Builders Risk Insurance: A Must-Have

Your last newsletter discussed the benefits of Building Ordinance insurance. If you’re planning to build on your property or adding to an existing structure, a related policy – Builders Risk – can protect you from losses during construction, helping make sure that you finish the project.

The amount of coverage should reflect the total value of the completed structure (including the costs of material and labor, but not the value of the land). In most cases, the construction budget will be the best source for calculating this amount.

The policy is usually written for a period three months, six months, or 12 months. If needed, the term can be extended once.

Builders Risk covers damage to the insured structure(s) from a wide variety of causes, ranging from natural disasters (wind, lightning, hail, and lightning) through accidental events (fire, explosion, or vehicle accidents) to human activities (such as theft and vandalism). Coverage usually also includes:

  • Fire department service charges for saving or protecting property from a covered cause of loss.
  • Removal of debris from property damaged by a covered loss.
  • Losses from the backup of sewer and drains.

Most policies exclude losses from earthquake, flooding employee theft, mechanical breakdown, contract penalties, war, government action, or faulty design and workmanship. You might be able to add coverage for some of these exclusions – such as earthquakes and flooding – if the building is in an area that’s prone to one or both of these natural disasters.

Bear in mind that this policy does not provide Liability coverage for accidents or injuries on your property.

We’d be happy to tailor a comprehensive Builders Risk product that fits your needs – and budget. Just give us a call.


Five Ways To Kill Life Insurance Payouts


You buy Life coverage to provide for your loved ones after your death. To make sure your beneficiaries receive what they’re owed, avoid these errors:

  1. Lying on your application. Truth hurts, but it can hurt even more if you lie on a Life insurance application. Although it might be tempting to deny that you’re a smoker, or have been treated for a particular disease or medical condition, doing so could make your policy null and void.
  2. Failing to make premium payments. Just because you miss a payment doesn’t mean your policy is dead. The insurance company will usually offer a 30 or 60-day grace period for payment, during which the policy will stay in effect.
  3. Not telling loved ones about your policy. Although this doesn’t mean the insurer won’t pay the beneficiaries after your death, it will make things more difficult for them. Most companies check databases for policyholder deaths, but not always in a timely manner. If you don’t give your beneficiaries policy information, some states have locator programs to help them check. The American Council of Life Insurers (ACLI) website also provides tips for tracking policies.
  4. Not naming other beneficiaries. If your primary beneficiary dies ahead of you, the secondary beneficiary will receive the death benefit. If he or she passes away before you, the proceeds will go to the final beneficiary. If both deaths precede yours, the benefit will go to your estate.
  5. Suicide. In It’s a Wonderful Life, Jimmy Stewart thought (wrongly) that he was worth more dead than alive because his family could collect on his Life insurance. However, under the “suicide clause” in a Life policy, if a policyholder takes his or her own life during the first two years of coverage, the beneficiaries would receive only the premiums paid to that point.


How to File a Life Insurance Claim

Life insurance beneficiaries are responsible to file claims for the funds to which they are entitled. If you’re a beneficiary of one or more life insurance policies, know how to file a claim and receive the money reserved for you.

Find the Policies

Before you can file a claim, you should find all the insurance policies or proofs of insurance certificates in which you may be named a beneficiary. Check filing cabinets, safes and bank safe deposit boxes for the documents you need.

Remember to check for group policies, too. Contact the deceased person’s former employers, banks, credit agencies, social groups and professional groups to find evidence of group policy coverage.

If you can’t find any policies or certificates of insurance, contact insurance agencies that may have issued the policies. You can also search financial records for any evidence of life insurance premium payments, contact the state insurance department to find the policy or hire a reputable company to locate the policy for you.

Contact the Insurance Agency

Once you find the life insurance policies, obtain a valid copy of the deceased person’s death certificate. Then contact the insurance agency that issued the policy. They will have paperwork for you to complete, so call the agency’s policyholder services department as soon as possible to begin the claim filing process. If you cannot fill out the paperwork yourself, the insurance agent will do it for you, and you will only need to sign your name.

Remember that you may also need to have to fill out IRS Form W-9. It allows the insurance company to notify the IRS if you receive an interest payment on the policy’s value. The insurance company will give you more information about whether or not this form is needed.

Wait for the Claim to be Processed

Many life insurance claims are paid within a few days. You may elect to receive your life insurance benefits in several ways. Select a lump-sum cash payment and invest or spend the money or choose a settlement option.

To receive the funds, the policy must be current, and all conditions must be met. Claims are most often delayed because the death certificate isn’t valid, the person died within two years of the policy’s original issue date or the policy contains false information.

