August 25, 2011  

Property Insurance Coverage Exclusion – Water

This post isn’t terribly exciting, but true. So I must share.

A client called me on Monday, a pizza parlor, about some troubles they have been dealing with over the past two months. A foul sewage-like odor had been permeating throughout the kitchen area of the restaurant and sometimes even the seating area. Nobody had an idea of where it was coming from. There had been no sewage back-ups or signs of plumbing problems or anything. The “porta-potty” like odor started to become a significant problem for the restaurant as it grew stronger and started pushing customers away. Finally, our client called the building owner to come check it out (this is another story).

It turns out there was a small pipe underground in the kitchen slowly dripping over the course of a month that was saturating the ground and walls and pushing through the vents which affected the entire two-story building with a foul odor. Plumbers had to jack-hammer the concrete floor in the kitchen to get to the leaky pipe and patch it. Then put it all back together. The cost was paid out-of-pocket by our client who is NOT the building owner, nor responsible for this loss in his lease. Now he’s dealing with the building owner on trying to collect on the loss. I visited last night and it still smells like crap in there which is not good for business. In fact, business has dropped a bit which has our client stressing!

From an insurance standpoint, it should be noted that a loss like this is NOT typically covered on a property insurance policy. If you review a property insurance special policy form, you’ll find the following language under the list of exclusions:

Water:

  1. Flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not
  2. Mudslide or mudflow
  3. Water that backs up or overflows from a sewer, drain, or sump; or
  4. Water under the ground surface pressing on, or flowing or seeping through (a)  foundations, walls, floors or paved surfaces; (b) basements, whether paved or not; (c) doors, windows, or other openings

*If water results in fire, explosion, or sprinkler leakage, carriers will typically pay for the loss or damage caused by that fire, explosion, or sprinkler leakage.

It remains to be seen how this whole ordeal will be play out between our client and his landlord, but a good rule of thumb to understand about water damage claims is: if water rises from the ground up and causes property damage, it’s generally excluded from coverage. However there are endorsements such as “sewer drain and backup” that can be added on Businessowners policies to give coverage back in some scenarios. Be sure to clarify with your agent/broker about your property insurance policy.

–JK

August 16, 2011  

Paso Robles Weekend Trip

This past weekend, Joanelle and I spent the time in Paso Robles (CA) with friends to do some wine tasting. Those not familiar with Paso Robles, it’s about halfway between Los Angeles and San Francisco on California’s central coast. Paso Robles is wine country where winegrape growing climate is perfect for the production of many amazing wines.

Paso Robles On the Map

According to the website www.pasowine.com,  you will find 26,000 vineyard acres, producing more than 40 winegrape varieties – from Spanish to Italian, Bordeaux to Rhône, including the area’s heritage variety Zinfandel. With so many different wineries, it’s tough to decide which ones to see in a single day. We made it to five:

  1. Turley Wine Cellars
  2. Four Vines Winery
  3. Lone Madrone
  4. Bianchi
  5. Tobin James

Paso Robles is a must if you enjoy wine or can appreciate some beautiful scenery. Here are a fraction of the photos we took over the weekend:

This slideshow requires JavaScript.

-JK

August 8, 2011  

Contractor Dies After Falling 30 feet at Local Plant

A man working on a construction project at the coastal Hyperion wastewater treatment plant near Playa del Rey was killed last Tuesday after 30-foot fall. Los Angeles city firefighters were called to the plant and found the worker dead at the scene.

The Hyperion Treatment Plant, Playa del Rey, CA

The man, who was not an employee, was erecting a 30-foot wall panel at the plant according to the state Division of Occupational Safety and Health (Cal/OSHA).

The man’s employer is a Stanton-based general contracting firm which has been working at the plant to construct a gas compressor facility that will replace equipment built in the 1950s. The incident is believed to be the plant’s first construction-related fatality since the plant was first modernized in the 1950s.

This incident is a strong reminder of the importance of carrying workers’ compensation insurance. Even more notably, the importance of making sure any subcontractors you have working for you carry workers’ compensation insurance. No matter if you’re a professional consultant, or a large construction company, you MUST be certain any independent contractors you hire carry workers compensation insurance and show you proof with a certificate of insurance before working any jobs for you. Otherwise, you as the employer are liable for any work related injuries or loss.

