How to sharpen your networking skills to add business value

Risk and opportunity are two sides of the same coin, and business leaders shouldn’t focus on one over the other. They work together. Those who thrive in today’s business climate find ways to take advantage of possibilities for organizational innovation and competitive advantages, while mitigating the surrounding risk.

One tool that can help you manage risk and seize opportunities is building a strong and diverse network. 

“For example, if you have a cyberattack or your system is hacked, you want to already have those vendor relationships built for how you’re going to handle the situation. And that’s where networking really helps,” says Kim Riley, president of Hylant’s Cleveland office, who moved to the area three years ago, after 20 years in Nashville.

“When I moved to this city, I had to figure out how to build a business, how to grow the business in a new city that I had never been in,” she says. “Networking and encouraging my team to network is what I did.”

Smart Business spoke to Riley about how to build a network to help grow your business.

Why is it important for employers to build a network? How does this relate to growth?

By networking with other organizations, you and your team can:

  •   Find new opportunities to invest in.
  •   Build deeper relationships with your current client base, helping them find opportunities for growth.
  •   Learn about acquisition opportunities, whether that’s a similar business or a new line of business.
  •   Build trust with other vendors that you may need to solve a business issue later.
  •   Forge strong connections with centers of influence who can provide introductions or open doors.
  •   Attract new talent, which has grown more important as workforces tightens. It helps put your brand out there and spreads the word to potential employees.

What are some networking best practices?

It takes more than one person. Build a culture around it, so everyone in your organization is out there, has their eyes open and is bringing connections back. As you collect business cards or meet people along the way, you’ve got to decide which are the best opportunities for you. If you work with a team of people, you can collectively determine which opportunities best fit with each team member to maximize the effectiveness of everyone’s efforts.

To keep your relationships from going cold, you’ll need to come up with a system for how you’re going to keep them engaged. That’s difficult, but you can use social media — LinkedIn, Facebook, Twitter, etc. — to stay in touch regarding birthdays, work anniversaries or promotions. 

It’s not something where you typically carve out an hour and network. It’s more of a mindset: ‘Who can I connect to my network today? How can I connect those dots? If I’m trying to talk to a company about an issue and I need a vendor who can help me, who in my network can help me have that conversation?’ One idea is to try to eat breakfast or lunch with people you don’t know, as often as you can. It will help you build your network, give back to others and build relationships along the way.

It’s also important to build rapport and trust before you put your hand out. Rather than meet someone and expect them to help you, first help them. Go into the conversation thinking, ‘What can I do to help them and their business?’ For example, try to connect anyone you meet with at least two others in your network, while spreading those introductions across your network.

Where do business leaders go wrong when building a network?

A lot of people only want to network with decision-makers, which puts pressure where everyone is bombarding the CEO or CFO. Some networking articles say you need at least three to five relationships within a company that know you and know who your firm is, before they’ll make a decision to change a vendor relationship. You can’t have just one relationship within the company.

You also don’t want to just have relationships with your peers. When you’re networking, value every person you meet. If someone isn’t a decision-maker yet, as they start moving up in the organization or spin off and create their own company, they’re going to remember that you took time with them and helped them along in their journey.

Insights Business Insurance is brought to you by Hylant

An ounce of safety management may be worth a pound of litigation

A workplace incident is any injury or illness that occurs at work for which the employee seeks medical treatment. With such a broad definition, it’s no wonder there were 114,000 reported incidents in Ohio in 2016, according to the Ohio Bureau of Workers’ Compensation.

However, there’s a bigger concern. While that 114,000 was down 9 percent from the year prior, the average claim cost increased dramatically. So, the lower frequency is coming at the cost of higher severity, says Chas Lowe, commercial insurance specialist at Zito Insurance Agency Inc.

“That’s why companies need strong safety programs that can help identify the root cause of a workplace injury. It’s only after you boil it down that you can determine measures to either prevent or severely reduce the likelihood of it happening again,” Lowe says. 

Smart Business spoke with Lowe about safety in today’s workplaces.

Why use the term ‘incident’ over ‘accident’?

Incident is a better way to describe workplace injuries because an accident is considered a random event that typically couldn’t have been prevented. However, nearly every workplace event that results in an injury is preventable, whether that be from additional training, improved onboarding processes, adhering to a safety program or avoiding the activity altogether.

Which employers are most at risk?

