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robintek

Jun 01
Love0

FAQ’S ABOUT HEALTH SAVINGS ACCOUNTS

By Life and Health

A Health Savings Account (HSA) is an alternative to traditional Health insurance that offers consumers a different way to pay for their health care. HSAs enable you to pay for current and future health expenses on a tax-free basis, while an attached high-deductible insurance policy protects you against catastrophic expenses.

Here are answers to some common questions concerning HSAs:

Can anyone open an HSA?

To be eligible for an HSA, you must be under 65 years old, and covered by a Qualified High-Deductible Health Policy (QHDHP).You are ineligible if covered by another Health insurance policy (except coverages such as Cancer, Dental, Disability, Long-Term Care or Vision insurance) that isn’t a qualified high-deductible plan.

Where can I open an HSA?

Accounts can be established with banks, credit unions, insurance companies, and other approved companies. Your employer might also set up a plan for its employees as well.

What is a QHDHP?

To qualify the policy must meet current IRS requirements. For 2009 the requirements are as follows:

  • The deductible must be at least $1,150 for individuals or $2,300 for families.
  • The annual out-of-pocket expenses cannot be greater than $5,800 for an individual or $11,600 for a family. These figures include the deductible and any co-insurance, but not the premiums.

How much can I contribute to an HSA? What happens to unused funds at the end of the year?

Limits are updated annually by the IRS. For 2009, the contribution limits are $3,000 for singles and $5,950 for families. However, if you are 55 or older, you can contribute an extra $1,000.

The unused balance in an HSA rolls over automatically year after year. You won’t lose your money if you don’t spend it within the year.

How do I receive the tax benefits?

If you have an HSA through your employer, you might be able to make pre-tax payroll contributions. Otherwise, your contributions will be deductible when you file your taxes, even if you don’t itemize. Also, you are eligible to make a full contribution regardless of income unlike IRAs.

What is a qualified medical expense?

Qualified medical expenses are defined in IRS Publication 502, Medical and Dental Expenses (available at www.irs.gov).

Can my HSA be used to pay for a family member’s medical care?

Yes, you June withdraw funds to pay for the qualified medical expenses of yourself, your spouse, or a dependent without tax penalty.

Can I pay Health insurance premiums with an HSA?
You can only use your HSA to pay Health insurance premiums if you are collecting unemployment benefits or you have COBRA continuation coverage through a former employer.

Can I use the money for non-medical expenses?

Yes, but you’ll be hit with a 10% penalty plus income tax on the amount of your distribution. However, after age 65 the 10% penalty is waived on non-qualified distributions which enables your HSA to effectively serve as a retirement supplement.

I have an HSA but no longer have HDHP coverage. Can I still use the HSA?

Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.

With an HSA can I still contribute to an IRA?

Absolutely, your HSA contributions won’t affect your ability to contribute to an IRA in any way.

Jun 01
Love0

LOW COST OPTIONS TO BURGLAR PROOF YOUR HOME

By Personal Perspective

If you wanted to, you could build a panic room for protection from robbers or kidnappers. But what about protecting your belongings when you’re not home? Perhaps you really don’t want to install an alarm system — or Junebe you do. Either way, here are some no-cost and low-cost tricks to make your protection more complete, and help keep your belongings away from thieves.

Outside Areas

Begin with the landscaping, which is the first thing a burglar sees and the first thing he will assess. To make it harder for a burglar to hide and gain entry:

  • Prune lower limbs from any big trees.
  • Trim bushes so a person could not use one for cover.
  • Move any decorative trellises away from windows or porch roofs so they cannot be climbed for second-floor access.
  • Consider planting thorny bushes below first-floor windows, and be sure they are close enough to the house so that an adult could not wedge behind one to jimmy a window without getting scratched up.
  • Remove any trees or bushes beside exterior doors. They can hide a burglar from passing cars and they can also hide intruders from your sight when you answer the door.
  • Make sure all ladders and tools are secure inside the house, not inside a garden shed.
  • If your yard is dim at night, install the brightest, biggest lights you can afford for all entries to your house. Use them. Turn them on when you leave the house at night; set up motion detectors to turn them on when you are away

Inside the Home

Windows generally provide easier access for criminals than doors. Here are some window tactics:

  • Buy special window locks at your hardware store for all first-floor windows and any second-floor windows accessible from a porch or garage roof. DO NOT hang the keys on clever little hooks or nails beside the window. Crooks know that one and will simply break a pane and reach around until they find the key (but be sure the whole family knows where the keys are in case of emergency).
  • Don’t demonstrate the easiest window to enter by climbing in it. If a family member regularly forgets his or her key, consider leaving keys with a trustworthy neighbor for emergency use. DON’T CLIMB IN THE WINDOW EVER. Even amateur burglars can figure that one out, especially if they’ve seen you do it and figure the neighbors won’t notice.
  • For sliding windows, use the same techniques as for sliding doors, below.

