Tag Archive | insurance
March 12, 2011  

Insurance Topics In the News (3/6-3/12)

  • States Must Decide if Workers’ Comp Benefits Extend to Illegal Workers: (Read)
  • Property & Casualty insurance workforce hit a 20-year low in January: (Read)
  • THEN AND NOW: Long Beach Earthquake, 1933 & 2011
  • Court: Former NFL Redskins Punter Can Collect Workers Compensation for back injury: (Read)
  • Virgin Atlantic forced to pay $500,000 for massage injuries to employees: (Read)
  • Japan Earthquake 2011: Devastating Photos Of The Wreckage

AP Photo/Nexco East Japan via kyodo News

–JK

 

March 10, 2011  

Employee Benefits Liability

Do you offer employee benefits for your employees? If so, pay close attention to this subject: Employee Benefits Liability.

Picture this scenario:

Busy Betty, office manager for your small business, functions in countless different job capacities ranging from purchasing agent to human resources manager. One day while dealing with other urgent issues, Betty forgets to enroll a new employee on your firm’s medical insurance plan. The error isn’t discovered until the employee is hospitalized with a life threatening cancerous tumor and the bills started to roll in—over $300,000 in all.

What now?!

Well, in a case like this, it’s safe to assume that busy Betty (your business essentially) will be found liable for the damages. This is when you’re hoping you have an endorsement on your commercial general liability insurance policy known as “Employee Benefits Liability” coverage.

Carrying Employee Benefits Liability coverage means your commercial general liability insurance carrier will pay those sums that the you become legally obligated to pay as damages because of any negligent act, error, or omission committed in the “administration” of your employee benefit program, barring any exclusions. The amount of insurance paid is limited to the amount of liability coverage you carry on your general liability insurance policy.

“Administration” of employee benefit programs is defined as:

  • Counseling employees, including their dependents and beneficiaries, with respect to your employee benefit program;
  • Handling records in connection with your employee benefit program;
  • or, effecting or terminating any employee’s participation in a plan included in the employee benefit program.

Employee benefit programs typically entail group life insurance, group accident or health insurance, profit-sharing plans, and pension plans.

Employee Benefits Liability coverage does not apply to losses arising out of any dishonest, fraudulent, criminal or malicious act or omission, committed by any insured; or claims or suits based upon failure of any investment to perform as represented by any insured; or advice given to any person to participate or not to participate in any plan included in the employee benefit program.  Other exclusions apply, so keep a close eye on your policy forms. Here’s an example of a typical Employee Benefits Liability coverage form.

In most cases, minimal premium charges apply for this important endorsement (as low as $50 to $100 annually). This is a no brainer if you have an employee benefit program in force. Don’t waste time digging up a copy of your policy to confirm. Call your insurance agent today. Also keep in mind that this coverage is written on a claims made basis.

–JK

March 3, 2011  

Gas Prices Up- Reduce Your Fuel Costs, NOW!

I don’t know about you, but as I have making my daily 40 minute commute to work, I’m seeing these gas prices skyrocketing by the hour it seems! I can’t help but notice the local gas station signs and their prices increasing over .07 cents a day! Whoever’s job it is to bring the pole out and update those numbers is working overtime. Here in LA, we’re above the $4 mark per gallon at some stations. In fact, I filled up my tank on Monday and my receipt came out to $62.70 and I’m not even driving a truck or an SUV. As if it isn’t frustrating enough for individuals, businesses with auto fleets are feeling more pain at the pump and it’s cutting into their bottom line.

Here are 10 Ways to Reduce Your Fuel Costs, NOW!

Here's a picture I took last night, 3/02, of a gas station sign in my neighborhood in Long Beach

Purchase Fuel Wisely – Save up to 20%

  • Use the right grade of gasoline/ Don’t top off: most cars run fine on regular. Check your vehicle owner’s manual to find out what’s right for your car. (See regular vs. premium.) Don’t “top off” at the pump and make sure your fuel fill cap is on tight and working right. Regular grade fuel cost about 20-cents per gallon less than premium grade.
  • Look for the Best Price / Limit Purchases When gas prices are High: Today’s gasolines provide very similar engine performance (although some brands have different gasoline blends that provide other benefits), so choose stations in your area with the lowest prices. Fuel prices can vary 10% within a few blocks. Avoid filling the tank during high-price periods.