Although any employer can be impacted, the highest rate of reportable accidents in the U.S. occurs in the health care and social service industries, followed by transportation and manufacturing.

No matter what industry a company operates in, unsafe actions and behaviors lead to an overwhelming majority of workers’ compensation claims — a staggering 96 percent.

How can employers minimize incidents?

All employers, regardless of size or industry, should implement a safety program with continual training and systematic processes to identify factors that may lead, or have led, to an incident or injury. Another key is ensuring temporary employees are subject to the same training as permanent employees.

A good post-incident investigation program is also important. These investigations provide insight into the root cause of the incident, help generate recommendations on how to fix what went wrong, and most importantly, include documented follow-up to ensure employees get back to work as quickly as possible, even if it’s not in the same role. Post-injury management is crucial. Outreach to injured employees keeps them engaged and may help stem additional claim costs in the form of lost pay and additional medical treatment.

Why are safety programs so important?

Regardless of the type of insurance — property and casualty, health or workers’ compensation — historical claim costs drive rates. Therefore, a safety program can help mitigate costs by reducing the number and severity of incidents and injuries. 

A strong safety program can help ensure safety is a part of the fabric of the company. While these programs are usually managed by human resources or a safety manager, to get true buy-in, employees need to see top management demonstrate their commitment to safety in every organizational decision.

How can employers get started? 

To start a safety program, contact your insurance broker, third party administrator and/or managed care organization for help. A good broker will take a hands-on approach in helping you to develop a program and give you access to resources to help tailor the program to your specific needs. 

What can employers do to make an existing program more effective?

Bring in a third party to audit the safety program. If it’s done internally, employees may shy away from pointing out the flaws because it was implemented by a superior and they don’t want to speak out of turn. A third party will give an unbiased opinion as to how effective the program currently is and where they think it could be improved.

Also, it’s important to view safety as a living-breathing process and to empower your employees and encourage management to continually think of ways your safety program could be improved.

Insights Business Insurance is brought to you by Zito Insurance Agency Inc.

How to transfer risk when pollutants may lurk under commercial land

Purchasing, leasing or selling commercial land often comes with environmental risk. This isn’t a risk you can afford to ignore because when claims do occur, they are severe.

Mary Gerding, ARM, vice president, Client Service Executive, Environmental Risk, at Hylant, says there’s risk when developing something new on a site that’s got a history. Even on farmland, unexpected discoveries of pollution can pop up.

That’s why you need to investigate prior use, both on-site and nearby. 

“A site that is downstream from a chemical plant, dry cleaner or gas station has a higher likelihood of contamination,” Gerding says.

In fact, common chlorinated solvents or degreasers can be one of the worst offenders. Other major risks include things left behind in the soil, such as a storage tank releases, buried debris and fertilizers/pesticides that can leach contaminants.

Smart Business spoke with Gerding about environment risks in real estate transactions.

How does investigating the site history mitigate these risks?

Site investigation is a must for both buyers and renters, and it’s often required by lenders. 

In a Phase I Environmental Site Assessment, consultants look for recognized environmental conditions in the prior use of the site and its surrounding properties. If the investigation suggests potential contamination, a Phase II assessment, with sampling and lab analysis, is usually next. 

What is transactional environment insurance? How does it help?

Investigating the site history is the first step to risk protection, yet absent the seller’s indemnity, you can’t be certain without insurance. Transactional environmental insurance is also known as premise pollution/environmental site liability insurance. This surplus lines insurance policy pays cleanup costs if contamination is discovered on your property or on a nearby property if your site is the source. 

With no standard policy form, coverage is customized to fit your site conditions and deal. That’s why you need an insurance expert who can focus on the site issues and policy terms and conditions. 

The use of environmental insurance has grown out of the industrial box. It can help address mold, legionella and other indoor air quality concerns, which are critical to the residential and hospitality sectors.

What exactly can be insured?

The policy can cover existing but not yet discovered conditions or new releases. Beyond paying for the cleanup costs, it provides legal defense expense and third-party protection for bodily injury and property damage claims. So, you would have coverage if, for example, a tenant becomes ill on your property, or the contaminant causes loss of use, stigma damage or natural resource damage.

Transportation liability and non-owned site liability, such as when you ship waste off-site to be landfilled, recycled or incinerated, is also insurable. These policies won’t cover the cleanup of an existing known condition before issuance of a no further action, or abatement of asbestos or lead paint, although third party claims response can often be negotiated.