Some burglars like to enter like a guest, through the door. Here are some ways to discourage that sort of burglar:

  • Make every entry door solid core wood or metal; hollow-core doors are easily kicked in. The door should fit the frame snugly, with no more than 1/8 inch between door and jamb. If the gap is larger, replace the door, or install a heavy-gauge metal strip available at the hardware store.
  • Replace doors with decorative glass windows or panels. If that’s too expensive, install break-resistant plastic panes, or install a decorative grille over the glass.
  • It’s unlikely, but if an entry door has hinges on the outside, rehang it with hinges inside. If that’s impossible, reinstall it with pinless hinges. Burglars can pop pins and take off the door to enter.
  • Make sure locks on all sliding glass doors are sturdy. Then use a solid stick of wood or broom handle in the track of the closed door.
  • Adjust door rollers so the door cannot be lifted out of its track.

A Few More Hints

  • Close your garage door when you’re away, whether or not it also leads into the house. An empty garage equals “no one’s home.” Cover garage windows completely with shades or curtains so no one will know if there’s a car in there or not.
  • Don’t leave notes on entries; if you were home, you wouldn’t leave a note. Not even for FedEx.
  • Don’t hide keys in the yard; burglars know all the usual places, even those cute little garden toads with hollow bellies.
Jun 01
Love0

USE THESE SAFETY TIPS WHEN DRIVING IN THE RAIN

By Personal Perspective

With the dawning of Spring, often comes a deluge of rain showers and thunderstorms. Although a soft Spring rain might seem innocent enough from the safety of your home, even a gentle shower can cause major problems on the road. Thousands of car accidents each year are caused by rain and wet roads — and motorists who don’t know how to drive on them.

During and after a rainstorm, a film of water quickly forms on asphalt roads. This sheath of water causes tires to lose traction, which means drivers can lose control more easily. However, slippery roads are not the only danger to driving in the rain. Drivers also lose visibility during a rainstorm. Heavy rain can be blinding, fogging up the windows and even blocking your headlights. These things all add to an extremely dangerous situation.

If you find yourself on the road during a rainstorm, follow these safety tips to ensure you arrive alive:

  • Be especially careful when the rain first starts. When the roads are dry for a long period of time, engine oil and grease builds up on roads and highways. As soon as the first drops of rain start to fall, the water mixes with this build-up making the roads incredibly slick. This is why the first few hours of a rainstorm can be the most hazardous for drivers. If the rain continues to fall for a few more hours, the water will eventually wash away the greasy build-up.
  • Slow down. You should always drive at a slower speed when the roads are wet. The faster you drive in a rainstorm, the more likely you are to have an accident. Leave the house earlier than usual to give yourself additional travel time so you won’t feel the urge to rush.
  • Brake earlier and slower. When you need to slow down or stop on wet roads, ease on the brakes earlier and with less force than you would normally. This decreases your risk of hydroplaning and keeps a safe distance between you and the car in front of you. It also alerts any drivers behind you to slow down. If you stop too suddenly in a rainstorm, you could get rear-ended.
  • Turn off cruise control. When you have cruise control turned on during a rainstorm, your car could actually speed up if you hydroplane. Plus, when you use cruise control, you’re probably not paying as much attention to the road. Turn off the cruise control and stay alert at all times when driving in the rain so you can react quickly if necessary.
  • Avoid big puddles. If you spot a huge puddle in the road up ahead, drive around it or take a different route. Sometimes, seemingly shallow puddles can actually be five or six feet deep — and that amount of water can cause serious problems for your car’s electrical system. Depending on how deep the water is, it could even float your car. If you aren’t sure just how deep a puddle is, steer clear of it altogether.
  • Turn on your headlights. Even if just a few raindrops are falling, turn on your headlights. Not only will this help you see the road, but it will help other drivers see you. However, don’t use your high beams in the rain. This can actually reduce your visibility and blind other drivers.
  • Turn on your defroster. Your windshield can fog up quickly during a rainstorm, which can cause you to lose sight of the road. Turn on your front and rear defrosters and the A/C to defog your windows.
  • Keep an eye out for pedestrians. In a rainstorm, a pedestrian’s view of the road could be obscured by their rain slicker hood or umbrella — which means they might step into the road accidentally at the wrong time. If you are driving in a city or another area with pedestrians, keep a close eye out for people in the road.
  • Pull over when things get bad. If the rain is falling so hard that you can barely see the car in front of you, pull over and wait for the rain to slow down or stop. After all, it’s much better for you to make it to your destination a little late than not at all.
  • Don’t brake if you hydroplane. If you feel your car starting to hydroplane, don’t brake suddenly or turn the steering wheel. This could send you into a skid. Instead, ease off the gas pedal slowly and steer straight until you feel your tires regain traction. If you have to brake and don’t have anti-lock brakes, tap the brake pedal lightly. If you do have anti-lock brakes, you can brake normally.
Jun 01
Love0

TAKE THREE CRUCIAL STEPS BEFORE BORROWING A CAR

By Personal Perspective

“Bill, can I borrow your truck? I have to pick up a new mattress.” Questions like this are routine. Friends and neighbors borrow and lend their vehicles. College roommates borrow their friends’ cars. Six cars are parked in a driveway at a party and one needs to be moved so another car can pull out. The owner tosses someone the keys and tells him to move it. When situations like these end with an auto accident, whose insurance pays, the owner’s or the borrower’s?

In general, the vehicle owner’s policy is primary and pays first in the event of a loss. If for some reason the owner’s policy does not cover the loss or provide enough insurance to fully cover it, the borrower’s policy will apply. For example, assume that Joe has a policy with an insurance limit of $100,000 for injuries to one person and Bill’s policy has a limit of $250,000. Joe borrows Bill’s car and severely injures a pedestrian, resulting in damages of $300,000. Since Bill owns the car, his policy will pay first. It will pay $250,000 (his limit of insurance,) and Joe’s policy will pay the remaining $50,000. If Bill’s policy does not cover the loss (for example, if he had let the policy lapse), Joe’s policy would pay all of its $100,000, but Bill and Joe might be responsible individually for paying the balance.

The owner’s insurance will also be primary for damage to the car itself. However, the borrower’s insurance can make up for a difference in deductible. Suppose Joe has a $500 collision deductible on his car and Bill’s collision deductible is $1,000. Joe totals Bill’s $5,000 car in an accident. Bill’s insurance will pay $4,000 for the car ($5,000 minus the $1,000 deductible) and Joe’s insurance will pay $500 (Bill’s deductible minus Joe’s $500 deductible). If Bill’s insurance is noncollectable because he didn’t buy collision coverage, Joe’s policy will pay $4,500 ($5,000 minus the $500 deductible).

A person must have the car owner’s permission to borrow before the owner’s insurance will cover him. The insurance company will consider the person to have permission if he had a reasonable belief that he could use the car. For example, if Bill at one time said to Joe, “Take the car whenever you need to; the keys are on my desk,” and Joe had in fact borrowed it several times with no objection from Bill, it would appear that Joe had a reasonable belief that he could use it. On the other hand, if Bill never said anything to Joe about using the car, and Joe had to search Bill’s home to find the keys, Joe’s belief that he could use it might not appear to be so reasonable. In this case, Bill’s policy might not cover Joe’s liability for injuries or damages. Worse, Joe’s policy might not cover him, either.

Permission must come from the vehicle’s owner, not from a member of the owner’s family. Joe will not have coverage if Bill didn’t give him permission but Bill’s teenage daughter told him to use it. However, the daughter has coverage if she borrows the car, with or without permission. A member of the owner’s family has coverage without having to prove they had permission. To be considered a family member, such a person must be related to the owner by blood, marriage or adoption.

Before borrowing someone else’s car, we advise people to do the following:

* Make certain you have the owner’s permission.
* Make certain the owner has insurance in-force on the car.
* Check your own insurance to see if it will cover damages the owner’s policy doesn’t cover.

Our agents can assist you with the third item. Ask the questions ahead of time to avoid unpleasant surprises later.

Jun 01
Love0

PROTECT YOUR COMPANY FROM EMPLOYEE THEFT

By Business Protection Bulletin

Did you know that theft and pilfering is four times more likely to be committed by your own employees? It only takes one individual to cause significant damage to your bottom line. Employee theft is estimated to be in the billions of dollars each year!

