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Twisters, Twisters and More Twisters

Thu, 23 May 2013 13:58:31 +0000

It's late May and tornado season is in full swing. A "super cell" thunderstorm that hit northern Texas last week generated 16 tornadoes. Can you imagine the wind power of 16 twisters? One of those tornadoes packed winds up to 200 miles per hour. Five days later an even stronger tornado hit Moore, Oklahoma. The devastation is horrendous. The one good thing about tornadoes is that they are covered by property insurance. Insured losses in Moore may exceed $3 billion.

I experienced a minor tornado many years ago and it was scary. I was in my apartment around nine P.M. one evening during a thunderstorm. Ironically, I was just about to move from the East Coast to Oklahoma. I heard a roar, like a train was in my back yard. I looked out the window (not a smart thing to do during a tornado!) and the wind was blowing so hard the trees were almost horizontal. The noise stopped and the power went out. The next day I could see the path of the tornado from the destruction it left behind.

The recent tornadoes serve as a reminder of the importance of maintaining adequate property insurance. Your business need not be in Tornado Alley to be hit by a natural disaster. If a catastrophe occurs will your firm's property policy provide adequate restitution? Will you be able to rebuild or replace key property?

Floods and earthquakes require specialized coverage. Flood insurance is available through the National Flood Insurance Program. Sources of earthquake coverage vary by state. Ask your agent for help getting a quote.

A disaster can do more than damage your physical property. It can cause your business to shut down temporarily, generating a loss of income. You can protect your firm against income losses by purchasing business income coverage.

Most of the school kids in Moore survived the tornado thanks to the disaster plan the schools had in place. When the tornado hit, everyone knew just what to do. An emergency plan can save your business and your employees. Both OSHA and FEMA provide useful tips on how to draft a disaster plan.

Image Courtesy of [Dan] / FreeDigitalPhotos.net

Risky Business

Thu, 16 May 2013 12:07:46 +0000

Like most small businesses, yours is probably covered by a general liability policy. But have you actually read your policy? Plowing through a bunch of legalese isn't fun, but you do need to know what your policy covers. Take the first step by reading my introduction to the standard liability policy. If your company offers health insurance or other employee benefits you'll also want to read my article on employee benefits liability insurance. You'll be glad you have this coverage if your firm is hit with a lawsuit because of an administrative error.

Speaking of liability, you've probably read about the explosion that occurred at a fertilizer plant in Texas last month. The plant caught fire and blew up, killing 14 people and injuring over 200.

The explosion decimated the plant, and damaged or destroyed numerous homes and a few commercial buildings. The factory contained two fertilizers, ammonium nitrate (which is also an explosive) and anhydrous ammonium.

Clearly, fertilizer manufacturing is a risky business. While the factory owners couldn't predict the explosion, should they have considered the possibility that a disaster might occur? They don't seem to have done that. Many news outlets, including the Los Angeles Times, have reported that the factory had only a $1 million general liability policy. Liability insurance is supposed to compensate members of the public who have been harmed due to a company's negligence. The $1 million in liability limits won't go very far considering the number of people that were injured.

It is really sad that so many homes and businesses were built near the plant. I don't think the plant will be rebuilt but if it is, I hope it will be located a good distance away from homes and other businesses.

The incident has many people asking whether companies in hazardous occupations have an obligation to the public to buy adequate liability insurance. Granted, the factory owners in West could have purchased ten or twenty times the existing limit, and they still wouldn't have had enough insurance to cover potential claims. But ten or twenty million would be better than one million.

Government officials in Texas say that they limit regulation in order to support business. Is freedom from regulation more important than compensating people who have been injured by a business? A lawyer for one of the victims has called the plant owners irresponsible because they bought so little liability insurance. Is he right? What do you think?

Image courtesy of iStockphoto.com

Distracted Drivers, A Modern Menace

Thu, 16 May 2013 12:07:45 +0000

If you have ever been confused about the difference between an auto and mobile equipment (terms used in commercial auto and general liability policies), my article on mobile equipment should clear things up. Does your company rent autos? If so, check out my piece on "Questions to Ask Before Your Business Rents an Auto". This article can help you avoid costly mistakes when using rental vehicles.

