How to negotiate your insurance renewal to get the best value

Business owners purchase insurance based on emotion. Actually, almost all purchases are based on emotion — people think logically but decide emotionally.

For insurance, employers reach out to people they trust — friends, relatives, golf buddies or community and business connections in the insurance industry — to discover where to turn for an insurance relationship. They also typically remain loyal, unless the owner experiences a bad loss or poor service.

As word gets around about the soft insurance market, employers need to guard against getting too price conscious.

“You are buying a service. Not only are you buying insurance to put your mind at ease so you can sleep at night, but you need a partner to work with you proactively to make your risk profile look attractive to the insurance company,” says Kerry K. Gregoire, an assistant vice president at SeibertKeck Insurance Agency.

Smart Business spoke with Gregoire about using the strong bargaining position you have now in the insurance industry to set your company up for the long term.

If business owners constantly shop their insurance, how can it backfire?

Insurance representatives and insurance companies will lose interest in quoting if a business owner shops his or her insurance annually. Most carriers today, although hungry for new business, are seeking long-term relationships and looking for loyalty, including after they’ve paid claims. They look at the whole picture, including how frequently you’ve been shopping your property and casualty insurance.

A business owner needs to be in a position of having an insurance company available and interested to quote when it’s really needed, such as a tough loss history or circumstances that drive premiums up.

Where exactly is the marketplace cycle and what is it doing for premiums?

For the past two years, we’ve been a soft market with 5 to 10 percent increases. That has moved over to flat renewals, and there are reports projecting a 5 to 15 percent decrease for 2015, depending on your risk profile. Cyber insurance, however, continues to increase because it’s new, people are getting hit with cyberattacks and the marketplace is still being tested.

No one has a crystal ball, but a typical soft market tends to hang on one to three years, depending on the outcome of catastrophic losses and market performance. The insurance market is a cycle. Educated buyers understand that eventually everything will go back up, so you don’t want to burn bridges with available insurance companies.

How would you recommend businesses negotiate renewals?

In a soft or hard market, business owners should consider bidding insurance out once every three years, and remember it’s not all about price. Make sure you aren’t losing any coverages if you switch to another insurer. Plan ahead and standardize the process for obtaining all of the necessary documents that pertain to the quoting process.

Also, limit agents who are competing; streamline the process of market selection. If you have more than a couple, agents end up approaching the same markets.

In a soft market, besides reduced or flat pricing, an insurance buyer can request more value-added services from an insurer or its representatives, such as a multiyear rate guarantee program that is contingent upon staying below a loss ratio threshold.

Plus, many insurers have been enhancing their risk management techniques and loss control resources to help customers manage their insurance costs and claim activity. Make sure you express to your agent your company philosophy — you want to self-insure or have higher deductibles for certain coverages. You can take a more proactive approach to try to prevent a claim or lessen its impact. You’ll also want to plan necessary time for loss control visits by insurers.

In the meantime, between shopping your insurance, be involved. Review your claim history so you can implement internal changes, if needed, prior to shopping. You may need to ask for quarterly loss run reports or quarterly claim review — via meetings or conference calls with the insurer — if you have claims activity. Insurers like to see that the business owner is demonstrating good risk management, which in the end controls losses and insurance costs.

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How to determine whether to buy extra insurance for a rental car, or not

When you rent a car, you’d better be prepared for the rental insurance offer — where the rental agency wants you to buy supplemental coverage.

But people are generally divided on this issue. The National Association of Insurance Commissioners found that only about 20 percent of all consumers actually purchase rental insurance. The remainder didn’t want added costs or believed their car insurance or credit card would cover any damages.

Smart Business spoke with Ryan Clugston, client advisor for the Select Unit at SeibertKeck Insurance Agency, about what you need to know before you make your decision of whether to buy coverage or not.

Does a personal auto insurance policy provide coverage when you rent a vehicle?

