The Risks of Not Keeping Up Your Commercial Property

California Gov. Jerry Brown has signed into law a number of bills that will drastically change the landscape for employers trying to resolve sexual harassment and discrimination claims.

Brown signed three bills that will make it easier for workers to bring claims of harassment and discrimination in the workplace, and curtail the ability of employers to resolve the claims with motions for summary judgment.

They will also prohibit non-disclosure agreements, and will expand the number of employers that will be required to provide anti-sexual-harassment training to their staff.

Any organization with employees needs to be aware of the new laws to avoid any future legal quagmires, as failing to comply with some of these laws could drastically increase an employer’s liability.

Here’s a rundown of what you need to know:

SB 1343

Existing law requires that organizations with 50 or more employees provide two hours of sexual-harassment prevention training to supervisors every two years. This was mandated two years ago under another piece of legislation, AB 1825. 

The new law expands this training requirement to all employers in California with five or more employees.

But SB 1343 goes beyond requiring only supervisors to be trained by also requiring that it must be provided to all employees every two years.

SB 820

This law takes effect Jan. 1, 2019 and will bar California employers from entering into settlement agreements that prevent the disclosure of information regarding:

• Acts of sexual assault;

• Acts of sexual harassment;

• Acts of workplace sexual harassment;

• Acts of workplace sex discrimination;

• The failure to prevent acts of workplace sexual harassment or sex discrimination; and

• Retaliation against a person for reporting sexual harassment or sex discrimination.

The big issue employers will need to watch out for, according to experts, is that the new law could actually keep the employer and employee from reaching resolutions for disputes.

SB 1300

This new law bars other nondisclosure agreements related to claims of sexual harassment, and also overturns prior court rulings that have limited harassment lawsuits. 

SB 1300 bars employers from requiring an employee to sign a release of a Fair Employment and Housing Act claim or signing a non-disparagement or nondisclosure agreement related to unlawful acts in the workplace, including sexual harassment in exchange for a raise or bonus, or as a condition of employment or continued employment.

One good thing, the prohibition does not apply a “negotiated settlement agreement to resolve an underlying claim under [FEHA].”

The new law will also make it more difficult to collect attorneys’ fees and costs. Now they will only be granted if the court finds that the action was “frivolous, unreasonable, or totally without foundation when brought or the plaintiff continued to litigate after it clearly became so.”

SB 1300 also expands current law under which an employer can be held responsible for sexual harassment committed by non-employees like clients, vendors and other third parties, if the employer knew or should have known of the conduct and failed to take immediate and appropriate corrective action. 

Now employers can be held responsible for all forms of unlawful harassment committed by non-employees, not just sexual harassment.

The law also includes an unusual section on “legislative intent,” which is language that was designed as guidance for the courts but is not legally binding. It includes:

Single incident grounds for a claim – The new law declares that a “single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment.”

Stray remarks doctrine – Even a single discriminatory remark, even if not made directly in the context of an employment decision or uttered by a non-decision-maker, may be relevant and circumstantial evidence of discrimination.

Summary judgments – Harassment claims are “rarely appropriate for summary judgment.” According to the law, summary judgment is a motion usually filed by the defendant to have the case thrown out before trial.

The New Landscape of Risk That Every Business Should Prepare For

Businesses are facing larger and larger liability claims throughout the country, driven by a number of legal trends that are resulting in bigger lawsuit awards and new risks that many companies are unprepared for.

A recent study by Liberty Mutual Insurance found that the U.S. insurance industry’s liability-related payouts have been growing steadily due a number of factors, including:

• Higher average claims costs

• Increased number of claims

• Higher legal costs and settlements

• Higher medical costs for injured parties (in terms of hospital, rehab and pharmaceutical costs).

There are a number of trends that business managers and owners should be aware of so that they can take the necessary precautions to protect their organizations to the best extent possible. If you run a business, you should be aware of these trends, some of which could seriously financially damage your organization.

Legal trends

The report first looked at some trends that are not only increasing the amount of litigation businesses must contend with, but also higher awards.