As a claims made insurance policy, most people buy a five- to 10-year policy for a real estate transaction.

Why might a tenant need to be concerned?

Tenants may not think environmental risks apply, but it depends on the lease language. They may have responsibility for any environmental harm they cause. But if the prior tenant had a similar business, how do you prove which company is responsible? 

Do sellers also use this type of insurance?

Sellers may choose to be proactive. If there is environmental uncertainty, they can conduct a study and share the findings for a coverage proposal. This can add to the site’s marketability, protect the price point and speed up the closing.

Sellers can collaborate with an attorney, environmental consultant and insurance broker to preplan how various technical and risk transfer tools fit together to benefit all parties — as the buyer, seller and lender can be identified in the policy as insureds.

Don’t allow your transaction to lose momentum when environmental concerns pop up without first exploring risk transfer to an insurance policy.

Insights Business is brought to you by Hylant

Workplace violence incidents are not black swan events

Sadly, violence can’t always be avoided.

You can, however, reduce the likelihood of such acts in the workplace with education, planning and processes/procedures to help proactively identify these type of risks before they escalate to violence. And then, if and when an unfortunate act occurs, do you have the resources for all of those impacted?

Smart Business spoke with Chas Lowe, commercial insurance specialist at Zito Insurance Agency, Inc., about workplace violence.

What types of workplace violence exist? 

People view these incidents as black swan events, when, in reality, they occurred more than 300 times last year, according to AlertFind, which is dedicated to helping employers reduce workplace violence.

Workplace violence is often broken into four categories. According to the Centers for Disease Control and Prevention, these are:

1. Criminal intent, such as robbery or shoplifting.

2. Customer/client. Health care settings most commonly experience this type of violence.

3. Co-workers. This can include verbal as well as physical violence.

4. Personal relationship. An example would be the significant other of an employee showing up at the place of employment.

It’s important to note that violence can occur in any industry. Unfortunately, these acts often result in collateral damage.

Which businesses are most vulnerable?

The most vulnerable are companies that deal with the public — i.e. hospitals, schools, government entities, social services — as well as places that exchange money and/or businesses that are open late. 

The current status of the business can also impact the risk for violence. For example, rumors about layoffs, outsourcing or a business closing have been shown to increase the likelihood of a violent event occurring.

How can employers protect their employees?

First, employers have a duty to implement risk management practices to deter violence and help people deal with issues before they become a crisis. Processes and procedures should prevent conflict from turning into harassment or violence. Effective lines of communication on all levels can ensure employees are comfortable approaching management or reporting violent acts. Counseling services or company training helps people know what behavior will and will not be tolerated, while also encouraging employees to accept individual differences.

Consider offering counseling services or mental health resources through a health benefits package. A well-thought-out disaster plan should also address what to do in the event of workplace violence. 

How can insurance help? What misconceptions do employers have? 

Insurance coverage for these types of unfortunate events is usually a standalone endorsement, which can be added to your policy for an additional cost.

One misconception is that workplace violence coverage is activated by legal liability or a lawsuit; however, it is actually triggered by the actual violent act. Another misconception is that workers’ compensation will cover these violent incidents. In fact, some workers’ compensation specifically excludes coverage for acts of violence or the threat of lethal force. 

What does workplace violence insurance typically cover?

Workplace violence insurance covers expenses an employer may incur, including:

  •   Medical expenses for all of those affected
  •   Hiring independent security consultants 
  •   Victim employees’ salaries and replacement employees’ salaries
  •   Loss of business income in the event of a workplace shutdown 
  •   Post-incident crisis management, including consultants and mental health specialists
  •   Rewards for information leading to an arrest

While some businesses are more vulnerable, all employers face the threat of workplace violence. Every employer needs to foster a safety culture and implement risk management designed specifically for workplace violence. Your insurance agent can help you understand your exposure and the value of this important coverage.

Insights Business Insurance is brought to you by Zito Insurance Agency Inc.

How people make the difference in your total cost of risk

The total cost of risk (TCOR) goes far beyond insurance costs and claim occurrences. Managing the TCOR requires the involvement of almost every person in an organization.

For example, according to Brad Croce, senior vice president at Hylant, there’s a strong correlation of engagement in the workplace and the frequency and severity of loss incidents across all industries, from a manufacturer’s production line, to the drivers in a fleet safety program, to the security of a company’s data from a cyberattack.

