Skip to main content
search
Monthly Archives

July 2010

Jul 01
Love0

PROTECT YOUR BUSINESS WITH A POLLUTION LIABILITY POLICY

By Business Protection Bulletin

In April 2010, an oil drilling rig owned and operated by Transocean Ltd. exploded and sank in the Gulf of Mexico. The accident killed 11 people and set off a massive oil spill, causing catastrophic damage to marine life and imperiling coastal areas in four states. Transocean was operating on behalf of the giant energy corporation BP, who owned the rights to the oil field where the rig was located. BP came under intense criticism from the president, Congress, and the public for what was perceived to be inadequate safeguards to prevent the disaster. The companies involved in the incident might have legal liability for economic damages and clean-up costs totaling billions of dollars.

Most U.S. businesses are not drilling for petroleum in an important waterway, but they could still face similar loss exposures on a smaller scale. Millions of companies have fuel storage tanks above or below ground, or transport fuel or chemicals. Manufacturers use a variety of toxic substances in their operations. If any of these substances leak into the land, water, or air, the companies might be responsible for remediation costs and damages. If these companies do not have the right insurance, these costs could drive them out of business.

The standard Commercial General Liability (CGL) insurance policy does not apply to most accidents involving pollution. It does not cover injuries or damages caused by the escape of a “solid, liquid, gaseous or thermal irritant or contaminant,” nor does it cover any costs the business insures because it was asked or required to clean up the contamination. There are some exceptions; for example, the policy covers a contractor if fuel or fluids leak from construction machinery brought to a job site. It also covers injuries or damages caused by heat, smoke, or fumes resulting from an uncontrollable fire. However, the insurance companies that offer this policy do not intend to cover incidents similar to the gulf oil spill.

Some companies offer a Pollution Liability policy that fills much of the coverage gap. It covers injuries or damages caused by an ““emission, discharge, release or escape of pollutants into or upon land, the atmosphere, or any watercourse or body of water.” It defines pollutants in the same terms as does the General Liability policy. One significant feature is that it is a “claims made” policy; it covers pollution incidents that occur on or after a date specified in the policy (called the “retroactive date”) and for which claims are made during the policy term. For example, if the policy has a term of January 1, 2010 to January 1, 2011 and has a retroactive date of January 1, 2007, it will cover a claim made in May 2010 for an incident that occurred in August 2008. It would not cover a claim for an incident that occurred in August 2006.

Because so many types of businesses use potentially toxic substances (paints, oils, printer chemicals, etc.), the pollution liability exposure is not limited only to manufacturers and energy companies. All business owners should consult with our professional insurance agents to identify their vulnerabilities to pollution claims and ways to handle them — before a loss occurs.

Jul 01
Love0

AMERICAN WORKFORCE PLAGUED BY BACK INJURIES

By Construction Insurance Bulletin

Injuries sustained in the workplace present problematic issues for both the employer as well as the injured employee. Of the many types of work-related injuries, back injuries are the most commonly reported malady to Workers Compensation carriers.

A back injury can cost a company thousands of dollars due to such incidents. Missed work for doctor appointments and recovery time account for a large majority of financial losses that might occur.

Types of Work-Related Back Injuries
The most common type of back-injury complaint is that of the lower back. Nearly a million employees per year in the United States alone have reported lost work days due to lower back injury. Spine ailments, such as strains or sprained muscles, account for a great number of disability claims, especially in the field of construction and manual labor. The greater the physical demand of the work, the higher the rate of back injuries.

Although the pain and suffering of the worker who experiences a back injury might seem obvious, the employer is left to deal with the pains of financial loss due to the absence of the employee as well as the Workers Compensation costs. Neither party benefits in any way from an injury of such magnitude. In short, both sides are faced with long-term issues related to the back injury. Companies feel the financial aftershocks of workforce injuries in the amount of $13.4 billion per year.

