Protect Your Officers with ‘Drive Other Car’ Coverage
Linda is a junior partner in a law firm and drives a car that the firm owns and insures. The firm’s auto insurance covers her as a partner and she doesn’t own another car, so she sees no need to have her own policy.
Most of the time, this is not a problem. However, spring break comes and she takes her kids to DisneyWorld. She rents a car at the Orlando airport and never gives a thought to whether her firm’s insurance will cover her if she has an accident with the rental.
But in this case, a phone conversation with the firm’s insurance agent would have been a great idea.
While driving to her hotel one night, Linda rear-ends a new Lexus. The damage to the other car is extensive; she looks to her firm’s auto liability coverage for the cost of repairing it.
The ISO Business Auto Policy covers the person or organization shown in the Policy Declarations (the information page at the beginning.) In this case, the name shown is that of Linda’s law firm.
The policy goes on to say that, for liability insurance, the firm is an insured and so is anyone else using, with the firm’s permission, a covered auto the firm owns, hires or borrows, with some exceptions.
Unfortunately for Linda, the firm didn’t rent the car; she did … in her own name. Consequently, the firm’s insurance will not cover her liability for this accident. She will be forced to pay for it out of her own funds.
However, there are a couple of policy endorsements that her firm could have purchased that would have solved the junior partner’s problem.
‘Drive Other Car‘ Coverage — Broadened Coverage for Named Individuals
The insurance company will require the insured to list the names of one or more individuals on the endorsement.
The change extends several of the policy’s coverages so that they apply to the listed individuals and their resident spouses. This Drive Other Car endorsement comes with some significant limitations:
- It extends to the listed individuals’ coverages that the policy already provides; it does not add coverages not provided. If the firm’s policy does not provide collision coverage on its vehicles, Linda would not have collision coverage on a car she rents.
- It covers the named individual’s spouse if they live together. If Linda is married to Jim, he automatically has coverage for a car he rents in his name.
- The only family member it automatically covers is the resident spouse. It will not cover any other family members in the household unless the endorsement specifically lists their names.
Individual Named Insured
An alternative to the above endorsement is to list individuals’ names in the Policy Declarations along with the firm’s name and attach an endorsement called Individual Named Insured.
This endorsement covers the individual listed in the declarations and automatically covers the person’s resident spouse and family members. It also covers these individuals should they injure another of the policyholder’s employees.
These policy changes affect several coverages, including liability, uninsured motorist, medical payments and physical damage.
If you are considering this type of extended coverage, you should consult with us to discuss the endorsements’ details and identify the one that will best insure the concerned individual(s).
With the right coverage in place, Linda would have been able to enjoy her vacation without having to worry about who would pay for the fender-bender.
Spike in Pregnant Workers Fairness Act Lawsuits Alarms Employers
Since the Pregnant Workers Fairness Act took effect in June 2023, there’s been a huge spike in lawsuits against employers alleging failure to reasonably accommodate workers covered by the landmark legislation.
In the first 11 months following enactment of the law, the Equal Employment Opportunity Commission received 1,869 complaints from workers who allege their employer failed to provide them with reasonable accommodation under the PWFA, according to an article in Business Insurance, a trade publication.
As a result, the EEOC has taken action and between Sept. 10 and Oct. 11, 2024 it initiated four federal lawsuits against companies over alleged violations of the law.
The recent activity should be a wake-up call to employers to put as much effort into complying with this new law as they do the Americans with Disabilities Act, which is similar to the PWFA in that it requires employers to initiate an interactive process with a worker who seeks reasonable accommodations under the act.
The law
Essentially, the PWFA requires employers to make reasonable accommodation for workers covered by the act if they request it, particularly if they are temporarily unable to perform one or more essential functions of their job due to issues related to their pregnancy or recent childbirth.
Reasonable is defined as not creating an “undue hardship” on the employer. Temporary is defined as lasting for a limited time, and a condition that may extend beyond “the near future.” With most pregnancies lasting 40 weeks, that time frame would be considered the near future.
What‘s required
The law requires employers, absent undue hardship, to accommodate job applicants’ and employees’ “physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions.”
