R&R Insurance Blog

Wisconsin statutes allow sole proprietors, partners or members to elect to cover themselves by a workers compensation policy. Officers of corporations (with fewer than 10 stockholders) are automatically included for coverage, but up to 2 officers may exclude themselves from coverage.

Before you decide to exclude yourself from workers compensation benefits, it is a good idea to check your health insurance and disability insurance policies to be sure a work-related exclusion does not exist. Policies are not uniform in how this language reads. Insurance policies will commonly exclude any loss that’s covered by workers compensation. Some will state that the exclusion does not apply if workers compensation is “available” or “payable” to you.

Workers compensation benefits not only pay for medical expenses but also income replacement in the event you are unable to return to work either on a short-term or long-term basis. Those excluding themselves from workers compensation may want to consider disability insurance in addition to health insurance to address both aspects of work-related injuries.

It is important to address this question with your health and/or disability insurance provider so any gaps in coverage may be addressed in advance. Once you are excluded (or have not elected to be covered) from the workers compensation policy, work-related injuries and illnesses will not be covered. It’s important to know how your health or disability policy will respond to a work-related incident.

Please contact your R&R Knowledge Broker if you have any questions or would like to discuss further.

As outlined by Payments Source, unprepared merchants may be at risk for significant loss to their bottom line if they suffer a data breach.

All merchants that accept, transmit, or store credit card holder data are subject to the Payment Card Industry Data Security Standard (PCI DSS). These security requirements were launched on September 7, 2006 to ensure that merchants maintained a secure environment for data. Any and all merchants that have a Merchant ID (MID) are subject to these regulations.

A new revision to these security standards takes affect at the end of June 2015. In short, merchants will need to change the common SSL (Secure Socket Layer) protocol to a more secure version of TLS (Transport Layer Security). E-commerce merchants will need to configure Web servers to work with TLS and turn off support for SSL, while brick-and-mortar businesses may need to update their payment applications.

For those merchants that are unprepared there is a significant risk for fines and penalties if they were to suffer a data breach. A security engineer for Trustwave Security told Payments Source that the fines and penalties could range between $100,000 and $500,000. In addition, penalties may include breach expenses ranging from $50,000 and $100,000, a $50 re-issuance fee per compromised card, and a $2 per customer for credit monitoring. These penalties are in addition to a wide variety of expenses to comply with breach notification laws.

While cyber and data breach insurance policies will include coverage for breach notification expenses, credit monitoring, and ID theft repair, many (but not all) policies provide coverage for PCI fines and penalties. At R&R, we can customize a policy to fit the needs of your organization. Contact a knowledge broker to make sure you are prepared.

While it may seem complex, understanding the basics of a coinsurance penalty will save you from any surprises down the road. The first step in gaining an understanding starts with the Coinsurance Clause.

A Coinsurance Clause is a property insurance provision that penalizes the insured's loss recovery if the limit of insurance purchased by the insured is not at least equal to a specified percentage of the value of the insured property. The coinsurance provision specifies that the insured will recover no more than the following:

Insurance Carried

--------------------------- x Loss = Amount Recoverable

Insurance Required

As an example:

A building actually valued at $1,000,000 has an 80% coinsurance clause but is insured for only $750,000. Since its insured value is less than 80% of its actual value, when it suffers a loss, the insurance payout will be subject to the underreporting penalty. Assume it suffers a $200,000 loss:

$750,000 ÷ (0.80 × 1,000,000) × 200,000 = $187,500 Payout (less any deductible).

In this example, the underreporting penalty would be $12,500.

Business income coinsurance is solely a function of time; a 12-month period of time to be more specific. How long will it take, following a worst-case-scenario loss, to return the operation to pre-loss condition and capabilities? Knowing this allows the insured to accomplish two tasks:

1) Pick the correct coinsurance.

2) Ultimately decide on the limit of business income coverage to purchase (again, the amount subject to loss is a function of the coinsurance percentage and the percentage a function of time).

• 100 percent = 12 months (12 months x 100%) Estimated Loss of Income (Amount Subject to Loss) Calculation: • Maximum Coinsurance Percentage x 12 months business income calculation = Amount Subject to Loss

As an example:

The policy states there is a $1M limit with 50% coinsurance. This means the 100% amount would be $2M. If, at the time of loss, the 100% amount was $3M, then the limit should be $1.5M (50% of $3M). Therefore the insured would be penalized 33% of their claim, and paid $1M versus $1.5M.

