Computer Technology
The question sounds silly, but with our increasing reliance on computers and the increased virus attacks that we’ve seen recently, it’s a question that holds a lot of validity.
Computers are prone to viruses, crashes, power surges, and user mistakes that can cause lost data. It might not be the end of the world for a home user, but for a business, it could spell catastrophe. I was on the internet the other day searching for ways to protect my computer and came across some great tips that I thought I’d share with you.
1) Use anti-virus software and keep it up to date. Yes, it costs money, but it’s a small investment that protects your largest investment - your business.
2) Don’t open emails or attachments from unknown sources. It sounds obvious, but this is the number 1 way viruses are spread. Be careful even when opening emails from people you trust – people frequently spread viruses unknowingly.
3) Use “firewalls” to protect your computer from unwanted intruders. Firewalls help filter out unwanted data, keeping it from your computer. They work - if you don’t have one, get one!
4) Regularly download security updates and patches for your operating system. Software companies create patches to eliminate software vulnerabilities as they are discovered. By continually downloading these patches you help close the gaps in your computer.
5) Use passwords that are hard to guess. Passwords are easy to figure out with software programs that will run billions of potential combinations. The only way to create a secure password is to vary upper and lowercase letter with numbers and symbols, make them at least eight characters long, and change them regularly.
6) Back up your computer data regularly. It is inevitable - you WILL lose computer data at some point (if you haven’t already!). Once this happens you will know why backing up your data regularly is so important. Prevent it from happening in the future by backing up your data to removable media on a regular basis.
7) Don’t share computer access with strangers. This sounds simpler than it is. Obviously you won’t let a stranger play on your computer, but what if you use a file sharing program? That opens the door for others to use your computer from a remote location. Don’t let that happen - keep your computer to yourself!
8) Disconnect from the internet when not in use. The internet is used to send and receive information, which means that when you’re hooked up to the ‘net, you’ve opened a two-way portal. The surest way to keep people out is to disconnect. It’s that simple.
9) Check your security on a regular basis. Your security settings can become outdated over time, so check them regularly. A good rule of thumb is to review your computer security every time you change the clocks for daylight savings.
10) Make sure others who use your computer know what to do if your computer becomes infected with a virus. If other people are using your computer, make sure they know how to update virus protection software and download security patches. This way, if you aren’t around, you won’t have to worry about your computer’s security being compromised!
While you can’t protect your computer from everything, there are preemptive measures that you can take to greatly reduce your risk.
General Liability
“The three most commonly used additional insured endorsements in construction relationships are the Insured-Owners, Lessees Or Contractors-Scheduled Person Or Organization (CG 20 10); Additional Insured Owners, Lessees Or Contractors-Automatic Status when Required In Construction Agreement With You (CG 20 33); and Additional Insured-Owners, Lessees Or Contractors-Completed Operations (CG 20 37).”
All three of these General Liability additional insured endorsements have undergone some changes under the various edition dates since 11/85. Most of these changes have resulted in significant reductions in coverage for additional insureds.
The 07/04 versions of CG 20 33 and CG 20 10 are essentially the same as far as language except for the wording in CG 20 33 states that additional insured status ends when the work contracted for is completed (no completed operations coverage is extended to the additional insured). CG 20 10 arrives at the same result by limiting coverage to “ongoing operations”.
The 07/04 version of CG 20 37 states that additional insured status is approved only when the entity is scheduled. Conversely, the 07/04 CG 20 33 states that any entity requiring additional insurance status via a contract is covered.
The 07/04 edition of all three additional insured endorsements limits coverage to the additional insured’s vicarious liability for the actions of the named insured.
A basis for conflict between insurance professionals and general contractors (and their lawyers) has been the 11/85 edition of the CG 20 10. A contract requiring the CG 20 10 11 85 “or its equivalent” is still being requested even though the general contractors and their lawyers have admitted that this option does not exist and have instead asked for equivalent protection. “Equivalent” protection is not provided by the 07/04 version of CG 20 10 coupled with the CG 20 37. ISO does not have comparable wording. A few of the smaller regional carriers may have some proprietary company form that provides something similar.
Source Insurance Journal-National Region January 12, 2009
Remodeling
The latest Hanley Wood report indicates the average cost and the average recoupment on resale for various remodeling jobs such as new bedrooms, baths, kitchens, decks, windows, siding, roofing, sunrooms, etc.
This is important information for remodelers to use in their sales presentations.
