Are You Managing Your Certificate of Insurance Process Carefully?

It is no secret that the larger companies with big budgets and teams of lawyers often lead the way over smaller companies when it comes to risk management and safety issues.  Still, smaller companies can learn by watching the behaviors of the large companies in their trade group. This blog is designed to share with you some of what the big boys already know when it comes to insurance certificates.

Most small contractor companies understand the need to obtain certificates of insurance to prove that their subcontractors are insured.  But what often gets lost is a clear understanding of just why you need that certificate and how your certificate processes might impact your company’s risk profile.

If I were to randomly survey the small contractors that call our office to request an insurance certificate on one of our clients, and ask them why they need this certificate, the lion’s share of them would say that they need it for their insurance company when their policies are audited.   And while I understand that this is the most pressing issue; you don’t want to have to pay for insurance on your subcontractors if you don’t have to; this mindset completely overlooks the risk management component of this process.  In fact, the real reason that you want a certificate of insurance is to make sure that you are not taking on the risks of an uninsured subcontractor on your job site.  Look at it this way; you’ve put a lot of thought, time and care into your insurance protection. Do you want to let an uninsured subcontractor put all of that in jeopardy? 

Focus now on the risk management side of this equation.  You are relying on this certificate of insurance to protect your company from dangerous or uninsured subcontractors.  With that in mind, take a look at this short list of issues to keep in mind regarding the insurance certificates that you request from your subs. 

Make your certificate request to the insurance agent, not the subcontractor.  Several years ago it was reported that people were offering blank and/or fraudulently completed certificates of insurance for sale on ebay.  If your uninsured subcontractor wants to find a way to fake a certificate of insurance, it is not going to be that difficult to do.   So, to help insulate your process from this risk, ask your subcontractor for the contact information for his or her insurance agent and then contact the insurance agent directly to request the certificate.

Carefully review the certificate information.  So many contractors simply file away certificates of insurance without even glancing at them.  This is a dangerous practice.  You should take a minute to check the names of the insurance companies listed as providing coverage.  Do they look legitimate?  Are they names that you recognize?  Now take a close look at the policy effective and expiration dates.  If a policy will be expiring soon, especially if the expiration date is before you expect that the subcontractor will be finished at your job site, then you will need to get another certificate, one that shows that the policies were renewed.  Last of all, check the limits of coverage shown for each policy.  You want to be sure that your sub has limits high enough to keep your insurance from having to respond to a large loss.

Remember, with an insurance certificate you are looking at a snapshot in time.  Keep in mind that any information shown on the insurance certificate is just a record of the coverage in place on the day that the certificate was created.  If your sub fails pay his next insurance bill then he could be working on your job site with cancelled coverage, exposing your company to a huge unknown risk of loss.  And don’t be fooled by the idea that you will receive a notice of cancellation if your sub gets behind on his insurance payments.  The ugly truth is that most insurance companies do not even want to see copies of certificates issued by their agents and they have no intention of letting you know if a policy is cancelled.  The truth is, they couldn’t notify you of a cancellation, even if they wanted to as they have no record of the certificate in their files.

The Additional Insured option provides better security for you.  The larger contractors have taken this route and small contractors who care about their risk management should consider it as well.   In addition to asking for a certificate of insurance from your subcontractors, you might also consider asking that your company be added as an additional insured on the subcontractor’s policies.  Some companies charge for this but generally the charge will be pretty low.  As an additional insured, you will now receive an endorsement to the policy from the insurance company, so you know that they know about you.  This also solves the snapshot problem as you hold a position on the sub’s policy that entitles you to receive cancellation notices or notices of nonrenewal should any of those be triggered.

Don’t fall into the trap of focusing only on the audit requirement of an insurance certificate while forgetting that you need protection from your subcontractors and their behavior on your job site.  Don’t let your certificate of insurance procedures become a simple rule following process, instead take action to be certain that your company is getting the protection that it needs from the risks of uninsured subcontractors. 

