1)Check the definition of business use class that your auto is rated under. In many cases, contractors autos are rated for commercial use when many, if not all, may qualify for the service use classification. Since commercial use is generally much more expensive than service use, correcting this mistake can lead to substantial premium savings.
2)The higher the population of a rating territory, the higher the auto insurance rate. If your office or yard is in a highly populated area, but you work mainly in outlying suburbs/rural areas, you might want to consider garaging them in the outlying areas if convenient. Doing so might result in a major physical damage premium reduction.
3)Older field vehicles are sometimes taken out of service and used for purposes other than those for which they were originally intended, such as light hauling around the yard. An insurer may be willing to grant a rate reduction based on the reduced exposure.
Tuesday, October 11, 2011
Monday, October 10, 2011
California Strengthens its Data Breach Notification Law
As we suspected, California's current governor, Edmund G. “Jerry” Brown, Jr. (D), signed into law S.B. 24, which adds some additional protections to the state's current data breach notification requirements. The champion of this law and its recent enhancements, State Sen. Joe Simitian (D-Palo Alto), has finally succeeded after a number of prior attempts to pass this measure were vetoed by then-Gov. Arnold Schwarzenegger (R).
Summary of Changes
Under S.B. 24, breaches occurring on and after January 1, 2012, that require notification to California residents will have to meet the following additional requirements:
•The notifications themselves will need to satisfy specific content requirements, such as including a description of the type of information breached, time of breach, and toll-free telephone numbers and addresses of the major credit reporting agencies;
•If more than 500 California residents are affected by a single breach, an electronic copy of the breach notification must be send to the California Attorney General;
•If the law's "substitute notice" provisions are used, notice also must be provided to the Office of Information Security or the Office of Privacy Protection. Substitute notice is permitted when the person or business required to provide the notice demonstrates that (I)(i) the cost of providing notice would exceed two hundred fifty thousand dollars ($250,000), or (ii) that the affected class of subject persons to be notified exceeds 500,000, or (II) the person or business does not have sufficient contact information. Prior to the change, substitute notice consisted of only email notification, conspicuous posting of the notice on the person or business' website, and notification to statewide media.
Companies responding to multi-state breaches face significant challenges trying to harmonize the various state law requirements. See, for example, the recent changes to the Illinois statute. Presently, a number of bills are being considered in Congress that would preempt all of the state laws in this area, however, passage of one of these laws does not appear to be imminent. As data breaches go global, similar concerns exist as countries are enacting their own breach notification mandates.
Posted on September 1, 2011 by Joseph Lazzarotti
http://www.workplaceprivacyreport.com/2011/09/articles/data-security/california-strengthens-its-data-breach-notification-law/
Summary of Changes
Under S.B. 24, breaches occurring on and after January 1, 2012, that require notification to California residents will have to meet the following additional requirements:
•The notifications themselves will need to satisfy specific content requirements, such as including a description of the type of information breached, time of breach, and toll-free telephone numbers and addresses of the major credit reporting agencies;
•If more than 500 California residents are affected by a single breach, an electronic copy of the breach notification must be send to the California Attorney General;
•If the law's "substitute notice" provisions are used, notice also must be provided to the Office of Information Security or the Office of Privacy Protection. Substitute notice is permitted when the person or business required to provide the notice demonstrates that (I)(i) the cost of providing notice would exceed two hundred fifty thousand dollars ($250,000), or (ii) that the affected class of subject persons to be notified exceeds 500,000, or (II) the person or business does not have sufficient contact information. Prior to the change, substitute notice consisted of only email notification, conspicuous posting of the notice on the person or business' website, and notification to statewide media.
Companies responding to multi-state breaches face significant challenges trying to harmonize the various state law requirements. See, for example, the recent changes to the Illinois statute. Presently, a number of bills are being considered in Congress that would preempt all of the state laws in this area, however, passage of one of these laws does not appear to be imminent. As data breaches go global, similar concerns exist as countries are enacting their own breach notification mandates.
