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What exactly IS a Hold Harmless Agreement?

April 14, 2014

“I’m lonely, I’m bored. I’m looking for somebody interesting to date, somebody with some passion,” said Steve to his good friend Zach, who immediately thought of Kim, who was fun, lively, attractive…and had a disquieting tendency at restaurants to toss drinks in the face of nearby strangers whom Kim deemed were talking too loudly.

Sora Garlasco

Sora Garlasco, Commercial Lines Account Manager

“Well…,” said Zach, thinking about it, “There is someone…fun, lively, attractive…but with this habit of throwing drinks in the face of overly talkative strangers.”

“Hmm…” said Steve, imagining a scale of justice with boredom on one side and soggy strangers on the other, “I’ll take the risk.”

“If you take this plunge, I can’t be responsible for what happens,” said Zach. “We will need a hold harmless agreement in place first.”

While not necessarily common in the dating world, hold harmless agreements — also known as indemnity agreements — are actually very common and a smart safeguard for individuals and businesses to have in place when they come together in a transaction.

When two companies jointly work on a project, a hold harmless agreement between them might state that concept of good contract with magnifying Glassneither will sue the other because of losses or damages that occur as a result. (This is sometimes accomplished through a “double indemnity” clause in a comprehensive contract. Such a clause would explicitly state that Company A agrees not to sue Company B, and Company B agrees not to sue Company A. Less commonly, the agreement is one-way only and the “indemnity” clause states Company A agrees not to sue Company B, but Company B retains its right to sue Company A.)

Other hold harmless agreements between two parties cover circumstances where a third-party like a consumer, another business, or an innocent bystander, brings a liability claim against one or both parties. In this type of scenario, a hold harmless agreement is a legally binding contract in which one party agrees to indemnify or “hold” the other party “harmless” – literally, to take the full brunt of any liability claim that arises against the other party in certain circumstances. These hold harmless agreements come in limited form, intermediate form, and broad form.

Limited form hold harmless agreement — Zach needs a new roof on his house and hires Nearsighted Roofing Company to do the job. While working on the roof, a nearsighted employee who keeps rescheduling his eye doctor appointment attempts to toss a crowbar into his toolbox. He misses, and the crowbar goes sailing off the roof, bonking a newly minted lawyer on the head. Because Zach insisted on a hold harmless agreement, if the bonked law-school grad tries to sue Zach, Nearsighted will legally have to bear the full responsibility for responding to the suit, even if the company itself is not named in it. In this scenario, Zach would have no potential liability. Like a pinch hitter in baseball, Nearsighted would step in and replace Zach in the legal sphere.

Intermediate form hold harmless agreement — Zach is a “hands-on” kind of guy who likes to work on his home alongside the contractors he hires. While up on the roof, Zach and some of the Nearsighted Roofing Company guys engage in an inadvertent game of hot potato involving a crowbar, which, as you may have guessed, ends up getting tossed off the roof and only a newly minted lawyer’s head. He sues Zach and Nearsighted because both were responsible for the accident. However, Nearsighted had agreed to sign an intermediate form hold harmless agreement, which meant they would legally bear the full responsibility for responding to the suit if it was the result of their behavior solely OR the joint behavior of both parties. Thus, even though Zach was also involved, Nearsighted will step in and replace him in the suit.

Broad form hold harmless agreement — These are uncommon and not allowed in many states, including Connecticut, which has statutes that specifically prohibit holding someone harmless for his own negligence in connection with construction contracts. But, just to give an example, let’s suppose Nearsighted really wanted the roofing job, and agreed to sign such an agreement. Now, if Zach himself tosses the crowbar onto the lawyer’s head and is solely responsible, Nearsighted would STILL have to step in and cover for him. Indeed, whether the accident was Nearsighted’s fault, both of their faults, or just Zach’s fault, Nearsighted will be on the legal hook.

One thing to keep in mind: Hold harmless agreements are typically out the window if somebody causes harm intentionally or negligently. Many courts have thrown out indemnity clauses that attempt to cover intentional or negligent behavior. Fraud and criminal intent is also a big no-no and will render a hold harmless agreement invalid.

Tip: When entering into a contract with another individual or business, make sure any indemnity clause provides at least equal protection for you, in what is known as double indemnity.

