No one wants workplace injuries. But accidents can happen, particularly when projects need to be finished right away.

“That’s usually where the breakdown occurs. If you have to rush a project through and you’re potentially cutting corners for the sake of efficiency, that’s generally when injuries happen,” says Derek M. Hoch, president of Leverity Insurance Group.

Smart Business spoke with Hoch about complying with Occupational Safety and Health Administration (OSHA) standards, which can result in a safer overall workplace.

Do most manufacturers have workplace safety programs?

Larger corporations usually do. Some smaller operations may not have any program in place, as they have had the same employees for a long time and, while they know the equipment and systems very well, they don’t necessarily follow established procedures.

Employees may take shortcuts because they’re comfortable with equipment they’re using. They can lose sight of the fact that doing something in a hurry and not in the proper manner can result in a workplace injury.

How is a workplace safety program developed?

The best way is to sit down with your risk manager — your insurance broker — to develop a program because it’s really about managing and controlling risk. You should work with an expert who can guide you through proper policies and procedures that should be in place.

This plan should be followed by a legal review to ensure that everything complies with OSHA regulations.

A good safety program includes appointing a company inspector who will routinely evaluate the workplace and conduct self-audits to make sure employees are following standards and adhering to policies.

The company inspector asks the same questions and uses the same checklist that an OSHA compliance officer would. These items include required employer postings, record keeping, medical services and first aid, fire protection, personal protective equipment, lockout/tagout, company evacuation plan, tools and equipment, environmental controls, electrical safety and accident investigation.

How often do programs need to be updated?

Programs need to be updated accordingly to comply with workplace and regulation changes. But, more importantly, you need to educate employees by providing refresher courses and holding quarterly or semi-annual safety meetings. The staff should have knowledge of OSHA standards and what the regulations are within their specific industry.

Revisit the program and make it real, because there is a tendency to get complacent in a job you’ve been doing for a long time. Spot checks help to ensure that everyone is complying with company procedures.

What are particular areas of risk?

OSHA’s most frequent citations are for violations of standards covering fall protection, hazard communication and respiratory protection.

Problems are particular to industries. For example, a manufacturing facility presents potential respiratory hazards if employees aren’t wearing the proper protective masks, or losing limbs if they are not wearing protective guards or guards aren’t properly installed on the equipment.

Powered industrial trucks, like forklifts, also can pose potential risks if proper training is not established. Another issue involves lockout/tagout procedures — having machines shut off and started up properly when there is maintenance or servicing work.

If violations exist, what are the potential costs and penalties?

Penalties can be significant, but not valuing a workplace safety program will lead to larger issues beyond OSHA citations, like employee injuries, fires and mechanical failures. Unfortunately, many companies wait until there is an accident before focusing on implementing, correcting or amending a safety plan.

Derek M. Hoch is the president of Leverity Insurance Group. Reach him at (216) 861-2727 or derek@leverity.com.

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Even with the proper insurance coverage, recovering from a disaster can be difficult for businesses that have not thoroughly prepared for the rebuilding process. Disaster plans and insurance money may not be enough to save a company that hasn’t tested its ability to address a crisis.

“Yes, there’s insurance to protect against a disaster, but what happens after the catastrophe occurs? It’s great to have a written plan in place, but if you don’t do a trial run or an audit of the plan, how do you know it’s going to work?” says Derek M. Hoch, president of Leverity Insurance Group.

Smart Business spoke with Hoch about the basics of disaster recovery and how insurance supplements the planning process.

What is often overlooked in terms of disaster planning?

Both business owners and key employees can become complacent because there is a plan in writing; they assume it will automatically work. Employees read the plan, understand their role, then over time there is no refresher about what they specifically need to do in that job function if a disaster were to occur.

From an insurance aspect, it’s easy enough to get monetary relief and rebuild if you insure the building structure and business personal property. What often gets overlooked is business interruption, or business income coverage. This is a major component in any businesses risk management program. It represents the economic loss, the potential loss of key employees, ongoing payroll and utility expenses, as well as any extra expenses that you normally wouldn’t have if the disaster didn’t occur. There are a lot of variables that business owners do not think about until after a disaster, and those costs are often overlooked and underinsured.

The problem with business interruption insurance is that it’s a difficult number to determine. There are business income worksheets and calculations that can be made, but it’s not a static number like replacing a building, which has a specific dollar amount.

What is necessary, once the written plan is in place?

Companies will put the plan in writing and explain it to employees, but never conduct a test because they don’t want the disruption to their business for a half or full day. A catastrophic event could occur at any moment. You may need to shut the business down in order to:

  • Test the facilities.
  • Make sure employees relay the proper information to the correct people or authorities.
  • Confirm anything done off-site to back up systems is in place, and you’re not losing valuable information and data that would compromise the sustainability of the operation.

Companies don’t want to disrupt their businesses. What they don’t realize is that one day off to test their plan could potentially save them thousands or even millions of dollars.

Why is it vital to reopen quickly, and what can businesses do to speed up the process?