Have them furnish you with evidence of coverage with a Certificate of Insurance. Mark their policy expiration down on your calendar to remind yourself to request a renewal Certificate before their policy expires. (While you’re at it, make sure their general liability coverage is also listed on the Certificate and that you’re named as an Additional Insured)

Your workers’ compensation insurance carrier will want to see copies of your independent contractor’s workers’ compensation certificates. Without the certificates, your carrier may consider the independent contractors your employee and charge you an additional workers’ compensation premium at the time of audit.

A good rule of thumb is to have ALL your workers, whether employees or independent contractors, covered by workers’ compensation insurance. Numerous court cases have ruled the hiring party is responsible for injuries to independent contractor’s employees when the independent contractor did not have their own workers’ compensation insurance.

–JK

July 28, 2011  

Thai Life Insurance Commercial

I’ve been playing around with Google+ a little bit and one feature I have come to like is the “Sparks” link which basically brings you stories on the things you love from all across the Web. Using the keyword “insurance,” I found this heavy hitting Thai Life Insurance Commercial which really doesn’t hold anything back when striking at your emotions.

You don’t see commercials like this running in the U.S. on Sunday afternoon during a PGA tournament! However, it’s powerful. Do you have life insurance?

Here’s a great resource to start if you’re considering buying life insurance.

–JK

July 19, 2011  

Clean Up Your Mess!

I wrote insurance coverage for a commercial building earlier this year, property and general liability, only to receive a phone call a couple of months later from the carrier telling me that an inspection was done on the building and for lack of a better term, the premises was an absolute mess. It needed a fix quickly, or coverage was going to be cancelled short-term. The call took me by surprise so I decided to visit the property myself. Here’s what I discovered:

This was borderline hoarding. Storage was disorganized, with random articles stacked in solid piles up to the ceiling in some areas. There were no aisles and inadequate means of getting out from the storage area in the event of an emergency. Combustible material was stacked near an electrical switch, box, and panels, etc.

The loss control recommendation from the carrier: housekeeping. “There is excessive storage of combustible inventory and miscellaneous material throughout parts of the warehouse. Such arrangement of material (with 1 small walking path) could impede safe egress from the structure; The volume of closely packed material increases exposure to a rapidly spreading fire. The material also obstructs access to fire extinguishers and is stacked adjacent to electrical boxes and panels; The heavy fire load may not be controlled by the existing sprinkler system.”

The recommended solutions to this mess?

  • The inventory should be rearranged so all electrical boxes/panels have a 3′ radius free of combustible material.
  • The inventory should be rearranged to allow access to fire extinguishers.
  • The inventory density should be reduced to allow better access to storage areas and improved water distribution for the sprinklers.
  • Housekeeping should be improved and then maintained on a regular basis.

This is one of the most extreme examples of a disorderly premises that I have encountered. It doesn’t take an insurance professional to know that this is a severe property and general liability insurance hazard. There is absolutely no way of writing insurance with any carrier if you have a premises in this kind of shape. The risks are just too extreme. I’m not an obsessive compulsive neat freak by any means, but I ask myself if this insured has any bit of concern for protecting their assets? The point here is about risk management and risk reduction, not about making things look pretty at your home or business.

What type of housekeeping do you maintain at your home or business?

–JK

July 14, 2011  

Rodney King and DUI’s

The infamous Rodney King,  whose videotaped 1991 beating by police ignited the Los Angeles riots the following year, was arrested Tuesday afternoon in Southern California, suspected of driving under the influence. King was driving erratically and was taken into custody where he was evaluated and later arrested on suspicion of DUI of drugs or alcohol.  He was also convicted of DUI for a 2003 traffic stop where he was found driving under the influence of PCP.

Riverside County Sherrif's Department via AP

Let this be a lesson about the costs of getting a DUI. Everyone knows drinking and driving is dangerous, but most don’t think about the possible financial repercussions driving under the influence of alcohol or drugs.  You may have a few drinks at the bar, or even dinner for that matter and think no biggie, I just want to get my car home and avoid the cost of a $30 taxi ride.

Well think again before getting behind the wheel. $30 is chump change compared to what you’ll be paying if you get nailed for a DUI. From court costs, fines and attorneys’ fees, to traffic school, probation and higher insurance premiums, expect to pay $10,000 or more for the experience here in California. Not to mention a big pain in the arse dealing with the bureaucracies and other non-financial hurdles you must go through in the process.