The condition does not need to meet the ADA’s definition of disability and the condition can be temporary, “modest, minor and/or episodic.”
The PWFA covers a wide range of issues beyond just a current pregnancy, including:
- Past and potential pregnancies,
- Lactation,
- Contraception use,
- Menstruation,
- Infertility and fertility treatment,
- Miscarriage,
- Stillbirth, and
- Abortion.
What’s a ‘reasonable accommodation‘
The law’s definition of reasonable accommodation is similar to that of the ADA. The regulation lays out four “predictable assessments,” which would not be an undue hardship in “virtually all cases.” These would allow an employee to:
- Carry or keep water nearby and drink, as needed;
- Take additional restroom breaks, as needed;
- Sit if the work requires standing, or stand if it requires sitting, as needed; and
- Take breaks to eat and drink, as needed.
The takeaway
The PWFA poses a significant employment liability risk for employers since it’s a new law and supervisors and managers may not be aware of it.
Employers will need to ensure that they properly handle and respond to accommodation requests under the PWFA.
To ensure compliance, you should ensure that personnel who are responsible for handling accommodation requests under the ADA are also trained in how to respond to requests under the PWFA.
As well, you should ensure that you have in place a robust employment practices liability insurance policy that may help cover the costs of any lawsuits filed under the act.
Insurance companies that underwrite these policies may also ask targeted questions in applications forms on how a business handles PWFA accommodation requests and whether the responsible employees have been trained in its application.
Companies that don’t have policies in place may instead get a policy that contains an exclusion for PWFA accommodation claims.
The Holidays Have Their Own Workplace Perils
On-the-job accidents may increase during the holidays as distractions in the workplace increase and decorations can pose safety issues.
Normal routines and schedules are disrupted, and your staff — like everyone else — are also rushing around to crowded and chaotic stores and malls after work and on weekends.
Be aware that accidents may be more likely to happen at this time of the year at the workplace, on the road or at home. Employees tend to take extra physical risks ― such as when hanging lights and lugging trees around. And if you hold a holiday party, it opens up a new set of potential liabilities.
In-office safety
When planning decorations for the office, it is important to keep holiday safety in mind.
Decorating the office helps workers enjoy the spirit of the season together, but remember that proper safety precautions should be observed at all times:
- Be mindful of potential fire hazards when selecting holiday decorations and where you place them.
- Be careful of stapling holiday lights, do not add too many strings of lights and make sure illuminated items are turned off.
- Verify that all fire extinguishers are in place and fully charged and accessible.
- Do not block exits, hang decorations on fire extinguishers, fire alarms or fire hose boxes, or obstruct the view of exit signs.
- Do not hang decorations from sprinkler heads or electrical panels.
- Without proper planning, holiday decorations can create tripping hazards. Extension cords should not be run through traffic areas where they pose trip hazards and, if you have to use an extension cord, use the proper one.
- Avoid placing trees, freestanding decorations and presents in traffic areas.
Holiday party
The holidays bring office parties and, if alcohol is being served, keep in mind the liability involved.
Provide plenty of alternatives to alcohol, such as soft drinks, coffee, tea, water and cocoa. Hire a professional bartender who can cut people off if they have too much.
Enforce the same workplace rules of etiquette at the party as you do in the workplace.
If you serve alcohol, also serve food.
Stop serving alcohol a few hours before the party ends. Offer to cover the cost of an Uber or Lyft ride home for anyone who needs it.
The takeaway
If you keep in mind that the holidays put extra pressure on everyone, it may help you to keep your workplace free of accidents.
By following a few simple safety tips, it will be easy to enjoy the holiday and the events at work without dealing with injuries or damage to property.
When planning for the holidays, incorporate safety precautions into the planning process.
Legal Traps to Avoid When Dealing with FMLA Requests
When employee files a federal Family and Medical Leave Act request to either deal with a health issue or care for a loved one, their employer is often put in a tight spot, particularly if the person serves a vital role in their organization.
There are also a number of rules that employers need to follow to avoid running afoul of the law and there are plenty who have been sued for it, a prospect that can be costly.
If you are confused about navigating the FMLA, here’s a handy list of mistakes to avoid.
