Month: September 2016

Travel exposure and work comp

I have had many conversations recently about employees and travel exposure in regards to workers’ comp insurance. Most employers understand that regular commuting does not result in a work comp claim.  Even if there is an accident involving an employee. However, many carriers view every day or long distance highway travel as a higher risk exposure.

Salespeople, nurses, and other employees who are on the road a lot often are exempt from the coming-and-going rule. Travel is integral to their employment because they don’t work from a fixed office. This also holds true for construction risks.  These businesses have employees that are going from their home state to another state to work. Basically from the time they leave their front door until they return home from that job they have 24/7 work comp exposure. The Walsh Test helps to determine jurisdiction when multiple states are invloved in a workers compensation claim for these employees.

Workers Compensation Coverage for Travelling Nurses.

On-call employees are likely covered from the moment they are called into work even if they get hurt at home. Employees who are injured during business travel may receive compensation, even if the accident happens during recreation. Courts generally are liberal in determining workers’ compensation eligibility in work travel accidents. In many cases, even if the activity that caused the injury is not considered work related.

If an employee is on a trip that is work related and they go to work out at the gym, if they injure themselves at the gym they are covered by workers comp. They are covered because a lawyer  would argue they were only in that gym at that time because they were out of town for a work trip.  For this reason the injury is covered.

With that being said, if an employee goes out for a business dinner and is in an accident after having too much to drink, work comp would most likely deny the claim.  This is because the use of alcohol would exclude the injury whether they were on the clock or not.   So with in certain limits would work comp kick in for traveling employees. It’s worth noting that workers’ compensation coverage for commuting employees varies state to state.

If an employee runs a work-related errand on the way home from work and gets in an accident, her injuries may be compensated. Another example of this would be if an employee is injured running a work-related errand while out for [personal time] lunch. This relates to the dual purpose or capacity concept.

Most of the time I run into having this conversation with a client if it is a higher risk construction company.  A company like carpentry commonly has employees in the home state that are traveling into multiple states annually. Here is the outlook from an underwriting perspective.  Not only is your business in a risky trade like carpentry, but we are throwing in across state lines travel. Where accidents happen in a vehicle with possibly one if not three or four employees could be injured. These are two big reasons insurance carriers are not interested in this type of risk.

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Differentiating Workers’ Comp Insurance from being a Commodity Product

Workers’ Comp Insurance is often thought of as a commodity product. There is some logic to that line of thinking. Pricing is determined by classifying employees and then taking the percentage rate assigned to that classification and multiplying it by estimated payroll. In some states such as Florida and Wisconsin, the workers’ comp rates assigned to those classifications are set by states, whereas in some states the rates by classification can vary from carrier to carrier. In competitive states, pricing is often thought to be the main differentiator between workers’ comp carriers. Most of the benefits paid from claims related to workers’ comp insurance are set by statutes, so carriers should be viewed pretty similarly in that regard as well.

Other than pricing, what can separate workers’ comp insurance carriers? Carrier rating is one factor that is considered. It relates to the financial strength of carriers. A higher carrier rating should lead to more certainty that claims will get paid, but it is highly unusual for claims not to get paid by any workers’ comp insurance carrier. Higher carrier ratings are sometimes required to meet insurance requirements of vendors or customers. A carrier’s customer service reputation can also be relevant. Additionally, payment plans can vary by carriers. Some carriers offer pay as you go. This allows premium to be paid in line with how busy a company is at a particular time. Furthermore, it generally reduces large audit balances.

Another differentiating factor is, are different programs offered by workers’ comp insurance carriers. Missouri Employers Mutual is one carrier who offers several programs to enhance employee safety. They often safety grants to policy holders. The grants will provide dollar for dollar matching funds up to $20,000 for successful applicants to purchase more permanent type safety devices. Some applicants may be able to get a grant larger than their policy premium. Missouri Employers Mutual also offers safety dividends to policy holders with lower loss ratios as a way to reward good safety practices. The Hartford is another carrier that offers numerous programs to differentiate its product. They offer programs to provide discounted slip resistant footwear to employees, programs that can lead to weight loss and overall a healthier employee pool and discounts related to vendors which can provide a more ergonomic friendly workplace. The Hartford also provides a broad form policy which includes things like more cancellation notices, pays benefits for more additional expenses, includes complimentary waivers when needed and provides longer notification periods for insureds related to certain mandatory notification events. Some carriers, such as Employers, offer price differentiators such as filing for a 5% rate deviation in Florida which allows them to offer worker’s comp rates which are 5% lower than other carriers in Florida which must use the rates set by the state.