Litigation funding – Outside investors are fronting legal fees to pursue lawsuits on behalf of aggrieved or damaged parties in exchange for a percentage of any ultimate settlements or judgments. In these scenarios, the claimants are more likely to want to take the case to trial and refuse settlement offers.

They may also push for unnecessary medical treatments. Attorneys may also present complex legal arguments that draw out the case and increase legal costs.

Traumatic brain injuries – More plaintiffs are claiming that they suffered traumatic brain injuries even for non-serious incidents. Claiming brain injuries requires additional medical treatment, more frequent doctor’s visits – and even settlements that would pay the person for a lifetime of care.

Higher jury awards – Juries seem more inclined to award higher and higher awards for breach of contract, intellectual property, product liability and wrongful death lawsuits. This is likely due to a growing sympathy from the public – and hence jurors – for injured parties (in their eyes, victims). In 2016 alone, four verdict awards amounted to $1 billion or more.

Medical costs increasing

In many liability lawsuits there is a claim of physical harm that necessitates medical treatment, and costs are on the rise for several reasons:

Medical inflation – Overall medical costs are on the rise. And general liability claims are costly because they can sometimes require years of treatment and rehabilitation for the injured party. Hospital services are increasing, as are drug costs.

Medical management challenges – Insurance carriers have little control over the medical treatment choices and costs of general liability claims. Because of this, it’s easier for the plaintiff’s lawyer to direct medical treatment to favored clinics or doctors. This has driven up medical costs for liability claims exponentially.

Other costly trends

More violence – As active-shooter incidents increase, you should know that more than 50% of them occur in places of business, government buildings or educational institutions.

Technology – Technology is advancing at a rapid clip and with an increasing number of data-driven companies, the use of the Internet of Things, 3D printing, social media and more, there is a whole new area of liability for companies.

Sharing economy – The sharing economy, while good in many ways, has created a lack of clarity about when coverages begin and end. This is forcing the insurance industry to devise customized insurance products.

The takeaway

Each industry has its own unique set of risks and you should work with us to tailor your insurance policies to meet your potential liabilities.

You should also discuss with us how to best put together a strong risk management policy for your organization, focusing on the largest risks that your company faces.

In terms of insurance, you may need specialized policies beyond your general liability policy.

And you may want to consider an umbrella or excess liability policy, so you have the additional protection you may need in case of one large claim.

New OSHA Deadline for Fall Protection

Slips, trips and falls are some of the leading causes of workplace injuries. They account for 20% of all workplace fatalities, disabling injuries and days away from work in general industry.

The injuries and risks are so common that four of the top 10 most cited standards by OSHA are related to fall prevention.

With that in mind, you should be aware of changes to OSHA regulations that take effect Nov. 19, 2018. The changes are part of a larger rewriting of the general industry walking-working surfaces standards that took effect in 2017.

Specifically, those rewritten standards:

• Clarified definitions

• Eliminated overly specific application conditions

• Better organized the requirements

• Simplified general requirements

• Aligned more closely with the construction standard, and

• Gave flexibility to use personal fall protection systems in lieu of guardrail systems.

The fixed ladders provision

That said, one area that was left for later implementation was standards for fixed ladders.

Under the revised standard, cages or wells for fall protection on fixed ladders higher than 24 feet are no longer acceptable. However, there are grandfather provisions and a phase-in period for the new provisions:

• Fixed ladder systems installed before November 19, 2018 must have a cage, well, ladder safety system or personal fall arrest system

• Fixed ladder systems installed on or after November 19, 2018 must be equipped with a personal fall arrest system or ladder safety system (cages or wells for fall protection are no longer acceptable).

• When any portion of a fixed ladder is replaced, the replacement must be equipped with a ladder safety or personal fall arrest system.

What’s happening on the ground

OSHA continues to take the risks of slips, trips and falls seriously and continues to focus on some of the most overlooked areas that can contribute to these incidents. The most cited citations in OSHA’s 2017 fiscal year, which ended Sept. 30, 2017, were for general requirements violations, including housekeeping violations (291 citations), followed by 122 citations for clean and dry floors and 53 citations for walkways free from hazards.