Firing – It would be a bad idea to fire an employee if they’re unable to return to work following the end of FMLA leave that is due to their serious health condition. Better to find out if the employee is entitled to any additional time off under employment laws or through company policies.
The Americans with Disabilities Act (ADA) may consider granting of additional leave “reasonable accommodation,” in legal terms.
That definition comes from determining whether the employee’s condition is a disability. Under the ADA, most serious health conditions as defined by the FMLA are considered disabilities. If you’re in doubt, ask your legal counsel for advice.
Then you have to figure out whether the requested time off is legally considered “reasonable.” Under the ADA, you as an employer don’t have to grant leave as an accommodation if it poses “hardship” or “undue hardship” to your organization.
Miscalculation – You are able to calculate FMLA leave by either calendar year, any fixed 12-month period, or the 12 months measured forward from when an employee’s FMLA leave begins. It can also be calculated backward from a 12-month period from the date an employee uses the leave.
Deadlines – Meeting FMLA deadlines for processing requests for leave under its guidelines is critical. Within five business days of learning an employee has requested FMLA leave, you must provide them with the “Notice of Eligibility Rights and Responsibilities Form,” or something similar that your company has prepared.
Next, if you require the employee to file a certification form, you must allow them 15 calendar days to do so. Then, within five business days of receiving the certification form, you must provide the employee with an FMLA designation form that tells them whether the request has been approved.
But if the certification form is incomplete or insufficient, you then must allow the worker seven calendar days to make necessary corrections. You must give written notice to employees of all deadlines, and the consequences of failing to meet them.
Reassignment – If you want to reassign an employee on FMLA leave for better efficiency, you can only do so for employees who need intermittent or reduced schedule leave.
Reassignments can be done for the employee, family or covered service member if such leaves are a planned medical treatment, a period of recovery from a serious health condition, or due to the birth of a child or placement of a child into adoption or foster care. Beyond that, the reassignment is to be only as long as is required by the leave period.
You are also prohibited from transferring employees to a position to discourage them from taking FMLA leave. That means you can’t demote them from marketing supervisor to customer service rep, even if their pay and benefits remain the same at the reassigned position.
Meanwhile, you may not require a transfer to another job when the employee’s need for an intermittent or reduced schedule is unforeseeable.
The takeaway
As you can see, the FMLA is a veritable minefield for employers and, if an employee requests leave under the law, you must make sure you don’t do anything to infringe on their rights, lest you open your organization to being sued.
Business Interruption the Fastest-Growing Cyberattack Cost
A new study has found that the fastest-growing cost associated with cyber incidents is business interruption, reinforcing the need for businesses to have in place robust response and data restoration measures, particularly after a ransomware attack.
Between 2019 and 2023, the average cyber insurance claim that involved business interruption ended up costing 450% more than claims that had no lost income, according to the 2024 NetDiligence Cyber Claims Study.”
Business interruption can occur if a cyberattack like ransomware fully or partially disables a company’s operations or if a vendor suffers a cyberattack that forces the client company to suffer a loss or inability to operate.
The latter, known as “contingent business interruption,” can occur if a cyberattack cripples a supplier’s factory from producing a part that’s crucial for another company’s production operation.
The study also found that if business interruption is involved, the cost of all parts of a claim, such as crisis services and recovery costs, also increase.
For claims with no business interruption losses, the average cost of a cyber claim for small and mid-sized enterprises (SMEs) between 2019 and 2023 was as follows:
- Crisis services: $96,000
- Regulatory and legal: $24,000
- Total incident cost: $205,000
However, for SME claims with a business interruption component during the same period, average costs were*:
- Business interruption: $487,000.
- Crisis services: $279,000
- Recovery expense: $115,000
- Total incident cost: $995,000
* There was no information on regulatory and legal costs for these types of claims.
For large companies, the average business interruption cost was $26 million, with total incident costs averaging $36 million in 2019-2023.
What you can do
First: Ensure that you have in place systems, policies and training to reduce the chances of your organization being hit by a cyberattack.
One of the study authors noted that many companies he deals with are woefully unprepared for a cyber event-caused business interruption.
