Monday, January 31, 2011

Five Questions to Determine Your Business Interruption Exposure

The September 11 terrorist attacks caused immense loss of life, human suffering, and property destruction, particularly at the World Trade Center in New York City. The insurance losses from injuries and property damage were very large. However, the losses resulting from businesses in the area having to shut down for extended periods of time were huge. Businesses filed nearly 5,500 business interruption claims for more than $12 billion following 9/11. For many organizations, the loss of income coupled with continuing expenses after a fire or other disaster can be even more devastating than the damage itself.
To increase the chances that a loss will not shut operations down permanently, organizations must assess their exposures accurately by asking some questions.
  1. What is the most the organization could lose from a shutdown? Commercial Property insurance policies define “loss of income” as the sum of the expected pre-tax profit or loss and necessary continuing expenses. For example, if the expected profit is $300,000 and necessary continuing expenses are $100,000, the potential loss of income is $400,000. To calculate their exposure to business interruption losses, organizations should refer to their balance sheets, profit and loss statements, and cash flow statements. Insurance companies also have worksheets available to assist with the calculation.
  2. How much insurance should be carried? Once the organization knows the dollar amount of its exposure, it must decide how much Business Interruption insurance to buy. The key considerations are the length of time the insurance is likely to apply and the coinsurance percentage the organization must meet. Coverage usually begins 72 hours following the damage to the property and ends when business resumes at another location or when the building should be repaired with reasonable speed, whichever occurs first. If the organization decided that the coverage period would be around six months, it could buy an amount of insurance that would satisfy a 50% coinsurance requirement. If the interruption would last longer, higher coinsurance percentage and limits would be necessary.
  3. How long will it take business to return to normal? Even after operations resume, it could be some time before revenue returns to normal levels. Customers who had gone elsewhere during the shutdown might be slow to return. The standard insurance policy extends coverage for 30 days after operations resume, but some businesses might need more time than that, especially if their businesses are seasonal. For example, a seaside restaurant in New Jersey that makes most of its profits during the summer will need additional coverage even if it can re-open in November.
  4. How much of the normal payroll expense will continue during the shutdown? The organization will need the continuing services of some employees while it attempts to re-open, but other employees might not be necessary. For example, accounting staff will be needed to pay mandatory expenses such as property taxes and collect receivables earned before the shutdown. Employees who stock shelves will not be needed if there are no shelves to stock.
  5. Does the business depend on other businesses for revenue? A business can suffer a loss even if its own building is untouched. A loss that shuts down a key customer or supplier or damage to nearby property that causes authorities to close off access to the street can devastate a business’s bottom line (this happened to many businesses affected by 9/11). Special insurance coverage is available to protect against this possibility.
Our professional insurance agents can help you answer these questions and identify insurance companies that can meet coverage needs. With some effort and planning before a loss happens, an organization can emerge from a shut down and return to profitability.

Friday, January 28, 2011

Will Your Insurance Protect You From a Facebook Lawsuit?

Most everyone knows that the use of social media has grown by leaps and bounds during the past decade.

What many people don’t realize are the unique risks associated with social networking. 

Anyone using Facebook, MySpace, LinkedIn, or other social networking sites should exercise extreme caution in what they decide to say online.

As an example, in 2009 a teenager in New York sued some of her classmates and their parents, accusing the classmates of bullying and humiliating her in a Facebook Forum. Whether or not the allegations are true, the teenagers and their parents require legal resources to pay for the possible judgments against them.

Many people believe a standard Homeowners insurance policy will cover them in such a situation. In fact, it probably will not provide the necessary coverage. A standard policy covers bodily injury or property damage done to someone else. It defines bodily injury as sickness, harm or disease, and it defines property damage as destruction of or injury to physical property. Neither definition includes publishing or saying something that injures another person’s reputation. Hence, the policy is not likely to cover a Facebook post. In other words, the policy is unlikely to cover the act of making someone else feel miserable due to social networking.

A good source to consider for additional coverage is a Personal Umbrella policy. This kind of policy provides additional insurance in circumstances where a loss has depleted the amounts of Liability insurance offered under a Homeowners policy. Umbrella policies usually have a deductible of $250 to $500; but have the potential to protect the policyholder from financial devastation. 

As you become more exposed to risk through social networking, choose your words carefully on any social networking site. Additionally, speak with our insurance professionals to see if an Umbrella policy is a good match for your insurance needs in an increasingly risky world.

Thursday, January 27, 2011

Umbrella Insurance - An Extra Layer of Protection

Do you ever wonder if your family has enough insurance to cover a large insurance claim against you? And do you know where the money would come from, if you weren't adequately insured?
Umbrella Insurance
The answer to these questions comes from insurance agents who increasingly recommend a personal umbrella policy, which kicks in when a policyholder reaches the limit on the liability coverage in their home or auto policies.

