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The National Federation of Independent Business reports that small business owners now list insurance as their biggest concern. The NFIB conducts a monthly poll. For the last three months cost and availability of insurance was listed as the number one concern by the greatest number of responders (23%). This is the first time since the poll began in 1973 that insurance has been at the top of the worry list.
According to a study by the California Workers Compensation Institute, workers compensation insurer payments to chiropractors increased 153% during the period 1996 - 2001. This rise propelled chiropractors ahead of orthopedists and physical therapists to become the number one medical specialty in terms of cost. This rise occurred even though the number of injuries and the number of cases involving chiropractic care declined. CWCI did not study results in other states. However, California is generally regarded as a trendsetter.
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| Impaired driving - a bigger risk than you may think |
Have you ever noticed how many others on the road around you seem to drive erratically? That "semi" coming toward you may have an impaired driver at the wheel. According to Joseph Osterman, director of the National Transportation Safety Board's Office of Highway Safety, as many as three quarters of all accidents may involve some form of driver impairment. Consider these statistics for the U.S. population.
- 2,500,000 persons have epilepsy
- 17,000,000 have diabetes
- 18,000,000 have sleep apnea
- 62,000,000 have cardiovascular disease
Any of these conditions can cause sudden unconsciousness or seizures.
- 1,000,000 have Parkinson's disease
- 4,000,000 have Alzheimer's or dementia
These diseases can result in cognitive or motor problems that can affect driving.
There are other diseases and conditions that can affect the ability to drive such as macular degeneration, hypoglycemia and hypertension. In addition to disease, there is the problem of medication-induced impairment. Even over-the-counter medications such as antihistamines can slow reaction times, cause drowsiness or otherwise affect driving performance. Add to the conditions above the portion of the population on some form of anti-depressant, prescription medication, illegal substance or alcohol (or any combination thereof), not to mention those on cell phones, and one almost wants to stay home.
There are a few ways you can help protect yourself, your family and your employees.
- First, don't drive impaired. Pay attention to warnings on medication. Watch what you mix and never drive after drinking.
- Keep yourself fit. Get regular physicals and eye exams. If you have a condition that might affect driving, discuss the matter with your physician.
- Learn to drive with a "safety bubble" - a space between your vehicle and those around you in traffic. Allow for a margin of error for the other guy who can't quite stay in his lane.
- Keep an eye on those around you. Watch for weaving, sudden stops or other erratic behavior. Avoid getting close to anyone exhibiting unusual driving.
- Adopt policies for employees driving on company business regarding impaired driving. Actively educate employee drivers on the risk of driving when one is less than 100%.
- Consider physicals or other forms of screening for employees who drive on business.
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| Guidelines for safe e-mailing |
High-profile litigation where e-mail has surfaced to embarrass the sender has become legend. There are steps that any organization can take to minimize the risk that e-mails will be taken out of context and used against the sender or the company. Here are a few.
- Think before you type. The tendency is to treat e-mail as informal conversation. The reality is that in court, every word is picked over just as if the e-mail were a formal written document.
- Consider your real audience. Think about the person you would least like to read this message. Write it as if they will be getting a copy. You never know to whom the item will be forwarded.
- Watch that reply button. "Reply to all" means everybody gets a copy, including those on "bcc" list. Also, sometimes all the "cc" targets can't be seen without scrolling.
- Watch those subject lines. Ever notice that in some insurance policies or contracts a caveat says that headings are used for clarification only and not to convey meaning? Someone may try to use your subject line to infer more than you intended. Or, the subject line itself can be a "red flag."
- Use labels. If it is a confidential communication or attorney work product, label it as such. Remember, however, that when someone outside the attorney/client relationship receives the message it is no longer privileged.
- Be original. Don't just forward long chain e-mails. First, you may be sending confidential information wrapped in public information. Second, you may be forwarding privileged material. Finally, your addition to the comments could be placed in a different context than you intended by inclusion of the prior work.
- Watch your language. Don't say things you wouldn't want a jury, or your worst antagonist or your mother to hear.
- Choose your medium with care. If a subject is the least bit sensitive, chose another communication medium, such as a telephone call.
A little care and attention to detail in the art of communicating, especially by e-mail, can help prevent a great deal of embarrassment or worse.
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| Equipment maintenance insurance |
When you buy a house, the seller usually furnishes a "home warranty." In reality, this is an insurance policy against certain types of equipment breakdown or other problems. For businesses, an insurance product that provides some of the benefits of a home warranty (a sort of "work" warranty) is available. Coverage applies principally to electronic equipment used in business. Examples of equipment covered include:
- Computers
- Security equipment
- Office machines (copiers, faxes, etc.)
- Communications equipment
- Printing and duplicating equipment
- Photo equipment
- Specialty electronic equipment
Equipment maintenance insurance allows businesses to consolidate multiple vendor maintenance contracts into one insurance policy. This consolidation should produce savings over the individual costs and the administration of multiple agreements. Programs can be tailored to cover not only repair, but also scheduled preventive maintenance. Some insurers provide online access to scheduling, claim information, reports and more. Incident reports can help provide data for future purchasing decisions.
In some cases, equipment maintenance insurance can provide broader benefits than most maintenance agreements with vendors. For example, EMI can reimburse for losses associated with power surges, human error or negligence, in-house repairs, substitute equipment rental, preventive maintenance inspections and consequential damages caused by the environment.
