Lessons Learned – Week of October 31, 2010
Always be prepared for an Earthquake! On October 21 at 10:21 a.m., California residents statewide practiced drop, cover and hold On in the 2010 California ShakeOut
Jimmy Kimmel prepared his staff with this hilarious video “Security Guard Adelina Braves Big Earthquake” Check out this Youtube clip from his show.
Sports Championships, Riots and How They Relate To Insurance
Congratulations to the San Francisco Giants who beat the Texas Rangers to win the World Series this week. It was the franchises first championship since 1954 and their first since moving to San Francisco from New York after the 1957 season. You think the fans were happy? Like many other professional sports championship victories, passionate “fans” often congregate and begin to riot in celebration.
Luckily, riots don’t happen often but rest assured if they do, it is a covered peril on a property insurance policy (unless there is a specific exclusion attached to the policy form). So if your business gets stuck in the middle of excess celebration and your business property is damaged in a riot or civil commotion, you are covered under a standard property insurance form. Just make sure you carry the appropriate amount of insurance to cover your particular needs.
Six Employment Practices Statutes You Should Be Aware of as a Business Owner
If you’re a small business owner, chances are you don’t have the luxury of your own Human Resources department to oversee employment law compliance or employee relations and communication. You probably have your hands tied in many other areas just trying to make it through each day. To make your job more difficult, state and federal bureaucracies throw lists of employment statutes at you that you must comply with or run the risk of getting sued. Among the long list, the following statutes are some of the more noteworthy ones, but certainly not the only to be concerned about:
- Title VII of Civil Rights Act of 1964 (Title VII): This statute is a common source of employment litigation. This Federal statute makes it unlawful for an employer to refuse to hire or terminate any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of race, color, religion, sex, including sexual harassment, national origin, and pregnancy, childbirth, or related medical conditions.
- Equal Pay Act: This act deals specifically with unlawful differentials in compensation based on sex. The Equal Pay Act makes it unlawful to pay employees at rates less than the rate applicable to employees of the opposite sex for equal work for jobs requiring equal skill, equal effort, equal responsibility, and where the work is performed in similar working conditions.
- Americans with Disability Act (ADA): The ADA prohibits discrimination on the basis of disability against a qualified prospective or current employee, defined as an individual with a disability who, with or without reasonable accommodations can perform his or her essential duties of the employment position for which the person desires or holds. Many states also have statutes that place additional requirements upon employers.
- Age Discrimination in Employment Act (ADEA): The ADEA applies to employees who are age 40 or over and makes it unlawful for an employer to fail or refuse to hire or terminate any employee or otherwise discriminate against any individual with respect to his or her compensation, terms, conditions, or privileges of employment because of their age. Many states apply ADEA to all ages prohibiting age discrimination of any kind.
- Fair Labor Standards Act (FLSA): The FLSA sets the minimum wage and maximum hour/overtime requirements. The Wage and Hour Division of the Department of Labor manages the administration of the FLSA.
- Family Medical Leave Act (FMLA): The FMLA offers certain employees with up to 12 weeks of unpaid, job protected leave a year, and requires health benefits to be maintained during leave as if the employee continued to work instead of taking the leave. This statute is the responsibility of the Department of Labor (DOL).
As a business owner, how do you feel when you read these? Content and compliant? Or disturbed? What if a lawsuit was brought against your business tomorrow for wrongful termination or emotional distress, among other things? You probably wouldn’t feel as bothered if you knew you had an Employment Practices Liability Insurance policy in force to protect your business.
As I’ve written on prior posts, Employment Practices Liability Insurance provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. Employment Practices Liability Insurance (EPLI) is needed by any business with employees and those which begin to hire employees. EPL claims are not limited to major corporations. In today’s litigious climate, employers of all sizes are vulnerable. In fact, six out of ten employers have faced employee lawsuits within the last five years.
The cost of employment practices liability coverage depends on your type of business, the number of employees you have, and various risk factors such as prior claims or loss history. Your insurance agent can provide a quote with very minimal information, often right on the spot. If you don’t have a policy in force now, you must consider calling your insurance agent right away to discuss. This might be your best alternative to not having your own HR department or HR director.