Alter Travel Practices – Save up to 30%

  • Use Carpooling/ Public Transit/ Non-Motorized Options: Ride the bus, carpool, bicycle or walk instead of driving alone. Sharing a ride to work with a friend or two effectively doubles your fuel economy for the trip and may allow you to use the diamond lane.
  • Take Advantage of Telecommuting/ Telecommunications Technology: Many employers offer telecommuting as an option. Use the computer and telephone to replace vehicle trips for business, shopping and services when possible.

Drive More Efficiently – Save up to 20%

  • Don’t Drive Aggressively/ Drive at the Speed Limit: Avoid aggressive driving and aggressive starts. All vehicles lose fuel economy at speeds above 55 mph. Driving 65 instead of 75 mph reduces fuel cost 13%. Driving 55 would save 25%.
  • Reduce Air Conditioner Use/ Close Windows: Using the air conditioner increases fuel cost from 13% up to 21%. If it’s cool enough, use the flow-through ventilation instead of rolling down the windows or using the AC.
  • Eliminate Extra Wind Resistance and Weight: Using a loaded roof rack increases fuel consumption. Carry the load inside your vehicle if you can. Removing unnecessary weight is better still.
  • Minimize Vehicle Idling: Today’s vehicles are designed to warm up fast. Avoid idling when you can; idling is 0 miles per gallon.

Improve the Efficiency of the Vehicle You Drive – save up to 50%

  • Maintain Vehicle Efficiency: Regular maintenance as prescribed by the vehicle owner’s manual will help your vehicle achieve its best fuel economy. Some overlooked maintenance items, such as a dirty air filter and under-inflated tires, can increase your fuel cost up to 13%. When replacing your tires, replace them with the same make and model as the tires that were on your vehicle when it was new. It’s been estimated that if all Californians properly inflated and aligned their tires, we’d save 300 million gallons of gasoline a year!
  • Drive or Purchase a Fuel-Efficient Vehicle: Drive your most fuel-efficient vehicle whenever possible. When purchasing, consider the most fuel-efficient vehicle and save up to 50%. Consider a hybrid-electric, a diesel vehicle, or even a motorcycle. The next best option is to purchase the most fuel-efficient vehicle within the class of vehicles you are considering.

Final Word on Gasoline-Saving Devices

Please also be aware that many companies will try to sell you mileage improving devices. Some claim that they will save you 10 to 50%. Buyers Beware! The U.S. EPA and Federal Trade Commission have both said that there are no devices that will boost your mileage any appreciable amount. See web page for Energy Myths on Gasoline-Saving Products.

Source: California Energy Commission

-JK

March 1, 2011  

California Business Owner Convicted of Insurance Fraud

Here’s a word of advice for you: If you’re a business owner, make sure you’re accurately reporting your payroll on your workers compensation insurance policy. If you are using subcontractors/ independent contractors to perform services for your clients, you must obtain a certificate of insurance from these contractors confirming they carry their own workers compensation insurance coverage. If not, you may be liable for any losses that occur as a result of the services they are performing for your business.

Here’s a friendly reminder that it doesn’t pay to cheat the system:

California insurance commissioner, Dave Jones, announced in a press release on 2/23 the conviction of a California business owner for insurance fraud and perjury. The case involves a $1.6 Million penalty for failure to pay premiums and failure to accurately report payroll.

Ronald J. Haas Sr., 69, has been convicted on 10 counts of insurance fraud for failing to accurately report payroll and for failing to pay insurance premiums to his workers’ compensation insurance carriers.  Haas was sentenced to one year in the county jail and restitution to the entities involved, and three years probation.

“Workers’ compensation insurance fraud is an egregious offense and it will be fully investigated by my Department,” said Commissioner Dave Jones. “Those who would seek to cheat a fund to help workers who were legitimately injured will be prosecuted to the fullest extent of the law.”

