August 20, 2010  

Lessons Learned – Week of August 15, 2010

On Wednesday, an 1,100 pound bull leaped out of a bullring in Tafalla, northern Spain and charged into a crowd of spectators. Some 40 people were injured, but nobody was killed. The bull had already twice tried to jump the barrier during the event, breaking one of his horns, and was about to be removed from the arena when he launched himself into the crowd.

Lesson Learned: Don’t provoke an 1,100 pound bull. You play with fire, you’re going to get burned.

August 18, 2010  

What Is Employment Practices Liability Insurance?

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. These types of claims are not covered under a general liability insurance policy.

In December 2009, NASCAR settled a $225 million sexual harassment and racial discrimination lawsuit by former official Mauricia Grant

Who Needs Coverage?

Employment Practices Liability Insurance (EPLI) is needed by any business with employees and those which begin to hire employees. It used to be that EPL claims were limited to major corporations. This is no longer the case. In today’s litigious climate, employers of all sizes are vulnerable. According to EEOC data, 41% of all EPLI claims are brought against small employers with 15 to 100 employees.

Why is Employment Practices Liability Insurance Needed?

Statistics show businesses are more likely to face an employment claim than a property or general liability claim. Cases against employers are on the rise. Once these claims manifest, they become a huge burden on a businesses assets and can easily put a small employer out of business for good. Here are some powerful statistics that bring the seriousness of EPL claims to light:

  • The average amount paid for out of court settlement is $40,000.
  • Defense of an average EPL case, through trial, costs over $45,000.
  • The median compensatory award for EPLI cases is $218,000.
  • 67 percent of all employment cases that litigate result in judgement for the plaintiff.
  • 41 percent of all EPLI claims are brought against small employers with 15 to 100 employees.
  • Six out of ten employers have faced employee lawsuits within the last five years.
  • The U.S. Equal Employment Opportunity Commission (EEOC) announced this past January that in 2009, more than 93,000 workplace discrimination charges were filed with the federal agency nationwide. This is the second highest level ever recorded

EPLI policies will reimburse your company against the costs of defending a lawsuit in court, even if a claim is groundless or fraudulent. They will also compensate for judgments and settlements. It doesn’t matter whether your company wins or loses the suit. Policies typically do not pay for punitive damages or civil or criminal fines, however.

How much does an EPLI Policy Cost?

The cost of 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.

-JK

August 16, 2010  

Commercial Building Vacancies – A Property Insurance Concern

These past few years, the economy has been merciless. We’ve seen homes lost, businesses folding, and the American public as a whole has been agonizing as a result. It’s a trickle down effect. When jobs are lost, people don’t have money to spend, and businesses must close their doors. When those doors are closed, commercial building owners don’t have tenants to fill their space. All too often, it takes months or years before a vacancy is filled. And when things can’t seem to be any worse, this creates a whole new potential problem from an insurance standpoint.

Under the commercial property insurance form drafted by the Insurance Services Office and used by most insurance carriers, there is a vacancy clause in the property policy form which alters insurance coverage for buildings vacant for more than 60 consecutive days. Insurance carriers will generally not pay for any physical loss or physical damage caused by any of the following perils:

• Vandalism
• Sprinkler leakage, unless you had protected the system against freezing
• Building Glass Breakage
• Water Damage
• Theft
• Attempted Theft

 

For any other covered causes of loss besides these, insurance carriers will usually reduce the amount they would otherwise pay by 15%.

If you own a commercial building which is currently vacant, contact your insurance agent to discuss possible alternatives or resolutions. As if the unrelenting economy hasn’t thrown enough at us, make sure you’re aware of this very important clause on your property insurance policy and stay protected!

-JK

August 13, 2010  

Lessons Learned – Week of August 8, 2010

Amazingly, the biggest story in the news this week is Steven Slater, aka, the rogue JetBlue flight attendant who lost his mind after a rough day on the job.

 It is a hard-to-beat story: Going off on a passenger, grabbing a couple of beers and sliding down a parked plane’s emergency chute to end his 20 year career as a flight attendant.

In lieu of this spectacle, this week’s lesson learned is themed, “A Bad Day In the Office”

Lesson Learned: Come up with a creative way of venting your frustrations after a bad day at work and you might be an overnight celebrity too.

August 11, 2010  

General Liability Insurance: What Does “Additional Insured” Mean?

As a business owner, it’s likely you’ve been asked at some point or another to add a client, landlord, or similar entity onto your general liability insurance policy as an “additional insured.” You might ask, why do I need to put them on my business insurance policy?? What about their insurance policy? Well, here’s a little background on what it means and why it is requested so often in doing business.

Adding another entity as an additional insured on your general liability insurance policy serves to protect that additional party in the event of negligence on your part as the primary policyholder, or “named insured.” It is not the intent of your policy to pick up the liability of another party when you had nothing to do with a claim or occurrence.

Here are some loss examples to give you a better understanding:

• You are a sub-contractor and have added a general contractor on your policy as an additional insured by request. An individual walking the grounds of your job site sustains a serious injury from a fall caused by a pothole in a parking lot. The parking lot is being built by you. This individual brings a suit against the general contractor who is covered as an additional insured on your policy.

