Business Record - Iowa Biz

Melting snow means rising waters

It certainly seems that spring has sprung. As I write my entry this week, most of the snow has melted and Thursday was absolutely gorgeous. Everyone I have talked to lately has a little bit of spring fever - which is fitting since we just had spring break. I am being optimistic about the upcoming weekend report.

While many of us are thrilled to see the snow leave, it doesn't depart us without an additional threat. Iowa has had it's share of flooding issues in the past. I am sure many of you remember the floods of 1993, as well as the floods of 2008. Flooding is such a concern in our state that Gov. Culver has proclaimed the month of March to be "Flood Awareness" month.

This is actually a good time to start thinking about those concerns as well. Flood insurance is not coverage that is provided in your standard homeowners or business owners policy. This coverage is sometimes confused with water back-up coverage. Though most policies can provide coverage for water back up and/or sump pump failure, it is not the same as flood insurance.

Flood insurance is actually a separate policy that would need to be purchased in order to have coverage for those damages. There is also a 30-day waiting period that applies before coverage goes into effect. 

One of the most important steps one can take is educate themselves about flood risks. There are many resources available that can help address your concerns and help you be prepared:

• www.bereadyiowa.org - this site has helpful tips with creating emergency supply kits and evacuation plans
• www.Floodsmart.gov - has a tremendous amount of information from what the definition of a flood is, to instructions on reading a flood map. They also have resources that can help you determine if you are in a flood zone, as well as assist you with the cost calculations of flood insurance
• www.rio.iowa.gov  -  has excellent information about how our state is helping, legislation as well as other community forums

So if you are concerned about flooding issues, or want to know if you should be, check out these resources.

It will be worth your time.

Photo on Flickr by American Red Cross

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.

You have enough insurance – really?

I admit it – I try to avoid the news as it tends to be depressing. Thursday night’s newscast was no exception – however I found myself staying up to hear the story that KCCI was reporting about the homes and businesses in Eldora, Iowa.

In August, Eldora was hit with a hail storm in which every business and home sustained hail damage. Eldora is a small city with the last population count of 2,734.

Regardless of their size, Eldora is only 90 minutes away from Des Moines, and something of this nature could easily occur to any one of our communities.  As a matter of fact, I know several businesses in Johnston that suffered hail damage recently, as well as a couple of car lots on the east side of town.

However, it's two months later and the residents in Eldora are still cleaning up after this loss.  Why? Because many of them did not have an insurance policy or have enough insurance to cover their damages.

So what does this mean to all of us?

Well, last month I touched on being prepared for a disaster in my blog post and earlier in May I blogged about being properly insured. So it was interesting to learn that there were still so many business owners and homeowners that were either uninsured or did not have enough insurance. 

I know I harp on this all the time – but the reality is for most individuals – their home or business is the single biggest asset they own! So why not make sure you have insurance coverage to protect it and second make sure you have enough coverage.

I am not sure what it is about insurance – but people just dislike talking about it and/or dealing with it. I hear comments from business owners like – “Oh, I have plenty of insurance,” “I have great insurance,” and my all-time favorite is “I have a family member that handles my insurance.”

I am sure that the business owners and homeowners in Eldora are no different. However, often times it is after a loss occurs that one finds out they didn’t have “plenty of insurance” or their insurance wasn’t so “great” and unfortunately “their family member did not have them covered properly.”

So what can you do? Well – it comes down to the basics:

• Make sure you purchase the proper insurance policy.
• Communicate any changes that you make throughout the year with your agent.
• Make sure that you are physically reviewing your policy with your agent every year.

Don’t let your insurance policy just renew year after year and accept it being mailed out to you. I know there are some of you that get your policy in the mail and don’t even open it!

Remember, this is about your assets – consult with your insurance agent to make sure you have the right coverage in place today.

Sticky fingers – and I'm not talking about BBQ

When times are tight – people’s hands can get a little sticky. I came across an article regarding retail businesses in Iowa City and, surprisingly, they have had a 52 percent increase in theft over last year.

Could your business sustain such a loss in a year? Or what if the loss occurred over time and it amounted to thousands of dollars?

Now, this article talks mainly about shoplifting and perhaps your business is not retail, but there are other forms of theft that can have a detrimental effect on businesses. In the past, I have talked about data theft and identity theft, however, this article reminded me of a couple of situations dealing with employee theft:

There was this restaurant that I was familiar with that had five locations. Their bookkeeper was a trusted employee and had worked for this company for many years. Her primary duty was to collect the daily receipts, reconcile them and make the deposit. Everything was tracked and double checked by a staff accountant.

So it appeared that they had an excellent checks and balance program. However, this individual found a loophole and it was later discovered that she had embezzled close to $100,000 from this company over the course of five years. A little bit here and a little bit there – ends up to being a lot when it gets counted!

There was another incident with a computer store. One of their employees – actually it was a manager – was skimming equipment from his employer and reselling it. 

As I think about this more, I can recall countless situations where I have heard about companies that had inventory missing, locks left open, misuse of credit cards and product shipments not arriving at their destinations. I am also confident that many of you can remember reading stories just like these – does anyone remember the CIETEC scandal?  It is truly amazing how creative a thief can be. 

Desperate people will do desperate things.

Regardless of your industry, employee theft and dishonesty should be a concern to every business owner and good controls in place can reduce your exposure. Good tips to follow are:

1. Have an internal audit system in place
2. Perform criminal background checks on your employees before you hire them – especially if they are going to be handling money.
3. Use someone other than the person who makes the deposits to balance the checking account.
4. Have procedures in place for your computer operations.
5. Use an independent accountant to perform your audits.

While it is virtually impossible to eliminate all of your risk, you can have procedures in place to reduce your risk. You can also make sure that your insurance policy has coverage for employee dishonesty. 

Now, keep in mind this coverage does not normally apply to business owners and/or partners and it does have limitations. However, it can certainly protect an employer from financial loss due to fraudulent activities of an employee.  So to make sure your business stays out of the headlines, review this coverage with your agent to protect your business today.

When disaster strikes - are you ready?

More than 6,000 homeowners have been evacuated - more than 12,000 homes are threatened – and the fires in California are still blazing as I write this.

It’s obviously a serious situation for both homeowners and business owners, whhich is why I have to ask you, “how prepared are you in the event of a total loss?"

I often meet people who just don’t think it will happen to them. I have learned over the years to never say “never.” In Iowa, we may not be faced with fires like those in California, but we have had total losses due to flooding and tornadoes.

Iowa has averaged 56 tornadoes a year since the inception of the Doppler Radar system. In 2008, there were 105 tornadoes reported – two of which were extremely powerful. As a matter of fact – Iowa had not been struck by a category 5 tornado since 1976.

