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September 2010

SOCIAL MEDIA PRESENTS SPECIAL RISKS TO BUSINESSES

By Business Protection Bulletin

When just about any business these days is deeply involved with social media, it is apparent that these sites and tools have become mainstream. Indeed, it is hard to imagine that their use will not grow in coming years. They bring businesses to the places where their customers are and enable conversations. However, as with anything, the use of social media comes with risks of which every business should be aware.

The great thing about social media is that a business’s customers can talk about it. The bad thing about social media is that a business’s customers can talk about it. When they’re happy, social media is a boon, but when they’re not, it can be a public relations nightmare. A disgruntled customer can post a negative comment on Twitter or Facebook at 3:30 p.m. on a Sunday, and by 4:00 p.m. a few million people might have seen it or passed it on. There is little a company can do to control the spread of this kind of message.

A major concern with social media is that a business might unintentionally violate local laws and regulations, since messages on Facebook and similar sites spread all over the world. Among the areas of concern are:

  • Advertising — Businesses might land in hot water if statements on social media sites are false or misleading, if they improperly influence bloggers to write favorably about their products, or if they improperly use user-generated content.
  • Defamation — Not all countries defer to free speech rights to the extent the United States does. A statement that U.S. law might not consider defamatory might be just that under the laws of another country.
  • Privacy — Social media sites are easy to use. With little effort, employees can publicly reveal trade secrets, information about products under development, troubles within the business, or even private information about employees.
  • Employee use — Employees can create a “hostile work environment” (as U.S. law defines that term) by making inappropriate and derogatory posts about their colleagues.
  • Securities disclosure — If employees post information that could appear to be an attempt to manipulate financial markets or that appears to be insider information, securities regulators may take action against the company.

There are a number of steps a business can take to manage social media risks, including:

  • Developing and enforcing a company policy for using social media
  • Designating an individual as the point person for social media
  • Learning the requirements of every country’s laws and regulations
  • Reviewing insurance policies with an eye toward social media risks and purchasing additional insurance to fill in gaps

Social media sites and tools are important ways for a company to market and brand itself. However, they must be used with care and forethought. With the proper controls in place, a company can reap the benefits of social media while minimizing the risks.

BUSINESS OWNERS: PROTECT YOUR COMPANY WITH EPLI

By Construction Insurance Bulletin

Some of the most common lawsuits heard in courtrooms are discrimination suits against businesses. This is confirmed by the fact that in 2009 more than 130,000 complaints were filed with the Equal Employment Opportunity Commission alone. There is no officially estimated figure as to the total cost of discrimination lawsuits on businesses, but a reasonable estimate is around $2 billion per year.

Fortunately, there is an insurance product designed to protect businesses from these kinds of lawsuits: Employment Practices Liability insurance (EPLI). Insurance companies offer EPLI as part of their Business insurance product line. However, there is a disparity involved: A lot of eligible companies do not purchase EPLI. Despite the fact that the United States has become a litigious society, and despite the huge costs to businesses who do not have this kind of insurance, it seems odd that so many would resist protecting themselves from this incredible liability.

Regrettably, there are many myths about EPLI that have taken hold in the popular business consciousness. It is necessary to dispel these myths in order to drive home to businesses that they need to protect themselves from discrimination-related litigation.

1. Too many companies believe, whether due to the structure of their business or some other factor, that they are immune from lawsuits. This is flat out false. No matter what kind of company it is or how it is structured, even if it is set up as a corporation, legal protections can be stripped away instantly by a judge. Depending on the size of the business, it might not have the human resources practices and policies necessary to prevent a discrimination lawsuit. Therefore, if the business does not have that administrative structure in place, they are more exposed than they realize, and thus are a candidate for EPLI coverage.

2. Aside from believing that a business is immune from lawsuits, believing that they can absorb the costs of a lawsuit is the next most damning myth. Legal action is inevitably costly, and not just financially, either. Since in legal situations management staff and other professional members are asked to testify, gather evidence, and perform other actions for the court, the more time they spend on these non-core business activities, the less time they are focusing on the bottom line. Therefore, the more time it takes, the more lost revenue it costs that business. It is actually quite easy for a business to go bankrupt as the result of a lawsuit.