The second-most common citation was for failure to protect against fall hazards along unprotected sides or edges that are at least four feet above a lower level, including:

• 205 citations for unprotected sides and edges

• 55 citations for fall protection stairways

• 49 citations for falls – holes

• 26 citations for falls around dangerous equipment

The takeaway

OSHA continues to police slip, trip and fall violations with gusto. Based on the statistics, you should make sure to keep work areas and floors clear of obstructions and slip and fall risks.

You should also make sure you have protections in place to avoid any unprotected sides and edges.

Why Your Firm May Need Professional Liability Coverage

A majority of companies are leaving themselves exposed in one crucial area as they take on high-end professional services work.

As more companies’ work is intangible, many firms are missing a critical element of protection for their professional services.

Professional liability insurance in the past was mainly purchased by architects, accountants and lawyers, but with more work like coding, programing and other ventures spawned by technology, the need for this type of protection has grown.

In fact, a recent report by Forbes Insights and The Hanover found that 40% of small business owners believe they face professional risks, yet they have not purchased professional liability coverage as part of their overall insurance package.

Many more firms are in the business of consulting or providing hi-tech services. In addition, the rampant growth of social media has also fueled the need for this type of coverage.

Professional liability insurance, also called errors and omissions insurance (E & O insurance), protects your business if you are sued for negligently performing your services, even if you haven’t made a mistake.

Businesses that need professional services coverage include:

• Technology and software firms

• Health, beauty and well-being services

• Therapists

• Architects and engineers

• Real estate agencies

• Consultants

• Marketing and advertising firms

• Medical professionals

• Wedding and event planners.

Coverage gaps

If you are relying solely on a general liability policy, it may not cover you in the event of a lawsuit over an issue with the services that you have rendered.

Professional liability coverage can be especially important if you have customers who sue you for non-performance of your products or services, or withhold payment due to a contract dispute.

This is especially true if you are:

• Performing consulting work, training or other services for customers.

• Involved in work requiring special licenses.

• Designing, recommending, installing or testing products.

• Designing software or apps to a client’s specifications.

What it covers

Negligence – Professional liability insurance coverage can protect you and your business against actual or alleged errors and omissions that may occur while providing your professional services.
These claims can include anything from giving incorrect advice or omitting a piece of information, to failing to deliver your service within a desired timeframe.

Legal costs – The policy includes covering your legal costs in defending against a claim. Some insurers will even appoint an attorney to represent you.

Examples

• A marketing consultant develops a drip e-mail campaign for a retailer that doesn’t generate the number of leads expected.

• A management consultant develops an organizational strategy to improve communications in a company, but problems persist at the client and communications don’t improve.

• A software developer fails to develop an app to the client’s specifications.

In all of these examples, a client may sue for damages. And in every instance, a professional liability insurance policy should help protect you and your firm.

Employers Failing to Report Serious Injuries to OSHA, DOL finds

A recent federal government report has urged the Occupational Safety and Health Administration to take steps to ensure that employers report fatalities and injured worker hospitalizations.

Many employers may not be aware, but in 2015 OSHA amended its severe-injury reporting rule to require that employers report the inpatient hospitalization of a single injured employee. Prior to the new rule, they only had to report to OSHA if three or more workers were hospitalized.

Other parts of the rule were left unchanged, including:

• The requirement that employers report to OSHA workplace fatalities within eight hours.

• The requirement that employers report any amputations or the loss of an eye within 24 hours.

Amputations are defined by OSHA as: “… the traumatic loss of all or part of a limb or other external body part. This would include fingertip amputations with or without bone loss; medical amputations resulting from irreparable damage; and amputations of body parts that have since been reattached.”

Inpatient hospitalization is defined as: “A formal admission to the in-patient service of a hospital or clinic for care or treatment. Treatment in an emergency room only is not reportable.”

Between January 2015 (when the new rule took effect) and April 2017, employers reported 23,282 severe injuries to OSHA in addition to 4,185 workplace fatalities, according to the report by the U.S. Department of Labor’s Office of Inspector General.

