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January 2012

Jan 01
Love0

PROTECTING YOUR ASSETS FOR THE NEXT GENERATION WITH SURVIVORSHIP LIFE INSURANCE

By Life and Health

Most people view Life insurance as merely a death benefit for their dependent children or surviving spouse. However, Life insurance, specifically a type called Second-To-Die or Survivorship insurance, can additionally be a very effective asset preservation tool for estates of all sizes.

This type of Life insurance covers two individuals (most often spouses) through a single Life insurance policy. The premium for Survivorship insurance is usually much less expensive than other Individual Life insurance policy options and the policy respects martial estate tax deductions that defer estate taxes until both insured spouses are deceased. The benefit will not be paid out until both individuals on the policy are deceased.

Survivorship Life insurance can be very beneficial in a number of estate transfer circumstances. Here are five scenarios where survivorships might be considered:

Avoiding Taxation Eating Away at Retirement Account Assets. Many are surprised to learn that the 401 (k), IRA, or other retirement account that they’re planning on leaving to their children, grandchildren, or other loved ones can be cut in half by the time all the applicable taxes are applied to the money. In order to avoid tapping into this money to pay these taxes, you may buy a survivorship policy equal to the estimated taxes on your retirement account assets. This way the survivorship policy negates the tax burden.

Ensuring Charitable Contributions Are Dollar-For-Dollar. Just as with retirement accounts, you may use a survivorship policy to ensure that your charitable donations to qualified non-profit organizations are received dollar-for-dollar upon your death. In the meantime, if you name the non-profit organization as the owner and beneficiary of the policy, then you’ll be able to deduct the survivorship policy premiums from your annual taxes.

Keeping Non-Liquid Assets Intact. You might have assets that aren’t liquid, such as a family business or real estate, and that your beneficiaries don’t want to sell to pay the estate taxes. The benefit from a survivorship policy can be used to pay the estate taxes and keep your non-liquid assets intact. The survivorship policy can also be useful in cases where you have multiple children or grandchildren, some of whom might not be interested in ownership of the involved real estate or business. Those interested in the asset(s) can use their portion of the Life insurance benefit to buyout the other involved parties.

Gaining Insurance for a Spouse with Poor Health. Your spouse might have been told he/she is uninsurable due to a poor health condition. A survivorship policy can generally be obtained so long as the other spouse is in relatively good health.

Caring for Children with Special Needs. Ensuring that your child with special needs is cared for after you and your spouse die is a daunting process to say the least. A survivorship policy is one cost-effective way that you can ensure your special needs child has a large death benefit to provide for their care once you and your spouse are deceased. This is usually done aside a special needs trust to ensure that the funds are properly managed and to retain the child’s ability to receive government funds like SSI.

In closing, for the survivorship policy to have the desired impact, it must be excluded from the estate of the insured parties. If you and your spouse have separate estates, then it must be excluded from both. Neither spouse can have ownership rights on the policy. You might choose to assign the rights of the policy to an adult child, setup a trust, or such. It’s best to consult with your estate lawyer to ensure the structure is congruent with your estate planning needs and goals.

Jan 01
Love0

SIX EASY STEPS TO PREVENT MEDICATION ERRORS

By Life and Health

Despite America having one of the best health care systems in the world, medical mistakes are still a reality. Medication-related errors are among the most frequently occurring preventable medical mistakes. A report by the Institute of Medicine of the National Academies found that at least 1.5 million individuals are harmed each year as a result of medication errors in hospitals, long-term care facilities, or outpatient settings. Another study by the Agency for Health Research and Quality estimates that adverse drug reactions result in over 770,000 deaths and injuries per year and cost each hospital involved around $5.6 million dollars.

To say the least, the medication error statistics are shocking and disturbing for patients and consumers. However, there are some very simple things that you can do to help prevent finding yourself in a medication error situation. Play it safe with your medications by following these safety steps:

1. Keep a detailed list of all the medications you take. Write down the name and dosage of each medication you take, including vitamins, minerals, herbal supplements, over-the-counter (OTC) medications, and prescription medications. This list should be brought with you each time you go to a doctor, pharmacy, or hospital. You might keep the list in your purse or wallet so that you don’t forget to bring it. If you don’t make a list, at least collect all of your medications and bring them with you.