In addition to the non-calculable cost through lost earnings, an examination of the precise costs to businesses from discrimination lawsuits is very revealing. In two 2005 cases, Wachovia Corporation and Consolidated Freightways agreed to pay more than $5 million and $3 million to settle their respective lawsuits. In 2004, United Airlines was forced to pay more than $36 million to settle its own discrimination lawsuit case.

3. The final myth involves business owners failing to understand the full extent of their current coverage. Falsely, many think that general business insurance protects them against discrimination lawsuits, when in fact, it does not. Business Owner Policies, Workers Compensation, General and Professional Liability policies actually sometimes specifically exclude liability from discrimination suits.

Despite all possible non-insurance precautions that businesses take, EPLI is still the only way to protect themselves fully from the costs of lawsuits based on discrimination. EPLI provides coverage for liabilities such as sexual harassment, general discrimination, wrongful termination, breach of employment contract, negligent evaluation, failure to employ or promote, wrongful discipline, deprivation of career opportunity, wrongful infliction of emotional distress, and management of employee benefit plans.

WHAT ARE YOU REALLY BUYING WITH A CONTRACTOR’S EQUIPMENT POLICY?

By Construction Insurance Bulletin

Contractor’s Equipment insurance is an essential part of any construction firm’s insurance program. Commercial Property insurance covers a business’s personal property while it is at a location listed on the policy, but it does not cover property that moves among different locations. Business Automobile insurance does insure property that moves around, but it does not cover “mobile equipment” — property such as bulldozers, loaders, digging equipment, and power tools that the business uses off its own premises. Power tools might cost only a few hundred dollars, but large pieces like backhoes and excavators might be worth tens of thousands of dollars. To properly insure such property, the firm needs Contractor’s Equipment insurance.

A typical Contractor’s Equipment policy will cover the insured’s owned pieces of equipment listed on its declarations page or a separate schedule. It will also cover equipment that someone else owns and that is in the insured’s care, custody, or control. For example, the policy will cover a loader that the insured borrows from another contractor on a job site or that it rents from an equipment dealer. It might also provide one amount of insurance to cover a group of less expensive items, such as power hand tools. For example, it might provide $10,000 coverage on tools but no more than $500 for any one item. It will not cover automobiles, trucks, aircraft, watercraft, contraband, and it might not cover equipment the insured uses in underground mining operations, or equipment rented or loaned to others.

The policy will cover equipment for a variety of losses, including fire, explosion, vandalism, theft, collision with other equipment or objects, and overturning. Unlike standard property insurance policies, Contractor’s Equipment insurance often covers losses caused by floods and earthquakes. Insurance companies usually offer several coverage options, such as:

  • Rental reimbursement coverage, which covers the cost of renting a temporary substitute when a covered cause of loss damages an insured item.
  • Reimbursement of income the insured loses when it cannot complete a project because a covered cause of loss has damaged an insured item.
  • Blanket coverage, which insures all covered equipment under one large amount of insurance instead of insuring each item under its own individual amount.

To purchase the proper amount of insurance, the firm must determine the values of each piece of equipment. A typical policy covers equipment for its “actual cash value,” which is the difference between the cost of replacing the equipment and the amount by which it has depreciated. Published equipment pricing guides, advertisements in trade magazines, and local equipment dealers are good sources of information on equipment values. In addition to the other options available, an insured must consider factors such as:

  • Whether to pay extra to insure the equipment for its replacement cost without depreciation. This might depend on both the firm’s budget and the ease with which the firm can obtain used equipment should it need to.
  • Whether the policy has a coinsurance clause, which penalizes the insured if coverage on the damaged item is less than its value at the time of the loss. Some companies might offer “agreed value” coverage, which eliminates the coinsurance clause and requires coverage up to some agreed amount.
  • Whether to buy a higher deductible to decrease the premium.