Another area carriers can differentiate themselves is by superior loss control or claims management services. Utah Business Insurance (UBIC) is a carrier that offers superior loss control. Very knowledgeable field reps meet with prospects and insureds to provide insight on safe work places. These field reps are strongly versed in OSHA and other safety protocols. Both UBIC and Missouri Employers Mutual also diligently investigate claims as they arise.

While price is always an important consideration as it relates to workers’ comp insurance, there are numerous other factors worth considering when selecting a workers’ comp provider.

Eight CyberSecurity Tips for Small Businesses

Cyber Security

In-depth Training for Employees in Cyber Security Prevention

You and your information technology expert need to come up with basic security practices for your employees. There need to be clear and concise rules of behavior for your employees regarding passwords and customer information.

Protect all sensitive Information from Cyber Attacks

Starting with just keeping the computers clean and always running the latest security software on schedule.  Make sure you are install all of the proper malware, antivirus, and key software updates. If you and your IT Professional are constantly paying attention to cyber security, the employees will take more of an interest as well.

Make sure you purchase the proper Cyber Insurance Policies

Cyber Security Insurance comes in two forms that are usually packaged together. The first is commonly referred to as Data Breach Insurance and it covers your first party damages to you and your business. The other coverage is commonly referred to as Cyber Liability Insurance. This coverage protects your business from the third party liability your business may have to customers and other parties who may be damaged by a data breach that occurs within your business.

Get the best answers to Data Breach and Cyber Security Insurance questions at MyInsuranceQuestion.com

Do not forget about having a policy regarding Mobile Devices 

Mobile devices are such a common part of our lives now that many people forget to realize their phones are a prime target for criminals to access a business’s sensitive information. Many employees may want to have access to their company email on their phones, especially if they travel much for work.  Having a well thought out policy that you are comfortable with and adequate measures to check that your employees are following the procedures is essential.

Make backup copies of important business data and information

There should always be a way for you to retrieve customer’s sensitive information. Microsoft one drive is a great fairly new software program that allows you to store and share information internally.  If you can afford it, having a second server at a separate location may be necessary depending on how much information your business does store.

Cyber Security Insurance is needed for most small businesses.

Strictly control access to your computers and create user accounts for each employee

This can help dramatically if you have an internal problem. Knowing who was logged in at the time of the access can help determine where to go to find information about a hack. It may be as simple as an employee who opened a zip file in an email and they are scared to bring that to your attention fearing retribution or it may help you find the source of employee theft.

Secure your Wi-Fi networks

Properly securing your Wi-Fi network may seem like something obvious to prevent a hack. For small businesses owners without a lot of technology experience may not know how to do this or the need for this type of security. This should be the first and foremost thing a small business should do to prevent unauthorized access.  This is important to consider for businesses that are open to the public or may offer Wi-Fi access to their customers.

A Strong Password is essential to a good Cyber Security Program.

Passwords and authentication

Passwords protection is crucial to defending your business from a data breach.  It is important to give your employees hard examples of what is a good password and what is not.  What may seem secure to one employee may be something as simple as October which is not acceptable in the least bit.  Here are some examples of password you can use to demonstrate strong and weak passwords.

6f8Il,E6pg%j2

This would be an example of a password that is extremely secure.

BaSkeTBaLl_2741+3657

This would be an example of a password that is a little less secure, but easier to remember.

JoeSmith or password

These are examples of terrible passwords that should never be used.

You will find many employees like to use something similar to the middle password. This is because it has some resemblance to a word they can associate with to remember the password more easily.  I personally like this because, in the Fall I might use Football or Autumn, in the Winter I might use basketball or Thanksgiving. As long as you are keeping the other numbers and special characters random it is difficult for hackers to hack through these secure passwords.  The birthdays of yourself or a family member should never used. There should also be a time period for how frequently a password must be changed. Every 90 days is a good rule of thumb, but many businesses have different requirements based on the needs of their organizations.

Additional Insured or Waiver of Subrogation

My Customer Service Representative (CSR) and I see a ton of requests for a Certificate of Insurance. Many of our clients do not understand what a Certificate Holder is or what being an additional insured means. I want to describe the differences between additional insured and a certificate holder. I want to explain this because, many clients don’t understand why an Additional Insured cannot be named on a workers comp policy. These same clients do not understand why the same person can be named on Liability Policies. Well I am going to shed some light on this situation. Here are four common terms that will help a business owner through the process.