2. Always tell your doctor and pharmacist about your drug allergies. Even if you have a long-standing relationship with your doctor and pharmacist, don’t forget to mention your known drug allergies when you’re prescribed a new medication. Also, check that new prescriptions are safe to use with all the medications you’re already taking.

3. Check your prescriptions for errors. Make sure that you’ve received the correct medication and strength each time you pick up new and refill prescriptions. Additionally, note if the refill’s packaging or the pill’s shape, size, or coloring has changed. Patients are often the first to notice a medication error. Do point out anything that seems amiss to your pharmacist before you take the medication.

4. Ask questions. You should take the time to ask your doctor and pharmacist questions about any new medication. You might want to take notes on what the doctor and pharmacist tell you about your medications, or bring someone else with you to help you keep track of the information. In any event, make sure to ask for clarification on any medical terminology that you don’t fully understand. If you can’t get clear answers on the medication, you aren’t comfortable with your provider, or he/she doesn’t take time to listen and address your concerns and questions, then it might be time to seek a different provider.

5. Know how to use the medication. Some medications come with specific instruction on how it should be taken – such as, with meals, with or without a particular fluid, avoiding the sun, not driving, not consuming alcohol, and so forth. Some medications must also be measured or taken multiple times per day. It might cause you to get the wrong dosage or lead to health issues if you don’t follow the instructions. If you have any doubt about how you should take, store, or use a medication, then you should always ask your pharmacist and doctor to clarify the instructions.

6. Know the side effects. The list of potential side effects that accompanies a new prescription more often than not gets a brief glance and then hits the trashcan. The side effects of a drug can range from bothersome irritations to life threatening medical emergencies and drug allergies. So, it’s vital that you know what the potential side effects are for all the medications you take by reading the list of side effects enclosed in your medication’s packaging -and- by asking your doctor and pharmacist what you might expect while taking the medication. Remember to stop taking the medication immediately and contact your health care provider if you develop signs of a drug allergy or serious side effect.

Considering that medication errors can have life and death consequences, these six simple safety steps shouldn’t be too difficult to follow.

Jan 01
Love0

DON’T LET DRIVING EMERGENCIES TAKE YOU BY SURPRISE

By Personal Perspective

There are two golden rules to remember when driving – expect the unexpected and be ready for anything. Many agencies, such as the National Safety Council, have compiled listings of the most common road emergencies and the ways that drivers can best handle them safely. Let’s look at six of them:

1. Blown Tire. Don’t over-steer, but do maintain a firm, steady grip on the wheel to keep the vehicle going in the desired direction until you’re able to slow it down. Keep in mind that a front blown tire will cause the vehicle to pull toward the blowout’s side, while a rear blown tire will cause the vehicle’s rear end to weave. Apply your brakes smoothly and slowly enough that you can pull the car to the side of the road at a safe speed. Never immediately swerve to the side of the road or jam on the brakes as you could lose control.

2. Blown / Malfunctioning Headlights. Slowly brake and come to a stop on the right shoulder. Try to get as far away from passing traffic as possible. Turn on your emergency flashers, if they’re still operational, and place road hazard markers or flares at least 300 feet from the rear of your vehicle. If you don’t have a cell phone to call for roadside assistance, then you can open the hood and try to scrape the battery cable’s lead terminal posts and the inside of connector lugs. This might provide a better connection and enough intermittent light to make it to a phone. As a last resort, you could use your emergency flashers as an intermittent light source if they’re on a separate circuit.

3. Skidding Vehicle. Remove your foot from the gas. Steer into the direction of the skid until you feel your rear wheels get traction again. Now, straighten the wheel. Never jam on the brakes or over-steer during the skid. To avoid skidding to one side when you need to come to a sudden stop, you can rapidly jam and immediately release the brakes. For those with anti-lock brakes, keep your foot on the brake and continue firm pressure while steering.