If you regularly read online insurance publications such as Insurance Journal then you know that distracted driving is a hot topic these days. Much of the attention has focused on texting by teenaged drivers. However, in a survey conducted by the Pew Research Center in 2011 over 90 percent of the survey respondents between the ages of 18 and 49 admitted that they had engaged in texting while driving. This should give you pause if your firm employs workers that drive on the job. How do you think your auto insurer will respond if an employee of yours is texting and causes an accident?

I first became aware of inattentive drivers as a passenger in a carpool many years ago. When I looked out my window on our long morning commute I was amazed to see what other people were doing in the driver's seat. One guy brushed his teeth as he drove over a bridge in heavy traffic. Other people flossed, shaved or put on eye makeup as they drove.

My carpool days are long gone but there are still plenty of distracted drivers on the road. Nowadays, the main distraction is the cell phone. Many people find this gizmo irresistible. They know that driving and cell phones are a bad combination but they just can't put the thing down. Cell phone addicts have become such a danger on the highway that many states have passed distracted driving laws. Most of these laws ban texting and driving or the use of hand-held cell phones.

Distracted employees can be a menace to your business. They can cause auto accidents that result in damage to your firm's vehicles or that generate lawsuits against your company. Injuries sustained by distracted drivers can cause your workers compensation premium to go up. What can you do? Training employees about the risks of distracted driving is essential. You should also draft a written policy regarding cell phone use in vehicles. Useful tips about how to perform these tasks are available from the National Highway Traffic Safety Administration and the National Safety Council.

Distracted driving laws focus on cell phones but many other electronic devices can divert drivers' attention. I was shopping for a new car recently and was amazed at the number and variety of gadgets that are available. You can get a Bluetooth-enabled stereo, and power outlets for your laptop, iPod or cell phone. Other options include a satellite television and headrest monitor with a built-in game system. If cell phones have made us a danger on the highway, how will these gadgets affect our driving? Will we need laws for these things too? What do you think?

Today is National Healthcare Decisions Day

Mon, 16 Apr 2012 15:07:23 +0000

April 16, 2012 is the Fifth Annual National Healthcare Decisions Day. A day created by a coalition of health providers and insurers to remind the public about the critical importance of having advance healthcare planning.

If you do not have any form of advance directive telling your friends and loved ones how to make medical care decisions, you risk losing control of those decisions. "42% of Americans have had a friend or relative suffer from a terminal illness or coma in the last five years and for a majority of these people and 23% of the general public, the issue of withholding life sustaining treatment came up." We do not like to think about disaster, but planning can ease the burden on us and our family.

Advanced planning is important for business continuity as well. If you are a key person in the business and suddenly taken away, have you provided direction as to how to run the business or make decisions.

Good estate planning attorneys are not going to charge you extra for an advanced directive and/or living will as a part of the estate planning process. This is because the legally acceptable forms are free in order to encourage the public to plan ahead. The forms are free and encourage a frank and open discussion with your medical professionals and family about how you want to be cared for in the event of a serious illness or injury.

There is no excuse, download your state appropriate form, talk to your family and plan ahead.

Practical Workers' Compensation Manual

Mon, 26 Mar 2012 13:35:19 +0000

The Risk and Insurance Management Society (RIMS) is a great source of information for companies looking to control risk and control business insurance premium costs. The RIMS professional library is a terific way to learn risk and insurance management.

The Society frequently sends me e-mails about product offerings and I do not receive any compensation from RIMS. I mention their publications because I know they are well written and practical.

Workers' compensation is complicated. It is also mandatory. It is also one area of business insurance where proper preparation and implementation of good company policies can significantly reduce premiums. Often very simple bookkeeping or hiring changes can save 15-20% of premium dollars.

RIMS is offering a 2012 publication entitled Workers Compensation Management Program - Reduce Costs 20% to 50% at its store. "The book guides the user through each aspect of a workers' compensation program, to learn, step-by-step about a variety of techniques that show organizations exactly how to reduce workers compensation costs." If your company has a large workers' compensation premium and doesn't have a good handle on controling costs, this might be a resource for you.

The Butcher With the $1.5 Million Taste Buds

Thu, 22 Mar 2012 10:16:50 +0000

There is this agricultural board in the U.K. called BPEX(British Pig Executive) and it "represents pig levy payers in England. BPEX is focused on enhancing the competitiveness, efficiency and profitability for English pig levy payers and driving demand for English pork and pig meat products in Britain and globally."

Yeah, I'm not sure I understand all that either.