“We continue to see SME clients transform their businesses to be more reliant on digital systems while failing to understand the inherent risks that come from complex digital ecosystems,” said Alden Hutchison, principal of global consulting firm RSM US LLP.
“This becomes very evident during the recovery process for a client where it’s clear they haven’t planned for resilience in their digital platform nor practiced operating their business processes during a crisis scenario,” he explained.
Experts recommend:
Disconnecting all networks. As soon as a threat is discovered, disconnect every vulnerable device from your network in order to keep the attack from spreading.
Regular back-ups. Back up critical data to a secure, offsite location to enable swift recovery in case of a cyberattack. Even better: Download your data on a daily basis to a hard drive that is not connected to your database or the internet.
But beware: Ransomware can have dwell times as long as six months, so malware might have been included in your archival backups. Before restoring, run an anti-malware package on all systems and drives.
Detailed planning. Create a detailed plan outlining response procedures to a cyberattack, including roles, responsibilities, and data recovery and restoration strategies. Also, prioritize in advance what data or systems needs to be recovered first, and when.
Continuous monitoring. Continuously monitor network traffic for suspicious activity to detect potential threats early and before they spread and threaten to take your entire system down.
Cyber coverage
Finally, you should have in place a cyber insurance policy. Most policies include coverage for both business interruption due to an event on your systems and contingent business interruption for a cyber event at a vendor or supplier.
You can often work with us to tailor-make your cyber policy to ensure it would cover your business’s specific needs.
New Class-Action Lawsuits Target Group Health Plan Tobacco Surcharges
A new wave of class-action lawsuits is targeting employers that apply health insurance premium surcharges to employees who use tobacco, accusing them of discrimination and violating the Employee Retirement Income Security Act (ERISA), according to two new blogs by prominent law firms.
The lawsuits, according to a blog by Chicago-based Thompson Coburn LLP, assert that the surcharges are violations of fiduciary duty rules under ERISA, as well as discrimination regulations under the Health Insurance Portability and Accountability Act (HIPAA).
The law firm says these cases are being filed across the country on an almost daily basis and to date no courts have ruled to have the cases dismissed.
The fast-developing lawsuit trend is notable, considering that tobacco surcharges are widely used, and if any of the new lawsuits are successful, they could set a precedent that could expose thousands of employers to legal action. Most of the lawsuits are against self-insured plans, but even employers who purchase health insurance and also impose surcharges for tobacco use could be targeted as they are considered “fiduciaries” under ERISA.
The lawsuits hinge, in part, on a HIPAA prohibition on group health plans and wellness plans discriminating on the basis of health status. For example, health plans are barred by the law from charging higher premiums to group health plan participants with pre-existing conditions.
However, HIPAA has one exception to the rule: It allows plans to charge different premiums for employees who enroll in and adhere to “programs of health promotion and disease prevention.”
You can find HIPAA’s non-discrimination rules for wellness plans here.
The lawsuits target a common practice: requiring employees who use tobacco to pay higher health plan premiums than their colleagues who certify that they don’t use tobacco products (cigarettes, e-cigarettes, chewing tobacco and similar products).
Common themes
The lawsuits have two common themes. They allege that the plan:
- Did not provide an alternative standard for tobacco users to obtain a discount because the premium reductions for participating in the wellness plans are only available on a prospective basis, in violation of ERISA Section 702, and
- Failed to provide information on the existence of such alternatives in “all plan materials.”
The lawsuits typically seek several of the following remedies:
- Declaratory and injunctive relief.
- An order instructing the employers to reimburse all persons who paid the surcharges, with interest.
- Disgorgement of any benefits of profits the businesses received as a result of the surcharges.
- Restitution of all surcharge amounts charged.
It should be noted that as of the end of October 2024, no court has ruled on a motion to dismiss a case, according to the blog. At least one case has settled as a class action and the employer and plaintiffs in another class-action case had informed the court that they were working on a settlement agreement and would both ask the court to dismiss the case.
In addition to these private actions, the Department of Labor has sued several employers targeting premium surcharges, including in 2023 when it brought action against a firm whose health plan was charging tobacco users a $20 per month surcharge, according to a blog by Washington, D.C.-based Groom Law Group.