Yes, your personal auto policy provides several coverages needed when you sign the rental agreement, which include:

  • Liability coverage. This is protection for you. If you injure someone or damage their property, your policy extends the same liability protection you have on your owned vehicles to the rental vehicle.
  • Medical payments. This is coverage for you and your family members in the event you are injured operating the rental vehicle.
  • Physical damage. This is coverage for the vehicle you are driving. This will extend from your policy if you have collision and comprehensive coverage on at least one of your vehicles on your policy.

However, all drivers, even if they drive for a short break, must be listed on the rental agreement in order to drive the car. The rental car agreement is considered void if they are not listed upfront.
Also, there is likely to be an additional charge.

When does your credit card provide coverage when you rent a vehicle?

Most major credit cards offer secondary rental car insurance, picking up costs not covered by your personal auto insurance policy, if the rental is wrecked or stolen. But this coverage varies, even among cards within the same network, according to msn.com.

So, call your credit card issuer before you rent the vehicle, and ask if the issuer will cover ‘loss of use.’ This is the cost the rental car company incurs while the vehicle you rented is being repaired or relocated if it’s stolen, according to msn.com.

Generally you’ll need to use the card to book the rental, and you also must decline the collision damage waiver when you rent the car, according to msn.com.
Many cards don’t provide coverage in all overseas countries, so you’ll need to check on that, too.

Why is it often a good idea to buy supplemental rental insurance, even with these other types of coverage?

There are always issues with rental cars, and therefore many insurance professionals recommend that you buy the insurance sold at the rental car agency for both liability and physical damage. There are many reasons for this.

Insurance with many companies follows the driver, not the car. This means that your insurance may or may not be primary for your friend depending on what both of your insurance policies say. It can get messy in a claim.

If there is an accident, most rental car agreements state that they have the right to put the damages on your credit card immediately, and they sort out the loss after all policies are reviewed. That can put you in a bad situation until all is resolved.

If your insurance does respond to a loss, your personal auto policy will be surcharged for a full three years. You can avoid that if the rental car company’s insurance pays.

Rental car companies also can charge you for ‘diminished value’ in the event of a claim. Even after repairs are made, rental companies can state that they can’t get as much money when they later sell a car because it’s been in an accident. Insurance policies exclude this and the rental agreements will hold you responsible.

If you buy the insurance for liability and physical damage through the rental company and keep your insurance out of it, you will face fewer problems if there’s a claim later. It’s always a good idea to review your options and coverage with your trusted insurance provider before taking a chance.

Insights Business Insurance is brought to you by SeibertKeck

How to keep the lights on, even if you must temporarily close your doors

The unexpected happens — there’s a fire, a natural disaster or your machinery breaks down and the new part is weeks away. Sometimes, you don’t have a choice — you must shut down your business.

But if you’re closed, you still have to pay the bills.

“Make sure the policy limits are sufficient to cover your company for more than a few days. After a disaster, it can take more time than anticipated to get back on track,” says Todd Winter, executive vice president at SeibertKeck Insurance Agency.

Smart Business spoke with Winter about what you need to know about business income coverage.

What is business income insurance and what does it cover?

Business income is the net profit or loss that would have been earned or incurred if the suspension of the business had not occurred, plus any normal operating expenses that must continue during the suspension of the business.

With business income insurance, also known as business interruption insurance, you can cover the actual loss of business income sustained because of a necessary suspension of your operation.

The suspension, however, must result from direct physical loss or damage to real or personal property. Coverage is provided against the same causes of loss covered under your property policy.

Most businesses underestimate the amount of time it takes to return to normal operations. It can take one or two months for investigations and debris removal; two to three months to secure permits for repair; and upwards of a year to reconstruct the property and replace machinery and equipment.

What additional coverage does business income insurance provide?

