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Are your employees driving safe?

There are many examples of unsafe driving occurring every single day.

An employee was making deliveries and at the same time was trying to find a new song on this cell phone. The driver did not see a pedestrian crossing at an upcoming rosswalk and struck the pedestrian.

A driving became enraged with the driver he was following and lightly, but intentionally and repeatedly, used his front bumper to tap the rear bumper of the other vehicle. Witnesses confirm the incident. The driver left the scene.

A driver suffering from sleep apnea dozed off, crossed the center line, and collided head on with an oncoming vehicle. The oncoming driver had numerous internal injuries and multiple fractured bones.

After fixing a flat tire, the driver tried to make up time by speeding. He lost control of the vehicle on a corner and crossed the center line striking another vehicle head-on.

You may be liable.

Employers may be held responsible for the harm or damages caused by their employees where the harm or damage was caused by the employee while acting in the course and scope of his or her employment. For example, the employer’s liability (also known as vicarious liability) may arise when its employee, while acting in the course and scope of his/her employment, is involved in a vehicle crash that injures another person.

Damages may also be awarded to an injured party when the employer has entrusted a company vehicle to a driver who is known or should have been known to be an unsafe driver. This is commonly referred to as negligent entrustment. In some states, punitive damages may also be awarded and may not be covered by insurance.

To help protect your business, consult qualified counsel to understand the exposures unique to your business and the laws applicable in your state.

There are some tools to help.

Driving Policy

Developing an effecting driving policy that is read and signed by all employees is a crucial element to your company’s successful implementation of a safe driving program. Make it known that the purpose of the policy is to ensure the safety of the employees and the communities in which they operate. The driving policies outlines the expectations for each driver and the repercussions for any violation of the policy. Some key elements may include: mobile device restrictions, MVR standards, personal use of company vehicles, etc.

Driver Monitoring

A properly implemented and compliant driver screening program may help protect your business from driving-related losses. A driver screening program may also help you determine whether drivers meet your company’s driving standards.

Consider enrolling your drivers in the iiX Driver Advisor Monitoring program. You are alerted when new activity is detected on their driving records. This service also orders the motor vehicle records which can help you evaluate the driving behavior of those employees who are operating your vehicles.

Safety Meetings

Creating a policy and monitoring drivers is not enough. You must keeping safe driving front of mind though regularly scheduled safety meetings. Each meeting should be well documented with each employee signing in when they attend.

 

While this information is for general information only and should not be used as legal advice, these tips may greatly help reduce the risk of accidents. If you would like addition material or access to videos, please email me at [email protected] and I will be happy to provide them.

Stay safe out there!

 

Like most folks who read this blog, I have extremely busy days. Yesterday, I got up at 5am - per usual -completed my morning routine, and launched out the door. The game plan was to complete an annual client review with a top client, review a proposal with the CFO of a large precision machining company, and then cold call until the day was over.

When I got home, I asked Anna if she would like fish or chicken for dinner. She said chicken and I carried on with what I was doing. Not more than 5 minutes later, I asked her again what she would like for dinner. She shook her head and I realized that I had done it again.

Forgetfulness, distraction, and living life without intention has taken hold of me and so many others and it is eating away out our lives without us even realizing it. This week, I was on the phone with one of my clients who pays my company over half a million dollars a year to insure his business. He was frustrated by not being able to find his phone. “Bill – you’re on the phone with me right now.”

These stories are harmless, but our addiction to distraction and lack of focus has become a real problem. The National Highway Traffic Safety Administration has said that every day over 67% of drivers are driving while using electronic devices. On average, since the introduction of cell phones, over 3000 lives per year are taken due to distracted driving.

At this level, I view the distracted driving problem as an epidemic and something we need to come together to stop. Individually, we need to commit to labeling the car a phone free zone and not use it while driving. Companies need to step up as well. Phones manufactured by Apple, Samsung, and Google all have the ability right now to sense when you are driving at a certain speed and they could trigger them to be inactive when you reach a certain speed.

Trust me, these devices manufacturers know the amount of death and destruction that is the result of someone using their devices, and the fact that they refuse to do anything pisses me off. These companies can literally flip a switch and save over 2000 lives per year and prevent over 200,000 injuries. Yet, they refuse to. They are too busy sitting on one of history’s largest piles of money ever.