Back Injury Prevention in the Workforce
Although the effects of job-related back injuries are readily known, the causes and how to prevent such injuries should take center stage for both employers and employees. Many companies offer in-house training and courses to help educate management and workers on how to avoid back injuries. A common program found in many companies is an injury prevention course that promotes safe work habits, such as:

  • Proper lifting procedures
  • Maximum weight guidelines
  • Training on lifting equipment such as dollies and carts
  • Proper access to storage equipment to promote easier lifting

Another preventative measure that might facilitate back injury prevention is a company incentive program for workers. Through these types of programs, the worker is offered a bonus for safety and injury-free work. Not only do programs such as these benefit the worker, the employer ultimately will deal less with the problems related to back injuries by implementing such programs.

Aside from the ill effects and prevention ideas presented, employers would do well to also avoid taking a disbelieving stance in response to an employee who might have sustained a back injury. Although it’s possible to feign such an injury, most workers who claim to have acquired an injury are not attempting to deceive their employer. Proper steps must continue to be taken to ensure the health and welfare of both the company and its workers.

Jul 01
Love0

DOES YOUR BUSINESS HAVE COVERAGE FOR “IMPAIRED PROPERTY”?

By Construction Insurance Bulletin

A contractor gets a job to install the systems that will control the bank of eight elevators in a new 20-story hotel. The contractor obtains the components from the distributor, installs them without any problems, and moves onto the next job. However, prior to opening, the hotel’s owners find that none of the elevators are working. Diagnosing and repairing the problem will delay the hotel’s opening by at least two weeks and possibly more. The owners sue the general contractor who built the hotel and hired the sub; the GC in turn sues the sub. The sub submits a claim to its Liability insurance company, but the company denies coverage.

The same subcontractor gets an identical job for a new apartment building. This time, the elevators work during testing, but two months after the building opens, they grind to a halt between floors. An investigation reveals damage to the wiring leading from the control panels; the inspectors determine that the control panels short-circuited, causing a power surge that damaged the wires and shut down the elevators. Again, lawsuits follow and the sub forwards the claim to its insurance company. This time, the company pays the claim.

Why did the company deny the first claim but not the second? The answer lies in a provision in the Liability policy known as “the Impaired Property Exclusion.”

The standard Commercial General Liability insurance policy covers the insured’s liability for damage to tangible property and for the loss of use of undamaged tangible property. It also creates a category of property called “impaired property.” This is tangible property (other than the insured’s product or work) that is either less useful or cannot be used at all because it includes the insured’s product or work, and that work is “known or thought to be defective, deficient, inadequate or dangerous.” In both of the examples above, the buildings are impaired property. They cannot open with inoperable elevators, and the reason the elevators are inoperable is that they include the subcontractor’s components and the components are not working properly.

The impaired property exclusion states that the insurance does not apply to property damage to impaired property or property that has not suffered physical injury, if the damage arises from a defect or other problem with the insured’s product or work. There is also no coverage if the damage arises from the insured’s failure to live up to the terms of a contract. The hotel was unable to open because a defect in the contractor’s components prevented the elevators from working. Because the hotel had not suffered physical injury and the damage resulted from a defect in the contractor’s work, the insurance did not cover the contractor’s liability.

The exclusion has an important exception, however. The insurance will apply to the loss of use of other property if it arose from sudden and accidental injury to the insured’s product or work after it has been put to its intended use. The elevators in the apartment building initially worked; they didn’t break down until after the building opened. Because the damage arose out of damage to the contractor’s work after it was put to its intended use, the insurance covered the contractor’s liability.

The impaired property exclusion removes coverage when merely replacing the defective part will solve the problem, but it provides coverage when a defective part damages other property and necessitates repairs. The distinction can be subtle, but it determines whether a contractor has insurance for thousands of dollars in damages.

Jul 01
Love0

DON’T ALLOW A HOSTILE WORK ENVIRONMENT TO DETRACT FROM YOUR COMPANY’S BOTTOM LINE

By Construction Insurance Bulletin

The Equal Employment Opportunity Commission received more than 30,000 complaints of harassment in the workplace during 2009. It found 4% of them to have merit, and the employers involved paid $80 million in penalties. That same year, it received more than 12,000 complaints of sexual harassment, 33,000 complaints of racial discrimination, and 11,000 complaints of discrimination based on national origin. The employers who were found to have permitted these actions were fined more than $150 million, and these dollar amounts do not include settlements of lawsuits between the employers and affected individuals. The lesson: Allowing a hostile work environment is bad for an employer’s bottom line. Courts have ruled that a work environment is hostile if the speech or conduct occurring there is severe or pervasive enough to offend a reasonable person. This includes things like:

  • Sexually explicit remarks
  • Sexually explicit displays, such as calendars, posters, and screen savers
  • Frequent use of language that denigrates members of one sex, racial, or ethnic group
  • Sexually or racially oriented jokes and e-mails
  • Unwanted physical contact
  • Unwanted solicitations

Managers can be responsible for harassing behaviors in the workplace, even if they do not participate in them. The U.S. Supreme Court has ruled that a company may be legally liable for sexual harassment by supervisors even if the employees do not report it. In a separate case, the court ruled that companies may have legal liability even where the employees do not demonstrate that they suffered a tangible loss. However, there are several things employers can do to keep their workplaces free of harassment.

  • Develop and enforce a written workplace policy against all forms of discrimination and harassment. The policy should define prohibited acts, consequences for violating the policy, procedures for reporting violations, and a clear statement that there will not be retribution against those who complain. Every employee should receive a copy of it. It might be necessary to provide training on what constitutes harassment and what employees can do about it.
  • Managers must themselves not act in ways that might appear to be harassment, and they must take steps to stop any harassment of which they become aware.
  • Follow the established procedures for dealing with harassment. Report all complaints to the human resources manager or other responsible staff person. Conduct a prompt and thorough investigation. Take appropriate action, if called for, against the perpetrator. Depending on the severity of the offense, these actions can range from a verbal warning to a written reprimand to termination of employment.
  • Update the computer usage policy to include prohibiting accessing Internet sites that are inappropriate for a work environment. The policy should also warn employees against circulating sexually explicit jokes and materials through the e-mail system. Install filtering software to block employees from visiting pornographic websites. Monitor Internet usage and report to human resources incidents of employees visiting offensive sites. Add provisions to vendor contracts requiring vendors working onsite to abide by the employer’s computer usage rules.

All businesses should consider buying Employment Practices Liability insurance (EPLI). This insurance covers amounts an employer is legally liable to pay because of employment offenses such as discrimination, harassment, discrimination in hiring, firing, or promoting, and other acts. The insurance also covers the costs of defending a claim. Even well-run workplaces might become targets of employee lawsuits, so it is important to have this protection as a backstop.

The workplace should be a safe environment where employees can perform up to their potential. With appropriate rules and attention, managers can keep their workplaces harassment free.

Jul 01
Love0

AVOID THE SERIOUS CONSEQUENCES OF ON-THE-JOB EYE INJURY

By Workplace Safety

A recent American Academy of Ophthalmology study on workplace safety found that around 2,000 employees suffer on-the-job eye injuries each day. Furthermore, approximately 20% of these injuries keep employees from returning to work due to temporary or permanent vision loss. On the other hand, experts have found that 90% of all work related eye injuries are preventable with proper protective equipment and employee training.

Eye injuries pose a constant threat in many lines of work. Carpenters, construction workers, painters, welders, and those who work around dangerous chemicals are only a sample of employees that face the risk of serious eye injuries every day. Particles can fly off of saw blades and hazardous chemicals burn and release fumes, both with the potential to leave an employee seriously injured.

The majority of on-the-job eye injures result from the employee not wearing the required eye protection. Although the simple solution to this problem is to have the employees wear goggles and/or face shields, much more goes into keeping workers’ eyes safe on the job. Even welders experience eye injuries while wearing helmets and face protection while grinding, mostly because the protective equipment is dirty or does not fit properly. Wearing goggles without side shields or using face-masks that are too large or too small leave the employee’s eyes open to blowing dust or intense heat, defeating the purpose of wearing protection in the first place.

The key is selecting the correct eye protection for the job. A wide array of eye protection is available with prescription or standard lenses, including safety glasses, protective goggles, face shields, welding helmets, and even full-face respirators. As with most safety products, the higher the quality, the better it protects. When selecting eye protection, check for a snug, comfortable fit and seek out any gaps in coverage or areas of weakness. Also, investigate how it is put together to ensure the protective equipment is durable and will hold up in the work environment.