Contractor’s Equipment insurance is not just for contractors; municipal governments and other organizations that uses this type of equipment need it as well. A consultation with one of our professional insurance agents will reveal your coverage needs and the appropriate insurance companies to meet them. Because the equipment is so expensive, the buying decision should be based on coverage and a company’s reputation, not just the premium.

WILL YOUR BUILDERS RISK POLICY COVER DELAYS IN PROJECT COMPLETION?

By Construction Insurance Bulletin

Work on the new office complex was progressing on schedule. The owner had lined up tenants for two-thirds of the space and was in talks with several others. The general contractor expected to finish construction on time. All that changed when a fire broke out on the first floor late one afternoon. It spread from a stack of drywall awaiting installation to a pile of scrap plywood, where the wind picked up the flames and carried them to the structure. Drywall, insulation and plastic wiring all soon ignited. Firefighters were able to contain the blaze and limit the damage. However, it would now take an additional two months to complete the project because the contractors would have to clean up the debris from the fire and ensuing water damage, order replacement materials, and re-do much of the first floor’s construction. The owner faced the certainty of thousands of dollars in lost rents and additional interest on the construction loans.

The owner and general contractor had purchased a Builders Risk insurance policy to cover damage to the project. They would have coverage for the lost rents and interest expenses if the policy included special protection known as “Soft Costs Coverage.” Soft costs are costs or reduced income resulting from a delay in a project’s completion. They include expenses such as:

  • Lost rents
  • Additional interest on loans
  • Additional real estate taxes
  • Additional advertising costs
  • Additional insurance premiums

Some Builders Risk policies have this coverage built in, while others provide it only if the insurance company adds it and charges an additional premium. The insurance covers the named insured for loss of income and additional expenses that result from direct physical loss of or damage to the covered property. There is no coverage unless the peril causing the loss is one that the policy covers for direct damage. For example, the policy will cover losses caused by fire but not losses caused by faulty workmanship. The lost revenue and extra expenses must accrue during the period starting a specified number of days after construction would have been complete if no loss had occurred and the date construction actually was complete. Some policies limit this period to no more than six or 12 months.

Soft costs coverage may provide one limit of insurance that applies to all covered losses, or it may have separate limits for different types of losses. For example, one company’s policy defines “soft costs” as loss of rental income, loss of gross earnings, additional interest and finance expenses, and additional expenses. The policy could have separate limits for each of these categories. A waiting period deductible applies, though some policies may apply a dollar deductible to losses that occur in a lump sum, such as legal fees. Some policies may also set a maximum amount that they will pay for any one month. They do not cover certain types of losses, such as those caused by strikes, breach of contract, design errors and omissions, lack of funds for repair or reconstruction, building laws and ordinances, and others.

The insurance company will determine the value of a loss by calculating the actual amount of income lost or extra expenses incurred during the delay period because of the delay. It will pay the amount of the loss or the amount of the insurance purchased, whichever is less.

Work with our professional insurance agents experienced in arranging your Builders Risk insurance. To make sure that the coverage terms and limits are appropriate, you should review the building contract, financing agreements, construction schedules, and other related documents. The type and amount of coverage will vary from one project to another, so it is important to give careful attention to each job’s particular circumstances.

LADDER SAFETY BEGINS ON THE VERY FIRST RUNG

By Workplace Safety

When using a stepladder or an extension ladder, there are some easy-to-follow safety guidelines that need to be respected in order to keep you working, and out of the ER.

Ladder safety begins before you step onto the first rung. Take a good look at your ladder before climbing on to ensure each rung is secure and free from slippery debris. Also, inspect your ladder’s ropes, pulleys, and locking mechanisms to see if they are working properly, and remember to check the ladder’s footings for proper traction. Remember, even if a problem appears minor during your inspection, it could pose a serious safety risk when you climb onto the upper rungs. Always err on the side of caution.

Once you’ve determined that the ladder is safe, it’s time for another round of inspections. This time, you need to examine thoroughly the surface you will use to set up the ladder. Look for an area that is level, stable, and free from small stones or other debris. Never place a ladder atop bricks or other props to keep it out of mud or to even out the surface, as these can easily slide or shift, causing the ladder to tumble.