Back From Vacation
I have been away for the past week on vacation, so I haven’t been able to post any blogs recently. However, it’s good to be back even though I had an awesome week off. I visited Playa Del Carmen, Mexico for a wedding and my girlfriend Joanelle and I made a vacation out of it. Playa del Carmen is a city just south of Cancun on the coast of the Caribbean Sea. I will admit there was a tiny bit of anxiousness on my part going to Mexico since the country has a recent string of violence, but the southern tip of the country hasn’t been affected like the northern borders. Playa Del Carmen is about a 45 minute drive from Cancun and a beautiful part of the country. The natives couldn’t have been more friendly or welcoming. If you are considering a getaway, keep Playa Del Carmen in mind! I’d be happy to share more details of our stay if you’re interested.
Joanelle and I took hundreds of pictures, but here is a small sample:
–JK
Lessons Learned – Week of October 17, 2010
What can’t you do with a cell phone these days? Apple’s next commercial?
Four Insurance Endorsements You Shouldn’t Go Without
First off, what’s an endorsement you ask? As defined by the Insurance Information Institute, an endorsement is a written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions. When an insurance policy is endorsed, the premium paid for the policy can change. However, not by much considering the additional coverage provided.
The following four endorsements are not typically part of a regular property or general liability insurance policy, but they are a must if they apply to your operations.
- Hired & Non-Owned Auto Liability: Hired & Non-owned auto is a small endorsement which can have a huge impact on your general liability insurance coverage. It protects your business from bodily injury and property damage claims caused by a vehicle you rent or borrow; or caused by vehicles owned by others, such as your employees. A simple errand to the store by an employee can put your business at high risk if you don’t have this endorsement on your general liability policy.
- Employee Benefits Liability: Liability of an employer for an error or omission in the administration of an employee benefit program. Coverage is intended to extend to the “administration” of these plans, including counseling employees, handling records, enrolling/terminating/cancelling employees in specified plans on a timely basis, etc. This endorsement is usually added to the general liability policy but may also be provided by a fiduciary liability policy.
- Earthquake Sprinkler Leakage (For CA & other earthquake regions): Earthquake is an excluded peril on a standard property insurance policy and your fire sprinklers bursting as a result of an earthquake and discharging water all over your property is not covered either. However, by adding an Earthquake Sprinkler Leakage endorsement to your property policy, you would be covered for the water damage caused by bursting sprinklers from an earthquake. This is never more than a few hundred dollars to add.
- Sewer Drain & Backup: Fall and spring tend to be the wettest seasons of the year, making buildings and homes most susceptible to the backup of sewer or drain lines. These events don’t occur often, but when they do, it can become a small disaster. A standard property insurance policy excludes coverage for such an event. The backup of sewer and drains as well as the failure of a sump pump is also excluded on a standard property policy. The damage you sustain from either of these problems will not be covered and you’ll be responsible to pay for the loss and the clean up. You shouldn’t go without this coverage endorsement.
To reiterate, it’s never more than a few hundred dollars annually to add any of these endorsements to your existing property or general liability insurance policies. In fact, it’s usually less than $100 in many cases for small businesses. With the amount of coverage provided by adding them, this is pocket change! Be sure to review your policies today to see if you carry these endorsements on your current policies.
–JK
Florida Man Sues Bar For Not Halting His Drinks
In a story reported last month, a 73-year-old Florida man got a ticket from police after he was hit by a car while riding his scooter home from a bar. Now, he claims the bar is to blame for selling him too many drinks, and he wants the bar to pay.
John Wasko of Manatee, FL filed a lawsuit against The Oasis Bar, saying the bar should have stopped giving him drinks. He’s seeking more than $15,000 in compensation. Ironically, Wasko was not booked for a DUI, but was ticketed for riding in front of a vehicle. Rough night! This happened in January, but Wasko waited 9 months to file suit.
After the accident, Wasko was taken to the hospital with non-life-threatening injuries, but he blamed the injuries on the bar’s failure to know when to stop selling him drinks. His lawsuit claims the servers were not trained well enough to know his condition and when to stop selling him drinks.
What does this have to do with insurance?
