is important that you contact your independent insurance agent to see about securing this extra protection for you or your business. After all, if you are driving around with your assets in the front seat of your car, wouldn't you want to make sure they survive the accident?

Six Hours can give you 3 Years of Savings!

2011-01-07T10:13:00.007-05:00

In 2005, New York State had one of the highest average car insurance rates in the country (National Association of Insurance Commissioners). Factors like area accident rates and location can affect even the perfect driver’s premium.

The New York State Department of Motor Vehicles (DMV) allows motorists to take a defensive driving course for not only traffic point reduction, but also a 10% car insurance discount. This rate decrease is mandatory and will last you 3 years. All you have to do is take the defensive driving course and present the certificate of completion to your insurance company.

The NY DMV, as part of its part of the New York Department of Motor Vehicle’s Internet Point and Insurance Reduction Program or (IPIRP), recently authorized the ability to complete the NY Defensive Driving course on line through authorized vendors. This course is designed to teach motorist’s driving strategies that help minimize risks associated with hazards on the road. In addition, this defensive driving courses includes applicable New York state traffic laws that help drivers use safer driving techniques to avoid and prevent accidents.

Some frequently asked questions related to the course are as follows:

How long is the New York Defensive Driving Course?
This defensive driving course is a total of 6 hours. The online course, unlike the classroom course, allows you to log on and off and complete the course at your own pace.
Do I have to take a test at the end?
No. This course does not require you to pass a final exam to get your certificate.
How do I know I can qualify for point reduction?
You must have received the violation and points eighteen months before course completion. Points for earlier violations or future violations will not be affected.
How do I get my points reduced by taking this defensive driving course?
Once you complete the course, we will notify the New York DMV. At that point, it will be entered on your driving record and it will automatically reduce your active point total by up to four points. Important: "Point reduction" means the DMV will not count up to four points on your driving record toward license revocation or suspension.
How do I verify my course completion has been noted on my driving record? We will be offering a service for you to pull your driving record at a nominal fee. However, if you need to verify the defensive driving course completion is on your record, you may request a copy of your driving record from the DMV. Click this link for more information and access to the New York DMV form: FORM
How do I qualify for insurance premium reduction by taking the defensive driving course?
You will receive a certificate of completion when you graduate via the delivery method you choose. If you present this certificate of completion to your insurance company or agent within 90 days after course completion, your liability and collision premium reduction will begin immediately. This reduction will actually be retroactive to the date you completed the course.
If you present your certificate more than 90 days after course completion, your insurer could issue the premium discount effective from the date presented.
How often can I take this defensive driving course to reduce my insurance premium?
You may take the course once every 36 months to keep your insurance reduction benefits.
Can more than one person on the same insurance policy receive a discount for taking the course?
The discount can be applied to only one driver for each covered vehicle. The insurance reduction applies to all motor vehicles principally operated by the motorist who completes the course.

The Woodoffice has recently partnered with the American Safety Council to provide an approved Online NY Defensive Driving Course. For a the low cost of just $25.00 per person you can get tremendous savings on your automobile insurance for 3 years. To access the course follow this link to the Client Tools section our our website. There you will find a banner link to the registration page for the course.

This course can not only save you money on your insurance, but is also a sound risk management strategy to help you be a better driver which can prevent an accident from occuring in the 1st place.

Happy and Safe Driving!

Their bite is worse then their bark

2010-05-17T13:52:00.003-04:00

As this week, May 16-22, is National Dog Bite prevention week I thought this was a good topic for discussion and wanted to share a personal experience I had with this very subject matter.

While on an adventure south during a spring break trip, I stopped to stay with my brother in North Carolina. At the time, my brother had a room mate who had a dog, a Rottweiler. Now this dog was actually quite friendly, but did have some aggressive tendencies. While there, I came down stairs, encountered the dog and leaned over to pet him on top of the head. Unbeknownst to me, just few minutes before another friend had been playing a game with the dog where by he would lean over, scuffle with the dog then retreat; the dog in turn would playfully nip at him as he retreated. As you can imagine, as I leaned down the dog assumed this was a continuation of the game. Needless to say, the result was rather unpleasant and involved a trip to the hospital. I won’t share the details here, but let’s just say you would be surprised how little force the dog had to use to cause significant damage to me.

As an independent insurance agent, with over 20 years of experience I have seen a fair share of dog bite claims against my clients such as I just described. Dog bites continue to be a significant problem in the US and according to the Centers for Disease Control and Prevention (CDC) over 4.5 Million dog bite incidents occur in the US every year. Of those over 900,000 require medical care and well over half of them are children.

The Insurance Information Institute (III) shows for the years 2003 through 2008 there was an average of 15,310 claims per year and with an average total value of $337.83 million dollars in damages; that works out to a little over $22,000 per claim. The good news is that these were covered claims by the insurance carriers. The bad news is that the industry as a whole is engaging in breed profiling and closing the door on coverage for many know aggressive breeds of dogs. Their reaction to certain dogs can range from exclusion of coverage for the dog to outright refusal to write any liability coverage at all. Some of the breeds on various insurance carrier “hit lists” include:

Akita
Alaskan Malamute
American Pit Bull Terrier
Chow Chow
Doberman Pincher
German Shepard
Rottweiler
Siberian Husky
Wolf Hybrids
Any dog with a bite history

There is now a whole industry of specialty insurance carriers selling dog liability only policies, to help people that can not find insurance with the standard markets. However, a buyer of this type of coverage should be wary, as these policies tend to be written on proprietary forms that have terms and conditions limiting coverage. Also they are not inexpensive, though when faced with a complete lack of coverage at all, they can be worth the cost.

There are also many steps you can take to limit your risk of claim as a dog owner, regardless of the breed of dog you own. The III recommends the following:

Consult with a professional (e.g., veterinarian, animal behaviorist, or responsible breeder) to learn about suitable breeds of dogs for your household and neighborhood.
Spend time with a dog before buying or adopting it. Use caution when bringing a dog into a home of with an infant or toddler. Dogs with histories of aggression are inappropriate in households with children.
Be sensitive to cues that a child is fearful of or apprehensive about a dog and, if so, delay acquiring a dog. Never leave infants or young children alone with any dog.
Have your dog spayed or neutered. Studies show that dogs are three times more likely to bite if they are NOT neutered.
Socialize your dog so it knows how to act with other people and animals. Discourage children from disturbing a dog that is eating or sleeping.
Play non-aggressive games with your dog, such as “go fetch.” Playing aggressive games like “tug-of-war” can encourage inappropriate behavior.
Avoid exposing your dog to new situations in which you are unsure of its response.
Never approach a strange dog and always avoid eye contact with a dog that appears threatening.
Immediately seek professional advice from veterinarians, animal behaviorists, or responsible breeders if the dog develops aggressive or undesirable behaviors

The best tip of all is to never underestimate your own dog’s propensity to bite. After all, the bite on you wallet could be the worse bite of all.

Its a bad Environment to do business in.

2010-04-30T09:47:00.013-04:00

With the massive oil slick containing hundreds of thousands of gallons of oil bearing down on the gulf coast I thought it was a good time to talk about Environmental Liability coverage. Now, I know that most small businesses are not faced with the possibility a of multi-billion dollar environmental disaster like this one; however, the level of the disaster is in the eye of the beholder and how relative it is to them.