OSHA shortcomings

But the report found that OSHA had no assurances that employers reported hospitalizations, amputations and losses of an eye – and that only about half of those injuries were reported.

It also found that the agency was not consistent in citing employers that failed to make the reports in a timely manner.

Overall, the report found that OSHA had not been consistent in monitoring employers that it had authorized to conduct their own investigations into what had caused the incidents.

The report had sampled 100 severe injuries and found that OSHA had made inspections in only 37 of the cases and allowed employers to investigate in 63 of the cases. But in 50 of the 63 cases that employers were supposed to investigate, the report found that OSHA failed to document its decision to allow employers to perform an investigation.

In about 87% of employer investigations, OSHA lacked justification for its decisions to allow employers to perform an investigation or closed investigations without sufficient evidence that the employers had abated the hazards that caused the accident, according to the report.

Employer takeaway

Safety specialists predict that the report could spur OSHA to take a tougher stance and improve its policing.

The report recommendeds that OSHA develop guidelines and train its staff on how to detect non-reporting of these incidents, and issue citations for late reporting or failure to report.

As an employer, you should be diligent about always following OSHA regulations, and now in particular, by following the rules on reporting serious injuries or fatalities.

If you do have a serious injury as defined above, here’s what you need to know:

To make a report:

• Call the nearest OSHA office;

• Call the OSHA 24-hour hotline at 800-321-6742; or

• Report online, at www.osha.gov/pls/ser/serform.html.

Be prepared to supply:

• The name of your business;

• Names of employees affected;

• Location and time of the incident;

• Brief description of the incident;

• Contact person and phone number.

NLRB Moves to Restore Joint-Employer Standard

The National Labor Relations Board has issued a proposed rule that would roll back an Obama-era board decision on joint-employer status for companies that hire subcontractors or use staffing or temp agency workers.

The decision by the NLRB in 2015 overturned a long-time precedent (a standard in place since 1984) that a company must have “immediate and direct” control over a worker to be considered a joint employer. The board ruled instead that a company need have only “indirect” control of a worker and not even exercise that control to be considered a joint employer.

Under the 2015 standard, a company could be deemed a joint employer even if its “control” over the essential working conditions of another business’s employees was indirect, limited and routine, or contractually reserved but never exercised.

The ruling was roundly criticized by businesses as it put both the hiring employer and its contractor or staffing agency on the hook for labor violations. The decision also applied to franchisors that were suddenly liable for labor issues at individual franchisees’ operations.

The ruling also spread plenty of confusion in the employer community, and it sent companies that used contract or temp labor to set strict written procedures of where their responsibility ended and the subcontractor’s began.

The proposed rule

The proposed rule affects businesses:

• That are franchisees or franchisors,

• Use temporary staffing agencies to supply manpower, or

• Hire outside or subcontractors to work on their sites.

Under the proposal, an employer may be found to be a joint employer of another employer’s employees only if it possesses and exercises “substantial, direct and immediate control” over the essential terms and conditions of employment “and has done so in a manner that is not limited and routine,” according to a statement issued by the NLRB.

“Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship,” the statement said.

In announcing the proposed standard, the NLRB included a number of examples of how it would apply. Here are two:

Example 1: Red Line Staffing supplies line workers and first-line supervisors to Sporting Apparel at Sporting Apparel’s manufacturing plant. On-site managers employed by Sporting Apparel regularly complain to Red Line Staffing’s supervisors about defective products coming off the assembly line.
In response to those complaints and to remedy the deficiencies, Red Line Staffing’s supervisors decide to reassign employees and switch the order in which several tasks are performed.
Sporting Apparel has not exercised direct and immediate control over Red Line Staffing’s line workers’ essential terms and conditions of employment.

Example 2: Temp Worker Plus supplies line workers and first-line supervisors to Breadstone Enterprises at Breadstone’s baking plant. Breadstone also employs supervisors on site who regularly require the Temp Worker Plus supervisors to relay detailed supervisory instructions regarding how employees are to perform their work. As required, Temp Worker Plus supervisors relay those instructions to the line workers.
Breadstone possesses and exercises direct and immediate control over Temp Worker Plus’s line workers.
The fact that Breadstone conveys its supervisory commands through Temp Worker Plus’s supervisors rather than directly to Temp Worker Plus’s line workers fails to negate the direct and immediate supervisory control.

