A resilient business starts with resilient people.

This article is the first in a series on business resiliency. We’re covering what resiliency looks like in a business for its people, property, product and planet, and how you can use scenario planning tools to equip your business for the next what if.

It’s hard enough running the day-to-day operations of a business. Being ready for anything that may happen down the road is even harder. If 2020 has taught me anything, it’s the value of looking ahead – planning for what to do when a “what if” happens. There are a lot of names for this planning: business continuity, emergency response, succession planning, disaster recovery, etc., but the theme is the same: how do we respond to any crisis while keeping the business alive and thriving.

A well-thought-out response plan can make the difference between shutting down or staying open. Companies with solid, rehearsed plans (that have communicated those plans to their employees) are far better positioned to survive the worst scenarios.

Here are three areas you’ll want to pay attention to in your response planning:

The reason you’re planning in the first place: Life Safety
Your first priority as a business is the life safety of your employees. Before you worry about increasing production or improving your bottom line, every one of your employees needs to be able to leave work as they arrived. This is a fundamental reason your plan exists.

Your plan will serve as a playbook – a script for handling different types of crises. Outline who will go where, who will call which emergency services, which areas of your building will need to be secured and more. This should be distributed or available to all of your employees and incorporated into your training programs.

How you make it happen: Training
Onboarding is changing. Employees are leaving jobs far more quickly than usual. Good leaders can combat high turnover rates by making sure every team member knows exactly what their job is and what it means to have (and keep) a job at that company. Clearly outline your terms of employment, any rules employees are expected to follow, and what success looks like at your company. Itemize what your employees must do to complete their jobs safely and responsibly, and have an open discussion about their rights and benefits. Don’t assume your new hires know these things intuitively. Be clear and upfront about your expectations.

Pay close attention to your methods of training, too. Reading a list of rules from a screen and providing a signature or taking a one-time, several-hour course won’t work for everyone. Make sure you’ve provided alternative training options to accommodate every person’s learning style. Allow time to address any open questions. Document all training. To borrow the famous line, “so it is written, so it is done.”

Everyone has an onboarding program, but not all onboarding programs are equal. Take the time to evaluate what you’re doing to equip your employees for success at your company. Check your new hire and annual training to see if they cover how to handle emergencies, exit paths, injury first aid services, and in the event of a true emergency, how to call 911.

Surviving and thriving: recruitment and retention
Planning for continuous recruitment and retention under any circumstance elevates your contingency response plans from functional to successful. This year brought challenge after challenge on the recruitment front, particularly in the manufacturing industry. Laid-off employees received generous unemployment benefits and childcare virtually disappeared overnight. Everyone was encouraged to stay home as much as possible to avoid exposing their loved ones and themselves to the virus. Employees were concerned about being on a crowded manufacturing floor.

Companies got creative, and we saw three trends emerge:

• Virtual job fairs: Innovative organizations and new software programs make virtual job fairs more user-friendly than ever before. Companies sign up for virtual “booths,” and participants can either make appointments in these video chat “booths” or pop in for a quick, casual conversation. Links to marketing materials and recruitment flyers can be posted alongside the booth and representatives can talk to potential employees from the safety of their own socially-distanced offices or homes.
• TV and social media: If you want to tell people about your openings, you’ll have to find them first. The easiest way to find people is to meet them where they are. This year, we know exactly where people are: at home, doing things like watching TV and scrolling through their social media feeds. Creative HR departments are leaning in to these mediums and posting videos and information about their openings to these audiences.
• Changing the public’s perception of the industry: There are good jobs out there and good people to do them. The same people who’d shy away from a “factory” job wouldn’t from a “manufacturing facility” job. Your benefits, culture and pay don’t reflect the image of tired and sooty turn-of-the-century factory workers – give your business a better chance by making sure your language doesn’t either. High school grads with an interest in engineering but no money for college might be perfect candidates for your equipment positions, or aspiring chefs might be able to leverage your roles as stepping stones to the career of their dreams if you’re a food manufacturer. Broaden your lens to ensure you collect applications from the best candidates.

The COVID-19 pandemic brought a set of unique and still-evolving challenges to the forefront of business leaders’ minds. Leading our companies through these challenges might be the first level of success, but emerging from it better prepared for future crises is the next.

Navigating these challenges safely and responsibly will help us build a better future – for our people, our properties, our products and our planet.

Stay tuned for Part 2: Building Business Resiliency in Property.

For Immediate assistance call 1-800-268-1830

How we weigh risk to ensure fair workers’ compensation cost sharing.