4. Engine Failure. Turn your right signal on and let the vehicle’s momentum carry you to the shoulder. If this isn’t a possibility, then remain in your lane or along the right side. Pump your brakes and turn your emergency flashers on to let other drivers know you’re in trouble. Once you’ve come to a stop, you’ll ideally exit the vehicle on the side without traffic flow. You can alert other vehicles by placing reflectors or flares; keeping your taillights on; and placing a white cloth around your handle, spoiler, or antenna. Use your cell phone to call for help or flag down a law officer. There might be an emergency call box on long bridges.

5. Stuck Accelerator. Turn off the ignition and apply the brakes. Keep in mind that your power assist feature will no longer work and braking and steering will be more difficult. Never lean down to handle the gas pedal, but you can try to lift the pedal with your toe if the pedal and throttle linkage have a positive connection. 6. Brake Failure. If your brakes still functioning properly, but you have a system light indicating a brake failure, then you should slowly take the most level route to a service station or mechanic shop.

If your brakes don’t feel normal, but are still offering some resistance, then pump them rapidly. This action could build enough hydraulic pressure to slow your vehicle down. You might be lucky enough to have a clear road and be able to coast to a stop or roll and apply your parking brake. Use your horn and flash your lights to alert pedestrians and other vehicles. You might need to carefully sideswipe hedges, snow banks, parked cars, and/or guardrails to help your vehicle stop if your on a downward, steep roadway. Never swerve to the left of a vehicle in your path unless it’s your only choice. If you’re headed straight for another vehicle, firmly press the brakes; head for a shoulder, ditch, or open ground on the right side; and try to alert others with your horn.

Driving emergencies are hard to think through as they’re happening. For the best outcome possible, you’ll need to know what the potential emergencies are, know how to safely deal with them ahead of time, and make the subjects part of your family’s safety discussions.

Jan 01
Love0

AVOID THE DAMAGE OF WINTER

By Personal Perspective

Many disasters caused by winter weather conditions can be prevented by taking a few simple steps. Although it’s hard to think about such things during warmer months, it’s important to be prepared when the colder weather arrives. It’s hard to predict the weather in the future. However, long periods of low temperatures frequently experienced throughout history have proven that it’s important to be prepared.

Regular Homeowners policies provide coverage for ice dams, burst pipes, loss from fires and wind damage from snow or ice. When snow melts, it can cause serious damage to a home. One of the most common causes of catastrophic loss is winter storms. Although wind and hail are the most common causes of insurance claims, freezing and water damage follow close behind. It’s important for homeowners to carefully review their insurance policies before winter arrives to understand what is covered. It’s crucial to have ample coverage for rebuilding a home and replacing all the belongings in it. It’s also helpful to consider purchasing sewer backup insurance.

There are several ways to prepare a home for winter and the damage it usually brings. Consider the following tips:

  • Clean out all gutters – It’s important to remove all sticks, leaves and debris. This helps the melting ice and snow flow smoothly. It also prevents ice collecting and forming a dam, which can result in water seeping into the house’s ceilings and walls.
  • Keep trees and branches trimmed – When branches hang over houses during the winter, they’re likely to accumulate snow and ice, which might make them break. Branches falling on homes can cause significant amounts of damage. They might also hurt people who enter the property.
  • Use gutter guards – These guards are useful for preventing interference of water flow from debris.
  • Seal cracks and holes – Caulk all holes and cracks to ensure that melted snow and wind can’t enter the home.
  • Keep steps and handrails safe – It’s important to ensure that steps and banisters are sturdy. If they accumulate snow or ice, they can contribute to serious injuries.
  • Use insulation liberally – Homeowners should add extra insulation to basements, attics and crawl spaces. When heat escapes through the roof, it contributes to ice and snow melting faster. As the moisture melts, re-freezes and accumulates, it can cause a roof to collapse.
  • Maintain a warm temperature – It’s best to keep the thermostat at 65 degrees to prevent pipes from freezing. The temperature in the walls is always colder than the temperature in the house.
  • Call the professionals – The heating system should be checked and serviced every year to prevent fires. It’s also important to ensure that smoke alarms are working. Carbon monoxide detectors are another valuable safety feature that should be placed in every home. In addition to this, homeowners should have a contractor evaluate the home for structural damage. It’s best to identify and repair minor problems before they become a disaster.
  • Be familiar with shutting off the water – Homeowners should know how to do this, and they should know where their pipes are located. When pipes freeze, it’s imperative to act quickly. When going away for an extended time, it’s best to have someone look after the home or have a service professional drain the system.
  • Add an emergency pressure release valve – By adding this to a current system, homeowners will have a system that is protected against increasing pressure from frozen pipes.
Jan 01
Love0

