Is Your Home Winter Ready? – Part 2

In this part we discuss an important legal responsibility created for homeowners by the winter season.

Creating A Clear LiabilityAvoid this insurance claim. Slipping on Sidewalk

Snow doesn’t show favoritism. Instead of conveniently falling onto unused areas, it covers homes, sidewalks, and driveways. As a responsible homeowner, you should arrange to make travel across your property safe. This calls for clearing your walkways of snow and ice. It is also important to clear your property of items such as rakes, shovels, tools, toys and similar items. Remember that it takes only a small amount of snow to hide items that, during clear conditions, are easily seen and avoided. So take time to move such property and make repairs to uneven or cracked pavement.

Keep in mind that clearing walkways (including stairs) is an invitation for pedestrians to use the path. So, once you clear an area, it has to be kept clear and safe, especially from ice. Also, avoid creating piles of snow that can block either a driver’s or a pedestrian’s view. Finally, be sure that your property is safe for children who are enjoying winter. Don’t allow children to slide around without being aware of pedestrians or motorized traffic and don’t let anyone throw snow or ice balls at cars (you could be sued for any accident caused by careless play) related from the use of your property or premises.

Don’t forget the inside of your home. Visitors should be kept safe from harm. Be sure to keep interior stairs and floors clear of the watery remains of melted snow. Keep things dry and consider using mats that provide good traction and an area where folks can clear snow and ice from their shoes or boots.

As always, an insurance professional is a valuable source of safety and insurance information. Don’t hesitate to contact an agent to discuss your questions. If you haven’t had the chance, please be sure to read parts one and three of “Is Your Home Winter Ready” which discusses other winter concerns.

 

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Insurance Companies Working Behind the Scenes Making the World a Safer Place

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The Greatest Tragedy of our GenerationThe Greatest Generation.  Triumph over adversity

I’ve heard that tragedy defines us.  I disagree with that; it is how we as a group rise and address adversity that defines us.  An excellent example is my grandfather’s generation.  They’ve been referred to as the Greatest Generation, a fitting accolade to the group that defended our freedom and won WW II.

What is the great tragedy of our generation?  Is it global warming?  It could be the rise of terrorism!  While I can’t answer the question, I do know that school shootings and other active shooter related incidents have to be somewhere in the mix.

Tragedy is often the precursor of innovation.  It certainly was during WW II.  It also drives changes and the creation of new products in the insurance industry.  The insurance sector exists because individuals, businesses and other entities have a need to transfer risks to another party.  Increasing active shooter incidents in recent years and the corresponding legal actions have created demand for products that can provide financial protection.

The insurance industry is actively working to develop products that will protect businesses, schools and other government entities from gaps in current insurance policies.  Professional liability policies were not designed to protect against active shooter risk or anything similar to that.

So what can be done and how do we do it?  Products have been created and will continue to improve that will offer financial protection to entities that have been accused of failing to adequately prepare.  But there is more.

Insurance companies seldom get the respect that they deserve; however, behind the scenes they are making a difference.  The insurance industry is much more than a financial risk transfer vehicle, insurance companies are the leaders in making our world a safer place to leave.  While most of us will never understand the significance, the insurance industry will lead America’s efforts as we deal with the risk of loss of life, mental trauma, and financial loss associated with active shooter incidents.

How?  Who understands risk as well as the insurance industry?  The better we understand risk exposures, the better we can prepare.  The insurance No!  Stop!! Now!!!industry will over time and after numerous assessments develop standards that when deployed will ward off many would be active shooters.  They work for insurance companies will also work to reduce the after effects and of course provide financial relief.

The insurance industry is working to make our world safer.  If you are interested in learning more about the insurance industries role in managing active shooter risk you are more than welcome to contact us:

 

by phone (502) 410-5089

 

by email: info@truepointgroup.com

 

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Employee or Independent Contractor? – Part 2

w-2 or 1099In part one of this article, we discussed the situation of properly classifying workers. In this part, we discuss a method for making that distinction.

In the U.S., common law helps determine worker status. Some confusion is created by improper focus on a given work relationship. Instead of a narrow focus, proper worker classification is a result of looking at the total work situation in which an individual performs a job. Essentially, classification is a matter of control. Specifically, consider the following areas:

Behavioral – Who has primary control over how work is done, the business or the worker?