Businesses that sell and serve liquor need liquor liability insurance for alcohol related claims. A general liability insurance policy does not provide coverage for these scenarios. Liquor liability insurance is a form of commercial insurance that protects businesses against loss or damages claimed as a result of a patron becoming intoxicated and injuring themselves or others. It provides coverage for bodily injury or property damage resulting from:
- Causing or contributing to the intoxication of any person;
- Furnishing alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or
- Violating any statute, ordinance, or regulation relating to the sale, gift, distribution, or use of alcoholic beverages
Liquor liability insurance coverage will reimburse your company against the costs of defending a lawsuit in court, even if a claim is groundless or fraudulent.
This story is just a random example of a liquor liability claim. As you can imagine, they happen all the time because people generally make dumb decisions when they’re drinking. Funny thing is they rarely seem to think they’re fault when they get into trouble. Make sure you are covered adequately if someone blames you for over-serving them!
–JK
Lessons Learned – Week of October 10, 2010
“Once you lock it, you’re okay…”
Commercial Property Insurance – What Insurance Carriers Review Before Writing Coverage
Commercial property insurance is a “first party” coverage designed to protect the assets of a building owner. In simple terms, commercial property insurance protects buildings and contents for losses such as fire, smoke, vandalism, sprinkler leakage, collapse, theft, etc.
If you are a commercial building owner applying for commercial property insurance, carriers look at various physical characteristics of your building when underwriting. They use the “COPE” method which is an acronym that stands for four property risk characteristics:
- Construction (e.g., frame, brick, masonry, etc.)
- Occupancy (how the building is being used)
- Protection (e.g., quality of the responding fire department, adequacy of water pressure and water supply in the community, the presence or absence of smoke alarms, burglar alarms, etc.)
- Exposure (risks of loss posed by neighboring property or the surrounding area, taking into consideration what is located near the property, such as an office building, a subdivision, or a fireworks factory).
Construction type is a major component in property pricing. If construction type is incorrectly identified, the premium pricing will either be too high or too low.
Occupancy is very important to an underwriter because it helps determine the combustibility of a particular building. Each time the occupancy of a building changes, it presents a different underwriting situation and will need to be re-evaluated by an underwriter. Also, common hazards such as the plumbing, heating, roofing, and electrical systems are important factors. Underwriters will want to know when these were last updated or inspected if over 30 years of age.
In addition to evaluating the actual building and contents to be insured, insurance carriers will look at the exposures and occupancies surrounding the building to be insured. An acceptable risk may be affected by the proximity or conditions of exposing properties.
Finally, public fire protection is a key underwriting consideration, as it is the most essential element in controlling a fire once it has started and gained headway.
The pictures below are an example of a commercial building which insurance carriers desire to insure. It is well maintained, has a low-risk tenant, in a nice industrial area, with low-risk neighboring businesses (i.e. – no dynamite manufacturers next door or anything comparable).
When possible, I prefer to visit buildings first hand before sending to insurance carriers for quotes. This way, I know the exposures when discussing with underwriters.
–JK
Insuring An Industrial Chemical Manufacturing Business
Today I visited a client to do an annual review of their insurance program which we handle here at our firm. This is not your everyday business when you consider their operations. This is an industrial chemical blending manufacturer which produces chemicals used in a variety of industries. From solutions used in everyday household cleaning products, to compounds used to preserve metals through oxidation, their insurance demands are unique compared to most businesses. Here are some of the pictures I took during my visit:
Some of the coverages which apply to their operations are:
- Property Insurance (Building & Contents)
- Business Income & Extra Expense Coverage
- Workers Compensation Insurance
- Earthquake Insurance
- Commercial Auto Insurance
- Commercial General Liability (Including product liability)
- Employee Benefits Liability
- Pollution Legal Liability Insurance
- Excess Liability/ Umbrella Insurance
- Employment Practices Liability Insurance
- Group Health Insurance
Every business has unique exposures, so insurance policies need to be written specific to the demands of each and every business. Insurance is not one size fits all by any means!
–JK
About Me
I grew up in Fullerton, CA and graduated from Servite High School in Anaheim. I have my Bachelors degree from Loyola Marymount University in Los Angeles. I currently live in Tustin, CA.
Please contact me if you need help with any of the following lines of insurance for your business:
-Cyber / Data Breach
-Commercial Property
-Commercial General Liability
-Products Liability
-Workers Compensation
-Commercial Auto
-Umbrella/Excess Liability
-Errors & Omissions/ Professional Liability
-Employment Practices Liability
-Directors & Officers
-Life & Disability Insurance
Jimmy Kinmartin, CPCU 