THE IMPORTANCE OF AN ANNUAL INSURANCE REVIEW

By Personal Perspective

Most people know the importance of insurance protection. You don’t want to be without it when problems strike. What many don’t realize, however, is that protecting themselves with insurance isn’t a once and done event. You don’t wear the same pants you did when you were five years old because, besides no longer being in style, they simply don’t fit. A Homeowners policy purchased when your house was furnished with bean bag chairs and bar stools is no longer going to “fit” once you’re lounging on Italian leather sofas while watching television on your wall mounted plasma screen. Life is constantly changing, and your insurance policies should reflect that.

Does this mean that I have to immediately call my insurance agent every time I buy a new piece of furniture or my cousin Gwen moves in for six months? Not necessarily. Although more significant changes should be reported immediately (such as getting married or getting a new car), items such as improving your home entertainment system or upgrading your car’s tape deck to an MP3 player, can be reported at your annual insurance review. Agents reach out to their clients because they want to make sure to check up on these changes and make help avoid any gaps in their clients insurance, however it’s equally important to for a policyholder to reach out to their agent to make sure they are covered. Schedule your own annual review, and call your agent as you get your annual renewal. If one agent handles all of your coverage, this task is relatively easy. Jot down any changes that have occurred over the last year, even if you’re not sure whether they are significant enough to mention. Doing so will ensure that all of your insurance policies are best suited to your current life situation.

Some examples of changes that should be mentioned to your agent immediately are listed below. Ask yourself these questions every year:

  • Have I gotten married or divorced?
  • Have I had a new baby, or adopted a child?
  • Is anyone in my house a new driver?
  • Is anyone living with me who wasn’t before?
  • Will they ever be driving any of my vehicles?
  • Do I have a personal umbrella policy? Do I need one?
  • Have I purchased any new properties?
  • Have I started a home business?
  • Have I purchased new furniture, electronics, or fine jewelry?

These are just a few examples of life changes that are often picked up during an annual review. However, they are far from the only changes that can affect your coverage, so be thorough when documenting and reporting items to your agent.

Some of the above examples might seem pretty obvious. Most people know that if their teenager gets his license, they need to notify their auto insurance carrier. However, not everything is as obvious.

For example, take a couple who just had their first child. They decide that it’s time to purchase Life insurance to provide for the child if something ever happens to them. This couple is doing the responsible thing. They understand the importance of buying Life insurance when starting a family. That significant step in planning for the future is taught to the general public quite effectively, in the form of commercials, television shows, radio spots, and the like. But what about five years later when little Ellie is born? Having child number two doesn’t necessarily flip on the proverbial switch like the first time, shining that bright light on the right decision. Television shows don’t show “made for T.V.” couples updating their Life insurance policies for child number two. Advertisements don’t highlight the importance of adding new children as beneficiaries. All anyone ever hears about through popular culture is the importance of getting Life insurance if you don’t have it, especially if you are starting a family. If the Henderson family gets a Life insurance policy when their first little one is born, and four children later, mom and dad are hit by a logging truck on a trip to Alaska, only the first child gets the money.

Protect yourself, your family, and your personal belongings by making sure that each of your insurance policies gets an annual check-up. You’ll rest much better once you do.