Certified, additional insured, waiver of subrogation.

Certificate of Insurance:

A certificate of insurance is a document issued by an insurance company to verify insurance coverage to another person. The document tells what coverage is secured and under what specific conditions grated to the listed individuals. The document lists the effective date of the policy and the type of insurance coverage secured. Also, a certificate of insurance includes the limits of liability and the dollar amount of coverage. It is important to understand the holder of the certificate is not covered under the policy. The certificate serves as proof the holder made sure the person they are interacting with secured coverage.

Additional Insured:

When an insurance professional refers to an additional insured, they are referring to a type of status associated with General Liability Insurance Policies. Those policies provide coverage to other individuals or a group of individuals who were not initially named on the policy. After endorsement, the additional insured will be protected under the named insurer’s policy. They can file a claim in the event they are sued. Additional Insured is available on General Liability, Auto Liability and Umbrella Liability.

Certificate Holder:

A certificate holder is an individual or entity that is named on the certificate of insurance. When named on the certificate, they are notified when coverage is cancelled prior to the renewal date. This is needed in the event a business is partnering with a contractor or another business and that business does not hold the necessary coverage for the business interaction. No coverage protection under the contractor’s policies is provided to a Certificate Holder.

Waiver of Subrogation:

A Waiver of Subrogation means the insurance carrier agrees to relinquish any right to recover damages if it is determined in the course of investigating the claim that the client or one of the client’s employees was responsible for the loss. An insurance carrier may reserve the “right of subrogation” in the event of a loss. This means the company may choose to take action to recover the amount of a claim paid to a covered insured, if the loss was caused by a third party.

Waiver of Subrogation is available on General Liability, Auto Liability, Umbrella Liability and Workers Compensation. A Waiver of Subrogation provision prevents an insurance company (who steps into the shoes of the insured after it pays a loss) from suing the other party to the contract. This is likely the party who caused the loss.  Moreover, Waiver of Subrogation provisions found in contracts are generally upheld by Courts.

When a contractor works another person’s property, there are risks involved. Contractors can damage personal property or be injured while performing work. Companies and individuals that hire contractors want to be certain they will not be held liable for injuries, damages or substandard work. For this reason, they will frequently request to see a certificate of insurance from those contractors.

In my experience, most client’s call and request an additional insured to be added to a work comp policy.  An Additional Insured cannot be added to a Workers Compensation Policy. As stated above, an Additional Insured is naming someone else on a policy and a Work Comp Policy is written to cover injured employees. Workers Comp does not cover another company.  The alternative to this issue would be requesting a Waiver of Subrogation.  If you are a sub contractor and you are working with a larger company requesting a Waiver of Subrogation, it is important to make sure you the contractor understand what you are being asked to waive.

If your company hires subcontractors, it’s important to get a certificate of insurance from every subcontractor. Even if you trust your subcontractors. For example, if you have worked with these contractors in the past you need to get updated certificates. Even if you knew the to have insurance in the past they may not have it now. A business owner should submit a request for a certificate each time they hire a contractor. This insures they have proper insurance. Proper insurance at the time you hired them. Doing this can prevent a scenario where you inadvertently take on the risks associated with the work your subcontractors perform.

 

The content of My Insurance Question is created by the experts at The Insurance Shop LLC. The Insurance Shop is an independent insurance agency that was founded in 2005. Over the past decade and a half, the agents at The Insurance Shop have developed relationships with more then a dozen insurance carriers. These carriers give their agents the ability to shop your policy around and make the carriers compete for your business. If you are looking for a better value when renewing your commercial insurance package, let us shop insurance so you don’t have to. Give us a call today at 800-800-4864.

What Do My Workers Compensation Limits Mean?

We get this question a few times a week because most business owners don’t quite understand their workers compensation limits. They try to compare them to their general liability limits and that is where some of the confusion sets in. The Limits on your workers’ compensation insurance policy provide coverage for a business against lawsuits arising from employment-related injuries or illnesses.  For example, if an injured employee is not satisfied alone with medical and loss of wage benefits because they feel their employer purposefully put them in harm’s way on the job or were grossly negligent, and as a result they were injured, they may sue for punitive damages.  In some cases, even the employee’s family can sue for the same damages. This is where Part II of a workers’ comp policy would kick and provide coverage.