The business income and extra expense form provides the following additional coverages:

  • Extra expenses are any expenses over and above those that would have been incurred during normal operation of the business. They include expenses incurred to avoid or minimize the suspension of operations; to repair or replace property; and pay for overtime work to speed up the restoration of the business.
  • Civil authority is when access to your premises is denied by civil authority as the direct result of damage or destruction of a neighboring or adjacent property belonging to others. If the damage or destruction is caused by a cause of loss covered by the insured’s policy, this coverage applies. Your premises would be covered for the loss of income during the period of suspension, up to two weeks.
  • Alterations/new buildings provides coverage for loss of income resulting from a delay in beginning operations. The delay must be the result of damage to new buildings or structures, either completed or under construction. Damage to additions or alterations to existing buildings also are covered. The damage must be the result of a covered cause of loss.
  • Extended business income provides the time needed for your former customers to return once the business suspension is over by providing coverage for loss of income until sales return to normal, or up to a maximum of 30 days.

What optional coverages may be included to customize the policy to your company?

Business income coverage is not sold separately; rather it is added to a property or package policy and can be adjusted to cater to specific needs. For example, extended period of indemnity is an option that extends the ‘extended business income coverage’ over the standard 30-day period, to 60 days or up to a maximum of 360 days.

The selected time would depend on the time you estimate it would take for revenues to return to normal after a suspension of the business.

Business income coverage increases a business’ ability to survive a substantial loss, because of this, it is important to have the correct coverage in place before a loss. An experienced agent will be able to walk you through calculating the correct coverage limit and options needed for your unique risk.

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How to cover fire legal liability in your property lease agreement

It’s a new year, and if you are a business owner leasing space, this is the perfect time to pull out your lease agreement and review the insurance clause, especially the fire damage legal liability.

“Better yet, send this agreement to your insurance adviser for evaluation to be sure your insurance program meets the contract requirements,” says Shelley C. White, assistant vice president at SeibertKeck Insurance Agency.

The purpose of a contract is risk management, which is why it defines the obligations and benefits of each party — risk acceptance and avoidance issues.

Smart Business spoke with White about fire damage legal liability insurance clauses in property lease agreements.

What is the purpose of the insurance clause in a lease agreement?

This clause establishes the rights and obligations of each party with respect to insurance covering leased premises and the activities of the business owner. It identifies who must purchase the insurance, what coverage is required, limits of insurance to carry and each party’s rights to waive or not waive subrogate for losses.

Older lease agreements often make the tenant responsible for their negligence resulting in fire loss to the ‘occupied’ leased premises. The business owner is, therefore, liable for damage to real property in his or her care, custody or control.

What exactly is fire damage legal liability?

Fire damage legal liability, also known as damage to rented premises or fire legal liability, is an important provision under a commercial general liability (CGL) policy when a business is leasing either the building or partial space within a building. It provides coverage for property damage due to a fire to the leased or rented premises as a result of the insured’s negligence.

Why is this so important to review?

This is a frequently overlooked coverage. Insurance professionals are likely to focus on the major coverages within the CGL policy.

Fire damage legal liability is giveback coverage and limited. It covers only fire losses, and applies only to the leased or rented premises ‘occupied’ by the tenant. Limits are usually written at $100,000 or less, but you can increase the limit up to $1 million for a nominal charge.

How is coverage determined?

It’s always difficult to know what limit to show on the policy, but there are options. For example, if a tenant is leasing 25 percent of a building valued at $400,000, a limit of $100,000 is reasonable; if the tenant is leasing the entire building, he or she is underinsured.

How can you insure for this exposure?

There are several coverage options:

  1. Amend the lease to a triple net lease agreement, which requires the tenant to insure the building. This normally requires tenants pay for other expenses like real estate taxes, maintenance, repairs and utilities. A tenant leasing a portion of space doesn’t have this option.
  2. The tenant’s agent also can provide legal liability coverage on the property policy by endorsement, which can be written on an all risk or special (not just fire damage) form for broader coverage.
  3. The landlord can insert a waiver of subrogation clause into the lease agreement in favor of the tenant. This risk reduction method waives the subrogation clause in the landlord’s insurance policy so it doesn’t apply to claims against the tenant. The landlord’s carrier cannot seek restitution from the tenant for fire loss.