Jan 01
Love0

PLAN NOW FOR THE DISASTER THAT WILL HIT YOUR BUSINESS

By Business Protection Bulletin

Disaster can strike a business in a multitude of ways. Businesses located near the coast from Texas to Maine are highly susceptible to hurricane damage. Fires and explosions can devastate buildings regardless of where they’re located. A building need not be the target of a terrorist attack to feel its effects, as many business owners discovered after the September 11 attacks. After a catastrophic event, evaluating the damage to the facilities quickly and accurately is essential for both insurance recovery purposes and for getting back into operation as soon as possible.

The business must do much of the important work before the disaster occurs. Identifying the facilities and equipment at risk is the first step. For a small business with one or two locations, this may be obvious; for a larger business with operations in many states and localities, the question may be more complex. Some locations may be in earthquake-prone areas, while others may be relatively safe from natural disasters. Such businesses must evaluate the worst-case scenario for any one event and plan around that.

Businesses must also address the question of who will do the evaluating. After a disaster, some members of the group may be injured or otherwise unable to reach the scene because of the severity of the damage or law enforcement restrictions. Therefore, the list should include several names with multiple people able to fill each role. The business should also have a written communications plan for reaching members of the group, including all of their phone numbers (both land lines and cellular), e-mail addresses, and each person’s emergency contact information.

The more information a business has about its property after a loss, the better. Therefore, it should assemble multiple copies of documents such as architectural drawings, appraisals, inspection reports, maintenance records, and others. The business should store documents in several locations and media so that backups exist should one set be destroyed. Members of the disaster recovery team should survey each location, identifying special features, key processes, characteristics that increase the building’s vulnerability to a particular threat, and equipment that will be difficult to replace.

It is often helpful to have members of the local police and fire departments tour the building and meet with personnel to discuss disaster planning. They may identify weaknesses in the plan or deficiencies in the building that the disaster recovery group missed. Also, the more familiar they are with the building before a loss, the better able they will be to respond after it.

After a disaster occurs, the disaster team coordinator should take steps to contact each member of the group and arrange for inspection of the facility at the soonest possible moment. The group may not be able to enter the building immediately due to safety concerns or orders from law enforcement. As soon as the group can inspect, they should identify emergency measures necessary to protect the facility from further damage, assess the extent of the damage, identify areas that are unsafe to enter, and evaluate the condition of the areas where critical processes occur. They should use the information developed before the loss to assist in their evaluation.

After the inspection, the group should prepare reports on each damaged facility. Local authorities may require the business to file these; in addition, government bodies that assist with disaster recovery and insurance companies may need the information.

Business owners should ask their insurance agents for resources to help with disaster preparation. Many insurance companies have loss control departments that can offer valuable assistance, as well. Government agencies such as the federal Small Business Administration, the Federal Emergency Management Agency, and Web sites such as Business.gov have plenty of information on this topic. To a large extent, a business owner has control over whether the business will survive a disaster. With some careful planning, the business will survive it and thrive.

Jan 01
Love0

WHY BACKGROUND CHECKS ARE ESSENTIAL FOR ALL EMPLOYERS

By Business Protection Bulletin

With more jobs becoming available today, there is a major problem presenting itself for employers. Employees who are applying for jobs are lying about important aspects of their lives. In most cases, the truth may be a disqualifying factor. To avoid the hassle of hiring an unfit employee, it’s important to conduct a background check.

Background Check Result Statistics. According to the ADP’s 2009 Hiring Index, 46% of 1.7 million applicants reviewed had discrepancies in their resume’s employment, credentials, education or reference checks sections. In addition to this, 37% of applicants had traffic violations or convictions, and 6% had criminal charges within the past seven years. While not all applicants lie about convictions, others may fabricate details that make them look more appealing. This practice, which is commonly called resume padding, is a method used by people who aren’t qualified for a position to attempt to obtain it. It’s important to be able to identify both omissions and lies.

Understanding What Is in a Background Check. Not all background checks are the same. There are hundreds of online services that advertise cheap and fast background checks. However, these companies provide limited information. They often have limited access to databases that are not regularly updated. In order to get the most accurate and recent records, it’s best to use state resources.

