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Monthly Archives

August 2008

Aug 01
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RESEARCH SHOWS CONSTRUCTION SAFETY IS A COOPERATIVE EFFORT

By Construction Insurance Bulletin

The link between project design and construction job site safety is a concept that is being widely explored. In July 2007, the National Institute for Occupational Safety and Health (NIOSH) hosted the first Prevention through Design workshop as a prelude to a national effort to eliminate occupational hazards and control risks to workers early on in a construction project.

OSHA is also taking part in this effort. It has formed a partnership with the American Society of Civil Engineers to promote safety through design. Their Design for Safety workgroup has developed a number of instructional presentations outlining how to achieve this objective. They also maintain a Web site at www.designforconstructionsafety.org.

These efforts are the result of some prominent academic research. In a 2006 study titled An Analysis of Construction Accidents from a Design Perspective, researcher Michael Behm, Assistant Professor in the Occupational Safety Program at East Carolina University, analyzed 450 reports of construction workers’ deaths and disabling injuries obtained from OSHA and NIOSH. His purpose was to determine if a proactive approach to safety in project design could have prevented the incidents. What he discovered was that in 151 cases, the hazard that precipitated the incident could have been eliminated or reduced if designing for safety measures had been incorporated into the plan.

When project designers use a designing for safety approach, they address features of a project that impact on construction worker safety. Examples of this in Behm’s study include deigning parapet walls to be at least 42 inches high, which act as a guardrail to prevent workers from falling; alerting construction company management to the safety hazards at the work site; and noting on contract drawings of the location of existing overhead power lines.

Designing for safety is a natural outcome of the Hierarchy of Controls methodology used by safety professionals. This approach focuses on finding ways that are inherent in the project itself to reduce or eliminate workplace hazards before relying on external factors, such as personal protective equipment or administrative controls. Practitioners of the Hierarchy of Controls philosophy believe that waiting until construction begins substantially limits your risk abatement options to those that provide the lowest amount of protection.

As of a result of his research, Behm made the following recommendations:

  • The construction industry should implement the concept of designing for construction safety as a standard practice to reduce safety risks. However, implementing the design-for-safety concept is only one element in a systems approach for preventing injuries and deaths among construction workers. The contractor must continue to play a critical role in ensuring worker safety and must adhere to the design-for-safety specifications.
  • Designers should include fall protection in specifications for roofs, skylights, and structural steel construction.
  • Designers should include barriers and other measures that prevent contact with electrical and other utilities.
  • Designers should consider incorporating design-for-safety measures in all types of projects, including residential, commercial, and industrial, as well as new projects, renovations, and demolitions.
  • Root-cause accident analysis and other accident investigations should routinely consider whether design-for-safety modifications could have prevented the incident. As safety professionals demonstrate the link between the design-for-safety concept and construction incidents, they will drive its implementation as a method to reduce overall project risk.
Aug 01
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DOES YOUR INSURANCE COVER YOUR CONTRACTUAL AGREEMENT?

By Construction Insurance Bulletin

Most construction projects involve written contracts. A contractor signs a contract with the project owner, with the general contractor, or with a subcontractor on the project. The contract normally spells out the obligations of the contractor regarding, among other things, the insurance the contractor must carry and liability that he will assume. Construction contracts often contain “indemnification” agreements under which the contractor agrees to assume some of the owner’s or general contractor’s liability for accidents that occur during the project. Should something happen, will the contractor’s General Liability insurance policy pay for the damages he assumed?

The policy is probably similar to the Insurance Services Office’s Commercial General Liability Coverage Form. This form covers the injury or damage for which the insured is liable because he assumed liability in an “insured contract” executed prior to the accident. It also covers attorney fees and other litigation expenses to defend the owner or GC if the contractor agreed to assume those costs in the contract. By an insured contract, the form means:

  • A lease of premises
  • A sidetrack agreement with a railroad
  • An easement or license agreement
  • An indemnification agreement with a municipality
  • An elevator maintenance agreement
  • Other business contracts

Contractors are mainly concerned with these “other” business contracts, as construction contracts fall into this category. The general liability form covers the tort liability of one party assumed by another. This means that, for coverage to apply, the first party must have some legal responsibility for injury or damage suffered by someone else.

