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July 2008

Jul 01
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AVOIDING INJURIES IN THE WORKPLACE MAKES GOOD BUSINESS SENSE

By Construction Insurance Bulletin

The current shift toward a global economic community requires effective and efficient management in order for a company to stay competitive. One of the most significant areas that needs to be controlled is risk. An organization that is serious about controlling the potential costs associated with risk must develop a business-focused approach to its safety management process.

A company can take the following five steps to create a business-focused safety program:

  1. Take an enterprise-wide approach to safety management. Most organizations are organized vertically, meaning the company is subdivided into functional departments. These departments operate independently of one another, oftentimes each with its own goals. Similarly, most company’s safety departments have been vertically organized and managed, making that department independent from other departments within the organization. However, if the safety management process is to be effective, it cannot be compartmentalized. A company must weave safety into the organization’s framework by making safety a consideration in every aspect of every department’s daily operations.
  2. Measure how safety affects the bottom line. Stop looking at the adverse cost of injury in terms of exposures and incidents, and instead measure its impact on all aspects of the organization’s operations.
  3. Raise safety’s presence in the organization. The successful implementation of an enterprise-wide safety program necessitates having it headed by a senior executive who has the CEO’s and board members’ ears, and the power to implement change.
  4. Think continuity. Safety should be an ongoing activity and behavior, and not a focused activity, or priority program, only when the number of worker injury incidents rises.
  5. Think lean. A truly safe work environment is one that espouses the principles of lean management. It transcends departmental borders to create cross-functional integration, and it eliminates waste through a holistic view of operations. A business-focused approach to safety addresses risk within organizational systems, procedures and processes, and minimizes risk across the board through collaboration among different departments.

The key to the success of any well-formed safety management program is that it develops a mechanism for improving overall business performance. Strive to make your safety program the catalyst that gets management and workers involved in something that is universally valued and operationally important. Consider how this works in practice:

  • Employees want a safe environment that protects their health.
  • First-line supervisors want a workforce that is productive and consistently meets daily production goals.
  • Middle mangers want to stay on schedule and on budget, and they depend on the workforce to be productive.
  • Senior management wants a project to be profitable, and they rely on middle management to keep a project focused as to time and budget.

All of these goals can be met only if safety becomes the guiding principle in every aspect of every project. Whenever safety is sacrificed for the sake of cutting time or costs, it usually ends up backfiring because worker incidents increase, slowing down production and adding to the cost of getting things done — which works against any company’s business interests.

Jul 01
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TAKE STEPS TO MINIMIZE RISK OF EMPLOYMENT-RELATED LAWSUITS

By Business Protection Bulletin

If you own a business, the last thing you want to face is a lawsuit filed by a current or former employee. In addition to the obvious financial risk involved in defending a case, a lawsuit can result in lower employee morale and a damaged reputation in the community. Even if you win your case, you’ll lose time and money in the process.

For these and many other reasons, it’s a good idea to be proactive about avoiding employment-related lawsuits. How do you do it? A good approach is to familiarize yourself with situations that can prompt employees to file suit. When you understand the common legal pitfalls, you’ll be in a better position to avoid them and protect your business.

Understanding why employees sue

If you’re like most employers, you try to treat your employees fairly. But complicated situations can arise. And remember, your perceptions might not match those of your employees.

Here are some issues that can result in employment-related litigation:

  • Employees feel they have no voice: If you provide employees with a way to express opinions or address problems, you’ll generally have more motivated employees and may also reduce exposure to lawsuits.
  • Employees aren’t in the loop: If your business is going through changes, it’s a good idea to keep employees in the loop. Otherwise, their expectations may not match future business plans, which can result in hard feelings.
  • Managers don’t understand regulations: There are hundreds of employment-related regulations governing the relationship between employers and employees. Make sure you understand them and abide by them.
  • Employees are dissatisfied: When employees are unhappy, they aren’t as productive, and they may also be more likely to resort to litigation to express their unhappiness. Good morale can reduce exposure to litigation and improve business performance.