Someone told me over the Thanksgiving holiday that this argument sounds like the argument for gun control. It’s not. The American society has a whole is addicted and we have the power to prevent the drug from being used while we do the most dangerous thing we do in our lives. Let’s compare it more to drinking and driving. You can’t prevent people from being alcoholics, but if you had a guaranteed way to prevent all alcoholics from driving drunk, would you do it?

On October 18th 2017 my fiancé Anna was in a major car accident that left her with a crushed right foot, broken sternum, a concussion, and scrapes and bruises all over her body. That afternoon Anna left a doctor’s appointment in Gastonia and was on her way to our apartment in Hickory when a vehicle traveling in the opposite direction as her attempted to cross in front of her at an intersection. The 1996 Toyota pickup failed to yield on their left hand turn and pulled directly out in front of Anna causing her to T-bone their truck at 45 miles per hour.

The police report stated that the driver of the other vehicle was distracted and placed 100% of the responsibility for the accident on that driver. In this case, the owner of the vehicle was in the passenger seat and his girlfriend was driving. Since auto insurance follows the vehicle not the driver, his insurance carrier is responsible for the property damage to Anna’s vehicle and her bodily injury claims – up to the limits that he had purchased, which in his case was $50,000 for property damage and $100,000 for Bodily Injury per accident.

Anna’s car – a 2008 Toyota Prius – was totaled and only valued at $6800. Since this is well under their property damage auto liability limit of $50,000, we had no issued getting this settled. The way this played out was pretty straight forward. Anna’s auto carrier is Erie Insurance. She was issued a check for $5000 immediately from Erie, and was told that she would get the balance of $1800 minus her deductible after she released the vehicle to the salvage yard. Even though she was not at fault, Erie was required to withhold the deductible amount until they subrogated against the at fault carrier (State Farm) to get reimbursed for the total amount. At that point Anna would get her remaining $500.

 

The major issue that we are dealing with is the bodily injury side of this claim. The bodily injury limit includes the cost of any medical procedures, treatments, medications, or physical therapy stemming from the accident, as well as any lost wages, and compensation for pain and suffering. With Anna being out of work for nearly 3 months and major medical bills piling up, she was beginning to realize that the at fault driver’s limit of $100,000 for bodily injury liability was not going to even come close to what she needed to be made whole. When this is the case, her Uninsured Motorist (UM) and Underinsured Motorist (UIM) limits come into play to offer additional protection.

Occasionally, I hear a client or prospect share that they have heard financial “experts” say that permanent life insurance coverage is a waste of money and they just need to buy term insurance. We know that for many clients, permanent life insurance provides flexible, lifetime coverage and is often a good option to help protect a family or business. However, in a situation where the client’s needs are short-term or resources are truly limited, a level term product can provide an affordable solution that is a good first step towards helping address a client’s problems

Term Products Overview

Term life insurance provides protection for a limited period, or the term of the policy. The death benefit is paid if the insured dies within that specific term period. If the insured survives the term, the policy ends and no benefits are paid. Many term policies have a conversion privilege, which allows an exchange to a permanent policy without underwriting.

Three Primary Types of Term Insurance

Yearly Renewable Term (YRT) has premiums that begin low and increase each year. The policy renews each time a premium is received until the policy ends.

Level Term has a premium guaranteed to remain level for a stated number of years. At the end of the level term period, many plans can continue as a yearly renewable term at a substantially higher, increasing premium.

Return of Premium (ROP) has a level premium with an option to have some (or possibly all) of the premium returned. When the term period ends, 100% of the premium is returned and the policy expires. If the policy is surrendered before the term ends, only a portion of the premiums paid, if any, will be returned. These plans are more expense than other types of term life insurance.

Things to Consider

  • Net Cost – the net cost of term insurance is equal to the total premiums paid for coverage. Since premiums increase with the age of the insured, a term product may be the most expense form of insurance in the end. It is a very real possibility that the insured could end up with a continuing need for life insurance, but be unable to afford the higher cost.
  • No Flexibility – There is no flexibility in death benefit or premium. If the premium is not paid, the policy will lapse. Coverage cannot be increased or decreased.
  • Conversion Privilege – A product that offers a conversion privilege provides the policy owner with an option to keep coverage beyond the normal term period by exchanging the policy to permanent insurance. There is usually a limited timeframe to convert the policy.