A waiver of subrogation is the most desired method of transferring the risk back to the property owner and least costly to tenants.

What if the tenant causes damage to other parts of the building?

The property damage limit under a CGL policy covers damages to ‘other’ parts of the building not occupied by the tenant for loss by fire due to the business owner’s (tenant’s) negligence. If the business owner has an umbrella policy, this limit will go above it for additional coverage. The umbrella limit, however, doesn’t go over the fire legal liability limit, which could create problems.

A periodic review of lease agreements is a key part of risk management, so be sure to provide these documents to your agent. It might prevent future financial problems.

Insights Business Insurance is brought to you by SeibertKeck

How your insurance score affects your rates and what you can do about it

When it comes to borrowing money, you most likely are aware that your credit score is a major factor for what a lender offers. An insurance score, however, is a term that isn’t so well known, even though this particular number can play a very big part in how much you’ll be charged for insurance coverage over time.

Insurance scoring is a model, developed by your insurance company — all companies have unique models — that determines a customer’s likelihood of experiencing future insurance claims based on his or her financial behaviors.

Smart Business spoke with Kevin Franczkowski, client advisor at SeibertKeck Insurance Agency, about insurance scoring, shedding light on this misunderstood facet of insurance.

How does an insurance score affect rates?

The scoring is based on the analysis of a consumer’s credit report information. The models are based on actual claims history of consumers with similar financial behaviors.

These models use predictive characteristics to anticipate possible loss, and it will greatly affect your rates for your insurance policy, whether it is for health, homeowners, auto or life insurance. The better your score, the better your rates.

An insurance score typically ranges from 200 to 997. Scores that fall below 500 are generally considered to be poor, while anything above 770 is considered good, according to InsuranceScored.com.

Very few individuals possess a perfect insurance score, although it is possible to obtain.

Is an insurance score the same as your credit score?

No. Your insurance score is not the same as your credit score.

Your credit score is used to predict your future credit behavior. Your insurance score is used to predict the possibility of future claims. The difference is very important to remember.

Your insurance score does not measure your income, and these scores are just one aspect of underwriting and rates.

Insurance scoring enables your insurance company to make better risk selections and develop more accurate pricing, helping you to save more money.

What factors affect your insurance score?

The factors that are evaluated and used to determine your unique insurance score can include, but are not limited to:

  • Outstanding debt.
  • Length of credit history.
  • Late payments.
  • Collections.
  • Foreclosures.
  • Bankruptcy.
  • New requests for credit and the length of time since the most recent credit inquiry.
  • Your number of open accounts.

Personal information such as age, gender, income and address are not used to determine your unique insurance score.

How can you improve your insurance score?

There are several ways to improve your insurance score. They include paying your bills on time, re-establishing good credit and keeping a watchful eye on your available credit. And keep in mind that your most recent history is more important than past years.

Maintaining a good insurance score by keeping your overall debt down and by filing fewer claims over a certain period of time, generally based on a three to five year time frame, also will help keep your premium down.

After a catastrophic loss to your home, such as a fire, your insurance company may essentially restore you financially, so you can focus on the things that really matter: your family, your home and surviving an emotional crisis.

Insights Business Insurance is brought to you by SeibertKeck

How to combat the alarming trend of social engineering fraud

Your CFO gets an email from one of your international vendors. It says, “We’ve made a few changes and we’re switching banks. Here is our new SWIFT (international routing) code and account number. Please remit all future payments here.”

The email is from somebody the CFO recognizes with the right logo and email signature. He or she forwards the message to whoever will make the necessary changes to your online system, and the next time you need to make a payment to that vendor, your company uses the new information.

About a month later, your CFO gets an email from the company, asking why you haven’t paid them. He or she sends the record. Your international vendor says, “That’s not my account number.”

So, if the money is gone, you’ll want to make a claim on your crime policy. In nearly every case, however, your policy will exclude the claim because it was voluntary parting.