By Bob Poitras, CPCU, ARM, MPA

Self-insured counties use a lot of variables when allocating workers’ compensation costs.

Counties could have workers’ compensation plans that provide coverage not only to the county, but to a city, multiple towns, even more villages and still more fire departments as well. The plan’s operating costs would be paid for by its participants – but not all of these participants use the plan in the same way. Our challenge is to allocate the costs fairly.

Weighing Risk to Determine Who Pays What
We first determine cost percentages by measuring the weight each participant puts on the plan. Then, we allocate the costs according to each entity’s proportionate share.

While we might physically weigh, say, the pounds of salt a town takes from a county’s supply and then charge accordingly, in the world of workers’ compensation, our measurement factor is risk.

The Traditional Method
Many longstanding formulas favor the participants’ ability to pay and the use of clearly-measured values (like population, weighted votes, or loss payment history) over the more complicated method that the industry uses. That method attempts to measure the risk each participant puts on the plan, based on what its employees/ volunteers do for work.

There’s no doubt that the industry method is more complicated. Nonetheless, some county plans in recent years have decided to emulate the insurance industry. This usually involves hiring a company to perform the calculations and work with the plan’s stakeholders.

Using NYCIRB Loss Costs to Measure Risk
Perhaps a county has only two plan participants, both towns. Town A has a police department, public works, administration, and a water and sewer department. Town B has only administrative employees doing office work in the town hall.

There are different levels of workplace injury probability in the professions you find in Town A. Town B would appear to have a much lower risk of workplace injury for its employees.

Knowing that is the simple part. The difficult part is measuring that difference in risk. This is where an organization called NYCIRB comes in. The New York Compensation Insurance Rating Board (NYCIRB) provides the insurers of New York with an actuarial estimate of the cost of injuries to workers based on their jobs. Every August, NYCIRB publishes these values, called “loss costs,” which allow insurers to then price workers’ compensation policies. Loss costs reflect both the frequency of injuries for the job classification and their average severity.

Clerical workers, according to NYCIRB, carry a small chance of being hurt and the severity of their injuries is a lot less, on average, than that of other municipal workers. A police officer will cost an expected 27 times more on workers’ compensation plans than a clerical worker, and road repair crew members cost a whopping 115 times more.

The variable against which we apply these values is payroll. If three workers in our Town A are the town attorney, a police officer and a DPW worker, and each is compensated $50,000, we would use NYCIRB’s loss cost estimates to say that relatively speaking, the risk factor of the attorney is $60; the police officer, $1,630; and the DPW employee, $6,870.

Further Variables to Consider
As a leading expert in the marketplace for workers’ compensation, OneGroup is able to use these values to provide our clients three important and distinct measurements.

First, we estimate what each participant would pay to buy a standalone workers’ compensation insurance policy from the marketplace, based on the current pricing rules of the New York State Insurance Fund. This tells us if the county plan has a reason for being. After all, if the participants could buy the coverage elsewhere for less, the county plan may not be needed.

Second, we calculate how each participant is performing according to the average that the NYCIRB numbers provide us. A town might be having losses 20% less than expected, or it could be running above the average, say, 50%. This value, called the Experience Modification Factor (EMF), is an especially useful number.

Third, we use each participant’s estimate of retail workers’ compensation insurance cost with NYSIF and allocate the plan’s costs accordingly. When we allocate the cost according to the individual estimates, we are sharing that cost and benefit of the plan fairly across the participants.

Self-Suffiency
Now that we have measured risk by employee for each participant, modified the participant’s share by their performance against expected losses and have allocated the plan costs accordingly, we might now be splitting the pie differently between the county, villages, towns, and the fire districts. We have not shrunk the size of the pie, though.

This is the most important reason providers of municipal workers’ compensation in all fifty states, and for more than 100 years, have determined cost this way. Classifying employees, preparing rates per $100 of their payroll, and calculating an Experience Modification Factor are all pieces of their attempt to be profitable for the coming policy year. For this reason, many counties have no need to change their formula from what they’ve been using for decades. They are not profit-motivated and use the plans as a financing mechanism for the county and its governmental subdivisions. Some of our oldest clients have not changed their formulas because the ones they have in place do the job.

OneGroup’s goal is not to change allocation formulas to the one “right” formula, but to:

• help clients choose the right formula for their circumstances,
• to implement that formula fairly and accurately,
• to explore modifications based on successes we’ve seen in other counties when problems arise, and
• to use the information we have to lower the cost of the plan itself.

