R&R Insurance Blog

Claims against employers are on the rise and business owners should explore employment liability if coverage is not already in place. Wrongful termination, discrimination and harassment claims filed against employers increased 23% between 2007 and 2008, and retaliation claims are up 30%.

Employment liability insurance is a product that continues to evolve as the economy changes. Within the last year, new plan designs for employment Liability insurance have included crisis management coverage, workplace violence coverage and network security.

For each Workers Compensation claim, an adjuster will open a file for the injured worker and set aside money specifically for the estimated cost of the claim.

Over the life of the file some money is spent and the remaining amount set aside is in "reserve". This reserve amount should represent the remaining cost of that claim.

Open Reserves
The dollars sitting in open reserves for your WC claims impact your Experience Modification. It is critical that these reserves be reviewed prior to the data being reported to the WC Rating Bureau.

If the actual cost of the claim will be less than the initial "estimated" cost, then the adjuster should lower the reserve. Lowering the reserve will help your Experience Modification.

When is the data reported?
Your WC carriers for the prior three years will report claim data to the WC Rating Bureau six months before your insurance renews. Open claim reserves should be verified prior to that date.

What is Equipment Breakdown?
Equipment Breakdown is Property coverage. It has a different title, but it is an extension to the Property form. In most Property forms you will find exclusions for losses due to steam boiler explosion, loss due to mechanical breakdown and loss due to electrical arcing (the latter is where I see the majority of claims). The intent of Equipment Breakdown is to fill those specific gaps (exclusions) for Property damage, business interruption, extra expense and consequential coverage.

Who has an Equipment Breakdown exposure?
Every insured has an exposure. If you use electricity, you have an exposure. A specific Property exclusion is "Loss due to electrical arcing." Without an Equipment Breakdown policy, if the power supply is lost because of a short, arcing, or a loose connection that causes the electrical main to disconnect or distribution of power to fail, there would be no coverage for the property damage, the interruption in your business, or the extra expense or consequential loss. If you had to temporarily relocate due to lack of power (which would affect your communication systems, heating, cooling, plumbing) there would be no coverage. Extra Expense on an Equipment Breakdown policy provides that coverage.

What Equipment Breakdown coverage is not is a maintenance policy. An example would be where rust and corrosion led to the demise of a gas fired heating blower. The unit had not been serviced in 10 years and thus no one knew that the unit was rusting away. Rust and corrosion are specifically excluded from coverage in the policy.

This question was posed by one of the LWMMI insured utility districts and the timing was perfect as the August 2009 issue of “The Municipality”, a publication of the League of Wisconsin Municipalities confirmed the response we provided. Here’s the response (slightly paraphrased) from “The Municipality”: Local governments are not subject to Occupational Safety and Health Administration (OSHA) regulations. But local governments are subject to state regulations which are at least as stringent as OSHA regulations. Although OSHA governs the private sector and federal agencies in Wisconsin, OSHA does not have jurisdiction over the state or local governments because the definition of “employer” under the OSHA Act of 1970 specifically excludes states and any political subdivision of a state. Instead, the State of Wisconsin has jurisdiction and sec. 101.055 of the Wisconsin Statutes requires that the Department of Commerce adopt, by administrative rule, standards to protect the safety and health of public employees. These standards must provide protection at least equal to that provided to private sector employees under OSHA standards.

Last week, I had a conversation with a business owner in Sheboygan about whether or not he should purchase the rental car insurance offered at the rental desk. Truly, the decision must take into consideration what is stated in your policy, and your agent should be able to answer that for you.

Most policies will cover physical damage to the rental car and liability coverage if you cause bodily injury and property damage to others. The two claims that are often NOT covered however are "Loss of Use" of the vehicle during the time of repair and "Diminution in Value" of the vehicle. When you think about "Diminution in Value," think if you pulled a CarFax report and it showed that 10K in repairs had been performed on the vehicle a few years back. Would you rather buy that vehicle or another without the damage although they look exactly the same? There is a dollar value associated with Diminution in Value that you could be on the responsible for if not covered by your policy. Loss of use is simply the loss of rental value to the rental business because the vehicle is in the shop getting fixed.

Next time, before you go on a business trip or vacation, be sure to determine what is covered and what it not. Ultimately, it's going to come down to your risk tolerance, but I still recommend that my clients take the insurance.

