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March 2010

Mar 01
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WHAT ARE THE FACTS REGARDING A CONTRACTUAL LIABILITY LIMITATION ENDORSEMENT?

By Construction Insurance Bulletin

Scenario #1: A structural steel erection firm wins a contract for the construction of a five-story office building in an urban location. The contract requires the firm to assume the general contractor’s legal liability for accidents occurring during the project and arising out of the steel work. One week into the project, a crane lifting a load of steel bars topples over into a street, damaging cars, nearby buildings, and injuring drivers and pedestrians. Several of the victims file suit against the property’s owner, the general contractor, and the steel firm. As per their agreement, the general contractor looks to the steel firm to defend it in court and pay any resulting judgments. The steel firm forwards the claim to its Liability insurance company, which proceeds to defend both the steel firm and general contractor. The company settles with the victims and pays on behalf of both contractors, up to the policy’s limits.

Scenario #2 is identical to #1, but this time the insurance policy contains a wrinkle. The policy includes a special endorsement, ISO form number CG 21 39 10 93, Contractual Liability Limitation. Accordingly, the insurance company defends the steel firm and pays an amount to settle its claims. However, it refuses to defend the general contractor or pay the amount of the loss the steel firm assumed under the contract. When the steel firm is unable to pay these sums out of pocket, the general contractor sues for breach of contract, setting off a long round of litigation.

What is the Contractual Liability Limitation Endorsement? What does it do, and why would an insurance company use it?

The Commercial General Liability coverage form states that it does not cover injuries or damages for which the insured must pay by reason of having assumed liability under a contract. However, it turns around and gives some coverage back: It will pay for liability the insured assumed under an “insured contract,” a term that the policy further defines. The term includes a real estate lease, a railroad sidetrack agreement, an easement or license agreement not pertaining to railroad work, a requirement to indemnify a municipal government, an elevator maintenance agreement, and other agreements in which the insured assumes the tort liability of another party. The Contractual Liability Limitation Endorsement changes that definition: It removes completely the last part (other agreements in which the insured assumes another party’s tort liability) from the definition. When a liability policy includes this endorsement, these types of agreements are not insured contracts, and the policy does not cover liability assumed under them.

In both scenarios, the steel firm (the insured) assumed the tort liability of the general contractor. In scenario #1, the steel firm had a liability policy without the Contractual Liability Limitation, and the insurance company paid for the amount of the loss the firm assumed. In scenario #2, the endorsement applies; the company does not pay anything for the general contractor’s defense or liability. For many construction firms, this can be a catastrophic gap in coverage.

An insurance company may add the endorsement to a contractor’s policy if it wants to approve the insured’s contracts selectively on a case-by-case basis, rather than insuring them all on a blanket basis. This gives the company some control over its exposure, but it can be slow and cumbersome for the insured.

All construction firms should review their Liability insurance policies with their agents to determine whether the company has added this endorsement. If it has, a discussion on what to do about it is essential. It will be too late to do solve the problem after a loss occurs.

Mar 01
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STRESS THE SIGNIFICANCE OF SAFE DRIVING TO YOUR EMPLOYEES

By Workplace Safety

You most likely learned to drive many years ago, and haven’t looked back since you were sixteen. In fact, you probably haven’t thought a whole lot about your driving skills since you first learned to drive. What is important to realize is that your driving abilities, or lack thereof, can have a tremendous impact on your safety at work.

The No. 1 cause of death on the job is highway accidents, according to a 2007 Bureau of Labor Statistics study. Of the approximately 5,600 on-the-job fatalities in 2007, more than 2,300 were transportation-related incidents. In fact, many of the fatalities were salespeople headed to sales calls or someone out for an occasional trip in the company vehicle. Because of these grim facts, many employers are taking steps to reduce accidents by organizing driver’s training for some or all of their employees.

Not only do car accidents carry a heavy price tag in terms of dollars, but they also take an emotional toll on employees. Although offering a driving course to employees is an expense for an employer, the training might pay off in the long run. For example, some insurance companies offer discounts to companies who participate in driver’s training programs, which might offset those costs. Programs range from videos and workbooks to online classes, some of which are available directly from the National Safety Council. With the National Safety Council program, for example, employer’s can track which employees signed up for the online course. This way, an employer can individually reward an employee for participating in the program.