How the pie is cut up is important, but shrinking it is important, too.

What’s next? Improving WC Costs for the Future
Reducing the operating cost of a self-insured workers’ compensation plan while maintaining its optimal efficiency is OneGroup’s expertise and has been for many years. While I am the “allocation expert,” as soon as I have finished my reports, I turn to the risk control and claims management experts on my team to ask, “where can we make improvements?”

We generally return to the EMF. If we know a participant is performing below expectations, we look to find out why and how we can fix it. We’ll look through the front windshield (the year’s upcoming operations and initiatives, policies and procedures, safety training/education programs, service contracts, purchases of new equipment and new facilities built), in the rearview mirror (the claims history), and the broader economic and relevant externalities (like injury trends or litigation patterns).

Communication with our county plan participants is critical. The worst thing any risk group can do is send a bill to its participants each year, pay and be done. That approach provides no incentive for improving performance. The participants’ “buy-in” is critical. Good communication encourages that, as do clear and measurable metrics. What you measure, you can manage – so the saying goes.

To learn more about any of the formulas or ideas above, call us at 800-268-1830.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

For Immediate assistance call 1-800-268-1830

Letter to Cuomo calling for removal of absolute liability standard.

By Brett Findlay, ARM and John Schmitt

New York State’s construction industry workers are all too familiar with NYS Labor Law sections 240 (commonly referred to as “Scaffold Law”), 241, and 200.

On September 29, 2020, a group of more than 75 organizations of contractors and trade groups wrote a letter to Governor Andrew Cuomo calling for removal of the absolute liability standard in these Labor Laws. The call to action is not to repeal the law(s) or change any of the safety provisions within, only to reform the absolute liability portion.

(You can check out a great summary of the reform calls in this article by Elizabeth Blosfield of the Insurance Journal.)

In recent years, calls for reform have revolved around the interpretation of strict or absolute liability under section 240. NY Labor Law section 240 imposes strict or absolute liability on owners, general contractors and their agents – whether or not they supervise or control the work. The plaintiff’s own negligence does not furnish a defense. It is still necessary for the injured worker to show that the statute of NY Labor Law section 240 was, in fact, violated, and that such violation of the law was the proximate cause of the plaintiff’s injury. The reform efforts have been to acknowledge and recognize the negligence of the injured worker that exists in other NY Labor Law sections, such as 241 and 200. NY Labor Law sections 240 and 241 read similarly, and neither addresses the comparative negligence of the plaintiff/injured worker. (It is worth noting, though, that Labor Law section 240 has been interpreted by the courts differently than 241.)

As of now, the only viable defense under NY Labor Law section 240 is the “recalcitrant worker” defense. Under this interpretation, the owner, general contractor or their agent, as a defendant, has no liability if they can prove that the plaintiff/injured worker:

1. Had adequate safety devices available on the jobsite.
2. Knew that the safety devises were available and that the injured worker was expected to use them.
3. Chose for no good reason not to utilize the safety measures or equipment.
4. Would not have been injured had they not made that choice.

However, the lack of governmental support and the financial strength of the Trial Lawyers Association have thus far been successful in halting reform momentum. They argue that any potential change to the existing laws (which were enacted to protect the construction workers of NY) will diminish or discourage the safety efforts of construction companies. This claim was proven untrue in Illinois in 1995, though, in the construction workers’ “Structural Work Act.” Additionally, NY Labor Law sections 240 & 241 were enacted in 1885, prior to the development of federal workplace safety standards like OSHA for the construction industry.

According to Blosfield, there are financial benefits to reform as well. The referenced letter claims that the potential reform would free up millions of dollars in state and municipal budgets, hundreds of millions in infrastructure costs and release an estimated $200M per year in education budgets.

Labor Law reform could impact the insurance marketplace. Inflated insurance costs and limited marketplace availability for NYS contactors have been partly created by NY Labor Law sections 240 and 241. It is significantly more difficult for construction companies in NY to obtain adequate insurance coverage and subsequently protect their business. Some insurers have refused to insure clients in New York because of the Scaffold Law, and those that remain have consistently increased their rates to insure the risk.

You can find Elizabeth Blosfield’s article in the Insurance Journal here.

Brett Findlay is vice president, business and construction risk specialist at OneGroup. He can be reached at 315-280-6376 or BFindlay@OneGroup.com.

John Schmitt, Jr, is a construction risk specialist at OneGroup. He can be reached at 315-558-6789 or JSchmitt@OneGroup.com

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

For Immediate assistance call 1-800-268-1830

Organizations with volunteer first responders have a lot of unique risks. Here are our expert’s tips for making sure your organization is properly insured.