• You are a tenant of a commercial building and have added the landlord of your building as an additional insured per the terms of your lease. A customer visits your premises and slips on a wet spot on the vinyl floor. The customer cracks their head open and brings a suit against the landlord who is covered under your policy.

Typically, a larger and more powerful business will require that smaller entities (desiring to do business) have the larger business named as an additional insured. This reduces the loss exposure of the additional insured and keep its premiums manageable.

-JK

August 9, 2010  

Workers Compensation – Employee or an Independent Contractor?

One of the biggest dilemma’s concerning workers compensation insurance coverage is whether a given individual is an employee or an independent contractor. It applies to pretty much any industry. Recently, I had a discussion with a janitorial services business which uses a specialist to do floor waxing when needed. The owner told me this individual is an independent contractor. I explained to the owner that individual might be considered an employee in the eyes of an insurance carrier.

The reality is there is no definitive test to determine Employee or an Independent Contractor! It’s not a black and white issue. In many cases, it is the court of law who decides.  California Workers Compensation laws are construed liberally; in other words, in favor of the claimant. There is a presumption of employment unless the employer can prove otherwise.

There are certain basic questions which might help determine the status, however. The following circumstances can help determine the relationship between and employee versus an independent contractor:

Employee Independent Contractor
Has the right to control the manner and means of accomplishing the result desired Responsible only for the result of the work performed
Has a specific title and/or position Engaged in a distinct occupation or business
Works under the direction of a boss Is a specialist, does actual work without supervision
Uses company tools and/or equipment Supplies their own
Working hours are set by the company Has no set hours, may come and go at will
Is paid salary or by the hour Paid on a per-job basis
The person assumes they are an employee The person believes they are an independent contractor and usually has a certificate of insurance

These are just a handful of circumstances. If you have additional insight to share, please comment below!

-JK

August 6, 2010  

Lessons Learned – Week of August 1, 2010

This weekend is family wedding weekend for me (Congrats Chris & Annie!). In commemoration, this week’s lessons learned is a wedding theme:

Lesson Learned: Drink Responsibly! (and refrain from any pole dancing)

August 4, 2010  

Why Your Business Should Consider A Cell Phone Usage Policy

Did you know that more than 1.5 million collisions a year, or 4,300 crashes daily are caused by driver distractions or inattentive driving? This comes from the National Highway Traffic Safety Administration. Probably the most obvious reason for driver distraction comes from cell phones and PDA’s. Whether it be text messaging, emailing, or straight talking, people on the road seem to make it their priority, putting driving secondary. Even here in California where it’s against the law to use hand-held devices while operating a vehicle, most don’t seem to care from what we see first-hand on the road every day. If it isn’t the cell phone, then it might be laptops, GPS systems, food, drinks, reading, writing, grooming and other crazy things.

A 2009 study from the Virginia Tech Transportation Institute reflects the severity of cell phone distraction while driving. From dialing and talking to reaching and texting, cell phone usage while driving can be over 23 times riskier than non-distracted driving. Text messaging is by far the riskiest as the study results show.

The important message here is if you’re an employer, you may be held liable if one of your employees causes an accident, catastrophic or not, from distracted driving. As long as that employee is driving in the course of employment, then beware. It’s highly recommended to establish a cell phone usage policy for your business and to educate your employees on the potential severity of their actions. If employees must use their phone to conduct business, they should at least pull over to the side of the road or into a parking lot. Or, get out of the car completely.

1.5 million accidents a year is substantial number. However, it might only take one employee accident to affect your business substantially.  Know your risks!

-JK

Photo Courtesy of TPS Report; Additional Resource: Insurance Information Institute
August 2, 2010  

Auto Liability Insurance You Must Have

For all you business owners out there, do you ever send your employees on errands to the store or to the post office? To pick up food for the office? Do you have sales reps driving their own autos to meet clients or potential clients? Ever go on business trips and rent cars? If you have a business of any kind, I’d be shocked if none of these scenarios apply to your daily/weekly/yearly operations.

Have you ever thought about what would happen if that employee you sent to pick up lunch hit a pedestrian and seriously injured or even killed them? Or if your sales rep was involved in an accident causing serious bodily injury or property damage to others involved? Unfortunately, accidents are not uncommon and when an employee causes an accident, the injured party will more than likely look to YOUR company to pay damages.

This is why you need to be certain ‘Hired & Non-Owned Auto’ liability is added as an endorsement to your commercial general liability insurance policy. Your business doesn’t need to own vehicles for this to apply.

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. It usually does not pay for physical damage to the vehicle itself; that’s covered by the owner’s insurance (although this option is sometimes available).

What’s great is that it’s incredibly inexpensive to add this coverage to your existing general liability insurance policy. Usually no more than $100-$200 annually for $1,000,000 in coverage! To be blunt, you would be dumb not to carry this endorsement if it is an option on your GL policy.

Be sure to check your current policy to see if this endorsement has been included. If it’s not, or if you’re uncertain, call your agent today to discuss! Accidents are not uncommon, so tomorrow may be too late!

-JK

July 30, 2010  

Lessons Learned – Week of July 25, 2010

Props to this guy, he is really feeling it. Just like the double rainbow. I want to line him up as the DJ for my next event! Anyone getting married anytime soon??

Lesson Learned: Live it up! Could you imagine if we were all half this happy all the time???

« Older Posts
Newer Posts »