Financial – Who controls how a worker is paid, how are expenses handled, who is responsible for supplies and tools that are needed for work?

Relationship – What defines the work relationship, manner of pay, what benefits are in place, does worker have paid vacation and what is the nature of the relationship?

It’s important that all the above factors be considered when evaluating a worker classification.

Evaluation should be performed on a simple scale. The greater the control by a given party determines how to make a classification. If a business exerts the greater overall control, the worker is an employee. If the individual worker exerts the greater overall control, the worker is an independent contractor.

Practically speaking, areas of control involve the level of freedom a worker has in getting tasks done, but Tax Law Rulesanother element is the nature of the work. Some businesses want to minimize both their tax liability and legal liability (and related payroll costs) by use of independent contractors. However, the situation can’t be a façade. If workers have an ongoing relationship with the applicable business because the work is normal for that business, likely the work involves employees. When the work is unusual for the given business and lasts for a short period, especially when it involves specialize labor or skills not existing in that business, the work likely involves independent contractors.

If a business or a worker is unclear over a classification, help is available from the IRS. Specifically, a work situation description can be submitted to the IRS to get its interpretation. Having that department’s help (and documentation) for a situation could be quite helpful in dealing with both tax and insurance matters.

 

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Active Shooter Risk – Part 2

As we mentioned in part one of this discussion, a strategy for dealing with this exposure involves a significant amount of pre- and post-incident activity. Active shooter programs commonly involve the following:

Non-Insurance Services

Pre-event

Risk Assessment

Employee Crisis Training

During Event

Crisis Management

Second (Event) Responders (those who supplement initial, emergency action of fire, medical and police [first responders] and handle return services and site clean-up.)

Post-event

Counseling Services

Psychiatric Care

Public Relations Disaster Team

Investigation Assistance Funds (Rewards)

Expenses for additional, temporary security measures

Insurance Services

Liability Coverage for Lawsuits due to loss created by active shooting incident

Limits vary from $250,000/$500,000 up to multi-million dollar maximum

Business Income and Extra Expense

Limits vary from $1 million up to $100 million

Emergency medical care

Rehabilitation Expenses

Funeral and Burial Expenses

Marketing for the product targets those who are most vulnerable to this exposure such as Educational institutions, Entertainment organizations, Hotels, Healthcare providers, Religious institutions, Retail organizations, Shows (ex. Fairs, Trade Shows and Rodeos.)

 

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Active Shooter Risk – Part 1

Headlines tragically remind us quite frequently that many aspects of our lives have become unavoidably dangerous. Sadly, this danger is due to the whim of individuals and access to weaponry. The deadly risk is the “active shooter incident.”School Shootings

An active shooter incident describes a situation in which at least one person is actively killing or attempting to kill persons in a populated area. Naturally, as we are referencing a shooter, such incidents involve firearms.

Active shootings are becoming more common. Studies made by the FBI between 2000 and 2015 indicates annual mass-shooting events rose from 6.4 per year to 20 per year. Studies also show that most shootings take place within a business or school (educational) environment. The frequency of shootings is accompanied by, on average, an increase in the number of persons killed or wounded per event.

As with any other risk that becomes significant, it is very important to find a strategy to deal with active shootings. Insurance is among the tools helpful with both pre- and post-incident planning. However, much uncertainty exists regarding protection for active shooter losses.

school shootings out of controlFirst, there is customer expectations. Insurance consumers may be under the impression that damage and injury created by shooters are covered. Second, the insurance market is fragmented over the issue depending upon how incidents are interpreted. Coverage may be sought from existing policies that individuals, commercial or non-profit entities may already carry, including General Liability, the Liability portion of Homeowners, or Workers Compensation. On the other hand, responsibility for harm due to a shooter may need to be covered by a form of professional liability policy as the obligation to protect against shootings may be considered as a failure to provide adequate security.

Confusion may also be caused by insurance policies via the silent coverage problem. An insurance form is considered silent when it neither specifically names nor excludes a source of loss, such as shootings. It can be chaotic during the time it takes to clarify coverage gaps.

The insurance sector has a reputation as being slow to react to change. Of course, speed is never at the level that most would wish when new coverage issues arise. However, the insurance market has been stepping up and addressing the serious active shooter exposure. While there is the option of trying to amend standard policies to add protection, other ways that coverage is being addressed are separate policies that supplement insurance protection with a variety of services.