The proposed rule is currently up for a 60-day comment period, after which it may be amended following input from stakeholders. For now, you should stick with the contracts you have had since the Obama-era decision until this new rule is set in stone.

Preventing Substance Abuse in the Workplace

Drug and alcohol use by employees on or off the job is a troublesome societal plague that has put many employers on the defensive.

Research by the U.S. Department of Labor shows that between 10% and 20% of the nation’s workers who die on the job test positive for alcohol or other drugs.

The same research shows that industries with the highest rates of drug use are the most physically dangerous and involve the operation of machinery, such as construction, mining, manufacturing and wholesale.

With this in mind, you need to know all of the tools available to you as an employer to ensure that you keep a strong drug- and alcohol-free workplace policy in place, while trying to minimize the effects of employees who are heavy users off the job.

An effective policy can reduce the risk of workplace injuries to an impaired employee as well as co-workers and anybody your company may come in contact with, particularly customers or vendors. The actions of one impaired person, or someone that uses heavily off the job, can have far-reaching effects and turn out to be a significant liability for your company.

Various Occupational Health and Safety Administrations (OSHAs) at both the federal and state level offer employers help in sorting out the complexities of putting together an effective drug- and alcohol-free workplace policy.

Federal OSHA outlines five components it considers necessary for a drug-free workplace: a policy, supervisor training, employee education, employee assistance and drug testing.

Drug testing, it says, “must be reasonable and take into consideration employee rights to privacy.”

The federal agency has guidelines available to help resource-challenged small businesses formulate a policy aimed at a drug- and alcohol-free workplace. They include:

•                 Drug-Free Workplace Advisor Program Builder. For employers needing to develop a policy from scratch, this guides them through the various components of a comprehensive written drug-free workplace policy. It then generates a policy based on an employer’s specific needs.

•                 Substance Abuse Information Database (SAID). This includes sample drug-free workplace policies, surveys, research reports, training and educational materials and regulatory information.

•                 Resource directories. These contain current lists of national, state and local resources, including summaries of state laws on workplace-related substance abuse, community organizations that help make businesses drug-free, and help lines for those who have a drug problem.

•                 Training and educational materials. These include presentations, articles, fact sheets and posters to help employers provide workplace drug and alcohol education.

•                 Workplace Frequently Asked Questions. These are available free of charge.

More detailed information for each of the above guidelines is online at: www.osha.gov/SLTC/substanceabuse/index.html

The New Zealand example
One good approach to drug and alcohol policies comes from New Zealand. Its OSHA – in simple, practical language – advises employers in that country to:

•                 Formulate rules, agreed to by all parties, which apply the same for everyone: employees, contractors and employers.

•                 Write the policy clearly and make it available to all in the workplace.

•                 Describe steps needed to ensure a drug- and alcohol-free workplace.

•                 Enforce the rules “consistently and fairly.”

The policy, says New Zealand OSHA, should aim to avoid worker drug or alcohol impairment without discriminating against or punishing employees.

Once formulated, the agency adds, the policy should be part of the company’s official health and management practices in recruitment and training, integrated into its human resources department and widely circulated throughout the business.

Fifteen Warning Signs of Workers’ Comp Fraud

Workers’ compensation fraud costs the insurance industry roughly $5 billion each year, according to estimates by the National Insurance Crime Bureau. And depending on whom you ask, fraud accounts for as much as 10% of the costs of all workers’ comp claims.

This type of fraud is typically associated with malingering employees who fake injuries in order to collect compensation and some paid vacation time.

In tougher economic times, particularly as lay-offs mount, some experts think there is an increased exposure for employees to claim a work-related injury for a variety of manufactured reasons, such as for an injury that occurred on personal time.

Anytime you feel you have a suspicious claim on your hands, look for these tell-tale signs of potentially fraudulent claims. Usually one of these items alone is not enough to point to fraud, but if you have two or more of them, it could suggest a problem.