Uncategorized
Chubb Group of Insurance Companies recently conducted a nationwide survey of 1,000 people and “more than four in 10 Americans are worried that the economic environment can expose their families to crime…”
Here are some of the findings:
- 41 percent of those who responded to a nationwide survey are anxious about crimes that they and/or their families will be exposed to based on the economy
- 40 percent are disturbed about domestic contractors’ dependability
As for improvements to the home:
- 45 percent intend to prolong home improvements such as additions or renovations
- 25 percent intend to cut back their spending on repairs and maintenance
Source: 2008 Chubb National Home Protection Survey
Business Auto, General Liability, Insurance Audit, Risk Management, Workers' Compensation
Our agency conducts annual insurance checkups for our contractor clients, and I am often asked “Why is this necessary or recommended since updated information has already been provided in the renewal applications and over numerous phone conversations that occur throughout the year?”
The purpose of the contractor annual insurance checkup is to review your current coverages; to determine if your coverages and limits are adequate (example: have you signed a contract that requires higher limits?); to determine if your key employee structure has changed, and to find out if anything new is going on with your business.
Your insurance agent is not necessarily the first contact you think about when you change your operations or buy something new (unless you need proof of insurance). The time to discover you forgot to let us know is NOT after you’ve had a loss.
During the annual insurance checkup, we will review your Workers Compensation, General Liability, Business Auto, Contractors Equipment, Bonds, Umbrella and Builders Risk (if applicable) and make risk management recommendations using our custom checklist tool. We can also provide you with quotes for Life Insurance, Key Man Life Insurance and Group Health Insurance.
As your business grows, or you downsize your operation, your insurance needs change. Also, the education that you receive will likely result in maximum premium savings.
In addition to meeting with your agent to discuss your business changes and needs, it’s also a good idea to do an annual checkup with the agent who handles your personal insurance.
Working together, we can help you protect your valuable assets by providing the right coverage at the lowest possible cost.
Construction Defect
A Minnesota builder settled a lawsuit where it was alleged that defective foundation construction was the cause of death of a 10 year old girl and not the tornado itself.
The 2006 tornado carved a six mile path of destruction and injured six people and damaged 340 homes.
I have no idea about the settlement details but it seems that it would have been difficult to prove that the defective construction was the proximate cause of the injury during a tornado. Nevertheless, this category of lawsuit sends a warning signal to builders who are not in compliance with building codes dealing with wind damage in hurricane and tornado prone areas.
Source: Startribune
General Liability, Insurance Audit, Workers' Compensation
Insurance Audit – just these simple words can trigger very negative emotions for a contractor! In this blog I will attempt to help prepare you for your next Workers Compensation and/or General Liability audits.
To begin, both of these policies are based on estimated numbers (employee payroll, uninsured sub payroll, amounts paid to insured subs, gross receipts, etc.) since you don’t know exactly what they will be at the end of the policy term. Usually you will be contacted by the auditor 30 to 45 days after the expiration of the policies requesting an appointment to meet with you and review your records.
The insurance auditor will want to review the following:
-
W-2′s (employee payrolls)
-
1099′s (subcontractor payrolls)
-
ledger statements
-
certificates of insurance on your subcontractors (please make sure that the policy effective and expiration dates on your subcontractor’s certificate are in line with the dates of their service; sometimes you will need to have more than one certificate on your subcontractor).
-
Job duties of your employees and subcontractors — this is needed to make sure that they are properly classified according to insurance rules and regulations
After the insurance auditor meets with you and reviews the above information, he will go back to his office and “count the beans” to determine whether you overpaid or underpaid your premiums. He will then send his report to the insurance company. Depending on the outcome, you will either receive a return premium or additional premium invoice along with a copy of the audit worksheets. Please be sure that you understand audit additional premiums are due and payable in full within 30 days of the audit, unless it’s being disputed.
Due to confidentiality laws, your insurance agent will not be given a copy of the audit worksheets unless you give your permission during the audit. I strongly recommend you give your permission. If you do dispute your audit you will need your agent’s help during the process. Without the audit worksheets there won’t be much we can do for you.
When the insurance auditor arrives at your office I recommend that you have a comfortable, quiet place for them to work, and have all of your paperwork ready and organized. Make sure that the person who is to meet with the insurance auditor has cleared their calendar so they won’t be interrupted with phone calls, office meetings, etc. Treat the auditor as a respected guest and not as the “enemy” — offer them the same amenities you would offer to any other guest. Remember, they are people too and are there to do their job. I’ve dealt with many insurance auditors, and their main complaints are that when they get to their appointment the records, people, place to work, etc. are not available and the insured was rude. Their negative impressions may not be the “whole story”, but it can make a difference. Believe me when I tell you they don’t want to be in your office any longer than absolutely necessary!