Contact your knowledge broker to learn more about how to avoid the potential fallout from a coinsurance penalty.

Under the Wisconsin Workers' Compensation Act, there are nine criteria that must be met for a subcontractor to truly be considered an independent contractor for the purpose of workers’ compensation.

Contrary to popular belief, it can be difficult for a subcontractor to meet all nine of these criteria. Unless your subcontractor has their own workers’ compensation policy; you may have an exposure you did not foresee. Potentially, you may have a work comp claim for someone who you do not consider to be your employee.

The criteria are as follows:

1) Does the subcontractor maintain a separate business?

2) Do they have a separate FEIN from the IRS? Or have they filed business or self-employed income tax returns with the IRS for work or services in the previous year?

3) Do they operate under specific contracts? Meaning do they have a contract for services stating what service is to be performed, and for what amount of money?

4) Are they responsible for operating expenses under the contract?

5) Are they responsible for satisfactory completion of the work under the contract?

6) Are they paid per contract, per job, or by commission or competitive bid?

7) Are they subject to profit and loss under the contract?

8) Do they have recurring business liabilities and obligations?

9) Are they in a position to succeed or fail if business expense exceeds income?

As you can see, all of these can be broadly interpreted. There are published court cases that go both ways on whether a business meets the criteria for independent contractor status. These often hinge on one or two small facts about the relationship between the employer and subcontractor.

Keep in my mind that the subcontractor must meet ALL nine of these criteria to be considered an independent contractor for work comp purposes. If they do not meet all of them, courts will generally look somewhere else for coverage for this person. If as a business owner you are directing the work, you may be found to be acting as the employer, and thus be on the hook for a worker’s compensation claim.

The Department of Workforce Development has stated that a person is NOT an independent contractor for workers’ compensation purposes just because they say so, or because the contractor over them says so, or even if other government regulators say so. The Department looks at whether all nine of the criteria mentioned above are met.

The best course of action is to insist that all subcontractors maintain their own workers compensation insurance policy, and ask for proof of that via a certificate of insurance. Contact your knowledge broker for additional information.

In case you haven’t heard of this, it is the latest trend in the theft of money that is NOT covered by either a Crime Policy or a Cyber Policy. Here is a description of how it works.

The accounts payable clerk receives an email from the company president directing him/her to transfer money to an account in China. Since the company regularly transacts business in China and the email came from the president, the clerk proceeds with the transaction. However, it turns out that the email was never sent by the president. Another example is that the company has a contract with ABC janitorial service. The accounts payable clerk receives an email from ABC indicating that they have changed their banking relationship and to direct all future payments to a different bank (including routing numbers/account number, etc.). Time goes by and ABC contacts the company and inquires why their account is 3 months past due. Turns out that ABC never sent the email changing the banking information.

These instances are not covered under a commercial crime as the policy was designed to cover theft perpetuated without the insured’s knowledge or through unauthorized access or fraudulent funds transfer by an imposter. There is no hacking, virus, unauthorized access to the network, etc. that would trigger any cyber coverage. These are examples of gullible employees who fail to follow procedures or assume that because they received an email it has to be true. A new version of “The Sting.”

For information on how to protect your business, contact a knowledge broker at R&R Insurance.

Efficiently running a business without outsourcing tasks can be a major challenge in the fast-paced world that we live in. As ProfessionalEmployer.net states, business operations such as accounting, tax filing, and human resources take up a huge amount of time and generate zero profit for the business, however, they are essential operations. This can be a large pitfall for business owners. While some companies choose to hire in-house employees to handle these areas of the business, others hire third party companies to do the work for them.

Professional Employer Organizations can be a great fit for many organizations and absolutely serve a purpose in the market. That being said, there are many cases where business owners do not properly utilize a majority of the services provided. As a result, owners are paying a higher administrative fee for a complete package of services that are potentially unneeded. Some key areas to be aware of include:

• Potentially Higher Insurance Cost
  For a long time, PEOs have claimed that they have the ability to obtain cheaper health insurance prices for their clients’ employees. While this is true in some cases, it’s not always that way. If a PEO has lots of clients, there is a decent chance that some of their clients have unhealthy employees in high numbers. In a case like this, the rate you are quoted by the PEO might be the same, or even higher, than the rate you could obtain on your own. This is entirely case-by-case, and it never hurts to compare rates.
  