Unless you’re in a niche industry, planning for a disaster is vital because you will have competitors able to come in and supply your customers when you are shut down. This is the equivalent of business death, because the longer it takes, the more customers and employees will go elsewhere.

Your insurance broker/risk manager should sit down with you and — just as you do regarding the physical structure and assuring adequate coverage — walk you through the potential disasters that could happen and help formulate what necessary steps to take to ensure sustainability. It’s really a team approach, asking open-ended questions and letting the business owner talk about their business, so a plan can be instituted. This plan will complement the other forms of insurance coverage you purchase to protect the rest of your business.

You can try to prepare for everything, but having a plan in place and practicing it at least annually can help get you back up and running earlier in the event of a disaster.

Derek M. Hoch is the president of Leverity Insurance Group. Reach him at (216) 861-2727 or derek@leverity.com.

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With juries awarding multi-million dollar verdicts, primary liability insurance policies don’t always cover the entire cost. That’s when umbrella liability, also known as excess liability, can help.

“Experienced business professionals understand that the litigious nature of our society combined with monumental liability judgments can be financially devastating to their organization,” says Peter Bern, CEO of Leverity Insurance Group.

“You can find several examples of those types of verdicts, and many companies don’t have liability limits that cover the entire loss. It’s not unusual for individuals or companies to be sued for more than $1 million. To assist with the financial burden of a claim, many business owners purchase umbrella insurance in addition to their primary liability insurance policies,” he says.

Smart Business spoke with Bern about how umbrella insurance works and why companies and individuals might want to consider coverage.

Why not increase existing coverage rather than purchase umbrella liability?

Primary liability contracts typically have limits of $1 million per occurrence, and $2 million total for a policy year. Some policies are available with double those limits, but that’s usually as high as they will go. Most liability policies have an aggregate limit that, once exhausted, will not cover any other damages or legal expenses.

How do umbrella policies work?

They sit on top of primary liability policies and apply to claims where the aggregate limit of the underlying policy has been met, so there are not enough funds available in the policy to cover the entire claim. For instance, if your liability policy has a $1 million limit and a loss is incurred for $1.5 million, the primary liability policy will cover the first $1 million and the umbrella policy will cover the remaining $500,000.

Are there particular exposures in which companies and individuals should consider an umbrella policy?

For the most part, umbrellas cover large, severe events that can cause exponential damages. Without coverage, these events — as few and far between as they may seem — would be financially devastating to many companies.

The umbrella extends the limits of a company’s commercial liability, business auto, employer’s liability, professional liability, environmental liability and management liability policies, to name a few. If your product, service or operating environment is particularly hazardous, or the limits of your underlying policies won’t cover the worst of your possible losses, an umbrella policy is a must.

With respect to personal insurance, an umbrella policy will sit over your personal auto and home liability exposures. For example, if you have teenage children driving, what if someone gets hurt and you don’t have enough insurance? Chances are your limits are $100,000 per person and $300,000 per accident. If you get sued for $2 million and are found negligent, the insurance company will pay up to your $300,000 limit at the most. The balance is due from you. Do you have an extra $1.7 million lying around? Without an umbrella, your personal assets and future earnings are at risk and, in the worst-case scenario, can push you into personal bankruptcy. Can you afford this exposure?

Is there a way to figure out how much coverage you need?

There are a number of factors to consider, including how much risk tolerance you have, the severity of your exposure, the amount of assets you stand to lose and how much you are willing to pay in premiums. The umbrella market is often erratic and requires the guidance of a trusted insurance adviser to find competitive premiums that address your specific risk categories.

Peter Bern is the CEO of Leverity Insurance Group. Reach him at (216) 861-2727 or peter@leverity.com.

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Lawsuits can pose a considerable threat to businesses, and actions related to employment practices should be a particular area of concern to business owners. According to researchers, about 60 percent of employers can expect to be sued by a prospective, current or former employee.

“It’s the increasingly litigious nature of our society,” says Derek M. Hoch, president of Leverity Insurance Group. “These lawsuits really started to trend upward when the market plummeted to its lowest point in combination with the state of the economy over the past four to five years. Desperate times can sometimes lead to desperate actions. When people couldn’t find employment, they filed suits against employers who let them go during that period of recession.”

Smart Business spoke with Hoch about how employment practices liability (EPL) insurance can help businesses manage risks associated with such lawsuits.

What are the most widely recognized types of employment-related lawsuits?

  • Wrongful termination — Discharging an employee for invalid reasons.

  • Discrimination — Denial of equal treatment to employees of a protected class.

  • Sexual harassment — Workers subject to unwelcome sexual advances, or obscene or offensive remarks.

Lawsuits can also be based on things such as wrongful failure to employ or promote, wrongful discipline and religious discrimination.

How can EPL insurance protect employers?

More than half of all claims for employment-related liabilities are against businesses with fewer than 50 employees. Claims can be costly, especially if a case has the ability to go on for an extended period of time. The average cost of an employment lawsuit exceeds $270,000. Even if the lawsuit is frivolous, it still takes time away from operating your business.