Seven Steps To A Safer Workplace


If you think of your business as a safe place, think again. Security experts recommend taking these precautions:

  1. Parking Lot Security/Lighting. Because crime flourishes in the dark, implement a “buddy system” to ferry workers to and from cars. Limit parking lot access and keep the lots – and your entire facility, inside and out – well lit during non-business hours. Entrance Area Safety. Keep a receptionist on duty at all times. Provide a registration system for visitors (even if they’re dressed as service personnel). Have locks on doors and windows. Use badge or other photo ID systems, with frequent checks of entry codes. Never let employees prop open an outside door with a chair so it doesn’t lock behind them during a break.
  2. Suspicious Activity. Urge employees to report anything suspicious around the building. Instead of allowing employees to open suspicious packages, give them to the authorities for search and disposal.
  3. Information Safety. Because it’s increasingly easy for hackers or disgruntled employees to steal your organization’s vital data, use updated security software with regular backups. Shred paper documents containing critical information when they’re no longer needed.
  4. Equipment Security. Inventory critical equipment, hardware, and software. This is especially important as electronic devices keep shrinking in size. An inventory will also make it easier for your insurance company to process any claims if anything “goes missing.”
  5. Employee Valuables. Provide secure places, such as lockable drawers and closets, for employee property. Valuables, especially those that reveal personal information, should be locked away during meetings or breaks.
  6. Safety Team. Have a group of managers and employees meet regularly with a set agenda.

To learn more, feel free to get in touch with our Risk Management specialists at any time.


Sexual Harrassment: Some Folks Still Don’t Get It!

The Westendorf v. West Coast decision by the Ninth Federal Circuit Court of Appeals offers yet another example of management’s failure to understand that sexually hostile behavior is not permitted in the workplace. In this case, the boss and coworkers said the plaintiff was doing “girly work,” talked about the large breasts of another woman with her, made tampon jokes, joked about orgasms, and eventually started cursing at her. As mentioned in previous articles, whether she eventually ends up winning or losing isn’t the point. Either way, the employer now finds itself as a named defendant in a nationally publicized lawsuit that will cost it tens, if not hundreds, of thousands of dollars to defend what amounts to stupid and boorish conduct.

In this case, the plaintiff never reported the alleged harassment to a human resources officer. Perhaps if she had an alternative channel of complaint other than through the ranks, she would’ve received appropriate attention. Apparently the boss did admonish a manager and coworkers to quit the harassment, but when they continued it, the plaintiff just couldn’t take it anymore.

The court ruled that although the sexually hostile conduct was not severe or pervasive enough to alter the terms of her employment and support a sexual harassment claim, she might have faced retaliation for bringing the claims in the first place. It’s important to note even though this case was decided on April 1, 2013 dealing with conduct that ended in July 2008, it has yet to go to trial! I can only imagine what it could have, and should have, been settled for soon after filing, rather than slogging through the courts for the past five years. This doesn’t benefit either the plaintiff or the defendant – but it certainly helps fill counsel’s billable hour requirements.


Wellness Program Rules Create Hurdles For Employers


A recent expansion of nondiscrimination rules for workplace wellness programs could curb the ability of businesses to use incentives for improving employee health care outcomes.

The Department of Health and Human Services (HHS) set final regulations under the Patient Protection and Affordable Care act that broaden protections for employees who are medically or otherwise incapable of completing activity-based or outcome-based objectives to earn rewards or avoid penalties under worker wellness programs.

Under the rules, employers must provide a “reasonable alternative standard” through which workers can still earn an activity-based wellness incentive if a medical condition prevents them from completing the activity. Employers will also be required to provide reasonable alternative standards for employees who can’t meet a health outcome plan target— such as a percentage reduction or benchmark in their body mass index, cholesterol, or weight.

There’s no way to tell how many employees will use these broader alternative standards, and/or if the reasonable alternative programs can work as well as the initial programs in terms of health outcomes. The additional discrimination protections tied to outcome-based incentives could make it harder for employers to use rewards as a way to drive engagement in health management, or gauge how well the programs are working if significant percentages of employees use alternative methods to obtain these rewards.

Says one employment law expert, “It’s very difficult to design a reward for the outcome that you want your employees to achieve if anyone who doesn’t meet that standard, regardless of whether they’re capable of doing so, is given an alternative means of getting that reward.”

To learn more about implementing the new HHS regulations in your workplace, just give us a call.


Demand For Contractors Professional Liability Rises

New approaches to building projects, as well as new techniques, are leading to increased demand for Professional Liability insurance for contractors.

A few years ago, people would shake their heads at the idea of this coverage, asking how contractors could be held liable for professional risk when they don’t provide professional services.

However, there has been a blurring of the once-sharp lines between contractors and architects and designers, as more and more contractors are being drawn into the design process. Under the traditional “design-bid-build” method, a project would be designed, bids put out, and the project built. However, the spread of the “design-build” concept – which decreases the amount of time, and the cost, of the project involved – has meant that medium sized and large contractors often take the design responsibilities in-house, and even subcontract them to design firms.

These contractors’ biggest exposure is for claims filed against them for project delays and cost overruns. However, traditional General Liability insurance offers coverage only for Bodily Injury and Property Damage, and does not cover financial or economic losses. Contractors Professional Liability insurance fills this gap.