Most businesses fail to recognize their own potential for some type of environmental mishap due to their operations. Environmental exposures are perceived to be exclusive to specific types of business, such as contractors, oil companies or automobile service operations. Any business that has large equipment/machinery (i.e. processing machines, refrigeration units, vehicles), storage tanks, chemicals etc has a potential for a pollution loss that should not be underestimated. Hotels, schools, manufacturers, hospitals, retail stores and restaurants all have the potential for an environmental mishap that could not only involve expensive clean up costs, but also expenses to restore the reputation of the business.

All businesses need to evaluate thier potential risk for some type of environmental liability loss and what they should do to manage it. Some of the critical questions to ask are:

What are its exposures?
What will the response be should an event occur?
How will we pay for the clean up & and any claims that may result?

The cost of an event can not be understated. Management should understand when it comes to paying for any losses that their Commercial General Liability(CGL) coverage, in almost all cases, specifically excludes Environmental related claims and can not be relied upon as a financing source. The CGL policy was never intended, nor priced, to provide coverage for these types of losses. Fortunately there is insurance coverage available for these risks.

Known as Environmental Impairment Liability Coverage, it is designed specifically by insurance companies to handle the unique exposures and losses related to environmental issues. Key areas of coverage include:

Remediation Expense includes actual clean up costs, compensatory costs for cleanup costs incurred by others and related legal and defense expense.
Coverage for losses arising out of contamination due to the insured’s waste or products at Non-Owned Locations
Coverage available for loss arising out of contamination due to transport of the insured’s waste or product by the insured or a third party carrier
Underground Storage Tank coverage available
Coverage available for loss arising out of contamination due to the insured’s contracting operations
Coverage available for Business Interruption and Extra Expense due to contamination at an insured location
Image Restoration Coverage to assist the insured in restoring their reputation in the event of a claim or remediation expenses
Disciplinary proceeding defense cost
Coverage for the ‘midnight dumping’ at project sites or owned and leased locations – Contaminants illegally disposed of or abandoned by a third party
Coverage for the insured’s Emergency Expenses, to protect third parties or the environment from an imminent endangerment due to contamination
Coverage due to mold, legionella and low level radioactive matter or waste
Property Damage includes coverage for Natural Resource Damages
Bodily Injury includes medical and environmental monitoring
Remediation Expense includes both clean-up to the extent required by law and in absence of such laws to the extent recommended by an Environmental Professional

This coverage, though not inexpensive, is readily available from many insurance carriers for a wide variety of operations and situations. A true risk manager or responsible business owner will recognize having the insurance is does not preclude responsibility. Each business needs to set up a proactive strategy to deal with an event in a fast, yet effective manner should the need arise. The insurance should not be thought of as the exclusive remedy, but merely as the financing tool that allows them to be aggressive and timely in their response. A business should want their neighbors, customers, regulators and the public in general to know they care about what happens, and are acting quickly to mitigate the effects of the loss, thus limiting the harm.

Talk to an independent insurance agent who understands this type of coverage and can help provide you with the tools to evaluate your potential exposure. Stay ahead of any potential problems so they do not blind side your business. After all, the real potential damage from these types of losses is to the business environment you operate in

Your skill is what can get you into trouble!

2010-04-05T09:33:00.015-04:00

During an economic downturn, especially a protracted one such as we are in now, many individuals turn to working from home as the new means of employment. In fact many companies will "down size" only to hire back an employee as a contractor to do the same work they were doing as an employee. This new "self-employed" status for individuals can create a range of new exposures to loss that may be missed without careful consideration.

The new exposures now faced with this "home-based" business include:

Property - some coverage can be found on the Homeowners (HO)policy but the amount can vary significantly from carrier to carrier. Also specialized coverage for computers, software, loss of income, valuable papers & records, etc; are virtually non-existent on a traditional HO policy.

General Liability - coverage for Bodily Injury (BI) & Property Damage (PD) related to the business can be endorsed on a LIMITED basis on a traditional HO policy. However it is usually only for on-premises (the home only) and fairly restricted in the types of business operations it will allow. No coverage for Advertising injury (libel, slander, copyright infringement, etc) is afforded either.

Professional Liability - This is by far the most likely area of exposure for a self-employed professional and for which there is NO coverage available on the HO policy .

It is this Professional Liability exposure I would like to address in greater detail. As a "Professional" or "Expert" you are typically being hired for your knowledge or skill in a given area. The subsequent advice or services you provide based on that expertise is what the client will in turn make decisions on. These decisions will have financial ramifications on the client's own business, and the results of those ramifications are your biggest exposure, especially if they are negative to the client's bottom line.

The damages your professional expertise may cause to a client is what you need to protect yourself from. More importantly it is the mere accusation of harm that can cost you tens of thousands of dollars in defending yourself from. You may be entirely blameless from having caused any financial harm to the client, but you still have a long and expensive road to go down in order to exonerate yourself and your reputation.

A Professional Liability (PL) policy, sometimes referred to as and Errors & Omissions policy, is your best protection from claims of negligence on behalf of clients who feel you provided faulty or unsound advice or services. The policy is fairly customized around the type of services you are providing. Often times it can be tailored to very specific types of work and are usually written with Insurance Companies well versed in your area of expertise. You want to be sure you choose coverage with knowledgeable insurers so that you can avail yourself of their legal and loss control experts should the need arise.

The PL policy is not a license to be reckless. You want to have good risk management strategies to help mitigate your exposure to claims from a disgruntled client. A critical component of risk management for the professional is a solid contract that clearly spells out the terms, conditions and expectations of the services to be provided. A contract is not a firewall against litigation, but may be an important piece of your defense. You should work with a good attorney who is knowledgeable about your business and where potential litigation arises from. Your contract will be the 1st line of defense should an issue arise.

When comparing coverage between insurance companies you should proceed carefully. There is no standardization between coverage forms of the various insurance companies that provide PL coverage. It is important to work with an Independent Insurance Agent to help you navigate through the various offerings to determine which policy is providing you with the best coverage for your premium dollars. Some things to look out for include:

Defense Costs- Are they included in the coverage limit or outside the limit of liability?

Deductible - Is it applicable to defense cost, damages or both?

Definition of covered services - Does it clearly define what you are doing as covered?

Territory of coverage - is it United States and territories, or is it world wide.

Coverage basis - Is coverage on a "Claims-Made" or "Occurrence" basis.

These are just some of the aspects of the coverage you should be cognizant of when procuring a PL policy for coverage Make sure you avail yourself of the knowledge and skill of your independent agent when looking in to this vital coverage for your business. After all you are hired for your expertise and skill, you should trust in theirs.

Spring brings flowers, birds, greenery and oh yeah Flood!

2010-03-19T22:15:00.010-04:00

Last Friday evening was a beautiful spring (almost) evening here in Central New York, and flooding was the furthest thing from my mind with the sunny blue skies over head. That was until I ventured up to the new shed I built last year to rescue one of my daughter's bikes from it's winter slumber. You see the ground was literally seeping water around my shoes with each step and that reminded me that its Flood Season.