Eye injuries have serious consequences. They can leave employees permanently disabled, affecting their income and livelihood. Understand that the vast majority of workplace eye injuries can be prevented through the use of proper safety equipment.

Jul 01
Love0

TAKE PREVENTIVE STEPS TO PROTECT YOUR EMPLOYEES FROM THE PERILS OF HEAT-RELATED ILLNESS

By Workplace Safety

When employees face the challenge of working outdoors in the heat of summer, or even in intense indoor heat conditions, it is critical to have guidelines in place to prevent and manage heat-related illness. When temperatures soar, the body might not be able to cool itself enough through perspiring. When this happens, the temperature of the body can rise dramatically and lead to heat-related illness.

Working in the heat also can lower mental alertness, physical performance, and increase emotional volatility, all of which can lead to a higher frequency of workplace accidents. Each year in the U.S., tens of workers die and hundreds of others experience heat-related occupational injuries and illnesses requiring days off work.

The Occupational Safety and Health Administration recommends that companies take the following preventive steps to protect employees from the hazards of working in the heat:

  • Train all workers to recognize the signs of heat stress, which include headache, dizziness, nausea, irritability and confusion, and vomiting and muscle aches or cramps. Workers should also be trained to administer appropriate first aid when heat related illness is suspected. Supervisors should have special training to detect the early warning signs, and have the authority to allow workers to break from their work if they are becoming uncomfortable in the heat.
  • Supervisors should be aware of the physical condition of each employee, and understand if they are fit to work in extreme temperature conditions. Obesity, pregnancy, certain medications, advanced age, and lack of conditioning are conditions that can put a worker at greater risk for a heat-related illness.
  • Since disorientation, confusion, and even loss of consciousness are symptoms of some heat-related illnesses, jobs should be designed so that employees can work in pairs to look out for one another.
  • The body needs time to condition itself to new levels of heat intensity. Help your workers adapt to the heat by altering the workload, including extended rest periods for the first several days. If an employee returns from any kind of job absence, including a vacation, their body will again need time to be reconditioned.
  • Emphasize that employees should drink plenty of water, even if they do not feel thirsty. Remember that alcohol, coffee, tea, and caffeinated sodas can actually dehydrate the body and should be avoided.
  • Workers should be encouraged to wear lightweight, light-colored, loose-fitting clothing and to change their clothing if it becomes saturated.
  • Because good airflow helps cool the skin by increasing evaporation, use general ventilation and spot cooling during times of high heat production.
  • Alternate short work periods with rest periods in a cooler area and schedule heavy work for cooler times of the day.
  • On an hourly basis, monitor temperatures, humidity, and your workers’ responses to heat.

OSHA has created a free, fold-up laminated card with information and tips related to heat stress. The OSHA Heat Stress Card is available in English and Spanish. For more information, visit www.osha.gov.

Jul 01
Love0

DRIVE SAFELY BY ADHERING TO RULES FOR SKID PREVENTION

By Workplace Safety

You might think of vehicular skidding as the result of chemical spills and inclement weather only. In reality, skidding can be caused by many driving behaviors that are completely avoidable. It is essential to familiarize yourself with and avoid unsafe driving traps, and to be aware of the limitations of your vehicle. Safety Rules of the Road:

Rule 1: Inspect the tread on your tires. Without tread, tires cannot get enough traction and your vehicle will be more prone to skidding — regardless of what other precautions you take. Get your tires rotated regularly, and make sure there are no flat or bald spots on your tires.

Rule 2: Observe the speed limit in good weather, and in bad weather, drive below the limit. One of the most common causes of skidding is driving too fast for the current weather conditions. Rushing to your destination does no good if you risk life and limb to do so. Keep your vehicle, yourself, as well as other drivers and pedestrians safe by monitoring your speed carefully.

Rule 3: Avoid the tendency to over accelerate, or you might force your wheels to spin without gaining any traction.

Rule 4: On a slippery road, avoid using the speed retarder.

Rule 5: Exercise caution with how sharply you turn the vehicle. If you make a sharp turn that the vehicle cannot handle, you could force it to skid.

