Include/Exclude Option on Work Comp

As the Owner of a business, you have the option under the Workers Compensation Laws to either include or exclude your payroll from your policy.  So, the first question you would ask is “Why would I want to pay for work comp insurance on myself when I would never file a claim?” Besides, you have health insurance, right?

The Owner of a small business often finds they become the installer, delivery driver, salesperson, receptionist, etc. 

Consider this:

You have a large job to finish and your best worker is out sick for the day.  You decide that you will have to throw on some boots and do it yourself.  You get to the job site and climb the ladder to start the job.  For some reason, the ladder becomes unstable and you fall 15 feet to the cement below breaking your arm and causing a serious head injury.  3 months earlier, you decided that it would be better to exclude yourself from work comp coverage because you hate the fact that you are required to purchase this to do business and you want to pay as little as possible for it.  Suddenly, we have a very serious situation to address.  Will your health insurance take care of your hospital bills, medication, rehab?  Maybe.  But it isn’t very likely as most health insurers specifically exclude work-related injuries.  NEVER ASSUME THAT YOUR HEALTH INSURANCE WILL COVER THIS!! 

I highly recommend that all Owners, Officers, Partners, or Members of a company include their payroll on Workers Compensation Insurance.

Here is the breakdown in Utah:

LLC Members, Partners, and Sole Proprietors: Are automatically excluded from the workers compensation coverage, but by written request may elect to be included. Each member, partner, and or sole proprietor that elects coverage will be rated on a stated amount of $39,000 in payroll regardless of the amount of money paid to them by the company (Utah stated payroll effective 12/01/2010).


Officers of a Corporation: Are automatically included in the workers compensation coverage, but by written request may elect to be excluded. Each officer that does not opt out of coverage is subject to a minimum payroll of $39,000 up to a maximum payroll $159,000 per officer (Utah stated payroll effective 12/01/2010). Each officer's payroll that falls in between is subject to their actual payroll.

If you decide to Exclude yourself from Work Comp coverage then there are other options to make sure you are protected in the event of an accident which MIGHT include a rider on your health insurance policy, a long-term disability policy, a life insurance policy, etc.

The safe thing to do is to add that little extra payroll into your Workers Compensation coverage as you never know from day to day which hat you will be wearing to work.  Contrary to somewhat popular belief, the work comp system is a great way to protect owners and employees from accidents in the workplace that affect them and their families.  If you have any questions or would like to discuss this in more detail please contact me.  BE SAFE OUT THERE!

OSHA Crane and Derricks Rule

THIS NEW RULE WILL HAVE WIDESPREAD IMPLICATIONS FOR GENERAL CONTRACTORS, SUB-CONTRACTORS, PROJECT OWNERS, CRANE OPERATORS, TRUCKING COMPANIES, AND OTHERS.

Cyber Liability

I found this article at http://www.riskandinsurancechalkboard.com/ it provides great information and advice on Cyber Liability.  If you store private information on your company computers you will want to consider purchasing this type of insurance.  Any storage of personal information such as credit card numbers, social security numbers, etc. can expose you to this type of loss which is not covered under your General Liability.  The article follows:

I am sure in the 1960's TV show Lost in Space, Will Robinson never envisioned that the Galaxy would suffer a greater threat from cyber hackers than asteroids. Most businesses today are not insured for the criminal risk of unauthorized access to their network systems. These uninvited guests no longer just cause a minor disruption or annoyance. According to the Ponemon Institute study of 2009, the average cost of a data breach globally is over $3 million. Some of the costs incurred are system damage, recovery costs and lost business due to business disruption, as well as negative publicity that results. The focus in this article is the necessary costs associated with notification and credit monitoring for those affected. There are insurance products in the marketplace designed to address cyber liability, but until recently there has been minimal interest.
What has been learned in recent years is that theft and fraudulent use of personal information is not always the major cost of a breach in security. If a corporate database is infiltrated by an outsider, there is the potential infection of personal data that is stored, financial and credit card information of customers and social security numbers of employees. When this occurs, there is a need for individual notification to anyone who may be exposed to the breach.There are over 40 states now that have legislated notification requirements for security breaches and more stringent  federal guidelines are expected in the future.

According to the Ponemon study, the actual cost for individual notification and credit monitoring is in excess of $200. On an individual basis, this may not appear to be that catastrophic. However, consider the need to notify 10,000 customers of possible compromised access to credit/debit cards coupled with post-breach credit monitoring.  We are now talking about costs in excess of $2 million. This is just the “damage control” expense side of the breach and does not begin to address any third party litigation that may follow.

These remediation costs, along with any regulatory fines or penalties, have been an area where most insurers offer minimal limits of coverage. Today, more insurers realize that these costs are the major focus and need for this insurance. Darwin Insurance and Allied World Insurance now extend this coverage up to full policy limits, which also includes regulatory fines or penalties. It is clear this coverage continues to evolve in line with legislative changes and a better understanding of the exposure to loss.

It would be wise for any business responsible for personal information -- credit information, social security numbers or medical data -- to evaluate the need for this insurance. In the words of the Robot, “Danger, danger Will Robinson!”. It is best to be aware of the dangers associated with cyber business risks even if you don’t buy the insurance.

Insuring Your Auto Fleet

The majority of business insurance claims come from their Auto Insurance.  The more vehicles a business has on the road, the more likely they are to have claims.  However, there are several things you can do as a business owner to reduce claims, get the best rates, and make sure you are properly insured.

First, what can you do to reduce claims? 

1. Hire quality employees and check their driving records before allowing them to drive company vehicles.  A general rule in insurance is that frequency leads to severity.  If a driver has a number of violations or accidents on their record, they are far more likely to be involved in a serious accident.  If someone is driving a vehicle with a company name on it and they injure another person, that person will likely come after the company rather than the individual because they perceive that is where they will get the most money.  So, hire people that represent your company well.
2. Maintain your vehicles.  Companies with large auto fleets will find that it is a pretty big expense to constantly change out tires, replace brakes, fix windshields, and service the engine of all those vehicles.  Therefore, they can get lazy in doing it or will put it off because of the expense involved.  This simple step can prevent major accidents from occurring.
3. Implement company policy for drivers.  There should be a zero-tolerance rule for driving under the influence of any drug, rules for cell phone use, speed limitations, seatbelt use, using a guide while backing, limiting distractions, and whatever else you feel is appropriate.

How do I get the best rates?

1. Reduce claims by implementing the above controls and showing the insurance company that you monitor and enforce them.
2. Show pictures of an organized, clean, well-maintained fleet of vehicles.  This shows the insurance company that you take pride in your assets and that you take the responsibility seriously to do everything you can to reduce risks.  If a loss control visit it performed and the insurance company finds a fleet of vehicles with cracked windshields, worn tires, safety violation issues, etc. they are unlikely to offer much credit on their insurance quote.
3. Stay with one insurance company for several years as long as they remain competitive with other markets.

How do I know if I am properly insured?

1. Place your insurance through a quality agent who knows your operations and is able to advise you on all aspects of Auto coverage.
2. Use the same insurance company for your Auto and General Liability insurance.  There are several gray areas as to which policy should respond in certain situations.  Using the same company will eliminate any questions as to who should pay the claims.
3. Make sure you are insuring your business property and property of others that you carry in your vehicles or on your trailers.
4. Purchase an Umbrella policy that you feel comfortable with so you know that you will have adequate limits in the event of a large claim.

These are only a few things to think about when trying to properly insure your company vehicles.  Please contact me if you have any concerns or questions about your Business Auto Policy.