How should I go about shopping for my insurance? Select an insurance broker that has access to a broad range of carriers. Do some of your own research on the internet and look for primary carrier names like The Hartford, Chubb, Allied, Zurich, StPaulTravelers, Safeco, Everest National, Liberty Mutual, Republic Indemnity. Then ask your broker if their office has access to these and other A-rated carriers. Here’s why: insurance is distributed through a licensed broker and/or agency. If your broker and/or agent has access to all the primary (best) carriers for the type of insurance you’re looking for; there really is no need to shop through multiple brokers or agents because the rate for your business will be the same, regardless of which agent gets the quote. This is because insurance carriers will only quote an applicant once. Once a broker submits an application on your behalf to a carrier, all subsequent applications from other brokers are “blocked”; this is done because the insurance carrier doesn’t want to waste their time, your time, or the broker’s time by creating unnecessary processing. Again, the particular carrier’s rate through one broker is the rate you will get through every broker. Where the competition lies is between carriers. That’s why you want a broker who has access to all the best carriers available for your particular business needs.
2.Choose an agent that you like working with and with whom you can develop a long-term relationship. They should be courteous and respond quickly to your questions via email or phone the same or next business day. Remember to ask them how long they’ve been an insurance professional and if they hold, or are working toward, an industry certification such as CIC (Commercial Insurance Consultant). This level of education tells you that your agent is on the cutting edge of product knowledge and education. Ask them if they have a list of current references of business owners you can talk with. Also, check the Department of Insurance Licensing Bureau to see if any complaints have been lodged by policyholdersBack to TopWhat are the different kinds of liability insurance and which one(s) do I need?There are 4 main types of liability insurance, each protecting an important part of every business:
• Commercial General Liability Insurance [<- this should link to the CGL page] – needed by most businesses to cover basic business, tenants, owners and landlord’s liability.
• Professional Liability Insurance [<- this should link to the PL page] – needed by all professionals to cover negligence and specific errors or omissions; such as a doctor, engineer, attorney, real estate broker or other type of professional.
• Employment Practices Liability Insurance (EPLI) [<- this should link to the EPLI page] – needed by employers in the event of accusations by current or former employees or business associates.
• Product Liability Insurance [<- this should link to the PL page] – needed by any business that manufactures or sells a product, whether tangible or intangible.Back to TopWhat is a Business Owner's Policy (BOP) and is the best choice for my small or medium business?A Business Owner's Policy is ideal for small and medium business owners who want comprehensive coverage in a single plan. BOP policies combine a number of basic coverages into a single policy, including:
• Equipment / Machinery
Because the coverages are included in a single policy and easier for the insurance company to manage, they are often cheaper for the business owner than buying each coverage separately. Please note that Commercial Auto [<--link to commercial auto] and Workers Compensation is general not included in this plan. For more information, call our office today for a quote or fill out our online quote form.Back to TopWhat is Commercial General Liability Insurance and why would a business consider it?All businesses need some form of basic liability insurance. A very basic form of liability is “slip and fall” insurance. It may also be referred to as “OLT Insurance”, Owners, Lessors and Tenants insurance. As a business owner, you take a risk that if a customer, salesperson, or vendor enter your premises and injure themselves, you may be held financially liable for medical and other injuries or losses sustained. A Commercial General Liability policy, among other things, will respond to this type of suit. There are other benefits to this type of insurance – refer to your current policy or an insurance professional for additional coverages and clarification.Back to TopWhat is Professional Liability Insurance and Errors & Omissions Insurance and why do I or my business need it?Professional Liability Insurance should be carried by any professional performing a service, such as a doctor, attorney, or accountant. It’s an insurance policy that will respond to a loss that covers the insured for perceived or real “negligence” and “errors or omissions” that injure their clients. If you are an architect or structural engineer working on designing multi-million dollar homes or other structures, you need to have this type of insurance in the event structural defects are detected. Consultants, sub-contractors, and all professionals performing services should consider this type of insurance.Back to TopWhat is an Umbrella Insurance Policy and how does it work?Commercial Umbrella (aka Excess) liability insurance is an important source of protection that supplements the limits of an insured's underlying policies such as general liability, automobile liability, and employers liability. Umbrellas also protect insureds from exclusions and gaps that exist in their primary liability insurance. Covered causes of loss that are not normally included in primary policies are subject to a self-insured retention (SIR), which is the responsibility of the insured to pay. SIRs in the amounts of $10,000 or $25,000 are common.Back to Top What is Employment Practices Liability Insurance (EPLI) and why should my company have it?EPLI covers businesses against allegations by workers that their legal rights have been violated by their employers.