How to Perform a Background Check. Usually the office of the Highway Patrol is the best place to begin a search. Some jobs require a prospective employee to manage a budget and handle money. If this is the case, it’s a good idea to request a credit check also. It’s important to have the applicant’s SSN, date of birth and any last names or aliases they’ve used in the past 10 years. Be sure to have the applicant’s approval before performing a background check. Some employers have found that searching for an applicant on Facebook or other social media sites is beneficial. Keep in mind that people may make fictitious profiles and claims on these sites, so this information shouldn’t replace what is available on a background check. However, sometimes discrepancies between resumes and social profiles is enough to raise a red flag against a potential employee.

Deciding What Information to Verify. There is no need to verify information that doesn’t pertain to the job. For example, if an applicant for an accounting firm has degrees in nursing and accounting, there is no need to verify the nursing degree. To do so would be a waste of time since the applicant won’t be using nursing skills in an accounting job. There is no need to request information that isn’t necessary. In addition to being more costly, it is a waste of time. For example, don’t request a credit check for an employee who won’t be controlling a budget or working with cash. However, if an applicant will be caring for disabled individuals, it’s important to verify that they don’t have any past charges of abuse, assault or neglect. Always use common sense to determine which bits of information need to be verified.

Employer Reference Considerations. Verifying employment and inquiring about an applicant’s work ethic with a previous employer is important. However, it’s also important to make the reference call count. Never rely on the phone number provided by the applicant. Either look up the number through an online phone directory or use a reliable source to verify the number. Although it isn’t common, sometimes applicants provide erroneous phone numbers that may not belong to the previous employer they listed. In some cases, employees may provide a friend’s number instead. That friend will often provide a bogus reference to make the employee look good. Be sure to ask pointed and concise questions to the applicant’s previous employer. The following questions are good examples:

  • What are the applicant’s strengths?
  • How does the applicant deal with stress and conflict?
  • In what ways could the applicant improve?
  • How do the applicant’s skills with other team members rank?

The best time to perform a background check is after extending an offer for employment. However, be sure to tell the applicant that their employment with the company is contingent upon them passing a background check. It’s always a good idea to specify that a background check will be conducted in a wanted ad or online job posting. This is usually effective in discouraging applicants who know they have a checkered past and intend to lie about it. The most important thing to remember is to always obtain an applicant’s written permission before ordering a background or credit check for them.

Jan 01
Love0

COST EFFECTIVE LEGAL DEFENSE TO PROTECT YOUR BUSINESS

By Business Protection Bulletin

It’s no secret that insurance companies hire from among the best attorneys available, and those attorneys defend you when you get into a legal incident covered by a liability policy that you have secured. But you might ask these two questions: Is it still cost effective to get such legal defense through an insurance policy and what policies does a business need to secure to get the best legal guns to defend themselves in a given situation?

If you get an attorney demand letter or any kind of notice of legal action, who do you call? Well you can always call an attorney who might be a friend, done a trust for you, or might have put together some contracts for you, but would they be the best litigation attorney for you if it came to that? Keep in mind the plaintiff will probably know if you have a qualified attorney or not and that will dictate how they will proceed and how much they are willing to settle for. The less qualified your attorney is, the more leverage the opposition will have against you and the more likely it is that they will drag out a settlement or even take the case to litigation. The worst part of this is when these legal issues take away time and distract you from running your business.

The bottom line: Hiring an attorney yourself can be very costly when compared with the benefits of going through your insurance company. Insurance company claims departments handle these kinds of incidents every day, and they know exactly how to keep costs low without compromising on skill. They specialize in managing attorneys and claims incidents. The bottom line is, they are so efficient that it costs them less to settle than it will ever cost you doing it by yourself. This savings is built into the cost of the premium for liability coverage. The good news is, this cost is capped every year for whatever your insurance policy premium is. By not having a policy, legal expenses can easily run into six figures, even before any settlement or litigation takes place. Also, in many cases those taking action against you, most especially if it is frivolous, would rather not face an insurance company attorney and this puts you in a much better position.