Consider the risk in the following scenarios:
  • Your teenage son is in a car accident and you get sued for $1 million.
  • A neighbor is injured in your swimming pool.
  • A passerby trips and falls on the sidewalk at your house.
  • Your dog bites a friend's child.

What's My Exposure?

Today, anyone can be sued, and million-dollar judgments are becoming more common. And, alarmingly, any amount exceeding your standard liability policy would fall to you. In order to cover the costs, you could be forced to use money from your current assets, such as savings accounts, 401(k)s or even your home. And your future earnings could be applied as well.

So, while these types of catastrophic events are unlikely, insurance companies offer umbrella policies for customers who want to protect their assets and feel more secure.

American Business Insurance offers umbrella policies with $1 million, $2 million and $5 million in coverage. Since these types of events are rare, the umbrella insurance is relatively affordable. An annual policy typically costs from $120 to $200 for the first $1 million of insurance.

How the Coverage Works

If there is a covered liability claim under your auto or homeowner's policy and the dollar amount of the judgment is greater than the coverage limits you have purchased on those policies, the umbrella policy goes into effect. Certain limits must be met on your auto policy before you can purchase an umbrella policy.
The big question is often: How much coverage should I carry? The answer usually depends on your net worth. Counting up your home value, stocks, mutual funds, and retirement accounts is the first step.

Umbrella insurance policies can vary depending on your situation and your individual needs. Call an insurance specialist at 317-888-7283 or email to to learn if personal umbrella insurance is right for you.

Wednesday, January 26, 2011

4 Great Ways to Raise a Money Genius

Want to make sure your little one grows up to be a money genius? It’s time to get to work. You might be thinking, “But my son just mastered potty training!” However, it’s never too early to start grooming your child into a money-managing pro. Although your children will probably learn the basics about money in school, it’s up to you to teach them how to manage their finances. Here are a few tips to help you raise a money-managing genius.

 Start early. From the time children start walking and talking, you can start teaching them some important lessons that will put them on the financial fast track. Of course, the complexity of these financial lessons will depend on your children’s ages.

Teach preschoolers about money by showing them how you use those mysterious green bills to make every day purchases. When you’re paying the cashier at the grocery store, explain that you are giving the store money in exchange for the items in your cart. Once your little urchins learn how to count, you can really get down to business. Help them tally up the coins in their money bank and discuss how much more they need to buy that fancy toy. When they’re preteens, show them how you balance the checkbook, pay the bills, and deposit checks at the bank. By the time they’re in high school, you should be talking to them about your family budget and investments. You could even check your IRA or 401(k) statement together. Your teens might not fully understand all the specifics right now, but these exercises could plant those first financial seeds.

Make them work for it. If you want your little ones to blossom into true financial planning masterminds, make them work for their weekly allowance. Don’t just hand over a wad of cash. If you set that precedent now, your kids will be in for a rude awakening when they enter the real world. So, if your son insists that he has to have that super-cool, high adrenaline Xbox game, don’t hand it over immediately; make him work for it. Tell him if he really wants that game, he’d better get busy mowing the lawn, taking out the trash and bathing Fido.

Although some parents are anti-allowance, many financial experts say that a weekly allowance is often a great learning tool. Your children will learn that they have to work to earn money, and then they will have the option to either spend or save that money in whatever way they choose. Before you agree on a weekly allowance, it’s important to set some ground rules. Figure out which household chores your children will have to complete each week in order to receive their weekly pay. You can even help them set “financial goals” with their allowance. For example, if your daughter has been eyeing a pair of designer jeans, tell her that she could buy them if she saves up her allowance for a couple of months. This teaches her a valuable lesson about saving.

Give him a head start. Want to give your kiddo a financial head start on his path to financial security? If you’ve got the cash, and they have some amount of earned income, you might consider making a small monthly contribution to an IRA in their name. When it comes to retirement accounts, the sooner you start investing, the bigger the nest egg grows.

Here’s an example: If you contributed $56 a month from the day your child is born until her 18th birthday, her retirement account will grow to $1 million by the time she’s 65 (assuming an 8% average annual growth).
If you decide to open an IRA in your child’s name, sit down with her and tell her how it works once she’s old enough to understand. This will teach her the importance of investing and saving.

Lead by example. Of course, the most effective way to teach your child about money is to demonstrate smart financial planning yourself. You can’t rightly tell your child how important it is invest and save when your own savings account is empty and you’re busy racking up thousands of dollars of credit card debt.