It is important to note that employers’ liability coverage is limited, unlike medical benefits or loss of wages.  This is the spot that a lot of business owners or anyone starts to get confused. They see limits on their workers’ compensation policy and naturally think that is the max that would be paid in an injury scenario. A workers’ compensation policy will pay out whatever it takes to rehabilitate an injured employee. Employers liability or Part II will not pay out unlimited amounts on behalf of employers who were charged with gross negligence or knowingly placing their employees in harm’s way.  Employers’ liability coverage in most states starts at $100,000 each employee, $100,000 each accident and at $500,000 per policy limit for disease- these limits are statutory or minimum limits that come with the purchase of a policy.  These coverage limits can be raised for a nominal additional premium percentage on most policies.  Many businesses opt for increased employers’ liability limits.  They do this because of a need for peace of mind or because their work contracts often require higher limits than statutory requirement.

To give you an idea on how these limits work, think about it in this manner. An employee working in a manufacturing plant is exposed to lead on a daily basis. The employer does not have proper ventilation or does not always check on the employee to make sure they are wearing proper attire. Whether that is long sleeve shirts and pants or to have a respirator so they are filtering the air quality they are breathing. The employee gets injured on the job after many years of never missing work. It is also discovered that they have come down with a serious illness that may be caused by years of lead exposure. The employee and his family are not satisfied with the level of benefits workers compensation is providing and has decided to sue the Employer for negligence. This is where the limits in Employers Liability or Part II would kick in. There are many other scenarios that could come into play outside of illness, but this is just one example of how a 3rd party may potentially bring suit against your company. The best thing to do is always be proactive with safety, etc. which can be hard for a small business.  Because your time is very invested in the day to day activities of the business.

6 things an underwriter loves to see when quoting commercial insurance.

For most small business owners, purchasing insurance is not one of their favorite things to do. Most business owners would rather be involved in the day to day operations of what their business does to make a profit. Taking a little extra time before you pick up the phone to get a quote can make all the difference in the world when you are offered a quote.  Here are 6 things to keep in mind when speaking with your agent about a business insurance quote.

Small Business Insurance

Have your info.

Everyone wants a quote and they want it quick, but insurance is not a business in which a company can quote a price on the drop of a hat. Proper tax id number, your experience modification rating and accurate payroll figures make the process much quicker for an agent to get a quote from the underwriter. If you don’t have this information a carrier cannot and will not offer you a quote. to save yourself and the carrier some time, have this information ready before you start looking around for coverage.

Safety programs are in place

Safety programs can be expensive and time consuming, but they absolutely benefit your company in many ways. First and foremost, they lower the amount and severity of injuries that occur to your employees. Second they limit the amount of time it takes injured employees to return-to-work. Third it can impact what you pay in premium for commercial insurance. If and when you have an injured employee, your insurance agent can negotiate on your behalf with your insurance carrier to not raise your rate on premium because of the claim. If a detailed safety plan is in place the carrier might see this one incident as more of an outlier and not a sign of how the business operates. If there is not a safety plan in place your business is much more likely to have your rates go up or be dropped by your carrier altogether.

A thorough and accurate website

The accuracy of your website is extremely important. Your agent is going to have a conversation with you about your operations. During this conversation it is important to tell him not only what your business does, but more importantly what your business does not do. Your website needs to match up with this description.  If you run a landscaping business that does not work on trees, but your website offers tree services than an underwriter is going to wonder what else you are not telling them. This is a great way to get a higher premium or more likely be denied coverage altogether.

A detailed payroll history

I know you may not like giving away too much information about your business, but the more accurate this number is that you give to your agent the more accurate your quote will be.  This will all get straightened out during an end of term audit, but it is best to prevent over or underpaying on premium by giving accurate numbers to your carrier up front.

Don’t be a rate jumper

A business who seems to change carriers every year at the slightest drop in premium. Carriers want to establish a long term relationship with a customer. If you have several carriers over the last few years it may be a red flag that those carriers dropped your business or that the carrier may only have your business for one term. Unless your payroll is extremely high it may not be financial sound for them to quote you.

 

Don’t forget, in the end they work for you

If you forget a few pieces of information that are necessary for a quote than it might be expected for the agent or underwriter to be a bit frustrated. But never forget that these people work for you. If they make you feel too uncomfortable do not hesitate to walk out and speak with another agency or carrier. Do what you feel is best for your business.