Smart Business spoke with Croce about TCOR and how employers can encourage their people to help keep risk costs low.

Have executives today become more interested in the need to address risk in their businesses?

There has been more awareness of the need to improve risk management and thus the TCOR. Since the Great Recession, company executives have increasingly focused on this from a cost containment standpoint as well as a management tool.

When a company is managed with a strong foundation for ethical behavior and compliance, it creates a corporate culture where managing risk is at the forefront for employees. 

This foundation begins at the top of the organization, where all executives are aligned and committed, with an emphasis on risk identification, mitigation and correction. 

Not only does this result in a reducing TCOR, it also makes a workplace more attractive to prospective and current employees.

How should risk management work to keep the TCOR down?

Although each company is different, well-run organizations focus on risk identification and prevention, which include strong safety and security procedures, resulting in loss avoidance. Along with this approach, data show that the ancillary administrative costs decrease as well. 

In addition, when insurance company underwriters consider culture, management style, employee engagement, etc., in their due diligence and assessment, the resulting judgments they make when providing pricing and terms and conditions back to the insured can derive an additional financial benefit.

What are some best practices for minimizing the TCOR in your organization?

A TCOR review by the entire company management is a good starting point. It helps the company understand the full extent and cost of all risk management activities and expenses.

Another benefit of this exercise is that management has the ability to better align risk mitigation actions with the corporate strategic goals and objectives. TCOR also can be benchmarked against industry peers to accurately measure performance and identify opportunities for improvement.

Another best practice is involving employees to assess the current behavioral issues and what could be done to improve them, which then facilitates the implementation of any changes or improvements. For example, if a company has a fleet of vehicles — even if they’re not the core business — it could screen and/or survey the drivers to identify links between attitudes, beliefs and behavioral tendencies with the frequency and severity of accidents. This type of analysis could result in more enhanced driver training while also helping employees feel involved and valued.

In addition, whatever gets measured seems to be what gets done. If a safety committee is then formed, it brings together people from different levels of the organization, where the expectations around it are clearly communicated and followed up with documentation, which then holds people accountable.

Insights Business Insurance is brought to you by Hylant

Not all insureds are treated equally by carriers. Get the details right.

While it is common to have multiple entities listed as “insureds” on a commercial liability policy, all parties insured by the policy are not treated equally. Therefore, it is critical that this often-overlooked section of the policy be set up properly, says Chris Zito, president of Zito Insurance Agency, Inc.

Smart Business spoke with Zito about what employers need to know about the types of insureds and the very different ways they’re treated in a policy. 

What are the types of insureds that could be listed on your insurance policy?

Typically, there are three different types of insureds that may be included on a commercial liability policy: first named insured, additional named insured(s) and additional insured(s).

What exactly is a first named insured?

The first named insured is the entity that has ultimate control of the policy and is afforded unique rights, such as the ability to:

  •  Change coverage.
  •  Cancel the policy.
  •  Receive premium refunds.
  • Receive cancellation or non-renewal notices.
  • The first named insured also is legally responsible for:
  • Paying the policy premiums.
  • Filing claims and proof of loss.
  • Submitting to a claims interview.

Because of these unique rights and obligations, it is important that the appropriate entity is listed in this position on the policy.

How does an additional named insured differ?

Additional named insureds are entities provided the same coverage as the first named insured, but they do not have the same rights and responsibilities as the first named insured.

What does an additional insured mean and why is it important?

With additional insureds, typically this is an entity unrelated to the first or additional named insured, which has been added to the policy by endorsement in order to satisfy a contractual requirement. Examples are a landlord, lessor of equipment, a higher tier contractor on a construction project, etc.

There are a number of additional insured endorsements used depending on the situation, all of which provide different levels of protection, so it is very important that the correct form is used to meet the intended purpose. Since additional insured are often confused with a named insured, it is important that contracts containing insurance requirements be carefully reviewed — ideally by your insurance agent or broker before signing.

One consideration to be conscious of when adding an additional insured to your policy, is that you are sharing the coverage limits available under your policy with these entities. Depending on how many additional insureds are listed and the nature of the relationship, a review of your coverage limits for adequacy may be in order.

What can be the consequences of a mistake with your insureds?