The takeaway
Thompson Coburn said in its blog that these types of cases are snowballing: “Given the number of complaints being filed weekly — at times daily — it is highly possible that any group health plan that applies tobacco surcharges as discussed faces the possibility of a class action lawsuit.”
The law firm recommends that businesses consider reviewing their health plans to ensure that they comply with HIPAA’s non-discrimination rules for wellness plans, which allow tobacco surcharges when applied properly, such as charging different premiums for workers who enroll in and adhere to a program that’s focused on promoting health and preventing disease.
This is a newly evolving threat to employers. We’ll provide future updates after courts rule on the merits of the cases, which will provide more guidance on when tobacco surcharges can be applied.
Leave Protections Expanded for Employee Victims of Violence
Gov. Gavin Newsom has signed into law a bill that provides a right to paid time off and other protections for employees who are victims of violence, including threats, assaults, stalking and domestic abuse.
AB 2499 makes significant changes to California’s “jury, court and victim time off” law by expanding instances when a victim of a “qualifying act of violence” can take time off, and provides protections against retaliation for taking that paid time off. The law already requires that employers provide time off for workers who are on juries or have to appear in court.
The new law also requires employers to provide reasonable accommodation to employees who are victims of violence, in a process that’s akin to the Americans with Disabilities Act’s interactive process.
Current law
Under current law, employers are barred from discriminating or retaliating against a worker based on their status as a victim of crime or abuse, for taking time off for jury duty or to comply with a subpoena or other court order.
As well, firms with 25 or more workers may not discriminate or retaliating against an employee who is a victim of crime or abuse from taking time off:
- To seek medical attention for injuries related to the crime or abuse,
- To obtain services as a result of the crime or abuse, or
- To participate in actions to increase their safety from possible future crimes or abuse.
Changes under AB 2499
AB 2499 replaces the term “victim of crime or abuse” with an individual against whom a “qualifying act of violence” (QAV) is committed, which includes:
- Domestic violence,
- Sexual assault,
- Stalking, or
- An act, conduct or pattern of conduct in which an individual:
- Causes bodily injury or death to another,
- Exhibits or uses a firearm or other dangerous weapon against another, or
- Uses or makes a reasonably perceived or actual threat against another to cause physical injury or death.
The law also extends protections to employees who need to take time off if they have a family member who is the victim of a QAV. “Family” includes:
- A child, parent, grandparent, grandchild, sibling, spouse or domestic partner; or
- A “designated person” who is blood-related or whose association with the employee is equivalent to a family relationship.
It also bars employers with 25 or more employees from discriminating or retaliating against a victim of QAV or whose family member is a victim, for taking time off to:
- Obtain relief, including restraining orders.
- Obtain medical attention after a QAV.
- Seek assistance from a victim services organization.
- Seek mental health services related to a QAV.
- Recover from QAV-related injuries.
Reasonable accommodation
Under an ADA-like component to the new law, employers are required to engage in an interactive process to determine effective accommodations if an employee:
- Discloses the fact they or a family member is a victim of a QAV, and
- Requests accommodation for safety reasons.
Some examples of reasonable accommodations include:
- Work transfers or reassignments,
- Modified schedules,
- Changed workstation or telephone,
- Lock installation, and
- Temporary time off.
However, organizations won’t be required to provide accommodation if it would pose an undue hardship to them, including if it would violate their duty to maintain a safe workplace.
Notification and paid time off
The new law allows victims to use paid vacation or sick time during any QAV-related leave they take.
If the leave is granted as an accommodation under the Family and Medical Leave Act, the paid leave must run concurrently. Employers may restrict leave to the following:
- Twelve weeks for an employee who is a victim.
- Ten days if a worker’s family member is a victim.
- Five days if a worker’s family member is a victim and needs help relocating.
The takeaway
California employers will be required to provide notice to their employees that informs them of their rights under the law when they are hired and if an employee informs the organization that they are a QAV victim.
This is one of those laws that should spur you to seek legal counsel if confronted with a request for time off, and especially if the affected worker requests reasonable accommodation.