In other words, if you’re going to talk the talk, you’ve got to walk the walk. After all, children generally mimic their parents’ behavior and develop similar habits. So, if you want your child to be financial planning genius, you’ll have to become one yourself. With a little bit of encouragement, lots of love, and plenty of financial advice, you can put your kiddo on the road to financial brilliance.

Tuesday, January 25, 2011

Insurance policies: Questions to consider on long-term care coverage

The market for long-term care insurance grew even more foreboding for some consumers last year when big insurers announced sizeable premium hikes.

Insurers that provide coverage for a nursing home stay, adult day care or a home health aide have seen higher-than-expected claims at the same time their ability to grow a cash cushion has been hampered by low interest rates. Because of the squeeze, MetLife Inc. recently stopped selling coverage and Genworth Financial Inc. and John Hancock raised their prices.

Here are some things to consider when seeking a policy.

What is long-term care and what's driving up premiums?

Long-term care insurance is used to pay for care if you have a debilitating condition that keeps you from performing daily living activities like eating or bathing.

About half of the money used to pay claims comes from returns on invested premiums. Long-term interest rates have fallen, and that means the invested money isn't growing at the rates insurers expected when they issued some policies in the early 1990s.

On top of that, more customers are keeping their policies and submitting claims than insurers expected. Insurers had assumed that as many as 5 percent of the people who bought policies would lapse or stop payment, but only about 1 percent have, said Jesse Slome, executive director of the American Association for Long-Term Care Insurance, which represents independent agents and brokers.

Should I buy a policy before more companies leave the market or rates climb even higher?

Not necessarily. The best thing to do is shop around.

The premium increases aren't a sign that all prices are about to soar. Waves of rate hikes and consolidation have hit the industry in the past, said Anne Tumlinson, senior vice president for long-term care at the private research firm Avalere Health.

Some policyholders will go several years without a rate hike. Aside from insurer assumptions on interest rates or use, increases also depend on the amounts state regulators require an insurer to keep in reserve to pay claims.

What's the right age to buy one of these policies?

There's no magic number. Most people buy these policies between ages 55 and 64, Slome said. Don't wait too long, but don't start coverage too early.

What are the biggest keys to finding the right policy?

Read a policy's coverage definitions to make sure they match what you want. Policies offer dozens of permutations such as different daily benefit amounts, coverage lengths and ways to protect against inflation.

An independent insurance agent, a financial planner or an attorney can advise you.

Is long-term care coverage worth it?

It can be a gamble. Customers might pay annual premiums exceeding $2,000 for years before making a claim, or they might never use the coverage.

But skipping coverage can prove costly, too. A private nursing home stay, can run more than $200 a day.

What will the new government long-term care plan provide?

The health care overhaul passed last spring calls for the creation of a long-term care program called CLASS, or Community Living Assistance Services and Supports. Working adults can enroll after benefits and premiums are laid out next year, but they will have to pay premiums for five years before they can make a claim.

Benefits will be at least $50 a day, an amount that would help cover a home health aide. But Tumlinson said the program isn't expected to pay the entire bill for more expensive care like a nursing home stay.

Monday, January 24, 2011


This real-life case reinforces the need for every business to provide OSHA-required training.

A West Virginia company assigned a new employee – call him Jim – to drive a forklift, even though he had no experience or training in forklift operation "There's nothing to it," his supervisor told Jim. "It's just like driving a car." However, his first few weeks on the job turned out to be bumpy. Several times on each shift, while driving the forklift, he would knock things over. Although the supervisor warned Jim to be more careful, he continued to bump his way through the workday, leaving a trail of destruction wherever he went.

About three weeks after being hired, Jim's supervisor instructed him to drive down a narrow aisle between two rows of stacked, loaded pallets. After objecting, Jim reluctantly proceeded down the aisle. His left foot, which was dangling outside the forklift where it shouldn't have been, became pinned between the forklift and the wall of pallets. Jim suffered multiple fractures of the foot, together with a badly twisted knee; both injuries required surgery. Instead of going back to work, Jim went to court, filing suit against his employer and his supervisor for negligence.

His argument was clear: The company and his supervisor failed to provide safety training that could have prevented the accident. Jim's attorney told the court that, although OSHA regulations mandated specific training, testing, and certification for forklift operators, the company had not trained, tested, or certified him. This meant that Jim should not have been operating a forklift – and if he hadn't been doing so, the accident would not have taken place.

The Supreme Court of Appeals of West Virginia agreed, ruling there was sufficient evidence to prove that both the employer and the supervisor were negligent. When they hired the employee; they knew that federal law required proper training or certification of forklift operators. Allowing Jim to drive a forklift without proper training was an act of negligence.

The message: Failure to provide OSHA-required training is a huge mistake. Whenever you hire new employees or assign workers to new jobs with new hazards, make sure that they receive proper training from the get-go. Never allow an employee to operate dangerous equipment or perform any other hazardous job until they have completed the required training and demonstrated competence, as well as understanding the hazards and necessary precautions.