From the moment you’re taken into custody, you start a running tab, and we’re not talking about a bar tab here. Each jurisdiction’s costs, fines and penalties will be a little different, but this is what you can expect if you’re suspected of driving under the influence of alcohol or drugs:

  • Your car will be impounded. You will be charged a towing fee and pay for the privilege of having the local authorities look after your vehicle while you get the mess sorted out. There could also be a vehicle release fee. The ticker starts at $250 or more just to keep your car in your possession.
  • You will need to post bail so that you may be released from custody until your first hearing. Your bail will vary depending on the county and circumstances surrounding your arrest, but can range from a few hundred to a few thousand dollars. If you don’t have that kind of cash on hand, you will call a bail bondsman. Bail bondsmen will typically ask for 10 percent of the total bond. If your bond is $5000, you’re still going to have to come up with $500 quickly.
  • On a first offense DUI conviction, you will be fined not less than $390, and not more than $1,000, excluding court fees.
  • California requires 96 hours of jail time if you’re convicted of a DUI, 48 of which much be served consecutively. Many judges allow this time in work service. All of this will likely result in some time off work, and for many people lost time means lost wages. DUIs remain on your criminal record for life if employers or future landlords do a background check.
  • You will get a minimum of 3 years probation.
  • Your insurance carrier may place a surcharge on your auto insurance policy for up to three years. However, because a DUI stays on your driving record for 10 years in California, a driver with a DUI will not be eligible for a good driver discount for up to 10 years.
  • Pay a license re-issue fee of at least $125. To get your license back you will probably have to complete an approved alcohol education and treatment program at your own expense.
  • If you get your license back it will likely be restricted and you may be required to install an ignition interlock device, also at your own expense. An ignition interlock device (IID) is wired to your vehicle’s ignition and requires your breath sample before the engine will start. If the IID detects alcohol on your breath, the engine will not start. As you drive, you are periodically required to provide breath samples to ensure you haven’t taken a drink since beginning your journey.

Next time you’re out enjoying adult beverage’s, don’t let the alcohol do the thinking when it comes time to close your tab and leave the bar. Just print this blog post out and put it in your purse or back pocket to remind you the list of troubles you’ll be dealing with should you get caught for a DUI. Not to mention the danger you’ll put others in if you get behind the wheel. Case in point…..Rodney King.

Source: Insurance Information Network of California 

–JK

July 1, 2011  

Happy 4th of July!

To everyone, I hope you all have an awesome 4th of July! It’s a good time to enjoy a long weekend in the sun. Whether you’re at the beach, in the pool, or just kickin’ it at home, have a blast.  Be sure to take a moment to reflect and give thanks for being able to live in freedom in this great country of ours. This Independence Day we celebrate America’s 235th birthday. As we enjoy all the traditions, don’t forget about those who have done so much to secure and safeguard our independence throughout our history.

As they say, have a SAFE and SANE holiday weekend. Take it from these people:

–JK

June 24, 2011  

What Is A Workers Compensation Insurance Experience Rating?

I attended a workers compensation related seminar this past week on the subject of  insurance and more specifically, the infamous “experience rating.” Five minutes after the seminar began, I was reminded how complicated the subject is when it comes to the statistics and calculations of experience ratings. I figured it would make a good insurance blog topic if I could somehow weed out the x’s and o’s and put it into layman’s terms on what it all means to you, the business owner who has an experience rating tied to your workers compensation insurance policy.

What is an experience rating?

California’s workers’ compensation experience rating system is a rating system intended to provide employers a financial incentive to reduce work-related accidents. It’s a method for adjusting premium rates to reflect an individual employer’s claims history. Essentially, it predicts an employer’s future losses based on past experience and compares the loss or claims history of one company to all other companies within the same industry/classification.

Employers may receive discounts off their premium for good claims records or may be surcharged for their poor claims records.

There are approximately 500 different business classifications used to describe the various types of businesses in California. Businesses assigned to your SIC (standard industry classification) are relatively similar to your business, however, there are differences which can have an impact  on workers’ compensation claims costs. To address these variations and encourage workplace safety, experience rating adjusts the premium  you pay either upward or downward based on a comparison of your company’s history of payroll and claims to what is expected for businesses of similar size within the same industry classification. This comparison results in your “experience modification.” An experience modification greater than 100 results from less favorable loss experience compared to the average of other similar businesses, and vice-versa, an “ex-mod” less than 100 results from more favorable loss experience compared to the average of other similar businesses .

