Risk & Business

Here is the scenario, your best driver in your company got a DUI on the weekend after leaving a restaurant and blowing a .08 at a checkpoint. This driver has had a excellent record up till this unfortunate situation. Now he has lost his license and cannot drive for your business for 6 months. Its a tough burden on your company but you make arrangements and keep the driver on as an employee waiting for the suspension to end. Finally the day arrives and he gets his license back. You notify your insurance company that you wish to add him back on as a driver in your fleet. The insurance company refuses to allow it and tells you he cannot be a covered driver for another 2 years!! This scenario is happening more and more as insurance underwriting standards have become tougher than state driver licensing laws. This usually adds up to more headaches and higher premiums for business owners. The reason for this can be found in the courts. Insurance company claim payouts...

A recent survey of  business owners on what they felt were their top risks, found that the risk of business interruption is feared the most. With tight margins and a continued sluggish economy , business owners know that they cannot afford for their companies to be down for any amounts of time. With this in mind,  let's take a look at the top 5 risks of business interruption.  Supply Chain issues tops out as the number one concern. Most businesses depend on just a few main suppliers or vendors. This dependency has a major financial risk to the business if the flow of goods or services were to be interrupted or stopped all together. Cyber Crime falls in as the second biggest risk. This is a growing problem that does not show any sign of slowing down. Rounding out the last three are Fire, Natural Catastrophes, and Machinery Breakdown. Keeping the business open needs to be a main talking point for insurance professionals as they discuss risk management strategies with owner...

There is a lot of talk about the sharing economy. Businesses that share resources with other businesses for money, is rapidly increasing. An example of this would be Company A  allowing a salesmen from Company B to share a ride in a company auto, for a small fee. Property and equipment sharing is also another example. This isn't new. Businesses share things with other peers all the time. What is different is money is now exchanging hands. When money is involved you create contracts. When there are claims involving these sharing situations standard business owners policies may not cover the contractual relationship a sharing risk creates.  The insurance industry is starting to respond to this trend but not as fast as it is growing.  Make sure you contact your insurance professional and check your policies if you are sharing your business resources.  It may seem like a great way to make extra profits, but you could be risking more than you realize. Until next time be c...

Many business owners allow some personal use of company vehicles by employees. Mostly this is for minor business type activities after hours, emergencies, or general accommodations. However in the age of big data, business owners are getting a wake up call.  A quick review of an employee motor vehicle record (MVR), an employer can assess if  fines, accidents, or other violations were after hours in a company vehicle. What is being revealed is that employees are driving a lot more with business autos, than was even expected. One example, is when a DUI shows up on an employee MVR. Employers find out their employee stopped on their way home to a local bar or restaurant and registered a DUI in a company truck.. The bad part about this is the business owner now has a driver that can no longer drive for work and also the business was exposed to high risk due to the driver's irresponsibility. There are many other examples of the ...

The value of mandatory post accident drug testing as a safety and risk management strategy, has been clearly demonstrated for many years. These policies have helped business owners protect employees from injuries and also reduce the costs of insurance and risk. However this has now changed. OSHA has put into effect a new rule that protects employees from actions by employers deemed to be retaliatory. Mandatory drug testing is one of those actions. OSHA wants employers to have a more balanced approach which limits post accident drug testing to situations from which drugs would have likely been involved in the accident. In other words the employer should at least suspect a reasonable possibility that drugs caused the accident. This may be simple in theory but in practicality it will be extremely difficult for employers. Training employers to accurately spot drug use between injured employees so as to determine who gets the drug test and who does not, is a recipe for problems. Mandatory d...

There is a new sheriff in town when it comes to catching insurance fraud. Social media has become a fraud investigator's best friend.  Over and over individuals who have claimed work comp injuries or disability injuries are getting caught by their posts on social media. Even the courts are agreeing with the insurance companies ability to use social media against claimants. Critics however,  are saying that it is an invasion of privacy. In addition there has been some question of the ethics of "spying" on claimants in order to deny their claims or arrest them for insurance fraud. These questions are not stopping the industry as they are now using social media investigative software to track people. This is going to get interesting as this type of crime stopping continues to develop. What is amazing is the amount of fraudsters who continue to expose their true intent on social media with no worries about getting caught. Keep your eyes on this one folks. Until next time be c...

The experience, of buying business insurance, has been the same for over 100 years.  Most business owners look at it as a necessary evil, and something they hate doing.  Well, times are changing. With many of the biggest insurance companies in the world investing in tech, buying business insurance on your cell phone is not to far away. In fact there are platforms right now that allow you to do it. The insurance buying process will get easier and more efficient over the next few years. Small business owners will be able to utilize their mobile devices to interact with their agents and brokers , who in turn will connect seemlessly with the insurance marketplace. In addition the role of the insurance agent/ broker as a trusted advisor and "go to"  professional  will still be in high demand. However they will need to be tech enabled to allow for an easier communication and processing experience in order for consumers to find them valuable.  All this innovation will...

Hiring employees and managing them to help your company grow is a daunting task. A strong insurance portfolio and good risk management is needed especially when you have to fire someone. Most business owners work in States that have employment "at will" which many believe make it easier to terminate an employee. This is just not the case. Federal laws and regulations have set up protections for many employees. FMLA, Anti-Discrimination Laws, and Fair Employment Standards Act, are some of the laws that protect employees from "wrongful termination". Also,  many states have their own protections.  Firing can be even more problematic when you take into consideration the employer's responsibility in managing the run off of the health and benefit plans. To have employees work for you, means that you need a good insurance and risk management strategy. The risk of a wrongful termination lawsuit is greater than its ever been. Make sure your work comp and Employers ...

Many business owners are using drones in their daily operations. Surveying job sites, properties, and aiding in repairs, are all practical uses of drones. However there could be problems with insurance. The Federal Aviation Administration now requires any drone .55lbs or greater to be registered. In addition pilots must be certified if the drone is to be used commercially. This is where the insurance issues come in play. Most commercial liability policies exclude damage caused by aircraft. Once a drone becomes registered it is now classified as an aircraft. Business owners are using their registered drones and not realizing they have no coverage if the drone was to damage something or someone.  Also, the property policy will not cover physical damage to the drone itself. There is good news however. The insurance industry is responding with endorsements that add coverage for the use of drones. Also there are special insurance programs that c...

The state of Texas currently allows qualified employers to "opt out" of the work comp system. This allows  businesses to take care of worker injuries outside of the rules and regulations of the law. Proponents of this option are testing other state legislatures in an effort to mirror Texas. Recently, Oklahoma courts declared this to be unconstitutional , but the fight for "opt out" goes on. Work comp laws were put in place many years ago to make sure employee work related injuries were taken care of and the employers were protected from injured worker lawsuits. This was deemed the "exclusive remedy"  between employees and employers. It has worked well for almost a century. However businesses have been plagued with skyrocketing work comp premium costs and rising medical costs. So business owners are looking for a way to control these costs and feel that opting out of the work comp system may be the ticket.  The risk for  business is they no longer get the ...

In a recent report from the National Society of Actuaries, the life expectancy for Baby Boomers, GenX and Millenials has dropped 6 months. Now I know what you're thinking, "who are these actuaries and what do they know?"  Actuaries are those people that take all of the big data that is out there and figure out insurance rates as well as life expectancies for the insurance industry. Currently a 65-year-old man can be expected to live to his 86th birthday. A woman at the same age gets a few more years, to 88. For Millennials, a 25-year-old man has a 50/50 chance of seeing age 86 and 11 months and a Millennial women has a 50/50 chance to see age 90. Here is the bad news. These projections are 6 months less than the same projections from last year. The actuaries have seen the numbers decline because the health of people overall has deteriorated. Obesity, liver disease, stressful living, are all factors that are reducing life expectancy. It remains to be seen if this is a tre...

Small business owners need to understand the difference between what insurance companies consider  water damage versus flood damage. This is important because water damage may be covered under standard property policies. Flood damage is usually not covered and has to be bought from the National Flood Insurance Program (NFIP). So let's simplify what you should know. If water comes up from the ground, runs off from heavy rains,  or inundates areas around lakes, streams, rivers, or oceans, then it is considered flood and is not covered by standard property insurance. When pipes rupture accidentally, building damage allows rain in, or internal water containers burst or crack, this is considered water damage and is usually covered. With this simple way of understanding the difference, it is clear that every business needs a flood insurance policy to protect their property.  Flooding from rain, and over flows of bodies of water continually surprise business owners when their ...

Trucking is a necessity for our economy, as  the flow of goods and services depends on it. However small independent trucking companies are seeing their insurance premiums increase. In addition some small truckers are having trouble finding insurance companies that will even insure them. So what is the problem?  Actually there are many issues causing the insurance challenges for truckers. First there is the increased reporting that insurance carriers have access to on every truck on the road. Federal reports/scores, on driving practices, inspections, out of service rates etc... are making decent small truckers look worse. Insurance companies are putting a lot of weight on these scores and rating policies or not writing policies based on them. Also, small business truckers are having a tough job finding qualified drivers. The trucking lifestyle is not appealing to many younger drivers. In addition the tougher standards on motor vehicle records disqualifies many potent...

In today's work environment small business owners find themselves working farther from the city or town they are located in. It is not uncommon for companies to send employees to other states to work and complete jobs. This is especially true in areas where small business locations are close to state lines. So the question that gets asked quite frequently is ,"If my employees get hurt in another state are they covered?"   The answer is "it depends",  and sometimes it could be "no".  Let me explain this in more detail. The work comp policy that covers your employees injuries will cover in most states as long as the jobs or work is temporary and the policy is properly written to include the respective state. If the state is not represented on the policy then there maybe no coverage. Some states have their own work comp programs (monopolistic). To get coverage you have to buy into their program.  Your policy would be use...

Attention all small business owners with truck fleets, you have to use the new online registration system to comply with the Federal Motor Carrier Safety Administration's (FMCSA),  new guidelines by Jan 1 2017.  This new online system applies to all fleets that have USDOT numbers. The federal agency will only accept electronic filings using the online forms. This means starting in January of 2017 you will no longer be able to submit paper forms or faxes.  Also starting in 2017, identifiers such as MC and FF will no longer be used.  So what are you to do?  You need to go online through the FMCSA's online portal and set up an online account. This account will allow you to be part of this new Unified Registration System. All filings and financial responsibility proof will have to be in your electronic account to avoid penalties. You do not have a lot of time to get this done as January 2017 will be here before you know it. You also may want to hire a third party p...

As a small business owner you are constantly battling the cyber criminals who are  trying to bust into your server and steal your data. If you haven't addressed cyber security with a modern risk management approach, you are opening yourself  up for potential problems. So with that in mind, let's briefly discuss the risk management of cyber security.   As a business owner you need to analyze some key risk indicators.  They are: ,   1) What would be the financial impact from a cyber hack? 2) How resilient are we if we did have an attack?  3) How imminent is an attack on our data?  If you can answer these questions honestly about your business then you are on your way for a solid risk management plan. The hard part is finding the answers. There are a lot of cyber risk checklists and analytical tools out there to assist but no matter how difficult you have to get started. Also don't forget to buy Cyber Liability Insurance. These policies...

Many small business owners see the coverage "uninsured and underinsured" motorists coverage on their business auto policy, and do not fully understand what it protects.  I thought I would write a few lines that may help with this understanding. Uninsured and underinsured motorists (UM & UIM) coverage protects you, the business owner , from damage with drivers that meet this definition. Based on recent studies, 25% of all drivers either have no insurance or very little insurance. The minimum coverage in many states to have legal auto insurance can be as low as $15,000 liability limits. If you get hit by a driver in a minimum limits auto policy,  they can only offer the $15,000 to pay for your auto damage and your injuries. This leaves you with a potential big gap. That is where your uninsured and underinsured motorists coverage kicks in. This coverage will pay for your damages and repairs and also help pay injuries and lost wages. It is also ve...

With the new OSHA rules mandating that employers report any employee hospitalizations, heat related issues have garnered some attention. Prior to the new reporting rules, only multiple employee hospitalizations from one incident had to be reported. In heat stress related claims, very few multiple events occurred so there was very little reporting to the Feds. Now many employers find themselves having to report when an employee gets heat stress on the job and has to go to the hospital for hydration and monitoring. Heat related cases are common in the summer months for workers who spend their work day outdoors. Now a usually non reportable , has to be reported to OSHA. The Feds are taking notice since the amount of reported cases has increased this year. Fines have followed with some "willful" penalties assessed to employers. So this summer take some risk management steps to avoid having your employees get heat stress. here are some steps as noted by the Business Insurance Jour...

During this time of the year many small business owners enjoy throwing summer picnics for their employees and families. The events usually include food , alcohol and fun activities. Unfortunately this combination causes some things to happen. So the question comes to mind, who is responsible? Employees that get hurt during employer sponsored picnics could file for work comp benefits. Some state jurisdictions will allow these type of claims. A lot will depend on the circumstances surrounding the injuries however.  If a family member of an employee gets food poisoning from bad egg salad, is the business owner liable?  Maybe, maybe not, the good news here is the business general liability would cover the claim if the business if found to be liable. What about alcohol related claims , is the business liable?  Again , possibly, but the general liability policy will cover under the clause of host liquor liability, unless you are selling the alcohol and deemed " in the busines...

Many small business owners get confused when it comes to insurance. It can be down right intimidating.  Understanding the umbrella policy is one of those intimidating items. Every small business owner needs one but only a low percentage actually have them in place.  So let's take a few minutes and clarify what the umbrella policy is and why you should buy one. An umbrella policy is extra protection over your business policy, auto, and work comp all in one form. It is also very inexpensive when compared to other lines of insurance. An umbrella policy can also add extra limits of liability coverage even if you only have one underlying policy. You do not have to have a lot of other policies to have an umbrella. So if you only have a business owners policy covering your small business and no auto or work comp, you can still have an umbrella policy over top adding an extra limit of coverage. Most umbrella policies add another 1,000,000 of coverage, but this limit can be increased ...