The schedule of named insureds is an area of the policy commonly overlooked, which can have severe consequences. With the exception of temporary coverage afforded to newly formed or acquired entities in some cases — typically 90 days or less — the insurance carrier is only obligated to provide a defense to entities that are specifically scheduled on the policy. 

The type of organization (such as corporation, LLC, partnership or sole proprietor) is also significant because who within the entity is covered and how that company is covered by the policy is, in part, dictated by the type of business structure. It is also important that the legal name of the entity be reviewed for accuracy.

What’s your takeaway for employers?

As with any legal document ‘the devil is in the details,’ so paying proper attention to this particular detail can determine who will be writing the check to the defense attorney in the event that one of your companies is sued.

Insights Business Insurance is brought to you by Zito Insurance

Drug use and substance abuse must be addressed by employers

There can be an element of “don’t ask, don’t tell” to employee drug and alcohol use, but this is no time to bury your head in the sand.

With the opioid epidemic, prescription drug utilization has many of the same potential consequences as someone who is using illegal drugs, in terms of the ability to be present and fully engaged. Additionally, shifting societal views and Ohio’s acceptance of medical marijuana create even more change.

“Job candidates are already coming in for pre-employment drug testing, and when they test positive for marijuana, saying, ‘Wait, that’s not a drug anymore.’ But just because it’s legal in more than 30 states doesn’t mean it’s not a controlled federal substance,” says Stephen Ligus, vice president and employee benefits leader at Hylant.

With the low unemployment rate, some employers realize not only will they probably employ individuals in the future who may not pass a drug test, they already have employees who wouldn’t pass.

A zero-tolerance policy and hardline approach may no longer be an option for everyone. But a comprehensive policy for a drug-free workplace or substance abuse is a must for all business owners.

Smart Business spoke with Ligus about employer drug policies in businesses today.

Do companies typically have a drug-free workplace or substance abuse policy?
Given the rapidly changing environment, having a current drug-free workplace policy is essential. Some businesses have integrated a drug-free workplace with safety programs and do random drug tests to get discounts on workers’ compensation premiums. Others are federal contractors that must have a drug-free workplace policy, or they employ drivers, which need to meet Department of Transportation qualifications.

Why is it important to have a comprehensive policy in your handbook?
If you don’t have a policy, it’s difficult to enforce the conditions you want for your workplace. Take a holistic approach — recognize the risks inherent in your population, the potential safety issues involved and understand that society is changing. A comprehensive policy doesn’t mean a failed test is grounds for immediate termination, but it should help protect your organization and provide resources to, hopefully, help individuals.

To assist employees with substance abuse, employers provide employee assistance programs (EAPs), awareness of community resources and even peer counseling.

What’s important to understand about Ohio’s medical marijuana law?
Ohio’s medical marijuana law, like other states, does not provide a ‘free pass’ to use marijuana in the workplace. Nor does it provide employees freedom to show up to work under the influence. Your policy should state that employees can’t work under the influence if it interferes with workplace safety, ability to work, etc.

Employers also can take a hardline stance against possession and use of the drug and its paraphernalia, as well as distribution. From a federal standpoint, it remains an illegal drug.

Overall, it’s increasingly difficult to determine whether someone is under the influence. Proper training and education of your supervisors and managers is essential. As an example, mood swings or being lethargic may indicate use of a substance, medical prescription or it could mean the person is just having a bad day.

How does an employer’s health plan play into this?
Medical marijuana is not a benefit paid for by health plans; however, virtually every health plan covers mental health and substance abuse treatment. From a mental health parity standpoint, it’s important that employees and their dependents understand their plan’s access to care.

For employers, there needs to be a firewall between your health plan and your employment decisions. For example, there may be additional protections for employees through other laws and regulations, such as the Americans with Disabilities Act, which should be consulted.

In all instances, employers should consult their attorney and employee benefits professional to review their policies.

Insights Business Insurance is brought to you by Hylant.

Protect your company with written telecommuting guidelines

Telecommuting and working remotely have both advantages and disadvantages. Traditionally telecommuting refers to employees working from their residence. These types of programs are becoming increasingly popular due to advances in technology and flexibility demanded by today’s workforce.

In fact, the Bureau of Labor Statistics found that, on an average day in 2017, 24 percent of full-time employed workers spent some time working while at home.

