R&R Insurance Blog

We have covered a lot of the basics on how to evaluate your business income and extra expense exposure.

The next question is what type of coverage do I choose. Some of the options are:

• Full year or partial year coverage
• How long do you anticipate being down in the worst case scenario?
• Maximum Period of Indemnity
• The coinsurance requirements are removed and replaced with coverage for the actual loss sustained during the first 120 days of loss, not to exceed the stated limit of liability.
• Monthly Limit of Insurance
• A limit of insurance is selected as well as the time-period. The most a carrier would pay is either 1/3rd, 1/4th or 1/6th of the limit selected in each month.
• Extra Expense
• What additional monies over and above your lost income would need to be spent to get you up and running faster?

Additional options that are above and beyond the basic limit:

• Extended Period of Indemnity – available with the full / partial year coverage.
• After your business re-opens, how long would it take to get back up to pre-loss sales? This is your extended period of indemnity. Insurance can cover you for your continued loss sales up to a period of time
• This coverage is stated is a period of time. IE-30 days, 60 days, 365 days or longer.
• The maximum payout would be the business income limit purchased.
• Agreed Amount
• The carrier agrees that values are accurate and will not apply a coinsurance penalty to the claim
• Blanket Coverage
• This is helpful when there are multiple locations and it's hard to determine the impact to all locations when a loss occurs at one location
• Ordinary Payroll Limitation or Exclusion
• Do you want to get paid if you have no income coming in?
• Do you have critical workers that you do not want to lose?
• If the answer is yes, then include this coverage and a payroll amount for a period of time
• Common deductions that can be taken are power, heat, refrigeration
• Selected if you are a high user of energy and the cost will not continue if you have a loss.

Items to consider when completing a business income worksheet include
 Identify the longest possible interruption. “Worst Case”
 Consider peak seasons.
 Consider employment market conditions and training of new employees or loss of key employees.
 Identify and analyze other situations that could affect repairs & the restoration of a business.

Finally, evaluate the Business Income from Dependent Properties.

What is a Dependent Property? This will be covered in the next post.

A detailed, well thought out business continuation/contingency plan should be able to help a company make the necessary evaluation.

Where do I have this information?
This information is contained in the working knowledge of your business. It may already be part of other business plan documentation.

The basics are:

• Internal to company (other production lines/sister plants)
• What company resources do you have at other locations?
• Can work be shifted?
• Can the other locations pick up the work?
• Will this lead to extra costs?
• Redundant raw materials, equipment, production lines
• Are there substitutes available?
• Can the work be shifted?
• Is the equipment easy to obtain?
• Agreements with other companies / competitors / vendors
• Will they be willing to help you out?
• Are these agreements in writing?
• Have these plans been tested?
• Is it feasible?
• Do these companies / competitors / vendors have the capacity to help you out? And more importantly, would they?

A written plan should be in place and should include:

• Specific procedures
• Telephone numbers of key sources and employees
• Key decision makers
• Timetables and action plans
• Provisions for testing and implementation

The Contingency Plan should also address dependent properties.

When establishing values, the insured should not overlook cost to operate contingency plans.

There are a number of factors that could reduce or increase your business down time.

Lice in schools is an issue every fall. Read what experts say about prevention and solving the lice problem. This article from Chicago Tribune on October 12, 2011, lists some solutions.

In adition to treating head lice and eggs on a child's hair and scalp, parents should treat objects that may harbor the small parasitic bugs. The Illinois Department of Public Health recommends:

• Exposing lice and nits to temperatures above 125 degrees Fahrenheit for 10 minutes is lethal. Most personal articles of clothing and bedding can be disinfested by machine washing in hot water or machine drying for at least 20 minutes using the hot cycle. Be sure to allow time between loads for water to reheat to the proper temperature.

• Place nonwashable personal articles of clothing or bedding in the dryer on high heat for at least 20 minutes, dry clean, or seal nonwashable fabrics in a plastic bag for a minimum of 10 days.

• Place combs and brushes in a pan of water and heat on a stove to about 150 degrees Fahrenheit for 10 minutes. If heating may damage combs or brushes, soak them for one hour in a phenol solution, such as Lysol. To prevent the spread of head lice, do not share combs, brushes, hats, coats, towels or other articles that come in contact with the head, neck and shoulders.

• Thoroughly vacuum or clean car seats, bus seats, and individual infant and car seats according to manufacturer's directions.