Now you are ready to climb aboard and get to work. Construction experts recommend that ladders should extend at least three feet above its upper support point, to ensure stability. When using an extension ladder, remember to keep a 1:4 ratio. For example, the base of an 8-foot ladder should be two feet away from the support structure. On stepladders, never climb on until the stays or cross-braces have been locked securely.

When climbing up or down ladders, make sure to keep your torso facing the ladder, with your hands free of anything that could prevent you from getting a secure grip. Roofers and builders follow a three-point rule, keeping at least one hand and two feet or both hands and one foot on the rungs when climbing. When using tools, carry them in a tool belt, or use a hoist or the help of a partner to keep you and the people below safe.

Not all ladders are created equally. Refer to your ladder’s instruction manual and safety precaution stickers to see how high you can safely climb. On most extension ladders, you should not climb past the third rung from the top. With stepladders, do not climb above the second rung from the top.

Following these simple guidelines will reduce the risk of injury when using ladders, which is a smart and safe way to get the job done.

EXERCISE EXTREME CAUTION AROUND FLOOR OPENINGS

By Workplace Safety

Anyone who works in a construction environment on a regular basis has found themselves working in hazardous areas before. Perhaps one of the most dangerous things one can encounter in the workplace is an opening in the floor. Floor openings are extremely common in construction environments, and can end up costing you your life if you aren’t careful. Anyone who works around the hazards of floor openings on a regular basis must be sure to take extreme care and caution each day they are on the job.

Working around floor openings is no laughing matter, as there are many deaths and injuries each year that revolve specifically around floor openings. Since openings in the floor are not always properly sealed during a construction project and lighting can often be poor, it is no wonder why working around open holes in the floor can be so dangerous. On top of the danger of falling through the hole from a high elevation, the danger of dropping something through the hole also exists, as there might be workers on the floor below.

A floor opening is defined by OSHA as being 12 inches in diameter and posing a significant risk for someone to fall through. Although some people feel that these floor openings can simply be covered, it can add extra protection if the openings are boxed in by rails. Rails will make the hole more evident to passers by, which will limit the chance of careless mistakes.

One of the best ways to be sure that you are safe on the job is to make sure that you and everyone else at the work site is fully aware of any floor openings that might be present. This often involves taking a survey of the site at the beginning of the job and marking any and all floor openings with highly visible markers such as bright colored flags. If the openings are marked, they will be much easier for people to identify and use caution around.

Always be sure that if you are working near or around floor openings that you are extremely careful. Never lean over an opening for any unnecessary reasons, and be sure that you have someone nearby in case something goes wrong. As long as care is taken when working around floor openings, work can continue safely. Be sure to read up on OSHA regulation 1910.23 for more information.

EVEN WITH INCREASED RISK, CONSTRUCTION WORKERS LACK SCREENING FOR SKIN CANCER

By Workplace Safety

During the summer when your workers are outdoors all day in the hot sun, you’re probably worried about the risk of dehydration. Although this is a major concern, your employees are facing an even bigger hazard from the sun that ultimately could be fatal.

Construction laborers, whose work keeps them outside for extended periods of time, are at high risk for skin cancer. However, because there are so many other risks to their health and safety that are more immediate, the dangers of skin cancer have often been overlooked.

The severity of the problem was recently documented by Dr. Robert Kirsner at the University of Miami Miller School of Medicine, in a study titled Reported Skin Cancer Screening of U.S. Adult Workers. Kirsner and his fellow researchers used the National Health Interview Survey (NHIS) data from 2000 and 2005 to estimate the percentage of:

  • Workers who received a skin exam during a routine appointment with a primary health care provider within the past 12 months
  • Workers who had a skin exam in their lifetimes

After studying the data for 38,124 workers included in the survey during that time frame, the researchers concluded that only 15% of the workers said that they had undergone a skin examination during their lifetime. In addition, only 8% of those who had seen a health care provider in the past 12 months responded that they had received a skin exam during their visit. As a result of these statistics, Kirsner and his colleagues emphasized that all patients, regardless of their occupations, should ask their physician to provide skin exams during routine check ups.