Teaching safe driving techniques is by no means a new concept. In the 1940s, Harold L. Smith marketed the Smith System to help prevent accidents before they happen. More than half a century later, the five basics of The Smith System are still taught to help drivers make good choices behind the wheel. The five basic tenets of The Smith System are:

1. Look ahead at least 15 seconds, giving you an opportunity to see a problem and make a decision before it’s too late.
2. Keep a 360-degree view of what is going on around your vehicle. Check mirrors every five to eight seconds to update yourself on what is happening.
3. Keep your eyes moving! Avoid staring straight ahead by looking around and maintaining your involvement in the road conditions.
4. Maintain space around your vehicle to provide an alternate way out in the event of a dangerous situation.
5. Seek eye contact with other drivers and pedestrians to make sure that you are seen in your vehicle.

Even if a formal driver’s safety course is not offered in the workplace, some common sense tips on being a safe driver can still be emphasized. Fatigue and technology are both potentially fatal when combined with drivers on the road. If you feel yourself getting tired, pull over – plain and simple. Don’t hesitate to ask someone else to drive or to locate a highway rest stop for a short break. In addition to fatigue, technology, cellular phones, mp3 players, PDAs can be deadly. Don’t make that important business call from the road, and don’t try to jot down notes from a meeting. Stop and get off the road to attend to business. It could be the most important stop you make all day.

Employers should also take the time to highlight the benefits of safe driving to the employees themselves. Although safe driving skills obviously benefit the employer, they also benefit the employee personally through reduced speeding tickets and fewer accidents and injuries. The costs associated with emphasizing safe driving are quickly outweighed by the benefits to everyone involved.

Mar 01
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LEARN AND PRACTICE THE GUIDELINES FOR SAFE LIFTING TECHNIQUES

By Workplace Safety

According to the Bureau of Labor Statistics, more than 1 million workers suffer back injuries each year. In many cases, these injuries could have been prevented if the workers learned and practiced the proper lifting of heavy objects.

Learning safe methods of lifting and handling heavy objects can protect against injury and make work labor easier. Although these methods might take a while to get used to, over time, safe lifting practices will become second nature.

Guidelines for Safe Lifting

Ask yourself the following questions before you attempt to lift an object:

  • Can I safely lift this object by myself?
  • Is the load too awkward or too large to handle alone?
  • Does the load have good grips or handles?
  • Is there anything present to obstruct proper lifting?
  • Might the contents of the load shift while being lifted?
  • Is there enough space in the work area for easy movement?

Practice the following heavy lifting techniques to protect yourself from injury:

  1. Place your feet at least shoulder width apart to maintain good balance. Keep your feet firmly planted, and try to distribute weight evenly throughout the soles of both feet.
  2. Utilize your abdominal muscles. You will reduce stress and strain on your back by tightening abdominal muscles before starting the lift.
  3. Bend from your knees. This will ensure that weight comes into the thighs and hips first, rather than the spine. Never lift with your knees locked because the hamstrings will tighten and lock the pelvis into an unbalanced position. Never bend from the waist. This improper practice puts tremendous pressure on the back. During the lift, keep your back straight, but not vertical.
  4. Tuck in your chin. Tucking your chin will help keep your back straight.
  5. Grip with your palms, not with your fingers. You are less likely to drop an object by gripping with your palms, as opposed to gripping with only the fingers.
  6. To start the load moving, use your body weight, and then lift by pushing up with the legs. By using your legs, you will fully utilize the strongest muscles in your body.
  7. To avoid strain on your upper back, keep the arms and elbows close to the body while lifting.
  8. Keep the load close to your body. Use your feet to change direction.
  9. Make sure you can see where you are going!
  10. To lower the object, bend the knees. Never stoop. Place the load on a shelf or bench and push it into position. Make certain your hands and feet are clear when placing the load.

Make a point to practice the above steps when lifting anything, even a relatively light object.

Don’t be afraid to ask for help. If the weight, size, or shape of an object is too much for one person, don’t take the risk. Instead, ask for assistance from one of your co-workers. Ideally, workers should be approximately the same size for team lifting. Designate one lifter to be responsible for control of the action to ensure proper coordination. If efforts are not coordinated among lifters, the risk of injury can increase.

Mar 01
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AVOID AGGRESSIVE DRIVING

By Workplace Safety

Aggressive driving is defined as the operation of a motor vehicle in a fashion that endangers or is likely to endanger people or property. Here in the United States, each year thousands of traffic accidents and associated fatalities are caused in part by aggressive driving. Showing little regard for others, most aggressive drivers operate their vehicles as if they were the only drivers on the road. They are not; but they might be the most dangerous.

