The following provides some workers compensation savings tips for law firms and other office-centric industries.
1. Make sure you understand the job classifications you’re claiming on your worker’s comp policy. Workers with high-risk jobs will require you to pay a higher rate for workers’ comp insurance than workers whose greatest risk is slipping on a wet spot in the bathroom. By clearly understanding how your employees are classified and ensuring that no error has been made during the classification process (for example, listing a clerical employee in a field position), you can help reduce your workers’ comp insurance costs. Make sure that your employees don’t step outside their job descriptions and perform riskier tasks than their typical duties. An employee who is injured performing a non-routine task can hurt your workers’ compensation insurance rates.
2. Keep your safety rating high. Over time, your workers’ comp insurance rates will depend on how many claims you’ve had. When you insist on on-the-job safety, going above and beyond to ensure your workers’ safety, your rate of on-the-job injuries and claims will decrease, dropping your insurance rates along with it.
3. Have a plan in place to get your workers back on the job even if they’re injured. An employee who can work even part-time, even if it’s in a different position from the one they usually hold, is an employee who can close their workers’ comp case. When you plan to help expedite this process and share it with your insurance company, your rates will reflect the change.
4. Review your payroll calculations regularly. The claim amount that could potentially be paid out in workers’ compensation is directly related to your payroll–and that’s separate from tips and independent contractors’ wages. By evaluating your payroll regularly, you ensure that your workers’ comp insurance information remains accurate–and that you aren’t paying more than you have to.
5. Streamline the claims process as much as possible for your employees. Employees who have difficulty reporting their claim or getting the medical care they need will be out of work longer, thus increasing their overall workers’ compensation insurance rates. Take care to ensure, too, that your employees know the difference between a minor injury that can be treated on the job or through a quick office visit and one that requires a workers’ comp claim. Your employees should also have easy access to information concerning what to do in the event of a workers’ comp claim. Please put it in the employee handbook, list it online, and make it easy for your employees to contact you with any questions about the claims process.
6. Stay in touch with workers who are out on workers’ comp claims. Let them know that they are valued employees and that you’re looking forward to getting them back in the office. Please discuss any plans that you’ve made to modify their workday so that they’re able to return to work. All of these steps are critical to ensuring that employees are back on the job as soon as possible, thereby keeping your workers’ comp insurance rates as low as possible.
Common client requests for law firms are for types of liability insurance. Clients have increasingly requested a waiver of subrogation to go along with their professional liability insurance or general liability insurance policies. So, what exactly is a waiver of subrogation?
What is subrogation?
In simplest terms, subrogation is when an insured party agrees to have the insurer cover the losses incurred by a third party. The insurer then inherits the right to recover those losses from the third party responsible for the loss for a paid claim.
For example, suppose you and your client face a common lawsuit for negligence. Part of that claim alleges you were faulty in delivering your services and part of it alleges fault due to your client’s faulty services. A judgment may be awarded that your insurance company pays in full to release you from the claim. However, if your client were also partially responsible for the loss, you would have the right to recover the part of the loss that is their fault. But, since your insurance company has paid the full amount on your behalf, they now inherit your right to recover that portion of the loss. In turn, the insurance company can seek to recover damages directly from your client or their insurance company.
What does it mean to waive this right to subrogation?
A waiver of subrogation is when the right of subrogation is relinquished. Clients who want your business to waive your subrogation rights want peace of mind that they will not be held liable for damages if they are somehow partially responsible for a loss.
This waiver of subrogation prevents your business (and your insurance company) from seeking a share of any damages paid, eliminating potential business conflicts between your business and client.
How do I obtain one?
A waiver of subrogation request can typically be accommodated on most general liability policies. Since you are giving up your right to recover any losses, your insurance company now has fewer rights to recover any loss they might pay. This increases their exposure will probably lead to a higher premium.
Workers Comp Audits
All workers comp policies require a premium audit at the end of each policy period. The audit is done because your premium is actually a payroll function, meaning the higher the payroll, the more you pay in premium. The audit will determine the difference between your estimated payroll and actual payroll, and it will adjust the premium accordingly.
We know that workers’ compensation audits are a pain for many people as they can be time-consuming, cumbersome, and downright annoying.
Unfortunately, premium audits happen every year, so we put together a guide to prepare for your next one.
When and How are Audits Typically Done?
The best way to begin preparing for a workers’ compensation audit is to understand how and when audits are typically performed.
When are premium audits performed?
Premium audits are performed shortly after your policy expires. In fact, most are usually done just a few weeks later.
How are they typically done?