Rule 6: Try not to slam on the brakes. When you brake too hard, the result is that you lock your wheels and run the possibility of skidding. Back wheel lock can result in a jackknife as your trailer skids sideways and tries to “catch up” with your front wheels.

Rule 7: Reduce your speed on curves and turns. If you drive through curvy roads and turns too quickly you might not give your trailer or rear a chance to change direction.

Stopping a Skid in Progress
If you find yourself beginning to skid, and feel that you are running the risk of jackknifing, follow these instructions:

  • Skidding while braking: Take your foot off the brake pedal then push your clutch in while you steer.
  • Skidding while accelerating: Take your foot off the gas pedal and you should stop skidding. Next, push your clutch in while you steer.
  • Skidding while turning: As the trailer begins to jackknife, steer your vehicle in the direction you are headed for. Then, as the trailer begins heading in the direction you want, quickly turn the wheel in the opposite direction. This is called a countersteer.

The more familiar you are with these methods of skid avoidance and skid stopping, the more successful you will be when you need to employ them. If you think that some focused training would help you in better executing these tips on the real roads, let your employer know that you are interested in additional training.

Jul 01
Love0

GET READY FOR HEALTHCARE REFORM’S IMPACT ON FSAS AND HSAs

By Employment Resources

If your company currently sponsors a Flexible Spending Account (FSA) or a Health Savings Account (HSA) to allow employees to pay out-of-pocket medical expenses with pre-tax dollars, be prepared for upcoming changes. New health care reform legislation could make these “cafeteria plan” benefits less appealing to employees.
Under the new law, maximum annual FSA contributions are reduced, and there are new regulations affecting how the funds can be used. The intent of the new rules and penalties is to generate revenue which can be used to fund aspects of the health care reform package.

FSAs and HSAs (assuming the employee is covered under a qualified high deductible health plan) allow an employee to contribute tax-free funds that can used to pay for deductibles, drug co-pays, treatments that are not covered by Health insurance, and other qualified medical expenses.

Beginning on January 1, 2013, the annual limit for FSAs will be set at $2,500. Previously, the IRS had stipulated that employers could establish their own FSA contribution limit, and according to the Center on Budget and Policy Priorities, these limits generally fell into the $2,000 to $5,000 range. In 2009, Mercer’s National Survey of Employer-Sponsored Health Plans stated that the average yearly employee contribution was $1,424.

Annual limits for HSAs, however, were not affected by the new legislation.

Be aware that some restrictions will become effective more quickly. For example, as of January 1, 2011, FSA and HSA participants will no longer be able to spend the funds on over-the-counter medications unless a physician has prescribed them specifically. Also starting next year, non-qualified withdrawals from HSAs will be subject to a 20% penalty instead of the 10% penalty which is applied currently.

Jul 01
Love0

E-FILING FORM 5500? ADHERE TO THESE RULES

By Employment Resources

Starting January 2009, all Form 5500s are to be filed electronically using the Department of Labor’s newly implemented program, EFAST2. Here are some tips to remember to ensure that you fill this online form and file Form 5500 smoothly and without facing any hassle:

  1. Before filing using EFAST2, responsible parties should register at their website. Here they would identify the individual who would be completing the Form 5500 and all signing parties. Early registration is recommended.
  2. The five roles available upon registration are Filing Author, Filing Signer, Transmitter, Schedule Author, and Third Party Software Developer. It’s important that one understands their roles prior to registration as they cannot change them once the registration is complete.
  3. The Filing Author is the individual who completes this online form at EFAST2, and those who sign the Form 5500 should register as the Filing Signer.
  4. Each individual uses their personal credentials and these are not associated to the company. The process of registration assigns each user with a personal identification number and password.
  5. Either the Filing Author or a third party administrator can complete the Form 5500 online. This third party administrator should be certified to prepare the form and submit it for the company.
  6. According to the Internal Revenue Code, the plan sponsor, employer, or plan administrator is allowed to sign the filing. However instructions provided with Form 5500 states that forms that are not signed electronically by the plan administrator could be rejected and subjected to civil penalties under Title I of ERISA.
  7. Social Security information should not be added, as filings entered under the EFAST2 program will be posted on the Department of Labor website. Also if your plan is regarded as a defined benefit plan, certain details from the Form 5500 should be posted on your company’s intranet for employee viewing.
  8. For those filing extensions, a Form 5558 copy does not need to be attached to the Form 5500. Those who have already submitted a Form 5558 for the plan year would only need to check the right box on Line D. A hard copy of the Form 5558 must be maintained for the plan’s permanent record.
  9. Schedule SSA and E have been eliminated from the Form 5500. One needs to file the annual registration statement directly with the Internal Revenue Service.
  10. A hard copy of the Form 5500 must be kept with the permanent records of the plan, with all the necessary signatures.