• Fumigating rooms and using insecticidal sprays on furniture and carpets are not recommended to kill head lice; thorough vacuuming of houses and rooms inhabited by infested persons is sufficient

1. 32 successful years!. R&R began in 1976 with a mission to provide the best coverage and pricing available for our clients. We're still here!
2. We have markets! We have access to a huge volume of standard markets, specialty programs, and non-admitted carriers.
3. We are an independent insurance broker with a single owner! We have freedom to place your coverage with the program that best serves your needs. We work for you!
4. We are staffed with seasoned specialists! We have invested in experienced professionals who have underwritten the exposures presented and understand the products available in the marketplace.
5. Carriers seek our business! We are routinely approached by insurance companies offering new products and enhancements for our customer base.
6. We can negotiate specific coverage and pricing on behalf of our clients when necessary.
7. We can assist you in the application process, coverage interpretations, and risk management education.
8. We offer a full line of insurance products including person, business, management, specialty, excess, life, health, and employee benefit coverages to round out your insurance portfolio.
9. We have grown to five locations in Wisconsin, making access to our services local and efficient for all of our customers.
10. We have established a stable relationship with thousands of customers, including over 100 law firm with a retention of over 98%. We must be doing something right!

This information represents a joint effort by NETS, NHTSA and OSHA to reduce motor vehicle-related deaths and injuries in the nation's workforce.

Every 12 minutes someone dies in a motor vehicle crash, every 10 seconds an injury occurs and every 5 seconds a crash occurs. Many of these incidents occur during the workday or during the commute to and from work. Employers bear the cost for injuries that occur both on and off the job. Whether you manage a fleet of vehicles, oversee a mobile sales force or simply employ commuters, by implementing a driver safety program in the workplace you can greatly reduce the risks faced by your employees and their families while protecting your company's bottom line.

Motor vehicle crashes are a leading cause of death and injury for all ages. Crashes on and off the job have far-reaching financial and psychological effects on employees, their coworkers and families, and their employers.

You need a driver safety program:
To save lives and to reduce the risk of life-altering injuries within your workforce.
To protect your organization's human and financial resources.
To guard against potential company and personal liabilities associated witd crashes involving employees driving on company business.
Your program should work to keep the driver and those with whom he/she shares the road safe. And, if necessary, the program must work to change driver attitudes, improve behavior, and increase skills to build a “be safe” culture. By instructing your employees in basic safe driving practices and then rewarding safety-conscious behavior, you can help your employees and their families avoid tragedy.

Employees are an employer's most valuable assets. Workplace driver safety programs not only make good business sense but also are a good employee relations tool, demonstrating that employers care about their employees.

This booklet outlines ten steps for building a driver safety program in your workplace. These steps will be useful to any organization regardless of size of the organization, type of traffic encountered, number of vehicles involved, or whether employees drive company or personal vehicles for work purposes. Also included are real-life examples of successful safety programs, key traffic safety issues to address in the workplace, instructions for calculating your organiza-tion's loss from motor vehicle crashes, and a list of resources to help you fine-tune your program.

Promoting Safe Driving Practices Helps Your Bottom Line

Motor vehicle crashes cost employers $60 billion annually in medical care, legal expenses, property damage, and lost productivity. They drive up the cost of benefits such as workers' compensation, Social Security, and private health and disability insurance. In addition, they increase the company overhead involved in administering these programs.

The average crash costs an employer $16,500. When a worker has an on-the-job crash that results in an injury, the cost to their employer is $74,000. Costs can exceed $500,000 when a fatality is involved. Off-the-job crashes are costly to employers as well.1

The real tragedy is that these crashes are largely preventable. Recognizing the opportunity that employers have to save lives, a growing number of employers have established traffic safety programs in their companies. No organization can afford to ignore a major problem that has such a serious impact on both their personnel and the company budget.

Calculate Your Costs for Motor Vehicle Crashes

To understand the impact of motor vehicle crashes on your organization, use the Costs of Traffic Crashes to Employers Worksheet, found at the end of this booklet, to calculate the cost of your crashes. You may want to initially select one recent crash to illustrate the magnitude and complexity of such losses. Once you master the worksheet for one crash, you can then apply it to all the crashes experienced in a chosen time frame (e.g., annually) within your organization to characterize your crash loss profile.

Once you know the costs associated with motor vehicle crash-es you will realize that the costs associated with implementing a driver safety program are minimal compared to the costs of crashes to your organization. Examples abound of the positive return-on-investment (ROI) realized by companies – small, medium, and large – that have implemented well-designed safe-ty programs for the benefit of their employees. In fact, the Liberty Mutual Insurance Company reported in 2001 that, based on its Executive Survey of Workplace Safety, 61 percent of surveyed business executives believe their companies receive an ROI of $3.00 or more for every $1.00 they spent on improving workplace safety.2

Depending on the size of your organization, you may have access to all of the data that you need. Or you may need to work with your human resource manager, safety manager, workers' compensation representative, accountants, and med-ical and motor vehicle insurance representatives to obtain the numbers you'll need.

Costs of Motor Vehicle Crashes to Employers Worksheet
Use the worksheet found at the end of this booklet to estimate the cost of a motor vehicle crash to your organization. The costs included on the worksheet will be estimates based upon the records, receipts and recall of those involved with the crash. It may be helpful to consult copies of accident reports, police reports, damage receipts, insurance claim records and payroll records. It is often very difficult to identify all costs associated with these crashes, so use the best information you have available. If your company incurred expenses not listed on the worksheet, be sure to include them.