Theft by employees includes merchandise, cash, materials, computer equipment, tools, information and industrial espionage, administrative fraud and embezzlement.

The threat of exposure to potential employee theft will increase proportionately with the size of your company. If your company has negligible safeguards in place, it is crucial to consider implementing sound internal security procedures to protect your company’s assets.

Areas Most Vulnerable to Internal Employee Theft

Administration – What about the books? Whether you process information on a hard drive or manually, figures can be manipulated. Does your company have controls in place for the signing of checks, payroll, or inventory? If the answer is no, you can be exposed to the possibility of padded payrolls, kickback schemes with suppliers, forged or check duplication, or falsified inventories — just a few of the scams administrative personnel can perpetuate.

Merchandise and Equipment – Assets such as office furnishings, supplies, tools, assembly parts, or equipment, can be pilfered by staff, delivery drivers, or even the night time cleaning crew. If you lack the facility to monitor office supply rooms, neglect the effective supervision of staff and cleaning personnel, or have loose control over your inventory, your risk is greatly enhanced.

Shipping and Receiving – These are the most vulnerable and popular target areas where employee theft is committed. If either area has high traffic volume, infrequent or limited supervision, or minimum safeguards for the two way flow of parts and goods into and from your company, store, or warehouse, then at the very least, you are a company that is just waiting for thefts to occur.

Information – Industrial espionage is increasingly popular these days, especially in the uses and application of new product development technologies and manufacturing processes. Employers must be on guard to prevent internal procurement of sensitive or unsecured data. Password security is simply not enough. Anyone can use available hacker programs to access customer lists or new product information, all of which can be sold by one of your employees to a competitor. Theft of internal company information for resale can be very lucrative.

Monetary – The person operating your cash drawer can siphon off money and merchandise in numerous ways. Theft is as simple as voiding a sale and pocketing the cash, or working in collusion with an outside party. If you are uncertain that your till receipts reflect your actual cash sales, you better address the situation before it becomes a major problem.

Safeguards to Protect your Business Assets

All these areas can be protected and secured. Reduce the risk of employee theft by establishing strict procedures and controls over your vulnerable assets. Protective counter measures can be as simple as implementing specific policies regarding your cash register.

Other simple safeguards might include the securing of peripheral areas like windows and doors; convex mirrors to eliminate blind spots; unscheduled walk through of unsupervised areas; regularly checking outside locations such as trash bins, and employing logs to monitor the movement of goods, tools, and materials. Basic preventative measures can be administered at nominal cost. Solutions don’t have to be expensive to be effective.

Stronger security needs might require the installation of video surveillance, or securing sensitive data through software encryption or firewalls. You might consider hiring security personnel or a private investigator to act as an undercover operative. Consider constructing protective storage areas to safeguard expensive items such as parts or inventory. Keep these storage areas locked and restrict access.

A qualified security consultant can point out your company’s flaws and offer a variety of solutions. With a little imagination and research, you can implement many safeguards yourself.

Security systems might appear expensive, and a pain to implement, but they are worth your time and money in the long haul. Good security can save your company a lot of money and grief.

Jun 01
Love0

UPDATED BUILDING CODES MIGHT MEAN YOU’RE UNDER-INSURED

By Business Protection Bulletin

The owner of a commercial building might believe that Replacement Cost insurance coverage on the building is sufficient to protect them from financial loss. After all, they took the insurance agent’s advice and bought enough insurance to pay for repairing or replacing the building if it were completely destroyed. However, this might be a false sense of security, particularly if the building is an older one. Although the building might not have changed greatly over the years, local building codes undoubtedly have. Even codes in effect at the time the building was constructed could affect your insurance coverage.

Many local governments have ordinances that require the demolition of a building when more than 50% of the building has been damaged. These ordinances require the reconstruction of the building in accordance with current building codes. Zoning and land use codes might have changed over the years prohibiting the reconstruction of that type of building at the same site. This could require the owner to rebuild somewhere else or with a much different building design. Laws and codes requiring buildings to be accessible to handicapped people might affect rebuilding if the building previously lacked ramps, doors that can be opened remotely, wheelchair-accessible toilets, and other accommodations.

