Business Record - Iowa Biz

Tips on reporting a loss

One of the questions that I am often asked is "What do I do if I have a loss?"

Well, every insurance company has their own guidelines in their policy usually found under the title “Duties in the Event of a Loss.”

While insurance companies can have some different language and requirements, there are typically eight basic guidelines you will find under most policies:

1. Report the loss to the insurance company or agent
2. Notify the police
3. Provide a description of the loss to the insurance company
4. Mitigate your damages – i.e. take all reasonable steps to protect your property from further damage.
5. Cooperate with the insurance company with the investigation.
6. Provide proof of damages. Prepare an inventory describing property, value and quantity of damaged or stolen property.
7. Allow inspection of property, including: permission to obtain samples of property or make copies of material. Submit to an examination under oath if necessary.
8. Send a signed, sworn proof of loss containing the information requested, within 60 days of the request.

Now some of these guidelines may seem simple, however, if you haven’t had a loss you may not know what to do.

Other helpful tips that aren’t specifically outlined in the list above would be:

• Take photos – make sure that you document your damages. This is especially important if you had to fix something in an effort to prevent further damage.
• Keep receipts – if you incur any additional expenses as a result of a loss – you may be able to get reimbursed. Having receipts of your damaged goods is also very helpful in proving your loss.
• Have an inventory of your property – it is amazing how much stuff we can accumulate over the years – if you have good documentation of your property it can help you determine your damages too.

Whether you suffer a loss or are a victim of one, it is up to you to prove your damages. Having good, clear documentation can help you be prepared for a loss and help streamline your claim process.
 

When an audit is a good thing

If you’re like many businesses, you are receiving your premium audit paperwork in the mail this month. And, like many others, you may be wondering why insurance companies need information like:

• legal business entity
• gross sales last year
• description of business operations
• itemize list of all employees (name, description of work performed, gross wages paid and number of weeks worked)
• subcontractors used (and certificate of insurance)

The company already insures you, right? Don’t they already have this information?

While that might be true, often times a business can change over a period of a year. A company might incorporate, add a new product line or start offering a new service.

They also could have downsized, eliminated a service that they use to provide or have fewer employees. There are many things that can happen during the course of a year and it is important to make sure that the insurance company has the right information to properly calculate their premiums.

An audit can be mutually beneficial for a business owner as well as it can uncover discrepancies that might have been previously reported and help you lower your insurance costs. The key is to be prepared for your audit.

• Make sure you have accurate job descriptions for your employees

• Have your gross sales for the prior policy period calculated

• Have your payroll calculated and separated by class code

Last but not least, the most important step is to review the final audit when the insurance company has completed it.

I often see these final audits stuffed in a folder or binder - unopened.

Audits contain key information that can affect how much you pay for your insurance. Take the time to review it, confirm that the reported figures are correct and that the class codes match your job descriptions. A little time might save you a lot of money.

What’s in your safety toolbox?

A safe work environment can not only affect productivity in the workplace, but it can also affect your workers compensation insurance.

Workers compensation premiums are derived from your annual payroll, employment classification and your experience eod (if your business has one). A good way to help control the costs of this insurance is by having a safe work environment.

While many insurance companies offer free safety videos and loss control services, there are also some free services available online. I came across a unique site at www.safety.blr.com.

This Web site has resources available that range from written safety tips and meeting outlines to Power Point presentations that you can download for free and use for your meetings. 

A common misconception is that safety meetings are only needed for construction industries, garages or manufacturing companies. However, injuries can occur in any workplace including an office and home-based businesses. Computer usage is becoming more prevalent in our everyday work environment and these types of injuries are on the rise:

• Slips, trips and falls
• Overuse injuries
• Back and neck strain
• Eye strain

Here are a few simple steps you can take to make your workplace safe:

Keep all electrical cords organized and out of walk areas

If you use a mouse – make sure it is positioned close to the keyboard

Invest in ergonomic chairs and keyboards

Make sure you have proper lighting and that your employees take their scheduled breaks

Sometimes little things can have the greatest impact in the workplace. A safer work environment can help you have fewer claims. And with fewer claims, you may be able to reduce your workers  compensation expenses.

So the next time you think about the safety of your workplace – think about the toolbox.