I probably would have little interaction with BPEX as I live in Ohio and my "bangers" come from Ohio. Our state is typically in the top ten in pork production (Iowa beats us every year). But, there are a number of news reports talking about the butcher with the Board whose taste buds are so valuable to them that they have taken out a $1.5 million insurance policy on his taste buds. Yes, when it comes to business insurance you can insure anything of value.

According to the BPEX "who's who," Mr. Keith Fisher is the Butchery Development Manager. He is a master butcher with a lifetime of honed taste buds. In a newspaper interview, Tina Mulholland of BPEX stated, "As a grandmaster butcher and the resident baconologist and head judge for Bacon Connoisseurs' Week, Keith's vast experience makes him the ideal person to lead the judging panel of tasters. As part of his role as head judge he and the rest of the panellists had to taste over 200 different cuts and cures of premium bacon for this year's award. As such, it was imperative that we protect his prize assets for the campaign."

Happy Spring!

Fri, 16 Mar 2012 15:49:36 +0000

In honor of Spring, I posted an article about insuring a flower shop.

Whether you own a flower shop or if you yearn to own a flower shop when it starts getting nice outside, always consider the proper business insurance for your business.

Happy International Women's Day!

Thu, 08 Mar 2012 13:22:52 +0000

Today is International Women's Day. A day to reflect upon the role of women in your community and around the world. Google has honored the Day with its own Google Doodle.

According to the organization Women in Insurance & Financial Services (WIFS), "[t]he first recorded women's organization within the insurance industry was the Women Leaders Round Table, founded in 1936 with its membership based solely on production. It served as a recognition program, which met annually." That organization grew into MIFS and it is celebrating its 75th anniversary this year. The organization had the honor of ringing The Opening Bell on the New York Stock Exchange on December 27, 2011. The first women's financial organization to do so.

Women still face significant hurdles in the financial services and insurance. Studies show, on average, that women (in the U.S.) earn approximately $.80 for every dollar earned by men for similar work (this figure is somewhat anecdotal as the 2007 study used percentages). And while the opening bell being rung by a well-respected women's financial group is a milestone, the staff of Jersey Shore and the Sport's Illustrated Swimsuit Models got the honor before MIFS. In fact, the NYSE was not open to women as traders until 1943. It is a market-driven and male-dominated industry.

My two daughters will have significantly greater opportunities in their carreers because of the women who came before them as pioneers. So perhaps, rather than focus on all of the disparity today we can look to and honor those women. Happy International Women's Day!

Violent Tragedy in Chardon, Ohio

Tue, 28 Feb 2012 11:54:24 +0000

Yesterday a 17-year old kid took a gun to school and shot five other kids. Two of those kids have died.

This violent tragedy occurred about thirty minutes away from where I write.

It reinforces the importance of creating a disaster plan and protecting public places from random violence. Between 2004 and 2008 there was an average of 564 people killed at work each year. In 2009, the Bureau of Labor Statistics reported 521 workplace homicides, accounting for 12% of the total fatal work injuries in the U.S. Unfortunately, workplace and public violence are not isolated events.

Business owners can take steps to secure their workplaces and insure the risk. The typical commercial general liability policy does not cover workplace violence or intentional violent acts. However, there are business insurance products that do provide coverage for such events.

One of the benefits of such business insurance is that the policies typically require the business or property owner to take rudimentary precautions in order to secure coverage. Businesses get the benefit of professional expertise in reducing workplace violence.

And that training and planning cannot be overlooked. One of the only positive things that resulted from this tragedy is the knowledge that pre-planning paid off in saving lives. Chardon school-district Superintendent Joseph Bergant II was quoted today stating, "We've had a number of disaster drills in the past. Thank God we put those in place."

Don't Forget the Health Care Tax Credit!

Thu, 16 Feb 2012 14:44:18 +0000

Tax filings for corporations and S corporations are due on March 15. The deadline quickly approaches!

The health care tax credit is part of the Affordable Care Act passed in 2010. For small businesses the Act includes a tax credit of up to 35% for the cost of employee health care. I have posted an article about the credit.

The credit has been in place since 2010 and increases in 2014. However, it appears that few eligible businesses are taking advantage of the credit. It was predicted that nearly $2 billion in claimed credits would be forthcoming for the 2010 tax year. By the end of 2011, however, it appeared that only $435 million in credits had been claimed.

This is a valuable credit that can be rolled forward or back. Talk about the credit with your tax and insurance professionals.