Posted on September 1, 2011 by Joseph Lazzarotti
http://www.workplaceprivacyreport.com/2011/09/articles/data-security/california-strengthens-its-data-breach-notification-law/
Thursday, September 15, 2011
10 Liability Exposures That Could Put a Contractor Out of Business
1.Many "verbal" contracts are given and accepted on the job site. It turns out that, proprietary commercial general liability policies are now excluding covered losses if they arise out of any verbal contracts. Either check your policy form or get all contracts in writing no matter how minor.
2.Make sure that the “insured contract” exception to the employer’s liability exclusion preserves coverage for 3rd party action over claims. For example, this would provide coverage if a contractor’s employee was injured on a job site and filed suit on the project manager.
3.Your general liability policy most likely excludes mobile equipment if it is being towed or is permanently attached to the vehicle. Utilize an equipment floater policy, to protect yourself against this exposure.
4.Borrowed equipment and tools are typically excluded on both your general liability and property policies. Endorse it on your inland marine, C.O.C., or purchase a contractors equipment policy.
5.Be aware that faulty workmanship is excluded on ALL commercial general liability polices.
6.The job is considered a completed operation once it is “contractually completed” even though you may have corrections, repairs, replacements, services, or maintenance to perform.
7.Claim reporting obligations are daunting for smaller contractors and especially GC’s. A claim must be reported once there is “knowledge” of it, or it will not be covered. It is virtually impossible for a contractor to be fully aware of everything that transpires on a site and many incidents aren’t reported. Your broker should negotiate clarification of these definitions and have your insurance carrier put the discussion in writing, OR endorse an unintentional failure to disclose hazards.
8.For my residential contractors:
a.Make sure there is no designated work exclusion on your general liability policy. This will exclude completed operations coverage.
b.Ensure that there is no alienation of premises exclusion: this excludes coverage for property damage of premises that is sold by your company. I.e. you are buying and flipping homes.
9.Grading, excavation, foundation, and demo contractors:
a.Be certain that there isn’t total pollution exclusion on your general liability policy.
b.Remove any subsidence (earth movement exclusion)
c.Keep off (if possible) any X, C, U exclusions.
10.Things to endorse on your policies (or ask for)
a.Extended notice of cancellation: forces insurance carriers to give you at least 60 days of notice prior to canceling you. This will give you time to find another insurance company so there is no lapse in coverage.
b.Try to add as MANY additional insured’s as possible to a policy. General contractors – ask to be added to all of your subs polices.
c.On your umbrella policy: look at the definition of bodily injury to make sure that it picks up mental anguish.
2.Make sure that the “insured contract” exception to the employer’s liability exclusion preserves coverage for 3rd party action over claims. For example, this would provide coverage if a contractor’s employee was injured on a job site and filed suit on the project manager.
3.Your general liability policy most likely excludes mobile equipment if it is being towed or is permanently attached to the vehicle. Utilize an equipment floater policy, to protect yourself against this exposure.
4.Borrowed equipment and tools are typically excluded on both your general liability and property policies. Endorse it on your inland marine, C.O.C., or purchase a contractors equipment policy.
5.Be aware that faulty workmanship is excluded on ALL commercial general liability polices.
6.The job is considered a completed operation once it is “contractually completed” even though you may have corrections, repairs, replacements, services, or maintenance to perform.
7.Claim reporting obligations are daunting for smaller contractors and especially GC’s. A claim must be reported once there is “knowledge” of it, or it will not be covered. It is virtually impossible for a contractor to be fully aware of everything that transpires on a site and many incidents aren’t reported. Your broker should negotiate clarification of these definitions and have your insurance carrier put the discussion in writing, OR endorse an unintentional failure to disclose hazards.
8.For my residential contractors:
a.Make sure there is no designated work exclusion on your general liability policy. This will exclude completed operations coverage.
b.Ensure that there is no alienation of premises exclusion: this excludes coverage for property damage of premises that is sold by your company. I.e. you are buying and flipping homes.
9.Grading, excavation, foundation, and demo contractors:
a.Be certain that there isn’t total pollution exclusion on your general liability policy.
b.Remove any subsidence (earth movement exclusion)
c.Keep off (if possible) any X, C, U exclusions.