This Insurance Can Help You Survive Another Business’s Disaster
November of 2011, floods inundated large parts of central Thailand, including thousands of factories that made everything from automotive parts and hard disk drives to eyeglass lenses and air conditioners. In addition to the human and economic cost in Thailand, the disaster affected businesses around the world.
Carmakers in Detroit shut down because they could not get the parts they needed and half of the world’s hard disk drive production was wiped out, leaving computer manufacturers with stalled assembly lines. When disasters like this occur, businesses around the globe feel the effects.
In addition to making advance arrangements for alternative suppliers, businesses can protect themselves by purchasing two types of insurance coverage: Contingent business interruption, and supply chain insurance.
Contingent business interruption
Contingent business interruption insurance, also called business income from dependent properties, pays for a business’s lost profit plus continuing expenses when it must slow or stop operations because of damage to another business’s property.
These other businesses can be customers or suppliers. For example, if a motorcycle dealership was left with no bikes to sell because its supplier in Japan suffered a fire, the insurance would make up part of the lost income.
The damage must result from a cause of loss that the insurance policy covers, such as fire or a hurricane. This is important because standard property insurance policies do not cover losses caused by catastrophes such as floods and earthquakes.
Supply chain coverage
Supply chain insurance takes contingent business interruption a step further. It covers income lost because of damage to a supplier’s or customer’s property. However, it also covers losses resulting from events that do not cause physical damage. These may include:
- Labor disruptions
- Production process problems
- Trade disputes
- Wars
- Political turmoil
- Closed roads, bridges, railroads and shipping channels
- Public health crises
- Actions by regulators
- Financial difficulties
Businesses often have different tiers of suppliers, with key suppliers in the top tier and less important ones in the lower tiers. It is common for them to insure only the top tier.
However, insurers are increasingly offering multi-tier coverage. This applies to the business’s entire supply chain. Multi-tier coverage provides a more comprehensive solution for the business while also spreading out the insurer’s risk.
Some insurers offer options. One lets policyholders choose between measuring losses in terms of gross earnings or number of units from the supplier. Some also offer agreed-value coverage, which eliminates penalties for buying amounts of insurance less than the amounts of value at risk.
Businesses should determine where they are vulnerable to supply chain losses and develop back-up plans for dealing with unexpected disruptions. These could include reserves of the needed supplies and contracts with alternative suppliers.
Insurance can help the business recover from a supply chain loss after the fact. Advance planning can help make that loss as small as possible.
If you would like to know more about business interruption insurance, don’t hesitate to contact us.
Preventing Carpal Tunnel Syndrome in Your Staff
Carpal tunnel syndrome is the bane of the office worker and if an employee gets it from repetitive motion work in front of the computer, the employer can end up with a costly workers’ comp claim on its hands, particularly if doctors call for surgery to remedy the injury.
That’s why it’s important that companies focus on prevention by making small changes to how their employees work in jobs that involve repetitive motions, like working on a computer, a cash register, a restaurant and in many manual labor and manufacturing occupations.
Carpal tunnel syndrome is triggered when the nerve that runs from your forearm to your wrist gets pinched at the wrist. This muscle controls a few of the small muscles in the hand and fingers as well as all sensations, and it is a common workplace injury that is caused by repetitive motions, particularly among people who are frequently using a keyboard and mouse.
Here’s a look at this all-too-common affliction and how you can help your employees avoid it.
Symptoms
There are several symptoms that usually occur when an employee has carpal tunnel. The first is a frequent burning, itching or tingling feeling in the palm of your hand. Often people say their fingers feel swollen when there is no visible swelling.
Signs of carpal tunnel syndrome often occur at night and can wake the sufferer up with the need to shake out their wrists as if they have fallen asleep. Another common symptom is decreased strength in your hands that may make it difficult to get a tight grip on something or to pick up tiny objects with your fingers.
Prevention
Train all of your employees who spend long hours behind a desk or typing on a computer in the following preventive measures for carpal tunnel:
Provide chairs with sturdy back support that promote sitting up straight and prevent workers from slouching.
Good posture is key. Employees should adjust the height of their chairs so that their arms and wrist are level. Do not bend your wrist all the way up or down when using a keyboard. A relaxed middle position with the wrists parallel to the floor is best. Keep your keyboard at elbow height or slightly lower.