It is that time of year when the winter melt combined with the spring rains often creates the perfect recipe for flooding and tragically this peril is not covered by any personal property insurance policies (e.g. Homeowner Insurance) nor by 99% of commercial property policies in effect today. Sadly, despite millions of dollars in awareness advertising by the National Flood Insurance Program(NFIP) and written notice in every property policy letting the policyholders know, many insureds do not understand this gap in coverage exists until it is too late.

Let me be perfectly clear now so there is no misunderstanding:

YOU ARE NOT COVERED FOR FLOOD!

There I said it, now you know. Of course you should understand what is meant when someone calls something a flood. The NFIP defines Flood as follows:

A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder's property) from: --Overflow of inland or tidal waters; or--Unusual and rapid accumulation or runoff of surface waters from any source; or--Mudflow;or

Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

The sad fact is it is not so clearly defined in most property policies out there. In fact the ISO Homeowners policy does not define it at all, but they do exclude it. You may wonder why there is no coverage for the exposure in your traditional property insurance policies, and it lies in the root of the catastrophic nature of this type of loss. For the most part floods are widespread and cause large amounts of damage. Do to this massive exposure it was deemed un-insurable by the traditional insurance companies. In response the federal government created the NFIP, a department of the Federal Emergency Management Agency (FEMA) in an effort to reduce the financial losses of consumers and public entities from the devastating effects of flooding. It was designed to provide a federally backed insurance market to handle the exposure of Flood as defined by NFIP.

The good news is you can buy flood insurance through your local Independent Insurance Agent via the NFIP or one of its approved Write Your Own (WYO) insurance carriers. This access is for both Consumers and Businesses, each in there own unique programs.

There are 2 critical things to remember when making the decision to purchase Flood Insurance. The first is that the only people that can purchase flood coverage through NFIP programs and have it be effective immediately is for a mortgage closing which requires the coverage. Otherwise you have to wait for 30 days from the date of application for your policy to become active. This stipulation was put in to prevent people from only securing coverage when there was an eminent threat of a flood, thus forcing participants to be proactive. The 2nd thing to remember is that contents of the structure are not automatically included in the base flood policy. So you will want to add that coverage in when you purchase the policy.

There are many other considerations when purchasing flood insurance. It is important you talk to an Independent Insurance Agent to discuss the coverages you need and the unique characteristics of your exposures. You will also find more information at the following website - http://www.floodsmart.gov/.

Its Flood Season....are you ready?

Protect yourself through "No-Fault" of your own.

2010-03-12T10:04:00.004-05:00

Many states including New York are known as "No-Fault" states when it comes to coverage under your Personal Auto (PA) policy. This "No-Fault" status was brought on in the 1970's to help ensure that persons injured in auto accidents would have prompt and adequate resources to cover their injuries and subsequent income loss. In New York it came into effect on Feb. 1, 1974 as a result of the New York Comprehensive Motor Vehicle Insurance Reparations Act.

The intent of the law here in NY was to relieve the injured parties of the burden of the time consuming and often fruitless litigation needed to secure the money to pay for their injuries. At the time this law went into effect only 14% of liability premiums were reimbursing victims for their economic loss, and then only after 16 months from the time of the accident.

The law provides for a bundle of benefits to vehicle occupants that are injured as a result of a covered accident. These benefits are known as Personal Injury Protection (PIP) and they came from the promise of Basic Economic Loss stipulated in the legislation. In exchange for these guaranteed and promptly paid benefits, the covered individual gives up some legal rights to sue for what is known as non-economic damages, such as pain and suffering and offset by possible collection under other social programs (i.e. workers' compensation and social security). These benefit are payable regardless of who is at fault, hence the term "No-Fault". There is still the ability to litigate against the negligent party if the injury is one on the "verbal threshold". This is a list of nine injury types, and if the injury meets this definition they injured party may pursue litigation. The threshold list is:

Death;

Dismemberment;

Significant disfigurement;

A fracture;

Loss of a fetus;

Permanent loss of use of a body organ, member, function or system;

Permanent consequential limitation of us of a body organ or member;

Significant limitation of use of a body function or system;

A medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person's usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment.

The PIP benefits, the product of the promise of Basic Economic Loss, are a up to $50,000 per person for the following in combination:

All eligible medical expenses resulting from the accident, without limit for time;

Income lost up to $2,000 per month and no more than 3 years;

Other reasonable and necessary expenses (i.e. transportation, cleaning) up to $25 per day and only for 1 year;

and

Death Benefits of $2,000 payable to the estate of the covered person.

It must be remembered that these benefits are guaranteed, however they may also come from other sources such as workers' compensation, Social Security or state disability benefits. They can contribute with your auto insurance to meet your Basic Economic Loss.

Under the law you also have the option to purchase and additional $25,000 of Optional Basic Economic Loss (OBEL) which can be used to cover the same benefits as the base $50,000. However, you or your legal representative are allowed to determine what it is spent on as opposed to the party who 1st demands it (e.g. your physician).

A NY automobile insurance policy holder also has access to purchase what is called Additional Personal Injury Protection. This as an additional amount of PIP of up to $100,000 which not only covers the 3 Basic Economic Loss benefits defined in the law; but also broadens the definition of an eligible injured person to include a NON-Residents of New York if they are a passenger in your vehicle while you are outside of NY state.

No Fault coverage is a complex yet critical component of your automobile insurance policy. It is very important you discuss this coverage thoroughly with you Independent Insurance Agent so that you fully understand how it impacts you and your family; and to determine the proper limits and structure of coverage.

At my agency we strongly encourage all of our clients to carry the maximum PIP benefits available to them. After all, the purpose of the benefits are to be sure you have the means necessary to get the medical care you need if you are injured in an automobile accident and $50,000 in today's health care climate does not go very far. As the additional cost to increase from the basic amount is nominal why not be sure you have the protection you and your family deserve.

Why expose yourself and your family to a serious financial situation from an automobile accident through "No-Fault" of your own?

How can I save money on my Car Insurance?

2010-03-05T09:22:00.008-05:00

Affordable personal auto insurance in today's economy can be a moving target. Here are 5 areas you can control to help you maintain the costs of your auto insurance without sacrificing critical coverage protection for you and your loved ones.

Driving Record - The most obvious tip, but it can not be overstated. Your driving history is the biggest factor that insurance companies will look at when evaluating you for coverage. So drive defensively and consider taking a Defensive Drive Course. The course is a great refresher for good driving habits and rules of the rode. The cost of the course will often be recouped in the savings on your insurance in the 1st year and it is good for 3 years.
Manage your Credit - The auto insurance companies have established a link between an individuals credit history and their likelihood of having an accident. Using what is referred to as your insurance credit score, they have modeling programs that can predict for them if your likely of having an accident. Managing your credit will help you to keep your rates low.
Vehicle Type - You car is a significant factor in the cost of your insurance. Cost, age, body type, engine performance, weight, etc.; all factor in to what your premiums will be. Generally, the newer and more expensive a vehicle, the higher the cost. When you are considering a new vehicle, contact your independent insurance agent and have them give you a quote for your insurance if you were to buy the vehicle. The cost of your insurance should be part of your purchase decision.
Premium Payment - Pay on time, another obvious statement that can't be said enough. Insurance companies are less and less tolerant of poor pay customers as they add significant costs to the servicing of the policy. A poor pay history can make you ineligible for preferred pricing. Also, pay in less installments; the less frequently you make payments (i.e. quarterly vs. monthly) the less installment fees you pay. These fees can range from as little as $1.00 to as high as $15.00! Several companies are now even offering a Paid in Full discount!
Target Coverage - Make sure you are paying for the coverage you need. It often makes sense on your collision coverage to assume risk (i.e. higher deductibles) of loss to your vehicle or remove it all together if the vehicle is older; and use those savings to maintain higher limits in other areas (i.e. liability, no-fault, uninsured motorist, etc). You may want to consider removing the comprehensive coverage as well, though if wish to keep glass coverage you will need to keep this coverage in place.
Fraud - About 10% of your insurance premium is the result of fraud. Insurance companies, regulators and law enforcement personnel are in a constant battle combating fraud. You can help; ask your state legislators to make the fight against insurance fraud one of their priorities. Report insurance fraud to your insurance agent, insurance company or local police when you see or suspect it. Speak out against insurance fraud to your friends, family, and business associates. After all, it's not just the big insurance companies that pay. All those costs eventually filter down to you.