These tips should help make the new e-filing process smoother for all to use. Remember to register early on the EFAST2 website, http://www.efast.dol.gov, before starting the application process to avoid unnecessary errors. And finally, be sure to read through the instructions and be aware of each person’s role in completing the Form 5500.

On a lighter note, it is funny to note that although this e-filing system was implemented to save paper, one still needs to maintain a paper hard copy.

Jul 01
Love0

COBRA ADMINISTRATION REQUIRES PROPER DELIVERY OF NOTICES

By Employment Resources

The COBRA continuation of coverage law requires that certain notices be furnished to employees and other qualified beneficiaries by the employer or plan administrator. Because the penalties for noncompliance with the COBRA notice requirements can be costly, following the requirements for furnishing — that is, delivering — the necessary notices is an important part of COBRA administration.

COBRA notices that the employer or plan administrator must furnish include:

  • The initial (or general) notice containing information about COBRA rights and responsibilities, which must be provided to the employee and spouse within 90 days of when the employee first becomes covered under the plan.
  • The election notice, which must be provided to qualified beneficiaries within 14 days of the administrator being notified of a COBRA-qualifying event.
  • The notice of unavailability of COBRA coverage, provided when the administrator receives notice of a qualifying event from an individual who is not eligible for continuation coverage.
  • The notice of termination of COBRA coverage, required when COBRA coverage terminates before the maximum COBRA continuation period.

In providing COBRA notices, the employer or administrator should “use measures reasonably calculated to ensure actual receipt” by the employee, spouse, or other qualified beneficiary. COBRA regulations recognize that notices might be furnished through a number of different methods, including mailing, hand-delivery, and electronic transmission. According to these regulations, a notice is considered furnished as of the date of mailing, if mailed by first class mail, certified mail, or express mail; as of the date of electronic transmission, if the notice is transmitted electronically; or upon receipt by the individual to whom a notice is directed, if the notice is hand-delivered.

In the case of the initial COBRA notice, which must be provided to both the employee and covered spouse, the regulations specify that a single notice may be provided, addressed to both the employee and spouse if, on the basis of the most recent information available to the employer, the employee and spouse reside at the same address. There is no separate notice requirement for dependent children who live with the employee or spouse who receives the notice.

Though the regulations permit the initial notice requirement to be satisfied by including COBRA information in a summary plan description (SPD), since spouses also are entitled to this notice, plans that include the COBRA notice in an SPD and then hand-deliver the SPD to the employee at work will not be considered to have fulfilled the initial notice requirement concerning the spouse. Similarly, delivery of a required notice to an employee’s work e-mail would not meet the requirements when notice also is required for a spouse.

Though the regulations offer several options for delivery of COBRA notices to the required parties, in practice, many employers have opted for delivery by first class mail. First class mail has the advantage of being a reliable method for delivery of items and an accepted business practice. If an employee or other intended recipient raised an improper notice challenge, the employer or administrator would need to prove that it furnished the notice through an acceptable delivery method, not that the employee actually received the notice. Thus, establishing processes for mailing notices and keeping records that such processes were followed are important. For example, obtaining a certificate of mailing (which provides evidence that an item has been presented to the Postal Service for mailing) would establish that the notice was, in fact, mailed. Note that a certificate of mailing differs from certified mail with a return receipt. The latter provides evidence of actual receipt by the addressee, which is not required to show compliance with COBRA notice requirements.

Ensuring correct delivery of the necessary notices, and establishing procedures that show COBRA notices are being furnished as required by law, can help avoid costly compliance challenges.

Close Menu