R&R Insurance Blog

On Sunday, March 21st, with a vote of 219 to 212, the U.S. House of Representatives passed HR 3590, the health care reform bill that was passed by the U.S. Senate on December 24th, 2009. President Obama signed the bill into law on Tuesday, March 23rd. On March 24th, the President also signed and Executive Order that restricts funding for abortions in the health care bill.

The House also passed (220 to 211) a "Reconciliation Bill" (HR 4872) on March 21st with “fixes’ or changes to the original Senate Bill. After debate which was limited to 20 hours, the Senate passed the Reconciliation Bill by a vote of 56 to 43. However, the Bill then had to go back to the House for another vote as the Senate Parliamentarian had found two minor provisions that violated Congressional Budget rules which were removed from the bill. The final Reconciliation Bill was approved by a House vote of 220 to 207. The President signed this final piece of legislation on Tuesday, March 30th.

Needless to say, it has been difficult enough to keep track of the legislative process and much more difficult to actually know and understand what it contains and means. We know that there are many more questions than there are answers at this point. One simple and common question that we have received from many of you is: "So what happens next?" In an effort to help answer that question, we have made two documents available to you. One is a simplified timeline of the Senate Bill that describes the major milestones that will impact you as an individual and as an employer. The other document is a detailed timeline that also encompasses facets of the Reconciliation “fixes” to the Senate Bill with, of course, much more detail on the Senate Bill.

The new health insurance laws are both comprehensive and complex. There will be much more information to follow in the coming weeks and months that will come from interpretation of this massive legislation. We anticipate much more confusion to ensue as both the Reform Bill and the Reconciliation Bill contain numerous contradictions that need to be dealt with. Also, lobbyists for the insurance industry, labor unions, hospitals and medical professionals, the pharmaceutical industry, and other special interest groups have turned their attention and focus to influence the interpretations and the writing of the Federal "governing rules" which will dictate insurance coverage, requirements for employers and the insurance exchanges created under the law.

Bottom line...we know it will be difficult to filter out the confusion which will come from many directions but we will do our best. We also know that underlying medical costs will continue to increase, compounded by new added-tax costs. That coupled with a slow economic recovery means that your business has never been more challenged. Contact any one of our R&R Benefits knowledge brokers to understand more about how this affects you and how we can be of assistance.

Watch for announcements regarding upcoming seminars/webinars on health reform updates. Also, stay on top of the new health reform laws and what they mean to you by visiting our dedicated web page: www.myknowledgebroker.com/beinformed. There you will find all of the important pieces of legislation, summary documents, news and other articles for you to view or download.

On June 29, 2009, the Wisconsin Budget Bill was signed by Governor James Doyle. Included in that bill were a number of significant changes to Wisconsin Motor Vehicle Insurance Law. Despite insurance industry attempts to strike them from the budget, all insurers licensed to do business in Wisconsin are required by law to implement these mandates. The effect on individual policies will vary based upon your current coverages and limits. The mandated changes may result in a higher renewal premium for your policy due to increased or additional coverages that may need to be added. Policies that renew on or after 11/01/2009 are subject to the following changes:

Liability Minimums

The law requires the minimum limit for Bodily Injury Liability to be $50,000 for each person and $100,000 for each occurrence. The minimum limit for Property Damage Liability is $15,000 for each occurrence.

Medical Payments Coverage

The minimum limit for Medical Payments coverage has been increased from $1,000 per person to $10,000 per person. If your policy limit is less than the new minimum limit, it will be increased to $10,000. If your policy limit is greater than the new minimum limit, it will remain unchanged. In addition, the new law allows stacking (current coverage limit multiplied by the number of vehicles in your household) for up to three autos on a policy. Medical Payments remains an optional coverage.

Uninsured Motorist (UM) Coverage

Previously, UM was a required coverage and remains so under the new laws. The minimum limits for UM coverage have been increased from $25,000 per person and $50,000 per accident to $100,000 per person and $300,000 per accident. If your policy limits are less than the new minimum limits they will be increased to the new minimum limits. If your policy limits were greater than the new minimum limits, they will remain unchanged. The definition of an uninsured motor vehicle has been revised to allow UM coverage when there has been no physical contact between vehicles but can be substantiated by an independent third party witness. The provisions of the new law no longer allow UM limits to be reduced by sums paid by another applicable coverage. In addition, the new law allows the UM limits to be stacked for up to three vehicles on a policy.