Although relatively new in some industries, equipment maintenance policies have been in use in the hospital field for more than twenty years. The concept works better for financial companies, educational institutions, large retailers, high-tech industries and municipalities. One advantage for governments is that, once the coverage is in place, they no longer have to adhere to complicated procurement rules (RFPs) for individual equipment maintenance contracts.
Equipment vendors often argue that service will decline under EMI as opposed to traditional maintenance contracts. However, in most cases the same vendor is still providing the maintenance service. Because the individual maintenance contracts carry high profit levels, there naturally is some opposition to the consolidated approach of equipment maintenance insurance.
EMI can benefit some organizations. In some cases, equipment breakdown insurance ("boiler and machinery") may be more appropriate, or both may have a use. Your insurance representative can help decide what is best for your organization.
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| What's in a name(d insured)? |
Properly naming all entities and individuals on an insurance policy is crucial. Failure to mention a subsidiary or affiliated entity may, under some circumstances, preclude them from coverage when they need it most. As a business owner or manager, you are in the best position to make sure your insurance representative has all the information they need to make sure that the policy's named insured includes all whom may need coverage.
When specifying those entities that should be included, you need to identify:
- All DBA's ("doing business as") that the organization uses
- Trade names
- Subsidiaries
- Affiliates
- Partnerships
- Joint ventures
- Employee benefit plans or funds
- Any other entity in which the principal organization has an interest
- Principal owners
- Spouses of principal owners
- Discontinued entities
To accommodate all these parties, your insurance representative may need to add a special endorsement (called a "named insured endorsement," logically) since policy declaration pages often do not contain enough room to name all the parties that need to be named. Because many organizations are dynamic, your named insured wording may also contain so-called "omnibus" wording. This is language designed to catch all those entities that might be overlooked, changed or added during the policy period. The following is a sample of omnibus named insured wording that might be added to a policy by endorsement.
Named insured of the policy declarations is amended to read:
- XYZ Corporation
- Any partner, joint venture member of subsidiary (including any subsidiaries thereof) of the Named Insured as now constituted or may be hereinafter constituted
- Any partnership, joint venture or other organization (and any member thereof as respects his/her/its liability as such) coming under the Named Insured's active management control, but only to the extent the Named Insured is required by contract to provide such insurance
- The Named Insured with respect to any partnership, joint venture or other organization in which the Named Insured has a financial interest but does not exercise active managerial control to the extent the Named Insured's interest only
- Any organization acquired by the Named Insured during the policy period through consolidation, merger, purchase of assets or assumption of control and active management
The above is only one example. Your insurance representative can help you make sure that no party that needs coverage misses the roll call.
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When insurance markets tighten, all manner of things come out of the woodwork. Certain lines of insurance coverage, such as directors and officers liability and medical malpractice, can become difficult or expensive at certain points of the market cycle. Sometimes it's the economy. At other times it is the legal environment.
When insurance prices go up and availability goes down, enterprising parties find opportunities to step in and profit from the reaction. Recently, the Oregon department of insurance ordered a company located in Oregon to stop selling medical malpractice insurance. The company marketed its coverage through the Internet and faxed solicitations to medical providers. The company uses a post office box as its address. Reportedly, the company has never been licensed as an insurer in Oregon. Its advertising materials included claims that it could provide coverage at rates 30% to 50% below other insurers.
The old adage "If it looks too good to be true, it probably is" has special relevance to insurance. Nobody can continuously sell coverage at prices substantially below the competition and stay in business for long. Unfortunately, the history of insurance fraud is littered with those who managed to stay in business for just long enough to make big profits and leave policy holders with the losses.
In difficult times especially, it pays to work with established and reliable insurers and insurance professionals. There are better ways to manage costs than just trying to find a "great deal." Caution is the watchword in tough times - especially when it comes to your organization's financial protection.
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| Does your organization need tax liability insurance? |
As the Federal Government heads toward multi-billion dollar deficits and states face a similar fate, pressure on tax agencies to increase collections mounts. For some corporations, this situation constitutes an increased risk that needs to be addressed.
Tax laws create uncertainty. Interpretation of tax laws is complicated and subject to error. Nevertheless, corporations must attempt to take advantage of opportunities provided for in the tax laws, but do so at a risk. Failure to take advantage means reduced earnings and possible shareholder dissatisfaction. Aggressive use of tax "loopholes" or advantages means a possible need for contingent reserves (to pay penalties and taxes later deemed owed) and possible increased cost of capital as investors demand a risk premium.
Certain types of businesses and transactions are especially likely to have a risk of tax liability. Some of these include:
- Real estate investment trusts
- Organizations that use sale-leaseback arrangements
- Businesses producing synthetic fuels or renewable energy sources
- Organizations undergoing bankruptcy reorganization
- Companies involved in mergers, acquisitions or spin-offs
- Anyone using tax shelter transactions
Tax liability insurance removes some of the uncertainty about tax policy and can comfort investors concerned about the risk of large penalties or back taxes owed. Coverage can provide protection against those situations in which favorable tax treatment is essential but there is no time to obtain a ruling from tax authorities.
Policies can be written for up to six year periods. Compliance with current tax laws can be covered, but changes in tax law cannot. A major benefit of the coverage is payment for defense of enforcement actions and funding the legal expenses of a challenge. Your insurance representative can provide additional information about this type of coverage.
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