If you make the decision to speed, tailgate, or cut off another vehicle, you might be committing an act of aggressive driving. Other aggressive driving actions that should be avoided are blocking other drivers who wish to pass, and weaving in and out of traffic. Some acts of aggressive driving might not even be driving activities at all. Flashing your headlights, repeatedly honking your horn, improper hand gestures, and yelling are all examples of poor driving behavior. Your responsibility as a careful driver is to abstain from all of these behaviors, and to think about safety first.

Just as important as avoiding aggressive driving yourself, as a safe driver, you need to avoid contact with aggressive drivers whenever possible. If you do encounter an aggressive driver, the best plan of action is to get out of their way. Don’t ever retaliate. It could make the situation far worse for you and those around you. It is a good idea to create some space between you and an aggressive motorist and to avoid eye contact with the driver.

Another aspect of safe driving is to practice what you preach. Relax and enjoy the ride as you obey the speed limit and other rules of the road. Exercise courtesy and patience with other drivers, remembering that some of them could be new drivers still learning the ropes. Be realistic about your travel time and, if possible, allow yourself extra time to reach your destination. Avoid congested or construction areas whenever possible, and factor in delays that might be caused by inclement weather.

Driving is not a contest. It is a privilege that demands responsible actions. Choose to show other drivers, pedestrians, motorcyclists, and bicyclists the respect they deserve. Learn to share the road. Give other drivers the benefit of the doubt. They might be lost, in a hurry, or distracted by a problem they are facing. Learn to take the high road, make careful decisions, and arrive alive!

Mar 01
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KEY PROVISIONS REGARDING THE COBRA SUBSIDY PROGRAM EXTENSION

By Employment Resources

In late December 2009, President Obama signed into law changes to the COBRA premium subsidy law that previously was set to expire on December 31, 2009. The extension brings added compliance obligations for employers, as the program has been extended two months through February 28, 2010, the subsidy period is expanded by 6 months to 15 months total and separate notice requirements apply.

The American Recovery and Reinvestment Act of 2009 previously established a law under which “assistance-eligible individuals� (AEIs) could receive a 65% COBRA premium subsidy for up to nine months from their continuation effective date. Under the original legislation, an AEI was defined as any COBRA qualified beneficiary who elected COBRA coverage and: (1) Lost group health coverage as a result of an involuntary employment termination; and (2) had a qualifying event between September 1, 2008, and December 31, 2009. The Act included various new administrative requirements for employers, many of which were required within a short time period after ARRA was enacted.

Here are the key provisions of the new COBRA subsidy extension:

  1. The maximum subsidy period increases from nine to15 months.
  2. The subsidy eligibility period is extended to February 28, 2010 (previously December 31, 2009).
  3. AEIs who previously had reached the end of their original premium reduction period before the extension was passed will have additional time to pay their premiums to continue coverage. They must pay the 35% of total premium costs by the later of February 17, 2010, 30 days after notice is provided by their plan administrator, or the end of the otherwise applicable payment grace period.
  4. AEIs who paid the full COBRA premium after their original subsidy period expired are eligible for reimbursement or crediting of excess premiums paid.
  5. Plan administrators must provide notice of the subsidy extension by February 17, 2010 to those individuals who were AEIs on or after October 31, 2009.
  6. Additional notices must also be provided to AEIs who are eligible to make retroactive premium payments at the subsidized rate and those entitled to premium reimbursement.
Mar 01
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CONTROL OBESITY AND LOWER BUSINESS COSTS

By Employment Resources

Two critical tasks in managing any business are to control costs and maximize productivity. Many business owners feel confident that they’re doing all they can in both of these areas. However, if employers aren’t considering the shape their employees are in, they are missing a huge piece of the puzzle that might be affecting both costs and productivity adversely.

According to a study by the Centers for Disease Control and Prevention, 26.1% of American adults were obese in 2008, compared with 25.6% in 2007. If we count Americans who are either overweight or obese, a staggering two out of three fit the bill. These statistics become of even greater concern for business owners when you add the findings of the Department of Health and Human Services (DHHS) survey entitled “Prevention Makes Common Cents: Estimated Economic Costs of Obesity to U.S. Business.”� DHHS discovered that the total cost of obesity to U.S. companies is estimated at $13 billion per year. Health insurance costs related to obesity comprise the largest percentage of the total coming in, at a whopping $8 billion.

Of course, increased insurance costs isn’t the only story here. The ballooning American waistline is the cause of 39 million lost work days; 239 million restricted activity days; 90 million bed days; and 63 million physician visits; numbers which add up to an immense drain on productivity.