By the way, if you are told that you are covered for loss of use of diminution in value, I recommend getting it in writing.

Here are some top ten safety tips for rental cars:

• Don’t rent a vehicle larger than you can handle safely. If you are usually a subcompact driver, think twice before you rent a super-sized SUV or motorhome.
• Get acquainted with the controls. Look at the dashboard and steering column and locate lights, signals, horn, hazard flashers, windshield wipers and other essential controls. Make sure the controls are working correctly.
• Get the feel of the brakes before you need to use them.
• Check that the tires are inflated properly to prevent high speed crashes.
• Look in the trunk to see if there is a spare tire and a jack.
• If the vehicle has an on-board navigation system or emergency signal, make sure you know how it works.
• Ask for any special equipment such as a child seat, and make sure it is in good shape and functioning correctly.
• Figure out where you are going before you leave the car rental lot. Check the airport map and city map. Program the navigation system before you drive.
• For your own personal security, try not to look like a visitor in a rental car. Don’t leave maps where they can be seen from outside your car.
• Keep the vehicle windows up and the doors locked.

Prescription drugs are being misused and abused by a wide variety of people. According to SAMHSA, about 26 million Americans between the ages of 26 and 50 report they have used prescription drugs non-medically at some point in their life. Other age groups have lower lifetime incidents: 13 million who are age 50 or older, 9 million who are age 18 to 25, and 3 million who are 12 to 17 years of age.

Attached is a link to a Q&A with Michael Klein, Ph. D. about Combating Misuse and Abuse of Prescription Drugs - which I feel is relevant to the workplace as well. Having handled many workers compensation claims in a variety of jurisdictions including Kentucky and Wisconsin, drugs like Oxycontin and resulting addiction can undoubtedly impact a workers compensation claim in a negative way.

http://www.fda.gov/ForConsumers/ConsumerUpdates/ucm220112.htm

The Wisconsin State Supreme Court says a brake maker wasn't negligent in a machinist's death.

Walter Tatera, a former Hales Corners machine shop worker, died of cancer in 2004. His estate sued FMC Corp., a Milwaukee brake manufacturer, alleging disks the company sent to Tatera's shop contained asbestos and caused his cancer.

A Milwaukee judge found the company was not liable or negligent in Tatera's death. A state appeals court last year, however, ruled FMC could be sued for negligence.

The Supreme Court reversed that ruling in a 4-3 decision. The court says FMC's conduct didn't amount to affirmative negligence.

Jill Rakauski, an attorney for Tatera's estate, says she's disappointed and believes the estate should be allowed to make a claim.

Interstate Roofing has saved $1.3 million in premium since beginning their MOD management efforts with R&R Insurance.

“I can’t begin to explain what Jamie and R&R have done for us. In 2002 PLM had a mod factor of 1.15. We now boast a .69 mod. We have a fantastic safety program and a 45% reduction in premium. This reduction occurred during a huge company growth period.”
Grant Pozorski
Parking Lot Maintenance, Inc.

Wouldn't it be great to have some sort of system in place to stop workplace injuries, fatalities and equipment damage situations before they occurred? If your company created a near-miss (close call) reporting culture, it would move a long way toward achieving that goal.

There are several benefits to having a near-miss reporting culture in place, including these:

1. It enables companies to pro-actively resolve hazards before a tragic or costly incident occurs.
2. It engages the workforce (all workers at all levels) in solving problems.
3. It increases safety ownership and reinforces workers' self-esteem.
4. It exposes valuable information that otherwise might not be discussed.
5. It develops a positive and necessary attitude surrounding safety.

When it comes to creating a near-miss reporting culture, supervisors play a key role in education and awareness building efforts.

Make Reporting a Daily Event

Many employees are either reluctant to report near-misses, are unaware of the importance of doing so, or simply don't know the reporting process. So how do you encourage the reporting habit? Here's a good tip from John Brengosz, Loss Control Representative, from R&R Insurance Services, and a current manufacturing client:

We're a manufacturing plant working with fabricated metal. We have a pre-shift at the beginning of each shift to review the daily schedule and line assignments and ask if there were any near misses the day before. These are written on a dry erase board with the date and Production Line number: