Tag: Insurance

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.

Business Personal Property and Tools

Any time you have a business personal property policy in place which covers property of any kind, it is essential to have good documentation of what you have. It is also critical that your insurance policies are covering the right amount of property and type of property the way you want it covered.

Construction tools neatly organized in an office or garage show the need for business personal property insurance.

It is too easy when you get around to your year end renewal on your business owners package (If it has the Tools & Equipment Coverage or BPP Coverage on it) or your Inland Marine or Property policies, to just renew and not take a close look at what is actually covered.

I have worked with several companies, which, when we reviewed their tools and equipment or Business Personal Property coverage of their prior policies, the limits were not at where they needed to be. This happens for a variety of reasons. I have seen some companies who see a lot of growth in their first few years in business. After a year or two goes by, they don’t realize how much stuff they have accumulated, which ends up being worth a lot of money but not covered by their policy. So this is something we try to stress when you get your first policy, however it is something to make sure is updated as your company grows as well.

Claims Made General Liability

Claims made General Liability (GL) Policies cover claims that arise from injury or damage occurring during the policy period and reported to the insurer during the policy period. Claims arising from events outside the policy period or claims reported to the insurer outside the policy period are not covered unless special coverage is purchased or arranged with the insurer. This is done by purchasing a tail for a specified extended reporting period.

Claims Made Vs. Occurrence Insurance Policy

Generally once you have a claims made policy, its best to either keep going on with claims made policies. If you were to switch to an Occurrence Policy, this could leave a potential hole in covering claims if they were to arise. Most of the time a claims made policy will be less expensive at the beginning. If you have to purchase an extended reporting tail these can at times be just as expensive as the original policy themselves.

Here is a quick example of how they work both good and bad:

You own a Convenience Store and you have just finished up mopping the inside. A customer comes in and slips and falls. They get up and seem to be ok. You check on them and they tell you everything is fine so they leave and you think nothing else of it. Your claims made policy expires the next month and you switch to an occurrence policy. All of a sudden, 2 months later you hear from the person that slipped inside your store, and they are claiming a back strain due to the fall. They state that it has effected their work performance, life etc.

Since the claim has now been filed outside of the policy period and you have switched to an occurrence policy, you are now exposed to not having coverage for the claim. If you did not purchase extended reporting period or tail coverage, then, you will potentially not have coverage for the claim. If you decided to purchase the extended reporting period coverage, then you should be fine and the insurance carrier will cover the claim. It’s always important to discuss what type of general liability coverage is best for your company with your agent, not only in the short term but the long term as well.