At Clinard Insurance Group, located in lovely Winston Salem, NC, we want all insurance buyers to be informed consumers.  We have different types of contractor insurance programs, from landscapers insurance, plumbers insurance, electricians insurance to painters insurance programs and many others.  We insure contractors in North Carolina, South Carolina, Georgia, Tennessee and Virginia.  Should you need any help with your commercial insurance policies, I hope that you will feel free to call us, toll free, at 877-687-7557.

Electric Shock Drowning – Are You At Risk From This Silent Killer?

Electric shock drowning, referred to as ESD, is a relatively new danger to swimmers and boat owners.  With so many more docks now connected to shore power for lights and other electrical conveniences, more people each year are falling victim to ESD.  And since most people are completely unaware of this risk, we will continue to read about additional innocent victims each year.

Electric Shock Drowning comes about when small amounts of 120 volt alternating current leak into fresh water in places where swimming occurs.  Swimmers can be electrocuted or incapacitated by this AC leaked current.   This is a fresh water phenomenon as fresh water is highly resistant to electrical flow, meaning that a swimmer caught in the flow of escaped electrical current now becomes the path of least resistance for this current trying to return to its source.   It takes very few amps to incapacitate a person and lead to drowning.  Salt water by contrast has a low resistance to electricity so that the current would flow around a swimmer in salt water.

Electric shock Drowning incidents are most common around docks and marinas, but there have also been cases reported at water fountains, irrigation ditches, golf course ponds and other bodies of water.  Many cases may simply be written up as drowning if no one was there to hear the victim cry out before he or she drowned.  Despite these other places for ESD, the most common cause comes from a boat plugged in to shore power that is leaking this current into the water around it.  Before AC current can escape into the water around the boat, two things must happen.  The first is that the boat itself must have some electrical fault on board.   This would be a short circuit of some type or another, a wiring error or a malfunctioning appliance which is sending AC electricity away from its intended path.  Remember that AC electricity travels in a loop, from its source to the load and back again, forming what is called a circuit.  When the circuit is broken, AC electricity will try to find a way back to its source.  Proper AC setup requires that there be a green grounding wire serving as a backup return path for the electricity to complete its circuit if there is a fault in the circuit.   So the second thing that must go wrong is that the grounding system is broken or fails so that the AC current cannot return to its source.

So what can you do to protect yourself and your loved ones from ESD?  The best plan would be to never swim around docks or marinas where shore sourced electricity is present unless that electricity is turned off.  This is also why rough play on docks is so dangerous as it could lead to someone falling into the water around the dock.  Now if you must swim or dive around your boat in order to work on fittings or equipment, you should be sure that all electricity is turned off before you enter the water.  Should you ever feel tingling or shocks while swimming, then you should not return to the dock.  Touching a metal ladder in this case could be immediately fatal.  Instead, swim away from the dock or marina and head to shore 100 yards or more away.  To rescue an ESD victim, do not go in the water as that could make you a victim as well.  Instead, turn off the shore power connection at the meter or unplug the shore power cords, then throw a line to the swimmer or row out to help the victim.  And now that you know more about ESD, please spread the word about these risks to all of your friends and family who have docks or spend time at marinas and might be at risk.

For those of you who own docks with shore power, there are a few additional precautions you should take.  Post no swimming signs at your dock.  Only hire trained marine electricians to install or service the wiring at your dock.  Those trained as land electricians do not have the training or understanding to safely install or service wiring in a marine environment.  You can also purchase testers that can test your dock and the waters around it for electricity leaks.  Please also consider the following protective devices for your dock.

Isolation Transformer – This device transfers electricity from the shore to the boat without the shore wires physically touching the boat’s wires.  If you have a fault, then the current no longer seeks a path through the water back to shore.

Galvanic Isolators – These are designed to help prevent your boat from suffering from or contributing to galvanic corrosion while plugged in to shore power.  Choose a failsafe model that requires that if it fails, it will fail in the off position.

Reverse Polarity Indicator – Can tell you if a neutral wire becomes hot thus removing your protections from circuit breakers that are installed on hot wires.