It is important that you encourage your employees to get regular skin examinations. However, there are also some other proactive steps you can take to help your employees protect themselves from the dangers of excessive sun exposure:

  • Provide a tent or a canopied area where employees can take breaks and eat their lunch away from the sun’s rays.
  • Minimize outdoor work from 11:00 a.m. to 4:00 p.m. when the sun’s rays are the most intense. If your employees must work outdoors during these hours, schedule frequent rest breaks so that they can come inside away from the sun.
  • Make it mandatory for all employees working outdoors to wear protective clothing, wide-brimmed hats, sunglasses, sunscreen, and lip balm. Both the sunscreen and the lip balm should be SPF 15 or higher, waterproof, and protect against UVA and UVB radiation. Insist that employees carry their sunscreen and lip balm with them, so they can reapply every two hours.

Your employees can also visit the American Academy of Dermatology’s web site (http://www.melanomamonday.org/) to find out how they can perform a skin cancer self examination, and to see if there are free skin cancer screening centers in their area.

EMPLOYERS: COMMUNICATE THE BENEFITS OF GENERIC MEDICATIONS

By Employment Resources

As employees learn more about the availability of generic medications, they begin to make more cost efficient choices in the doctor’s office. Seems like a simple enough concept, and now there is more evidence to prove it.

A recent report from CVS Caremark has found a strong correlation between the amount of education employees receive regarding the use of generic medications and the reduction of the employers’ overall health care costs.

The 2010 Insights Report found that CVS Caremark was able to improve their GDR, or generic dispensing rate, by more than 3% in 2009 to 68.2% by educating customers on the money-saving advantages of generic medications. This increase also came during a time when few noteworthy generic alternatives were introduced.

Proactively, employers have designed their plans to maximize the availability of generic medications, while creating outreach programs in the workplace and with plan physicians. According to CVS Caremark, these tactics have been able to increase GDR dramatically, up to 90% in some drug classes.

Outreach programs and other tactics, like preferred drug lists, have been working for some time now. A Harris Poll study from October 2006 to December 2008, found that the amount of adults who would select generic alternatives to brand name medications jumped from 68% to 81%. Since more generic medications are hitting the market, this percentage is likely to increase.

In recent years, the patents ran out on brand name medications that have sold nearly $71 billion combined, and within the next five years, patents are expected to lapse on brand name drugs that sell more than $100 billion each year, all together.

The CVS Caremark research team predicts that this new wave of generic therapeutics could result in doctors writing about 80% of their prescriptions for generic alternatives as early as 2012.

The announcement of new generic drugs is music to employers’ ears, as they continue to look for ways to steer employees toward more cost efficient health care methods. As workers begin to understand how their use of generic medications is safe and financially responsible, the cost of benefits can be reduced, saving everyone money.

EMPLOYEES PLACE GREAT VALUE ON BENEFITS AND JOB SECURITY

By Employment Resources

According to a recent report from the Society for Human Resource Management (SHRM), employees consider benefits and job security as the two most important factors that contribute to their overall job satisfaction. This marks the fourth time in as many years that these two factors topped the SHRM’s annual Employee Job Satisfaction survey.

The survey also polled HR professionals on their thoughts about job satisfaction, and found similar results. HR professionals agreed with the employee population on the value of job security, positioning it as their second most important factor. An astonishing 72% of the HR population polled selected the employee-supervisor relationship as the most important factor effecting job satisfaction, ranking No. 1 in the survey for the seventh time in the past eight years. In comparison, only 48% of employees polled selected “relationship with supervisors” as an important factor, ranking it seventh on the list. The 2010 survey was made up of 25 elements spread across four categories, and included factors regarding wages, benefits, work environment, and advancement opportunities, among others. To ensure the validity of the survey’s results, the SHRM polled a wide sample of over 600 employees and 589 HR professionals, all from the United States.