Please see part two for more information on this issue.

 

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Employee or Independent Contractor? – Part 1

w-2 or 1099Business owners have a lot at stake when it comes to determining whether persons connected with their ventures are employees or independent contractors. The largest issue with making this determination involves taxes and insurance.

A business has specific responsibilities for employees, having the legal obligations to withhold and pay certain taxes (Medicare, Social Security) and pay other taxes (unemployment). If a business makes a mistake with classifying employees, it faces the financial burden of paying additional taxes and could well be punished with substantial fines. However, there are issues that are just as critical regarding determining a service provider’s status and insurance. Tax Law Rules

Many forms of both property and liability business insurance define the persons who qualify for protection under a given insurance policy. Property coverage is written for the direct benefit of the first party, the party who owns (or in other cases, has control or custody of) either real or business personal property. Liability coverage is written on behalf of persons defined as insureds, protecting them against harm they may cause to others or for damage they cause to property that belongs to others.

Employees are commonly granted coverage status in a variety of instances. However, coverage typically is not available to independent contractors who are considered unrelated third parties. FYI, under insurance contracts, the second party is the insurance company. Therefore, in many instances, if persons suffer losses under either property or liability policies, it is critical to be certain whether an individual is an employee or is independent.

Employee not independent contracterBecause of the position held by policyholder/insureds and insurance companies, the classification of workers is often in conflict as insureds desire liberal coverage and insurers wish to restrict protection to qualified persons. However, both parties are best served when worker classifications are clear. Premiums charged to policyholders are based on correctly recognizing the parties eligible for coverage. Proper classification keeps coverage affordable and makes the insurance process more efficient. Coverage involving employees should be connected to an applicable business that employs them. Coverage involving independent contractors should be connected to the contractors. In other words, they should secure their own, separate coverage.

In part two, we will discuss methods to determine worker status.

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Insuring A Mobile or Manufactured Home

Mobile HomeInsurers commonly provide coverage for mobile/manufactured homes by modifying a conventional homeowner policy with provisions called endorsements. The endorsements change key definitions and other elements of a conventional policy to fit a mobile or manufactured home situation. The result is a modified homeowner package that protects the home, outbuildings (unattached garages, sheds, etc.) and personal property. They also provide insurance for personal liability. Regardless of the type of home you own or live in, it is important that you learn about the coverage options that are available. You may find that different policies vary considerably in coverage and price.

Coverage for mobile/manufactured homes is generally offered using two approaches. Some policies include a laundry list of items (or perils) that may cause a loss. Other policies protect your home against everything EXCEPT for a host of specified perils. Either approach includes liability coverage that protects you for injuries or losses to others which you accidentally cause.

Property Insurance Needs

Manufactured HomeAny coverage option you choose is likely to reflect the fact that mobile homes are, well, mobile. Therefore coverage is affected by the fact that mobile homes:

  • are able to move under their own power (or are capable of being easily transported);
  • are more susceptible to wind damage,
  • tend to lose value with age.

The mobility of such homes creates a special need to protect the financial interest of the business that lent the money to purchase the home. For example, a mobile home owner who lives in Ohio decides to drive his home to Arkansas. The soon-to-be Arkansas resident “forgets” to mention his plan (and his new address) to his Ohio Mortgage Company. The Ohio lender would be out of luck if the policy didn’t include protection for this whimsical act. Another way in which a mobile or manufactured homeowner policy differs from conventional homeowner coverage involves coverage for unattached buildings. This coverage is usually minimal for, say, $2,000. Such a provision helps keep the premiums for policies lower by avoiding paying claims on very low-value structures. The coverage is likely to be offered on an actual cash value basis. Unfortunately, mobile and manufactured homes tend to lose value over time.

Mobile Home Insurance

The policy is likely to include a provision that requires you to get permission to move your home. Once granted, you’re likely to get thirty days of special transportation protection for collision; sinking, upset or stranding (a special, higher deductible may apply during the move). Another common coverage feature is coverage for your attempt to move the home in order to prevent damage from an insured cause of loss. For example, you move your mobile home fifty feet to get away from a neighboring trailer that is on fire. IMPORTANT: coverage for moving endangered property usually has a modest limit (several hundred dollars is typical) because of owners who may be too heroic or clumsy for anyone’s good.