Replace old keyboards and other desk tools with ergonomically designed ones. For example, alternative geometry keyboards (Microsoft Natural Keyboard, Apple Adjustable Keyboard) allow the user to adjust and modify hand positions, as well as adjust key tension. Most have a split or slanted keyboard that places the wrists at an angle.
Employees should make sure that their computer mouse is comfortable to use and doesn’t strain their wrist.
Provide wrist rests, which fit under most keyboards and can help keep the wrists and fingers in a comfortable position.
Helping sufferers
You should caution your susceptible staff that curing carpal tunnel syndrome is a lengthy and painful process and many cases require surgery that can be performed on an outpatient basis. If they develop the condition on the job, it may be considered a workers’ compensation insurance claim and could involve medication and, in serious cases, surgery.
After surgery, the employee will need to wear a brace and not use their hand(s) for a significant period of time. And rehabilitation may also be in order to ensure their hand(s) heal properly.
If you are starting to see dollar signs reading this, you are right. The process will cost your company time, lost productivity and money. If the claim includes surgery, it could affect your workers’ comp experience as well and possibly result in a rate increase.
Why It Is Important to Review Your Business Insurance Annually
One of the keys to managing risks when you first start a business is getting the right insurance to cover your operations, property and potential liabilities.
Unfortunately, many business owners fail to update their policies and just renew them year after year even if the company has grown, expanded operations and facilities, and added new equipment and property. If this is the case, the old coverage would be insufficient.
Business owners should review their policies every year to catch any omissions and make sure they are not underinsured. It is common for smaller businesses to secure a basic business owner’s policy (BOP) and workers’ comp when they first get started. A BOP includes:
- Property insurance for buildings and contents owned by the company.
- Business interruption insurance, which covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business.
- Liability protection, which covers your company’s legal responsibility for the harm it may cause to others. This harm is a result of things that you and your employees do or fail to do in your business operations that may cause bodily injury or property damage due to defective products, faulty installations and errors in services provided.
Outgrowing BOP coverage
As your business expands, you may outgrow the BOP and need additional coverage to manage your risks. Some examples include the following:
- Workers’ comp. While you likely added a workers’ comp policy when you made your first hire, you will need to update it as you add more staff. If you don’t, when your insurer audits you, you may face a hefty bill for additional premium. Be diligent about your policy and inform your insurer as you grow.
- Excess umbrella or liability coverage. You should consider this insurance to cover claims that exceed your BOP’s limit, providing you with an added layer of protection to protect your assets.
- Professional liability insurance. These policies provide coverage for mistakes for any professional services you provide. This used to be mainly for doctors, attorneys and accountants, but as our service sector has expanded it includes services provided by coders and software developers, appraisers, consultants, real estate brokers, graphic designers and home inspectors, among others.
- Auto, non-owned and hired coverage. This protects business owners if an employee has an accident while driving a rental or personal vehicle on the job.
- Employment practices liability insurance. This covers human resources issues related to discrimination, harassment and termination.
- Commercial auto insurance. This coverage protects autos that are not under a personal policy.
- Directors and officers liability coverage. This protects officers and directors in the event they are sued for wrongful acts while on duty.
Depending on the business, some or most of these insurance options may be required for adequate protection. Annual reviews with us are ideal for discussing your options. Make sure these elements are considered:
- If computers, equipment or other types of property have been added, this would be reason to increase policy limits.
- While revenue is an important consideration, it is also important to remember that it is a potential liability.
- A general liability or BOP may be affected if the owner has moved, added or closed locations.
- Hired and non-hired auto insurance is necessary if workers are driving frequently in rented vehicles.
- For specific types of work and services, employers may need additional endorsements for their general liability policies.
- People who are serving new industries or clients may have problems with their professional liability coverage if they have large amounts of high-risk industries or customers.
- If you experience an increase in the number of workers you have, or there is a higher turnover rate, it is important to think about employment practices liability coverage. And as mentioned, your workers’ comp policy should be updated to reflect any staffing changes and that you categorize your workers properly.