Growing up around water, I know I have many wonderful memories of swimming and playing around docks.  But we need to rethink this tradition as our docks are changing and becoming more dangerous places.  Please share this information with anyone you know who may be at risk.

At Clinard Insurance Group, located in Winston Salem, NC, we want all insurance buyers to be informed consumers.  If you need any help at all with your personal auto insurance, your home insurance or boat insurance or even your life insurance, please feel free to call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com. 

The Parent’s Role In Teaching A Teenager To Drive

This year, National Teen Driver Safety Week runs from October 20 – 26.  That got me thinking that now might be a good time to review the parent’s role in teaching a teen aged child how to drive safely.  This year, the theme of National Teen Driver Safety Week is:  It Takes Two – shared Expectations for Teens And Parents.

Gaining the freedom that comes with learning to drive and obtaining a drivers license is a life changing process for most teens and their parents.   The public schools in North Carolina take on some of this instruction, but most teens generally only receive about 6 hours behind the wheel in drivers’ education programs.  We know for sure that this is not enough time to learn to drive safely.  We advise our parent clients that they should spend at least 100 hours in the passenger seat with their teen behind the wheel learning from them.  If they can increase those hours to 150, then their child will have an even better chance of becoming a safe driver.   These hours of supervised driving are critical to the success of the driving training that a parent provides for his or her child.  This is a safety issue and the best way to insure that your child will be a safe driver is to practice good driving skills when your child rides with you in the car and to pass on your knowledge as the trainer in the passenger seat while your permitted child drives.   

It will also help if you have a good understanding of the statistical realities for inexperienced drivers.  As an example, a recent study found that 75% of serious teen automobile accidents were the result of driver error and that more than half of these wrecks were caused by one of three mistakes made by the teen aged driver.  These three common errors in judgment were:

1.       Driving too fast for road conditions – Teach your child about speed management, not only following the posted speed limits but also learning to make adjustments in speed for weather, traffic or road conditions that demand slower speeds.

2.       Driving while distracted – First of all, emulate non-distracted driving when you drive and your child rides with you.  Help them understand just how quickly a distraction can kill them.  Make it scary and make it personal if you have to but help them understand this concept.

3.       Failure to detect a hazard – Teach your child to constantly scan the road and the area around them for possible hazards.  They must learn to get the big picture by taking in data all around them for purposes of spotting hazards.

To help you with this important teaching process, Clinard Insurance Group has created a driver training book that breaks down what your child needs to know and how you can teach it to them into an organized, step by step approach.  If you and your child keep a log of the hours driven under training, this can help give him or her the incentive needed to learn these skills so that your teen will understand where the two of you are in the training process and will know what is required to finish this training.  Learn more about this training booklet here.

Once your child has completed the training while driving with you under a license permit, then the next step is to have your child test for and obtain a restricted driving license.  At this point your job is not finished.  Do not let up in your supervision of your child at this point.  At this point, it is important that you take the time to learn the rules of the graduated license system in your state and make sure that you consistently apply them to your newly licensed teen driver.  If your teen is anything like mine, then he will tell you that no other parents are making their children follow these rules to the letter of the law.  He will be wrong when he says this and it is your job to make sure that he moves through the graduated licensing process step by step, following all restrictions.   Graduated licensing programs have had a major impact in reducing deaths and injuries for teen drivers in states that have implemented them so please follow that process all the way to the end.

At Clinard Insurance Group, located in Winston Salem, NC, we insure thousands of families all across NC, SC, GA, and TN.  We want to help you with the process of turning your child into a safe driver and have many tools on our website for this purpose.  We can also help you reduce the cost of auto insurance for your teen driver while still helping you get the coverage that you need to feel comfortable with this change.  Please call us, toll free, at 877-687-7557 for help.

Did Your Car Dealer Forget To Add Your New Car To Your Auto Insurance Policy?

What a huge thrill.  Taking your new or even gently used car home from the dealership is a big day for anyone.  But before you drive off that lot you need to make sure that your insurance is in place on this new car.