Finally, a significantly important way you can help save money on your auto insurance is by working with an Independent Insurance Agent. An independent agent will advise you in the areas named above and as well as the right coverage for you. Then, with their freedom to go to multiple carriers, they can price out your customized coverage to make sure you are maximizing the discounts and credits you deserve.

"The art of living easily as to money is to pitch your scale of living one degree below your means."

Sir Henry Taylor

"Lights, Camera, Claim Settled!"

2010-02-26T13:58:00.009-05:00

The aftermath of a fire or natural disaster is not the time you want to be trying to remember all the treasures and possessions you have accumulated over a lifetime. Now is the time you should be preparing for the possibility of a catastrophic property loss and a Home Inventory is the best place to start.

I know what your going to say, the thought of going through your whole house, cataloging each and every item does seem daunting, but there is perhaps an easier way - Video. Today's video cameras are so much more compact and versatile than even the models from just a few years ago. The ability to store the data digitally on discs or portable hard drives give you the flexibility to make multiple copies for safe keeping at a relatively small cost.

When doing the video inventory of your home make sure you do the following:

Go through every room in your home. Do no forget the garage, attic and basement.
As you pass items of significant value or personal significance, provide a verbal description including there value and date purchase if possible.
Make sure you show the labels for appliance and electronics, and be sure you can read the serial and model numbers on the video.
Be sure to included carpeting, artwork, toys, furniture, jewelry, guns, etc.
Open closets, cabinets and drawers so as to get coverage of the contents inside.
Go back through the video and make a written inventory to go with the video.
Store the video and inventory in a safe deposit box and send a copy to someone you trust.
REMEMBER TO UPDATE THE VIDEO AT LEAST ANNUALLY. Just add the new stuff, don't shoot the whole thing all over again.

In addition to the video you should not forget important documents. These you should photo copy; keeping the copy in your home and the originals in the same safe deposit box as the video. Some documents to consider would be:

Personal - Birth certificates, will, passports, medical files, drivers license.
Financial - Bank account info, stocks, financial instruments, life insurance policies, credit cards, tax returns
Home - Title, deed, abstract, insurance policy, exterior photos, loan paperwork.

Any documents you have that will be difficult if not impossible to replace should be copied and stored securely off premises.

A little time spent now can save you a whole lot of anguish later and get you that much faster to a claim resolution. Now when the insurance claims adjuster says we will need an inventory, you can hand them the video with written summary. So what are you waiting for....LIGHTS! CAMERA! ACTION!

"Employee or Independent Contractor; Do I need Workers' Compensation Insurance?"

2010-02-19T15:17:00.005-05:00

A very common question we get here in our agency is "Do I need Workers' Compensation Insurance for this person I occasionally hire to do work for me?" More often then not our answer is yes, because of the guidelines set by New York State.

There are 5 key factors to determining if an Employer-Employee relationship exists and thus Workers' Compensation is warranted.

1) CONTROL How much are you directing the actions of the individual in question? If you are telling the person how to do the work you have contracted them to do and are expecting them to be there doing it at specific times then likely they will be considered an employee. If however, they are operating completely on there own and on there own schedule, simply meeting the agreed to deadline, then they are more likely an independent contractor.

2) MATERIALS Are you providing all the tools and equipment they are using for the job? If yes, that is indicative on an Employer-Employee relationship.

3) PAYMENT Are you paying on a typical payroll schedule, such as daily or weekly (even monthly)? Most independent contractors are usually paid when the whole task is completed, or with a deposit and final payment. If you are paying on a schedule it may be considered an Employer-Employee relationship.

4) SIMILAR WORK Is the work or task similar to the work performed by the hiring business? If yes, this a marker of an Employer-Employee relationship. A person hired to frame a room by a carpenter is more likely to be considered an employee then say an lawyer hiring a electrician to put in a light fixture.

5) TERMINATION Do you retain full rights to hire and fire the person performing the work? A true independent contractor retains some control over how and when the work is performed.

These main factors will be taken in to consideration after an accident by workers' compensation law judge. Based on their findings a determination will be.

More often then not, the judge tends to rule that Workers' Compensation coverage was needed because an Employer-Employee relationship existed; hence our advice is typically that insurance be put in place. After all, it is far cheaper in the long run to purchase the coverage and get credit back from an audit, then to not have it and go through the legal and regulatory costs!

For more information about NYS guideline you can refer to the following link: http://www.wcb.state.ny.us/content/main/Employers/Coverage_wc/emp_empDefinition.jsp

Your Cell Phone is for more than calling in the claim!

2010-02-11T14:50:00.004-05:00

The rapidly expanding capabilities of cell phones in today’s world are mind boggling to say the least. Calling, texting, email, pictures, video and web browsing are all just the tip of the iceberg. As the saying goes “We’ve only just begun”; with an “App” for everything from picking out wine to purchasing stocks the utilization of these handheld marvels of technology seems limitless.

One area they can be very helpful for right now is the claim process. Using just the features that are already built in to most phones today you can acquire, retain and forward key information related to a claim in real time. This will allow you to see a faster and more accurate settlement process with the insurance carrier or other party.

These devices can be helpful for virtually any type of claim, however I will use a typical auto accident as my example. Most auto accidents are of the “fender bender” variety, meaning 2 cars and no injuries. Regardless of who is at fault, you can use your phone to:

* Call the police so the accident can be reported.
* Take pictures of the accident scene, including positions of the vehicles and damage.
* Record information on the other driver such as name, contact, insurance and vehicle information.
* Gather information on witnesses, passenger and other parties(i.e. police officer) involved.
* Record information about accident itself including, time, date, weather conditions, road information, traffic conditions, etc.
* A record of events can be written while events are fresh in the mind, statements can even be recorded!

All of this critical yet often forgotten or lost information can be easy stored and transmitted to your agent for organization and processing. They in turn can get this to your own insurance carrier in a more timely fashion. This will help your agent to stay on top of the claim for you, speed up the work of the adjuster and get you to a satisfactory conclusion much faster.

If you in fact are the negligent party, it can help you to defend yourself and limit your exposure. With accurate information you can better aid your insurance company in defending you and limiting the potential for faulty or exaggerated claims by the other party. This is especially true if unfortunately it is more then a dented fender and people have been injured.