Avoiding situations that might create a lawsuit

Even employers with the best intentions can make mistakes that result in legal action. There are many regulations that can lead to legal pitfalls, especially in the areas of hiring, managing and firing employees. Employment-related regulations are not only numerous, they change from time to time, so keeping up with them can be challenging, but it’s vitally important. Here are some of the situations you should be aware of as an employer:

  • Promotion opportunities: Be sensitive to employee perceptions when you reward good performance or hold employees accountable for short-comings. If a court finds you created barriers to advancement for a protected class of employees, you could be held liable.
  • Compensation issues: Employee wage and hour regulations can be complex. Make sure you understand them and follow them to the letter. If you’re unsure, it’s a good idea to seek expert advice.
  • Harassment and discrimination: Employers have a responsibility to ensure a harassment and discrimination-free work environment. A sound harassment and discrimination prevention policy is essential.
  • Accommodation issues: Employees or potential hires who are disabled or who have accommodation needs due to religion are a protected class. It’s important to understand the regulations around accommodation.
  • Leaves of absence: Employers in certain locations and those who employee more than a specific number of employees should make sure they comply with state, local and federal regulations on leaves of absence.

How you can reduce legal exposure for your business

We’ve reviewed why employees might sue and some of the reasons employers get into trouble. The next step is to formulate a strategy to reduce risk for your business. A good first step is to formalize a method to address conflicts. If you have an employee handbook, outlining a way to address problems at work as a policy is a good idea. Another effective step is to implement harassment and discrimination prevention policies and outline how incidents will be addressed.

Taking steps to reduce your exposure to employment-related lawsuits takes some time and effort, but in the long run, it’s worth the effort. Not only will these steps help you stay out of court, you’ll improve morale at your company.

Jul 01
Love0

LOWER YOUR EXPERIENCE MODIFIER TO CONTROL WORKERS COMP COSTS

By Business Protection Bulletin

If you are looking for ways to keep your Workers Compensation insurance costs under control, it’s a good idea to take a look at your experience modifier. In fact, tackling your experience modifier is generally a far more effective method of lowering your costs than shopping around for cheaper workers’ compensation coverage. That’s because the experience modifier is used to calculate your individual rate.

However, many employers don’t fully understand how experience modifiers work. They don’t completely understand how lowering it can help them drastically reduce Workers Compensation costs. Let’s take a closer look.

What is an experience modifier?

The experience modifier is a formula insurance companies use to predict losses that an employer is likely to incur. To arrive at the experience modifier, the insurance company considers losses over a three-year period in history, not including the current policy period. It takes into account not only amounts actually paid as claims but also estimates of future payments for medical treatments or compensation that will be paid to make up for lost wages.

Your experience modifier compares your actual losses with the expected losses for employers operating similarly sized companies in your state and industry. If your experience modifier is 1.00, that means your losses match the average rate. A modifier that is higher than 1.00 reflects higher losses, while a modifier less than 1.00 means lower than expected losses.

Your experience modifier is used to calculate your Workers Compensation insurance premiums, so the lower your modifier, the less you’ll pay. Let’s take a look at ways to lower your experience modifier.

Toward a lower experience modifier

Here are a few tips on lowering your experience modifier:

Create a safer work environment. Since your experience modifier is derived from your workers’ compensation claims history over a three-year period, the most obvious first step is to create a safer work environment. A workplace focus on safety is a great way to improve morale and help keep costs down. Some companies form safety committees to find new ways to reduce workplace injuries and to provide training that helps employees stay safe.

Return employees to work as soon as possible. Another excellent way to keep costs down is to consider a return-to-work program for injured employees. Remember, workers’ compensation claims involve not only medical bills but also claims for lost wages. In many cases, injured employees who are not yet able to return to their former jobs can come back to perform light duty jobs while they complete their recovery. This helps lower claims costs. It’s a good idea to work closely with physicians who specialize in workplace injuries since they can more efficiently treat your employees and may have more experience authorizing returns to work for light duty assignments.

Hire the right people. Another long-term strategy for lowering your experience modifier is to implement good hiring practices. For example, you may want to consider a candidate background check and drug screening program. Employees who use drugs are far more likely to be injured on the job, lowering morale and driving up your costs. It’s always a good idea to be selective about whom you hire, and the likelihood of future on-the-job injuries is one more factor to consider.

The bottom line

When Workers Compensation insurance prices rise, it’s tempting for employers to shop around for new coverage. But the fact is, employers themselves control a major factor in determining rates: The experience modifier. Take control of your Workers Compensation costs by taking steps to create a safer work environment, return employees to work and hire the right people. Not only will you improve operations and employee morale, you’ll save money too.

Jul 01
Love0

CHECK YOUR COVERAGE FOR ON-THE-JOB INJURY CLAIMS BY TEMPORARY WORKERS

By Business Protection Bulletin

If you use workers from staffing or leasing agencies to supplement your workforce, how adequately do your current insurance policies protect your company in the event that one of these individuals is injured on the job?