Car dealers always want to help make the car buying process as painless as possible.  That’s why they often offer to handle the call to your insurance company for you to add coverage for your new car to your auto insurance policy.   And this seems more than convenient, but for some unlucky people this convenience has come at a huge cost.  I’m an insurance agent and have been for 30 plus years.  My word of advice is that you don’t leave this job to someone else.  Mistakes and oversights happen and we are discovering more and more cases where we don’t know about a new car purchase until months after it actually happened.    If this discovery comes after your car has been totaled in a wreck then you might lose quite a lot of money.   Please don’t delegate this important part of the car buying process to anyone else.

With that in mind, it might help to review exactly what the NC auto insurance policy says about changing  the cars on the policy.   I must preface this discussion by saying that this blog is oriented around the North Carolina Personal Auto Insurance Policy form so if you are located  in another state, or if your vehicles are insured on a commercial auto insurance policy then what you read below may not be accurate for your particular situation.  Also,  I want to keep the attorneys happy here by saying that whatever you read in this blog may or may not be accurate for your particular situation and that there is no substitute for reading your policy as what is written there will supersede anything that you read here.

Ok, so we have the disclaimers out of the way, now let’s see what the NC Personal Auto policy says about vehicle changes.  The policy form addresses this issue as two different categories which I will call replacement vehicles and newly acquired vehicles.  Replacement vehicles language refers to the case where you are replacing one vehicle with another one.  The newly acquired vehicles language will refer to the instances when you have acquired a vehicle and are also keeping all of your existing vehicles.  We will study each of these situations separately.

Here’s what the policy language says regarding replacement vehicles:  “If a newly acquired auto replaces a vehicle shown in the Declarations, it will have the same coverage as the vehicle it replaced except that coverage, if any, under Part D – Coverage For Damage To Your Auto applies only if you ask us to insure it within 30 days after you become the owner. “  For me, that means that if you replace one vehicle with another then the liability insurance will apply to the new vehicle no matter if you forget to tell the insurance company or not.  But the physical damages protections under coverage D, called collision and comprehensive coverage, will not be available for the new vehicle unless you ask the insurance company to make this vehicle change on the policy within 30 days of the purchase of the new vehicle.  So if your car dealer forgets to call in the car change, and you don’t catch the oversight, then after 30 days the new car will have no comprehensive or collision insurance in force if it replaced a car that had comprehensive and collision coverage in place.  Of course if the replaced vehicle was insured for just liability insurance, then that is all that you will ever have on the replacing vehicle unless you ask the insurance company to make the car change on your policy.

Regarding the situation where you purchase an additional vehicle that is not replacing a vehicle on the policy, the insurance policy language reads this way: “If the newly acquired auto is in addition to any shown on the Declarations, it will have the broadest coverage we now provide for any vehicle shown in the declarations if you ask us to insure it within 30 days after you become the owner.”   In this case your comprehensive and collision protection will be automatically apply to the new car as long as at least one other car on your policy has this coverage.  But all insurance on that new car will end if you don’t ask the insurance company to add the car to your policy within 30 days.

The take away for you as an insurance consumer in North Carolina is that it is your responsibility as the car owner to notify your insurance agent or insurance company as soon as you take ownership of an additional or replacement vehicle.  Leaving this detail to your car dealer could put your insurance protection and thus your assets in jeopardy.

At Clinard Insurance Group, located in Winston Salem, NC,  we insure thousands of families all across the state of North Carolina.  If you need help with your auto or home insurance,  or even your business insurance or your life insurance, please feel free to call us, toll free, at 877-687-7557.

An Insurance Policy That Monitors Your Driving – Are You Willing To Trade Your Privacy For Discounts?

No one likes an annoying back seat driver.  But could you stomach one that stayed quiet and just used observations of your driving habits to determine your auto insurance rates?  Well that time may be coming soon.   Insurance companies are beginning to build momentum in the field of using telemetrics as the primary actuarial data source for auto insurance rates.  Telemetrics, the science of measuring data created by your driving habits has the goal in mind of a more accurate auto insurance rate for each driver.