Smart Business spoke with Chris Zito, president of Zito Insurance Agency, Inc., about the variables an employer needs to consider, including the business risk, before deciding whether or not to implement a telecommuting program.

What are the benefits and risks to allowing employees to telecommute?
There are benefits to telecommuting for both employees and employers. Some of these benefits are:
  Reduction of brick and mortar expenses.
  Aids in employee attraction and retention.
  Flexibility.
  Eliminates the stress of commuting.
  Fewer sick days.

On the other hand, some challenges are:
  A lack of collaboration.
  Technology and/or security concerns.
  Limited face-to-face time.
  Equipment costs.

The extent to which a business experiences these pros and cons depends upon the industry, organizational structure and location, as well as how the telecommuting program is introduced and designed.

Before telecommuting is implemented, what factors need to be addressed?
The employer will need to determine which employees are permitted (or possibly required) to work remotely.

Consideration must be given to the role, hours worked and equipment required. Allowing some employees to telecommute but not others in the same or similar positions could create the impression of being discriminatory or giving preferential treatment.

Compliance with the Fair Labor Standards Act (FLSA) is extremely important. Allowing employees not covered by an FLSA exemption to work remotely outside of normal work hours could result in overtime wage issues. When an employer offers an option to work remotely, several issues must be addressed through written guidelines.

One area of concern is cyber liability and confidentiality. Because equipment is out and about, and not contained in an office, there is potential for non-authorized users to access the devices. Measures should be in place to protect equipment, secure internet connections, back up data and protect files. A computer and cellphone care policy ought to be created to outline how employees should care for both hardware and software.

The beauty of allowing telecommuting is that employees can work almost anywhere — the problem is this could be a vehicle. A driver safety policy should be enacted for any employees who work on the road or telecommute. Guidelines to reduce distracted driving should be incorporated into this policy. Employer liability also remains a concern for telecommuting employees. Although the location the employee is working in may be personal, the employee working remotely is still acting in the scope of employment.

Because of the lack of supervision and variance in environments, it is especially critical that preventative measures and adequate training is in place. Some telecommuting policies incorporate clauses allowing the employer to reserve the right to inspect off-site locations for safety concerns. When an injury occurs at home, for example, it is more difficult to determine if that injury was suffered in the scope of employment.

Before your company offers telecommuting, be sure to analyze if the duties of the position can be successfully fulfilled through telecommuting, while also considering the costs and risks involved. It is very important to have a telecommuting policy to ensure the employee and employer understand the expectations, requirements and responsibilities. This will help ensure that such a program benefits your organization.

Insights Business Insurance is brought to you by Zito Insurance Agency, Inc.

Avoid the pitfalls of group life insurance. Offer personally-owned policies.

Placebo: medicine or procedure prescribed to the patient more for the psychological effect than any physiological effect; a measure designed merely to calm or please someone.

“Really, if you’re looking at percentages, that’s what group life insurance is,” says Greg Zito, vice president of Life Services at Zito Insurance Agency, Inc.

“Ninety-nine percent of group life insurance policies never pay a benefit because it’s rare for employees to die during their working years. Most people make it to retirement. People leave their job and they leave those benefits behind,” Zito says.

Smart Business spoke with Zito about group life insurance’s false sense of security and what employers can do about it.

Why is group life insurance so risky?
When employers offer group life insurance, they don’t realize it’s not something of value to the overwhelming majority. Group life insurance doesn’t apply when someone retires, goes to another job or leaves work because they’re terminally ill. So, when life insurance is needed, it’s likely not in force.

People often have a $15,000 death benefit as part of their group medical benefits. Employees are told they have life insurance through work, therefore they believe their mortgage will be paid off or their family taken care of. In reality, $15,000 won’t cover a lot of funerals.

Many employers and employees don’t think through the implications of group life insurance. If you make it to retirement and try to buy life insurance, your age or health issues may make it cost prohibitive or impossible to procure.

What should companies be doing instead? Why is this option better?
It makes more sense — and may cost less — to introduce a program where employees have individually-owned permanent life insurance policies, so something that has actual value. It’s often referred to as a supplemental insurance benefit.

Your organization can start a basic plan for everyone and then offer your employees the opportunity to enhance the benefits. These plans can cost an employer the equivalent of giving employees a nickel an hour raise. And by offering this type of program, you could be supplementing or replacing a plan that will not pay 99 percent of the time, with a plan that will pay 100 percent of the time.