Tip: Whenever you are preparing to have work done on your home, make sure your agreement with your contractor includes a hold harmless provision that absolves you from legal responsibility for actions taken by your contractor that injure a third party.

Tip: Not all jurisdictions allow both kinds of hold harmless agreements. Some allow only those between two parties, while allows allow the limited and intermediate versions that protect against third-party legal action.

 

 

Questions?  Give me a call!  860-482-3506

Sora Garlasco

Commercial Lines Account Manager

sgarlasco@foundersgrp.com 

Do your subs have Workers’ Compensation?

March 24, 2014

Important Information about Subcontractors and Workers’ Compensation!

The Connecticut Workers’ Compensation Commissioner advises that insurance companies are within their rights to charge YOU for subcontractors you hire without Workers Compensation coverage.

Dennis edited color

Dennis Dressel, President & Managing Partner
Founders Insurance Group

If you hire subcontractors to perform work on your behalf and they do not carry Workers’ Compensation coverage the insurance company may charge you for them upon audit.

To avoid this situation please be sure to require a certificate of insurance from all subcontractors showing they have a current Workers’ Compensation policy.

As contractors get ready for the busy season, now is the time to do an internal audit on your sub-contractors!

If you have any questions about your policy, contact: Founders Insurance Group at 860-482-3506. http://www.foundersgrp.com.

Dennis Dressel

ddressel@foundersgrp.com

Drowning in Red Ink, The National Flood Insurance Program

March 5, 2014
Chris Garlasco, Owner & Managing Partner - Founders Insurance Group

Chris Garlasco, Owner & Managing Partner – Founders Insurance Group

Insurance is often complex, yet at its core, insurance is actually quite a simple concept. Simply put, insurance mitigates risk by spreading that risk over a large pool of people with the understanding that only a sub group of that large pool of people will actually have a claim during a set time period. To use simple numbers, imagine a pool of 100,000 people. We know that over the course of a year’s time that pool will be used to pay out a total of $1,000,000 (to pick a round number) in claims. Add to that pool the cost of expenses generated by the insurance company such as paying their employees, the cost of running their facilities, the legal expenses involved with covering claims and a host of other expenses. In a free market system there will also be room for a profit, held in check by competition. So in order to cover both the claims generated by that 100,000 person pool and the expenses that a company incurs managing that pool, the company will arrive at a premium amount that each of Flood insurance Feb 2011_img_2those 100,000 people must be charged during that year.

Here is where it gets more complex if not interesting. Expenses, for the most part, are a fixed cost. However predicting the actual dollar amount of the claims paid out of that pool is an actuarial science. Companies that are good at predicting losses out of that pool will make a profit. Justified government regulation helps in keeping consumers from being overcharged, but the role of regulation is also to help keep companies financially viable so that they can be counted on to cover their losses. The government understands that the balancing act of expenses and claims is a sensitive thing.

Using the analogy of the “fox guarding the henhouse”, the government struggles with its own insurance programs. Government run insurance programs often don’t adhere to the very laws that they rightfully impose on companies to protect the public and the solvency of the insurance company. In addition to that, politics often comes in between the delicate balance between expenses and claims. So instead of actuarial science we have the shifting winds of politics setting rates. To make things even worse, there is generally no competition to keep government costs in check.

Today, The National Flood Insurance Program, which is already swimming deeply in red ink, nixed the planned and needed rate increases due to public pressure. If a private insurer responded that way, not only would the insurer be in violation of insurance regulation, but would be on its way out of business. The National Flood Insurance Program is currently in debt to the tune of 24 billion dollars to the US Treasury; yet getting the rates correct is determined by the level of public outcry rather than the very mathematical science required by law for private insurers.