By Kelsey Ryan, AINS

Volunteer first responders keep our communities safe. Day or night, they are ready to protect, rescue and serve their neighbors. But when the alarm goes off and the call goes out, the last thing on anyone’s mind is insurance. That’s why it’s vital that your organization has the proper coverage in place, so you can focus on what is important – saving lives.

Here are several key coverages that you should be sure to have:

Property Insurance
You’ve covered your station and the garage, and maybe even the pavilion out back. But what about all of the stuff inside? If you tipped the building upside down, anything that falls out (aside from vehicles and their equipment) should be covered under Business Personal Property. Desks? Yes! Portable Radios? Nope, not covered here. Air Cascade System? It depends. Talk with your agent to make sure you have everything covered in its proper place.

Liability Insurance
Liability is a broad term – there are many types of liability. The types that your organization’s policy should include are General Liability (ex. someone slips and falls at the station), Professional or Management Liability (ex. someone sues your organization for malpractice), and Employment Practices Liability (ex. an employee sues your organization for discrimination, wrongful termination, or harassment).

Vehicle Insurance
Speaking of liability, your biggest day-to-day liability exposure is on the road. What happens if a car doesn’t stop at the intersection when you’re moving through with your lights and sirens? What if it’s uninsured? What if you are transporting a patient? All of these scenarios would be covered under your Auto Liability policy if you have the correct coverage in place. Your vehicles are perhaps the most visible and vital part of your operation – they’re not just any old trucks. These are large, commercial vehicles that are almost always customized to your department’s specifications. Making sure they are valued properly will be important in the event of a claim when you need to repair or replace the apparatus.

Portable Equipment Coverage
This is all of the stuff that your volunteers wear, carry, and bring with them to the scene. Everything from their boots and jackets to their personal cell phones can be covered here. Of course, these items are in constant flux. A high quality policy will cover all of your Portable Equipment on a blanket basis with no inventory required.

Crime Insurance
We’ve all seen the news stories about members stealing from organizations they are a part of. You should have coverage for that! Many different types of Crime Coverage are available to volunteer organizations and are a very affordable addition to your policy.

Cancer Insurance
Last year, this new coverage became mandatory for any Volunteer Fire Department in New York State that has interior firefighters. For a few extra dollars, there is also a new add-on endorsement that will cover your members for any type of cancer. This additional benefit is definitely worth its additional cost when you’re thinking about how to cover your valued members the best you can.

We understand how important it is to make sure your funds go as far as they can and that your members are properly covered. I’d love the opportunity to hear more about your organization and do a review of your current coverage. Contact me at KRyan@OneGroup.com or at 315-413-4448.

Kelsey Ryan, AINS is a Client Advisor and Business Insurance specialist at OneGroup. She can be reached at 315-413-4448 or KRyan@OneGroup.com.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

For Immediate assistance call 1-800-268-1830

By Brett Findlay

Workers’ compensation, one of a contractor’s largest single insurance-related costs, can be a critical component in bid competitiveness, project eligibility and general profitability. I often speak with contractors who don’t believe they can control their workers’ compensation costs. Enter: the Construction Premium Adjustment Program Credit and payroll limitation.

The workers’ compensation Construction Premium Adjustment Program Credit (more commonly referred to as your PAP Credit) is designed to level the playing field for contractors who pay higher wages to their employees. The PAP Credit is available to all eligible contractors but is typically more effective for those in the prevailing wage sector. We regularly see credits applied between 5-15%.

To be eligible for the PAP Credit, your classification must be listed on the application itself. If you are unsure of whether or not your classification(s) are eligible, check with your agent. There are more than 80 eligible construction classifications total.

It is also necessary to have an experience modification factor (commonly referred to as an EMR) promulgated. In order to qualify for an EMR in New York State you must be in business, have carried workers’ compensation for an experience period of two years, and have an exposure (payroll) that produced an annual premium of at least $5,000.

Once you have satisfied these requirements, you must complete a 1-page application annually. You can fill out this application either physically or electronically. Typically the results are processed faster when you fill out the application online. Once the application is processed, you’ll see any potential credit applied to your policy at renewal. We recommend that you fill out the application prior to your renewal for the coming policy period, but if you have not filled it out for the current policy period, you may have it applied retroactively.