For example, assume GC hires SC to run the cabling in an office building GC is constructing. GC and SC sign a contract in which SC agrees to assume GC’s liability for injuries and damage SC may cause during the project. One of SC’s employees trips over a toolbox that was resting on a ladder, and the falling tools injure an employee of another contractor on the job. The injured employee sues both GC and SC for medical costs and pain and suffering. Because SC agreed to assume GC’s liability for injury or damage suffered by a third party (GC’s tort liability), the contract qualifies as an insured contract. SC’s liability insurance will cover GC’s liability and provide legal defense for GC.

The insurance will not cover all of a GC’s tort liability, however. A third party must suffer bodily injury or property damage before coverage will apply. Suppose GC turns the completed building over to the owner, and the owner finds that computer networks do not work in four offices. The owner determines that the problem is the result of faulty cabling, and he sues GC and SC. Even though SC has agreed to assume GC’s liability, the liability insurance will not cover this loss. That is because the building owner did not suffer property damage. The building is defective, but it has not been damaged.

Contractors should expect to find indemnification agreements in most construction contracts. Because of this, the contractual liability coverage contained in general liability insurance policies is critical to their financial health. It is very important for contractors to review their liability policies to ensure that their insurance companies have not limited this coverage.

Contractual liability coverage is vital to a contractor’s business. Make sure that it does all that you need it to do. Contact us for assistance with this important coverage.

Aug 01
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UNDERSTANDING PSYCHOSOCIAL FACTORS IN RETURNING TO WORK AFTER INJURY

By Business Protection Bulletin

We all know that persistent pain from work-related injuries affects an employee’s attitude about returning to work. Unfortunately, the psychological ramifications of chronic pain can also result in prolonged legal action, increasing legal fees, large settlements, and ultimately, failure of the employee to return to work. So, how can we prevent chronic pain from escalating workers’ compensation costs?

In a study titled Integrating Psychosocial and Behavioral Interventions to Achieve Optimal Rehabilitation Outcomes that appeared in the December 2005 issue of the Journal of Occupational Rehabilitation, researchers studied the psychological factors that impede an injured worker in returning to work:

  • Obsession. The persistence of the pain becomes so overwhelming that it is the only thing the employee thinks about.
  • Fear. The employee fears the possibility of becoming re-injured, which increases their current pain. As a result, the possibility of another injury and resulting disability cripples the employee psychologically and causes them to put off returning to work.
  • Perception. When an injured worker has been on disability leave for an extended period, they may feel that co-workers believe they are faking their pain. This causes uneasiness about returning to work and facing co-workers.
  • Self-fulfillment. If an employee believes they are not physically capable of returning to work because of the severity of their pain, this can lead to a failed transition back to the workplace.

In addition to internal factors, researchers noted that there are external psychosocial issues that can impact the injured employee’s desire to return to work.

  • Co-worker support. When injured employees feel there is a lack of social support to help them transition back, they delay returning to work.
  • Job stress. Employees who believe that the stress level at work will intensify their physical pain tend to remain on disability.
  • Workplace attitudes toward disability. Injured employees who feel that the general attitude about disability is that it is a way to “milk the system” sometimes delay returning.

The researchers concluded that understanding the significance of the internal and external psychosocial factors on the employee’s successful transition back into the workplace is critical to the design of return to work programs. First-line supervisors should be trained to detect if an employee is experiencing any of the psychosocial risk factors, as well as how to eliminate or lessen the impact of those risk factors.

Aug 01
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THE IMPORTANCE OF EMPLOYMENT PRACTICES LIABILITY INSURANCE

By Business Protection Bulletin

Running a company can be a risky business. According to the Department of Labor, the amount workers received from employers due to discrimination claims rose nearly 78% between 2001 and 2006. A total of more than $51 million dollars was awarded to employees who pursued claims in federal court.