All of these requirements could increase the cost of rebuilding significantly. Unfortunately, standard Commercial Property insurance policies provide very little coverage for these higher costs. Most will pay either 5% of the amount of insurance on the building or $10,000, whichever is less, for the increased cost of construction resulting from a local ordinance or law. Therefore, the amount of insurance available for a building insured for $150,000 is $7,500; the amount available for a building insured for $500,000 is $10,000. The costs of demolition and rebuilding up to new codes or at a new location can quickly use up this relatively small amount.

Building owners should consider buying additional insurance to cover this possibility. Many insurance companies offer ordinance or law coverage for an additional premium. This coverage will pay for the additional costs of demolition and construction unless the costs result from failure to comply with previous ordinances or from the release of pollutants. Included are three distinct coverages for the specified building:

  • Coverage A – Loss to the undamaged portion of the building
  • Coverage B – Cost of demolishing the undamaged portion of the building
  • Coverage C – Increased cost of construction or repairs to comply with ordinances or laws

The amount of insurance available under Coverage A equals the amount of insurance covering the entire building. Separate amounts apply to Coverages B and C. There is no coverage if the damage results from a cause that the policy excludes. For example, most policies do not cover flood damage, so the policy will not pay if the law requires the owner to demolish the building after a flood. Also, the insurance will pay only the amount necessary to meet the minimum requirements. The insurance will not pay for the cost of exceeding requirements during rebuilding.

This insurance covers the owner only for the cost of repairing or replacing the building, not for income lost during additional reconstruction time. Separate coverage is available for this exposure.

Our agents can advise you on the types, amounts, and costs of coverage you might need to meet updated codes. Whether or not you decide they need the coverage, you should give it careful consideration. The last thing you want is a surprise uninsured expense after a disaster.

Jun 01
Love0

CONSIDER THESE CRITERIA BEFORE MAKING JOB CUTS

By Business Protection Bulletin

The recession that began in December 2007 has been unusually severe. Through March 2009, employers shed more than five million jobs. In January 2009 alone, businesses took more than 2,000 mass layoff actions (actions affecting more than 50 workers). Some affected workers have responded by claiming that their employers illegally discriminated against them. The Equal Employment Opportunity Commission reported a 15% increase in discrimination claims in 2008, bringing the number of claims to a record level. The largest increases were in the areas of retaliation and age discrimination.

These lawsuits can cost businesses dearly. A 2008 report showed that, between 2001 and 2007, almost half of all court verdicts favoring employees exceeded $250,000, and almost a third exceeded $500,000. Half of all age discrimination verdicts exceeded $250,000, and almost a fifth exceeded $1 million. By 2007, almost two-thirds of age discrimination suits resulted in plaintiff victories. Even more dangerous for employers are retaliation claims: More than a quarter of judgments against them exceeded $500,000. Forty percent were for amounts between $100,000 and $500,000.

How can businesses lower the chances that they or their insurance companies will end up on the hook for these payouts? They can start by considering a number of factors before making job cut decisions.

  • What will be the criteria for choosing affected workers? Will the decision be based on seniority with the employer? Work performance? Job function? Employment status (part-time, temporary, etc.)? Department profitability? Some combination of these? The criteria must be such that a reasonable person would not find them to be unfairly discriminatory.
  • How will the employer select the workers to be let go? Will it apply the criteria strictly, or will it allow managers to use some judgment and flexibility in making selections? How will the employer ensure that all affected areas follow a consistent process? Lack of consistency could increase the employer’s vulnerability to successful discrimination suits.
  • Assess the risk of adverse impact on classes of employees protected by law, such as older employees or those with disabilities. Because older employees with long tenures with a firm are likely to be highly compensated, they might be attractive targets for a layoff action. However, an action that has a disproportionate impact on these employees could leave the firm open to successful age discrimination suits.
  • Early in the process, review the precedents and lessons learned from any prior workforce reductions. An ability to show that it followed precedent in making layoff decisions will give the employer a strong defense in court.
  • Obtain claim waivers and general legal action releases from employees to whom the firm will pay severance. Federal law requires these releases to meet certain requirements for workers over age 40.
  • Depending on the number of employees affected, the firm might have to comply with a federal law that requires advance notice of the layoff. Employers must give 60 days advance notice of a plant closing, termination of 500 or more employees or termination of fewer employees if they amount to one-third or more of the workforce. Certain employees are exempt from being counted in these figures, so employers should consult with labor attorneys to determine whether the law covers them.