Remember, all products are unique and will vary depending on the issuing company. The key is to understand your needs and the products tradeoffs, so you can have a better understanding. If you are the Southeast I am here in and can help you understand each product type through a policy audit.

Insure the machine and the money

For those of you who are in a dealership trade or manufacturing trade, take a minute think about each of your locations as an ATM machine that spits out a certain amount of dollars every single day. These dollars are used to pay for expenses like employee salaries, rent or mortgage payments, accounts payable, advertising, and anything that is not spent is profit that you get to keep in your pocket.

Most insurance policies will rebuild your ATM machine if it is damaged or if it burns down, but many owners fail to think about insuring the dollars that get pumped out of the machine each day. Without that steady stream of income, where will the money come from to pay the employee’s salaries while you are rebuilding?

Business income coverage is supremely important to businesses like grocery stores, auto dealerships, machine shops, and building material dealers – types of businesses that have a heavy revenue burden at the business location. In contrast, specialized contractors like plumbers, HVAC, and electrical contractors for example don’t need this coverage since they drive most of their income from jobsite’s away from the insured building. If a machine shop burns down, they are effectively out of business. But if an office of a plumbing contractor burns down, they can operate out of their truck until they can find a new location to set up.

There are some key things to think about when evaluating the business income needs of your business.

First, what limit do you need?

It’s important to take a look at your P&L and Balance Sheet when making this decision. If all of your revenue is brought in through a retail or manufacturing location then you should consider unlimited coverage or a limit of “actual loss sustained,” to insure you’re made whole after a loss.

Secondly, what is your deductible or coinsurance cost?

Each carrier treats their business income policy a little bit different. By reading the fine print, you will find that some carriers add endorsements to this policy that states you may be liable for a certain portion of the claim via a deductible or coinsurance.

Third, if you have multiple buildings or locations, does the policy blanket the coverage?

Blanketing means that each building is covered under a single limit. Blanketing can be by location, with all buildings at one address under one blanket, or it can have a blanket on the entire policy with all locations included. In some instances, you will find very small limits on buildings that should have a bulk of the limit applied.

In summary, many generic policies will have a small business income limit tied to their property coverages, but it’s certainly a smart move to ask for more. The cost for blanket actual loss coverage is a fraction of the total property insurance cost and its benefits far outweigh the investment. In my opinion, insure the money machine and the money it produces.

 

I recently partnered with a Machine Shop in Marion North Carolina that specialized in machining parts under 10 inches in diameter and in a tight tolerance grouping. After completing a policy audit, my team and I found that their new agent had changed the work comp code they were classifying themselves in when he signed up their account last year.

I don’t generally point fingers, but this was either a devious act to help get the total insurance package cost down to make the option look more attractive, or it was a plain ignorance to which code he should have used for the scope of work they were doing.

Moving forward, let’s use the following guidelines to assist in selecting the appropriate workers compensation class codes for classifying a machine shop risk. Keep in mind that scopes should always be consulted.

•Start with the assumption that the machine shop risk belongs in Machine Shop NOC code 3632.

•If the business does a variety of types of machining, manufacturing, repair or job shop work, the appropriate code is 3632.

•Code 3632 anticipates assembly.

•Automotive machine shops are classified to class code 3632.

•Scopes provides a list of work comp class codes that are somewhat related in nature to codes 3632 and 3629, but are not assigned to those codes.

•NCCI has identified Code 3629 as a frequently misclassified code. To clarify its use, the term "precision" has been removed from the Scopes Manual description and references to tolerance requirements have also been removed. The new description is "Machined Parts Mfg. NOC." Under new Scope guidelines, code 3629 only applies to risks that machine single-piece parts for others that meet all of the following: ◦Business operations or parts manufactured are not described by another code

◦No assembly of single-piece machined parts. (Assembly operations are defined as including, but not limited to: welding, fastening, inserting, pressing, and the joining of springs, ball bearings, gears, or other parts or components to any other part or component.)

◦No casting, forging, stamping, forming, or fabrication

 

•A risk can't have both the machined parts code 3629 and the general machine code 3632 on the same workers compensation policy for the same location unless the operations are actually separate and distinct businesses that meet the Basic WC Manual requirements for a second basic class code.

•A mass production machine shop that manufactures single-piece parts and that also does job shop work would probably be classified into the general machine shop code 3632 due to the job shop work, unless the job shop work is extremely limited.