  
• Unneeded Services
  PEOs offer business owners an array of services to choose from. While they are all useful, they may not all be needed based on the circumstances of your company. Some PEO’s package too many unneeded services together and charge for them whether or not they are used. An example of this would be recruitment and selection services. When selecting a PEO, it’s important to select a company that offers flexibility within their offering.

• PEOs Need to Be Profitable
  Unlike an in-house HR representative, a PEO is a business on its own. In order to stay in business, it needs to maintain profitability. So, if your business starts costing them too much time or money, they may place you in a higher-risk category, and may even raise your rates. As they say, there are no free lunches!

• The Fine Print
  Every PEO has different rules and terms. It’s important to review each and every detail of the contract before you sign it. It would be wise to consult with a third party attorney, as well. Short of that, you should talk to the PEO’s legal advisor. You should be 100% sure about every aspect of the contract before signing it.

When signing up for a PEO, I highly encourage business owners to ask as many questions as possible on the front end to ensure that they are clear on services provided and setting proper expectations. If you have any questions, please contact a knowledge broker for additional information.

Dan is currently a Benefits Consultant with R&R Insurance. With over 14 years of experience, he has an extensive background in the payroll, PEO, and HR related field.

A representative from WMC recently spoke to the Waukesha County Business Alliance Economic Development Committee to provide insight on the Prevailing Wage Laws in Wisconsin.

Established by the Davis Bacon Act of 1931, prevailing wage laws were geared to stop outside contractors from undercutting local businesses. Wisconsin actually has three separate prevailing wage rate laws, each covering a different type of public works project:

1. Section 66.0903, Wisconsin Statutes covers projects bid or negotiated by a local governmental unit.
2. Section 103.49, Wisconsin Statutes covers projects bid by a state agency, except state highway and bridge projects.
3. Section 103.50, Wisconsin Statutes covers state highway and bridge projects bid by the Department of Transportation.

The Wisconsin Department of Workforce Development states “These laws mandated that most workers employed on public works projects must receive wages which are representative of the wages normally paid to workers on similar private projects in an area. Employers were required to base their bids on prudent planning, good management and supervision and the skill and efficiency of their workers and not solely on the wages paid to their workers.”

According to a recent study however, WISTAX stated that the formula for calculating prevailing wages in Wisconsin is flawed. The study showed prevailing wage rates are overestimated by 23% compared to Bureau of Labor Statistics (BLS) wage data for the same Wisconsin workers. When worker benefits are added in, taxpayers are paying for labor costs that are inflated by 45%. The current formula requires companies to submit data on wages, etc. They typically receive approx. 10% response rate.

Opponents of the potential reforms site concerns with outside contractors slashing prices and undercutting the marketplace, safety, and training. They are also operating under Union contracts that have prevailing wage laws taken into account.

Reform options that are being discussed and considered include:

• Repeal 1, 2 or all 3 laws
• Make an adjustment to increase the threshold for when prevailing wage applies
• Reform the formula
• Minimize Davis Bacon impacts

The situation currently at hand regarding the deficit with transportation fund in Wisconsin has elevated the importance of finding savings. The prevailing wage law will continue to be a discussion point. It is important to note that currently WMC has not taken a position on the pending legislation and it will continue to be a hot topic in the State of Wisconsin.

The Wisconsin Supreme Court recently issued a decision in Anderson v. Aul, 2015 WI 19, which clarified whether Wisconsin Statutes, §631.81 (1) and §632.26 (2), protect an insured when they fail to report a claim during the policy period of a claims-made-and-reported policy.

Aul was an attorney being sued by his former clients for legal malpractice. Aul received a letter from the Andersons on December 23, 2009 which stated that they “were dissatisfied with the legal representation Aul had provided.” This letter constituted a “claim made against the insured (Aul)”. As a result, Aul’s duty to report the claim to his professional liability insurance carrier was triggered.

Aul had purchased a claims-made-and-reported policy from the Wisconsin Lawyers Mutual Insurance Company (WILMIC) with a policy period of April 1, 2009 through April 1, 2010. However, Aul did not report this claim to WILMIC until March 2011. This was nearly one year after the policy period expired. The policy provided coverage for those “claims that are first made against the insured and reported to the insurance company during the policy period.” This language is typical of claims-made policies, although some policies do allow for an extended reporting period to report claims after the policy period ends. This is usually limited to 30, 60, or 90 days.