1. Late reporting. If you have an employee who suffers a legitimate on-the-job injury, they will generally report it right away. Late reporting may not always be indicative of a fraudulent claim, though, because sometimes the true effects of an injury may not be known until the following day. 

2. The Monday morning claim. If the injury allegedly occurred on Friday, usually late in the day, but did not get reported until Monday, there is reason to suspect there might be a little more going on than meets the eye. The logic is that the employee likely suffered an injury over the weekend and does not want to pay for it themselves if they lack health coverage, or if they don’t want to foot the bill even for their coverage deductible.

3. Lack of witnesses. Often your employees won’t be working in a solitary environment and there ought to be somebody on your staff who witnessed the accident. Still, not every claim has a witness and this should not be used solely to determine fraud.

4. Sketchy details or conflicting descriptions. Most claimants can recall the details of their injury. If the claimant seems to be fuzzy on the details and gives vague responses to questions, it could be a warning sign.
Also, if the employee’s description of the accident conflicts with the medical history or First Report of Injury, there may be a problem. This could arise if, upon further investigation, the employee keeps changing the story and adding or removing pertinent information – a good reason to suspect it to be a fraudulent workers’ compensation claim.

5. Disgruntled employee. A disgruntled employee is more likely to place fraudulent claims than an employee with high job satisfaction.

6. Financial hardship at home. Workers’ compensation benefits are sometimes seen as a way out of a tight financial situation at home. Although temporary disability benefits are lower than normal working wages, the worker could use the time to “double dip,” that is, take on extra work when they are supposed to be at home recovering from the alleged injury.

7. Hard to reach. This ties in with number 6. If this occurs every time the claimant is called, there is a possibility of fraud.

8. Misses medical appointments. If an employee is truly injured, they want to get better and will make sure to go to all medical appointments. Missing appointments is another reason to suspect fraud.

9. Engaged in activities not consistent with the injury. If your employee reported a back injury and other employees find that he is playing softball on the weekends or renovating his yard, there is good reason to suspect fraud.

10. Employment change. The employee reports the injury right before or after being laid off, near the end of a contract job or near the end of seasonal work.

11. Post-termination claims. If an employee files a claim after being laid off or fired, red flags should pop up.

12. Frequent moves and changes. The claimant has a history of frequently changing physicians, addresses and places of employment.

13. History of claims. If the claimant has filed suspicious or litigated claims in the past, they could be a person who feeds off the system.

14. Employee refuses treatment. There should be no reason that a legitimately injured worker refuses a diagnostic procedure to confirm the nature or extent of an injury.

15. Rigorous hobby. If the injured worker has a pastime that could cause an injury similar to the alleged work injury, the claim could warrant further investigation.

Remember, if you suspect fraud, you should talk to your broker or the insurance company claims representative to alert them. All insurance companies are required to have special investigation units that look into claims fraud. It benefits both you the employer and the insurer if the insurance company investigates and ferrets out a fraudulent claim.

If the insurer suspects fraud, they can reject the claim and report their suspicions to the local district attorney’s office and the Department of Insurance.

Preparing for a Workers' Compensation Audit

Just the mention of a workers’ compensation audit can stir up the butterflies in your stomach and add a serious dose of stress to your existence.

But, if you are scheduled for an audit, there is no need to dread it. A small amount of preparation and common sense can save you a lot of aggravation and money.

Timing
Devoting a few hours of effort now can save you a lot of time in the future. Give your full attention to the auditor and remain with them throughout the entire process. The process may take a couple of hours to complete, so make sure that the time and date of the scheduled audit are convenient for you. Call to reschedule the audit if it has been scheduled at an inopportune time.

Documentation

As soon as you learn about the audit, begin to collect and organize:

·        Payroll records,

·        Overtime payroll records,

·        Classification divisions, and

·        Insurance certificates.

This should give you plenty of time to compose a summary of each, which will help you to better communicate important data during the audit process. Information that is well organized will also expedite the process. If you can reconcile your calculations to payroll records, such as W2s and payroll stubs, the auditor might be more comfortable trusting your data.