•The name of the business should not be used to determine the correct work comp code that applies to the business.

•The machined parts code 3629 and the general machine shop code 3632 are both NOC codes, therefore neither class code is applicable if there is another more specific class code that applies. For example, a mass production machine shop that meets the requirements of code 3145, Screw Mfg, would apply code 3145, even though the risk also meets the requirements for code 3629.

•If the business makes a mass production product, check Scopes to determine if there is a specific code for it. An alpha type search (i.e. metal, gears, etc) in Scopes may lead to a specific class code. For example, pump manufacturing goes into code 3612, gear manufacturing into code 3635, and screw manufacturing into code 3145.

•Sometimes the type of machines used to make the product will give a hint of the correct work comp classification. For example, if the risk uses a majority of screw machines to make the product, code 3145 may be the appropriate work comp class code, even if screws are not the actual product.

•Code 3113 Tool Mfg.-Not Drop or Machine Forged-NOC is only applicable when the risk makes tools and dies for others. Code 3113 is not applicable to insured's that make tools, dies, or machine fixtures for use by their own business, even if they are made in a separate department.

•The same class code is normally used for both manufacturing and repair. For example, use code 3635 for both gear manufacturing and also gear repair. However, if a significant amount of other job shop work is done beside the gear work, then code 3632 would apply instead of code 3635.

•Quality control employees should be classified into the governing machine shop class code because quality control employees do not meet the Basic WC Manual definition of clerical employees.

•Driver code 7380 applies to employees who pick up or deliver items to customers. If those employees also do machine shop work, their payroll would be put into the highest rated classification of the jobs they do, unless separate payroll records are kept.

•When work is done at the customer's location, apply code 3724 to that work, including driving to and from the customer's location.

 

As a machine shop owner, it is extremely important to understand the role of coinsurance in your current commercial property insurance contract. Not know what your coverage requirements could really set you back in the event of a major claim.

Let's take a look at what coinsurance could mean for you. I'll start with the definition and formula and will move into a few examples.

Property Coinsurance Formula, If Carried Insurance is Less Than the Required Insurance

Amount of Recovery = Value of Loss x Amount of Carried Insurance/Amount of Required Insurance – Deductible

Property Coinsurance Formula, If Carried Insurance is Greater Than or Equal to the Required Insurance

Amount of Recovery = Value of – Deductible

Example # 1

Aaron Peacock’s Machine Corp of Boone North Carolina partially insures a property worth $700,000 for $495,000. The policy requires 100% of its value to be insured (aka 100% coinsurance) for full coverage, and has a $5000 deductible. Since the amount of insurance the company should have carried is 1.0 X $700,000 = $700,000 we will use that number in the denominator of our equation. If Aaron Peacock’s Machine Corp suffers a $100,000 loss the formula would work like this to figure out how much the company will receive from the insurance company:

$100,000 x $495,000/$700,000 - $5000 = $65,714.29

Example # 2

Peacock Tool Company in Hickory North Carolina insures their property for $650,000 and their building is valued by ISO at $700,000. They have a 90% coininsurance clause in their contract which means they need to be insured to at least to 90% of the replacement cost of $700,000. Here is the formula if Peacock Tool Company has the same $100,000 claim and they also have a $5000 deductible:

$100,000 - $5000 = $95,000

Notice that we did not multiply the coinsurance penalty to the claim amount. This is because $650,000 satisfied the minimum limit required which in this case is $630,000 ($700,000 [replacement cost] x .9 [90% coinsurance requirement from contract])

It’s important to know that the building value is determined at the time of a claim by a 3rd party organization.

Testimonials

Aaron is fantastic at explaining important coverages. I feel well protected and can sleep much better at night knowing what I have insured.

David Lytle

Universal Machine, Marion NC

About Me

Feel free to reach out. My email is [email protected] or call 828-434-3215. My office is in Boone NC and I service the North Carolina counties of Watauga, Wilkes, Avery, Ashe, Alleghany, Mitchell, McDowell, Caldwell, Catawba, and Burke. I can sell life insurance nationwide. Please contact me with any questions.

Small business owners across the US today have a tornado of expenses that seem to pile up and expand at an ever increasing rate. One of those is expenses that seem to be the most uncontrollable at times is the commercial insurance package and workers compensation.