General Liability, Workers' Compensation
I have been in the insurance industry for longer than I care to say, and there are numerous myths that seem to endure over time. In an attempt to put these myths to rest I will be be discussing some of the more “common” ones in a series of blogs.
The fact is that this is more complicated than it seems at first glance. For purposes of determining the employee count, most state laws also count uncompensated officers as well as employees of sucontractors. In addition, state laws count the total number of employees during an entire year, and not the average number of employees at any given time.
If an employer is required to carry Workers’ Compensation but does not do so, the injured worker can file his Workers’ Compensation claim with the state’s Uninsured Employer’s Fund and will get paid the traditional benefits. The state’s Uninsured Employer’s Fund will then file a lien against the non-complying employer for the amount of the payout and can levy substantial fines against the employer in addition to the benefits.
After I tell my client this, their next response is sometimes “Can’t I file the claim under my General Liability policy?”. The answer to this is very simple – “No”, as these types of claims are excluded.
Audit, General Liability, Workers' Compensation
I was talking to a new business prospect the other day (I’ll call him Steve), gathering information to quote the insurance for his residential construction business. When I asked Steve about his employee payroll and any amounts paid to uninsured subcontractors, he stated that he wanted to underestimate them so he wouldn’t have to pay so much money upfront. After all, the economy is rough and he thought he might be better equipped financially to pay the additional premiums after the audits had been completed.
This thought process is more common than you might think, and it is extremely dangerous! During my years in the insurance industry I’ve seen way too many businesses go bankrupt because of underestimating their payrolls and gross sales.
The reality is that additional premiums resulting from an audit are due within 30 days and can NOT be financed. If you can’t pay the audit additional premiums when due the insurance company will cancel your current policies. Once your policies are canceled, along with any certificates of insurance that may have been issued, your business comes to a halt. No insurance = no certificates; no certificates = no jobs. In addition, the insurance company will turn the unpaid debt over to a collection agency, which will impact your credit score.
The next thing I usually hear when I explain this is: “Well, I’ll just get insurance with another insurance company and/or agent.”
Unfortunately, unpaid audit premiums must be disclosed on the insurance applications, as well as the reason for your prior insurance policies being canceled. Believe me when I tell you that no insurance company is going to write a policy for you if you owe another insurance company money. Their reasoning is that you didn’t pay the other company, so you probably won’t pay them either. If you don’t disclose the information on the applications then you have committed fraud, which is a blog topic all in itself.
In conclusion, the best course of action is to be as accurate as possible when estimating employee payrolls and subcontractor costs to minimize large audit additional premiums. It’s much easier to spread the premiums out over months than to try and come up with the money in 30 days.
Construction Defect, General Liability
Most General Liability insurance carriers are wary of insuring contractors as a result of a high frequency and severity of construction defect claims that have occurred nationwide. As a result, many insurance carriers, especially those in the excess & surplus lines marketplace, are frequently using the following exclusions that take away much needed coverages:
* Residential Construction Exclusion: Believe it or not, residential construction is riskier than commercial construction due to the the frequent class action lawsuits filed within certain subdivisions.
* Tract / Row / Condo / Town Home Exclusion: These types of project are considered risky since they seem to invite class action lawsuits as well as lawsuits from home owners associations looking for a deep pocket to fund normal maintenance and wear and tear issues just prior to the running of a statute of repose for construction defect lawsuits.
* Subcontracted Work Exclusion: Many policy forms actually exclude lawsuits arising out of work performed by subcontractors.
* Product And Completed Operations Exclusions: Some carriers that want to eliminate almost all of their risk for construction defect claims will insert this exclusion.
Why would insurance carriers and agents that cater to contractors even offer a policy with these exclusions to their clients that would be negatively impacted? This is a good question that defies logic. As a general rule, only insurance agents that are inexperienced would set up their contractor clients with such deficient policies. An insurance agent that is knowledgeable and specialized in contractors would know how to find carriers that don’t have these problem exclusions.
Furthermore, these problem exclusions are just the tip of the iceberg when designing quality coverages for contractors.
Source: Trina Swartz, Beware Of Leaky Contractors Coverage, Agent Market Source, Fall/Winter 2008-2009
