We’ve all been there…A friend or relative asks to borrow your car, and naturally your first reaction is to just toss them the keys, with maybe a passing thought on whether they will be considerate enough to put gas in the tank. You’re a good person, why wouldn’t you let them use your car, they’d do the same for you, right? And then it dawns on you, what happens if they get into an accident, are you still covered?
The good news is that the coverage follows the car and not the driver. As long as you give permission to the person borrowing the car, they will be covered under your policy. The bad news is, it will show up on your policy as a claim. Some carriers – not all – will raise premiums when a claim occurs. More often than not that raise in premium is triggered by the loss of the “loss free discount”.
A few other important points to keep in mind are:
Don’t loan out your car to anyone who doesn’t have a license or who has a suspended license. Your policy may deny coverage in an accident if you knowingly allowed them access to your vehicle and you could be sued or face criminal charges or BOTH.
If someone is going to be a regular driver of your vehicle, like a nanny or roommate, you should contact your insurance company to see if they need to be added to your policy.
Make sure the person you are loaning your vehicle to is responsible, and the vehicle is not being used for illegal or dangerous reasons. If you know someone is a bad driver, think twice or even three times before letting them get behind the wheel.
It’s not just your motor vehicle that you should be careful when lending out, but also any recreational vehicles like boats, snowmobiles, and jet skis.
Loaning your car out is inevitable, especially if you own a fun convertible that everyone is always drooling over, or the always functional 8 person SUV that’s perfect for transporting home the new Big Screen TV. We tend to form an emotional bond with our vehicles even giving them names. So the next time Cousin Jimmy asks to borrow “Bernard” (your beloved, rough and rugged Jeep Wrangler), make sure his license is valid and his reason is legitimate. The only thing left to figure out is, how to get him to put gas in your tank…and maybe a trip through the car wash!
Still have questions regarding your auto policy? That’s what we are here for – give us a call! 860-482-3506
Personal Lines Account Manager
Insurance is complicated, and often times it is quite confusing! Insurance policies are long, wordy and have pages and pages of legalese. Our clients rely on us to interpret that novel and tell you what it all means in layman’s terms. One question I get asked quite a bit is to define “Coinsurance” and what it really means to the policy holder.
We most often see coinsurance in commercial insurance policies – but sometimes they do exist in personal lines policies.
In a nutshell, coinsurance is the sharing of risk between the insured and the insurer, and it’s also your promise, as a business, to insure your property at an adequate value.
You can find your coinsurance provision on the Policy Declaration Page. It’s the percentage – usually 80, 90 or 100% – listed next to the limits for building, personal property, or business interruption coverage.
Under reporting of your property value can have serious financial consequences. If you purchase a limit that’s less than the defined percentage of the replacement value of your property, the coinsurance provision will act as a penalty if you have a claim.
I know, it’s already getting confusing – so here’s an example:
- Your business has a building and the replacement cost value is $1,000,000. Your coinsurance requirement is 80% – or $800,000 of building coverage.
- You only purchase coverage with a limit of $700,000.
- You suffer a loss of $200,000.
- You have a $25,000 deductible.
In this scenario the policy would pay a claim of $175,000 less the $25,000 deductible. Your business would be responsible for $50,000 of the loss, and $25,000 of that will be the coinsurance penalty.
If your company had purchased a limit for the full $800,000 required, you would have only been responsible for the $25,000 deductible.
The coinsurance penalty is calculated by taking the purchased coverage divided by the required coverage multiplied by the loss ($700,000/$800,000 x $200,000).
Total Loss Scenario:
It’s important to note that the coinsurance will also come into play as sharing of risk in the event of a total loss. If you have purchased a limit adequate to comply with your coinsurance provision, you won’t be penalized in the event of a total loss, but in most cases you will not receive more than your policy limit less the deductible.
In the scenario above, if you have a building valued at $1,000,000, with an 80% coinsurance provision and a policy limit of $800,000, you will only receive $800,000 less the $25,000 deductible in the event that the property is a total loss.
Change in Value:
If you have had the same policy for a number of years, you should verify that the property values are adequate. These can change due to inflation and other costs, so you may be covered for less than you think.
Additionally, if you purchase expensive equipment during the policy period, you should notify your agent and make sure that cost is added to your coverage. The coinsurance provision applies to personal property, too.
If you don’t keep all your policy limits update, you may find yourself under insured – that is never more important than at the time of a loss. Insuring your property to value is the best way – as you will be able to rebuild without significant money out of pocket in the case of a partial or total loss.
Take a few minutes to review your policies – a quick phone call to Founders (860-482-3506) could save you some big headaches down the line!
Commercial Lines Account Manager
You faithfully make those payments and haven’t suffered any losses so why does your annual premium rise instead of fall?
There are a variety of actuarial calculations that are taken into account when you are given a proposal for insurance.
- The underwriter will look at both your company’s history of risk as well as your industry as a whole. If this group as a whole has suffered catastrophic losses, the insurance companies will require greater premiums to ensure against the probability that you will have a loss in the coming year. For instance, a roofing contractor has a much higher Workers’ Comp rate than a retail store – the chance of a roofer getting injured is higher, there will be more claims and the cost of those claims will be higher. Make sense?