So why should we care? The reason is simple. The National Flood Insurance Program cannot cover its debts and as a result, a year with unexpected losses will possibly require the tax payer to bail out the program. So rather than those that actually need flood insurance protection paying the accurate premium, the portion of the general public that doesn’t need flood coverage will end up paying for it anyway. Imagine for a minute that you don’t drive a car, but will be required to bail out a car insurance company for their losses. Or, imagine for a moment that you don’t own a home, but through your tax dollars you are going to pay out of pocket in order to cover that nice beach house that someone else owns because they are not paying the correct amount of money to cover their home insurance. Here is what is really important to understand as it relates to increased cost; typically when an insurer sees the pricing on the risk pool as inadequate, most often the end result will be a rate increase. When the government is in the same position, those increases are passed on in many different forms, often hiding from the consumer the true cost. It is one of the reasons why oftentimes there isn’t an outcry from the public. In the case of the ACA, not only have rates increased for many people, but there is a slew of fees, reductions in coverage, false rates being charged to other policy holders (such as young people covered under the ACA), and decreases in payments to doctors and hospitals. I have tried to raise awareness to the plight of people suffering from chronic pain. The ACA is seeking to cut payments to pain management doctors by a whopping 58%! This a cut in reimbursements to a payment level that was already lower than payments made to private insurers. Medical device taxes and fees to the consumer to cover a possible bailout of the insurance industry are also built into the program. So the actual cost to Americans is actually much higher than what most people realize.

The fact is that this problem exists in just about every insurance program run by the federal government. In addition to the National Flood Program, Medicare and Medicaid are also running deeply in the red. Whether you support the Affordable Care Act or you don’t, it is important to know that even with this law in its infancy, politics are already messing around with the delicate mathematical science needed to run a self-sustaining program. A great example is the “waiver” that some organizations have been granted; this only means that those not in those organizations will have no choice but to cover that cost for them. The health insurance carriers saw this sloppy math coming and it is one of the reasons that the ACA actually has a built in an insurance company bailout!

In the end, the costs of all of these insurance programs cost far, far more than they actually should. Today’s nixing of the Flood Insurance rate increase will ultimately, at some point, affect every American whether they need flood coverage or not.

It’s something to think about.

Have a great day!

Chris Garlasco

Remodeling your home or business? Tell your insurance company

February 18, 2014

 

Linda Robertson  Personal Lines Account Executive

Linda Robertson, Platinum Accounts Executive

 

 

“I was awake for the entire procedure. I can’t wait to tell you every detail…I was even able to snap some pics! See you at lunch!”

Sometimes it’s OK not to know.

When it comes to home remodeling projects though, it is definitely NOT OK for your insurance company not to know.

Making improvements to your home or business can be an exciting — but expensive — process. In the greater Hartford area, the average major kitchen remodel costs upwards of $58,000 and adding a bathroom can run you over $40,000. (Here’s a great source for the average cost of other remodeling projects and how much they contribute to resale.)

 

The good news though is that not only will you have refreshed space to live, work, and play in, you’ll have a more valuable property, and that’s where your insurance company comes in.

Your carrier bases your coverage on the value of your property and includes that figure in your policy. If you suffer a loss, your carrier will use that figure to determine how much it will pay on your claim. If the value figure is outdated and doesn’t reflect expensive improvements you’ve made, your payout will not cover your entire loss.

 

Guess who will have to make up the difference? (Hint: You.) In addition, some carriers will actually charge you a fee at the time of loss if you didn’t tell them about the improvements!

Don’t add to the already significant cost of improvements by making this mistake. Take care of your insurance needs in advance so you are entirely covered if anything happens during the project. If construction materials such as tiles or lumber will be stored on site, make sure your policy or your contractor’s policy will cover theft or damage.

Tip: Don’t put off the call to your insurance agent. Get that done right away before you get lost in color wheels and appliance catalogs.

Tip: Some homeowner policies are comprehensive enough to cover most home additions and improvements, but others are not. Even if you think you’re covered, get peace of mind by checking with your agent.

Tip: If new furniture and fixtures are part of your addition, make sure to include those in your updated coverage.

Linda Robertson

Platinum Accounts Executive

lrobertson@foundersgrp.com

860-435-2507

A little lapse in my insurance coverage can’t hurt, can it?

January 31, 2014

Sora Garlasco, Commercial Lines Account Manager

Sometimes it’s good to take a break.

It’s time to take a break from Candy Crush when you begin mentally rearranging people’s facial features. (Line up the nose with the eyes, three across…match!)

It’s time to take a break from binge watching Restaurant Impossible when you start acting like Robert Irvine in your own kitchen. (“This tastes like dog food…how could you serve me this?!?”)