10.Things to endorse on your policies (or ask for)
a.Extended notice of cancellation: forces insurance carriers to give you at least 60 days of notice prior to canceling you. This will give you time to find another insurance company so there is no lapse in coverage.
b.Try to add as MANY additional insured’s as possible to a policy. General contractors – ask to be added to all of your subs polices.
c.On your umbrella policy: look at the definition of bodily injury to make sure that it picks up mental anguish.
Monday, July 25, 2011
Personal Umbrella Policy: Determining Excess Liability Coverage Limits
We all are exposed to different situations everyday where we can be held legally liable for our actions, inaction or circumstances. A homeowners’ policy that includes personal liability coverage and an automobile policy providing third party liability coverage are our first line of defense to common liability exposures. But what if the liability limits are not enough?
A Personal Umbrella policy provides excess liability coverage over and above the liability limits provided on an underlying homeowners and/or automobile policy. A personal umbrella policy typically will require a minimum $300,000 liability limit on a homeowners’ or renters’ policy and a minimum $250,000/$500,000 liability limit on a personal automobile policy. The limit on a personal umbrella policy will apply if the limit on the underlying policy is not sufficient to entirely cover a specific liability situation.
A personal umbrella policy offers inexpensive coverage in million-dollar increments from $1M up to $5M, and up to $50M thru certain insurance companies. To find out if your excess liability coverage is adequate, you would need to ask yourself how much you can afford to lose if you are sued. You should choose a limit based on your individual requirements and specific circumstances. You would need to assess and evaluate your assets such as your home, other real estate properties, personal possessions, savings, and investments, and make sure that your personal umbrella coverage limit will provide ample financial protection in the event you are sued.
Contact your insurance agent today to discuss your current excess liability coverage limit, request a quote or learn more about the benefits of a personal umbrella policy.
A Personal Umbrella policy provides excess liability coverage over and above the liability limits provided on an underlying homeowners and/or automobile policy. A personal umbrella policy typically will require a minimum $300,000 liability limit on a homeowners’ or renters’ policy and a minimum $250,000/$500,000 liability limit on a personal automobile policy. The limit on a personal umbrella policy will apply if the limit on the underlying policy is not sufficient to entirely cover a specific liability situation.
A personal umbrella policy offers inexpensive coverage in million-dollar increments from $1M up to $5M, and up to $50M thru certain insurance companies. To find out if your excess liability coverage is adequate, you would need to ask yourself how much you can afford to lose if you are sued. You should choose a limit based on your individual requirements and specific circumstances. You would need to assess and evaluate your assets such as your home, other real estate properties, personal possessions, savings, and investments, and make sure that your personal umbrella coverage limit will provide ample financial protection in the event you are sued.
Contact your insurance agent today to discuss your current excess liability coverage limit, request a quote or learn more about the benefits of a personal umbrella policy.
Tuesday, April 5, 2011
The Workers Compensation Situation in California and why it’s More Important than Ever to Manage Risk, Exposures, and Claims
Brief Introduction to the Experience Modification
It’s a dawn of a new era for Workers Compensation in California. The experience modification formula has been altered as of 1/1/2011. Those of you who are not familiar with the experience modification, to put it simply, it is a comparison of your business’s claim frequency/severity against other companies in your governing class code. The industry average is 100, and anything lower (say and 84) is a credit modifier, conversely anything higher (106) is a debit modifier. Credit x-mods (experience modification) can have a significant reduction on your estimated annual premiums, because the insurance carrier views you as less of a risk.
On January 1st 2011, the WCIRB (workers compensation insurance rating bureau) recalculated the formula by putting more weight on a companies claims frequency, risk of a specific industries (classes of business), and the amount of employees that different companies have in their designated classes. i.e. If you had a debit modification of 104 and hadn’t had any claims for the past few years, but are in a class of business that is more susceptible to claims and have a high employee volume, then your experience modification still went up. Also, if you have a few claims in 2010 that were miniscule in cost, then your experience modification increased more than the company that only had one large claim.