- The Great Recession – something we are still battling – has caused premiums to rise as well. Many businesses closed or elected to not insure themselves thus lowering the amount of monies collected by insurers. The low interest rates have decreased the growth of both their investments and of the reinsurance companies. This has left less money to pay out claims leading to large underwriting losses in 2011 and 2012. Insurance companies had significant rate increases in 2013 and 2014 to make up for the losses, but now see the trend of rising rates leveling off in 2015.
- After many scandals and large lawsuits, many insurers have chosen not to assume certain risks anymore since the probability of large claims is inevitable. With less competition to vie for your premium companies can charge you more money. This is a simple supply and demand.
What can you to manage your insurance costs?
- Training programs for employees not just on safety, but on customer service and in-house procedures will help with Workers’ Compensation and E&O claims. Document theses training sessions by having employees sign an attendance sheet and include a short summary of what topic they are learning.
- If an incident occurs, document everything as thoroughly as possible and report it to your broker immediately. Even if a claim doesn’t arise, you want to make sure you are covered.
- Ensure that your schedule of equipment is up to date so you aren’t paying for items that you no longer own.
- Review the payroll classifications on your Workers’ Comp to see if there have been changes.
- Consider a higher deductible.
Meet with your agent and review your policy in detail every year. Business needs change constantly and you may find that there are coverages you are paying for that are no longer applicable. Even more importantly, you will want to make sure you are protecting yourself against any new exposures!
At Founders, we are always happy to review your coverages and counsel you on best practices. Have a question? Don’t hesitate to give us a call! 860-482-3506
Commercial Lines Account Manager
Laundry is a fact of life, some people love it and some find it a dreaded, but necessary chore. You know to wash your whites in hot and your colors in cold and when you put the wet clothes in the dryer you always make sure to clean the lint trap before turning it on. Good to go, right?
Not quite. You need to clean out the vent from the dryer to the outside of your home one to two times a year. According to the Consumer Product Safety Commission, obstructed airflow due to lint buildup causes 15,500 fires a year. These fires result in approximately 30 deaths and over 400 injuries making dryer fires the number two source of fire in the home. Perhaps just as dangerous, a gas dryer that’s improperly vented or has an exhaust clogged by lint can cause carbon monoxide to fill the laundry room – a very lethal oops!
Warning Signs of a Clogged Vent
- Clothes take longer to dry
- Clothes don’t fully dry
- Clothes are hotter than normal at the end of the drying cycle
- Outside of dryer gets very hot
- Outside of exhaust vent flap doesn’t open very much indicating low exhaust velocity
- Laundry room becomes more humid than usual
- Burnt smell is evident in laundry room
Benefits to Cleaning the Vent
- Improves the efficiency of your dryer thus reducing your energy costs
- Dryer will last longer with less repairs
- Clothes have less lint left on them
- Makes you safer from fire in your home
Experts recommend cleaning your dryer vent at least once a year. If you have a large family or a lot of furry pets and do many loads of laundry a week, you should clean the vents at least twice a year.
Regardless if you choose to clean the vent yourself or hire someone to do it for you, for the safety of you and your family, it’s time to add this task to the annual spring cleaning chores. It’s almost as fun as washing all the windows!
Happy Spring Cleaning!
Personal Lines Account Manager
Avoiding worker’s compensation claims starts with smart hiring but continues with employee training and safety programs.
As I blogged about recently [read more here], companies can save major worker’s compensation headaches by implementing a series of smart hiring practices. Once those practices are in place and fully vetted, quality employees are entering your workforce, the worker’s comp avoidance job is done, right? Not so fast. In order to keep worker’s compensation claims in the category of rare occurrence, an organization must have a sustained commitment to keeping its employees safe and knowledgeable.
Under the Occupational Safety and Health Act of 1970, every employer has an obligation to provide and maintain a safe, healthy workplace for employees. This protects employees of course, but also protects employers from dealing with a higher rate of worker’s compensation claims.
Implementing a comprehensive safety and health program will help employers of all sizes better manage their risk. Here are some best practices to consider:
Create a culture of safety and health — Make sure safety is a part of your workplace culture, with buy-in at all levels, from supervisors and managers to new employees. Establish a mentor program so new employees have a specific “safety” person they know they can consult with.
Provide training — Provide job specific, hands-on safety training to new (and existing!) employees, and make sure to involve supervisors and managers in both that process and follow-up and enforcement. If your employee population includes workers who are not native English speakers, provide training in other languages. Above all, encourage questions from your employees. The give and take will help instill confidence that the training is sinking in.
Make them stand out — Sometimes you just have to be a little different. During orientation, provide hard hats, eye protection, safety vests of a different color and name badges to help your employees identify and support new hires.
Focus on proper ergonomics — Whether they are desk jockeys or out in the field all day, make sure your employees have the right equipment for their job and that they are trained on how to use it properly. OSHA has found that $1 of every $3 in worker’s compensation claims are the result of ergonomic injury. Do not ignore this crucial area!