Payroll limitation is another way for eligible construction classifications to limit their workers’ compensation costs. In New York State, eligible contractors are allowed to limit the payroll they report to their workers’ compensation carriers. In New York State, the maximum weekly payroll limitation cap for eligible classifications is $1,401.17. Therefore, if your individual employees earn wages above $1,401.17 on a weekly basis, you may limit what you report as payroll on your workers’ compensation policy to that amount. Also note that when employees earn overtime wages, it is only necessary to report their regular wages. Review your payroll information weekly to determine if payroll limitations apply to you.

The majority of construction-specific classifications in NY saw back-to-back rate decreases over the last two years, and it is my hope that these new tips can help you decrease your costs even further. If you have any questions on your workers’ compensation program and the potential eligibility of it, please do not hesitate to contact me at BFindlay@OneGroup.com or at 315-280-6376.

Brett Findlay is a senior business and construction risk specialist at OneGroup. He can be reached at 315-280-6376 or BFindlay@OneGroup.com.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

For Immediate assistance call 1-800-268-1830

Explore the benefits of this low-premium plan option.

By Rachael Rotella

Qualified High Deductible Health Plans (HDHPs) are becoming more and more popular amongst employers of all sizes each year. While many are fearful of the thought of a “high deductible,” it is important to understand the opportunities these plans offer.

Not only do qualified HDHPs offer lower, more affordable premiums – they also give members the opportunity to participate in a Health Savings Account (HSA). An HSA is a great way to save for medical expenses and reduce your taxable income. An HSA is a bank account that can be used to accumulate tax-free funds to pay for qualified health care expenses as defined by the IRS, including medical, dental and vision costs. You can use the funds in your account to pay for costs incurred by any tax dependent – including those costs that your insurance may not cover – or save the money in your account for future medical needs.

There are also investment opportunities you may take advantage of using accumulated HSA funds. The money you earn from investing is tax-free and can continue to grow for health care expenses in retirement.

As the owner of the account, you determine how much money you’ll contribute to your HSA up to the annual maximum. Funds remain in your account from year to year, even if you leave the company, retire, or switch health plans. Some employers will even make a contribution into your HSA to help with your transition to an HDHP.

If your employer has shifted gears and is offering a Qualified HDHP like many other employers today, don’t panic. Take advantage of this opportunity. Take some of the extra funds that you no longer pay towards those expensive copay plan premiums and put them into an HSA.

An HSA is a great way to invest in your future.

Rachael Rotella is Senior Benefit Specialist at OneGroup. She can be reached at 315-418-4968 or RRotella@OneGroup.com.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

For Immediate assistance call 1-800-268-1830

There are several steps all homeowners should take to keep their homes safe and protected this winter. Use these three tips to keep your home and guests safe during the winter season.

By Mary Fontana

Temperatures have dropped and snow accumulation has risen – it’s time to winterize your home.

Living in the northeast means we are well-conditioned to the ever-changing seasons and are especially steeled to unyielding winters. As winter begins in full force, it’s important to remember a few seasonal insurance tips:

Shovel the roof. Recent storms served as reminders that Jack Frost can be unforgiving when it comes to snowfall accumulation. Shoveling your roof after a big storm can help prevent damage to your home from the weight of ice and snow.

Keep the entrance to your home accessible. Don’t we all love a home full of family during the holidays and winter months? Keeping the path to your home shoveled and sanded helps prevent injuries due to slip-and-falls.

Don’t overload your electrical outlets. When sprucing up that evergreen or adding some extra heat to certain areas of your home, try to use three or less strands of lights on any one extension cord; keep in mind extension cords and strands of lights can also be a trip hazard. We know the holidays can spark your festive spirit, but if we practice safe decorating we can minimize our risk for electrical damage!

If you want to learn more about home safety for the winter or what you need to do to protect your home, give me a call at 315-898-2204.

Mary Fontana is Personal Insurance Service Specialist at OneGroup. She can be reached at 315-898-2204 or MFontana@OneGroup.com.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

For Immediate assistance call 1-800-268-1830

What you need to know about the new Equal Pay addendums

By Kelly Goodsell, AIC

The New York Senate passed a set of bills to ensure equal pay for women and employees in “protected classes.” The bills are intended to ensure all employees receive equal pay for equal work and prohibit salary history inquiries (thereby reducing the risk of continuing a non-equal pay cycle) during candidates’ screening.

These laws protect employees of any “protected class,” meaning employers cannot discriminate against employees because of “age, creed, race, color, national origin, sexual orientation, gender identity or expression, military status, sex, disability, predisposing genetic characteristics, familial status, marital status, or domestic violence victim status.”