Does a liability policy cover every incident? Of course not, but you can mitigate your legal risks by making sure you have the right policies in place. Here are the most common policies that your business will need to cap your legal exposure:

General Liability (GL). This is the most common type of business liability policy. GL covers injuries caused to others, damage to the property of others, and may cover personal and advertising injury coverage, such as incidents caused by libel or slander. Many of these policies include products liability, which covers defective products that might cause injury or property damage.

Employment Practices Liability (EPLI). EPLI insurance is becoming more and more necessary for employers, both large and small alike. EPLI provides protection against employee lawsuits such as discrimination, sexual harassment, failure to employ, and many others. This coverage generally does not pay for punitive damages, but instead will pay for the company’s legal costs associated with a covered lawsuit.

Errors & Omissions Coverage (E&O). Also known as malpractice insurance, E&O provides coverage to individuals and firms who provide a certain expertise and counseling to their clients. When a professional receives payment in exchange for services, they are held to a high standard by both the client and the legal system. Although incidents are not common, when they do happen they are very costly. Having the right insurance coverage in place helps to allow continuity of a practice, while minimizing possible huge financial burdens and distractions by transferring these burdens to the insurance company.

Directors & Officers Liability (D&O). This type of insurance is taken out to protect legal action against directors and officers of a company. Any firm that has a board of directors, such as privately held companies, non-profit organizations, and homeowners associations, need this coverage. Anyone serving on a board without this coverage is putting their own personal assets at risk. Legal action against Directors and Officers can come from competitors, government agencies, creditors, employees, stockholders, and other third parties.

Pollution Liability. A Contractor’s Pollution Liability insurance policy covers environmental liabilities excluded by standard General Liability insurance. This coverage helps protect contractors against pollution incidents, such as contaminated soil disposal, accidental release of fuel oil, chemicals/toxic gases from broken pipelines, utilities, and stationary and mobile fuel tanks.

Auto Liability. A business should not neglect getting Auto Liability even if they don’t own any vehicles. If an incident happens during working hours and the injured employee was using their personal vehicle for business use, the business may be named as a party to legal action on any injury or property damage that may occur. If the business is using personal vehicles on the job full time, it is probably best to have those insured under the company to make sure the company has coverage against legal action due to an automobile incident.

Each business is different, which is why it’s so important to review all potential exposures with your agent to determine if any of these exposures can be covered by insurance. A business owner truly gets a great bang for their buck when having these liability policies because as mentioned earlier, you are dealing with experts who know how to leverage their expertise most effectively. These types of insurance policies also bring more certainty to your business, the premium is all you pay, you have no worries of losing your business or facing significant setbacks due to spending tens or hundreds of thousands of dollars defending and paying claims that most people have no idea how to handle.

Jan 01
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PROTECT YOUR WORK IN PROGRESS WITH AN INSTALLATION FLOATER

By Construction Insurance Bulletin

The materials that a contractor brings to a job site are subject to numerous perils in a variety of locations. The contractor might take delivery of them at his main location and store them for a period of time. At some point, he will transport them to a job site where they may again sit in storage. Finally, he will cut, drill, weld, or otherwise process the materials until they become a finished part of the building. During all of these stages, the materials might suffer damage by fire, theft, flooding, or even damage in a traffic accident during transport to the job site.

Commercial Property insurance policies do not cover materials once they have been moved off of the business’s premises, and they provide little coverage for materials while in transit. To insure property that moves around, the contractor needs an Inland Marine policy, which is a policy that covers property that can easily move from one location to another. The Inland Marine policy that covers materials a contractor will install in a building is called an installation floater.

Contractors might be familiar with a similar policy known as a Builders’ Risk policy. A Builders’ Risk policy insures an entire structure during the process of its construction. The structure’s owner or the general contractor in charge of the job might purchase this policy. An Installation Floater, while similar in coverage, insures only a specific type of property during the construction, such as the plumbing or electrical systems. Subcontractors, who ordinarily have a limited scope of work on the job, purchase Installation Floaters.