While some insurance companies offer EPLI as a stand-alone coverage, other insurers provide this coverage as an extension of additional coverage to their Business Owners Policy (BOP).
Here are some examples of the types of employee lawsuits against which EPLI protects the insured:
? Sexual harassment
? Wrongful termination
? Failure to employ or promote
? Breach of employment contract
The cost of EPLI coverage depends on your industry and the number of employees you have, in addition to risk factors such as your company’s claims history and written policies, as well as the procedures and limits of coverage requested. The policy covers legal costs, and pays damages to the injured party, if the lawsuit is favorable to the damaged party. The insured’s policy should reimburse for the costs of defending a lawsuit, regardless of whether the suit is won or lost in court.
EPLI is one of many ways to safeguard your business and should be considered part of an overall protection plan.Back to TopWhat is Product Liability Insurance and does my company need it?
If your company manufactures or sells a physical product, under the Consumer Protection Act 1987, the business is legally responsible for any damage or injury that a project you supply may cause..
Remember, negligence claims can occur even when a product is used incorrectly by the consumer.
Back to TopWhat is a Business Income & Extra Expense Insurance and why should I consider it?This coverage identifies risks that could disrupt the operation of your business and provides a plan to respond to those risks. If you’re like many small business owners, you may only think “liability and property damage” when you think about insurance. But have you considered the consequences of a major fire, beyond rebuilding and restocking your business? For example, if your business were shut down for months while you rebuilt, where would your customers go? Will they come back when you’re ready for them? Does your insurance cover temporary relocation elsewhere so you can keep your customers?
Consult your insurance professional to create a continuity plan for your business.Back to TopWhat’s the difference between an “occurrence” policy and a “claims-made” policy?
Some policies are offered in two forms: occurrence and claims made. The major differences are highlighted in the table below.
• Covers incidents on or after the policy effective date, so long as they are reported during the policy term.
• The policy may retroactively cover incidents occurring before the policy effective date.
• The cost of this type of coverage increases incidentally over the first 5 years of the policy, and may continue to increase, depending on the clams made against the insured.
• Covers incidents during the policy effective period, even if the claims regarding an incident is made against the insured after the policy is in force. For this reason, Occurrence Coverage can be expensive.
Back to TopWhat is Workers Compensation Insurance and why do I need it?All states require employers have some form of Workers' Compensation insurance. It’s the law. It pays for medical care and rehabilitation for employees and principals of companies eligible for coverage, who are injured on the job or contract a work-related illness. Workers' compensation also covers a portion of an employee's lost wages, disability benefits. It also provides death benefits for the dependents of employees killed in work-related accidents.
Workers' compensation covers all of the employees of a business except independent contractors (some states require coverage for independent contractors you hire-check with your insurance professional for resources to determine your situation). Special provisions must be made if employees work out-of-state or out of the country. If the employee dies because of the injury, the insurer pays death benefits to the worker's dependents.
All Workers Comp rates are based on the classification code of that job class. For example, an administrative assistant or clerical job class code is 8010 and for every $100 of annual payroll paid, Workers Compensation average insurance rate is $2.00 per $100 of payroll (this is an example, rates vary carrier to carrier and year to year). The higher risk occupational classes (like construction workers) and claims rate, the higher the cost. So if your admin assistant is earning $40,000 per year, you will pay $800.00 in annual Workers Comp premiums. There are hundreds of class codes for every type of job occupation. Your insurance professional will ask you for the total annual payroll paid for each job class.
About Experience Modification: The experience mod is the part of your Workers Compensation insurance premium that you, the employer can help control. It is a ratio of your actual losses to losses that are to be expected in an operation of your size payroll and your employment classifications.