Liability Insurance Needs

The liability protection connected with mobile or manufactured homes is, for all practical purposes, identical to the liability provided to conventional homeowners. Why? The likelihood of guests to be hurt at your home, or your probability of being sued, tends to be the same. The important thing to remember is that your agent is a tremendous source for getting the information you need to be sure that your home and property are adequately protected at a reasonable price.

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Boatowners Coverage

The insurance approach for covering boats and boating property is quite like what is used to protect cars Boat Insuranceand homes. Essentially insurance is offered on a package basis, meaning that there is coverage for physical property as well as protection against the legal and financial consequences of injuring others or damaging property that belongs to others.

Watercraft Insurance

Property Coverage – Typically a boatowners policy covers:

  • Boats – Refers to property designed to travel on water and includes sails, its permanent equipment, spars and fittings.
  • Boating Equipment – Includes a wide variety of property that is used in conjunction with boats and it includes accessories. Items considered as equipment are property used for communication (radios), navigation, sonar, radar, outboard motors, dinghies, skis and sports equipment (recreational flotation devices) that are towed by boats and similar property. As a rule of thumb, the more related an item is to the ownership and use of a boat, the greater the justification to classify it as boating equipment.
  • Boat Trailers – Trailers used (and designed) for transporting boats (as defined by the policy).jet ski insurance

This property must be owned by the person who is named as the policyholder. There are limited instances when such property that is temporarily in the policyholder’s possession also qualifies for coverage.

Items and situations that aren’t covered include boating property that is used in business activity, losses that involve races or competitions (an exception is made for sailboats) and boats that are used, full-time, as residences.

Liability Coverage – Besides protecting boating property, a boatowners policy also responds to claims or lawsuits caused when another person is injured, and /or when another person’s property is damaged or destroyed. An example would be a collision where the owner of a large speedboat collides with a person on a jet ski, seriously injuring the rider and demolishing the jet ski. The policy would handle both portions of such a loss. The liability portion would also provide a legal defense against lawsuits.

Another important coverage under the liability section is medical payments. This provides reimbursement for, typically, emergency or immediate medical treatment expense. Consider a person who slips on a boat deck and needs transportation to an emergency for treatment of a broken bone or concussion. Such costs would qualify under medical payments.

As is the case with property coverage, there are liability situations that are NOT covered by a boatowners policy, including losses that involve business activity, transmission of communicable disease, unauthorized operation of boating property, intentional acts, and criminal activity.

Boating property is a substantial investment and boatowners coverage is an efficient, affordable way to guard against accidental losses.

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What’s the biggest exposure for homeowners?

Tree falls on neighbor's houseIf you’re like most, replacing your home and personal property are the primary reasons for purchasing a homeowners insurance policy.  While that is important, insuring your property may not be the most important coverage offered by your homeowners’ insurance policy.child injured on trampoline

What would happen if a tree fell on your house during a windstorm and damaged your home?  After you meet your policy deductible, your homeowner’s insurance policy would cover the cost of repairs.

 

What if the wind had been blowing in the other direction and instead of crashing through your rough, your neighbor’s home is the one damaged.  In most cases, your neighbor’s insurance would cover the damages to his house.

However, there are cases where you are liable.  If the tree was dead, dying, diseased or unstable you could be on the hook.  If you are cutting the tree down, you are liable.

What’s your liability exposure?  We don’t know!  What should your liability limit be?  It depends!

The job of the insurance agent would be fairly simple if you were only getting property coverage.  How much is your house worth, how much personal property coverage would you like, and what causes of loss do we need to protect against.

Liability exposures are much more difficult to define.  How much will it cost to repair/replace your neighbor’s home in the example provided above?  Do you have adequate personal liability protection?

While the claim to repair the neighbor’s home could be very significant, relative to other potential liability exposures, this would be small.  Kids open the door to much larger exposures when their invited and even uninvited friends have access to your pool, trampoline, treehouse, fireworks, go-carts, and more.  How much coverage would you need if an injury or death occurred on your property due to your negligence?

Take some time to review your homeowner’s policy.  The limits on your home will most likely exceed the value of your home and personal property.  Can you say the same about your liability limits?  Finally, speak to a qualified insurance broker that can provide you guidance.  The last thing you need is for someone that can sell you insurance, what you truly need is an individual that can work with you in developing a compressive risk management plan.