A few Issues with California Comp
In this ever changing economic environment it is important to keep overhead at a minimum (i.e. insurance premium payments). Additionally, this soft market and diminished rates has relieved many business owners from paying extensive w/c premiums and have a variety of insurance carriers to choose from….However, the market is cyclical and there are a few subtle signs that the tide is beginning to turn. The WCIRB has already proposed a 40% rate increase for 7/1/2011 and beyond. This is due to medical payments being on the rise and the increasing costs associated with employee long-term disability. A lot of the w/c carriers that came into California a few years ago, with the expectations of undercutting the competition to gain market share have been leaving the market place due to their under pricing of high loss ratio accounts. These high loss ratios (riskier and more expensive) businesses will be forced to become insured with financially secure and established insurance companies that will compensate for these “risky investments” by raising the rates, which will increase the premium dollars coming in.
Consequently, the market will inevitably subside and a restaurant owner’s rate of $2.57 for the restaurant tavern class rate will rise to nearly $5.00. Regardless of a future rate increases and market potentially firming up, the new experience modification formula is a problem for business owners that don’t hold a high standard for safety. Even in this soft market, the new experience modification formula is continuously crippling companies that previously had miniscule debit x-mod and are now paying thousands more in premium dollars.
1.So is it financially feasible for business owners to continue sacrificing sound operational practices to enhance their short-term savings?
2.Will these owners unintentionally be paying out more money in the long-run if they deal with an insurance carrier that’s notorious for poor claims management and sets reserves too high/has difficulties closing a claim?
3.What is the most cost effective way to combat fiscal punishing debit x-mod formulas and imminent rate increases?
Why Inevitable Rate Increases in the Next Few Years + the Recalculation of the Experience Modification Formula = A Greater Focus on Claims Management and Risk Reduction
If you are a company with a debit 130 x-mod or higher and have a history of an elevated claims frequency: At this rate, you are paying tens of thousands more in premium dollars than you should be and the market place (insurance carrier availability) is shrinking up on you. You continuously jump at the cheapest quote that is put in front of you (usually the lowest graded carriers with third party administrators who handle the claims management) as you desperately try to stay afloat and keep your bottom line in tact.
Advice: Stop deciding to do business with a poor, low grade insurance carrier (a.k.a. 1985 Pinto) just to save 5,000 bucks at renewal. Instead, pay for a better product that will work with you to proactively minimize your claim your claim reserves and conduct loss control walkthroughs to proactively minimize future risks.. In addition, these companies will “actually” investigate assumed fraudulent claims with their SIU (special investigations unit) more promptly than other insurance companies, and will consistently send claims representatives to hearings in order to negotiate lower medical reserves/get the claim closed a.s.a.p.
If you are a company who has an 82 x-mod and does not historically have a prevalence of claims: You are in a great position and every insurance company wants your business because you are viewed as a great risk! You either know how to run a safe establishment because of your tenure in the business, are a relatively new company who has had a published x-mod for three or four years, have gotten lucky, or are in a classification of business that typically has a minimal exposure for claims.
Advice: Make sure that your representative/insurance consultant does not become complacent. It is important to always be looking for ways to enhance the safety of your business without diminishing its efficiency. When w/c rates are on the rise, the only thing that will combat a premium increase will be a credit experience modification.
It is also crucial that your insurance representative is auditing your w/c policy quarterly in an attempt to reclassify your business and employees. This could ultimately recalculate your annual premium and reduce what you are paying monthly.
Finally, make sure that your insurance consultant is looking at different carriers before renewal. If you have a great loss history and have been established for a length of time, then many insurance companies will want your business, thereby reducing their target price (which can save you money from year to year).
It’s a dawn of a new era for Workers Compensation in California. The experience modification formula has been altered as of 1/1/2011. Those of you who are not familiar with the experience modification, to put it simply, it is a comparison of your business’s claim frequency/severity against other companies in your governing class code. The industry average is 100, and anything lower (say and 84) is a credit modifier, conversely anything higher (106) is a debit modifier. Credit x-mods (experience modification) can have a significant reduction on your estimated annual premiums, because the insurance carrier views you as less of a risk.