Depending upon the amount of payroll you have, workers comp audits are typically done 1 of 2. The first (and easiest) way is by fax or mail, where the insurance company will send you a checklist with the necessary items. The second and most common way is for an insurance company representative to come out and gather the information.
What Records Do You Need for an Audit?
The more documentation you have prepared before the audit, the quicker it will go.
Every insurance company is a little bit different in the information they require to perform an audit, but here is a list of the most common items you will need to provide:
Payroll Records – payroll summaries by employees, federal tax reports, and state unemployment reports
Financials – copies of the income statement and balance sheet
Certificates of Insurance – if you used any subcontractors during the year, request they provide you with proof of workers’ compensation insurance.
How Can You Save Money?
If you are properly prepared with your documentation beforehand, there are several ways for you to save money on your premiums. Law firms that aren’t prepared end up paying more premiums than they need to.
Here are some ways to save money on your audit:
Class Code/Payroll Separation – For law firms with more than one class code of employees, it’s essential that you place each employee within their respective class code before the audit is performed. Not doing so may result in some of your employees being incorrectly classified to your highest-rated class code.
Employee Tips – In some states, you can actually remove declared tips from the gross payroll amount, but only if it is properly identified and separated on your payroll reports.
Overtime Pay – In most states, you can actually deduct the additional payments received from overtime work. For example, if an employee’s regular hourly rate is $8.00, and his overtime rate is $12.00, you can deduct the additional $4.00 an hour the employee received working overtime. You must have this additional pay identified and separated on your payroll report by the employee.
Certificates of Insurance – If you had subcontractors perform any work for your company during the policy period, you need to provide Proof of Insurance for every subcontractor who performed work for you.
If you cannot provide a certificate of insurance to your insurance company, then there is an extreme likelihood that you will incur the cost of providing workers’ compensation for those subcontractors.
Commercial auto insurance policies protect several different parties; you, your vehicle, and others. Covered auto symbols allow you to customize the extent that liability coverage is extended to these parties. The symbol may pertain to either a kind of vehicle (i.e., private passenger) and/or the vehicle’s ownership status (i.e., owned, hired, etc.).
The applicable symbols are numbered 1 through 9. They are found on the declarations page of your business automobile insurance policy corresponding to applicable coverage areas such as liability, uninsured motorist, medical payments, etc.
Symbol 1 – Any auto
Symbol 2 – Owned autos only
Symbol 3 – Owned private passenger autos
Symbol 4 – Owned autos other than private passenger autos
Symbol 5 – Owned autos subject to no-fault benefits
Symbol 6 – Owned autos subject to compulsory uninsured motorists law
Symbol 7 – Specifically described autos only
Symbol 8 – Hired autos (leased, hired, rented, or borrowed)
Symbol 9 – Non-owned autos (owned by employee or partners of the insured)
Why should you choose symbol “1” for liability coverage on a commercial auto insurance policy?
Symbol “1” provides coverage to any auto that is owned, hired, borrowed, or otherwise utilized by the named insured. If symbol “1” is indicated, no other symbols are needed because symbol “1” encompasses all.
Each of the other symbols applied to your business auto policy is limited to certain types of covered autos. For example, symbol “7”, another commonly used symbol for liability, provides coverage only for specifically described autos. In other words, only autos that are documented with the insurance carrier will be covered under the policy. But what happens when you purchase a new vehicle? While some policies provide a 30 day grace period of coverage to give time for the insured to report newly acquired autos, some do not. If the insured fails to report the purchase of the new auto to the carrier and an accident occurs, the insured would not be covered. Symbol “1” does not have this limitation. Any auto that the insured acquires during the policy period is automatically covered without reporting to the insurance company.
Because of the breadth of the symbol “1,” coverage can offer peace of mind to the insured, who can be assured that even as their fleet of vehicles grows or their auto usage changes, they have coverage through their business auto insurance policy.
Can a combination of other symbols be as effective?
A common alternative to Symbol “1” on your auto commercial insurance is a combination of Symbol’s “7”, “8,” and “9”. The benefit of this combination is potentially lower premiums due to coverage extending only to specifically described, hired, and non-owned autos rather than any auto. This may seem to add to similar coverage at a lower price; however, there are a few gaps and other concerns.
First, as described above, newly acquired vehicles need to be reported timely to the insurance carrier. Failure to report new autos to have them added to your commercial vehicle policy would leave the insured with an uncovered exposure.
Second, Symbol “8” does not provide coverage to the named insured if they rent the car in their personal name rather than the law firm name, a common mistake. Symbol “8” also specifically states that an employee car borrowed by the named insured is not considered a “hired” vehicle.