If you’re covered under an Insurance Services Office, Inc. (ISO) Commercial General Liability (CGL) policy and your Workers Compensation and Employers Liability policies are written on National Council on Compensation Insurance (NCCI) forms with no additional coverage endorsements, you might not be as protected as you think. You should consider adding the Coverage for Injury to Leased Workers (CG 04 24) endorsement to your CGL policy.

A potential gap in coverage arises from the way the CGL policy defines “temporary” and “leased” workers. A leased worker is a person leased to your company through an agreement with an employee-leasing firm to perform duties related to the operation of your business. A temporary worker is a person furnished to you to fill in for a permanent employee on leave or to meet seasonal or short-term workload conditions. Under the terms of the CGL policy, “employee” includes a leased worker, but does not include a temporary worker. The distinction is important, because the CGL policy’s Exclusion E: employers liability, excludes from coverage bodily injury claims made by an employee of the insured.

Thus, if your CGL policy definitions consider the worker to be an “employee” — even though that worker is provided by a staffing agency — the policy will not cover any bodily injury claims by that worker. If the worker is not specifically substituting for a permanent employee who is on leave, or meeting a seasonal need or short-term workload conditions, the worker is not a “temporary worker” in the eyes of the insurer, and instead is considered your employee for purposes of Exclusion E. To be a “temporary worker,” that individual must have a specific end date to his or her employment with you. A temporary employee who is hired for an indefinite period of time simply does not meet the criteria stated above, and is therefore considered an employee, and subject to Exclusion E if they are injured on the job.

Adding the Coverage for Injury to Leased Workers (CG 04 24) endorsement to your CGL policy will help you fill this coverage gap. This endorsement states that the term “employee” does not include a “leased worker” or “temporary worker,” making the employers liability exclusion of the CGL policy inapplicable to the claims for injuries to a leased or temporary worker.

Another way to protect your company in lawsuits by injured temporary workers is to require the staffing agency that provides such workers to include the Alternate Employer Endorsement (WC 00 03 01 A) on its Workers Compensation and Employers Liability policy, and specifically schedule your company as the alternate employer. This endorsement will provide you with coverage as an alternate employer in the event the temporary worker files a tort suit.

Without the right coverage in place, on-the-job injuries to temporary workers can present a significant potential liability to your company. Let us help you examine your current CGL policy and arrangements with any staffing or leasing firms you use to make sure your company is protected.

Jul 01
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WATCH OUT FOR TELEPHONE AND INTERNET SCAMS DESIGNED TO STEAL YOUR IDENTITY

By Personal Perspective

Identity theft is the fastest growing crime in our nation today. According to the Federal Trade Commission, more than 20% of all cases involve telecommunications and the Internet. Scam artists are pros at putting together legitimate-sounding scripts, Web sites, and e-mails.

Most scams, by phone or e-mail, ask you to provide either credit card account information or Social Security number. The Identity Theft Resource Center recommends that you never give out this information unless you initiate the call and you know for sure you are speaking to a true company representative.

The list of scams below represents only a few of the scams being circulated. Do not respond to these scams, not even to send a “do not contact me” e-mail in an attempt to remove your name from the list.

Account verification or “phisher” scams: These con artists purchase domain names that are similar to those of legitimate companies to use for scams. For example, those involving the use of the E-Bay name include ebay-verification.net and change-ebay.com. The scam involves sending out millions of e-mails trying to get consumers’ credit card and other identity information. They might, for example, ask you to “verify” a purchase you never made or threaten cancellation of your account if you do not provide the requested information. Do not respond to e-mails that ask for credit information, SSN, and other personal data until you have checked with the company directly to see whether the e-mail is legitimate. Companies that have been used for this scam include: Best Buy, Discover Card, AOL, MSN, Earthlink, PayPal, and Bank of America.

“Help me move money from my country” scams: Most people with e-mail addresses have received e-mail from someone purportedly in a foreign country asking the recipient to help the sender to move money from one account to another often for some humanitarian purpose, such as paying medical bills for a sick relative. Also known as “Nigerian Money Offers,” because the senders often claim to be in Nigeria, this scam promises to pay the recipient for their help. These scams predate the Internet and many people are aware of them already. Even so, estimates show these scams still net $100 million annually.

Canadian/Netherlands Lottery – “You Have Won”: Unless you entered a lottery or bought a ticket to win a prize, these are scams. This scam has bilked some victims of more than $20,000.