Friday, January 21, 2011

Younger Insurance Consumers Expect Online Insurance Options

Younger Insurance Consumers Expect Online Insurance Options: "It’s not a far stretch to predict that the next generation of insurance consumers will want to purchase more insurance coverages online. But the latest Employers Small Business Opinion Poll confirms that Generations X and Y want to interact with …"

Accurate Contact Data Improves the Bottom Line for Insurers

Accurate Contact Data Improves the Bottom Line for Insurers: "Accurate contact data helps insurers provide a high level of customer service while maintaining lean operating costs."

Judge Bars Life Insurer From Boosting Rates

Judge Bars Life Insurer From Boosting Rates: "

A federal judge in Los Angeles has prohibited an Indiana-based insurer from tripling life insurance rates for more than 50,000 mostly elderly policyholders.


Sunday, January 2, 2011


Since Title VII of the Civil Rights Act of 1964 passed, the issue of employees' rights continues to be controversial. Employers involved in interstate commerce are prohibited from discriminating against applicants.

Understanding How Fast Lawsuit Risks Are Increasing. As more laws are enacted for workplaces, employers face a higher risk of lawsuits. The likelihood of discrimination lawsuits is especially high. In order to minimize this risk, employers need to create a workplace that offers workers equal rights, opportunities, job access, working conditions, job security and opportunities for advancement. They must also strive to create a workplace that is in compliance with federal employment guidelines for mature and disabled workers. During the period between 1992 and 2004, the number of individual discrimination charges jumped from 72,302 to 79,432 annually. These figures, which were collected by the Equal Employment Opportunity Commission, include all types of discrimination filings.

The 2010 Wal-Mart Example. Claims of workplace discrimination hit a record high in 2010. The total number of claims was 99,922 during the fiscal year. This number gained national attention after the story of a class-action discrimination lawsuit was filed against Wal-Mart. The U.S. Supreme Court threw out the case. This case stated that more than 1.5 million female workers faced workplace discrimination in the aspects of pay and promotions. The Court ruled that the case couldn't continue because of the varied circumstances of the plaintiffs, which lacked uniformity. This was the most high-profile employee discrimination case of 2010. It was also the largest class-action lawsuit in U.S. history.

The Small Business Perspective. Wal-Mart had a policy against uniform employment practices. Since duties were delegated to individuals in specific branch locations, the case was overthrown. Smaller companies need to take the examples of larger companies by ensuring that they're properly protected from such lawsuits. On a smaller scale, discrimination lawsuits could devastate or bankrupt a small business. When employers have more personnel policies in place, there are fewer lawsuits filed. This is especially true if the policies are outlined well in a handbook and given to new employees. Educating new employees thoroughly is important. It's also essential to fully educate employees who already work for the company at the time such changes are made. However, even if the law is interpreted carefully, there are still times when employees may allege discrimination. During such times, employers are always thankful and reassured that they possess Employment Practices Liability Insurance (EPLI).

Importance of Employment Practices Liability Insurance. Most people aren't aware just how important this type of coverage is. The importance of it can be discovered by carefully examining the workplace. Most workplaces have an ethnic and racial composition that is constantly changing and evolving. In addition to workplaces, the entire country is changing because of these factors. Cultural aspects have become one of the most common roots of discrimination cases. Although America is known for high levels of educated workers, discrimination continues to thrive among employees. We are taught in school to tolerate and accept other cultures. However, exercising equal treatment in the workplace seems to be a problem for many. In addition to this, sexual harassment, handicap bias actions and age discrimination lawsuits are common. Workplaces facing these issues are finding themselves in serious legal trouble.

The Solutions. In order to avoid legal battles, it's important to have EPLI. Although many employers think it's too expensive, it can save a company from going under if a lawsuit is filed. Have one of our professionals perform a risk assessment to determine how much insurance is needed. In addition to having ample coverage, it's important to implement policies in the workplace that encourage equality and discourage discrimination. Information needs to be made available to workers to make them aware of what discrimination is and how to avoid it. Encourage workers to treat one another with equal and mutual respect. The press and human rights organizations are becoming more vigilant about spotting discrimination in multinational companies. With so many scrutinizing eyes watching, it's important to assess the workplace regularly to ensure that discrimination risks are low. Educate executives on proper hiring, firing and disciplinary guidelines.

Two factors are contributing to the rising number of lawsuits. First, employees are being educated about their discrimination rights more thoroughly. Second, financial hardships caused by the recession are making employees desperate enough to file claims that might not be legitimate. Regardless of whether claims are legitimate or not, it's essential to have EPLI to protect your business.

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