Smart Business spoke with Richard B. Hite, CEO of SeibertKeck Insurance Agency, about a new kind of crime endorsement that can provide coverage for social engineering fraud that is hitting an increasing number of companies.

What is social engineering fraud?

Social engineering fraud is deceptively gaining the confidence of an employee to induce him or her to part with money or securities. The fraudulent party might pose as a trusted vendor, client or employee through the act of phishing — sending emails from what appears to be a reputable source.

Why doesn’t a standard crime policy cover voluntary parting?

There is a voluntary parting exclusion in nearly every crime and/or property policy. Voluntary parting is when you willing give your property and/or assets away. Even if you were tricked into doing so, by voluntarily giving this away, an insurance company typically won’t cover your claim. For example, the carrier will say that you should have investigated and confirmed before changing that billing information.

Most businesses have some kind of crime insurance. They may not have enough or the right type, but they have a crime policy. It’s only when they go to actually use it that they find out how little it actually covers because it wasn’t written correctly.

Again, even if you buy standard computer fraud coverage on your crime policy, which is becoming more widespread, it won’t cover an instance that involves voluntary parting through social engineering fraud.

Who is being affected by this kind of fraud?

Social engineering fraud is an alarming trend; at our office, two claims have been filed in the past 60 days.

Even if your company conducts vendor background screenings, employs fraud detection systems, segregates financial duties and educates employees on how to detect fraud, it still may fall victim.

Smaller companies may lack proper financial or wire transfer controls, while large companies don’t always keep as close an eye on every single financial transaction.

For instance, your company’s accounts payable manager receives an email from a familiar overseas supplier. Your manager tries unsuccessfully to reach the bank, and the supplier’s emails asking you to pay the invoice become more urgent. Finally, in order to keep the supplier happy, the manager wires the money. Then, the next day, the real supplier calls in a panic and says it has been hacked.

How are insurance companies responding?

Carriers are starting to offer businesses the ability to buy an endorsement that fully carves back the voluntary parting exclusion for social engineering fraud. This is in response to the increasing number of claims being uncovered through a traditional crime policy.

With a full carve back, there is still a standard of proof but it allows your coverage to trigger in the event that you or your employees are duped or defrauded.

Some policies may include language that could stretch to cover this same type of claim, but voluntary parting will still be a burden to the insured.

This fraud is a trend that is only going to escalate in the business world, so ask your broker today about better protecting your company from social engineering fraud.

Insights Business Insurance is brought to you by SeibertKeck

How to avoid the three biggest pitfalls with products recall insurance

If you make, grow or package a product, your company faces products recall risk. Yes, a general liability policy responds to any bodily injury or property damage your product causes, but that’s not your only exposure. Products recall insurance picks up business interruption, lost profits, recall expenses, the cost to rehabilitate brand image and provides response funds for adverse publicity, says Karl Henley, vice president at SeibertKeck Insurance Agency.

The true cost of most product recalls is almost always in excess of $1 million — and that can run into hundreds of millions of dollars for a large company.

“Most companies don’t have the resources to address the impact of a widespread product recall. They just can’t absorb the financial loss and frequently fail as a result,” Henley says. “That’s why you should at least look at this and see what your exposure is.”

Smart Business spoke with Henley about what business owners must understand about products recall insurance.

Why do business owners make mistakes with products recall insurance?

Large companies get it, but the middle market relies on the advice of their agent. Unfortunately, there aren’t many agents that specialize in products recall insurance.

There is a fundamental misunderstanding of how the coverage works, which impacts whether a client is matched to the correct policy structure and carrier. The three biggest pitfalls of a products recall policy are the need for first- or third-party coverage, coverage triggers and coverage territory.

What do employers need to know about first- and third-party coverage?

Every products recall policy has two considerations: first-party coverage and third-party coverages.

From a liability perspective, first party covers your out-of-pocket expenses — the costs of notifying customers, any storage expense, the cost to dispose of the product and any costs associated with conducting the recall. This is what most agents/carriers offer, which covers base expenses only.

