Month: September 2015

Safety Programs and Meetings

The importance of a Safety Programs and Meetings

Safety programs and meetings may seem like a time consuming task and they may seem like they do not make much of a difference until you have had a claim. Even the best run operations will eventually have some sort of work related injury occur. Whether it is a law firm who has a legal assistant injured in an auto accident or a construction worker who has a back strain occur on the job, something will generally happen the longer you are in business.

All carriers ask if you have a written safety program.  This DOES come into play when agents are generating your quote and analyzing your business. For instance, if your business has a written safety program and conducts weekly safety meetings on a variety of topics than an underwriter might understand if you are having a year where a couple injuries occur. If you do not have these policies in place, your business may end up having a claims total higher than your premium paid. This may cause your current carrier to cancel you for claims.  All of a sudden you can’t find an insurance carrier to cover your business.

I have had many clients in this exact situation.  If your business has a safety program in place, what we have been able to do is make a case to the carrier on your behalf by using examples of your safety program and meetings conducted. We do this so when the carrier reviews your business they will take into account all of the right things you are doing and chalk up the recent stretch of losses to more of an outlier than an actual reflection of the way you run your business. On the flip side if you are not having regular safety meetings or do not have a written safety program than it is much harder to convince an underwriter that these losses are a fluke. With no examples to give them on why they will not happen again most underwriters and carriers will decline to offer a quote. This is because on paper it looks like there are no supporting arguments showing there is a plan in place to minimize the exposure in the future.

Now that we have established the importance of safety programs and meetings and programs, lets look at an outline that can be used. Meetings don’t have to be long.  They can be quite quick and effective if you are prepared.

1. PLAN your meeting in advance by looking at topics you have encountered in your years of running the business, industry related issues, or ideas from your workforce.

2. Help your workforce see or understand what you are talking about through pictures and videos. Not everyone learns or is engaged the same way. Pictures and videos will allow you to show specific examples of the point you are hoping to make.

3. Tell your employees how to apply the information you have presented and see if they have any questions, thoughts or concerns.

4. Attendance should be required and not optional.

5. Document attendance so if it ever comes up you can show you are constantly training your employees on safety.

This is a simple guideline you can follow that will keep your team focused for the 10-30 minutes it may take to conduct safety meeting. Meetings don’t need to be long or cumbersome but they should be to the point and deliver your message in an efficient, effective manner.

What is the Walsh Test and why does it matter?

The W.A.L.S.H. Test is an acronym to determine which state has jurisdiction for a Workers Compensation Claim when more than one state is involved in the incident. This is most relevant for businesses who operate across state lines. This applies whenever an injury occurs in a state away from a company’s primary headquarter, and is a way the courts use to determine how workers’ compensation coverage will apply.

Walsh is an acronym judges use to determine jurisdiction for a workers’ compensation claim. The acronym stands for:

  • Worked
  • Accident
  • Lived
  • Salaried
  • Hired

The weight of each part of the jurisdiction depends on the position of the term in the acronym W.A.L.S.H. Worked carries the most importance and Hired has the least importance when considering jurisdiction. The higher on the list the higher the relevance in relation to jurisdiction.

This comes in to play when a city, like Kansas City, MO for example, has businesses frequently operating in more than one state. More complicated instances occur with trucking companies or in the airline industry. One hypothetical example might be where a truck driver lives in Iowa. The truck driver gets hired by XYZ Trucking Company just across the border in Minnesota. XYZ Trucking Company is headquartered in California, which is where the truck driver is salaried. The truck driver gets in to a wreck in Georgia.

  • Worked –           Many states
  • Accident –          Georgia
  • Lived –                Iowa
  • Salaried –           California
  • Hired –                Minnesota

In this instance Georgia would probably have Jurisdiction. This is because the truck driver works in many different states, so W would lose relevance. Where the Accident took place is next on the Walsh Test. The fact that the truck driver Lived in Iowa has less relevance to this case.  So does the fact they were Salaried in California or were Hired in Minnesota.

Salaried and Hired are typically lowest on the totem pole because they have the least to do with the accident itself. The fact that a truck driver is Salaried in California and was Hired in Minnesota does not have much to do with a workers’ compensation claim regarding an Accident in Georgia.

Where the employee Worked and where the Accident took place have the highest relevance. This is because where the worker does business most of the time and where the accident took place have the most to do with this specific occurrence.

The one situation where the W.A.L.S.H. does not take effect is in monopolistic states. These states are North Dakota, Ohio, Washington and Wyoming. These monopolistic states require an employer to obtain workers compensation insurance from a compulsory state fund or qualify as a self-insurer.  It is critically important to let your agent know everything your business is doing and especially where. This can allow your agent to provide the correct coverage to protect your business when an occurrence takes place in one of these monopolistic states.