Employers should note that these are not new laws – they are sets of addendums to old laws. However, since they have been updated, people are talking about them. The more people talk about them, the more employees are likely to take action under them.

If an employee feels that he or she is not being paid fairly on the basis of sex, gender, race, religion or another factor – he or she could file a claim through either the Human Rights Division of New York or through the Federal Equal Employment Opportunity Commission.

The best way to be prepared for a scenario like this is to make sure that your company’s Employment Practices Liability Insurance Policy will provide you with a defense for a claim being made against you for both Wage and Hour Discrimination as well as a claim made against you under the Equal Pay Act. Not all Employment Practices Insurance policies provide a defense for both actions. Taking this step ahead of time will ensure that your company will be protected should a claim be made against your company.

Kelly Goodsell is vice president of claim risk management at OneGroup. She can be reached at 315-413-4413 or KGoodsell@OneGroup.com.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

For Immediate assistance call 1-800-268-1830

What it means if your umbrella policy is limited by another policy’s sublimit

By Douglas Cook, CIC, CPA

If any of your liability policies have a sublimit on them, your umbrella may not cover as much as you thought. It is important to work with your agent to understand all limits and exclusions on the policies.

School districts generally have a lot of important policies, from general liability to school leaders’ legal liability and more. One that we’ve unfortunately heard more and more about nowadays is the abuse/molestation coverage. Sometimes all three of these types of coverage – general, legal and abuse/molestation liability- are bundled into one policy, and the abuse/molestation coverage may be provided with a sublimit.

A sublimit is a set amount of money that the policy will cover, and it’s usually lower than the amount the policy coverage limit. If the policy will cover up to a million dollars per occurrence, the abuse/molestation coverage may carry a sublimit of only $250,000. In this scenario, the district would be on the hook for any fees or payments that exceed $250,000 to lawyers, families or other involved parties.

These types of lawsuits – particularly when there are young children involved – start at seven digits.

At this point, many districts would reference their umbrella policy – assuming that it would cover the remainder of the costs. That’s not always the case if the primary policy has a sublimit. If a family sues the district for, say, $5 million, and the court rules in favor of the family, an insurance carrier is well within its rights to limit their claim payment to the amount of the sublimit and pay nothing under the umbrella policy. The district would then need to pay out of pocket for $4,750,000.

Always be mindful of what exactly your policy covers, and never hesitate to ask an expert for help!

Douglas Cook is a business risk specialist at OneGroup. He can be reached at 610-867-4169 or DCook@OneGroup.com.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

For Immediate assistance call 1-800-268-1830

Do you know how your properties will be covered?

By Douglas Cook, CIC, CPA

For the average business, property coverage can be relatively straightforward. For a school district with multiple properties, there are a few more factors and options to consider.

With standard property coverage, our clients can insure their buildings for the amount they would cost to repair or replace. Policyholders do this by having an assessor or another third party take a look and determine how much the building would cost to replace should something catastrophic happen to it. Then they insure it on a property policy for that amount.

Sometimes that estimate (and therefore, the policy limit) can be inaccurate, particularly if the assessment was done a long time ago or the economic conditions have changed. For example, economic conditions after a hurricane change rapidly in hardest hit areas. The cost of materials rises significantly there simply because of basic supply and demand. That’s not even mentioning inflation, old/new materials, and rising labor costs.

Because of this danger, school districts with lots of buildings that have such important impacts on their communities in times of tragedy may consider looking into blanket coverage. Blanket coverage involves gathering the values of each building on the policy and having an agent request that the carrier add blanket coverage with an endorsement. The endorsement is a statement that establishes and describes the blanket coverage terms and conditions. Usually that means if anything were to happen to any one of its buildings, the school district would be completely covered regardless of inflation, market conditions and other factors, up to the blanket limit.

Those considering blanket coverage should also be aware of margin clauses and how those would impact their coverage limit. Margin clauses put a limit on how much of the total value of the blanket coverage can apply to any one building, and can build in additional coverage at the same time.

Blanket coverage can also be applied to both the building and contents, either as a combined limit or separately. However, for blanket coverage to apply to a building or contents these must be list and clearly described on the statement of values before the loss – otherwise they won’t be covered by the blanket. Simply having blanket coverage does not automatically cover the building or building’s contents.

If you have any questions on blanket limits, margin clauses or your school district’s property coverage, give OneGroup a call

Douglas Cook is a business risk specialist at OneGroup. He can be reached at 610-867-4169 or DCook@OneGroup.com.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

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