An EPL policy will help to pick up these defense costs and any judgments or claims assessed against your business. In some instances, these cases are settled before they even go to court; EPL will pay for settlement costs as well.

EPL also covers claims filed with the U.S. Equal Employment Opportunity Commission (EEOC). In 2012, the EEOC reported 99,947 charges for harassment, and costs of resolving these claims were $364.6 million.

Why is purchasing third-party EPL insurance so important?

Third-party EPL addresses the coverage gap that leaves employers vulnerable to discrimination and harassment lawsuits from customers, clients, vendors and suppliers. Standard EPL policies only cover actions related to employees or prospective employees, and most general liability policies specifically exclude harassment and discrimination.

More insurance carriers are including third-party coverage as part of EPL policies because every company is at risk. It’s vital for any business that deals with customers on a daily basis.

Other than insurance, what approaches can companies take to protect themselves?

Have a legal professional review your employee handbook to ensure it contains all the necessary information, including policies covering sexual harassment, discrimination, equal opportunity, grievances, discipline, termination, performance evaluations, Internet usage, pregnancy leave, hiring and employment at-will. Then make sure employees sign off that they’ve read it.

If you don’t have a handbook, you may not be able to secure EPL insurance because insurance carriers take this very seriously. They want to see that you’ve taken proper steps in terms of risk management and providing a safe workplace.

You can protect yourself even more by making sure you’re following proper procedures regarding hiring, firing, performance reviews and even interviewing prior to hiring someone.

Taking these steps also reduces risk, which will generally translate into lower insurance premiums. EPL insurance works hand-in-hand with your internal employment practices to provide necessary resources to defend your company against a lawsuit or claim.

Derek M. Hoch is the president at Leverity Insurance Group. Reach him at (216) 861-2727 or derek@leverity.com.

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Many businesses neglect cyber and privacy issues because they simply don’t believe they are at risk or they do not fully understand the exposure.

“The majority of them think they’re safe because they have a secured firewall in place and virus protection. This is the biggest misconception out there. In reality, data thieves are simply looking for the path of least resistance. Owners of small to midsize businesses who become complacent or think they have adequate protection against cyber and privacy attacks can actually be a bigger target than large companies,” says Derek M. Hoch, president of Leverity Insurance Group.

Attacks can be harder for small and midsize businesses to recover from. Many businesses close permanently within six months after being victimized by cybercriminals.

“That’s why it is vital to have adequate controls and the proper insurance in place,” says Hoch.

Smart Business spoke with Hoch about cyberattacks and how business owners can protect themselves.

What are the cyber and privacy issues for business owners?

Cyber and privacy liability is best described as any third party or first party hacking into your database for personally identifiable information (PII). This includes access to names, dates of birth, Social Security numbers, credit card information, emails and passwords. Ultimately, this can potentially lead to identity theft and/or cyberextortion.

In addition, businesses that operate with paper files or ‘non-electronic’ information have the same potential to be compromised by both third parties and employees.

However, the most overlooked exposure to business owners is the actual cost of a data breach when your records have been compromised. On average, a data breach can cost a company more than $200 per record when considering loss of business, ongoing forensic expenses, notification costs and credit monitoring.

What types of businesses need cyber and privacy liability coverage?

Every business owner has exposure on some level if they have third-party and/or employee information stored on a computer or in paper files.

Cyber and privacy liability is relatively new, so most business owners don’t even know that the coverage exists or is available in today’s insurance market. It is a significant exposure and should be included in your overall risk management program.

How can businesses protect themselves?

It starts with the culture of the business owner and includes training employees to use proper cyber and privacy security policies and procedures. This list of procedures should include the following at a minimum:

• Use passwords on all computers, laptops, tablets and smartphones.

• Regularly change passwords every 30 to 40 days.

• Limit employee access to data.

• Restrict authority to install software unless approved by management.

• Provide ongoing training for employees who gather, use, transmit and dispose of confidential data.

• Install and update anti-virus and anti-spyware programs on every computer. Smartphones and tablets are often overlooked, yet most salespeople out in the field are using them.

• Back up your data off-site in a secure location, not in the same facility of your day-to-day operations. If the system is hacked or temporarily shut down, you can still retrieve the information and continue to operate your business.

Isn’t cyber and privacy liability part of standard business insurance?

No, most insurance policies exclude this coverage or may offer a small amount of ancillary coverage to recover or reconstruct any lost data. Cyber and privacy exposures are not covered under any property, general liability, crime, directors and officers liability, or umbrella policies. Business owners need to purchase a true cyber and privacy liability policy including security and privacy liability, notification and forensic expenses, business interruption, and cyberextortion to complete the proper risk management of their business.

Derek M. Hoch is president of Leverity Insurance Group. Reach him at (216) 861-2727 or derek@leverity.com.

Social Media: Keep up on issues that could impact your business at www.linkedin.com/company/leverity-insurance-group-inc.

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