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As the economy continues expanding, companies need to be careful about properly managing their risk, according to a report by Advisen Inc., an insurance research and data firm. Increased activity typically means proportionally additional losses. For example, more trucks driving more miles will inevitably result in more accidents. However, there are other kinds of risk that can actually increase more than the jump in business activity. We look at three such areas here. Workplace safety Workplace injuries can increase as firms hire workers that have less experience. Typically, when employers expand their workforce to meet the growing demand for their products and services, the number of workers' compensation claims tended to rise disproportionately. New employees with less experience typically are more likely to sustain a workplace injury. At the same time, experienced staff may look for new job opportunities as compensation begins to take priority over job security. What you can do: One option is to hire a temporary-staffing firm to fill positions. In these relationships, the client company is not responsible for covering temporary workers. But you should be aware that OSHA requires what is known as the "dual employer doctrine", under which temps are considered employees of both the agency and the company using them. And you are also not off the hook for providing them with a safe work environment and safety training specific to their job. And remember: Check to make sure the temp agency has workers' comp insurance. Litigation increases The risk of being sued rises as employees make mistakes due to pressure on existing staff to increase production, and again when less experienced workers are added to the payroll. Your workers may be putting in extra hours. But fatigued workers make mistakes. For example, some of the worst industrial disasters have been in part the result of tired workers. Bhopal, Chernobyl and the Exxon Valdez oil spill all involved decisions made late at night or extremely early in the morning by people working long hours. In addition, inexperienced employees are more like contribute to incidents where outsiders are hurt. What you can do: Conduct thorough interviews, check references and carry out background investigations when appropriate to avoid hiring people with known problems. You are responsible for the actions of your employees. Also, make sure that you are not overworking your staff. Provide proper breaks so they can rest, especially in jobs that require attention and strength. Labor law violations Trends in litigation and regulation make it more likely that companies will be charged with labor law violations. Employees are braver now about filing complaints, thinking they have a good chance of landing a new job if they are fired. In addition, the federal and many state governments have cracked down on wage and hour law violations. As well, some companies may try to add to their worker pool by using more independent contractors, in order to avoid hiring new workers. But the federal government has mounted a serious crackdown on companies that inappropriately classify employees as independent contractors. What you can do: Pay close attention to your payment systems and audit your systems to make sure you comply with wage and hour laws as well as meal and rest break laws. The takeaway The lesson is to increase your vigilance in managing your risk and review your existing risk management strategies for gaps due to business growth. You can take the following steps to reduce your chances of increased claims:
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Parts of the Midwest have experienced record flooding in the spring of 2019, caused by rains and the melting of massive amounts of snow that fell in the winter.
And as the weather becomes more unpredictable, many areas throughout the country are experiencing flooding with increasing regularity. Moreover, some regions are flooding for the first time in recorded history. Floods are the leading weather-related cause of property damage. After Hurricane Sandy, the National Flood Insurance Program paid out well over $6 billion in claims. It is important to take these steps to prevent flood damage. Use flood maps These maps are drawn up and updated by the Federal Emergency Management Agency. They show the locations of flood zones and flood plains, and flood zone risks ranging from high to low. If unsure about the classification of a specific address, ask us. As part of FEMA's modernization program, most communities are receiving new maps with more details and helpful recommendations. Since flood zones may have changed, it is important that you look at the newest versions of these maps. Learn base flood elevation When property owners know their flood zone, they should also learn their property's base flood elevation (or BFE). This is the point where a building has a 1% chance of flooding each year. FEMA's newer maps typically list the BFE for different properties. If new maps are not available yet, your local building department may be able to help. When the BFE is known, it is important to determine the elevation of the first floor of the home. Is it below or above the property's BFE? Raising a structure with a main floor below the BFE helps reduce flood risks. This type of floor plan is typical with some split-level homes and buildings. Purchase flood insurance When you understand the full risk of flooding for your property, you can decide whether you should purchase flood insurance for complete protection. Obviously, if you live in or near a high-risk flood zone, you should purchase coverage. Sometimes you don't have a choice about buying coverage. Most lenders will require homeowners in flood zones to purchase insurance if they want to qualify for a home loan. Flood insurance is mainly available through the National Flood Insurance Program, although there are some private insurers that offer coverage in selected areas. To learn more about your options and how to enroll in coverage, call us. Reduce risks on your property There are several steps to take to reduce risks on the property:
To learn more about flood safety and preparedness, call us. Linda is a junior partner in a law firm and drives a car that the firm owns and insures. The firm's auto insurance covers her as a partner and she doesn't own another car, so she sees no need to have her own policy.