Insurance protects your assets. But do you know EXACTLY what assets you have?

Whether it is for your business or your home, insurance companies have several resources available to help you. There are also several companies that can provide services to help you document your belongings and store your data.

Companies that I would recommend that can help business owners and homeowners are: 

• Asset Protections Specialists - they can document your inventory

• Small Business Technology Services– they can back up your data and store it off site

I have personally used both of their services and highly recommend them.

Time slips away from us pretty quickly. It seems like the older I get the faster time goes. That’s why it is imperative that you have an annual review with your insurance agent.

While it's important to review your basic coverage information, it is also a good idea to discuss the following:

• Disaster plans – do you have an alternative plan in place that you can implement so your business can continue to operate in the event of a loss?

• Documentation – do you have documentation of your personal property, accounts receivables and equipment?  If a loss occurs will you be able to provide any proof of damages?

• Storage – how are your backing up data? Where is it stored? Is your information checked for verification? How will you gain access to it? When will you be able to restore your information and begin operating again?

• Income – do you have coverage for loss of income? Would you want that loss of income to cover ordinary payroll for your employees– or would you just lay off all your workers if you were not able to operate?

Don’t wait until it’s too late. Start preparing today.

 

Risk management and roller coasters

It is hard to believe that the summer is winding down and the kids are heading back to school. My kids start today.

Our summer was filled with camping trips (no roughing it for me though – camper all the way!), family reunions and a vacation to Florida. Of course we had to go to the amusement parks – Universal Studios and Islands of Adventure.

Surprisingly – several of the rides had some technical difficulties while we were there and we had to either wait an extended period of time or we had to return later in the day.

I always get a little nervous when I hear “we apologize for your delay – we are experiencing technical difficulties.” Especially if the technical difficulty is happening to a roller coaster that I am planning on riding.

If any of you have visited these parks, you are aware that they have a lot of special effects – some with water and several with fire.  So with these types of special effects you never know how serious the “technical difficulty” is. 

My family and I love amusement parks.

So far, we have not actually been on a ride where we have suffered any injury or even seen anything go wrong with their operation. However, it can occur. Earlier this month, 24 people were stuck on a roller coaster in California for almost five hours. Luckily, in this incident, no one was seriously injured.

However, sometimes people aren’t so lucky. Resources show that there have been several incidents over the summer from park employees falling, roller coasters derailing or colliding and boat rides capsizing – causing death.

So what does this have to do with insurance? Amusement parks are large companies – surely they have the right insurance to cover these incidents.  You are probably right.

However, the premise applies to any size company. It comes down to the basics – proper maintenance of equipment, making sure you have visible signage posted for any dangers, have printed employee handbooks and hold regular safety meetings with your employees.

Every business has a risk exposure.

An important way to avoid losses and injuries is to manage that risk. Many insurance companies have resources available for businesses to use and they are FREE. I actually work with some carriers that will send out a loss prevention specialist to help you get maintenance and safety programs implemented. 

So don’t wait until you get stuck on a roller coaster – contact your agent today and start managing your risk.

Is your pollution clean up covered?

To piggy back on Steve Sink’s recent blog post – Sad Tale of a Phase 1 – I find that most business owners are unfamiliar with this particular coverage on their policy. As a matter of fact, I often hear people ask me if they really need it.

As in this situation, I am sure the owner of this building probably did not think that he had an exposure for this type of loss either.

So what types of incidents would need to occur for this coverage to be effected? Well the first thing is that it has to be a result of a covered loss. In short, that means an accident had to have occurred which resulted in a pollution spill. For example:

• A piece of equipment overturns during its use, spilling fuel into a body of water causing pollution.

• A leak in a line at a manufacturing company accidentally dumps chemicals or chemical waste into the water supply.

• A building owner has several oil tanks that are damaged during a fire and leak oil into the ground water causing pollution.

• Old paint and cleaning supplies that has been stored is spilled and penetrates the soil.

Pollution can have an effect on many different industries. It is not just manufacturing companies or chemical companies that are at risk. Those companies should have a stand alone pollution policy to cover their environmental exposure.

Another consideration to understand is the limitations on coverage. Most insurance companies only allow minimal coverage for these incidents unless you increase your coverage.

Most policies will only cover $10,000-25,000 for pollution clean-up. While it may seem like a lot of coverage, it is easy to exceed these limits when you consider debris removal and clean up of the site after a loss occurs.

In order to avoid having a "Sad Tale" of your own, make sure that you address your pollution exposure with your agent annually.

Does your business have e-risk?

Is your businesses trying to go “green?”

It seems to me that there is a push to be paperless. I remember a time when small businesses did not have computers – it was an old fashion paper and pencil to process accounting books (ledgers – remember these?), accounts receivables/payables, invoices and payroll – okay, we had calculators.

We sure have come a long way fast. Now there are multiple software programs available that a business owner can use that will pretty much do everything for your business operation.

You can keep everything stored right on your computer and everything is available to you at the touch of a keyboard.

With our online capabilities, business owners are able to operate in many different forms and offer their clients an easier way to do business and a convenient way to pay.

Let’s face it – there is so much you can do with computers and online access. From a consumer perspective, it is great! It’s easy and convenient, with less paperwork and less mail. Need I say more?

However, from a business perspective, there may be some risks that you are not aware of. I touched on this subject last year in my blog titled - Are you protecting your customer's identity?

However, in light of the recent settlement announcement with TJ Maxx and Marshalls, I felt it was a good idea to touch base on it again.

A breach in data can be critical to a business that handles confidential information. The breach can take on different forms, too. It is not always someone hacking into your network and accessing your data.

• It could be an employee that forwards information from your business to their home or elsewhere.
• It could also be someone that steals your laptop, cellphone or mobile device.
• Do you have your computer programmed to remember your user name and password?
• Do you have your passwords stored on your Blackberry?

It does not matter the size of your company or the industry that you work in. If you have a computer in your business and/or utilize any online transactions that involve personal information with your clients, you are at risk.

When it comes to insurance – there are typically limitations on these risks unless you increase your coverage or add additional coverage. So dust off your insurance policy and call your agent today to make sure that you are properly covered.

Do you know how "products completed operations" can affect your business?

Do you know how "products completed operations" can affect your business?

Not surprisingly, most business owners don’t.

Often times, when I review this coverage with a client, if their business is not manufacturing, they don’t think they need it. I have even been asked if it can be removed from the policy since they do not make any products within their business.

So what I would like to do is review some simple scenarios that can show how useful and important this coverage really is.