You will also want to make any needed adjustment to payrolls; for example, subtracting bonus pay from overtime pay.

If applicable, you will need to apply the maximum and minimum payrolls to the calculations. This part may take a little research, since the minimum and maximum will vary based on state, career, and even among sole proprietors, partners and executive officers.

Classification and subcontractors

Before the audit, review the different employee job classifications and make sure that each person is correctly classified.

This is a key element to ensure that the audit flows smoothly. If there’s any question about how to classify an employee, call us. The auditor is most likely going to ask you about the classification and job duties for multiple different employees, so be prepared and armed with knowledge.

One last important preparation concerns subcontractors. Payments issued to subcontractors can go against your workers' compensation in the event that the subcontractor did not have a certificate of workers’ compensation.

You can get a copy of the certificate, but make sure that it is current and shows coverage during the time the subcontractor worked for you.

D-day

Once the audit arrives, you’ll be glad that you took a little time collecting, organizing and summarizing your information. You will also find that the auditor is not a nemesis, especially when you provide honest answers and organized paperwork.

At the conclusion of the audit, ask the auditor for the audit worksheet. Then ask us to review the accuracy of the final audit.

You have a legal right to ask for a corrected audit anytime you think there were any errors. If any overpayment was made under the last three preceding audits, you also have a legal right to recover it.

Use Technology to Prevent Losses and Manage Your Risk

Businesses are discovering that smartphones and tablet computers, besides being distractions for their employees, can also help them better manage their risks.

An increasing number of applications for these devices – matched with other technologies – can help businesses prevent losses, reduce the chances of workplace accidents and manage their risks.

Mobile devices can now connect to business security and utilities systems. Many security equipment vendors offer apps that give business owners instant information when they’re away from the premises.

For example, the system may send a text alert to a smartphone if a security camera picks up sudden movements. Other systems communicate via apps that will send alerts to you on your phone in similar situations.

Other systems may stream videos from multiple security cameras to a smartphone app, enabling the owner or personnel to keep an eye on the premises during off hours. This real-time information can help business owners limit the size of losses.

For example, a system might send a text alert when it detects a leak in the building’s plumbing system. Once alerted, the building owner can shut off the water remotely or in person, thus limiting the extent of the damage.

Video from cameras that monitor the premises can also be saved and used in helping businesses and police recover stolen property.

A coffee manufacturer in Portland, Oregon, implemented a system like this. Weeks after installation, it recorded video of a burglar stealing thousands of dollars in equipment. The owners downloaded the video, sent it to the local police, and posted it on social media channels. The video produced a full criminal investigation, arrest and conviction.

Companies that install security and utilities systems and accompanying apps can often get a reduction in their premiums.

This is particularly true for businesses that own or sell items attractive to thieves, such as jewelry, electronics, medicine, or certain building materials such as copper.

Vehicles

Businesses can also reduce losses and insurance premiums by using telematics technology with their vehicles. These devices transmit real-time information about how a vehicle is being used.

They capture information such as driving, speed, stopping speed, time and location. Businesses can use this data to monitor how their drivers are performing and identify training and incentive issues.

With this information, management might decide to reward drivers for a certain number of accident-free miles. This should reduce accident frequency and lower the businesss’s auto insurance premiums.

GPS technology can also help businesses track stolen vehicles and trailers, so an insurance claim will be either unnecessary or recoverable. Also, if a driver has an accident or medical event, GPS enables the business to locate the vehicle and driver immediately and dispatch emergency responders to the scene more quickly.

Some insurers offer discounts to businesses that implement GPS tracking.

Other risk management apps

Risk Reporter is for Android devices, iPhones and iPads. It is designed to help risk managers keep track of their organization’s potential risks. Users can record risk-related events as they occur and e-mail them to supervisors, all the while noting suggested risk-control measures and action plans

Citicus MOCA is for iPhones and iPads. It is a risk-management application that identifies the various effects that supply-chain disruption can have on a business. The app enables the user to list the company’s resources, exposures and probability of risk-event occurrence. It then generates a graph, which can be uploaded into a PDF, plotting the organization’s asset worth and maximum loss value over time.