On January 12, 2007, State Compensation Insurance Fund Special (SCIF) reported a suspected fraudulent claim to the California Department of Insurance Fraud Division for investigation of suspected workers’ compensation insurance premium fraud. The report alleged that Haas, President of R J Haas Construction Corporation, et al., Saratoga, CA, failed to accurately report employee payroll to his workers’ compensation insurance carrier, SCIF. From July 1, 1998 to June 1, 2005, Haas claimed that he had no employees and that sub-contractors did all the work for his company. However, during this period, four workers’ compensation claims were filed by injured employees. Haas reported payroll to SCIF only after an injury was discovered and then payroll reporting stopped shortly thereafter, with the cancellation of his policy. Subsequently, Haas obtained workers compensation insurance policies through First Comp and again reported minimal to no employees.

An investigation by the Silicon Valley Regional Office of the California Department of Insurance, Fraud Division and the California Employment Development Department (EDD) revealed that Haas misrepresented office staff, project superintendents, foremen, and even some of his own family members as subcontractors. A forensic audit was conducted and revealed that Haas owed $594,293.22 in insurance premiums to SCIF, $229,167.71 in insurance premiums to First Comp and $813,328.27 to EDD for failing to accurately report employee payroll for the purpose of determining employment tax liabilities.

On April 29, 2009, Haas was arrested for felony violations of Insurance Code. Haas is eligible to apply for a home electronic monitoring program in lieu of county jail time. At time of sentencing Haas had already paid the full amount of restitution owed to insurance carriers SCIF and First Comp and to EDD.

Source: California Department of Insurance

-JK

February 24, 2011  

Has An Earthquake Detection System Become Reality??

Plain and simple, natural disasters are horrendous! To put it politely, they S-U-C-K! Floods, tornado’s, hurricane’s, volcanic eruption’s, landslide’s, and notoriously here in California…earthquakes! All these natural disasters lead to some kind of loss, whether it be financial, environmental, or human loss. In most cases, there’s actually some degree of advanced warning as to when a natural disaster might strike. Take hurricane’s for example. We are able to pinpoint powerful storms in advance and prepare accordingly.  If nothing else, this allows us to reduce the probability of human loss.

Unfortunately, advanced warning does not apply when it comes to the earth shifting, otherwise known as EARTHQUAKES! ………Or does it??

In an article published by Fox News, there is now “a state-of-the-art, first-in-the-world earthquake detection system in now installed and operational” in southern California, near Palm Springs, in the Coachella Valley.  In fact, twelve locations are now in place with 120 sites planned, all meant to detect an earthquake and give people a chance to duck and cover, or brace themselves before the shaking begins.

This earthquake detection system was created by a company called QuakeGuard. The system works by way of sensors which are designed to detect the initial, or “P” energy waves given off by every quake, even though it’s only the later, or “S” waves that do all the damage. The time in-between the two waves varies depending on the proximity to the epicenter and as the first sensor closest to the quake goes off, it can offer advance notice — from a few seconds to a full minute– to other locations farther away.

The system can also be set to automatically open fire station doors, and water and gas valves for municipalities could be shut off. Back-up generators for hospitals could be turned on and, most importantly, warn school kids to duck and take cover.

Of the 12 sets of sensors currently set in place throughout the Coachella Valley in Southern California, all are tied to fire stations. Soon, they will be networked to every school in the area. Down the road, they can possibly be  linked to hospitals, private businesses and even people’s homes.

A mobile system is also in development and would help rescue crews detect aftershocks. A few seconds could get rescuers out from under the rubble and thus out of harm’s way.

How great would this be for California or for any other regions affected by the earth moving?? It’ll be interesting to see how technology progresses. In this case, not soon enough! We can’t stop an earthquake, but it would be nice to be warned if one is on the way . The sudden jolt of the earth shifting is the probably the scariest part of an earthquake in my opinion. Let alone the damage and destruction that comes with it.

Would an earthquake detection system ease your fear of earthquakes?