Because these policies are relatively recent, only a limited number of insurance companies offer them. These companies haven’t paid enough claims for underwriters to establish the underwriting history and set standard rates – which means that policies are usually negotiated on a case-by-case basis. The amount of insurance can be up to $50 million; if a contractor needs more capacity, coverage can be added through excess layers.

If your firm is (or might be) taking on project design responsibilities, a comprehensive Contractors Professional Liability policy can help protect your pocketbook – and provide peace of mind. To learn more, just give us a call.


Pollution Liability: The CPL Solution

Air, water, and soil pollution pose a serious financial threat for contractors. One small misstep can require thousands – or even millions – to clean up.

Consider these scenarios:

  • Remodeling a school kicks up dust.
  • Using construction materials generates fumes that pollute the air.
  • Hitting an underground storage tank leads to the release of liquid pollutants.
  • Spraying to remove a bees’ nest from a work area releases insecticides.
  • Tying into a sewer line improperly causes sewage to back up.

Your Comprehensive General Liability (CGL) policy provides severely limited protection against these types of pollution claims. Not to worry! Contractors Pollution Liability (CPL) insurance can protect you. (These policies are sometimes written together with Contractors Professional Liability coverage – see the previous article).

CPL covers Bodily Injury and Property Damage – whether by settlement or verdict – as well as the expenses of investigating, defending, or settling claims. Most policies also cover the costs of removing or neutralizing pollutants and restoring the damaged property.

CPL policies usually include a “hammer clause” that works like this: if the contractor chooses to fight a claim, rather than settle it, the insurance company’s liability for damages and claims expenses is limited to what it would have had to pay if the contractor had approved the settlement. As you can imagine, most contractors choose to settle when their insurer recommends this approach.

As with Contractors Professional Liability coverage, CPL policies are usually written on a case-by-case basis, with the size of the policy depending on your situation (for example coverage might be worldwide or limited to the U.S). Our agency would be happy to work with you, and the quality insurance companies we represent, to tailor a program suited for your needs. Feel free to get in touch with us at any time.


Residential Home Leak Claims Flooding Courts


In the residential-construction industry, plaintiffs’ attorneys keep coming up with new creative ideas for class-action lawsuits – a shift from litigation by individual homeowners to more inclusive claims, such as the Chinese drywall class-action suit settled last year for $80 million.

More and more of these Construction Defect claims by developers and builders, often filed in plaintiff-friendly jurisdictions such as Southern California, allege potential water damage from faulty pipe fittings and minor leakages in homes. For example, Karen Rice, vice president of construction claims at XL Group North America’s Los Angeles office, says that although fewer homes have been built in this region during the past several years, XL hasn’t seen a reduction in residential water leak litigation so far. She adds that plaintiffs are filing leakage suits within an average of three to five years, rather than six or seven years, “probably because of the [ailing] economy.”

According to Rice, “these are pinhole, minute leaks, causing some water damage; there really isn’t any water damage that we can tell.” Thomas Varney, risk-consulting manager in the Americas for Allianz, points out that such leaks often occur because a worker failed to tighten, cap, or complete a connection to the plumbing or sprinkler system properly – often in an area that’s not visible, or on a higher floor that might have a significant amount of water.

The best way to help protect your business against these types of claims is to set, and enforce, comprehensive and effective safety practices, guidelines, and criteria in the workplace.

Our Construction insurance specialists would be happy to review your safety program. Feel free to get in touch with us at any time.


Identity Theft Insurance

3Identity theft claimed 12.6 million victims in the U.S. last year – and can victimize you at any time! It’s all too easy for bad guys to pilfer your e-mail, take a photo of your credit card (including your security code), or even install “malware” that records every keystroke on your computer.

Identity theft can clean out your bank accounts, devastate your credit, and even result in charges of fraud against you. Although credit monitoring can alert you to the theft, you’ll still face the tedious, costly – and often lengthy – process of restoring your credit and, possibly, of clearing your good name. For example it might easily take months, or even longer, to settle fraudulent bills with your creditors.

Identity Theft insurance can help! As a rule, this coverage will reimburse you, up to the policy amount – which can range from $10,000 to $1,000,000 – for many of the costs of restoring your identity and credit rating, such as:

  • Notification of your banks, creditors, and credit agencies of the theft by phone or mail (including notarization of documents, registered or certified mail, etc.).
  • Replacement of lost or stolen identity documents – such as passports and, Social Security cards.
  • Attorney fees (if needed).
  • Lost wages, for time taken from work to deal with the theft.

Some policies also offer such benefits as providing restoration services to guide you through the process and an emergency cash advance if the theft occurs while you’re away from home.

Identity Theft insurance usually costs $20 to $100 a year, with an annual deductible of $100 to $150. You can either add it to your Homeowners policy or buy it as a separate coverage. We’d be happy to recommend the policy that’s best suited to your needs.