Risk Assessor is for both Android and iPhones. It lets you create detailed safety reports from your phone or tablet. Brand up the reports with your company details and create a bespoke hazard and control list to suit your business. 

Vacant Buildings Pose Risks, Insurance Challenges

According to the website Statista.com, the average vacancy rate for offices nationwide in the second quarter of 2018 was 12.2%, while 12.1% of retail spaces and 7.8% of industrial spaces were vacant. 

Unfortunately, when buildings stand vacant they become susceptible to a variety of problems.

There are roughly 31,000 fires in vacant buildings annually, resulting in dozens of deaths, hundreds of firefighter injuries, and an average $642 million in property damage.

Vacant buildings receive little or no maintenance, attention or security. This can lead to problems such as:

·     With no security on the premises, the building becomes a target for vandals. Vacant buildings frequently wind up with broken windows and graffiti-covered walls.

·     Fixtures and materials inside the building, such as copper piping, may attract thieves.

·     Vacant buildings can become convenient hang-outs for young people or shelters for the homeless; they also can become centers of criminal activity, such as drug-dealing.

·     Trespassers smoking on the premises, decayed wiring, arson, and production of illegal drugs like methamphetamines may cause fires in vacant buildings. In addition, automatic sprinkler systems may be shut off, allowing fires to spread, and lack of security prevents early detection.

·     Toxic substances remaining on the premises may leak and contaminate soil and groundwater.

Owners of vacant properties can take many steps to prevent these problems or make them less likely. 

·     Visit the property at least weekly, or hire a property management company to do so.

·     Clear the exterior of the building of scrap wood, paper, cardboard and brush.

·     Remove any toxic substances that could contaminate the area or harm police or firefighters.

·     Maintain sidewalks and parking areas in good condition, and clear them of snow and ice.

·     Erect obstacles to keep vehicles and pedestrians out of parking areas.

·     Hire security guards to watch the building at night, and have exterior lighting turned on.

·     Maintain heat or drain the plumbing system to keep pipes from bursting, but keep at least a minimum temperature in areas protected by automatic sprinkler systems.

·     Maintain electricity supply to emergency lighting and exit signs.

·     Shut off utilities, except where necessary to power desired lighting and alarm systems.

·     Maintain fire detection systems and link them to a central station monitoring service.

Insurance implications

Buildings that are more than 70% vacant for more than 60 days also lose some important insurance coverage. 

If the building is largely vacant, the standard commercial property insurance policy reduces loss payments by 15% for most causes of loss and does not cover others at all, including vandalism, water damage, glass breakage, and theft. 

For an additional premium, the building owner may be able to purchase vacancy permit coverage, which reinstates some or all of this coverage for a specific period of time. An alternative – vacancy changes coverage – can reduce the minimum occupancy that the building must have before the insurance company will consider it vacant from the standard 31%. We can work with you to get the coverage you need. 

A vacant building is never a good situation, but with the proper precautions, the owner can maintain its value and keep it secure until new tenants move in.

Business Interruption (Business Income) Insurance explained

Business interruption insurance can be as vital to your survival as a business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and windstorms.  How would your business manage if a fire or other disaster damaged the business premises so that they were temporarily unusable?  Business interruption can be added to a property insurance policy.  A business closed down completely while the premises are being repaired may lose out to competitors. A quick resumption after a disaster is essential. 

Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire.  It covers profits and other operating expenses, like electricity, that continue.  Ensure policy limits are sufficient to cover your company for more than a few days. After a major disaster, more time may be needed than anticipated to get back on track. Generally, there is a 48-hour waiting period before coverage starts. 

Pricing is related to the risk of a fire or other disaster damaging your premises. The price may be higher for a restaurant than a real estate agency because of a greater risk of fire.

Extra expense insurance reimburses your company for expenses incurred, over and above normal operating expenses, to avoid having to shut down during the restoration period. Extra expenses are usually paid if they help to decrease business interruption costs.  To discuss this or any other business insurance product please contact me:

David Jones

800 590-2531

david@davidjonesinsurance.com