An Installation Floater policy insures property used in a construction project. Although the actual policy form will vary from one insurance company to another, it will typically cover materials, equipment, machinery and supplies owned by the contractor or for which he has responsibility. The property must be used in or incidental to the fabrication, erection or construction project described in the policy. One single amount of insurance applies to the property; the limit should be the highest value for that type of property during the job. When insurance companies establish the premium for these policies, they take into account that the value of the property will start out small and increase as the job progresses. For example, if a boiler installation contractor buys an Installation Floater with a $500,000 insurance limit, the company will adjust the premium to recognize that, for most of the project, $500,000 worth of boilers and related equipment and supplies will not be there.

Installation Floaters cover all causes of loss other than those specifically listed in the policy. They cover losses caused by fire, lightning, theft, explosion, and several other perils. Typical policies do not cover losses caused by extreme events like earthquakes and floods, but some companies will consider adding these coverages for an additional premium. Most policies will also exclude damage that occurs during testing of a building component or system (for example, testing of compressors). Some companies might consider adding this coverage as well, depending on the type of property and the nature of the testing.

Beside the policy’s expiration, several other events might cause coverage to cease. Coverage ceases when the purchaser accepts the work, when the contractor’s ownership interest in the property ends, if he abandons the project, or within a stated number of days after he finishes work.

Because every Installation Floater policy is different, contractors should carefully review their policies. They should discuss any deficiencies or confusing provisions with their insurance agents. Construction contracts often require this coverage, so it is vital for a contractor to make sure he has the proper coverage.

Jan 01
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SHOULD I REPAIR THAT DAMAGED PROPERTY OR REPLACE IT?

By Construction Insurance Bulletin

When an individual or business buys property insurance, the primary concern is normally the replacement of the building if a fire completely destroys it. However, in many losses, a portion of the building escapes damage or machinery and equipment might be salvageable. In these situations, the policyholder and the insurance company must decide whether to repair the property or replace it altogether. The policy ordinarily states that the company will do whichever costs less. However, the answer to which costs less can become a gray area, complicated by several factors.

In some situations, the policyholder might want the property replaced, rather than repaired. For example, the business may want to replace equipment because repairing it would void the warranty. It may want to replace damaged products because buyers will be reluctant to purchase refurbished ones. The business may also fear an increased likelihood of product liability claims from these goods.

In some instances, there might be doubt as to whether repair will be less expensive than replacement. Old buildings, especially dwellings that have been converted to commercial use, might have been constructed with materials no longer in common use, such as plaster and lathe. Also, some types of machinery and equipment might be less expensive to replace because the price of a new unit has decreased, but the new unit may lack some features that the business needs.

Local laws or building codes may also affect the decision. Municipal governments often require a building to be torn down if more than a specified percentage of it needs repair, forcing the owner to replace it.

The age of the property or its components is also a factor. In the case of computer equipment, which tends to decline in price over time, replacement might well be the less expensive option. The answer may not be as clear for other types of property, such as construction equipment (assuming the policy covers such equipment for replacement cost.) A 15-year-old bulldozer that suffered damage in a rollover may be repairable, but it may also be near the end of its useful life. The same may be true of the electrical system in a 30 year-old building; perhaps only 20% of the wiring suffered damage, but it might be less expensive (and better loss prevention) to update the entire system.

Finally, buildings constructed decades ago may have architectural features, such as gables, atriums, or balconies, which are not important to the owners. Replacing the building with one lacking these features may cost less than repair.

If the policy provides Business Income or Extra Expense coverage, the company must weigh the impact of the repair/replace decision on them. For example, assume that fire has destroyed 60% of a building, forcing the business to shut down. Replacing the building with a similar one in a location ten miles away will cost 50% more than repairs would, but the business could resume operations there in three months, as opposed to a six-month shutdown if the building is repaired. When the company considers all of the applicable coverages, it may well find that replacement is the less expensive option.

Ultimately, the policyholder must negotiate the repair/replace issue with the insurance company. A business owner who is unhappy with the company’s proposed settlement should follow the steps listed in the policy for contesting it. The firm’s insurance agent can be a valuable ally at claim time, as she is familiar with the process and may be able to intervene on the firm’s behalf. Working together, all parties should be able to decide on an approach that quickly gets the business back to normal.

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