You may have seen news stories about huge jury awards in workplace discrimination claims. It happens every day, and every business is vulnerable. Here are just a few examples:

  • Thirteen current or former computer company employees claimed employment discrimination on the basis of race and national origin. Employees claimed they were treated unequally and subjected to a hostile work environment. Amount of settlement: $635,000 (salary increases, enhanced promotional activities).
  • Eight employees filed a class action suit alleging sex discrimination by their employer in the handling of wages, promotions, pregnancy leaves and other conditions of employment. Amount of settlement: $600,000 (plus $5 million in legal fees).
  • A senior regional attorney sued a securities dealer claiming age discrimination and retaliation. He claimed he was unfairly terminated for advice he gave to a co-worker regarding his employment rights. Amount of verdict: $443,000.

All businesses are at risk from issues related to employment practices. It can come up during hiring situations if you don’t hire someone who then assumes you were discriminating. It can happen if you terminate an employee who then decides he or she was treated unfairly. Employment-related lawsuits are filed every single day, and up to half of all businesses will face a lawsuit at some point. Is your business prepared?

HOW CAN YOU PROTECT YOUR BUSINESS?

As an employer, you do everything you can to treat your employees fairly. However, you can be held liable for the actions of your other employees or even vendors and customers. And with new employment-related regulations being added to the books frequently, it can be difficult to understand exactly what you are expected to do.

It’s important to make sure you remain in compliance with laws governing treatment of employees. But there’s an added layer of protection you can obtain: employment practices liability insurance, or EPLI.

WHAT EPLI COVERS

Employment practices liability insurance can protect your business against claims made by potential hires, employees currently on your payroll and terminated employees. With a good EPLI policy, your company is protected against claims of:

  • Wrongful termination
  • Employment-related emotional distress and invasion of privacy
  • Defamation
  • Retaliatory/constructive discharge
  • Sexual harassment and discrimination
  • Workplace torts such as slander

EPLI coverage generally includes the cost to defend against the charges plus any damages you are ordered to pay. Depending on your business needs, it might make sense to purchase EPLI coverage as part of your company officers’ Liability insurance since company officials can be named in lawsuits against the business.

LEARN MORE ABOUT EPLI

Our business insurance agents can answer your questions about EPLI and recommend the coverage that is right for you. We can also discuss how employment-related lawsuits can affect your business by assessing the risk typically associated with your industry.

Remember, employment-related claims can affect businesses of all types. Even if you are just starting out, you could be the subject of a discrimination suit if someone you interview but fail to hire feels that he or she was treated unfairly. And even if you do everything right and comply with all federal, state and local regulations, you can still be held liable for the actions of your employees, vendors or customers. EPLI can provide much-needed protection — and welcome peace of mind.

Aug 01
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TAKE STEPS TO PROTECT YOUR BUSINESS FROM EMPLOYEE IDENTITY THEFT

By Business Protection Bulletin

Your business could face big problems if one of your employees becomes a victim of identity theft. That’s an alarming fact considering the rapid growth of this costly white-collar crime.

How does identity theft among your employees affect your business? One of the provisions of the Fair and Accurate Credit Transactions Act is that an employer whose action (or lack of action) results in the theft of an employee’s information can be sued. As an employer, you should keep in mind that the workplace is the biggest source of identity theft.

Businesses should be concerned with more than just the lawsuits associated with employee identity theft. Reoccurring identity thefts lead to negative publicity — which can impact sales and significantly damage employee recruiting and retention efforts.

How can you protect your employees and your business? There are two things you should seriously consider: Offer identity theft coverage as an employee benefit, and tell your employees what they can do to reduce their chances of becoming a victim.

What does identity theft coverage give employees?

  • Insurance coverage: To help them get back on their feet after they’ve been a victim.
  • Credit monitoring: That alerts them when unusual credit changes take place.
  • Computer protection: Such as anti-spyware and wireless security.
  • Protection of personal information: Such as assistance with opting out of marketing databases, as well as tracking data in Social Security databases and financial databases.

What can you tell your employees about protecting themselves from identity theft? Start with the following checklist of do’s and don’ts.