So the W.A.L.S.H. Test is a tool judges use to determine jurisdiction in Workers’ Compensation Claims.  It is relevant to businesses who operate across state lines. Where your employees do their work can make all the difference in your company being liable for a Workers Compensation Claim — and to determine if your policy will cover the claim. Talk long and honestly with your agent about where and how you do business, and make sure that you have a state listed in section 3A of your workers compensation policy if you have an employee that might get injured in another state.

Janitorial Business, Liability Needs.

One of the first accounts I ever quoted was for a janitorial cleaning company. This company really stuck out to me. The client called me bright and early one morning looking for a workers compensation quote. It was a commercial cleaning company and when I started the quoting process, I realized there was much more to this risk than I actually thought. I noticed commercial janitorial cleaning was actually a very popular risk to insure, but sadly not many people know how to do it. It is not a difficult risk to write, but some might find all the questions to be rather nerve racking. So allow me to help you out!

If you are thinking about getting workers compensation for your own janitorial cleaning company, you need to first ask yourself these fundamental questions.

1) Will you be doing residential or commercial janitorial cleaning?
* There is a huge difference between commercial cleaning and residential. Commercial consist of any legal business, office, or sometimes contracted apartment cleaning (if the resident has moved out and you are cleaning it for the next resident.) Residential cleaning is basically any home that is occupied by residents.

2) What will you be cleaning?
* It is very important to tell your insurance agent exactly what you will be doing. For example: We will need to know if you are leaning window or gutters.  If so, we will need to know how you get to the gutters. What will be the maximum height you will go to, to do the cleaning? If you are moving furniture around.

3) How many employees will be on location?
* Since workers compensation is based off the employees’ payroll, it will be beneficial to tell your agent how many employees you will have at each location.

4) What chemicals will you be using?
* If you are using any type of harsh chemicals to clean with, then you should explain to the agent what the chemicals are and how you will be handling them.

5) What will be the travel exposure between job locations?
* This is a very important question. Your agent will need to know the estimated miles between job locations.

6) What safety program do you have in place?
* This is something you should always have no matter the job. It is critical you have a safety program in place.

These are some of the questions I always ask my clients. It is very critical to know exactly what the janitorial company does.

Now like all other workers compensation quotes, the agent will need to know employee count and payroll for each employee. If you have employees doing jobs other than janitorial cleaning, then you need to explain what those employees will be doing. After you have answered all those questions, then you will be ready to get started on the workers compensation quote.

Now I also want to share a piece of knowledge I learned while quoting janitorial companies. If you are seeking General Liability for your business, then here is a good piece of information that you want to ask your agent. A lot of janitorial businesses are trusted with a key to get into the building. Now if you have a lot of contracts with different locations, then you probably have several keys. Here is the gem I told you about, you need to ask your agent for ‘Lost Key Coverage.” Lost Key Coverage will be an endorsement added to your general liability policy that will pay to replace all the keys you have lost or were stolen. Having the locks replaced for 25 different businesses is very expensive. So if I were you, I would make sure that my general liability policy has lost key coverage or something very similar to it.

**There are also Janitorial Surety Bonds. These bonds will protects the insured’s clients, if one of your employees were to steal from the client. The employee must be convicted before any coverage will be applied.

Insurance Help on Vacation

A while ago, I took a phone call from a client in need of help getting Errors & Omissions (E&O or professional liability) Coverage for a large contract he was working on.  However, my client was in Italy on vacation and the coverage needed to be in place before the job started in three days. To say he was in a panic would be an understatement.  I wrote his work comp insurance and our agency handled many endorsements on his policy for him.  However, it was a different agent here within our company who wrote his Liability Policy.  But he trusted me with his insurance needs, so I presented him with the following options:

  • I could write him a new Liability Policy with E&O Coverage included.
  • I could become his Agent with the current carrier, but it would take several days.
  • I could write a stand alone E&O Policy, but it would cost a little more since the liability would not be attached.

This actually was no problem at all. I just needed an Errors and Omissions application filled out, signed and returned to me. Thanks to technology the client had all of this information back to me by the next morning. All the way from Italy.

Liability Insurance help on a beach vacation.

When I presented the first quote, which was the stand-alone E&O policy, my client was shocked at the price of the coverage. In the past he had only had a liability policy. I explained the bulk of his company’s exposure was in the Errors and Omissions Liability and he should expect to pay more for this coverage.

The second quote was with a new carrier.  It was a Business Owners Package (BOP) with E&O as an added coverage. This was also the carrier I had his Workers’ Compensation Policy with. This was a great quote and made the most sense to me. However, the client did want to wait for the quote from the carrier he currently had for his liability coverage. This is the company I had taken over as the Agent of Record (AOR). In the end both carriers had great pricing and coverage. My client chose to go with the carrier that already had written his Work Comp and offered all of the endorsements he needed for the contract he was working on.