Employees can cover family members — significant others, children, grandchildren — at their own expense, all on a guaranteed issue basis. That’s where you can’t be declined for any reason. Employees also can take the plan with them when they leave your employment and be billed at home with no change to cost or benefits.

What should employers keep in mind when designing these plans?
Any time you’re setting up a plan, make sure you have an experienced, independent agent. Independent agents have access to multiple programs and know which insurance company best fits your situation. You also want someone with an easy-to-digest presentation who can enroll your employees smoothly and efficiently without any pressure. The agent should provide strong service for you and your team, including keeping relationships going when employees leave.

There are a few types of life insurance to choose from. Permanent insurance is level for life in benefits and cost, while term life policies might be good for 20 years. Permanent plans have other benefits, like a cash surrender for emergencies or retirement needs. There also are policies where you can withdraw half of your death benefit, tax free, if diagnosed with a grave illness or confined to a nursing home. Also, ensure the plan is inexpensive. Some programs start as low as $1.78 a week.

What else would you like to share about life insurance?
It’s all about getting a plan that can actually be used. People aren’t well versed in life insurance. They don’t understand it and they don’t want to think about it. In fact, 75 percent of Americans don’t have personally-owned life insurance. They believe their employer has taken care of it, so they fall through the cracks.

Since employers offer employee benefits to attract and retain good people, it is a win-win to avoid the placebo with personally-owned protection.

Insights Business Insurance is brought to you by Zito Insurance Agency, Inc.

Don’t overlook the need for subcontractor agreements

It’s alarming how often subcontractor agreements are disregarded by companies that subcontract work to vendors. The biggest exposure tends to be for contractors who subcontract work regularly. However, manufacturers, building owners and any other company that utilizes vendors or suppliers can also have this exposure.

“The importance of risk transfer is frequently overlooked by many industries. It is surprising how often businesses — particularly in construction — do not utilize subcontractor agreements. We often hear that a company has used the same subcontractor for many years and trusts them. However, the right risk transfer mechanisms have not been put in writing,” says Nate Bell, CIC, commercial insurance specialist at Zito Insurance Agency, Inc.

“The need for risk transfer is starting to be recognized, but has not become universal.”

Smart Business spoke with Bell about tools like subcontractor agreements to transfer risk.

How do subcontractor agreements work?
Subcontractor agreements outline the responsibilities of each party, to ensure that if a claim were to arise, the responsible party is accountable. A subcontractor agreement provides protection to the company that hired the vendor or subcontractor by transferring the risk back to the party performing the work.

There isn’t necessarily a template or standard subcontractor agreement. They are often written by the business’s attorney. The agreement should include hold harmless and indemnification language. Many insurance companies require that specific insurance form numbers be incorporated as well.

When a business subcontracts work to a third party, it should complete a signed subcontractor agreement and obtain a certificate of insurance from the subcontractor. This certificate should reflect that the hiring company is an additional insured and needs to be retained and updated annually.

Why have both indemnity language and additional insured status?
Indemnification contract language outlines which entity or entities would be responsible to provide compensation for injury, loss or damage.

An additional insured is an endorsement added to an insurance policy. The endorsement ensures that the business contracting work coverage is on the subcontractor’s insurance policy. It’s a mechanism to transfer risk.

Do insurance companies require subcontractor agreements?
Insurance companies regularly consider the implementation of subcontractor agreements when underwriting a business. While a company may not accept or reject a business based on its use of the agreements, businesses that utilize subcontractor agreements consistently see more favorable pricing. The same holds true for businesses keeping track of subcontractor certificates of insurance.

Where do you see companies make mistakes with certificates of insurance?
There are typically two concerns with information provided on certificates of insurance. The first is if the limits shown meet or exceed the coverage requirements outlined in the subcontractor agreement. These limits should be determined based on the extent and scope of the work performed, industry and size/assets of the company, among other variables. Therefore, it’s a good idea to have both an attorney and insurance agent review the agreement.

The second concern is verification that the additional insured endorsement is correctly in place and the business is not solely listed as a certificate holder.

When should a company have these documents in place?
It is key that subcontractor agreements and certificates of insurance be completed and obtained in advance of work being started. Getting these documents in place upfront prevents the need to chase down documents after work has started. More importantly, it ensures that the mechanisms to transfer risk are in place before it is too late.

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