In this case, WILMIC argued that they did not owe a duty to defend Aul, or pay any damages, because Aul had failed to report the claim during the policy period as required. Aul responded by citing two Wisconsin Statutes, §631.81 (1) and §632.26 (2). These statutes say that an insurance company cannot deny a claim because of late notice, unless the insurance company was prejudiced by that late notice. In other words, if the insurance company could still investigate a claim, and was not harmed by the late notice in any way, the insurance company cannot deny coverage to their insured.

Therefore, the question the Wisconsin Supreme Court had to answer was whether these two notice-prejudice statutes supersede the reporting requirements specific to claims-made-and-reported policies. The Court stated that “Requiring an insurance company to provide coverage for a claim reported after the end of a claims-made-and-reported policy period is PER SE prejudicial to the insurance company.”

In other words, if you fail to tell your insurance carrier of a claim made against you during the policy period, you cannot rely on Wisconsin Statutes, §631.81 (1) and §632.26 (2) to protect you. So what does this mean to policyholders in Wisconsin?

First, this decision only applies to claims-made-AND-REPORTED policies. It does not apply to occurrence-based policies. Also, this decision does not apply to pure claims-made policies.

Examples of policies that typically have claims-made-and-reported wording are:

1. Professional Liability Policies for lawyers, engineers, architects, doctors, etc.
2. Employment Practices Liability
3. Manufacturing Errors and Omissions
4. Product Recall
5. Directors & Officers
6. Fiduciary
7. Contractors Professional Liability
8. Pollution Liability
9. Cyberliability
10. Technology Errors & Omissions

If you are not sure if your policy is a claims-made-and-reported policy, make sure you review the terms of that policy with your agent.

Second, businesses need to be aware of this decision at all levels of management. For example, a human resources person may be aware of an employment practices claim from a disgruntled employee, but the person responsible for reporting insurance claims may not. As a result, a claim may be late reported and denied under a claims-made-and-reported policy.

Finally, policyholders should always err on the side of caution and report any potential claim no matter if the policy is occurrence-based, pure claims-made, or claims-made-and-reported based. It is far better to send notice of a potential claim to your insurance company and rule out any potential denial due to late notice.

If you have any questions, please contact a knowledge broker.

Providing a safe working and learning environment is one of many responsibilities schools are tasked with every day. Preventative measures and protocols are important components in a school safety plan and should be thoughtfully prepared and executed. While there are many things to consider to safely protect the school premises and those inside, effective security should include: school and premises access restrictions, trained security personnel and adherence to policies intended to prohibit unauthorized entry.

Consider the following recommendations to protect your employees and students from the potential dangers that can accompany workplace intruders.

Security Personnel To Monitor Entrances

For security purposes, post uniformed security personnel at all regularly used entrances. Security personnel will be responsible for restricting building access and sending all visitors to the office area. Before you hire security personnel, complete a full background check.

If your school budget is restricted, consider tasking staff members to monitor entrances during high traffic times, when students are entering and leaving the building. Ask staff members to monitor for adults and ask them for identification. If they encounter a visitor, they should direct the visitor to the office immediately.

R&R Insurance Best Practice Recommendation: To test your school’s security effectiveness, periodically test how well the security personnel enforce your entry procedures.

Employee Identification Badges

For added safety, you should consider requiring all school employees to wear photo name identification badges at all times. Identification badges will clearly identify permitted individuals so there is no grey area on safe personnel within the school. In addition, this simple step can ensure visitors and students alike will know which qualified personnel to turn to if a problem should arise. Be sure your safety policy includes the retrieval of employee identification badges immediately upon suspension, termination or resignation.

R&R Insurance Best Practice Recommendation: If employees forget their name badges, there should be protocol on how they are able to identify themselves to security personnel and temporary identification should be provided.

Visitor Registration and Identification Badges

Visitors should register at the school office and log in and out using a visitor log. Visitors should be asked to provide photo identification and let the office receptionist know whom they are visiting and the purpose of their visit. It is important to provide visitors with an identification badge that is clearly visible, so staff and students know the visitor is permitted on the premises. Visitor badges should have a date so they cannot be re-used in the future.

If you are having any construction or maintenance work completed at the school, ensure the crew provides you with a personnel roster and that all visitor badges have an appropriate date range.

R&R Insurance Best Practice Recommendation: Consider installing a panic button under the office reception desk so the receptionist can discreetly summon help in threatening situations.

Deliveries and Messengers

In your safety policy, consider including safety procedures for deliveries and messengers. You should require that all deliveries be made in-person at the school office.