Most of the time, this is not a problem. However, spring break comes and she takes her kids to DisneyWorld. She rents a car at the Orlando airport and never gives a thought to whether her firm's insurance will cover her if she has an accident with the rental. In this case, a phone conversation with the firm's insurance agent would have been a great idea. While driving to her hotel one night, Linda rear-ends a new Lexus. The damage to the other car is extensive; Linda looks to her firm's auto liability coverage for the cost of repairing it. The ISO Business Auto Policy covers the person or organization shown in the policy declarations (the information page at the beginning.) In this case, the name shown in the policy Declarations is the name of Linda's firm. The policy goes on to say that, for liability insurance, the firm is an insured and so is anyone else using, with the firm's permission, a covered auto the firm owns, hires or borrows, with some exceptions. Unfortunately for Linda, the firm didn't rent the car; she did … in her own name. Consequently, the firm's insurance will not cover her liability for this accident. She will be forced to pay for it out of her own funds. However, there are a couple of policy endorsements that her firm could have purchased that would have solved Linda's problem. Drive Other Car Coverage - Broadened Coverage for Named Individuals The insurance company will require the insured to list the names of one or more individuals on the endorsement. The change extends several of the policy's coverages so that they apply to the listed individuals and their resident spouses. This endorsement comes with some significant limitations:
Individual Named Insured An alternative to this endorsement is to list individuals' names in the policy declarations along with the firm's name and attach an endorsement called Individual Named Insured. The endorsement covers the individual listed in the declarations and automatically covers the person's resident spouse and family members. It also covers these individuals should they injure another of the firm's employees. These policy changes affect several coverages, including liability, uninsured motorist, medical payments, and physical damage. If you are considering doing this, you should consult with us to discuss the endorsements' details and identify the one that will best insure the concerned individuals. With the right coverage in place, Linda can enjoy her vacation without having to worry about who will pay for the fender-bender. No company owner wants to undergo a workers' compensation audit, but they are a fact of life if you run a business and have employees.
Unfortunately, many audits don't go smoothly and sometimes your insurer may make mistakes. Missouri-based Workers' Compensation Consultants, which helps employers through the workers' comp audit process, recently listed the 10 most common audit mistakes that insurance companies make. The list highlights a common problem and how you can detect the mistakes to avoid being stuck with a massive audit bill. Insurance companies allow you to review the audit with your broker. If you notice that you have received an audit bill that is obviously overstated, you should contact us. Here are the things to look for when reviewing an audit by your insurance company: Wrong class code - Misapplication of job classifications occurs in many workers' comp audits. With hundreds of job classes to choose from, mistakes can happen. Talk to us and review your old policies to see if any of your class codes have changed. X-Mod is changed - After your insurer finishes the audit, it will use the information to calculate your premium. When that happens, it has to include your X-Mod to get the right rate. But sometimes the insurer may use an incorrect X-Mod. Check carefully. Subcontractors are counted - Sometimes insurers will include subcontractors as employees, which results in a new audit bill to account for the additional "employees." But if they are genuine subcontractors, they should not be counted. Often, uninsured contractors will be included as employees. Make sure to use insured contractors only. Disappearing credits - Most policies will have some sort of premium credits or other modifiers. Sometimes during audits, the insurer will remove them when recalculating the premium they think you owe. Watch out for missing credits and other modifiers if you get an audit bill, like:
Audit worksheets missing - If the auditor fails to provide you with audit worksheets, which are used to compile your payroll and other audit information, you should ask to check their work. They will provide you with the information you need to carry out such a check. Your rates changed - The rates you are charged at the beginning of your policy period must remain the same for the entire policy period. If your base rates have changed, the insurer may have made a mistake. Separation of payroll - Depending on your industry, you may or may not be able to split your employees' payroll between job classifications (like cabinet installers and sheetrock hangers). This is a pinch point when errors can occur. If the auditor says you are not allowed to split job classifications even though you have in the past, your audit may be in error. Unexpected large premium due - If you get a significant bill for your insurance company after your audit, the auditor may have made mistakes, particularly if you know that your employment has remained relatively stable and you've had no significant claims, if any. If it seems out of whack, call us. Payroll data doesn't match - If there is a discrepancy between your payroll data and what you see on the audit, a mistake may have been made. Try to match the payroll on the audit with that generated from your accountant. If the insurer made a mistake, you could end up paying for phantom payroll numbers. No physical audit - There are three types of audits:
The mail and phone audits are prone to errors since neither you nor your staff likely have any experience in premium auditing. If you have a big bill after a mail or phone audit, mistakes could have been made. Welcome to our new insurance agency blog! This is our very first post. We're not quite sure what we're going to write about here, but the plan is to create helpful content for customers and prospective clients about information that is relevant to you. We hope you'll come to view this as a top resource for keeping your family and your finances safe. Here are a few of the topics we may be writing about:
Stay Tuned! |
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