As illustrated, the benefit of a portable communication device at the time of a loss is in the gathering and retaining of information. Information is the key to any situation, the more you have the better off you are. Losses are more easily handled with accurate and pertinent information. These magical objects can make a world of difference and save you time.

Oh but please remember, it is better if they aide you AFTER the claim and not be the CAUSE OF a loss. Please do not use them while you are driving. :-)

Don't Forget to "Renovate" your Homeowners Coverage

2009-10-16T08:44:00.008-04:00

Given the current economic times, flat or decreased housing sales & tight credit, many homeowners are putting money back into there homes in the form of remodeling projects. These can be anything from just general maintenance jobs to full blown additions. Usually forgotten in this process is the Homeowners Insurance Policy (HO) and that can be a very costly error.

Often people will spend thousands of dollars on major modifications to their home and not even consider if or how their insurance may be affected. If the modification includes any kind of structural modification or addition, there could be serious impacts to their coverage. This oversight could lead to serious complications later on down the road should some type of major loss occur and valuation questions start coming in to play.

Most HO policies are written on a Replacement Cost (RC) basis. As part of the conditions of the RC coverage it is incumbent upon the insured to maintain an accurate RC insured value; else they could be in violations of the terms of the contract and loss settlement penalties could be applied. For example, let’s say you have an insurance policy on your home with an accurate RC limit of $200,000 and a $500 deductible. In the spring you put on a $75,000 addition but fail to report the addition to your insurance company. The following fall, there is a major fire and the ensuing damage results in a $100,000 loss. When the insurance company adjusts the loss they note the addition and inform you they are going to apply a co-insurance penalty to the loss.

Co-insurance is the minimum amount of insurance on a % basis of the actual replacement cost value of the home you are required to carry in order to maintain the RC settlement option. This % can vary by insurance company and policy, but typically as it relates to HO insurance policies it is 100%. If you do not maintain the proper limit, the insurance carrier can apply the co-insurance penalty which as a factor determined by dividing the amount of insurance carried by the amount of insurance required. The factor is then applied to the amount of the loss to determine the actual settlement amount less your deductible.

In our example we will use a 100% co-insurance requirement. Therefore to determine the co-insurance factor we will take the amount of insurance carried - $200,000 and divide it be the amount required - $275,000. The resulting factor is .72 or 72% (200/275 = .72). We then multiply that against the amount of the loss, in this case $100,000, and subtract the $500 deductible; the result is a settlement amount of $71,500 (100,000 * .72 = 72,000 - $500 = $71,500). A $28,000 mistake that could have been avoided.

Besides the valuation pitfalls, there are many other reasons to contact your independent insurance agent regarding any planned renovations before you get started. Depending on the extent of the renovations and your insurance company, you may eligible for credits or a change in rating tier based on the specific company underwriting guidelines. You may need to add a specific rider to your policy or change coverage all together to allow for the unique exposures (i.e. Theft of Building Materials) related to building renovations. Your agent can assist you with the process of hiring a contractor, especially with regard to evaluating the contractors insurance as it relates to your specific project.

So before you pick up your hammer, pick up the phone and call you independent insurance agent. Spending a little time now can you save you immensely down the road!

A good time to Take Stock!

2009-09-18T08:17:00.004-04:00

In my role as a business insurance advisor, I am often asked when insurance coverage should be reviewed. Most people assume the best time is at renewal and this tends to be the time most do. However, the renewal is often the time we are the most price sensitive, for obvious reasons and thus we tend to be blinded to the coverage needs by the potential costs. Also, the renewal date itself creates an arbitrary deadline that all parties involved (insured, agent & insurance carrier) feel they have to meet and have all decisions about coverage made. This is another barrier to a good evaluation of exposures and coverage, creating an atmosphere for potential costly mistakes by everyone involved.

A better time to evaluate your insurance coverage is at some point in the middle of the coverage period; when you can make a careful, fully informed assessment of your coverage needs. This should be a time when the insurance decision maker with the assistance of the insurance agent/risk manager can take the time to make a sound risk management analysis of their operations. I understand this is often easier said then done, but there is usually some point in the year that this can happen if planned for properly. The initial review can be somewhat involved, but if it done right the process can become fairly streamlined for subsequent years. Based on the complexity of the business, a complete risk management audit every 3 to 5 years is fairly adequate. In the intervening years one only need to review changes and trends in operations in order to make the necessary adaptations to the overall insurance program. The establishment of review protocols can assist this process greatly

The analysis concept itself is fairly straight forward; current and new exposures are assessed against established coverage to see if and where any gaps may be. Various alternative solutions can be investigated and discussed and applicable coverage can be adapted to meet the realized situation. This may involve simply amending policies that are already in place or seeking out new coverage through additional policies as needed. What’s more, in this manner premium dollars can be truly evaluated from a sense of priority as opposed to a sense of urgency often brought on by an impending renewal date. This also provides the additional bonus of knowing when it does come time to actually renew coverage and you decide to test the insurance market you can make an evaluation of competative alternatives strictly on price.

The bottom line is to get a risk management review process into your overall business planning and management activities. Making it part of your normal operations and moving it to a time when it can be given the attention it deserves will move you a long way along the road to a sound and secure business.

What's the Big ID!

2009-07-01T13:06:00.006-04:00

No matter where you look, listen or watch today, someone is warning you about Identity Theft. It is one of the fastest growing crimes, made even worse by today’s economic conditions. The Federal Trade Commission (FTC) estimates that over nine million people have their identities stolen every year.

ID theft can have serious consequences. Possible fall out to victims include denied loans, arrest for crime you did not commit, loss of job opportunities, lost time and money spent repairing the damage.

Here are 5 tips on how to protect yourself from this crime:

1) Know you own Credit Situation – Be sure of your own information so you can spot fraudulent behavior quickly. You can obtain your free credit report from all three (TransUnion, Experian and Equifax) of the major credit agencies buy going to http://www.annualcreditreport.com/ or calling 877-322-8228. You can verify all the information and make any corrections needed. Then stay on top of your situation by reviewing all financial account and billing statements very closely. Report suspicious activity immediately.
2) Protect your "Hard copy" information – Destroy all documents with personal information, including pre-approved offers, before discarding. Put all mail in US Postal collection boxes; do not leave mail in you mailbox overnight.
3) Protect you "Electronic" information – Utilize anti-virus software and firewalls. Do not us personal information for electronic ids or passwords (i.e. birth date, social security numbers, phone numbers, etc). Do not respond to spam or unsolicited emails. Be sure websites are trusted and secure before entering personal and financial data.
4) Subscribe to some type of credit monitoring service - Make sure you are checking your credit situation and receiving updates regularly.
5) Carry Identity-theft insurance. The coverage provides reimbursement for expenses resulting from the crime, such as phone bills, lost wages, notary and certified mailing costs and attorney fees. It is inexpensive and may be endorsed to your homeowners’ or renters’ insurance policies.

Do not take your identity or credit situation for granted. This is definitely a situation where a little prevention can go a long way.

Have a safe and Happy 4th of July! Please do not forget what this holiday is about and the people fighting for it!

Summer rental...what about my Stuff!