If you are a new business owner just starting out, your Workers Compensation modification factor will be 1.00. If you have been in business for at least one year or more, and you have had claims (losses) for Workers Compensation then your company pays a higher rate. If your losses are above “average” (1.00) your mod will be greater than 1.00. If your losses are below average, your mod will be below 1.00. For example, modification factors as low as .90 are not uncommon in the banking industry. Your business’s experience mod is multiplied by your premium to generate a surcharge (mods over 1.00) or a credit (mods under 1.00). So for example, if your mod is .85 you are saving 15% on your premium. Conversely, if your mod is 1.15 you’re paying an extra 15%.Back to TopWhat are some steps I can take to keep my employees safe and healthy while reducing the chance of a Workers Compensation claim?
There are several things an employer can do to safeguard employees and manage the risk of Workers Compensation claims. These are:
1. SCREEN WELL BEFORE YOU HIRE THAT EMPLOYEE
Reducing the frequency of your claims begins with hiring the right people for the jobs and duties they perform. Assuring that you are hiring an “A” player will not only improve the productivity and efficiency of your company, but may decrease your workers’ comp costs.
Prospective employees that have a history of “job hopping” and short-term employment relationships may also have a history of Workers Compensation claims. People who have filed fraudulent Workers Comp claims are often characterized as “quitting” their job, followed by periods of non-employment. Although you may not discriminate against an applicant on the basis of filing a Workers Comp claim, employers should look out for applicants with a spotty job record. Do your homework on each and every applicant, diligently confirming employment dates and reasons they left their jobs.
? Conduct a thorough background check (Research gaps and transitions in employment).
? Require a pre-employment physical when appropriate (Typically, there must be a relevant and bona-fide occupational qualification for the testing).
? Institute a pre-employment drug testing program.
2. KEEP SAFETY TOP OF MIND THROUGH TRAINING AND SAFETY PROGRAMS
Employees must constantly be made aware of the hazards that in the workplace and their potential consequences.
Ill-informed or untrained workers can be contributing factors to occupational injuries. Although Workers Comp is a no-fault insurance (the insured may pay no matter who’s at fault), many employees caught in accidents can blame their lack of knowledge or training as a contributing factor. To improve safety in the workplace, managers must initially and periodically train employees on proper safety techniques and practices.
Incorporating the training of specific procedures and responsible work practices is an ongoing responsibility. Close the skills gap and keep safe work practices at the “top of mind” for employees. Many safety-conscious employers that I have inspected have large signs that display the number of days since a loss-time injury. Many other successful safety managers have a safety-conscious award that they use to promote individuals “caught in the act” of taking the extra time to following safety procedures.
? Keep your Injury and Illness Prevention Plan (IIPP) up to date
? Your employee handbooks should require immediate notification of any injury
? Hold safety training meetings on a monthly basis (especially to avoid common injuries at your workplace)
? Conduct periodic inspections
? Abate hazards to avoid injury (document in your IIPP binder)
? Offer group and individual incentives for safety-conscious employees
3. GIVE THEM MORE BENEFITS
Offering medical insurance and retirement benefits provides employees with a higher quality of life. Employees who are uninsured often turn to workers’ compensation insurers to pick up the bill when it comes to “Monday morning” minor strains and sprains, the most common of all injuries. When faced with hefty bills, employees may file fraudulent claims to workers’ compensation insurance carriers rather than purchase health care out of pocket.
Providing health insurance may afford companies special discounts of 5 to 10% off annual health insurance premiums to help offset the cost of benefits when combined with Workers Comp. Workers Compensation insurers have a strong motivation to reward you; their exposure to fraudulent and non-occupational claims decreases significantly when employees have coverage elsewhere. For example, a joint partnership with Blue Cross of CA and Fremont Insurance may provide a 10% credit to your Workers Compensation premiums in their preferred provider network program. Qualifications apply, so check with your broker.
Another occupational benefit is the implementation of an early return to work program. This program gives employee’s modified duty when recovering from an injury. Implementation of a program will decrease the cost of indemnity payments (lost wages) to the insurer, thus lowering the overall cost of the claim. Another benefit of this program is the continued engagement of the employee. When employees are fully engaged in their work, they are less likely to consider alternatives to resolving their claims of Workers Compensation. With the proper amount of time, rehabilitation, and care, your employee will back to work.