What can employers do to combat this growing problem? Start with some suggestions offered by the American College of Occupational and Environmental Medicine:

  1. Offer healthy choices in cafeterias and/or vending machines.
  2. Provide nutritional information for cafeteria selections.
  3. Provide healthier snacks at meetings and other employee events. For example, serve fruit, popcorn, and low-fat yogurt, rather than doughnuts or pastries.
  4. Provide bottled water in the vending areas or cafeteria.
  5. Institute a workplace wellness program that provides mechanisms to aid employees in adopting healthy lifestyles.
  6. Provide educational material on the health risks of being overweight and how to eat healthier.
  7. Encourage the use of stairways instead of elevators by placing signs near the elevator and stairs highlighting the health benefits of stair use. Ensure that stairways are accessible and are lighted properly.
  8. Discourage employees from eating at their desks. Even a short walk to the cafeteria/lunch room can be helpful.
  9. Support physical activity breaks during the workday.
  10. Allow employees enough time for lunch so that they can walk or use the gym.

Although there might be an initial cost associated with implementing these provisions, the ROI will prove that the expense was well worth it when employers begin to see the improvements in productivity and the decline in obesity-related health claims. Even more important than these two benefits are the residual benefits received from implementing these changes. When employees see that their employers care enough to provide not just a safe workplace, but also a healthy workplace, these gestures encourage a real sense of loyalty that will ultimately translate into a healthy boost to everyone’s bottom line.

Mar 01
Love0

SUBSTANCE ABUSE PROBLEMS AFFECT YOUR COMPANY’S BOTTOM LINE

By Employment Resources

Employees with substance abuse problems cost businesses billions of dollars each year. According to the 2008 National Survey on Drug Use and Health, among the 17.8 million Americans aged 18 or older who admitted to illicit drug use, nearly 73% were employed. This equates to 12.9 million employees who admit to some form of substance abuse.

For the majority of substance abusers, their problem lies with alcohol. According to information published by Ensuring Solutions to Alcohol Problems, a part of the George Washington University Medical Center, alcohol abuse costs American businesses $134 billion in annual losses. Most of the losses are due to missed work: 65.3% of this cost is caused by alcohol-related illness, 27.2% due to premature death, and 7.5% to crime. People addicted to alcohol also spend more time in the hospital and have higher rates of job turnover than their non- or light-drinking co-workers.

Data such as this shows that alcohol and other substance abuse takes a toll on workplace productivity, and contributes to higher medical costs both for treatment of the addiction and for substance-related medical issues. Employee substance abuse problems also cause an increased occurrence of workplace accidents and higher Disability and Workers Compensation costs. There is no question that it is in an employer’s best interests to find ways to minimize the impact of employees’ substance abuse on the workplace.

Experts in the field stress that it is imperative that employers educate employees about the health hazards of substance addiction and encourage employees to seek early treatment of any problems. While stressing the importance of a drug-free workplace, policies that rely primarily on discipline can result in addicted employees hiding their problems out of fear of losing their jobs, and in co-workers enabling such behavior in a spirit of friendship. In this type of environment, an addicted employee might resist seeking assistance — such as obtaining treatment under the medical plan or taking a leave to enroll in a treatment program — until a crisis occurs.

On the other hand, employees will be more likely to seek the help they need if they believe that by doing so they will receive help, not punishment. The same is true of co-workers, who can be a valuable resource in encouraging addicted employees to ask for help and to stay committed once treatment has begun.

Since substance abuse is truly a medical problem, most medical insurance plans include at least some substance abuse benefits. Workplace communications about a business’s policies on alcohol/drug use should include this information. If employees realize that help is within reach, they are more likely to seek solutions to their problem. Some employees might not realize that this benefit is available to them. Employee Assistance Programs (EAPs) can also offer screenings, counseling, and treatment referrals for employees with substance problems. Depending on the individual EAP design, it also might have worksite awareness and supervisor training programs.

Employers should make employees aware that any communications regarding substance abuse issues are confidential. This, together with a supportive (instead of punitive) environment, increases the likelihood that employees will ask for help.

With so many dollars wasted in lost productivity, the incentives for a business to promote substance abuse awareness are compelling. And, because work is such an important part of most people’s lives, the workplace can be an effective place for substance abuse intervention to begin.

Mar 01
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START NEW EMPLOYEES OUT ON A SAFE FOOT!

By Risk Management Bulletin

If your idea of orienting a new employee is to introduce them around and show them the bathroom and the coffee room, you need to reorient yourself.

New employees are five times more likely than experienced workers to suffer a lost-time injury on the job in their first month at work. What’s more, two in five workers injured on the job have been doing it less than a year.

Why are “newbies” so vulnerable, and more important, what can you do about it?