Vacations, changes of scenery, getting away from the same old boring routine…these are all good, healthy, life-affirming breaks. However, there are some things you need working for you behind the scenes 24/7/365, perhaps none more so than your Home, Auto, Life or Business insurance policies.

Letting insurance lapse is a huge risk, and unlike, say, skydiving, there’s no reward and enjoyment mixed in with that risk, only headaches and the inevitable cost increases that will come with reinstating coverage.

What causes a lapse in your insurance coverage? In this case, it’s what you don’t do that counts. Don’t pay your premiums and you could get penalized financially through fees, a loss in preferred status, or worse, dropped. Why? Letting your coverage lapse gives a carrier the impression your finances are about as stable as Patsy and Edina after a trip to wine country.

Status is good. Preferred status is even better. In the case of insurance, status will often earn you a continuous coverage discount. Let your policy lapse for 30 days, however, and suddenly you have a new kind of status: Non-preferred status. (Has quite a ring, doesn’t it? You can actually feel the carrier holding its figurative nose.)

Non-preferred status is not only unpleasant sounding, it’s expensive. Insurance carriers dislike paperwork just as much as you do, and a break in coverage means lots of it for the carrier. Trust us when we say Murphy’s Law typically kicks in at this point:  No insurance?  Something is going to happen.  We see it all the time.

Play the “let’s let the insurance lapse” game too many times or for too long and suddenly there is no more policy to reinstate. After a period of inactivation, your carrier may treat you like a banana peel and toss you away forever. Now you’re on the hunt for a new carrier and one thing carriers don’t like is undercharging for risk.  AnyRisk Insurance Crossword guesses on whether that will be cheaper? (Hint, the answer is not yes.)

You can be sure there will be corresponding fees built in upfront should they choose to write you a policy. You see, at this point what we call a Standard Carrier in the insurance world won’t take you on – the risk is too high.  Remember this is insurance – it is all about risk aversion.  Will we be able to find you insurance if you let it lapse?  Yes, but it will be with a non-preferred, non-standard carrier or and “Excess & Surplus” lines carrier.  Get out your check book.

So what’s the worst that can happen if you let your business, auto, life, or home insurance policy lapse?

Auto insurance: For one thing, it’s illegal in Connecticut to  drive a car without insurance. Outlaw status aside, let’s say you’re cruising along and your phone dings with a status update from one of the cats you follow on Twitter. Distracted, you cause an accident that destroys your car and someone else’s. You are now on the hook for damages out of your own pocket. Grumpy cat you will be.

Life insurance: “I don’t plan on dying in February,” you tell yourself. “I’ll wait a month and pick the coverage up again in March.” Turns out February is a pretty popular month for dying. Now your family is left with a stack of bills and no income stream from your policy to help cover them.

Home insurance: As with life and auto insurance, you run the risk of catastrophe striking during your insurance “down time.” But there’s a twist if you carry a mortgage. Get Pig-Pen sloppy with home coverage and your lender will pick up your slack, forcing coverage of its choosing on you and billing you for the privilege. Like Bruce Banner when he starts to get a little ticked off, this is coverage you don’t want to see. Hugely expensive with bare bones protections and no coverage for your home’s contents or your personal liability, this forced lender coverage only protects what they have an interest in, which is the home itself.

Business Insurance:  You’ve worked hard to grow your company, one small law suit can bring it crumbling down in hours.  No insurance – No coverage.  Say good bye to your years of hard work

In short, there are a lot more rewarding ways to take risks then to let your insurance coverage lapse. Like extreme skiing.

TIP:

Just like with your car and real estate taxes, failure to receive a bill does not remove the responsibility of paying your premiums. Add your premium due dates to your electronic calendar and PLAN for the expense!

Sora Garlasco

sgarlasco@foundersgrp.com

Preventing Slips, Trips & Falls

January 18, 2014
Peggy Hill, CLCS, MBA

Peggy Hill, BSIE, MBA
Commercial Lines Coverage Specialist

Preventing workplace injuries and other risk control measures are key to managing your commercial insurance including Workers Compensation Coverage.  Thank you to our guest blogger,  Lisa Bisson, Corporate Health & Wellness Coordinator at Griffin Hospital Occupational Medicine Center  for taking the time to share with us some great tips on preventing slips, trips and falls!