Guard those machines — Manufacturers and others who use heavy equipment in the workplace need to ensure the machines have proper safety mechanisms in place and that they are in tested working order. Train new employees in safety practices related to the equipment and the relevant safety mechanisms.
Drive safe — If you have company vehicles, make sure you are routinely checking motor vehicle registration information on all employees with driving responsibilities. To boost driver safety education, consider enrolling employees in a course offered by your insurance carrier. Regularly inspect your vehicles and maintain them in good condition.
Implement a return-to-work program — A comprehensive return-to-work program protects your employees AND your bottom line. It can include accommodations such as modified duties or schedules, new tools that can help an employee work with a disability or injury, or employee reassignment, either temporarily or permanently.
Still have questions?
Give Team Founders a call! 860-482-3506!
Smart hiring practices (and retaining good employees) help protect against Workers’ Compensation claims
Just as all employees are not equal in skill-set or ability to produce, all employees are not equal in terms of their potential to file Workers’ Compensation claims.
An oft-held assumption is that an older workforce is more likely to file excessive worker’s compensation claims. That’s true in certain cases, particularly in the leisure and hospitality sectors, but overall the data shows that it’s not age but tenure that has the greatest impact, and it might surprise you to learn that workers with shorter tenure file more claims. Indeed, one study published in the Journal of Occupational & Environmental Medicine shows that injury reports were four to six times higher for workers during their first month on the job.
Recent research by The Hartford underscored these findings. The carrier discovered that the first year in an employee’s tenure poses the highest risk, with the first month twice as risky as the rest.
Unquestionably, retaining good employees over the long term is a top way to reduce your worker’s claim liability. But whether due to your organization’s growth or employee retirement/moving on, you’ll be hiring. When it’s time to do so, these practices can help you guard against the risk of future worker’s comp claims.
Comprehensive pre-employment screening — Criminal, motor vehicle, and financial background checks can help discover problems before you hire, as can drug screening. According to the U.S. Department of Justice, 30% of the population has a criminal record. Take the time to know who you are hiring.
Verify applicant information — According to Careerbuilder.com, more than half of all job applications contain inaccurate information. According to ADP, there are discrepancies in nearly half of employment, education, and reference checks provided by applicants. While some of these may be minor, invest the time and resources required to verify.
Post-employment controls — Once you’ve hired, periodic physical exams and medical assessments and random drug testing can help guard against worker’s compensation and negligence claims against you.
In short, new hires can pose serious risks for your organization, but careful on-boarding and training can help curb potential losses. Be persistent in your efforts. Risk management for work-related injuries is an ongoing process that provides benefits not only to new hires, but all employees and your organization as a whole.
Still have questions? Give Founders Insurance Group a call – helping people manage their Work Comp claims and process is what we do best!
Commercial Lines Account Manager
“Thank you for the dinner and a very pleasant evening. If your car could take me to the airport; Mr. Corleone is a man who insists on hearing bad news immediately.” —Tom Hagen, consigliere to Godfather Don Corleone
Putting aside the murders, corruption, strong arming, and illegal and unethical behavior of all stripes, Marlin Brando’s Godfather was a pretty good guy to have on your side.
In real life, a good non-mob godparent takes a strong interest in a child’s life, a protector who supplements and augments the traditional parental role. Like a good godparent, a good insurance company is there to protect you as well, but can’t help if you don’t report what’s going on, and promptly.
You need to file insurance claims fast, regardless of who’s at fault, otherwise, you could jeopardize your coverage, create future risk, and cause more problems.
The Don would not approve of such delay, but if that’s not enough to convince you, here are the top five reasons why you should promptly report a claim.
Guarantee you’re actually covered — It would be very bad, indeed, to actually find yourself unexpectedly not covered in an accident, but that can happen if you don’t report claims promptly. Your policy defines specified conditions and requirements for coverage, and one of them is usually your duty to report a loss just as soon as practical after the loss occurs. Do. Not. Wait.
Get relief faster — The sooner you report the claim, the quicker your carrier can investigate, determine liability and damages, and begin paying on the claim. Prompt reporting means an easier investigative process, which speeds up everything that follows — like getting a check!
Improve the chance of getting your deductible back — Let’s say you’re in a car accident that’s not your fault. Your insurance company will pay your claim and then go after the at-fault driver’s insurance company for the damages. This is known as subrogation. The best part about it from your standpoint is if your carrier is successful in the subrogation process, they will be able to collect not only what they paid you, but be able to reimburse you for any deductible you had to pay. Again, the faster you report the claim, the more likely this will happen.
Prevent additional damage — If there’s fire or water damage to your property, prompt reporting means your carrier can swiftly dispatch specialists who work around the clock and can immediately begin remediation work, preventing further damage. This ultimately lowers claim costs and helps keep premiums low.
To better defend you — If someone is injured in a claim that involves you, your carrier can negotiate a settlement early in the process, which often means better outcomes for you. Late reporting could allow key evidence to be lost or destroyed, leading to a not-so-positive outcome for all parties involved.
Remember, your insurance policy is merely a promise until you have a claim. Don’t be afraid to ask for help when you need it. The Don would no doubt approve.