2009-06-19T12:00:00.002-04:00

Summer is here and it is time to get the family in the van to hit the open road. Whether you travel to the cabin in the mountains or the condo on the beach one thing is for certain, to paraphrase the comedian George Carlin, you will be bringing a lot of “stuff”. Here is a brief synopsis of where you can expect to find coverage in your homeowner’s (HO) policy for the “stuff" you bring and the “stuff” that is already there.

Stuff I bring
The standard ISO HO policy provides coverage on a worldwide basis for your personal property up to the amount insured under your Coverage C – Personal Property limit. The only limitation to the amount is 10% of the Coverage C limit for property which stays at another residence, such as a second home or college dorm. It also includes guest’s property, so if family comes to visit you, or goes with you to the vacation property there would be coverage for their stuff as well.

Stuff that is already there
The definition of eligible property under Coverage C of the HO policy includes personal property owned or used by an insured. This would include the contents of a rented property such as a hotel room, cottage, condo, lodge, etc. As for coverage for the building of the rental property, coverage is a little precarious. There is no coverage for off-premises building under the standard HO policy, and under the liability or Section II coverage of the HO there is a an exclusion under the property damage liability except for damage caused by fire, smoke or explosion. There is a modest amount of coverage under the Section II liability for Damage to Property of Others, but at the most it is only $1,000.

One important note for the personal property coverage mentioned above; coverage is limited to the perils insured against under Coverage C. The standard policy typically only insures for Named Perils. I would strongly encourage that you endorse your policy or be sure you have coverage for Open Perils on Coverage C. This will give you the broadest coverage possible, not only for your peace of mind on vacation but also with your everyday life.

Don't "Volunteer" for trouble!

2009-06-12T12:44:00.006-04:00

Volunteering is as American as apple pie. Whether its staffing the rummage sale at church, coaching kids on the baseball team, or serving on the board of the United Way, most of us genuinely like to jump in an lend a hand. It is one of the features of this country that makes us great, but of course it also presents some challenges from an insurance coverage standpoint should something bad come out of it.

Unfortunately one of the negatives of living in this country is the litigiousness of our society. A seemingly innocuous stint as a basketball coach for the local recreation program can turn into nightmare claims scenario when a child suffers a severe head injury during a practice; or, while you’re a serving as a board member for a local not for profit and are personally sued because of a management decision the board made. Sadly these scenarios are not as rare as they may seem, and the time to investigate coverage is before they occur.

Let’s examine where we would likely find coverage, if any, for our activities as volunteers. The first place one might look is their Homeowners/Renters (HO) insurance policy. The good news is there is some coverage to be found here, the problem is it is limited. The typical HO policy will respond to the actions of an insured while functioning in his/her capacity as a volunteer (no compensation). The caveat is that they are limited to claims of liability for bodily injury and property damage only. The policy may and should be endorsed to include Personal Injury coverage (libel, slander, etc) as well.

What about claims other than bodily injury or property damage such as the second example above, a management mistake that results in a financial loss only? Here an insured might find coverage in their Personal Umbrella Policy (UMB), if they have one. This is somewhat of a precarious expectation though as there is no standardization in UMB policies, thus requiring a careful review of policy language to see if coverage is there and to what extent.

Ultimately your own personal coverage should be considered a supplement to the coverage provided by the organization you are volunteering for. Before choosing to volunteer you should be asking what if any liability coverage is in place to protect you as volunteer for the organization. Depending on the capacity under which you are serving you should be looking for the following:

General Liability. This is coverage for the organization similar to your personal liability. You want to be sure they have it and that is includes you as volunteer as and insured. Thus if you are sued you can look to this policy to protect you. If the volunteering is athletic or sports related, you want to be sure the policy is covering the athletic particpants and not excluding them. If children are involved you want to be sure there is abuse or molestation coverage as well; should some sort of accusation arise during your service.
Directors & Officers Liability. This is coverage to protect the organization and board members for the management of the organization. Thus if a donor or some other stakeholder sues over financial decisions made by the board you will be protected. Often times the By-laws of a not for profit will state the organization will indemnify board members for their service, but this does you little good if there is no insurance to back up the indemnification and the organizations assets are all there is. You’ll want to be sure it included Employment Practices Liability as well, to help protect against employment related claims (i.e. wrongful termination, harassment, etc).
Automobile Liability. If in your duties as a volunteer you are driving vehicles owned by the organization. You want to be sure they have adequate limits of coverage and that you as a driver are covered as an insured. With respect to using your own vehicle, typically your own insurance is primary, so the burden is on you to make sure limits are adequate and the insurance company is aware of the activity. The organization may have a Non-owned automobile policy, but it will be secondary to your coverage and protect them only.

The bottom line is your own personal insurance should be secondary to the insurance coverage of the organization you are volunteering for. A little due diligence on your part in the beginning can add to the satisfaction you receive from volunteering.

After all, volunteering is a good thing and shouldn't be ruined by an unforeseen accident.

Look past the limit of liability and see the all the coverage!

2009-06-04T15:29:00.005-04:00

Too often when it comes to liability insurance, clients see the limit of insurance as all that they are buying. When they are in the purchasing phase of the insurance buying cycle often they base their decision on limit vs. cost. While at this critical juncture, I encourage my clients to look past the limit to what else they are getting with their coverage. This helps them to not only better understand the cost, but more importantly the real value of the coverage.

Let us examine this further with some background information. In order for any liability policy to pay for a claim it has to be proven the covered entity was negligent and thus responsible for the financial loss being claimed by the third party and for which the coverage is applicable. As part of the coverage provided by the insurance company, they retain the Right to defend against the claims in order to protect their financial interest. Very often policy language stipulates in addition to this right they have a “duty to defend” these claims, whereby the company is required to provide a defense even if ultimately the claim is found not to be covered by the insurance. In my opinion, the real value of a liability insurance policy lies in this Defense and it is applicable no matter what type (Personal, Business, Automobile, Professional, etc.) of liability coverage you purchase.

As an additional benefit, most standard liability policies provide for the Defense Costs (the costs and fees associated for fulfilling the defense) to be outside the limit of liability limit. That is, the money they spend to defend is in addition to the limit of liability available to pay for losses. Thus there is the potential for the company to pay for thousands of dollars in legal costs associated with a claim in addition to amounts they may pay if found liable. This feature however is a little bit of a double edged sword, because as you may have surmised, the insurance company will want to keep these costs to a minimum and will be inclined to settle claims before they get out of hand in there eyes (Note: This goes to the heart of reasoning to purchase higher limits of coverage, but that is the subject of another posting).

There are, of course, several other supplemental coverage items included with most liability insurance coverage. However, none are as important in this author’s opinion as the defense.

"Do I need Employment Practices Liability Insurance for my business?"

2009-05-28T12:58:00.010-04:00

The current economic downturn and its resulting job losses have spurred the fears of employers. As jobless numbers increase so does litigation against employers by disgruntled former employees seeking redress for issues, both justified and unjustified, relating to their terminations. Therefore it does beg the question by most employers “Do I need Employment Practices Liability Insurance?”