Third party is often the one people don’t buy because they don’t realize they need it or don’t fully analyze their exposure. This is where you pick up a customer’s diminished value in their product because of your product, for example, when your product is an ingredient or component part. You should also consider coverage for your business interruption losses and brand reputation/rehabilitation expenses.

Recall expenses also are broken into a first- and third-party basis. Some policies only cover your expenses for a recall; some cover the expenses you pay to a third party, like your customers, to pull your product from the shelf or make repairs. Many contracts include indemnification language where you’ve agreed to reimburse these costs.

Where do business owners make mistakes with coverage triggers?

Coverage triggers are a critical area to review. Most policies are written so that if your product has caused or is reasonably considered to have caused bodily injury or property damage, your product recall policy will trigger. However, as an example, the U.S. Food and Drug Administration can issue a recall without an illness occurring. Some carriers cover this expense and others will not. It’s critical to understand how the insurance company writes their form.

In addition, two acts recently elevated the government’s ability to have stronger oversight into consumer products — the Consumer Product Safety Improvement Act of 2008 and the Food Safety Modernization Act of 2011. Both have raised the bar as far as the standard that companies have to jump through for consumer safety.

How does coverage territory come into play?

A lot of products recall policies are written with only a coverage territory of the U.S. However, many companies have global exposure. You want to make sure your coverage territory is extended to cover where your products are actually going.

What’s the biggest takeaway?

Take time to understand your coverage territory, coverage triggers and first- and third-party exposure before you buy the policy. From there, look at the financial condition of your company and assess what kind of financial risk it can self-insure to reduce the cost of the policy, which allows you to right size your coverage.

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How to prepare for travel accidents and emergencies with insurance

As business activity expands, staff and salespeople spend more time on the road, which increases the risk of accidents and emergencies. At the same time, business owners may travel extensively for work and personal reasons.

Health, life and workers’ compensation insurance may not cover the risks sufficiently — and in some cases won’t cover them at all. But travel accident coverage is insurance intended to cover losses incurred while traveling domestically or internationally.

“The types of losses covered with travel accident coverage range from inconvenient flight delay to cancellation due to illness or even a serious medical emergency,” says Marc McTeague, executive vice president at SeibertKeck Insurance Agency. “It can also extend to help pay for a variety of services from transporting a loved one to the location where the insured is hospitalized to location translation services.”

Smart Business spoke with McTeague about travel accident coverage and how it can protect your employees — and yourself.

How is travel accident coverage used?

Travel accident helps fill coverage gaps, in the U.S. and abroad, by combining three components into one policy:

  • Travel assistance coverage and services range from lost luggage and identity theft assistance to medical and legal referrals, emergency transportation and medical specialists.
  • Medical evacuation, repatriation and out-of-country medical coverage reimburses the costs of emergency treatment and transportation for injured or sick employees, and pays to bring them home.
  • Accidental death and dismemberment coverage pays a lump sum for accident loss of life, limb, sight, speech or hearing.

How often do you run across people who don’t even know this kind of coverage exists?

Very often — it is a coverage that is overlooked. It’s common to review property, liability and automobile coverage, and even suggest umbrella and crime coverage, but travel insurance can be forgotten.

Who benefits from this insurance?

Coverage should be reviewed for any organization with employees who travel frequently, as it protects your company, employees and travel investments. Any company with international manufacturing and sales should also consider a separate policy. Consult with a trusted insurance adviser for company travel plans as well as personal trips to review all of your options.

What are tips for setting up this coverage?

Some policies offer a limited amount of coverage for an insured while away from the office, but the coverage is not comprehensive enough to cover a serious accident or travel emergencies. The cost of the policy is far less than any expense you would face in the event of a claim.