Underinsured Motorist (UIM) Coverage

Previously, UIM coverage was an elective coverage. UIM coverage is now required on all auto policies issued in Wisconsin. The minimum limits for UIM coverage have been set at $100,000 per person and $300,000 per accident via the provisions of the new laws. If you previously did not have UIM coverage on your policy, it will be added to your policy at the new minimum limits. If you previously had UIM coverage with a limit greater than the new minimum limits, your limits will remain unchanged. The definition of an underinsured motor vehicle has been revised to allow UIM coverage to apply when the limits under the Bodily Injury Liability policy are less than the amount required to completely compensate the insured for his or her damages. The provisions of the new law no longer allow UIM limits to be reduced by sums paid by another applicable coverage. In addition, the new law allows the UIM limits to be stacked for up to three vehicles on a policy.

Personal Umbrella Coverage

Personal Umbrellas will now automatically include Uninsured Motorist and Underinsured Motorist coverage unless your insurance carrier receives a signed rejection form from you. Your carrier may also automatically increase your underlying Auto Uninsured Motorist and Underinsured Motorist coverage limits to prevent any gap in the underlying coverage and the umbrella. Personal Umbrella Uninsured Motorist or Underinsured Motorist coverage limits can also be stacked on your Umbrella in the event of a covered loss, for up to three vehicles on a policy. The stacking feature cannot be rejected if Personal Umbrella Uninsured Motorist and/or Underinsured Motorist coverage applies under the Personal Umbrella coverage. As a result of this mandate, we are anticipating noticeable increases in current Umbrella premiums.

For a Home/Auto Quote, call 800-566-7007 or visit myknowledgebroker.com/newlaw

There many circumstances that, if they occur, could be financially devastating to you and your family's well-being. No worries though! Auto and homeowner's policies have extra coverage options that may be added to your policy to meet your specific needs. The following are the most common additional coverage endorsements that are added to homeowner's policies. Please keep in mind you may have already elected to add some of these endorsements to you policy.

1. Back up of Sewer and Drain - Provides coverage for damage caused by the back up of a sewer, drain, or sump pump overflow.
   
2. Flood Insurance - Flood coverage is not provided on a homeowner's policy, it's a separate policy that we can provide for you. It provides coverage from an overflow of a body of water and surface water. You do not need to be in a flood prone area to purchase a flood policy.
   
3. Replacement Cost on your Dwelling and your Personal Property - Guarantees the dwelling or personal property will be replaced, without depreciation, in the event of a loss.
   
4. Identity Theft Coverage - Reimburses you for expenses related to restoring you identity if it were stolen.
   
5. Personal Property Schedule - Removes deductible & provides worldwide coverage for jewelry, guns, furs, musical instruments, collectibles, fine arts, etc.
   
6. Special personal property - Provides the broadest coverage available for your home contents.
   
7. Earthquake Coverage- Covers the cost to replace or repair your damaged property in the event of an earthquake. This coverage is excluded on a homeowner's policy.
   
8. Business in the Home Endorsement - Provides liability and/or business property coverage for certain home-based businesses.
9. Excess Liability (Umbrella) and Increased Liability Limits - Protects your assets in the event you or someone in your household accidentally injures another person or damages their property.
   
10. Recreational Vehicle Coverage - Coverage can be added for boats, ATVs, Snowmobiles, Golf Carts, etc.
    
11. Loan/Lease - Loan/Lease covers the difference between the amount owed on lease or loan and the amount normally paid by a car insurance policy at the time of a total loss.
12. Rental Reimbursement - Covers up to a specified amount for a rental car while your car is being fixed after a covered loss.
13. Towing - Covers roadside services for your vehicle, up to a specified limit.
14. Uninsured/Underinsured Motorist on Umbrella - provides excess coverage for injuries caused to you and your passengers should you get hit by an uninsured or underinsured motorist.
15. Life Insurance - A way of protecting your next of kin against financial hardship should something happen to you.