In addition to risk management steps, employers should obtain Employment Practice Liability Insurance to finance those losses that do occur. One of our agents experienced in placing EPLI and other types of Professional Liability insurance can provide information and assistance in obtaining coverage. Loss control and proper insurance will help your firm survive a very difficult business decision and any challenges that occur in the aftermath.

Jun 01
Love0

MAKE YOUR CONSTRUCTION SITE A CRIME-FREE ZONE

By Construction Insurance Bulletin

Construction sites are often plagued by vandalism, arson, and theft. Equipment and building materials are expensive. The added cost of insurance, delays, and replacing machinery and materials affects your site and your clients’ deadlines. Take these positive steps to minimize the costly impact of damage to your job site and to take a bite out of these losses.

Know Your Work Area

If you’re completing a job in an unfamiliar location, contact the local police and ask how extensive crime is in the area. Tell them what you are doing and ask if they can send a patrol to check out the job site occasionally, especially if you aren’t planning to employ on-site security.

Inventory Your Equipment

Have a detailed inventory and monitoring system in place for all your equipment so you can track everything on the site. Use an etching tool to etch serial numbers onto equipment and tools. Have prominent and easily identifiable company logos on your machinery and big ticket items. Small tools are especially vulnerable to theft, so a site supervisor or foreman should monitor what tools are going to which employees. The tools should also be logged in at the end of the workday.

Use GPS Tracking Devices and Ignition Cutout Switches

For expensive machinery, such as heavy equipment or big generators, consider that GPS technology has made great strides. You can now get small tracking units that will not only advise you when items are being used but will also provide its location. You can also add alarm features that will let you know when the equipment leaves its designated work area. Another good feature is to disable heavy machinery and vehicles with ignition cutout switches, which effectively immobilize them.

Lighting and Fencing

A well lit job site will dissuade impetuous vandals and give thieves pause. Use light motion detectors or infrared triggers that will automatically alert intruders and local neighbors that the area has been breached. Studies have also shown that a chain-link fence also makes a better deterrence than most other barriers because it protects a site while offering outsiders a clear view of the site. If a chain-link fence is not possible, then enclose designated storage areas for construction material and tools, flammables, or hazardous items.

Access Control

There should only be one way in and out of the site. The more access points you have to the job site, the harder it is monitor who and what is coming and going. Have your employees park off the job site, if possible.

Plan Deliveries and Installation

Fully or partially installing certain items when they arrive can help prevent damage to or loss of expensive items. Items such as HVAC systems, plywood, doors, and windows, for example, are more likely to be stolen or vandalized the longer they are left lying around.

Use Security Cameras, Security Guards, Dogs and Signs

The use of cameras can enhance your job site’s level of security dramatically. The presence of a security guard or guard dog brings even more protection to the site. Make sure you have plenty of signs that announce your site is under surveillance — even if it actually isn’t.

Employ Proper Lock-Up Procedures

Have key employees perform your lock-up at the end of the workday. They should ensure that that all equipment and tools are in their designated places and that all locks, doors, and windows are secured. Additionally, designated personnel should confirm that ignition keys have been removed from all vehicles and that gas and oil tank caps are locked.

Use Your Neighbors

Asking people who have visual view of your site to keep an eye out can also increase your chances of preventing loss or damage. Consider offering a small reward as an incentive, if their information leads to an arrest or prevents a loss. Common sense, good planning, and organization can go a long way towards reducing theft, vandalism, and arson on job sites. Taking these positive steps can save you a lot of money, grief and time on a project.

Jun 01
Love0

NO ACCIDENT, NO INSURANCE

By Construction Insurance Bulletin

Insurance companies design policies to cover their customers’ risks of accidental loss. A contractor excavating earth on a city street hits an underground telephone cable and knocks out service to a few thousand businesses and homes. A supermarket employee has partially mopped a floor when a manager summons him to help at the cash registers. A customer trips and falls over the mop left on the floor. All of these are accidents, not injuries or damage that the businesses or their employees intended. Insurance will cover these incidents, but what about situations where the harm might not have been accidental?

The standard Commercial General Liability insurance policy provides coverage for “occurrences,” defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Therefore, for the policy to apply to a specific incident, the incident must be an accident. Moreover, the policy goes on to state that it does not apply to bodily injury or property damage “expected or intended from the standpoint of any insured.” The questions of whether incidents were accidents and whether an insured expected or intended resulting injuries or damages have been fodder for the courts for years.

Courts in every state have tried to develop a precise meaning for the term “accident.” The definitions vary somewhat, but they all seek to evaluate the responsible person’s intentions. For example, one state defines accident as an “unintended and unforeseen injurious occurrence.” Another state holds an incident to be accidental if the insured did not intend the resulting damage, even if he intended the specific act. Still another calls an accident, “something out of the usual course of things … not anticipated and not naturally to be expected.” Therefore, it’s an accident when a painting contractor sprays paint all over 10 parked cars because he intended to operate a spray-painting gun but did not intend for the wind to blow the paint on the cars.

Courts settle the question of whether a person intended harm to occur when they determine the facts of a case. However, they tend to rule that harm resulting from some actions can never be accidental. The high court in one state held that an act is not accidental when it is so “inherently injurious” that it is certain to result in an injury. An example of this type of conduct is firing a weapon at close range. Other states have held that a court can infer that someone intended to cause an injury only when a reasonable person can reach no other conclusion. Therefore, if two conclusions are possible and only one of them points to intent to cause harm, the court must assume that the person did not intend harm. The CGL policy would provide coverage for the person in this situation.

Public policy prevents insurance companies from insuring people against liability for injuries or damages they intentionally cause. Otherwise, people could commit these sorts of acts with little risk to themselves. Besides, businesses pay good money to insure themselves against accidents. It is unfair to these organizations when intentional injury claims raise the cost for everyone.

However, proving what someone’s intentions were at a particular moment is difficult. If your organization has an incident that you believe might result in a liability claim, you should report it to your insurance agent as soon as possible. Let the insurance company investigate, and know that your insurance is there to protect you from the consequences of true accidents.

Jun 01
Love0

UNDERSTANDING BLANKET COVERAGE FOR ADDITIONAL INSUREDS

By Construction Insurance Bulletin

Any contractor who has been in business for a while is familiar with Additional Insured coverage. This coverage insures an outside organization, usually a project owner or general contractor, under the contractor’s own policy. It is often a requirement for construction projects, and it can be the source of insurance disputes if not handled correctly.

Owners and general contractors who hire subcontractors are also assuming responsibility for issues that arise during the project. If sparks from a welder hired by the general contractor start a fire that damages the building next door, the building’s owner will likely sue both the welder and the GC. The GC does not want liability for the welder’s actions since it cannot control them. In addition, the GC has the power in the relationship, since it makes the hiring decisions and controls the purse.

Therefore, most construction contracts require a subcontractor to assume the GC’s liability for losses that arise from the sub’s work on the job. The sub finances this additional liability through contractual liability coverage on its Commercial General Liability policy and by covering the GC as an additional insured on that policy.

Traditionally, insurance companies have covered an additional insured by attaching an endorsement to the policy. This endorsement lists the additional insured by name and insures it against liability arising from the named insured’s ongoing operations. This works well if the insured has relatively few requests for this coverage. However, it presents some risks of errors. The subcontractor might forget to tell its insurance agent that it needs the endorsement. The agency staff might fail to send the request to the insurance company. The insurance company might receive the agent’s request and never act on it. Any of these scenarios June cause the company to deny coverage to the GC when a loss occurs, forcing the GC to submit a claim to its own company. The GC June then sue the subcontractor for breach of contract. Because of the potential pitfalls, organizations that receive many requests to add additional insureds often want their insurance companies to provide a blanket additional insureds endorsement.

A blanket endorsement typically provides automatic coverage for any organization that the named insured has agreed to cover under the terms of a written agreement. This eliminates the need to send individual requests for each additional insured, saving time and effort and reducing the chance that an error will lead to an uncovered loss. However, these endorsements also have their disadvantages. The standard ISO endorsement provides coverage only if a written agreement requires the named insured to cover the additional insured. If there is no written contract, or that contract does not require additional insured coverage, the endorsement will not provide it. Also, it provides coverage only while the named insured’s operations for the additional insured are ongoing. When the sub’s work is finished, so is the GC’s additional insured coverage. That could be a problem if something in the sub’s work causes injuries or damages months or years later. Further, the endorsement’s wording could allow an insurance company to deny coverage for an accident that occurs while the sub’s work is ongoing but that is not reported until after the sub’s work is finished.

One of our insurance agents experienced in writing coverage for contractors can be a good source of advice and information about blanket additional insured endorsements. Many insurance companies have their own endorsements that differ from the standard. For example, some guarantee advance notice to the additional insured if the policy is cancelled. It is well worth it for a contractor to spend some time investigating the different coverage options. Call us today!

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