If deliveries are intended for specific staff members, the office staff should call the named individual to verify the delivery and ensure the items are expected. Do not allow anyone to leave unexpected or undesired items on school grounds.

R&R Insurance Best Practice Recommendation: In the office, consider having a delivery logbook, where messengers write their name, employer and the date and time of delivery.

Key Control

It is important to establish a key-control system. Consider which employees require a key and what their key should have access to within the school. If a key is lost, consider replacing locks. If an employee is suspended, terminated or resigns, be sure to change keypad combinations and retrieve their key prior to departure.

R&R Insurance Best Practice Recommendation: Be sure that no single key provides unrestricted access to all areas of the building. Consider having a locked and secure master key locker with a copy of all keys used in the building.

Additional Security Measures to Consider:

Secure Parking Areas

If you can, it is a great safety resource to have video-surveillance in school parking lots. At night, parking lot lighting should be bright enough to both deter trespassers and facilitate video monitoring. If video monitoring is not feasible, consider adding a fence around the school premises and have one single entry point to designated parking areas that can be monitored.

Loading Docks

If your school has a loading dock, it is important that the loading dock area is behind locked doors and does not permit access to the inside of the school building. If possible, consider adding video-surveillance. Before any cargo is left on school property, make sure it has been checked and approved by authorized personnel. Be sure to secure dock areas during periods of inactivity.

With the proper preventative measures in place, your school can be prepared to prevent intruders from gaining unauthorized access to your school. If you feel that your school is not adequately prepared, consider the initial steps you can take to improve school safety and reach out to R&R Insurance to obtain additional resources.

Interested in learning how R&R Insurance can improve safety in your school and reduce your costs? Request our free safety resources and case studies or schedule a call with one of our School Group Experts, today. At R&R Insurance, we are committed to helping schools minimize their risks, offering solutions and resources to help build safe environments for staff and students alike.

Across the nation, schools work diligently to provide a safe learning environment for students and a safe workplace for teachers. Prevention is an essential component to classroom safety, and learning to recognize potential dangers in the classroom is often the first step. With the right tools and guidance, teachers can advocate for prevention and promote a culture of safety.

We have outlined below some basic steps that teachers can take to help ensure safety in the classroom, for themselves and their students.

Consider Weapons of Opportunity

In the heat of an argument, many common classroom objects have the potential to become dangerous weapons. Common classroom items such as sharp scissors, heavy rulers, vases, letter openers, and paperweights could pose a safety risk. Consider storing these items out of site, in a drawer or covered shelving unit. Art, science and vocational teachers should also exercise caution with the variety of items in their classrooms. Sharp tools and instruments should always be safely stored and it is important that all classroom tools are accounted for and safety returned at the end of each class.

Avoid Cleaners and Chemicals In the Classroom

While most household cleaners are relatively non-hazardous, extra caution is needed in the classroom, especially in elementary schools. Students should seldom be exposed to cleaning agents and chemicals; moreover, students should never be asked to use hazardous items in the classroom without proper instruction. Schools should provide all cleaning agents and ensure that they are properly labeled with current material safety data sheets (MSDS) as required by federal safety laws. Specialized personnel should be responsible for all cleanups following the school’s outlined safety policy rules.

Use Extension Cords Safely

Extension cords can present many hazards in the classroom. Aside form the obvious tripping hazard they present; improper use of extension cords is the number one cause of fires. Here are few safety recommendations for proper extension cord use:

• Inspect each extension cord carefully before each use and before placing in storage. Ensure that the insulation is in good condition and that the grounding prong has not been damaged. Return any damaged cords to building services for repair or disposal.
• Extension cords should only be used on a temporary basis. Extension cords should not be used for long periods in place of adequate outlets.
• In your safety policy, ensure there is a provision about acceptable extension cords. All extension cords should be provided by building services and be of commercial grade. Cords must have a grounding prong plug.
• Never run extension cords under rugs, over ceiling tiles or hang them from nails or staples. This can cause damage to the insulation, making the cord a safety and fire hazard.
• Avoid using excessive power strips that can overload the circuit and create a fire hazard.

With prevention in mind, these simple steps can help you promote safety in your classroom each day. Learn to recognize potential dangers in the classroom and foster a culture of safety by encouraging others to do the same.

Interested in learning how R&R Insurance can improve safety in your school and reduce your costs? Request our free safety resources and case studies or schedule a call with one of our School Group Experts, today. At R&R Insurance, we are committed to helping schools minimize their risks, offering solutions and resources to help build safe environments for staff and students alike.