Travel accident insurance also provides protection far beyond typical travel coverage offered through the Internet and credit card companies. A credit card company may be able to refund fraudulent charges or protect you from identity theft, but a travel accident policy can pay for health expenses. For example, if medical costs are incurred as a result of an accident or illness when the insured is traveling abroad, health insurance companies may take weeks or months to reimburse medical providers. A travel accident policy can pay on the spot, which is critical in countries like Mexico where full payment is required before discharge.

Another component is accidental death and dismemberment coverage that provides protection for travel that not only takes place on common carriers but also chartered aircraft or watercraft.

Finally, with trip delay coverage, if the insured’s trip is delayed 12 or more hours due to inclement weather, hijacking, a natural disaster or terrorist act, the policy pays for a few days of food and temporary lodging until travel becomes possible.

Is there anything else you’d like to discuss?

This coverage is also for local traveling — sending workers to a trade show or out of town meetings.

As companies reach further across the globe and travelers explore more exotic and adventurous locations, the need for travel accident insurance has increased. Take time now to consider the health and safety risks before you or your employees face illness, accidental injury or other unfortunate events without the right resources.

Insights Business Insurance is brought to you by SeibertKeck

How to prepare for travel accidents and emergencies with insurance

As business activity expands, staff and salespeople spend more time on the road, which increases the risk of accidents and emergencies. At the same time, business owners may travel extensively for work and personal reasons.

Health, life and workers’ compensation insurance may not cover the risks sufficiently — and in some cases won’t cover them at all. But travel accident coverage is insurance intended to cover losses incurred while traveling domestically or internationally.

“The types of losses covered with travel accident coverage range from inconvenient flight delay to cancellation due to illness or even a serious medical emergency,” says Todd Winter, executive vice president at SeibertKeck Insurance Agency. “It can also extend to help pay for a variety of services from transporting a loved one to the location where the insured is hospitalized to location translation services.”

Smart Business spoke with Winter about travel accident coverage and how it can protect your employees — and yourself.

How is travel accident coverage used?

Travel accident helps fill coverage gaps, in the U.S. and abroad, by combining three components into one policy:

  Travel assistance coverage and services range from lost luggage and identity theft assistance to medical and legal referrals, emergency transportation and medical specialists.

  Medical evacuation, repatriation and out-of-country medical coverage reimburses the costs of emergency treatment and transportation for injured or sick employees, and pays to bring them home.

  Accidental death and dismemberment coverage pays a lump sum for accident loss of life, limb, sight, speech or hearing.

How often do you run across people who don’t even know this kind of coverage exists?
Very often — it is a coverage that is overlooked. It’s common to review property, liability and automobile coverage, and even suggest umbrella and crime coverage, but travel insurance can be forgotten.

Who benefits from this insurance?

Coverage should be reviewed for any organization with employees who travel frequently, as it protects your company, employees and travel investments. Any company with international manufacturing and sales should also consider a separate policy. Consult with a trusted insurance adviser for company travel plans as well as personal trips to review all of your options.

What are tips for setting up this coverage?

Some policies offer a limited amount of coverage for an insured while away from the office, but the coverage is not comprehensive enough to cover a serious accident or travel emergencies. The cost of the policy is far less than any expense you would face in the event of a claim.

Travel accident insurance also provides protection far beyond typical travel coverage offered through the Internet and credit card companies. A credit card company may be able to refund fraudulent charges or protect you from identity theft, but a travel accident policy can pay for health expenses. For example, if medical costs are incurred as a result of an accident or illness when the insured is traveling abroad, health insurance companies may take weeks or months to reimburse medical providers. A travel accident policy can pay on the spot, which is critical in countries like Mexico where full payment is required before discharge.

Another component is accidental death and dismemberment coverage that provides protection for travel that not only takes place on common carriers but also chartered aircraft or watercraft.

Finally, with trip delay coverage, if the insured’s trip is delayed 12 or more hours due to inclement weather, hijacking, a natural disaster or terrorist act, the policy pays for a few days of food and temporary lodging until travel becomes possible.

Is there anything else you’d like to discuss?

This coverage is also for local traveling — sending workers to a trade show or out of town meetings.