This year’s survey had other interesting results. Employee compensation fell to its lowest rank ever this year, coming in at fifth on the employees’ poll. Last year, compensation fell out of the top five rankings for HR professionals, and this year it was listed as the ninth largest contributor to job satisfaction.

Besides job security, employees and HR professionals appear to agree that having opportunities to utilize skills/abilities while at work contributes to overall satisfaction. It is the third consecutive year this factor has ranked in the top five in both surveys, with employees placing more emphasis on this choice in 2010 than in previous years.

SHRM included a new choice in this year’s survey that received a lot of attention from both sides of the table. For the first time in the survey’s history, participants could select “organization’s financial stability” as a key contributor to job satisfaction, receiving enough selections to rank fourth on both surveys.

As for employee benefits, a secondary survey revealed that health care coverage was the most important benefit, followed closely by paid time off. Despite the amount of significance employees place on benefits, only 38% of employees polled felt “very satisfied” with their current medical benefits. Conversely, the majority of employees were very satisfied by the amount of paid time off they received.

Some employers are concerned about how health care reform could affect the benefits they offer, which could also affect job satisfaction. On the brighter side, this year’s employee survey showed that “the work itself” was selected enough to tie for fourth, pointing out that satisfaction does not only come in the form of paychecks and paid vacations.

MORE PREVENTIVE CARE OFFERED THROUGH HEALTH CARE REFORM

By Employment Resources

The Patient Protection and Affordable Care Act, signed into law earlier this year, is beginning to bring about changes to the nation’s health care system. In July, a summit between the U.S. Departments of Labor, the Treasury, and Health and Human Services came together to issue new Preventive Regulations, in accordance with the President’s health care reform bill.

The new regulations require non-grandfathered health care plans to provide complete coverage of many preventive services for newborns, children, and adults, regardless of whether deductible costs are met. These regulations will apply for the first plan year on or after September 23, 2010.

The government has put these regulations in place in order to increase patients’ access to numerous services, such as diabetes and cholesterol tests, prostate and other cancer screenings, child/adult vaccinations, pre-natal services, and routine checkups for children and infants. In the past, many patients were required to cover deductible costs or share the cost of these services, but now preventive care will be covered on a full first-dollar basis. The new regulations only apply to in-network providers.

The Department of Health and Humans Services, or HHS, hopes that the increased access to high-quality preventive care will lead to earlier detection of disease and improve Americans’ overall health, essentially lowering health care costs. In the United States, seven out of every 10 deaths are caused by chronic diseases, such as cancer, diabetes, and heart disease. HHS estimates that 75% of the country’s health care dollars are spent on fighting diseases and illnesses that can be prevented. Additionally, the HHS states that Americans receive preventive services about half as much as they need to.

Here are a few health care services that will be covered under the new regulations:

Preventive Care. The U.S. Preventive Services Task Force selected a variety of services to be covered, including screenings for colon and breast cancer, screenings for high blood pressure and cholesterol, checkups during pregnancy, help for smokers trying to quit, and other high-priority preventive care services.

Vaccinations. Routine vaccinations selected by the Advisory Committee on Immunization Practices for children and adults are fully covered by the new regulations. These vaccines include Hepatitis A and B, MMR, Meningococcal, Tetanus, flu shots, and others.

Care for Children. All new plans will now cover the preventive services recommended by the American Academy of Pediatrics in their “Bright Futures” guidelines. Services include access to pediatricians until the age of 21, regular wellness checkups, hearing and vision screenings, developmental assessments, vaccines, and care that addresses childhood obesity.

Women’s Care. Health screenings for anemia and other risk factors in pregnant women are covered, along with screenings for breast cancer and osteoporosis in older women, as well as other preventive measures. An independent council of doctors and medical experts is currently working on new preventive care guidelines for women.

Prescription contraceptives are not currently listed as a covered preventive service, but officials from the Planned Parenthood Federation of America hope that contraceptives will begin to receive first-dollar coverage within the next year or two.

Information on all of the covered services can be found on the www.healthcare.gov website.