Third, Symbol “9” only extends liability protection to the named insured for the employee’s use of their personal vehicle on the named insured’s behalf. Coverage gaps appear when the named insured is a sole proprietor, partner, or an LLC. Since these individuals are considered insured, and the definition excludes coverage for any insured that borrows an “auto” from an employee, there is no liability coverage under the business automobile policy. Symbol “1” does not have this exclusion.
And finally, Symbol “9” extends coverage to specifically defined non-owned autos “used in connection with your law firm.” Without a clear definition for what a “connection” entails, this coverage is debatable.
Admitted Insurance Company vs. Non-Admitted Insurance Company for law firms is very specialized. As such, we often work with both admitted insurance companies and non-admitted insurance companies.
In this post, we want to discuss the difference between the two types and why this is so important to your law firms.
Admitted Insurance Carriers
An insurance company that is “admitted” has been approved by a state’s insurance department. Being “admitted” by the state’s insurance department means:
An insurance company that is “non-admitted” has not been approved by the state’s insurance department. This means:
The insurance company does not necessarily have to comply with state insurance regulations.
If the insurance company becomes insolvent, there is no guarantee that your claims will be paid, even if your case is active at the time of the bankruptcy or financial failure.
You cannot appeal claims decisions through the state insurance department.
You must pay additional surplus lines fees and taxes when you purchase your policy.
In looking at both options, it’s plain to see that law firms should purchase their admitted carriers’ policies whenever possible. However, there are situations where purchasing a non-admitted policy may be your only option.
To find out what options you have in purchasing an admitted insurance policy as a law firm, please contact our office to find out more. A member of our expert team will gladly answer all you r questions and ensure you have the coverage you need for your practice.
What does Wear and Tear Exclusion mean?
An insurance contract’s wear and tear exclusion provision states that the policy does not cover degradation from everyday, normal use. Because every property piece deteriorates over time, insurers would be too expensive to cover such losses. Insurance only covers losses due to unexpected events. Normal wear and tear cannot be avoided, and therefore, insurance policies do not cover it.
If insurers did not exclude wear and tear, they would essentially have to eventually pay for replacement or repairs to every building, tool, and piece of office equipment they insure. This would mean dramatically raising the premiums to pay for these expenses. For example, auto insurance only covers unforeseen events, such as accidents. It does not cover replacements of car parts that wear down over time, such as filters, hoses, and brake pads.
Business Property Insurance
Commercial Property Insurance is designed to cover most physical properties your business owns. The focus of this insurance is to help businesses recover quickly after suffering property damage or loss.
Many businesses choose to purchase this policy as insurance on a physical building. However, other types of business property can be covered by this policy, including physical copies of company records which are often stored onsite. The cost of rebuilding after a building has been destroyed or replacing property that has been completely lost are common coverage areas.
This type of insurance insures any revenue that is lost, and that can often be recouped. This insurance is designed specifically to help a business continue operating after property loss or damage.
Employment Practices Liability Insurance
Did you know that according to a Jury Verdicts Research study conducted that over 40% of employers with between 15 and 100 employees will experience some discrimination claim? Did you also know there is a 67% chance the plaintiff award will exceed $100,000?
Those are some pretty harrowing statistics, and litigation has only gotten worse since the study was done. Employers are increasingly becoming the targets of litigation from their employees, and lawsuits can stem from just about any situation.
The best way to protect yourself and your law firm are to purchase Employment Practices Liability Insurance.
What does it cover?
Employment Practices Liability Insurance can protect you from a variety of incidents. For example, claims stemming from discrimination, harassment, unlawful termination, and failure to promote are typically included in a standard policy.
Your policy will also include an attorney’s cost to defend you when these types of claims do arise. This is important because the attorney’s costs alone can be higher than the actual settlement amount of a claim!
Also, it is essential to include 3rd party coverage on your policy. This way, if a customer feels harassed or abused by one of your employees, you and the law firm will have the protection you need.
What does it cost?
Policy premiums are almost always based upon the number of employees you have within your law firm. The more employees you have, the higher the premium. Minimum premiums will usually start at about $1,500. And, while this premium may be a little high, it’s essential to remember that if you have just one claim against your firm, founded or unfounded, the cost of an attorney will be much more expensive than insurance ever would have.
If you would like to find out more, please contact our office.
Why Cyber Crime Insurance Coverage is Critical
Cyber insurance is designed to protect a business when costs are incurred due to cybercrime. Business owners should note that common insurance policies such as commercial property, business income, and general liability often restrict—and in many cases exclude—cyber-related damage.