As companies reach further across the globe and travelers explore more exotic and adventurous locations, the need for travel accident insurance has increased. Take time now to consider the health and safety risks before you or your employees face illness, accidental injury or other unfortunate events without the right resources. ●

Insights Business Insurance is brought to you by SeibertKeck

How Ohio’s group rating is still the best option for small and midsize companies

Cliff Baseler, Vice President, Best Hoovler Insurance Services Inc., member of the SeibertKeck Group

Cliff Baseler, Vice President, Best Hoovler Insurance Services Inc., member of the SeibertKeck Group

If your company has 500 employees or less, you want to be in a group rating program to get better workers’ compensation rates. Some court rulings have decreased the amount of group credits and increased rates for group rated employers.

“It’s still the best thing going for the small to medium-size employer,” says Cliff Baseler, vice president at Best Hoovler McTeague Insurance Services Inc., a SeibertKeck company. “The group is a fantastic idea, and an employer can receive much lower workers’ compensation premiums.”

Smart Business spoke with Baseler about the advantages of a group rating program and how the landscape has changed.

How does group rating save money?

The Ohio Bureau of Workers’ Compensation (BWC) allows employers with better than average claim histories to join together through a sponsoring organization for the purpose of being rated as a large group. As a standalone business with no losses, you might only develop an experience modification of a 5 to 7 percent credit off your rates. However, when combined with thousands of other companies in a group, your company can earn up to a 53 percent credit to your base rates. The credits can vary for individual businesses, depending on your type of business, whom you are grouped with, final loss figures, total enrollment and reported payroll.

What are other benefits of enrolling?

A third-party administrator (TPA) will manage your claims cost-effectively and aggressively, as well as representing you at Industrial Commission hearings for contested claims. You also have real-time access to claims information rather than trying to obtain it directly from the BWC.

The TPA physically reviews your rates and classifications assigned to your company. Many times the company classifications are wrong because of a change in operations or they were incorrect from the beginning. All of this can result in higher premiums.
The TPA also provides training, education, bulletins, seminars, newsletters, etc. It will help you receive various other credits for safety or a drug-free environment too.

What happens if you have a large loss?

With a group rating, if you have a shock loss, a death claim or a large medical claim, you can be asked to leave at the end of the policy year. Typically that precludes you from any group for two or three years, as all groups look at your current year and the previous three years of claim history. After you’ve been relatively loss free for two or three years, many groups allow you to re-enroll.

The problem is you might have been enjoying 45 percent credit, but now have a 35 percent debit — an 80-percentage point rate swing. For a lot of small businesses, that creates a financial strain since premiums can double the next year. Extra dollars in premiums could result in a workforce reduction.

If asked to leave, you still can sign a contract with the TPA to help you limit and possibly prevent other losses with the goal of returning to a group plan.

How are recent court rulings impacting workers’ compensation?

Some recent rulings in favor of plaintiffs in Cuyahoga County have hurt the rating structure of group plans. The argument was that if Company A has a bad claims history and pays a $20 rate per hundred, but Company B is in a group rating paying $5 per hundred, that creates an unfair advantage in a public bid situation.

As a result, the BWC decreased the maximum group credit to 53 percent and raised classification rates as much as 21 percentage points versus nongroup rates. This action seeks to equalize the playing field, in the court’s opinion.

Also, the governor authorized the release of $1 billion of ‘overpaid premiums’ to private employers and public taxing groups for the 2011 rating year as a result of another court ruling. Employers are receiving rebate checks for 56 percent of premiums paid.

With the increase in rates for groups and the decrease in the credits, many companies have to decide whether to stay in the group. While it may no longer be as cost-effective, you get extra services — aggressive claims management, hearing representation, rate analysis, etc. — and service means everything to your experience and rates.

Cliff Baseler is vice president at Best Hoovler McTeague Insurance Services Inc., a SeibertKeck company. Reach him at (614) 246-7475 [email protected]

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