IDENTITY THEFT PREVENTION DO’S

  • Always shred sensitive information rather than just throwing it in the trash. (This is wise advice whether you’re at home or at work.) Things to shred include any confidential information, such as credit card pre-approvals, credit card receipts, bank statements, etc.
  • Review your credit report regularly. Take the time to make sure it’s accurate. It’s also important to carefully check your bank statements every month.
  • It may seem like a hassle, but it’s a smart idea to have your financial mail deposited in a post office box rather than in your home mailbox.
  • Remove the mail from your mailbox as soon as possible to afford less opportunity for someone to steal it. Also, be sure to pinpoint when all your bills are supposed to arrive.
  • As elementary as it may sound, it’s important to do whatever it takes to keep your personal identification numbers (PINs) secret.

IDENTITY THEFT PREVENTION DON’TS

  • Obviously, you should never give personal information to anyone without a good reason for having it.
  • Never carry your Social Security card or passport in your purse or wallet, and never keep them in their vehicle. Remember that thieves are very interested in your private information – just as they’re interested in your tangible valuables.
  • Never put your address or driver’s license number on a credit card receipt.
  • Never put your Social Security number or phone number on your personal checks.
  • Never carry credit cards you don’t plan to use.

By helping employees keep their vital personal information from falling into the wrong hands, you’re doing your part to look after their financial health — and protect your business from a growing risk. Identity theft coverage as an employee benefit not only helps employees stay safer, it makes your business a more attractive place to work.

Aug 01
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YARD SALES RISKY WITHOUT ENOUGH HOMEOWNER’S INSURANCE COVERAGE

By Personal Perspective

One of the favorite rituals of the spring season is the yard sale. Homeowners love them because they change cleaning from a dreaded chore into a profitable enterprise. However, the whole experience can quickly turn into a nightmare should someone slip and fall, and you are considered legally liable. That’s why it is necessary to know exactly what your Homeowners insurance covers before you tag the first piece of merchandise.

The standard Homeowners policy provides you with $100,000 liability coverage for bodily injury or property damage that you or your family members cause to other people. This coverage extends to both the cost of defending you in court and any judgments against you, up to the limit of your policy.

Another feature of the liability protection provided by your Homeowners insurance is the no-fault medical coverage. This is designed to permit a person who is injured on your property to submit their medical bills directly to your insurance company, eliminating the need for a lawsuit. Most policies include between $1,000 to $5,000 worth of no-fault medical coverage.

Of course, we live in a society that loves any opportunity to sue, so it might be wise to add to your liability protection. As a first step you can increase the amount of liability coverage provided by your Homeowners policy to $300,000 or $500,000. For additional protection, you need an umbrella or Excess Liability policy. This type of coverage typically costs between $200 to $350 per year for $1 million of additional liability protection.

The Insurance Information Institute (I.I.I.) offers the following list of points you should consider about insuring your yard sale:

  • One-Time Event. Yard sales that are one-time events for the sole purpose of selling unwanted personal items are usually covered under a standard homeowner’s policy. However, it is important to have enough coverage, so be sure to check with your insurance agent.
  • Frequent Yard Sales. If you plan to have frequent yard sales, you should purchase a separate policy for business liability, or an in-home business policy.
  • Charity Fund Raiser. If the purpose of the sale is to raise money for a charity; you will probably be covered under your Homeowners insurance policy. But it’s also a good idea to contact the charity to see what type of insurance protection they can extend you.
Aug 01
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MAKE CERTAIN YOUR GOLF CART IS PROPERLY INSURED

By Personal Perspective

People are increasingly using golf carts for more than just golf. Many homeowners use them around their properties or even to travel to neighboring properties. For example, a couple might own a vacation home in a gated community located in a rural waterfront area. They have a golf cart that they use on the roads within the community to shuttle between their neighbors’ homes. The cart might suffer damage in some way or even be destroyed in a collision or fire. Also, it might injure another person or damage someone’s property; for example, it could roll over a person’s foot if the user has not parked it correctly. If something like this occurs, the cart’s owners need to have proper and adequate insurance.

Most Homeowners insurance policies cover liability for injury or damage caused by use of a golf cart under specific conditions. They cover use of a cart while the user is playing golf on a golf course. They also cover her while using a cart for other leisure activities permitted by the golfing facility, while traveling to or from the golf cart storage area at the course, and while crossing public roads to get from one part of the course to another. Finally, it covers her while the cart is inside a “private residential community” that includes her residence, if the community has authority over the roads and has permitted the use of golf carts on those roads. For example, the gated community might designate certain roadways for golf cart use. If the vacation home is in that community, she has coverage for injury or damage she causes with her golf cart while on those roadways.