“Free Credit Report” Scams: Almost all the “free credit report” e-mails you receive are scams. Either the scamster is trying to find out your SSN or will be billing you for a service later.

“You have won a free gift”: You might receive either a phone call or e-mail about a free gift or prize. You just need to send your credit card info to take care of shipping and handling. Free means free; there should be no charge. Once in receipt of your credit card information the scammers can use it against your will.

Questionnaires: You might get an e-mail card from an “old friend” or “chat room friend.” You are asked questions that help the sender find out your birth date, passwords (favorite things) and even blatantly ask for your SSN. Do not answer these, even with false information. You only let the other party know they have reached a “live” person and you could later give away information you never realized could hurt you.

Identity Theft from Resumes: Do not place your SSN or date of birth on resumes that you send out for jobs. There have been instances where a person placed a “help wanted ad” either on the Internet or in a newspaper and collected SSNs and other personal information from resumes submitted seeking the job.

Fake IRS Audits: Some taxpayers have received e-mail indicating they are subject to an “e-audit” and need to complete a questionnaire within 48 hours to avoid assessment of penalties and interest. The e-mail asks for the taxpayers SSN, bank account numbers, and other confidential information. The IRS does not conduct e-audits, nor does it notify taxpayers of a pending audit via e-mail.

For more information on identity theft scams, go to the Web site of the ITRC at www.idtheftcenter.org. If you receive a suspected scam e-mail, forward it to the ITRC at: itrc@idtheftcenter.org and they will let you know if it is a confirmed scam and take appropriate action.

Jul 01
Love0

KNOW WHAT COVERAGE LIMITS YOU NEED FOR AUTO AND HOMEOWNERS INSURANCE

By Personal Perspective

Most of us prefer to avoid thinking about scenarios that would cause an insurance claim — our homes damaged by fire or wind, someone injured on our property, or people hurt in an auto accident. However, it is necessary to give some thought to these disturbing possibilities to ensure that you are adequately prepared and protected in the event of such a catastrophe. Reviewing your insurance coverage will also clarify if there’s a need for an additional Umbrella policy for extra protection. So, let’s try to cover some of the basics on coverage limits.

Homeowners Insurance

Homeowners insurance covers three areas: Damage to the home, damage to the contents of the home (personal property), and your liability for injuries to others.

Before obtaining Homeowners insurance, it’s a good idea to stop and consider exactly what you want the insurance to offer you. You might want coverage just to pay off the mortgage in the event you can no longer occupy your home. It’s more likely you’ll want to continue living in your home after a claim or sell it at market value, so you will want your insurance to pay for repairs caused by fire, wind, or some other covered peril. In most cases, reconstruction means you will need insurance that actually covers more than the home’s market value.

Replacement value, which is the cost to reconstruct a damaged home, is generally higher than the cost of buying a similar home on the market due to the specialized nature of reconstruction as opposed to new construction. For example, in reconstruction there will be the initial cost of debris cleanup. New construction starts at the bottom and builds up, but with reconstruction it’s often necessary to take off the roof and build down, which is more expensive. Furthermore, after a natural disaster, construction costs rise due to demand. Bear in mind that your insurance can cover not only the costs to rebuild, but also the costs for you to live elsewhere, if necessary, while the home reconstruction is completed. We are experienced in determining replacement value and can help assess your coverage needs as well as determine available coverage based on the age and condition of your home.

Also consider whether you want replacement coverage for clothing, furniture, appliances, and other personal property inside your home. Without replacement coverage, your coverage for personal property is depreciated by the age and wear of the items lost. Due to depreciation, the computer you paid $1,500 for three years ago may be valued at only $400 or $500, which is all the insurance company would pay if you don’t have replacement coverage.

Some insureds will need more coverage for personal property (contents) than their policy provides. The amount of personal property coverage is usually limited to 70% of the coverage limit for the structure. For example, if you have an art collection, antique furniture, jewelry, or other valuable possessions, talk to your agent about supplemental coverages, such as fine arts or scheduled property endorsements, to adequately protect your investment in these items. The cost is modest for the extra protection.

The standard amount of liability coverage in a Homeowners policy is $100,000, which covers personal liability for damage to property or personal injury caused to others. Will this be enough to protect your assets in the event you are found liable in a personal injury lawsuit? If not, you need to consider a higher level of liability coverage with your Homeowners policy and/or you may want to consider purchasing a separate Liability Umbrella policy (discussed below).

Auto Insurance

There are six different types of Auto insurance coverage. Three relate to liability, two for damage to your vehicle, and one provides specific coverage for accidents involving you and an uninsured or underinsured driver.