Construction is a complicated industry that faces ever-changing conditions. 2010 will be no exception as contractors will be feeling the pressure of a struggling economy, increased costs, minimal work and increased competition. Those who are not prepared will feel significant pain and could ultimately fail. The following provides some suggestions for managing the year ahead:

• Work with a team of construction oriented professionals you can count on to assist in decision making. A bond agent well versed in contract bonding should be a priority. If your agent is not knowledgeable or does not have the market to fit your company's needs, then there is little other professionals can do to help with you bonding needs. A CPA that specializes in construction is a must. Attorneys, bankers and insurance agents are also key advisors.
• Work to provide a strong relationship with your surety and provide full disclosures. This means communicating good and bad news to your surety bond agent and underwriter if or when problems begin. If possible, many sureties will work with the contractor to help it through the problem. The surety is a critical partner though good times and bad and can help owners and contractors manage the changing economic climate. Bottom line, the surety wants you to succeed as much as you do.
• Have a bank line of credit available to support the company's business plan.
• Evaluate your bank. Contractors should critically evaluate the strength of their bank and that bank's knowledge of and "commitment" to the construction industry. When credit tightens, banks that do not have a deep commitment to contractors may pull back from an entire industry, regardless of the underlying credit worthiness of their customer.
• Bond subcontractors, especially when they represent a key trade, a significant portion or sole source of the work, you are unfamiliar with their company, or there are questions on their availability, capacity, ability or financial strength.
• Don't take on more than you can manage. Stay within your capabilities. Think twice before you consider work outside your known geographical area and niche.
• Do what you do best. Protect your top talent, who will manage projects well no matter what the market conditions are.
• Don't "buy" a job to keep employees busy—adjust overhead and maintain profit margins. Bid the job, not the competition.
• Don't be too anxious to fill your backlog. You have a choice on what projects to chase and what owners to work with. Evaluate the risk. Sometimes a contractor's best job is the one it does not get. One bad project can tear down a company.
• Demonstrate discipline in applying appropriate margins to the risk profile of work and refuse to accept unreasonable and inequitable risk in contracts. Understand the contract, and push back for amendments where warranted.
• Construction is cyclical and contractors should prepare for the pent-up demand that will build during recession. Protect your core resources and be ready to bid work when the economy rebounds.
• Update your business plan accordingly. If you don't have a business plan, it is imperative you develop one as it is critical every company have a "road map," goals or objectives.
• Showing signs of a weak balance sheet? Strengthening can usually occur by reducing revenue and overhead, as well as concentrating on collecting receivables and liquidating portions of equipment and inventory.
• Evaluate the quality of a potential client. Your bond agent should be able to assist here as well.

It is a variety of successes that make a good contractor, and it is a process that continually evolves. Successfully managing your business in both good times and bad is critical to your survival.

Can a sole proprietor be required under a contract to have a workers compensation policy even though he or she is not required to have a policy under the Wisconsin Workers Compensation Act?

Yes, a contract may require a sole proprietor to a have workers compensation insurance policy even though he or she is not required to have a policy under the Act. Contracts often stipulate that a sub-contractor (sole proprietor) have workers compensation insurance and require a Certificate of Insurance as proof that the coverage is in place. The Workers Compensation Division has no jurisdiction over contract stipulations that require worker’s compensation insurance.

What are the options available to a sole proprietor that is offered a contract that requires him or her to have a workers compensation insurance policy? There are three options available to a sole proprietor that is offered a contract that requires him or her to have a workers compensation insurance policy.

1. The sole proprietor may voluntarily purchase a workers compensation insurance policy to cover his or her own work-related injuries and illnesses. It is necessary to have the policy endorsed to name the sole proprietor as a covered employee. All workers compensation policies exclude the sole proprietor unless specifically endorsed to include them. The yearly payroll used to determine premium for a sole proprietor electing to be covered by under a worker’s compensation policy is currently $38,688.
2. The sole proprietor may purchase a "minimum-minimum premium policy". A minimum-minimum premium policy covers any potential exposure (employees) a sole proprietor may have, but it does not cover the sole proprietor. The maximum cost of minimum-minimum premium policy is currently $900 (based on the type of business being insured, the cost may be less). Under the Wisconsin Insurance Basic Manual Rules, if the designated minimum policy premium is greater than 20% of the earned payroll, the minimum premium is 20% of the earned payroll, but not less than the policy expense constant (the expense constant is the cost of producing and servicing the policy.) When a policy is audited, if there has been no earned payroll (no employees) during the policy year (since 20% of $0 is $0), the actual minimum charge for the policy is $220 (the expense constant). The sole proprietor will receive a refund of any premium amount paid in excess of the $220. Example: $900 (initial premium), minus $220 (expense constant) = $680 premium refund.
3. Do not accept the contract.

You may download the entire document pertaining to sole proprietors and workers compensation here:
Sole Proprietors Under the Wisconsin Workers Compensation Act