The policy will provide coverage for damage to a cart the policyholder owns only if she uses it to service her residence. Most people with golf carts use them for other purposes, so the Homeowners policy offers little protection. However, a policy change (called an “endorsement”) can supplement it. The Owned Motorized Golf Cart – Physical Loss Coverage endorsement covers golf carts designed to carry four passengers or less and not designed or modified to go faster than 25 M.P.H. on level ground. It covers damage resulting from a wide variety of causes, including fire, theft, vandalism, and others; collision coverage is available as an option. The insurance company will pay for the cost (above the deductible) of repairing the cart or the cost of replacing it minus depreciation.

Another alternative is to ask for coverage to be added to an Auto insurance policy. The Miscellaneous Type Vehicle Endorsement covers golf carts, and the policyholder can choose to cover the vehicle for some or all of the coverages that apply to cars on the policy. This coverage might be much broader than what the endorsement to the homeowner’s policy provides. For example, the auto endorsement can provide uninsured motorist coverage and No Fault coverage (if the policy is purchased in a state with a No Fault insurance law). However, not all Auto insurance companies offer this; an insurance agent should be able to give advice on which companies will do so. It might be necessary to buy a separate policy for the golf cart if the auto insurance company declines to cover it.

Like any other type of machinery or equipment, a golf cart can offer great convenience, but can also involve the user in an accident. The financial costs of an accident can be significant. Speak with one of our agents about getting the insurance protection that makes the most sense.

Aug 01
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HIGH EARNERS AND YOUNG ADULTS ARE TARGETS FOR IDENTITY THEFT

By Personal Perspective

According to Javelin Strategy & Research, which recently released its 2007 Identity Fraud Survey Report, young people and those earning more than $150,000 are the most likely victims of identity theft.

Young adults between the ages of 18 and 24 are at the greatest risk for identity fraud because they are the least likely to take safeguards such as shredding documents and using anti-virus software and firewalls. More than 5% of those surveyed in this age group reported having been victimized.

Of those who responded, more than 7% with annual incomes above $150,000 said that they had been victims of identity theft. The researchers also found that this group is twice as likely to not use paper statements and bills. Instead, they opt for electronic bills, which is a method of preventing fraud. They are also 65% more likely to monitor their accounts online, which allows them to spot a fraudulent event before large amounts of money are lost.

The survey also revealed that Americans earning less than $15,000 are the least likely to be victims of identity fraud. Only 2.8% of those polled reported being victims. However, this group takes the longest to discover fraud when it happens. It takes them on average 70% more time for them to detect a fraud than it does for higher income populations. These victims spent an average of 44 hours resolving the fraud. Lower income victims are also more than twice as likely to cut their overall spending, nearly three times more likely to not purchase merchandise online, and three times more likely to refuse to bank online.

Research showed that 500,000 fewer adults in the United States were victims of identity fraud in 2006 than in 2005. Only 3.7% of adults were victims in 2006, compared with 4% in 2005. This is a continuation of the annual decrease in this type of crime that has been occurring since data was first collected in 2003. In that year, 4.7% of the adult population was victimized.

There has also been a significant reduction in the incidents of new account fraud reported in the past 12 months. This fraud happens when criminals use a victim’s personal data to establish a new account. Such fraud dropped from 1.5% in 2006 to 1% in 2007. Additionally, when fraudulent accounts were opened, many victims caught it quicker because of the ability to view statements online. The average fraud amounts dropped from more than $10,000 in 2006 to $7,260 in 2007. Survey respondents said that resolution times had also improved significantly. It took 25 hours to resolve a fraudulent event in 2006, compared with only 5 hours in 2007.

Aug 01
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LIFE INSURANCE THROUGH YOUR EMPLOYER MAY NOT ALWAYS BE ENOUGH

By Life and Health

As you reach different stages in life, your Life insurance needs change. Getting married and having children are just two examples of the kind of life-altering events that necessitate increasing your coverage.

One place people often turn to when they need more Life insurance is their employer. You might already be covered under an employer-paid Life insurance policy. Many companies offer a minimal amount of Life insurance coverage as part of their general benefits package.

Don’t be lulled into believing that this is enough coverage. Typically these policies only provide coverage that is one or two times your base salary. According to The Life and Health Insurance Foundation for Education (LIFE), “most people need somewhere in the range of five to fifteen times their net income and sometimes even more.”

If your employer offers a buy-up Life insurance option, you could always obtain additional coverage to supplement the employer-paid policy. There are two definite advantages to this approach:

  • There usually are minimal health qualifications to be approved for the group coverage.
  • The premiums are automatically deducted from your wages, which decreases the chance of missing a payment.

However, there are some other factors to consider before you buy coverage through your employer:

  • The type of insurance offered under the plan. Most employers provide Term insurance, which pays a death benefit only if you die during the life or “term” of the policy. Unlike Permanent insurance, the premiums you pay for Term insurance don’t earn interest, and the policy doesn’t build cash value.
  • The method used to calculate premiums. You need to determine whether your employer’s plan charges all employees the same premium, or whether premiums are calculated by age group, a practice commonly referred to as “age-grading.”
  • The status of your health. Employees with health problems who obtain coverage privately will likely pay more than they would if they purchased coverage under their group plan. However, healthy employees are likely better off finding insurance outside their group plan.
  • The inability to take your Life insurance with you when you change jobs. When you leave you employer, you leave your group coverage behind too. This is a serious consideration if you’re older because there is the possibility that your health could deteriorate in the future, which would make it more difficult and unaffordable to purchase coverage on your own. This lack of portability makes it a good idea to own some insurance outside your employer’s plan.
Aug 01
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IS YOUR DISABILITY INSURANCE COVERAGE RIGHT FOR YOUR OCCUPATION?

By Life and Health

Much has changed with the disability income protection market during the past decade. There used to be dozens of carriers offering disability income, but as a result of consolidation, there are fewer than 10 companies offering competitive disability products today.

Because of liberal underwriting and policy declarations, insurers have been bombarded with claims. Much of these claims have occurred as a result of mental/nervous conditions, which remain hard to justify. Furthermore, true “Own Occupation” policies are few and far between now.

Even so, there are still several variations of disability definitions available to insureds today. Applicants can generally choose between an “Any Occupation,” “Own Occupation,” “Loss of Income,” or some hybrid of all these. Currently, a typical policy for most applicants has a “dual” definition. The first two to five years of disability are defined under the more liberal “Own Occupation.” After this initial period, if the person is still disabled, then the more restrictive language of “Any Occupation” is employed to determine benefits.

The most liberal definition, which of course costs more, defines disability as the inability to perform any and every duty of the person’s own occupation. This definition is generally used for professional people.

To illustrate the point, let us use the example of an orthopedic surgeon. This person has undergone many years of training and is at the top of his/her profession and income. Let us also suppose that while playing golf, the surgeon has an accident and breaks several fingers on his right hand. He requires surgery and long-term therapy in order to return mobility to his hand. However, he is unable to perform surgery again because he has lost dexterity in his right hand. With an “Own Occupation” definition this physician could teach school and still receive full disability benefits. Under any other policy definition, he may only be eligible for limited benefits for a short duration if he returns to a new occupation.

Another example would be that of a manufacturer’s representative. This person’s daily duties generally do not constitute the need for an “Own Occ” policy. There is not any one duty that truly defines this person’s occupation. A “Loss of Income” or “Any Occ” policy would probably provide adequate coverage for this person.

Let’s now consider the independent business owner the runs a small bookstore. She has three other employees that help her run the business. While she is definitely a jack-of-all-trades, neither an “Own Occ” nor “Loss of Income” policy would be appropriate for her in most cases. The first is obvious, but what if this business owner became disabled for six months and her store never truly suffered. She never realized a loss of income. In this case, a “Loss of Income” policy might never pay benefits.

Consequently, great care must be exercised in selecting the most appropriate occupational definition for the insured. And, while it is certainly true that the more restrictive definition is much less expensive, the potential benefits payable are also substantially reduced or entirely eliminated! So be cautious.

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