–JK

February 3, 2011  

Winter Blizzards- Tips For Winter Driving

Take a look at this accident footage from Salem, NH. I feel kind of guilty writing this post from Southern California as virtually everyone east of us is getting hammered with  snow, but I guess the cost of living makes up for it sometimes. With that being said, below the video clip are winter driving tips courtesy of Travelers Insurance. There wouldn’t be any legitimacy to these recommendations if they came directly from me. What does a Los Angeles native know about driving in the snow anyways??

Prepare for winter driving before a storm hits

  • Have a mechanic check your car’s battery, brakes, fluid levels (antifreeze, windshield washer fluid and oil), as well as the heating and exhaust systems to ensure that your car is in good, safe working condition.
  • Try to keep your gas tank full during the winter months. Don’t allow the gas to go below half a tank. Not only will this prevent damage from freezing, you’ll avoid running out of gas if you’re stuck in a traffic jam during the dead of winter.
  • Install snow tires or all-weather radials with adequate treads.
  • An adequate supply of windshield washing liquid is critical to wash away the mud and melted snow that can severely limit visibility.
  • Prepare for an emergency. Keep blankets, flares, a sack of sand for traction, shovel, windshield scraper and brush, tool kit, tow-rope, booster cables and a flashlight with extra batteries in your trunk. You should also stock your car with material for survival, such as waterproof matches to melt snow for drinking water, a first aid kit, dry clothing and a brightly colored cloth (to tie to the antenna).

When driving under adverse winter conditions

  • Take care pulling out of streets blocked by mountains of snow. It’s often difficult to see who or what is coming.
  • Back your car into the driveway so you have better vision when pulling out.
  • Be aware of joggers on the street. Often sidewalks are impassable and die-hard joggers venture onto the street for a clearer path. Unfortunately, they may not see icy spots or other hazards hidden below the slush.
  • Don’t turn corners too tightly.
  • If your car does not have anti-lock brakes and you start skidding on the ice, try not to slam on your brakes. Gently pump your brakes to maintain better control and prevent your wheels from locking.
  • If your car does have anti-lock brakes, slam on your brakes when skidding on the ice. Pumping your brakes prevents the anti-lock system from taking over.

Traveling during a severe storm. Travel only if necessary during a blizzard or severe storm. If you must travel:

  • Don’t travel alone. Notify someone of your estimated time of arrival as well as your primary and alternate travel routes.
  • If STUCK, stay in the car and wait for help. Run the engine and heater sparingly. Also make sure your exhaust pipe is clear of snow and ventilate your car so that carbon monoxide fumes won’t poison you.
  • Keep your energy. Eat food that provides the body with energy for producing its own heat. Replenish your body with fluids to prevent dehydration. Don’t eat snow; it will lower your body temperature. Melt it first.

Source: Travelers Insurance; Insurance Information Institute

–JK

February 1, 2011  

NY Tortilla Factory Shut Down After Fatal Work Related Accident

Earlier this week, a Brooklyn, NY tortilla factory employee died after falling into a waist-high dough mixing machine. Now, the state has closed the factory because authorities discovered the company’s workers compensation policy had lapsed in March 2010.

A NY State Workers Compensation spokesman said, “The owner would need to get the insurance and pay fines before he is permitted to reopen.” While the Workers Comp board doesn’t always shut down companies where the insurance is lapsed, the fact that there was a workplace death prompted officials to visit the tortilla factory. As it stands, the company owes $56,000 in penalties. OSHA and the Department of Labor are also looking into the incident.

This $56,000 in outstanding penalties is sure to be dwarfed by lawsuits likely to be coming from the employee’s family and surviving members. All this could have been avoided or significantly curtailed if the factory owner carried the workers compensation insurance coverage required by law.

The very core of workers compensation insurance is that it provides medical care for employees who are injured in the course of employment. Beyond medical care, Workers Comp insurance provides temporary and/or permanent disability benefits, supplemental job displacement benefits or vocational rehabilitation and death benefits. Workers Comp is a trade-off between employers and employees. Employees receive prompt effective medical treatment for on-the-job injuries or illnesses no matter who is at fault and, in return, are prevented from suing employers over those injuries.

The tortilla factory’s owner was reached on the phone by a newspaper Friday but said he couldn’t talk and hung up. He had previously said that the death was the first worker injury at the company and said it had been caused by “human error.”

Unfortunately, business owners usually learn the hard way when it comes to a loss. This being a prime, and severe, example. Personally, I would be surprised if this business survives considering what surely lies ahead with lawsuits, etc.

–JK

January 27, 2011  

Lawyers Professional Liability Insurance – Guest Blog

Harold Mayhack

This is a guest blog from Harold Mayhack, a colleague here at ISU/The Olson Duncan Agency. Harold received his Bachelor of Arts in Business Administration from the University of Strathclyde in Glasgow, Scotland in 1985. He spent several years underwriting lawyer’s professional liability insurance before becoming an insurance broker specializing in the insurance needs of law firms. For the past twenty years Harold has worked with local law firms; assisting with all of their insurance and risk management needs. He has presented to law firm groups and members of the Association of Legal Administrators and has been published in legal administrators’ newsletters. He is a member, and former local steering committee member, of the Professional Liability Underwriting Society; the Insurance Brokers & Agents Association and the ISU Network.

This is the first of several blogs that will focus on the pricing mechanisms for lawyers’ professional liability insurance; from the basics to some more subjective items underwriters take into consideration. Essentially, we are going to review the application as it impacts the final cost of your insurance with the hope that you will know the impact of your answers and what information you can provide to help underwriters offer their best pricing; they really do want to write your law firm’s insurance. We will also touch on a few questions that can qualify or disqualify your firm from some of the ‘preferred’ programs.

The first, and I believe the most important, consideration for law firms to consider when you complete your applications is the attitude brought to the process; why are you doing this? The application is your opportunity to tell the story of your law firm; why should an underwriter want to insure you and why should they offer you the best pricing they have available? Many of the applications we see include the basic answers but no additional details; especially for mid to large size firms, firms with higher hazard areas of practice or claims, the subjective picture we paint can be as important as the objective answers in the application. Why are you different? Every principal or firm administrator I meet is very proud of their firm; yet that often does not come across in their application. This is the information we want to provide to underwriters.

We will include this ‘attitude’ consideration in each of the sections that follow. Some things to keep in mind are; you started your firm for a reason, let’s explain that reason. You hired your attorneys and non attorney staff for a reason, let’s explain that. You manage your firm and its’ structure the way you do for a reason, again let’s explain that. If you have claims let’s explain why. Yes, this takes some time but it pays dividends in the number of insurance offers you receive and the premiums and terms of insurance you will have to consider.

Beginning with the basics, APPLICANT INFORMATION; your firm’s name, is it correct in the application? Most of the lawyers’ professional liability insurance policies available state; ‘we shall pay on behalf of the insured’. Insured is typically defined as the Named Insured, which will be listed on the policy’s Declarations page. This seems obvious but it is not unusual to see the Named Insured listed incorrectly. This becomes more important as we look at the definition of insured which will typically insure principals, employed attorneys, attorneys ‘of counsel’ and independent contractors among others and will include the limitation ‘for legal services on behalf of the Named Insured’.

Also requested in APPLICANT INFORMATION, your contact information; address, phone number, contact name, email and often year established. Most importantly, this is the information the insurance company will use to issue legal notices they are required to mail directly including; notices of non renewal, coverage changes among others. However, they also impact your premium. Most insurance companies have some form of territory rating; metropolitan areas like Los Angeles or San Francisco are often rated with a higher premium than outlying areas. Your year established is used as one factor along with your insurance history in the consideration of prior acts coverage. This date should be the establishment date of the earliest entity to which the current Named Insured is the majority successor in interest to ensure the policy will include the necessary prior acts coverage.

The next few blogs on pricing lawyers professional liability insurance will take us through the remaining application questions and several of the key supplemental applications. If you have any questions about any of the issues raised here please feel free to call me at any time. I would also appreciate any comments or feedback you would like to share.