Often times I hear “but Aaron, its work comp all the same? Don’t I pay a flat rate per $100 of payroll and I am protected against an employee injury?”

Yes and Yes. If you are a responsible employer and you have adequate coverage on your employees, you will have insurance for employee medical expenses for work related injury, employee lost wages due to work related injury, and protection against your liability as the employer for any negligence that could have contributed to the injury (up to a set limit as described in part B of your work comp policy).

I can hear you thinking: “if that’s your answer, then how can I save money on my work comp?”

Let’s dig in. Here are the big 5

  1. Safety and the Experience Modification Factor
  2. Claim Management
  3. Modified Duty Return to Work
  4. Self-Insurance & Deductibles
  5. Drug Free Workplace Credits

I recently watched an awesome video about the metrics you can use to track work comp success rates. Since I focus on business that pay under $2M in total work comp premium, I will leave out some metrics. The metrics I recommend are:

  1. Sales (Gross Revenue) to pay for a claim
  2. Cost Per Full Time Employee
  3. Lag Time
  4. Return to Work Ratio
  5. Number of employees out of work right now

In future articles I will dig into each area of savings and each metric. Be sure to check back soon for more info.

Despite the cheesy title of this article, the silica exclusion in your general liability, work comp, and umbrella polices are no something to gloss over. Take this nation-wide law firm that specializes in silicosis liablity claims:

http://www.silicosis-lawfirm.com/

Or this one that specializes in silicosis related work comp claims:

http://www.silicosis.com/

The amazing thing is that these attorneys are winning. Check this $7,000,000+ claim that was awarded in Mississippi: https://www.aboutlawsuits.com/silicosis-lawsuit-verdict-for-sandblaster-6938/

Here is a $30 Million Dollar Settlement for a miner:

http://www.reuters.com/article/us-safrica-silicosis-settlement-idUSKCN0W61L7

Here is a sheet of the top types of business that are exposed to the claims. Some big ones are countertop installers, quarry operators, masonry contractors, concrete workers, machine shops, special trade contractors, and any company who provides services to dwellings and other buildings. Some other lesser known types of business that are at risk are auto service, auto dealers, and boat dealers.

Let’s break down how profitable this niche is for them. The have built a specialty website for the injury, they have invested hundreds of thousands if not millions in advertising dollars in the search terms “silica”, “silica dust”, “Workers Compensation Silica Dust”, “Silica Dust Homeowner inhalation”, etc check it out…it’s all public information. Just google each term and tell me who shows up.

I already know what you’re thinking: But Aaron, I’m just a small business owner in a mountain town just outside of Boone North Carolina…there is no way I’ll ever get a claim like that.

I’ll tell you this, the world is filled with stories of people saying that it would never happen to them. Just know that it does. In my time servicing Western North Carolina, I’ve seen several multi-million dollar claims and I promise you that I have not seen the last.

If you would like to see what a silica dust exclusion looks like and what you can do about it, just shoot me an email. My contact info is below.

Aaron Peacock    828-434-3215

[email protected]

Cash Value life insurance is a type of life insurance policy that pays a death benefit when an insured individual dies, and it builds value during the life of the policy holder.

Permanent life insurance can be boiled down to a simple definition: its life insurance with a savings component. It allows the owner to have life insurance inforce for as long as they choose and allows them to build a substantial asset that they can add to their personal financial statement.

Permanent life insurance is absolutely not for everyone. It’s certainly not for those who are low income or overburdened with debt obligations that they are struggling to pay. The cost of permanent life insurance is substantially higher than term life insurance and most professional financial advisors would steer you away from this product if you total household income is less than $50,000 per year.

Related Articles:

Cash Value Life Insurance 101: Should I Consider Permanent Life?

What Does Cash Surrender Value Mean?

Is A Last Survivor Insurance Policy Right For You?

 

Aaron Peacock

Aaron Peacock

Hi, I'm Aaron and I'm a marketing representative for Federated Mutual Insurance Company - a Ward's Top 50 and an A.M. BEST A+ Superior rated insurance carrier. After my wife was severely injured in an accident involving a distracted driver, I've found one of my passions in life is to help educate people about the Danger of Distracted Driving and have started speaking to businesses in Western North Carolina on implementing the Federated Insurance DriveS.A.F.E. program. Click here to read more...

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