• A self employed contractor builds a deck for a client – three months later the deck collapses and the client is injured. It is later determined that the contractor neglected to fasten the deck correctly and caused the deck to collapse.

• A customer eats a hamburger at your restaurant and later makes a claim against the business claiming that they received food poisoning from eating at your establishment.

• A heating and cooling business installs a new water heater in a client’s home. Three months later, the water heater leaks and causes property damage to the client’s home.

While some of these situations seem simple - they are common, everyday business operations that can affect many different industries.

It is important to note that to be covered, the injury or damage must occur away from your own premises, unless your business includes selling, handling or distributing your product for consumption on your premises.

Just as important to know is that this coverage only provides protection while the policy is in force.  So, if a business owner cancels the policy, closes their business or retires - and a claim arises three months later for work they performed during their policy period - they’re probably not covered.

So the next time you are reviewing your policy, make sure that your Products Completed Operations coverage is adequate for the risk you bear.

As always, I welcome any feedback that you may have and click on the above links for more information on this coverage.

A misunderstanding about equipment breakdown insurance

Boiler & machinery insurance - now known as equipment breakdown insurance - is one of the most misunderstood coverages. Why?

If you are not a manufacturing company or a company that uses large machinery or don’t need a boiler in your business …why would you need equipment breakdown coverage?

Well, here is a situation that you may be able to relate to.

Many businesses these days rely heavily on computers. Say you have an internal power surge or the motherboard of your computer crashes and causes your computers to go down. What would you do?

For those businesses that properly back up their data at an off-site location and work with a company that’s ready to handle this situation – kudos to you.

However, I come into contact with many businesses that do not have this situation planned out. In the event of such an occurrence, a business can lose substantial income should they be without computer access.

So how does equipment breakdown insurance work and what does it offer you? Equipment breakdown insurance covers the cost of repairing and replacing the damaged equipment. And it frequently (but not always) includes "business interruption" and "service interruption" coverage, which will cover you against loss of business or income due to computer-related "downtime."

If these additional coverages are not included in your policy, you may have to ask for them. Perhaps you are a Web-based business that operates via the Internet and your Web site is managed by an independent ISP provider. In this situation, you want to ensure that the ISP has both property/casualty and equipment breakdown coverage.

And make sure your own equipment breakdown policy includes "service interruption" coverage. This should pay for your loss of business caused by a mechanical or electrical breakdown to the ISP's servers or other equipment. Equipment breakdown is not just limited to the above examples; it actually covers many types of equipment and is broken down into the following categories:

• Electrical
• Air Conditioning and Refrigeration
• Boilers and Pressure Vessels
• Computers and Communications and
• Mechanical

This coverage can also apply to a personal homeowners policy as well. As with all insurance policies, there are limitations and exclusions. However, I hope you think about equipment breakdown coverage with a whole new meaning now.

Click on the links to learn more about this intriguing coverage, or feel free to contact me with any questions.

A common insurance theme

In an effort to inspire me with my blog writing, a friend sent me to a recent blog post from “The Fit Bottom Girls."

She said this blog post was “funny, refreshing and highlighted past blogs” and thought it would be a good idea for me to try something like it.

Now, what makes this so hilarious to me is that:

• These girls are talking about exercise – not insurance
• They talk about food, family and fun – again not insurance
• They are hilarious - really, there are a lot of funny things that can be said about exercise.

Now anyone who has read an insurance policy knows that it is not something you would casually pick up and get a chuckle over. Out of curiosity, aside from myself, has anyone out there ever even read their policy?

Of course I am really stretching this - my friend's intent was to inspire me to perhaps be a little more creative with my writing. I just thought it was humorous to use a blog about exercise as a comparison to insurance.

Aside from other insurances and maybe financial planning (especially now) there aren’t too many other industries that aren’t fun to write about.

However, I am willing to give this a whirl and see how what happens. So, here's a highlight of what I have covered year to date. 

How many times have I asked you to keep a list or write things down?  2
(An insurance resolution list for business owners, Are you managing your workers’ compensation?)

How many times have I referred to people suing you?  4
Wow – you can tell that I have a claims background! (Businesses beware , Are you a gambler, It’s not raining so why do I need an umbrella? An office errand and your business auto insurance)

How many times have I suggested that you review your policy with your agent? 3
(Don’t be a copycat, If it ain’t broke, Have you ever had to rent equipment

So I guess my “theme” this year pretty much boils down to this:

• Write things down and keep a list because people will sue you
• Make sure that you review your policy and discuss your coverages with your agent

It’s a simple message really – making sure you have the coverage you need in place when you need it. That is what your agent is for – to help and advise you along your journey.

Well, I hope you enjoyed the recap this month – stay tuned for more exciting news - next time we will be talking about equipment breakdown: What is it? What does it cover? And, why do you need it?

Have you ever had to rent equipment?

There are many different reasons that you may need to rent equipment. Often times a construction worker needs to rent a Bobcat or a tiller. A landscaper may need to rent a mower or a chainsaw. Painters may need to rent some scaffolding or spray equipment.  Photographers or film makers may rent camera equipment or lighting. An event planner may rent signage or furniture for a booth display. 

As you can see, there are an array of companies that will need to rent equipment or property every once in a while.

Renting equipment can be cost effective compared with purchasing a piece of equipment that you may only use two or three times in a year.  However, you might want to make sure that you have the proper insurance to cover the equipment in the event of a loss.

A common error I see - particularly in the construction industry - is that this industry will often carry general liability only. While it is the business owner’s choice if they do not want to cover their own tools, here are some things they might want to think of if they are renting someone else’s equipment:

• What is the cost to insure the equipment?
• What are the chances of loss?
• Do you have enough funds to replace the equipment if the equipment is damaged?

If you answered no to No. 3 then you might want to consult with your insurance agent prior to renting any equipment to ensure that you have the proper coverage.

If you are a company that rents equipment to others – to better protect your interest, I suggest that you:

• Pre-qualify your customers – make sure that they are familiar with your equipment
• Attach safety labels, warnings and equipment instructions/manuals
• Inspect equipment before each rental and make sure that all of your equipment is properly maintained
• Use a standard rental agreement that protects your interests - a properly written and correctly used agreement will help protect your company in the event of an accident or injury during the rental period

Just because you have an insurance policy doesn’t mean that you have the right coverage for all losses. We are entering into a busy time of year for many businesses so I suggest that you review your coverages with your agent to ensure that you have what you need.

Are you a gambler?

If you are a business owner who chooses not to be insured, then I would say you are a gambler. You are rolling the dice - gambling with the risk that nothing will happen.

• No one will fall on your property and injure themselves
• The space you are renting will not get damaged or catch on fire
• No one will break into your business and steal anything.
• Flooding will not occur and shut your business down for a month or more
• And none of the work you performed will breakdown and/or cause injury.

I am sure you get the point now.

However, I continually see businesses like auto repair shops, IT consultants, construction workers, in-home caregivers and other home-based businesses that do not carry insurance. Many of these businesses run a huge risk of liability should they be sued. 

Not to mention the loss that the business owner will sustain should a loss occur. Without insurance then you are simply self-insured.

Now there is nothing wrong with being self-insured. Some companies can afford to do that. However, most start up companies or companies that have only been in business for a couple of years or so cannot.

Many business owners started their business because it was their dream.

So why risk your dream?

Make sure that you are protecting your business with the proper insurance policy. The benefits outweigh the cost.

Businesses beware!

With the economy struggling, we could see an increase in lawsuits. It seems that every time I pick up the newspaper or turn on the news,  I am reading or hearing about a company that is laying off. I am sure many of you can relate to this and some may even know a friend or family member that has been laid off recently.

So what do layoffs have to do with insurance? 

I know I have mentioned it in the past, but in recent light of our economic situation, I feel it is worthy to discuss again. Lawsuits are expensive to defend, so what can a business owner do?

Well, for one they can be properly insured. In order to defend you against a lawsuit from a previous employee, you must have an Employment Practices Liability Insurance policy.

EPLI is a coverage that can be added to your current policy or purchased separately.

EPLI provides protection against many kinds of employee lawsuits, including claims of:

• Sexual harassment
• Discrimination
• Wrongful termination
• Breach of employment contract
• Negligent evaluation
• Failure to employ or promote
• Wrongful discipline
• Deprivation of career opportunity
• Wrongful infliction of emotional distress
• Mismanagement of employee benefit plans

Having this type of coverage can be invaluable to a business owner since it is predicted to only get worse.

Lawsuits are increasing all over the country for an array of different reasons.  When the economy is weak, people become anxious about money and it increases their motivation to seek compensation from other sources. Of course, attorneys are right there - fueling the fire so to speak - and unfortunately businesses are attractive targets to these audiences.

So when you are reviewing your insurance, try to be more focused on coverage first rather than the price you pay for it. It could cost you a lot more if you don’t have the right insurance in place should you need it.

It’s not raining – so why do I need an umbrella?

Umbrella policies are one of the most misunderstood insurances in the market.

There are several myths surrounding them:

• They’re only for rich people
• They’re too expensive
• They’re complicated to deal with

Truly nothing can be farther from the truth. As a matter of fact an umbrella policy can prove to be invaluable to someone regardless of how much money they have or don’t have.

Just think about the following scenarios:

• You pull out from a parking lot to make a left turn - there is a van to your left with their turn signal to enter the driveway that you are exiting - you don’t see any other vehicles, so you pull out into the road. As you enter into the roadway, you run into a motorcycle. The driver of the motorcycle is ejected from his bike and pronounced dead at the scene.
• A neighbor falls on your property and hits their head on your sidewalk and suffers a severe brain injury as a result.
• A natural disaster in which another person's property is damaged by a tree on your property crashing down on their vehicle or home.  You may think this would be covered by your homeowners insurance.

Now these example are extreme – but they are also something that can happen to any one of us. With these types of situations, having an umbrella policy in place can provide that extra layer of liability protection for you.

That is what an umbrella is -  it is designed to cover you and everything you own underneath it – and will not “kick-in” until your underlying limits are exhausted.

So what other protection can it provide? It can also provide coverage for claims that may be excluded by the primary policies often including, but not limited to:

• False arrest
• Libel
• Slander
• Invasion of Privacy

So the next time you review your insurance, make sure you ask your agent about an umbrella policy. The benefit can definitely outweigh the cost – and you will be surprised at how reasonably priced an umbrella policy is.

Business auto insurance and you - part 2

(This is a follow up to my last post about business auto insurance.)

Do you think there are any differences in coverage between a business auto policy and your personal auto policy?

Have you ever wondered what other coverage is available on your business auto policy?

Here are some important things you should know about that make a business auto policy different from a personal auto policy:

• Higher Liability Limits – business owners are able to purchase higher limits of liability to better protect their assets.
• Rental Reimbursement – this coverage is typically higher than in a personal policy and covers a business owner should they need to rent a vehicle due to a covered loss.
• Drive Other Car  – this is an endorsement that can extend coverage to executive officers and their spouses while using a non-owned auto for their personal use.
• Hired and Non-Owned Coverage - this is one that seems to cause the most confusion. It is simply an extension of coverage to a rented or hired vehicle. Make sure that you check the policy language to ensure that Hired Physical damage is also included. Non-owned coverage can provide excess coverage over a borrowed vehicle, or if an employee uses their own personal vehicle, it can provide excess coverage over their policy if you have the proper endorsement – employees as insureds.
• Towing – higher towing limits are available. It costs more to tow a large truck than it does a small vehicle.

If you are thinking now that you don’t need a business auto policy because you don’t need this type of coverage, think again.

Most personal auto policies will exclude coverage if you are using your vehicle regularly for business use.
Now, keep in mind it does depend on which type of business you are using your vehicle for.

Another issue that is most troubling to business owners is how their vehicles are titled. If the vehicle is titled to the business and you are using it regularly for the business then it should be insured by a business auto policy.

Don’t wait until a loss occurs and find out that you don’t have any coverage because you did not have your vehicle insured under the correct policy. The benefits of proper coverage can far exceed the costs.

An office errand and your business auto insurance

Do any of your employees run errands for you? Sometimes a business owner can be faced with a liability exposure and not even know it.

Consider these scenarios:

• Your office manager stops by Office Depot to pick up some supplies for work on her way back from lunch.
• On the way home, your salesperson stops by a client’s office to get some paperwork signed.
• Your receptionist stops at the bank during lunch to make a business deposit.

What if they were involved in an automobile accident along the way?

Whose policy do you think would cover the loss?

Whose policy would cover the defense costs?

Who would pay for the damages to the employee’s vehicle?

Well, in Iowa, insurance follows the vehicle. Therefore, typically the employee’s vehicle would cover the loss first and then they may turn to the business.

Now I did say typically. What I mean by this is that it does depend upon what type of policy the business owner has and what their policy language states. Business auto policies are determined by how you have designated your insurance.

In general, you have three options for which vehicles you choose to cover.

• Autos your business owns
• All autos your business owns, hires or leases
• All autos used for the business, including those that your business does not own, hire or lease

It also depends on if you have employees listed as insureds and if you have Non-Owned Liability. Non-owned liability can act as excess over your employees personal policy.

For example, if your employee’s personal policy is not enough to cover the damages in the loss, then your business policy can pick of the difference up to your policy limits.

These are key factors that should be addressed prior to taking out a business auto policy or when you are completing your annual review. There are many other aspects to a business auto policy as well so stay tuned…

If it ain’t broke …

Do you know someone who has gone on vacation and come home to find two inches of water in the basement because a pipe broke or their sump pump stopped working?

Intermittent changes in our weather can wreak havoc on plumbing systems. As a matter of fact, frozen and broken water pipes are the second largest catastrophe next to hurricanes, in terms of the cost of damage. This may surprise some of you, however, water damage often goes undetected for several days before it is found ... and by then the damage is already done.

The good news is that water damage can be prevented.

Here are some tips and steps you can take to make insurance losses less likely during extended severe weather.

• Watch for ice dams near gutter downspouts. Keep gutters free of leaves and debris so melting snow and ice can flow freely. Ice dams can cause water to build up and seep into your house or business. 
• Keep your building heated to a minimum of 65 degrees. The temperature inside the walls where the pipes are located is substantially colder than the walls themselves. A temperature lower than 65 degrees will not keep the inside walls from freezing.
• Identify the location for the main water shutoff in your home or business. Find out how it works in case you have to use it.
• Disconnect hoses from outside spigots.
• If you are leaving your home to go on a trip or closing the business for a period of time, ask a neighbor to check your home or business regularly. Or simply have the water system drained by a professional to keep pipes from freezing or bursting.
• Install an alarm system that can detect water or low temperatures.

Most insurance policies will cover the resulting damage from broken or freezing pipes, however many policies will not cover backups in sewers and drains or flood unless you have the appropriate endorsement or flood policy in place.

And, of course, make sure to check with your agent to ensure that you have the proper coverage in place. If something is going to break, be prepared.

Don't be a copycat

Are you thinking of purchasing a new business? Or expanding your existing one?

Some may say you are “crazy” and others may say that “now is the time.”

While there are many legal issues that you need to take care of before you purchase a business, what I want to discuss are some of key insurance issues  that can arise out of expanding or purchasing an existing business.

When a business owner expands their business – whether they open up a new location or add an addition to their existing one – it is critical to discuss these changes with your insurance agent.  Insurance policies have limitations and you only have insurance for  what you are paying a premium for.

This is especially important when it comes to the increased inventory, improvements that you have made to the building (whether you own the building or rent it) and if you add any new employees. It is critical to let your agent know about these changes so the coverage can be added to the policy.

If you are opening a new location, it may make more sense to add a second location to your existing policy rather than starting a whole new policy. On multiple occasions I have come across this scenario and the owner simply did not know what his options were.

If you are purchasing an existing business – don’t just use a copy of the prior owner’s insurance policy. When you do that, you are “assuming” the prior owner’s coverage.  We all know what can happen when we “assume.”

Instead, take the policy to your agent and discuss your business in detail along with changes you’ve made so your agent can help you determine the coverage you need.

While the existing policy may have been adequate for the prior owner, it may not be the coverage you want or need.

Your needs have changed if you:

• spruced up the location with a remodel
• purchased new equipment
• hired additional employees

So be smart and communicate those changes with your agent to ensure that the coverage you need will be there when you need it.

It doesn’t always pay to be a copycat!

Are you managing your Workers' Compensation?

Most business owners are aware that they must carry Workers Compensation for their employees. However, many business owners are not very familiar with what workers compensation actually covers.

The Workers’ Compensation law requires most employers to provide benefits to eligible employees who have injuries arising out of and in the course of employment.

So who can be exempt?

• Proprietors (independent contractors)
• Limited liability company members and partners

These individuals are not considered employees but may elect to be covered by purchasing a valid workers’ compensation insurance policy specifically including the proprietor or partner.

What types of benefits are covered?

• Medical Benefits - The law provides for the payment of all reasonable and necessary medical care incurred to treat the injury. This includes reasonably necessary transportation expenses.

• Disability Benefits – Lost wages due to a work related injury

Things you may not know

There are time limitations on reporting claims -  If an employee is injured during the course of employment, the law provides that the employer must have notice or knowledge of an alleged injury within 90 days of its occurrence. If not, benefits may be denied.

An employer’s first report of injury must be filed with the workers' compensation commissioner when an employee alleges an injury arising out of and in the course of employment, which results in time lost from work of more than three days, permanent injury or death. The report is to be filed with the workers' compensation commissioner within four days of notice or knowledge of such alleged injury.

There is a Statute of Limitations - If within two years from the occurrence of the injury the employee does not receive Iowa weekly workers’ compensation benefits or file an application for arbitration, benefits may be denied.

If Iowa weekly workers’ compensation benefits have been paid, the employee has three years from the last payment of weekly benefits to receive additional benefits or file an action before the workers' compensation commissioner. If not filed within the three-year period, the benefits may be denied. This statute of limitation does not apply to medical expenses reasonably necessary to treat the injury.

So what can you do to help manage your Workers Compensation:

1. Improve your workplace safety: have a formal safety handbook and hold regular safety meetings
2. Inspect your equipment and replace or fix items that need repair.
3. Make sure your employees are wearing appropriate shoes, clothing, hats and glasses.
4. Implement a health program. Your employees can reduce their risk of injury if they are healthy and exercise regularly. Have an early return to work program in place.

Last, take advantage of the help offered by your insurance carrier.  Many of the carriers I work with have an abundant of resources available for their customers to use or purchase.

If you are a business owner that needs guidance, there are carriers that have a designated loss control person specifically available that can help you formulate some of these plans. This person can physically come out to your business, inspect your premises and help you get the ball rolling.

By being proactive instead of reactive you can help control the costs of your insurance premium. Feel free to contact me with any questions you may have

An insurance resolution list for business owners

A new beginning – that is what I like to call the new year.

Maybe you’ve procrastinated that phone call to your insurance agent. If so, now is a great time to start the new year right.

This is an excellent time to get you thinking about protecting your assets. Some of you may be laughing about that due to the volatile changes that we have had in the markets lately.

However, it’s especially important to properly protect whatever you have.

Sitting down with your insurance agent for 20-30 minutes to review and verify your policy coverage can give you peace of mind and make sure you are prepared in the event of a loss.

If you’re not sure what to review or talk to your agent about – start with the basics.

1. Verify all contact and address info.
2. Vehicle information – make sure you have the proper year, makes and models as well as VIN numbers listed on the policy.
3. Confirm all driver information.
4. Discuss and update sales and payroll information.
5. Discuss any new purchases you have made to confirm coverage.
6. And of course review your policy to confirm you have water and sewer back-up coverage.

This may sound simple, however, you might be surprised at what you uncover, especially if you have not looked at your policies in awhile.

If you are a business owner and need help with safety training or want to put together an employee handbook, your agent may have several resources available to you and often times they are FREE. 

So start your new year off on the right track and make your insurance appointments today.

Why do I need an insurance audit?

Well, the end of the year is upon us and something that often comes up with your business insurance at this time is your annual audit.

Ever wonder why you receive an audit from your insurance company? What are they looking for?

Well some of the main things they want to verify are:

• Job descriptions
• Payroll
• Annual sales
• Number of employees
• Driver information

All of these things help determine your risk classification and ensure that the insurance company is charging you the correct amount of premium for the risk that they are insuring.

It is important that this information is reviewed and updated on an annual basis because if it is not you can face some issues.

The most obvious being that you could be paying too much or too little for your insurance. Your rates are determined by the information they receive through your audit. When the insurance company receives it, they will adjust your premium accordingly with the information you provide. This can result in an increase to your insurance or a decrease in your next year’s premium.

This can be shocking to a new business owner if they haven’t updated their new hires and their payroll with their insurance agent throughout the year.

Probably the most important aspect of having this information correct would be in the event of a loss. If your business is not correctly classified you are running the risk of being denied coverage or worse having your policy voided due to misrepresentation.

Insurance companies have different risk appetites. Should you have a loss and during the investigation, the insurance company determines that your business is not an industry they would normally insure, they could possibly deny coverage and/or cancel your policy. 

Now you might think that this doesn’t happen, however, it can and very easily happens without you even realizing it.

Businesses tend to evolve over time.

• You may start a business and then add different components to it.
• You may change your focus altogether while keeping the same name.
• Or, you may simply change your insurance company.

When you do make these types of changes to your business it is important to keep your insurance company in the loop, so you don’t end up out of the loop should a claim occur.

Holiday cheer and your insurance policy

If you are one of the fortunate companies having an annual holiday party this year and plan on including alcohol in your celebration, make sure you assess your risk and review your policy for coverage.

While Dram Shop laws are typically geared toward establishments that sell liquor, there are social host liability laws that can apply.

Social host liability can impose liability onto individuals who provide alcohol to minors or obviously intoxicated adults who are then involved in an alcohol-related crash resulting in death or injury to a third-party.

Currently 32 states have some form of social host liability either through statute or case law - and Iowa is one of those states.

While we all like to have a good time and the focus of your party should be on entertaining, there are some preventative steps  you can take to lessen the possibility you'll be held responsible for your guest's actions after drinking too much.

• Host the event at a restaurant or bar licensed to serve alcohol, where professional waiters can monitor alcohol intake and politely cut off anyone they perceive has had enough to drink.
• Make sure that there is plenty of food available.
• Discourage guests from drinking excessively, and stop serving anyone who appears visibly intoxicated.
• Encourage employees to use designated drivers and provide alternative forms of transportation, such as free taxis.
• In extreme circumstances, you may have to take your guest's car keys and insist they sleep over.
• Make sure no minors are served

Another thing to think about is if you have coverage under your policy should a lawsuit be brought against you. Before you hold your party, make sure you are reviewing the dynamics of your party with your insurance agent. He or she will be able to advise you accordingly.

A little prevention can go a long way - and may even save someone's life.

A severed finger, a lawsuit and the right insurance policy

Panic is never a good business strategy. Just ask any savvy business owner.

The same theory can apply to insurance. Insurance is there to protect you and your assets in the event of an unfortunate incident. Let’s face it, with the way the economy is – a tornado, a flood, a natural disaster or a lawsuit could crumple any size business. However, there is no need to panic if you have the right insurance in place.

There was an article in the Des Moines Register this week about a local magician/actor/hand model who is suing Martha Stewart. Why? It appears that he had an unfortunate incident with a chair made by her company that was recalled back in 1997. This incident is alleged to have caused him significant injury. The article indicates that he has named Martha Stewart’s company and Kmart in the lawsuit.

If Martha has the right insurance coverage in place, she will not need to panic because her insurance company will provide a defense for her to help protect her assets. The same applies to Kmart.

That is the whole premise of insurance: to help you protect your assets.

• If you are sued, it can provide you with defense costs.
• If you are unable to occupy your space, it can help cover costs until you’re back in business.
• If you lose all of your merchandise and can’t operate your business, it can cover you for lost income.

There are many other benefits as well.

The intent of insurance is to restore you to your pre-loss condition. However, the key element is that you need to have the right coverage in place in order to reap any benefits.

This is where having good communication with your agent is so important. So don’t hold back information. Sometimes business owners think that if they tell their insurance agent too much then it is going to cost them more.

Now I am not going to say that doesn’t happen, but most of the time it is a misconception. When information is withheld, then the client can be put into the wrong product and that can cause everyone to panic should a loss occur.

Insurance for employee lawsuits

Wouldn’t it be great to see your company’s name on the front page of the newspaper? Or on the evening news?

Not if it was because a former employee was suing you.

Everyone thinks it’ll never happen to them. But are you and your business protected if you’re sued by a former employee?

Many business owners don’t realize the benefits that insurance can provide them. I often come across insurance policies that are very generic and essentially do not provide much coverage beyond general liability.

This concerns me, especially now during the economic crisis that we are facing. One lawsuit can easily ruin a business even during good economic times. Imagine what it can do when times are tough.

While I understand the concern to not be over insured, I do feel it is important to be adequately insured.

A coverage that is available now and that can help a business owner in a situation like this is Employment Practices Liability Insurance (EPLI).

Recognizing that smaller companies need this kind of protection, some insurers provide this coverage as an endorsement to their businessowners policy (BOP). The coverage limit is typically minimal so, depending on your company size, a separate EPLI policy may need to be purchased.

EPLI provides protection against many kinds of employee lawsuits, including claims of:

• Sexual harassment
• Discrimination
• Wrongful termination
• Breach of employment contract
• Negligent evaluation
• Failure to employ or promote
• Wrongful discipline
• Deprivation of career opportunity
• Wrongful infliction of emotional distress
• Mismanagement of employee benefit plans

In addition to paying a judgment for which the insured is liable, it also provides for legal defense costs, which can be substantial even where there has been no wrongdoing. This is a major benefit of this coverage as the cost of defense can sometimes be the largest cost factor of the claim.

Are you insured in case of lawsuit from a former employee?

If your answer is “I don’t know,” you might want to take a look at your policy or contact your agent to find out. And be sure you have an attorney who understands business law.

In this case the benefits can outweigh the costs.

Eight ways to reduce your insurance costs (without compromising coverage)

It’s no surprise that everyone is feeling the financial crunch these days – especially if you’re a small business.

You may need to find some creative ways to save some money any way you can. Here are a few ways that both small businesses and consumers may be able to cut down on the costs of their insurance premiums without compromising their coverage.

1. Shop around.
   Prices vary from company to company, so it pays to shop around. The easiest way to do this is to work with an independent agent who has access to a variety of carriers. Make sure you work with someone who understands your business.  It is also important to pick a company that is financially stable. Check the financial health of your potential insurer with rating companies such as A.M. Best and Standard & Poor’s.
2. Look at group rates.
   Purchasing your insurance through a business or professional organization can save you money. The savings typically outweigh any member dues. General business organizations, such as your local Chamber of Commerce and the Better Business Bureau also offer business insurance discounts. Your local home-based business association may offer lower prices on home-based business insurance.
3. Choose a higher deductible.
   Deductibles represent the amount of money you pay before your insurance policy kicks in. The higher the deductible, the less you will pay in premiums for the policy.
4. Consider a package policy.
   A Business Owners Policy (BOP) is often significantly less expensive than a self-designed plan. BOPs include: property insurance for buildings and company owned contents; business interruption insurance, which covers the loss of income resulting from an insured event (such as a fire) that disrupts the operations of the business; and liability protection, which covers a company's legal responsibility for the harm it may cause to others.
5. Set up a risk management/loss reduction program.
   Insurers will often lower your rates if you put a program into place that will minimize losses from fire, theft and employee and customer injuries. These can include workplace safety training programs, disaster preparation and human resource intervention. Consider installing a security or fire system. If your line of business uses vehicles, install anti-theft devices and hire drivers with good driving records.
6. Consider relocating your business.
   Deciding whether to relocate depends, to a large extent, on what kind of business you operate and where you move to. Moving from a downtown area to a suburb, for example, may reduce premiums on your property and vehicle insurance, and even your workers compensation insurance.
7. Work closely with your agent or broker.
   An insurance professional can provide invaluable advice to help protect your business. It is important to keep your insurer informed about any changes in your business operations. This includes major purchases, expansions or changes in hiring or in the nature of your operations.
8. Have the right amount and type of coverage.
   Having the right amount and type of coverage along with a carefully developed business plan that includes disaster preparedness can save you money in the long run. Be sure to keep your agent fully apprised of any changes within your business that might necessitate changes to your insurance coverage. Such changes may include: adding employees, expanding your business, increasing your inventory or materials, and purchasing major equipment such as tools or vehicles and adding suppliers.

Now some of these items may sound simple. However, I continually visit with consumers and small business owners and often find that they overpay on their insurance. I have discovered incorrect addresses, coverage for buildings, personal property and vehicles that the owner no longer owns and policies that are pieced together rather than packaged.

These are items that can greatly affect your insurance premium.

I know, many of you don’t like to deal with your insurance, but that is why you have an insurance agent. Now is a great time to pick up the phone and set up a time to review your coverage – to make sure you’re getting the most for your money.

One word can change the meaning of your contract

Whether you are signing a lease for some office space, purchasing a home, bidding on a job, or selling your business, you’ll have to sign a contract.

When you do … be aware of the small print.

Many contracts have a hold harmless agreement or indemnity clauses that can cause future repercussions to you after you have signed your lease, completed your contracted work, or even sold your business.   

So what does this have to do with insurance?

Surprisingly it has a lot to do with it.

Often times there will be insurance requirement language as well as a request for the leasing company or business to be added to your policy. This is typically done through an endorsement.

Agents are often asked to add an additional insured to an insurance policy and/or provide clients with a certificates of insurance. This endorsement actually provides coverage to those additional parties should a loss occur and can protect their interest as well.

Now make no mistake, we are not attorney’s. However, your insurance agent should be your adviser to help you manage your risk.

Your agent should be aware of the language in your contract, not to advise, but to ensure that your policy is endorsed properly and that you are protected.

Managing risk is vital to any business owner. If you don’t have coverage in place when you need it, it can be detrimental to your business -- not only with liability, but with all other costs associated with a loss.

Most people only associate insurance with liability, but in reality it is so much more than that. It’s protection for loss of income, extra expenses you could incur, reimbursement for your property damage, defense coverage and more.   

Unfortunately, sometimes people don’t read their contracts before they sign them. Maybe they compare it to reading their insurance policy. A lot of words that may not make sense, so why bother?

What is really concerning is when they don’t have their attorney review it prior to signing. This is where problems can begin.

So the next time you enter into a contract, you may want to think about having an attorney look it over.

An attorney can consult with your agent, review and explain the contract to you and offer suggestions to make sure that your best interests are protected.

You may be surprised by this … but contracts are negotiable. So if you happen to find yourself entering into a contract and are seeing words like: 

• any
• all
• persons
• whatsoever
• nature
• whole
• wholly
• directly
• indirectly

...you may want to seek your attorney’s advice prior to signing it.

Recalls and more that can close your door

According to a recent article I read,  the Centers for Disease Control and Prevention estimates that there are 76 million cases of food-borne illness that occur each year. There has been an alarming number of food contamination outbreaks in the past two years putting America’s food supply under intense scrutiny.

Just earlier this year, we had the largest beef recall in history. The U.S. Department of Agriculture ordered 143 million pounds of beef to be recalled from Chino-based Westland/Hallmark Meat Co.

Westland/Hallmark provided meat to the National School Lunch programs and about 150 school districts. It also provided meat to two fast food chains: Jack-in-the-Box and In-N-Out Burger.

So what does this mean to the retailer or restaurant owner?

• Who is liable?
• Do you have coverage for this under your insurance policy?
• Wouldn’t your General Liability coverage cover it?
• What other ramifications are there?

Well, the law is clear. Everyone in the chain of distribution is liable.

If someone becomes ill while eating at your establishment or from food they purchase at your store, you can be sure the first person they will name in a suit will be the store/restaurant owner. Things will just progress from there.

In regards to insurance, the area that a business owner with this type of risk should be concerned with is the Products and Completed Operations Coverage. This is an area of coverage that I have noticed that does not get much focus.

This type of incident is a huge exposure for distributors, manufacturers, processors, retailers and restaurant owners – these industries can’t afford to have mediocre limits for this coverage. The Products and Completed Operations limits is the part of the policy that will come into play should a loss like this occur.

Other ramifications can be business interruption. Often times the establishment(s) can be shut down while the appropriate agencies complete their investigation. Loss of revenue is immediate should this occur. Having business interruption coverage on your policy can help to keep your monthly income coming in while your investigation is underway.