First, as always, a little education; Employment Practice Liability Insurance (EPLI) is available to employers to help defend and respond to claims by employees for acts related to their employment. Typical (but not all) types of claims an employer would see coverage respond to would be:

Wrongful dismissal, discharge or termination of employment
Violation of employment discrimination laws (including harassment)
Breach of a written or oral employment contract or implied employment contract
Sexual or workplace harassment of any kind
Wrongful demotion
Negligent employee evaluation
Wrongful deprivation of a career opportunity

Other key aspects of an EPLI policy are:

Defense cost coverage for claims seeking non-monetary relief
Third Party Liability
Independent Contractor coverage
Claims involving arbitration, regulatory and administrative proceedings, EEOC & Department of Labor investigations

At this point some may ask whether or not their current liability insurance provides coverage for these exposures. The answer is an emphatic NO! Most Commercial General Liability polices and Workers Compensation policies have very specific wording excluding coverage for these types of claims in their policy language. For the most part the case law has upheld these exclusions with few exceptions.

Before we would look for EPLI coverage, I encourage clients to undergo some honest self evaluation regarding their own organization’s culture as it relates to employees. A thorough examination of their Human Resources (HR) procedures is not only necessary from an insurance underwriting position; it is also a good risk management process to undergo on a regular basis. Consistent evaluation can help identify potential problems before they develop and allow for corrections to be made. As a starting point I would ask “Do you have an Employee Handbook?” Whether you have 1 or 1000 employees, a handbook is probably the single most important tool an employer should have in their HR toolbox. A handbook represents the best avenue for communicating policies to and setting the HR tenor of the organization for employees. The development and update of an Employee Handbook will help to get an organization on the right path to EPLI loss control and is also required by most insurance companies as a condition of coverage. Again, the handbook is just a good jumping off point, a full assessment of all HR functions and activities should be done. There are many HR assistance organizations that can be utilized to aid any sized organization in this process.

Once the self evaluation is completed you can discuss the availability and make up of EPLI coverage for your organization. Be prepared, for depending on the make up of your organization (i.e. structure, size, industry, etc), the cost of EPLI coverage can run the gambit of relatively inexpensive to pricey. For example most Not-for-Profit organizations can have EPLI added on to their Directors and Officers Liability coverage for little or no additional premium. However for most For-Profit businesses it is a stand alone policy which can be expensive. As with most insurance, you get what you pay for, and, thus you can affect the pricing with the coverage options you choose. Also, there is no standardization of coverage forms as with most other insurance policies, so it is important to examine specimen coverage forms carefully to denote differences in coverage.

So to answer this week’s question, I say from a Risk Management standpoint, in good economic times or bad, having solid and consistent HR procedures will help mitigate your chances of a claim. However, it is not a total barrier and it would be nice to know you have the EPLI coverage to pull out of your tool box if needed. Think of the HR procedures as your belt and the EPLI coverage as your suspenders; it will be very unlikely you’ll get caught with your proverbial pants down!

"Should I buy the insurance when I rent a car?"

2009-05-07T12:43:00.016-04:00

This is a question we are frequently asked by our Personal Auto clients. The answer is not always an easy one, especially for anyone insured on an automobile policy here in New York State (now there's a surprise).

One important fact applicable to a person who is covered under a Personal Auto Policy (PAP) in New York is that by law there is automatic coverage for loss to a rental vehicle included in their policy per state law. It includes any amounts, including the loss of use of the rental vehicle, the renter is liable for damage to the rented vehicle and regardless if the vehicle is rented in or out of NYS as long as it is in the covered territory of the United States, its territories and possessions, and Canada.

Now getting back to the question, our answer is .... Yes! We encourage our clients to purchase the insurance from the rental company, also known as the Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW)

I can hear you know "Jamie why should I buy the CDW/LDW at anywhere from $8 to $20 a day if I already have coverage!" My simple answer is "The Headache" factor. How much of a headache do you want to have in the event you do have a loss with a rental car? I suspect your answer is going to NONE! Well I can not promise you none, however if you buy the CDW/LDW I can promise you a lot less hassle and that translates to a smaller headache.

Let's examine a hypothetical claim scenario. Please keep in mind this scenario assumes both drivers have a New York State Personal Auto Policy. If you are insured in another state or you are renting the vehicle for business you will need to check your specific coverage related to rental cars.

Jane and her family just enjoyed a wonderful yet long day at the Magic Kingdom. They survived the cramped monorail ride back to the TTC and subsequent tram ride out to Minnie 23 only to find one of the other fine patrons of the "Happiest place on Earth" has backed into their rental van with his rental. The whole front end is smashed in and it is not drivable.

Jane puts a calming hand on her husband's shoulder to contain his outrage; then digs her contract out of the glove box to locate the 800 number she is supposed to call if something like this happens. Stuart on the other end answers and listens carefully to Jane's tale of woe. When Jane finishes, Stuart happily reminds her that she (over the objections of her husband) wisely purchased the CDW/LDW and thus they will be showing up shortly with a truck to pick up her damaged vehicle. They will also be there with a replacement vehicle (of similar or larger size as typically stipulated in the CDW/LDW contract) so she can be on her way to the hotel. As Jane ends the phone conversation with Stuart, she notices Phil, the other driver, is on the phone with his rental company and his conversation is steering in a significantly different direction.

You see Phil did not listen to his wife and thus did not buy the CDW/LDW from his rental company, after all he already has a PAP. Phil is informed his rental company will be showing up with a truck to take the damaged vehicle, but he will likely have to get a cab back to the hotel and come to the rental company to settle the damages and to fill out another contract for a new vehicle. Phil hangs up and calls his insurance company to inform them of the accident. They let him know they will need to have an adjuster go out an look at the car and negotiate with rental company for the damages. The next day Phil has to take a cab to the rental company, which means he is not with his family(who also had to take a cab) at EPCOT. He is told when he gets there that they already have an estimate for the damage and they want payment. Phil calls his insurance company to tell them the situation. Phil's insurer insists they want their adjuster to see the estimate and the vehicle. He spends the next several hours on the phone with the insurer and the rental company trying to get the matter settled. He then has to arrange another vehicle and unfortunately they do not have any min-vans left, just compacts. Phil dutifully drives the compact to EPCOT to pick up his family. While they are trying to figure out how they are going to fit all the stuff and everyone else in the car, Phil looks up and spies Jane and her family walking to their new mini-van after a fun filled day TOGETHER at EPCOT.

So who do you want to be...
... Jane or Phil?
Pick your headache.

"My employees would never steal from me...we're a family!"

2009-04-20T11:57:00.013-04:00

Sadly this is the common philosophy that permeates most small business owners today and unfortunately nothing could be further from the truth.

The Real Risk

One of the leading areas of loss to small business today is from employee theft. This includes thefts of money, equipment, intellectual property or merchandise. Government statistics show the cost to business for these loses to be in the billions every year, and some indicate growth of 15% or more every year. In today’s economic climate the growth rate is even higher.

One insurance industry study showed that an average of 1 out of every 3 employees steal from their employer. For a retailer the loss do to employee theft is actually many times more costly in value of goods than a shoplifter. Employee Dishonesty losses not only threaten the profit of the business but perhaps even its very existence; employee theft is responsible for over 30% of business bankruptcies.

The Solid Solution

The biggest reason for these staggering statistics is lax procedures related to bookkeeping, inventory controls and general employee oversight. There are some simple strategies that may be implemented in order to mitigate your chance for losses of this type risk.