This document is not a standard or regulation, and it creates no new legal obligations. Likewise, it cannot and does not diminish any obligations established by Federal or state statute, rule, or standard. The document is advisory in nature, informational in content, and is intended to assist employers in providing a safe and healthful workplace. The Occupational Safety and Health Act requires employers to comply with hazard-specific safety and health standards. In addition, pursuant to Section 5(a)(1), the General Duty Clause of the Act, employers must provide their employees with a workplace free from recognized hazards likely to cause death or serious physical harm. Employers can be cited for violating the General Duty Clause if there is a recognized hazard and they do not take reasonable steps to prevent or abate the hazard.

Few people have more estate planning issues to deal with than the family business owner. The business may be the most valuable asset in the owner's estate. Yet, two out of three family owned businesses don't survive the first generation due to poor planning.

Following are three concerns all small business owners should address as that plan their estates.

Who will take over the business if you die?

Owners often fail to develop a management succession plan. It is vital to the survival of the business that successor management, in the family or otherwise, be ready to take over the reins.

Who should inherit your business?

This may not be an asset you should split equally among your children. For those active in the business, inheriting the stock may be critical to their future motivation. To those not involved in the business, the stock may not seem as valuable.

Perhaps you entire family feels entitled to equal shares in the business. Resolve this issue now to avoid discord and possible distaster later.

How will the IRS value your company?

Because family owned businesses are not publicly traded, it's usually impossible to know the real value of the business. The final value placed on the business for estate purposes is often determined only after a long and tidious battle with the IRS. It is critical that the owners plan ahead and make sure there is enough liquidity in their estates to pay estate taxes and provide support for their heirs.

If you think wills are only for the rich, you're wrong. A will is an essential part of any estate plan. It is the primary document for transferring your wealth upon your death. If you die intestate (without a will), state law controls the disposition of your property. Without a will, settling most estates is more troublesome - and more costly.

We can't cover all the critical elements of an effective will but there are three major provisions your will should include:

Guardian for your children. The will should name a guardian for your minor children in case both you and your spouse die. Selecting a guardian to care for your children deserves a lot of thought. Name someone whose ideas on raising children are similar to your. Also, be sure the person you select is willing to accept the responsibility.

Personal Property Memorandum. The will should reference your personal property memorandum. Wisconsin statutes permit you to detail the distributuion of personal property to your beneficiaries in accordance with intentions described in your personal property memorandum. The memorandum enables you to change the disposition of items of personal property without revising your will.

Creation of trusts. All a will can do is direct the disposition of your estate. To accomplish longer term goals, such as funding a child's education or providing for an elderly parent, you must include instructions for the creation of trusts. Throughout this article, we will show how trusts can be used to achieve various objectives.

One importand aspect to consider in any trust, however, is selecting your trustee. A good trustee shares many of the characteristics we discuss in the next section Keys To Selecting A Personal Representative.

Naming a Personal Representative. You personal representative has several responsibilities, including:

• Marshalling the assets and distributing the estate assets to your beneficiaries.
• Making certain tax decisions.
• Paying any debts or expenses of your estate.
• Ensuring that all life insurance and retirement plan benefits are received.
• Filing the necessary tax returns and paying the appropriate federal and state taxes.

Estate planning is an easy thing to put off. Maybe you think it's too early; maybe you think your estate is too small. Here are six good reasons why you should plan your estate now:

With a Plan:

• You decide who receives a share of your assets.
• You decide how ans when your beneficiaries will receive their inheritance.
• You decide who will manage your estate (executor, trustee, etc.)
• You can reduce state taxes and administrative expenses.
• You select a guardian for your child.
• You can provide for the orderly continuance or sale of a family business.

Without a Plan:

• State laws determine who inherits your assets - they could pass to an estranged relative.
• The terms and timing are set by law. Your children could be left unfettered control of a sizeable estate.
• The court appoints administrators whose ideas may not be compatible with your own.
• Costs are usually greater, due to required administrative expenses and unnecessary taxes.
• The court appoints a guardian for your child.
• Financial loss and family hardships may result from an untimely forced sale.

A powerful tool to help you control your destiny is the buy-sell agreement. This is a contractual agreement between shareholders and their corporation or between a shareholder and the other shareholders of the corporation. (Note: Partners also can enter into buy/sell agreements.) The agreement control what happens to the company stock in the event of a "triggering" event, such as the death of the shareholder. For example, the agreement might provide that, at the death of the shareholder, the stock is bought back by the corporation. As an alternative, the agreement might provide that the other shareholders buy the decedent's stock.

Benefits of a Buy-Sell Agreement:

• It provides a ready market for the shares in the event the owner's estate wants to sell the stock after the owner's death.
• It sets a price for the shares. In the right circumstances, it also fixes the value for estate tax purposes.
• It provies for a stable continuance of the business by avoiding unnecessary desagreements caused by unwanted new shareholders.

A well-drafted buy/sell agreement can solve several estate planning problems for the closely held business owner.