Business owners beware: You should be skeptical of enhancements to such common policies designed to address cyber exposure. These so-called “cyber enhancements” are often minimal and should not be relied upon without a thorough examination of an insurance professional.
How safe is private information when stored electronically?
The site allows you to scroll through a frequently updated chronological list of reported breaches of private data. Some data are lifted from large companies everyone’s heard of. What’s surprising is how many of the breaches occur at smaller organizations. The information on this site should prove that when it comes to personal data safety, businesses big and small must be on alert!
While it’s the large breaches that make headlines—think Citigroup or Bank of America—smaller businesses may be at a greater risk. They often lack the infrastructure and resources to protect from cybercriminals
What does cybercrime cost?
According to the Ponemon Institute’s First Annual Cost of Cyber Crime Study, a business can expect to pay an average of $204 per customer record lost or stolen.
Cyber Crime Defined
According to the Ponemon study, the list of cybercrimes is rapidly growing. While many are aware of common cybercrimes, such as identity theft, the list also includes other crimes that can cause damage to a business’s electronic infrastructure. Examples: theft of a business’s intellectual property, the creation/distribution of viruses and malicious code, and private data publishing in a public forum online.
Business owners may struggle to keep up with these often sophisticated threats. Such threats place a tremendous burden on business owners to prevent these losses. Many states have turned to legislation that requires business owners to spend money notifying consumers when a potential breach has occurred.
Protecting Your Firm
There are many insurance products available to help business owners deal with the cost of cybercrime. Policies may address both first and third-party losses.
What is a first-party loss?
This is a cost the business owners may absorb to cover the firm’s own expenses caused by cybercrime. Examples may include:
Notification and credit monitoring for compromised individuals. (Most states currently have laws in place requiring the business to pay the cost of notifying all consumers that may be victimized by a breach. Most laws require these costs to be paid regardless of whether the consumer has suffered financial damages resulting from the breach.)
Cost to restore data that has been stolen or damaged.
Lost income resulting from downtime caused by a damaged network, lost information, or data breach.
How about a third-party loss?
When a cybercrime occurs against a business, other parties also could be impacted. A third-party loss describes costs that appear when others incur expenses that can be attributed to cybercrime. Examples may include:
Judgments and settlements for lawsuits brought by customers, employees, and other third parties—such as a company claiming its network was damaged by a virus from another infected network.
Costs associated with fines or penalties imposed by a regulatory body.
Final Note on Cyber Crime Insurance
If you’re a business owner, threats to your data come from a variety of sources. Whether you’re the victim of a random hack, disgruntled former or current employee, angry competitor, or anyone else, cyber crimes can cause serious damage to your business. Worse, if the crime results in a breach of private consumer data, state law may impose significant fines that could devastate your firm’s bottom line. For more information about insuring against these growing exposures, call your Trusted Choice® independent insurance agent today.
Standard business liability coverage will take care of you in most situations, but commercial umbrella insurance will help ensure that your business is protected when serious situations arise. Learn what an umbrella policy is and how it works.
What is umbrella insurance?
Umbrella liability insurance protects you when accidents happen, and your existing liability insurance policies cannot cover all the expenses. Essentially, it picks up where your business auto liability, general liability, or other liability coverage stops, providing extra protection against bodily injury and/or property damage.
How commercial umbrella insurance works
A commercial umbrella policy serves two distinct purposes:
It expands the limit that your law firm already has in its existing, or underlying, liability policies. If your general liability policy offers $1 million coverage per occurrence or $2 million total, you could expand those limits to $6 million per occurrence and $7 million aggregate with a $5 million umbrella policy (which is the limit many state education boards require).
It broadens coverage for things that your underlying policies may not cover. If your auto liability policy covers accidents that might occur in a specific area, an umbrella policy could expand the coverage territory.
Customize your umbrella policy to fit your law firm.
We can tailor commercial um
f you don’t have an umbrella policy, here’s what you need to provide to get a customized umbrella policy quote:
The financial and operational details of your law firm.
A copy of the declaration page of your current general liability and business auto insurance policy (if you have them).
Any prior losses your law firm has experienced. Keep in mind that a loss doesn’t necessarily mean your premium will be higher.
A list of the company’s officers, positions, and experience is different from the record owners. Typically, the longer and more successful the law firm’s overall record, the better the insurer’s risk and the lower the premiums.
Annual payroll and a breakdown of employees who are full-time, part-time, subcontractors, or consultants.