On January 1st 2011, the WCIRB (workers compensation insurance rating bureau) recalculated the formula by putting more weight on a companies claims frequency, risk of a specific industries (classes of business), and the amount of employees that different companies have in their designated classes. i.e. If you had a debit modification of 104 and hadn’t had any claims for the past few years, but are in a class of business that is more susceptible to claims and have a high employee volume, then your experience modification still went up. Also, if you have a few claims in 2010 that were miniscule in cost, then your experience modification increased more than the company that only had one large claim.
A few Issues with California Comp
In this ever changing economic environment it is important to keep overhead at a minimum (i.e. insurance premium payments). Additionally, this soft market and diminished rates has relieved many business owners from paying extensive w/c premiums and have a variety of insurance carriers to choose from….However, the market is cyclical and there are a few subtle signs that the tide is beginning to turn. The WCIRB has already proposed a 40% rate increase for 7/1/2011 and beyond. This is due to medical payments being on the rise and the increasing costs associated with employee long-term disability. A lot of the w/c carriers that came into California a few years ago, with the expectations of undercutting the competition to gain market share have been leaving the market place due to their under pricing of high loss ratio accounts. These high loss ratios (riskier and more expensive) businesses will be forced to become insured with financially secure and established insurance companies that will compensate for these “risky investments” by raising the rates, which will increase the premium dollars coming in.
Consequently, the market will inevitably subside and a restaurant owner’s rate of $2.57 for the restaurant tavern class rate will rise to nearly $5.00. Regardless of a future rate increases and market potentially firming up, the new experience modification formula is a problem for business owners that don’t hold a high standard for safety. Even in this soft market, the new experience modification formula is continuously crippling companies that previously had miniscule debit x-mod and are now paying thousands more in premium dollars.
1.So is it financially feasible for business owners to continue sacrificing sound operational practices to enhance their short-term savings?
2.Will these owners unintentionally be paying out more money in the long-run if they deal with an insurance carrier that’s notorious for poor claims management and sets reserves too high/has difficulties closing a claim?
3.What is the most cost effective way to combat fiscal punishing debit x-mod formulas and imminent rate increases?
Why Inevitable Rate Increases in the Next Few Years + the Recalculation of the Experience Modification Formula = A Greater Focus on Claims Management and Risk Reduction
If you are a company with a debit 130 x-mod or higher and have a history of an elevated claims frequency: At this rate, you are paying tens of thousands more in premium dollars than you should be and the market place (insurance carrier availability) is shrinking up on you. You continuously jump at the cheapest quote that is put in front of you (usually the lowest graded carriers with third party administrators who handle the claims management) as you desperately try to stay afloat and keep your bottom line in tact.
Advice: Stop deciding to do business with a poor, low grade insurance carrier (a.k.a. 1985 Pinto) just to save 5,000 bucks at renewal. Instead, pay for a better product that will work with you to proactively minimize your claim your claim reserves and conduct loss control walkthroughs to proactively minimize future risks.. In addition, these companies will “actually” investigate assumed fraudulent claims with their SIU (special investigations unit) more promptly than other insurance companies, and will consistently send claims representatives to hearings in order to negotiate lower medical reserves/get the claim closed a.s.a.p.
If you are a company who has an 82 x-mod and does not historically have a prevalence of claims: You are in a great position and every insurance company wants your business because you are viewed as a great risk! You either know how to run a safe establishment because of your tenure in the business, are a relatively new company who has had a published x-mod for three or four years, have gotten lucky, or are in a classification of business that typically has a minimal exposure for claims.
Advice: Make sure that your representative/insurance consultant does not become complacent. It is important to always be looking for ways to enhance the safety of your business without diminishing its efficiency. When w/c rates are on the rise, the only thing that will combat a premium increase will be a credit experience modification.
It is also crucial that your insurance representative is auditing your w/c policy quarterly in an attempt to reclassify your business and employees. This could ultimately recalculate your annual premium and reduce what you are paying monthly.
Finally, make sure that your insurance consultant is looking at different carriers before renewal. If you have a great loss history and have been established for a length of time, then many insurance companies will want your business, thereby reducing their target price (which can save you money from year to year).
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