Brand image can also be damaged. With having the proper business interruption coverage in place it can also help the establishment stay afloat while it rebuilds its reputation in the community until it reaches its pre-loss operating condition. The rebuilding phase can be the most fragile one. If proper business interruption coverage is not in place, many companies may have to close their doors.

Even if you're not in the restaurant/food industry - you may face situations that put your business at risk.

I encourage all business owners to be aware of their risks, consult with their agents to ensure that they have the proper coverage for their industry.

Are you prepared after a loss?

In light of our recent, major catastrophic events that have occurred with tornadoes, flooding and hurricane Gustav, you not only have to be prepared before the loss happens, you need to be prepared after the loss happens.

For small businesses, many claims will be due to loss of business income. Good record keeping will help you recreate your records and have the information available to submit to your claims representative. So what else can you do?

Well, the Insurance Information Institute offers the following suggestions:

• Contact your insurance company or agent. Your insurance company will have representatives available to take your information and get your claim assigned to a qualified adjuster who will contact you as soon as possible to inspect the damage.  Your agent can also report the loss to your insurance company or provide you with the appropriate claim contact information.  If you have had to evacuate, make sure to give your  insurance representative or agent a telephone number where you can be reached. 
• Take photos of the damaged areas. These will help you with the claims process and will assist the adjuster in the investigation.
• Prepare a detailed inventory of all damaged or destroyed personal property. Be sure to make two copies—one for yourself and one for the adjuster. Your list should include a description of the items, dates of purchase or approximate age, cost at time of purchase and estimated replacement cost.
• Collect canceled checks, invoices, receipts or other papers that will assist the adjuster in obtaining the value of the destroyed property.
• Make temporary repairs if you are able to access your property. Cover broken windows, damaged roofs and walls to prevent further destruction. Save receipts for supplies and materials you purchase. Your insurance company will reimburse you for reasonable expenses in making temporary repairs. (This is called mitigating your damages and it is something you must do to protect it from further harm.)
• Get a detailed estimate for permanent repairs from a reliable contractor and give it to the adjuster. The estimate should contain the proposed repairs, repair costs and replacement prices.

Now, you might be thinking that you are doing all of the work with a list like this. However, many insurance companies put together special phone lines for victims to call in order to help expedite their claim process and they often dispatch CAT Teams to assess the damage  and provide extra support for their local offices.

Depending on the damages, they may even set up additional drive-in locations that can expedite many claims for customers.

Analysts predict that the damage from Gustav appears to be lower than previously expected. So, not to worry right? Well, there is still some concern. Even though this particular loss maybe less than expected, catastrophe losses add up. With four more storms on the horizon – we need to be prepared.

And if you think you've survived the summer storms - remember that winter is right around the corner!

Are you protecting your customer's identity?

Do you have protective measures in place to guard your customer’s information?

Just recently, the Department of Justice “busted” one of the largest identity theft cases they have ever prosecuted – 40 million credit card numbers were stolen from nine major U.S. retailers.

Now, you might think this type of thing only happens to small retailers.

It doesn’t. In this particular case Office Max, Sports Authority, Barnes & Noble, Forever 21 and DSW Inc. were among the companies targeted.

Maybe you think this can only happen to large companies.

Well, hackers do not discriminate. If they find a weakness, they will capitalize on it regardless of the size of your business.

So what can you do?

For the business owner:

1. Make sure your Data Security Standards are compliant with the PCI Standards.
2. Test your computer systems (several companies specialize in computer security).
3. Do business with companies you know and trust.
4. Educate your employees about avoiding scams.
5. Complete background checks on your employees. Many cases of identity theft come from employees.
6. Review your insurance policy. I know, I know, no one wants to read it – however, the information you will find can be extremely pertinent should you have a situation occur. Insurance companies have different interpretations of what electronic data means and policies have limitations on coverage for employee dishonesty as well as exclusions.

On a personal level:

• Monitor your checking accounts and credit card balances regularly.
• Shred documents you no longer need. Thieves will go through your trash.
• Guard your personal information - don't give information out over the phone in an unsolicited call.
• Request a copy of your credit report at least annually.

For added protection, you can also purchase some identity theft insurance. This can be a separate policy, or simply added on to your homeowner’s insurance policy. Contact your local insurance agent for more information.

The limits of an Identity Theft insurance policy can vary among carriers and will typically include:

• Lost wages reimbursement
• Help pay for attorney fees
• Costs incurred to repair credit
• Costs for certified mail to law enforcement, et cetera

How is the government helping you?

In 1999, The Justice Department established its Internet Fraud Initiative. In 2006 the president formed an Identity Theft Task Force and directed it to develop a coordinated strategic plan to combat identity theft. This includes ways to improve the awareness, prevention, detection and prosecution.

Check out their website - there is a ton of information available.

On the local front – Iowa Attorney General Tom Miller has enacted several policies and procedures that provide solid resources to the public:

• A free guide to victims of identity theft.
• One free credit report per year from each of the credit bureaus.
• Consumers can now freeze their credit reports.
  

For more information check out their website.

Are you hiring?

Whether you need a full-time employee, part-time employee or someone to work on a special project or two … there’s more to know about hiring than you may think.

One of the most important things a business owner needs to know is the difference between an employee and an independent contractor … especially as it pertains to your insurance coverage.

This is how the IRS defines it:

The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.

Consider this example from the IRS:

Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. She is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. She also performs additional electrical installations under contracts with other companies that she obtained through advertisements. Vera is an independent contractor.
How can this affect your insurance?

It can affect your insurance in several ways:

• Risk classification.  Most General Liability policies for contractors are classified on a payroll basis as well as the percentage (%) of sales paid to subcontractors.
• Workers Compensation premiums. Since premiums are payroll based, if you are using Independent Contractors (i.e. subcontractors), they are not eligible for Workers Compensation benefits.
• Certificates of Insurance.  Many insurance companies require the general contractor to obtain copies of the Certificate of Insurance from the subcontractor. They often require the same limits of liability and the General Contractor must be listed as an additional insured. This is probably the most important step that is overlooked when it comes to protecting the business owner from liability.
• Audits. Insurance companies typically conduct annual audits to check for proper classifications and review certificates of insurance. If this information is not accurate, you may be subject to pay a substantial amount of back premium.

So what is happening in the industry?

Well according to inc.com’s recent article, Governor Culver has recently created a task force to gauge the extent of employee misclassification and report back with recommendations within 60 days. Iowa lawmakers are cracking down on employers who misclassify workers as independent contractors to avoid payroll taxes and benefits.

So if you are a business owner who makes it a practice to use independent contractors, make sure you educate yourself on this definition and review your policies for proper classification.

It is typically less expensive to make any necessary adjustments now rather than later and be subject to any additional fees or fines.