Be sure to mention whether you carry professional liability, errors or omissions liability, liquor liability, employee benefits liability or employment practices liability insurance.
Controlling Liability Risks pt. 2
Controlling liability risks for your law firm is vital to ensure you avoid unnecessary claims and litigation. You may find extensive and specific information on reducing liability risk exposures from your insurance company, trade association, and the Internet for almost any type of venture. Briefly discussed here are some areas of concern that apply to many types of business. They include:
Slip and Fall Accidents
Employment Practices Liability
Hiring Practices and Liability Avoidance
Slip and Fall Accidents – These are one of the most common liability risks. Thousands of people are injured every year—some very seriously—in slip and fall accidents on business premises.
Employee training is critical to controlling liability risks. All employees who are likely to be around third parties on your premises should be trained about what to do should someone suffer a fall. Medical care should be quickly provided to the injured person, even if that means calling an ambulance. People who feel they were treated callously or indifferently are more likely to sue.
Elimination of slip and fall hazards should be a periodic scheduled activity. It may be helpful to use a checklist for this. Considerations for indoor areas include:
Lighting: All areas should be adequately lighted, including hallways and stairs.
Exits: Exits should be well marked, well lighted, and clear of obstacles.
Stairs: Handrails, steps, and landings should be in good condition. Stair treads should be constructed of uniform height and width.
Housekeeping: General housekeeping should be maintained, and storage areas kept neat.
Carpeting: Carpeting should be tight and smooth.
Floors: Any changes in floor level should be clearly marked.
Doormats: Doormats should be flat, slip-resistant, cleaned, and checked regularly in bad weather.
Spills: There should be an effective procedure to ensure that all spills are immediately cleaned up.
Considerations for outdoor areas include:
Walkways: Walkways should be kept in good condition.
Lighting: Lighting should be adequate.
Parking lot: Potholes, cracks, or uneven areas should be repaired.
Ice and snow: There should be an effective procedure for assuring ice and snow are removed.
If there are treacherous areas—such as an uneven area of the sidewalk or a ripped carpet—consider marking them as such, using signs to warn people away, and putting up barriers around them.
Employment Practices Liability – Federal law restricts employment decisions based on race and national origin, religion and creed, gender, age, and disability. The restrictions on race, religion, gender, and disability apply to businesses with 15 or more employees. The restrictions on age apply to businesses with 20 or more employees. An employee who feels discriminated against might sue to make such charges as extreme emotional distress or wrongful termination. It is not a defense in such cases to say you didn’t know your actions were unlawful.
Larger employers typically provide formal training to management and employees on compliance with civil rights laws. As a smaller organization, you may feel you cannot afford such programs’ time or money. There are many lower-cost ways of carrying out this training. For one, the Equal Employment Opportunity Commission (EEOC) has low-cost materials just for small businesses.
Hiring Practices and Liability Avoidance – Immature, careless, and irresponsible people are much more likely to engage in risky behaviors—from reckless driving to sexual harassment, cutting corners on safety rules, and stealing from their employers. Similarly, people who have drug and alcohol addictions are liable to present a variety of workplace dangers. The first step in cutting down on your liability exposure is to be as careful and thorough as possible about whom you hire. Failure to use a reasonable screening process for new hires could even expose you to negligent hiring liability.
Clear job descriptions and workplace rules, disseminated to all employees, and applied consistently and without favoritism, can be a tremendous help in minimizing the risk of unacceptable behavior.
Risk Management for Information Technology: The greater the role that computers, the Internet, and e-commerce play in your business, the more exposure you have to property and liability risks involving information technology.
The digitally stored information is subject to many of the same risks as any other property (fire, flood, tornado, etc.) as well as special risks (computer viruses, malicious hackers, etc.). To prevent the loss of your accounts receivables, customer orders, client records, or other such data, you should regularly back up the data and store the backup copies in a separate, secure location. Prevent data loss or corruption by viruses and hackers by keeping up-to-date antivirus software and firewalls on all your business computers.
If you rely on a Web site, either you or your Web site host should back up all critical material at least daily. To assure your Web site doesn’t go down, a real-time “mirror image” of all your site data should be maintained so that it can be transferred immediately if the original site crashes for any reason.
Digital technology also presents liability risks. You could be sued if a breach of your security and sensitive information about others is exposed or stolen. Make sure you use reputable vendors. You could face a lawsuit claiming that your Web site uses another’s copyrighted material or slanders someone. Some measures that could help control these risks include:
Using a “security seal” from a reputable security certification organization to encrypt data
Having your legal counsel approve your Web site content and your privacy statement