Lisa Bisson, Corporate Health & Wellness Coordinator

 The most common cause of workplace injuries are slips, trips and falls.  They can be the result of walking on a wet or uneven surface, a trip over an obstacle such as an extension cord or piece of equipment, or a fall from a ladder or scaffolding.  OSHA, The National Safety Council and other workplace safety organizations offer training programs for injury prevention and hazard recognition to help reduce the number of injuries in the workplace.

Many of these tools are helpful outside the workplace.   Many injuries at home are caused by slips, trips and falls as well.  While the actual hazards may be different – icy driveways, uneven sidewalks, toys left on the floor, wiggly step stools – the lessons for prevention are still the same.

  1. Maintain all floor surfaces.  Keep all walking areas clean, dry and free of obstacles including wires, equipment, toys, boxes and supplies. Pay special attention to items like rugs and matting that may become wrinkled or rolled.
  2. Repair all uneven surfaces.  If that is not possible, make sure the area is clearly marked with caution tape, signage or other materials.
  3. Install sturdy handrails, non-skid surfaces and bright lighting in staircases and areas of egress.
  4. Only use appropriate, sturdy and balanced ladders or stepstools to climb to higher areas.  Never use chairs, tabletops or other furniture that is not appropriate for climbing.
  5. Wear sensible and appropriate footwear, especially in poor weather conditions.
  6. Pay attention to where you are going and what you are doing.  Distractions from cell phones, conversations, surroundings, etc. are just as dangerous when you walking especially in an unfamiliar area.
  7. When furnishing an area, moving equipment or storing boxes and supplies, make sure there are clear open pathways to walk through, especially in the event of an emergency.
  8. If you are unsteady walking, use an appropriate walker, cane or crutch.  Do not rely on furniture, walls, or other people to help you balance.  See your doctor or physical/occupational therapist for recommendations on what would be appropriate and safe for you.

By:  Lisa Bisson, Corporate Health & Wellness Coordinator - (203) 944-3805 x107 or lbisson@griffinhealth.org

Griffin Hospital Occupational Medicine Center.  100 Commerce Dr.  Shelton, CT 06484

For more information on Loss Control in the Workplace and managing your Workers Compensation – Please contact Peggy Hill, BSIE, MBA – Commercial Lines Coverage Specialist at Founders Insurance Group   phill@foundersgrp.com or 860-482-3506  ext 11608

The Polar Vortex….BRRRRR!

January 6, 2014

iStock_000014805390XSmallThanks to our friends at NBC for the information on why it’s so darn cold everywhere!  The following is an excerpt from their website on 1/6/2014:

“Connecticut was bracing for another night of freezing temperatures and sub-zero wind chills on Monday night.

Wind chill advisories are up around the state and single-digit temperatures with wind chills anywhere from -15 to -20 were expected overnight, according to NBC Connecticut Chief Meteorologist Brad Field.

Dangerous wind chills are predicted for Tuesday morning as well. Single-digit temperatures and wind chills in the -15 to -20 range will make conditions difficult for kids waiting for buses early Tuesday morning.

The bitter weather is part of a polar vortex that dropped brutal cold into the Northern Plains and the Midwest over the weekend and into Monday. Parts of the country saw wind chills that reached 50 to 60 degrees below zero on Monday. Schools closed due to the extreme cold in Minnesota, Wisconsin, Indiana, Illinois and Iowa.”

 

Tips from Team Founders:

Protect your pipes from bursting!

  • Open up the cabinet doors underneath your kitchen and bathroom sinks  – this will allow warm air to surround the pipes
  • Steady drip of warm water will also help prevent pipes from bursting
  • Try to limit cold drafts – put blankets or towels at the edges of doors or windows
  • Be prepared for power outages – have a generator or woodstove to heat your home
  • If you are going to be away for extended periods of time – make sure you have the temp in your house set at 55 or above.  You can also install a low temp monitor (often times you can get an insurance discount for this!)
  • If a pipe does burst – shut the water off at the source immediately and call your insurance agent.  It will be a mess – and not fun, but we will help you through the process!

 

We are hearty New Englanders – we can survive the dreaded Polar Vortex!  Stay warm & bring your pets inside!

Call us if you need us!  860-482-3506   http://www.foundersgrp.com

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