4. TAKE CARE OF YOUR EMPLOYEES
Employees injured on the job often feel apologetic about the damage they have done. Some even feel guilty for tarnishing the company’s safety record or reputation. In any case, don’t let your employee feel alienated or rejected in the wake of an injury. That emotional separation from the employer commonly fuels employee decisions to hire an attorney or get legal advice regarding their claim. When workers’ comp claims are litigated, the cost of claims generally rises. This can affect the loss experience of your company and lead to increases in loss reserves and even your experience modification factor.
Take care of your employees and tend to their every need, especially when a workplace injury occurs. Employees who have been treated fairly rarely see the need to sue their employer for benefits from workers’ compensation insurance claims.
Always find out if:
? The employee is OK.
? The employee feels safe.
? Does he or she feel discomfort or pain?
Be sure to:
? Use a fitness for duty test
? Avoid “alienating” employees; spend time caring
? In the event of an emergency, take employee to medical provider of choice
? In the event of an emergency, obtain access to medical records (AB435)
? In the event of an emergency, correspond with their physician
5. INVESTIGATE AND LEAVE NO STONE UNTURNED!
Whenever an injury occurs, your government-mandated injury and illness prevention plan (IIPP) requires you to launch an investigation of the accident. Take copious notes and pictures, if possible. Obtain facts about the events and detailed descriptions of the physical characteristics of the claimants, machinery, equipment, facilities, conditions and environment. Ask witnesses to describe the accident in detail and to sign off on their statements.
Thorough investigation records that are accurate and timely provide incredible insight into the claim. When a litigated claim finally goes to court or appeal, 18 to 24 months may have passed. Without a detailed description documented on paper, what the employee/claimant says might prevail. Keeping good records can help minimize the cost of the claim.
? Take thorough witness statements
? Survey work area and conditions
? Take photographs of the work area (if possible)
? Maintain investigation records in your IIPP
? Update your OSHA 300 log (repeating injury)
6. MANAGE YOUR CLAIMS TO CLOSURE
Claims that are not closed in a timely manner increase your experience modification factor and, thus, your workers’ compensation premiums. By staying in touch with the medical provider (ideally an industrial medical clinic), employees, and other parties, you can help close out claims and keep your experience low.
After a claim is reported to your workers’ compensation insurance carrier, a loss-reserve is set aside on your policy based on anticipated future costs to return the employee to work. Such expenses may include medical costs, indemnity payments (lost wages due to injury), vocational rehabilitation, and temporary or permanent disability.
Once a year, your workers’ compensation carrier sends a report card to the government agency that calculates your experience modification factor for the upcoming policy year. The “Unit Statistical Report” provides workers’ comp bureaus with information both on premiums paid, and losses incurred as a result of injuries. If you have open claims during the time that your unit statistical report is calculated, your experience modification factor may be overstated.
? Maintain a good relationship with injured employees
? Report the claim in a timely fashion
? Obtain and audit provider invoices
? Correspond with claims adjuster; Keep a file
? Take steps to close claims
7. KEEP YOUR ‘EX-MOD’ LOW
Be sure to request a copy of your experience modification (often referred to as your “ex-mod”) worksheet from your state workers’ compensation bureau. This document provides the calculation and factors involved in the development of your mod. Businesses are often overcharged on workers’ compensation insurance premiums due to inaccurately calculated experience modification factors.
Another report you should request is your loss run report. This report from your carrier provides you with an accounting of your paid-in premium and your open and closed claims by policy year. Review any open claims and examine any outstanding loss reserves.
Be aware that the unit statistical report is sent out 6 months before the NAD
? Know that the calculation date is 2 months before the NAD
? Request copy of loss runs, unit stat and experience mod worksheet from carrier
? Take the initiative: You CAN dispute your mod!
CONCLUSION – TAKE CONTROL OF YOUR DESTINY!
Like many issues that plague businesses today, there is only so much that you can control regarding your costs for Workers Compensation coverage. Failed and insolvent insurance carriers have left the few players in the market holding the seller’s market hostage due to limited underwriting capacity. The underlying imperative to prudent businesses is to manage your controllable costs or hire a firm that with a comprehensive soup-to-nuts solution. In the end, you will find that a concerted approach with your management team, outside resources, and willing employees will be just the ticket to lowering your Workers Comp premiums.Back to Top
A good insurance broker will help you implement all of the above mentioned suggestions at little or no cost.