Avoiding risky business

By definition, insurance is a transfer of risk. Sometimes, however, you don’t really know you need insurance or you may not know what kind of insurance you need until a loss occurs.

There is so much happening in our economy – one can easily to be overwhelmed. Businesses are still closing and downsizing - and I am sure by now everyone has heard of the disastrous situation in Haiti. I came across this article in Business Week recently:  “Four Legal Pitfalls Loom in 2010” And, ironically, the author discusses many of the same subjects that I have addressed over the past year.

Here are the highlights:

1. Employee Lawsuits – this subject was addressed in my previous blog “Businesses beware!” However, what I find very interesting is the increasing number of lawsuits – in 2008 they were up 9 percent, in 2009 they increased 15 percent over the prior year and they are expected to be even higher in 2010. With these types of numbers, this issue can be a serious threat to a business owner. Employment Practices Liability Insurance (EPLI) is still a fairly new coverage and it is not commonly added to insurance policies. It only takes one lawsuit of this nature to get your attention – especially when you learn you have no coverage for it.
2. Immigration Audits – while this is not really an issue that insurance can assist with, it is an issue that can be corrected with good recordkeeping as well as an employee handbook addressing procedures.
3. Improper Insurance – I think this subject wins for my “Theme of 2009.” I actually blogged about this five times over the past year with “Don’t be a copycat," “It’s not raining – why do I need an umbrella?”, “Are you a gambler?” “You have enough insurance - really?” and “'Tis the season to keep your business healthy.”  I don’t want to beat a dead horse, but I am still amazed at how many business owners make changes in their business and don’t discuss the changes with their insurance agent.
4. Internet Security - The hot button or the buzz word, if you will. This subject comes in a close second with three blogs addressing it -“Protect your customers,” “The risks of social media” and “Does your business have e-risk.” More and more people are doing business online than ever before. Businesses are utilizing the Web with Facebook and Twitter to market their business. This is an area that business owners really want to be careful with and should have solid controls in place not only to protect their clients, but also their own business trade secrets.

Last but not least, I want to mention Haiti. The devastation that they have faced is truly shocking and heartbreaking. It is absolutely amazing what damage an earthquake can do. Which brings me to "When disaster strikes are you ready?" Make 2010 a year that you start off on the right foot. If you don’t have any insurance for your business, contact your agent to find out what you need to get a policy started. If you haven’t seen your agent in a while, call and set up an appointment to review your insurance.

You might be surprised what you learn about your policy when you review it.

Planning for the new year

It’s hard to believe that it is a new year.

This is the time of year when we think about getting organized and start our new year's resolution. We all want a fresh start for 2010, don’t we?

Well the best way to get organized is to start by writing down your goals.

It is statistically proven that when we write down our goals, we are more likely to achieve them. Just like your success in business, as Drew McLellan mentioned in his recent blog  - most marketers will enter 2010 with a huge disadvantage - no written plan.

You might be wondering what this has to do with insurance and is there a discount involved? Unfortunately, there are no discounts on insurance premiums for having a written marketing plan. However, there are advantages for having written Employee Handbooks and Safety Plans.

Employee Handbooks can be one of the most important documents that you share with a new employee, as it outlines the expectations of the employee and the employer. From an insurance perspective, it is written documentation that should outline your insurance benefits, provide information regarding your policies and procedures for reporting injuries and an acknowledgment from your employees of the policies and procedures of the company.

Safety Plans – I am sure many of you business owners are aware of the OSHA guidelines. However, some hazardous/ high risk industries can receive significant insurance benefits from having a solid written safety plan in place.  Some of these benefits include, safer work environment, healthier employees and less work related injuries. Less work related injuries can mean lower claims and lower claims can mean lower insurance premiums! Sounds like a win/win situation to me.

If you are not sure how your safety plan measures up or perhaps you don’t have one, there are a number of free services available through insurance companies and the United State Department of Labor – Occupational Safety & Health Administration.

Regardless of what type of business you own or what size you are, having written procedures in place can be beneficial for your business operation. So if you want to start out the new year differently this year – you can do so by just having a plan.

Bonds do more than get you out of jail

We have had quite a roller coaster year and many industries have been affected by our economy. I am sure many of you will agree that the construction industry has been hit pretty hard. Some of the changes in that industry that I am seeing are an increase in the use of bonds.