Collision coverage covers the costs of damage to your vehicle caused by collisions with other cars or objects. Comprehensive coverage covers theft or damage to the vehicle caused by events other than a collision with another car or object. How much coverage you need depends on the value of your vehicle.

Auto liability insurance is required in most, if not all, states, but the liability limits that drivers are required might not be enough to protect your assets. Even one serious injury caused by an accident for which you are liable could cost into the six figures, or more in extreme cases, just for medical expenses. And the amount only increases if there are more injured people. It’s easy to see that the $50,000 of per accident liability coverage required in many states would not be enough to pay all the costs of property damage and bodily injury. Auto insurance companies recommend that you have $100,000 of bodily injury protection per person and $300,000 per accident. If your personal net worth is more than $300,000, consider buying additional Liability Auto insurance.

Do I Need an Umbrella Policy?

Unfortunately, even with our best intentions and efforts, accidents can happen for which we are legally at fault. Medical costs are sky high. If someone were permanently disabled by an accident, the expenses of lifetime care could be astronomical. If someone killed left behind survivors who were depending on that person for support, you could be liable for damages to the survivors. Keep in mind that any costs not covered by insurance will come out of your pocket; you could be forced to sell property or to turn over part of your earnings for years to come, perhaps the rest of your working life, to an injured party.

There are limits on the amount of liability coverage available as part of your Homeowners and Auto insurance policies. If you have total assets valued at more than these limits — including, say, your vacation home, investments, rental property, boats and vehicles — or if you have a high income, an Umbrella policy offers a great deal of protection for a relatively low premium.

In addition to the assets you want to protect, you might want to consider your risk of being sued. Do you live in a state that is particularly friendly to plaintiffs? Do you have frequent guests on your property? Do you have a swimming pool, trampoline, swing set, or other sports equipment in your yard? Do you have a dog that is overly protective of your property? Are you or any of your household members aggressive, fast, or careless drivers? If so, your risk is greater that someone may be injured, perhaps very seriously, and you would be legally at fault. In fact, any situation that could result in serious injury, long-term physical impairment, psychological damage or death could put your financial well-being at risk.

Once the liability limits are exhausted on your home or Auto policy, your Umbrella policy takes over and provides another layer of liability protection. Policies typically start at $1 million with coverage available up to $10 million. Premiums start at around $300 a year — less than a dollar a day for a great deal of protection.

The best way to determine whether you need an Umbrella policy is to discuss your financial status, lifestyle, and current and future assets with your insurance agent. We’d be happy to review the liability limits in your current policies and suggest the best strategy to ensure protection of your assets in the event of an injury for which you are legally liable.

Jul 01
Love0

GET A ‘CLUE’ WHEN INSURING YOUR HOUSE OR VEHICLES

By Personal Perspective

You’re about to buy a new home or new car and you believe you’ve found the perfect one for you. You need to insure your new treasure, but for some reason you can’t find a carrier to cover it. Is there any way you can find out why you seem to be uninsurable? The answer is simple, get clued in with CLUE.

CLUE, also known as Comprehensive Loss Underwriting Exchange, is a database of consumer claims compiled by a company called ChoicePoint that insurance companies access when they are underwriting or rating a Homeowners or Auto insurance policy. An insurer can request a report for a piece of personal property that it is underwriting and receive claims information provided by the insurance companies who previously insured the property. This report also includes details such as the policyholder name, policy number, date of loss, type of loss, amounts paid, and a description of the property covered. The database contains up to five years of personal property claims history.

Under the Fair Credit Reporting Act, ChoicePoint can produce a CLUE report when a person or company intends to use the information in connection with the underwriting of a consumer’s insurance policy. This includes situations where the consumer asks for an insurance quote or applies for insurance; or when the insurance company or agent requests the CLUE report.

Why would an insurance company investigate loss history? Actuarial studies have shown a high correlation exists between a consumer’s prior loss history and future loss potential. This history, along with other factors, can be considered when a company is deciding whether to issue a policy and what premium to charge. It is legal for a company to investigate a prior owner’s loss history in determining your eligibility for coverage.

As a consumer, you are not without rights when it comes to CLUE. Under the Fair Credit Reporting Act, you have a right to see and correct information on your claims history reports. If you have been denied insurance or charged a higher premium, contact ChoicePoint or ISO within 60 days of your denial to request a free report. Otherwise, you will be charged a small fee for your claims history report. You can find more information by logging on to ChoicePoint’s Website.

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