Experience rating places more emphasis on the frequency of injuries than on the severity. An employer with one large loss ($100,000) will pay less for future insurance than an employer with 10 smaller lost time claims of $5,000 each – a total of $50,000 in losses. Experience rating cushions the blow of a large loss, but hammers employers with frequent losses.

What is the need for experience rating?

  • To provide a direct financial incentive for employers to reduce accidents and encourage safety– This allows employers to develop loss control programs and establish safety programs which create premium incentives.
  • To distribute the cost of insurance equally among employers in an industry classification– The reality is there is no “average” employer for a given classification code. The experience modification takes this into account to encourage the emphasis on loss control. Differences in management practices and methods of operation are reflected in final premium.

Who gets experience rated?

All California employers meeting minimum qualifying premium (Qualifying premium for 1/1/2011 is $16,700 and is amended annually). This accounts for approximately 120,000 employers in CA. Qualification is automatic and mandatory.

So what does this mean?

The science to determining your experience modification is pretty complicated. What you need to know is you want to keep your experience modification down, as it will bring your workers compensation premium down. To do help do this, you should  develop loss control and safety programs to control work related injuries. It starts with you. Your management practices and methods of operation are reflected in your final workers compensation premium. If you don’t know where to start, contact your agent or carrier. Insurance carriers will help customize a loss control program for your business. They want to control loss just as much as you do.

Resources: WCIRB California; State Compensation Insurance Fund

–JK 

June 16, 2011  

U.S. Open During Thursday Lunch Hour

I just joined a fantasy golf league so I need to keep on top of the action this weekend in the U.S. Open of golf. I spent the lunch hour today at my desk to watch the action live online from Congressional Country Club in Bethesda, Maryland. Not a good start for my team though…

-JK

June 15, 2011  

Safety First: Ladders

Yesterday I received a call from a client, a contractor, reporting that one of his employees fell off a ladder and broke his elbow on the job on Monday afternoon. As the employer, he did the right thing in seeking immediate medical care for the employee at the nearest medical facility. He obtained as much information as he could about the injury and supporting info from the employee’s personnel file including name, address, phone, DOB, SS#, date of hire, and wage info.  We called in the claim this morning to the carrier and a claim adjuster is now working with our insured to guide him and the employee through the treatment process.

Safety In The Workplace

Statistics show that falls from ladders injure over 20,000 workers annually. Some injuries result in permanent disabilities and even fatalities. If you’re working in a job capacity that calls for ladder use, be sure to make ladder safety a high priority for your employees. By following these safety guidelines, you can help prevent ladder accidents.

Safety starts before the ladder is even mounted.

  • Before using any ladder, check its condition. Make sure there are no broken, cracked, or missing rails and that rungs are not slippery from grease or oil.
  • Check for damage or corrosion on metal ladders.
  • If a ladder is in poor condition, don’t use it. Report the problem so it can be tagged and repaired.
  • A competent person should periodically inspect all ladders and remove damaged ladders from use until they are repaired.

When choosing and using a ladder, keep the following in mind:

  • Choose the appropriate type and size ladder for the job, including correct fittings, and safety feet.
  • Near electrical conductors or equipment, use only ladders with non-conductive side rails.
  • Set the ladder on solid footing, against a solid support.
  • Place the base of a straight ladder out away from the wall or edge of the upper level about one foot for every four feet of vertical height.
  • Be sure straight ladders are long enough so that the side rails extend above the top support point by at least 36 inches.
  • Single cleat job-made ladders should be 15 to 20 inches wide with ladder cleats uniformly spaced 12 inches apart.
  • Never try to increase the height of a ladder by standing it on other objects, such boxes or barrels, or by splicing two ladders together.
  • Portable ladders should be tied, blocked or otherwise secured against movement.
  • Keep ladders away from doorways or walkways, unless they can be protected by barriers.
  • Keep the area around the top and base of the ladder clear. Don’t run hoses, extension cords, or ropes on a ladder; these may create obstructions.
  • To avoid slipping on a ladder, check your shoes for oil, grease, or mud and wipe it off before climbing.
  • Climb the ladder carefully, facing it and using both hands. Use a tool belt or hand line to carry materials.
  • Most ladders are designed to hold only one person at a time. Two persons may cause the ladder to fail or be thrown off-balance.
  • Don’t lean out to the side when you’re on a ladder. If something is out of reach, get down and move the ladder.
  • Ladders should never be used sideways as platforms, runways or scaffolds.
  • Choosing and using ladders wisely is a step in the right direction.

Source: State Compensation Insurance Fund 

–JK

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