Many of us think of bonds as a way to balance out our investment portfolios. Stock values go down – bond values go up. Some may have had to post bonds to get out of jail.

However, in the insurance arena, bonds can be used to ensure that construction projects are completed on time and that the contractor pays all of the suppliers and workers involved in the project.

These types of bonds are called surety bonds. There are three main types of surety bonds for contractors:

• Bid Bonds – these essentially say that the contractor will perform the work at the agreed price in the contract and will provide the additional performance and payment bonds. (These bonds are commonly seen in the public sector)
• Performance Bonds – protects the owner from financial loss in case the contractor fails to complete the project.
• Payment Bonds – assures that the contractor will pay all subcontractors and suppliers related to the job.

Now, you might be thinking everyone should use these bonds and in some cases they should.

However, qualifying for these bonds is not always easy and a smaller contractor can lose out on a job because of it.

There are many other industries that use bonds as well: Mortgage Brokers, Home Health Care, Janitorial, Auto Dealers, Tax Preparers, Public Officials and more.

Bonds have a broad spectrum of coverage. As we discussed, in the construction industry they are mainly used to protect against a contractor that does not fulfill their contractual obligation and/or goes bankrupt before a project is completed.

In other industries they can assure compliance with state regulations, protect against fraudulent acts and employee dishonesty.

On a positive note, they provide credibility for a business owner. The important thing to remember is to measure the risk with the need of the bond.  So when you are asked to provide a bond, make sure you consult with your insurance agent for more information.

Protect your customers

This is the busiest time of year for most retail businesses. What this means for many retailers is thousands of credit card transactions being completed at their stores, over the phone and online. Having their computers, phone and Web sites up and running securely is very important to the retailer right now.

In 2008, it was discovered that the retailer Forever 21 had 99,000 credit cards compromised between 2004 and 2007. 

That same year, Advanced Auto Parts also discovered that they had approximately 56,000 customers information stolen information from old data between December 2001 and December 2004. This information was found to not be encrypted and thought to have been deleted – but it wasn’t.

I have discussed employee dishonesty and e-risk in a couple of my past blogs and while these issues are important for a retail business owner, professional liability for Web site developers, computer programmers and consultants is equally important.

There are many situations that can occur to cause this profession to be sued.

• A businesses website goes down and causes a business to lose income
• Software that was installed causes a businesses network to crash
• Breaches of security (firewalls, encryptions, et cetera) – a computer tech forgets to reset the firewall after installing new equipment or software.
• A business is sued for copyright and trademark issues after they launch their new Web site and logo.

The list goes on and on, but I think you get the point. Having the right liability policy in place can protect against these issues and more depending upon your exposure.  If you are a retail business owner, make sure you are discussing your cyber risk with your agent. If you are in the computer industry, make sure you do the same.

The mistake you don’t want to make is relying on someone else to have coverage for your business.

'Tis the season to keep your business healthy

With cold and flu season here, many of you are making your doctor appointments for your flu shots.  The same should be said for your business.  Many business insurance policies come up for renewal in January.  Just like a doctor appointment, this is the time of year you should be making your appointments with your insurance agent.

In the midst of the holiday season, business may be up for some and for others business may be down. As Tim Johnson indicated in his blog earlier this month, this is a good time to "make your list and check it twice."

So let’s take at look at some highlights on insurance coverages that seem to be overlooked but can have a substantial impact on a business owner:

Building Coverage – Do you own your building? If not, you may not need to insure the building. However, you will want to make sure you have enough coverage for damage to rented premises. It is not uncommon to see a business owner only carry $50,000 or $100,000 coverage for this. Make sure your coverage is sufficient.

Business Personal Property – Have you consolidated or downsized any of your locations? Are you increasing your inventory to prepare for the holidays? Make sure your coverage is sufficient to cover any of your seasonal changes.

Tenant Improvement and Betterments – Who paid for the remodeling costs of your space? If you did, then you may want to have coverage for this on your policy in the event that you have a loss and want to reoccupy your same space. If the building owner paid for these costs or you acquired the space, then it will be up to the building owner to have the right coverage in place. Another point to make is that some companies will include this in with Business Personal Property coverage, which can be a much higher rate. So it may be cost effective for you to look at a company that separates this coverage out.