After discussing all of the projects his company had coming up in the next year I offered him a Commercial Umbrella Policy to extend his coverages. I explained that this would help protect his company if ever a claim went beyond the limits of his policy. The client thanked me for mentioning an umbrella policy and he agreed that his business needed this coverage.

We were able to get all the documents signed, the policy bound and all of the needed certificates of insurance out to the Holder by the deadline. It all got taken care of expediently. All while my client was on vacation.

Insurance For Home Health Type Businesses – W-2 – 1099 – Leasing

The home health care industry is one of the fastest growing business types in the U.S. As the American population grows and the life expectancy becomes longer the population needing health care type services at their home continues to increase. In my experience home health companies are servicing the elderly, the mental or physically disabled and people with permanent disabilities that require constant care.

There are three types of home health agencies that can have a drastically different impact on the business insurance coverages.

  1. Business that employs all as W-2 employees
  1. Business that chooses to employ all as 1099 independent contractors
  1. Placement agency that places their employees with a third party employer

The first type is the easiest model to insure for professional liability, third party crime coverage and workers compensation coverage. Being employed on a W-2 status, these are direct employees and the ownership of the business has the right to direct, control and fire.   Insurance companies prefer this set-up.   Business owners MUST make sure their third party crime bond extends coverage to the client’s home.

The second type is the most difficult to insure. For the third party crime coverage, business owners must confirm that coverage is specifically for “independent contractors”. For the workers compensation coverage there is a specific question on the application asking about “sub-contractors” and whether they are insured or uninsured. You must answer the question “Yes, the business is using sub-contractors”. If you are covering the 1099’s under your policy the business owner must also answer “Yes, the sub-contractors are uninsured”.

The third type is different from the two above because the business owner is not purchasing a policy to cover their tax id number. For a placement agency, the business owner is “leasing” their employees to a “Leasing Company” aka “Professional Employer Organization” aka “Staffing Agency”. The staffing agency is insuring under their tax id number specifically for workers compensation. If the staffing agency requires the business owner to purchase their own professional liability and third party crime coverage, the business owner must inform their insurance company and make sure coverage is acceptable.

Artisan Contractors

Why would an artisan contractor need data breach coverage?

Data breach (or cyber liability) coverage has been one of the hottest topics in the insurance industry over the past few years. Insurance companies and agents alike unanimously agree that this line of insurance coverage is becoming critical for small businesses to protect themselves, but the odd disconnect is that many businesses don’t see the value.

First, let’s start by explaining what data breach coverage is designed to protect. This policy is designed to cover data breach recovery costs such as notifying any person/business potentially affected, good-faith advertising, and repairing security of the system. The coverage is important because a business is held responsible for protecting the personal information it collects from someone else. Most states have already passed (or are passing) regulations for steps a business must take for their clients when a data breach occurs. These regulations typically require formal notification that a breach has occurred to all potentially impacted clients, and typically the business must offer credit monitoring services for those clients for 1 year. Those steps alone can amount to a huge expense.

Most artisan contractors feel like this risk doesn’t relate to them at all, and others don’t realize that they aren’t properly covered. A recent study found that 39 percent of business owners think that data breach coverage is a part of their general liability policy. This thinking is wrong. Occasionally, a business owners package (or BOP) policy will include some minimal data breach coverage, but the limits are so low that the coverage would likely only cover a portion of any claim that existed. Many artisan contractors buy GL-only policies instead of a BOP anyway, because they feel like the extra coverage’s aren’t important for their business … and cyber liability is one line of insurance that is still considered a “luxury” expense.

In fact, one of my clients who is an artisan contractor and does HVAC work expressed himself pretty clearly: “Don’t try to sell me something that has no impact on my business. I don’t keep much information on my clients, and I’m so small that nobody would want to take the time to hack my company.”

That’s when I brought up the Target data breach, which he knew about because he was one of the victims and had to get new credit cards issued because of the hack. What this artisan contractor didn’t realize was that the hackers used a third-party vendor, HVAC company Fazio Mechanical Services, to gain access to the Target system.

The Home Depot data breach also began via a hack of a third-party vendor. In fact, using a third-party vendor is becoming the most common method for as an access point for a larger hack. As an artisan contractor, this is becoming the new risk and larger companies are starting to take notice.

Many larger organizations are now requiring a sub contractor to carry a separate cyber liability policy, along with the more typical insurance requirements (workers compensation, general liability, umbrella, etc.).

Over the next few years, I think getting a data breach policy is not only a necessary way to protect your business, but it is also a great way to separate yourself from the competition.