This vulnerability results from a combination of ignorance and fear by workers and employers alike. New workers are unfamiliar with the tools, conditions, and most important, safety hazards, associated with the job. However, many employers assume that new employees know more than they do. Certain jobs require precautions that might seem like common sense to someone who has spent years doing them, but that newcomers have never even thought about.

Rookie workers are often afraid to ask questions, so that they won’t seem unable to do the job and be vulnerable to termination. Questions also reinforce supervisors’ awareness of safety issues by reminding them of things that they didn’t explain fully or forgot to mention. Supervisors need to keep reminding new workers that the more questions, the better.

To encourage safe-mindedness on the job from Day One:

Acclimate new hires to workplace safety starts as soon as possible. Orientation is the perfect place to introduce safety training to a new worker. The new hire packet should include a safety policy that covers generic concerns and sources for additional information so that the employee feels comfortable asking questions.
Incorporate safety information in your walk-through, pointing out the safety elements you’ve built in, such as the location of fire exits and extinguishers, first-aid kits, and eyewash stations. Stress less obvious safety features, such as letting new workers know that they can improve safety by keeping walkways clean and clear. Imparting safety knowledge will also make the newcomer feel valued and informed, leading to a more engaged and productive employee.
Finally, if you haven’t already done so, set up and monitor a comprehensive safety training program for new hires.
Our risk management professionals would be happy to offer their advice. Just give us a call, or send an e-mail

Mar 01
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HELP YOUR WORKERS KEEP THEMSELVES SAFE

By Risk Management Bulletin

Most on-the-job accidents occur in “safe”� workplaces. Why?

Some on-the-job injuries result from inappropriate safety equipment or unsafe processes and procedures problems that workplace safety laws can help correct. However, most of these mishaps are due to employee error (taking unneeded chances without thinking about them). For example, a worker might suffer a back injury despite being trained in safety, having a safety belt available, and knowing that their behavior is risky.

Job-related excuses for a back injury might include:

  • “I’ve picked up bigger boxes than this before without hurting myself.”�
  • “Back belts are for sissies.”
  • “I’m too busy to stop and get a belt.”
  • In these cases, the employee at least thought about the possible dangers in lifting and alternatives.

You might also hear such non-job-relatedreasons� for ignoring safety procedures as:

  • “I’m mad at my spouse. My kids are a pain.”
  • “How am I going to get my car fixed? Where will the money come from?”
  • “What should I wear tonight? Do the Joneses like asparagus?”
  • “I sure need a cigarette. When’s my break?”

The solution to these cavalier attitudes: Develop a comprehensive, effective employee safety motivation program.

Market the program by instilling the value of safety. Include program evaluation and trainee feedback for supervisors and employees. Create detailed guidelines and documentation Set goals and reward success by providing such incentives as lottery tickets, gifts, savings bonds, and cash.

Although these efforts involve costs, they can save you big dollars. The rate of return on an effective safety program can be $4 to $10 for every $1 you invest.

What’s not to like?

Mar 01
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DEVELOP A SOCIAL-MEDIA POLICY FOR EMPLOYEES

By Risk Management Bulletin

With the “Web 2.0″� world of Facebook, LinkedIn, and other networking sites expanding exponentially, your company and your employees increasingly are becoming involved in the world of social media a reality that creates both opportunities and risks for your business. A comprehensive workplace policy on social media to help you manage this exposure should include these guidelines.

  1. Be sure that this policy meshes with other company guidelines on Internet usage, privacy, nondisclosure, noncompetition, ethics, etc. For example, both your social media and Internet policies should ensure your right to monitor any messages sent or received within the company’s e-communication systems.
  2. Have employees acknowledge that they understand your policy and agree to it as a condition of employment. Remind them that you’re an at-will� employer (unless you have employment contracts or bargaining agreements that limit termination options).
  3. Tell employees that, if they publish anything about your organization, they must note that they are employed there, and that their views are entirely their own.
  4. Emphasize the risks of online publishing, including the danger of disclosing confidential information which the company hasn’t released. If they’re in doubt, they should check with their supervisor.
  5. Make sure employees know that they’re legally liable for what they publish and that if they publish words or images embarrassing or harmful to the company, they’ll face discipline.
  6. Prohibit them from disclosing anything that would allow hackers to access personal information. A name and birth date can be enough for identity thieves with Web-crawling applications to triangulate their way to sensitive personal information.
  7. Stress the need for employees to check facts before publishing or attributing information and to make sure that they don’t present their opinions as facts. Doing so can make it easier to prove malice in defamation or invasion-of-privacy cases.

For more information, feel free to contact our risk management professionals.

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