Business Income – Do you have enough income listed to cover your expenses if your business is inoperable? Do you want to be able to pay your employees during this time? If so, you may need to include ordinary payroll in this coverage.

Water Back-Up/Sump Pump – This is not flood coverage. This is coverage in the event that a sewer backs up or your sump pump fails and causes water to get backed up in your building and damages your property as a result. This coverage is not included in your policy. You will need to add it.

Landscape – Have you spruced up the outside of your building with new rock, bushes, plants or trees? If so, there are limitations on business policies for this coverage. Often times the coverage is minimal. So take a look at your policy to make sure you have coverage and that it is enough to cover any damages you may occur.

Business Income from Dependent Properties -- I am sure many of you have never even heard of this coverage. However, this coverage can provide a business owner with income in the event that their main supplier or manufacturer has a loss which in turn affects the insured’s business. So if your business is viably dependent upon another – you may want to review this coverage on your policy.

Vacancy -- Have you lost some tenants in your building or shopping center? Is your rental building sitting empty? Insurance companies can have different definitions of the term vacancy, which can mean additional costs and/or some penalty charges to the policyholder in the event of a loss. An endorsement can be added to the policy to help avoid this. So it is a good idea to discuss any vacancy concerns and make sure that your policy is written correctly to ensure you have coverage.

So in an effort to keep your business healthy, a good checkup may be all you need.

Professional Liability, E & O, D & O – E.I.E.I.O.

So what is this type of coverage and what do these initials mean?

Essentially, they are all forms of professional liability insurance tailored for a particular industry.

• Professional liability insurance in the medical field is also known as medical malpractice - with coverage designed for your medical doctors, dentists, chiropractors, practitioners, nurses,  et cetera.

• Errors and Omissions (E & O) coverage is geared toward your insurance agents, notary public, real estate agents, appraisers and technology fields.

• Directors and Officers (D & O) coverage is for the directors and officers of a business. It provides the company with protection for any wrongful acts that one of its corporate directors may be responsible for while performing their corporate duties. These acts are not limited to misstatements, neglect or errors and omissions.

The key to remember is that a standard general liability policy or business owners policy provides coverage for bodily injury, property damage, personal injury or advertising injury claims. You will typically find that these policies contain an exclusion related to any claims resulting out of advice given. Therefore, if you want protection against this type of exposure, you will need to purchase a separate policy.

Professional liability coverage can essentially provide protection for that coverage gap and protect you from claims of negligence, misrepresentation and inaccurate advice.

The economy is changing with business executives being laid off. We are seeing these individuals starting up their own businesses, many of which are management and consulting firms.

A simple question that you can ask yourself to determine if this coverage is needed for your business is “are you giving advice, or making suggestions for an individual or business?”

If you answered “yes," then talk with your agent regarding your business exposures to ensure you have the right coverage for your business needs.

The risks of social media

Do you have a Facebook page or are you on Twitter? 

TV shows, movie stars and businesses are taking advantage of new ways to promote themselves. Social media are on the rise – and I am probably the only person I know that does not have a Facebook page.

While these are great mechanisms to communicate with your friends and family - and also a new way to market your business - they are not without added risk.

Earlier this month, a small business owner in Knoxville, Tenn. was sued for charges of libel stemming from allegations that the small business owner made on Facebook and Twitter.

In July, a Chicago Landlord sues ex-tenant over tweet complaining.

Then a doctor sued a patient for defamation over comments posted on an internet forum.

Our society is becoming very litigious and the insurance industry is certainly trying to keep up with the changes in our overall risk. However, there are limitations to insurance. That is why it is so important to make sure you purchase the right insurance for your risk exposure.

A standard business or homeowners policy will not typically cover claims for libel, slander or defamation charges. Coverage for these types of claims can be covered under an umbrella policy –  if you have one. I would, however, caution you to make sure that your agent confirms that your media exposure is covered under the policy.

For the serious blogger and/or social media networker, it may be sensible for you to purchase media insurance or a cyber-liability policy.

Most claims and/or suits stem from copyright infringement, defamation, invasion of privacy and  libel or slander. Having this type of policy can provide you with broader coverage.

Remember, as a business owner, you can be responsible for what your employees are putting on Facebook and tweeting as well. Talk with your agent today regarding your media risk exposure.