–Harold Mayhack

January 25, 2011  

Workers Compensation Insurance – Independent Contractor vs. Employee

The difference between independent contractors and employees is a common debate within the insurance world. I wrote another post about it back in August, but the question continually arises, so it’s worth reinforcing. Determining which is which, employee vs. independent contractor is all fun and games until someone gets hurt. As an employer, think about the following points from the California State Compensation Insurance Fund before trying to dance around paying workers compensation insurance premiums.

Employees vs. Independent Contractors is a common debate for contractors and Work Comp insurance

California courts typically use a number of tests to determine whether an individual is an employee or an independent contractor. A crucial factor in determining employment status is the employer’s right to direct and control the work being performed. If you have the right to control the manner and means of the work performed, the courts have routinely decided that the “independent contractor” is actually your “employee”.

There are many other factors, but the reality is there is no definitive test to determine employee or an independent contractor. The following circumstances can help determine the relationship between the two. Among them, whether the person performing the service:

  • Has the right to terminate the relationship at will.
  • Is engaged in a distinct occupation or business.
  • Has voluntarily chosen the burdens and benefits of self-employment.
  • Has the skill required in the particular occupation.
  • Supplies the instrumentalities, tools, the work location, and carries the license or certificate required to perform the work.
  • Has the right to hire and terminate others.
  • Is paid by the time worked, or by piece rate.
  • Works under the direction of the employer or by a specialist without supervision.
  • Whether the services are a part of the regular business of the employer.
  • Whether the parties believe that they are creating the relationship of employer/employee or employer/independent contractor.

If there are questions, the Labor Code assumes a worker is an employee for workers’ compensation purposes. The burden of proof to support the independent contractor status of a worker falls on the employer. The Labor Code also requires that any subcontractor who does not have an active valid contractor’s license be treated as an employee, not an independent contractor. However, even though a worker may have a valid license, the worker may still be an employee depending on the factors as discussed above.

A good rule of thumb: as an employer, always protect yourself.

  • If certain jobs require a license, request a copy for your records.
  • Obtain original Certificates of Workers’ Compensation Insurance addressed to you from all contractors and subcontractors who have employees or who, in turn, subcontract any portion of their own work.

Remember, it’s all fun and games until someone gets hurt. If proper documentation is not maintained and presented to insurance auditors, carriers are obligated to charge premium for any liability that may exist under your workers’ compensation insurance policy.

–JK

January 20, 2011  

Fired ESPN Announcer Strikes Back With Lawsuit

Ron Franklin

Former ESPN announcer Ron Franklin, who was recently fired for allegedly making sexist comments to a sideline reporter before the Chick Fil-A Bowl, is suing ESPN for wrongful termination.

He confirmed the lawsuit on Wednesday but did not comment on the details of the lawsuit.

Franklin allegedly said to the sideline reporter, “Listen to me sweet baby, let me tell you something.” After the reporter told him not to talk to her like that, Franklin responded, “OK, then listen to me a-hole.”

Franklin later apologized in a statement. The longtime college football and basketball announcer worked for ESPN for 25 years.

What’s the moral of the story?

Employment Practices Liability claims such as this are not limited to major corporations such as ESPN. In today’s litigious climate, employers of all sizes are vulnerable. According to U.S. Equal Employment Opportunity Commission (EEOC) data, 41% of all EPL claims are brought against small employers with 15 to 100 employees. This is why any business with employees, or those which begin to hire employees must consider Employment Practices Liability Insurance (EPLI).

Employment Practices Liability insurance insures against claims of wrongful termination, failure to hire, failure to promote, various types of discrimination, as well as sexual harassment.

These insurance policies will reimburse your company against the costs of defending a lawsuit in court. 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.

One more benefit of these policies is that most include risk management services. Employment Practices Liability Insurance policies will typically offer an unlimited phone hotline service, online training, and state and federal compliance assistance from licensed attorneys.

If you are a business owner and are interested in more information on Employment Practices Liability Insurance, you can reach us here and we’ll be sure to follow-up with you:

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Thank you,

–JK

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