Prevention starts at the TOP. As the owner/manager you establish the ethical standards and practices of the business. Employees will look to you as the “moral compass” of the organization. So set the standards high and lead by example!

Implement and communicate a clear “Zero-Tolerance” policy on Employee theft. Anyone who violates the policy, including managers, will be terminated. Follow through on the policy!

Audit your accounting and record keeping procedures. Limit access to accounting functions to only those that really need it. Closely monitor whoever is responsible for accounting functions, utilize surprise audits. Individuals who process accounts payable or reconcile accounts should not have signature authority. Vacations of more than 5 days should be required of key people so that their work can be audited.

Establish strong and consistent supervision strategies of all employees. Perform spot audits, if possible by people from other departments. Consider the use of video cameras, especially in retail or warehouse situations.

Examine and establish good hiring practices. Have consistent and thorough interview procedures. Perform thorough reference and background checks, including criminal

Following some simple strategies as outlined above can go along way to preventing losses do to employee dishonesty. There are many resources relating to employee dishonesty on the web that can help a business set up a system of checks and balances to aid in the prevention of these and other crime losses.

Coverage for these types of losses is often included or available on your standard Property Insurance policies. Your agent can help you structure a crime policy to cover not only Employee Dishonesty, but a wide range of Crime related exposures; including – Computer Fraud, Wire Fraud, Theft of Money & Securities, Counterfeit Money or Money Orders and Forgery. Such policies can provide the resources to help uncover and replace the losses from employee theft; without the claims experience affecting your other coverage.

The most surprising acts of dishonesty comes from the employee you trust the most...yourself! It happens when you deceive yourself into believing the risks outlined above do not apply to your business. Always remember my 1st bullet point "Prevention starts at the TOP...lead by example!"

"I don't need insurance, for my home based business....my Homeowners Insurance covers me, right?"

2009-04-08T14:30:00.001-04:00

THE REAL RISK

Sadly the above statement is a common misconception by most insured’s, or should I say uninsured’s, who have a business they operate out of their home. In today's economic climate, with massive layoffs and corporate downsizing, many individuals are turning to self-employment as a means to earn a living. This brings in new challenges for them, including insurance exposures.

Since each homeowners policy is unique, the following are general statements about the possible coverage problems faced by a business operating out of a home.

The standard Homeowners policy provides, in general, NO LIABILITY coverage for any business activities

The standard Homeowners policy provides very limited coverage, usually up to only $2,500 for business personal property while ON the premises. OFF premises exposures are even more limited

If the business is operated out of another structure on the premises, the other structure is not covered on the standard Homeowners policy

The definition of and "INSURED" in the standard Homeowners policy does not include corporations, non-resident “partners”, or employees thus there is no coverage.

You may be able to add by endorsement certain “incidental business” activities to your policy. However, the coverage is very restrictive and usually limited to ON premises activities, virtually no OFF premises activities are covered.

The standard Homeowners policy does not provide any coverage for professional liability. This is especially troubling as many in-home businesses are of a professional or service type nature providing consultation and/or professional advice to thier client. Therefore there is no coverage for these activities.

There is no coverage for business income on the homeowners policy.

Other coverages to be considered are potential Automobile Liability exposures if personal vehicles are used routinely in the course of the business operation and Workers Compensation if you have your own employees.

Your Homeowners Insurance Carrier has a right to know what you are doing and you have a duty to keep them informed. Failure to disclose the business exposure could jeopardize the personal coverage as well.

The bottom line is there are large and ominous coverage gaps facing individuals operating ANY type of business out of their home. The business should be treated as any other regardless of where it is operated.

THE SOLID SOLUTION

Start with a detailed conversation with your independent insurance agent. Many coverage options are at your disposal and surprisingly affordable. Many insurance companies specialize in writing small packages which bundle together necessary general liability and property coverages to protect these In-Home operations.

As with anything communication is key. By lettting your agent know what your plans are ahead of time, you can avoid an expensive uninsured loss.

Market Value vs. Assessed Value vs. Replacement Cost...what do they all mean!

2009-03-27T13:08:00.000-04:00

At least once a week one of our clients will come to us with a concern about the amount of insurance they have on their home or commercial building. Often it starts with a statement similar to this: "I just received our renewal policy; I could never sell the property for that much! I want you to reduce our coverage to the market value"; or this: "I just received our new tax assessment and it is much lower than what we are currently insuring our home for, shouldn't we lower our coverage?"

My first response is to discuss with the client different key values on a property. Part of that process is an overview of how an insurance company develops a Replacement Cost Value. The main goal is to be sure they have an understanding of how the property is valued.

The three most important values you will see placed on a property are as follows:

1) Market or Appraised Value- how much a given piece of property is worth to another buyer;

2) Assessment Value - the value placed on a property for municipal tax purposes;

3) Replacement Cost Value - the value placed on a piece of property by an insurance company for the purpose of coverage.

It is important to understand that as a general rule these values will not be the same.

Market Value(MV)
In its simplest terms MV is the price a willing seller will sell a given piece of property to a willing buyer in a standard arms length transaction. However, if you speak to a Realtor, Mortgage Broker or Property Manager, they will tell you that Market Value is a product of many factors including location, size, features, current market conditions, etc. In order to develop a good MV, an appraisal of the individual property is done. This is typically a full physical inspection of the property followed by a detailed study of all the other factors. Then a valuation is placed on the property. It should be noted that this is the most fluid of all the values on a given piece of property as the factors are almost always changing. The only time the factors from the actual cost of construction play into this number is when it is a new construction. The new construction costs are used as a basis to determine the worth of building relative to the anticipated sale price. Obviously the truest indicator of the MV of a piece of property or home is what it actually sells for.

Assessment Value(AV)
This value is often the most controversial of values a property is given since it is a basis on which an owner will be taxed. On its face, AV is purported to be tied to MV. However, it is more heavily influenced by economic and political forces due to the financial needs of the local municipality that sets the values. The AV is tied to more generic market conditions (i.e. similar properties that have sold in the area), not specific factors unique to an individual property. Another key issue is the data is usually a historical picture of the market based on information from the prior year. We know this can be dramatically different, both positively and negatively, then what the current conditions are. There may be times the AV will be the same as the MV, however typically it is only for about a year or two immediately following the sale of the property when a true value has been set.

Replacement Cost Value(RCV)
RCV is tied to the actual cost to replace a given piece of property with the same materials and in the same manner in which it currently exists without deducting for depreciation. It is driven by the cost of materials & labor in the area the property is located.

“But Jamie” my client says, “I just built my house and I know exactly how much it cost to construct it. Why is the insurance company coming back with a higher number?” At this point, I stress the word replacement. I remind them Replacement Cost is an insurance based value and there is also a factor that some loss (i.e. fire or wind damage) has occurred. Once a loss has occurred the clean up and debris removal of the damaged property must now be taken into consideration before any construction or rebuilding can begin. The property owner can expect approximately an additional 10%-25% of value added to the RCV for this contingency.

Each value is important and unique to each area. Interchanging one for another, especially for insurance purposes, would lead to negative financial consequences. The best solution is to work with your independent agent as your advocate, to establish a Replacement Cost Value which is reasonable and agreeable to all parties.