Insurance industry executives and underwriters have long wished for a better way to predict which clients will cause losses on their insurance policies.  In the world of auto insurance, the tools that insurance companies have had at their disposal in the past have been relatively crude.  Decisions about your driving ability and safety are currently based on information such as the kind of car you drive, your age and number of years driving, your past traffic violations and past auto insurance claims.  For instance, get a few speeding tickets and even though you’ve not filed a claim, in N.C., your auto insurance rates will skyrocket.  And yet I’ve seen quite a few clients with a high number of speeding tickets who never had an accident or filed an insurance claim.  Or take the example of teen drivers.  Not every new driver has accidents, but the insurance company simply has no way of knowing which child carries the greatest risk so they just have to charge huge inexperienced operator rates to all new drivers..  But what if the insurance company could watch young driver every time they head out in the car?  Would they then be able to make better decisions about which young driver is most likely to cause an accident and thus charge each a fairer rate?

Enter telemetrics, the newest underwriting science in auto insurance rates.  While this science has been around for a few years already, very few insurance companies have studied or adopted it.  That may be about to change.  State Farm Insurance, one of the largest auto insurers in the country is testing the use of telemetrics in several states and has indicated that they plan to roll this out to all states soon.  This strategy, should it succeed for State Farm, is bound to push this trend amongst all auto insurers much more quickly.  So what is telemetrics exactly?  Well, telemetrics is the gathering of data about your driving habits via small telemetric devices which plug into the car’s diagnostic ports.  This data is then sent to the insurance company and analyzed to determine if your driving habits indicate that you deserve  a discount refund on your rates for safer driving.  Right now these programs are focused on offering cash back discounts for good driving behaviors but are not designed to generate additional rate increases for the drivers who don’t make the grade.   That approach is almost certain to change should this form of auto rating, often referred to as usage rating become more common.    For now, this new technology is still in a testing phase and insurance companies would be hard pressed to get people to sign up to be monitored if they risked higher rates for doing so.

So what data are insurance companies collecting with telemetric programs?  Generally speaking they claim to monitor your speed, the number of miles your drive, the times of day that you drive, as well as your acceleration and deceleration habits and how hard you take turns.  What they currently claim not to monitor is seat belt usage, the exact vehicle location the car’s speed relative to the posted speed limit at that location. 

Telemetrics as a car insurance rating and underwriting tool is not without its critics.  The fears and complaints deal primarily with privacy issues in this data collection process.    Collecting this much data on U.S. drivers certainly puts insurance companies in a powerful position.  While they don’t currently plan to collect detailed data about where you have traveled, as telemetrics become more commonplace it can be assumed that more and more data will be collected.  This does create a slippery slope scenario where once you have given over your privacy to insurance companies, over time the data they collect on you could become more detailed and broader.  And once the data is compiled and collected, it could fall into the hands of law enforcement or even your separated spouse’s divorce lawyer or some other civil liability suit attorney.  And what about hackers gaining unauthorized access to insurance company data and using this information to harm you in some way?  And one other aspect of the slippery slope theory says that as more and more people accept the loss of privacy in order to try for more discounts, those who wish to maintain their privacy may have to pay higher insurance rates just to do so.  Would this be fair? 

Clinard Insurance Group is an independent insurance agency, located in Winston Salem, NC.  We insure thousands of families and businesses all across North Carolina, South Carolina, Tennessee and Georgia.  If you would like help with your auto insurance,  home insurance, life insurance or business insurance needs, please feel free to call us, toll free, at 877-687-7557.

If You Buy Flood Insurance, Your Next Bill Might Be A Shocker!

In the United States, flood insurance is very much a subsidized product.  You see, flood insurance, by its very nature, runs against the basic rules of the insurance industry.  With flood insurance, only people in flood zones will buy it.  Homeowners insurance and auto insurance are different.  Any house could burn, so every home owner will buy insurance and spread the risk around.  But flood insurance is very different as the risk of loss only applies to those in known flood zones thus removing the ability of insurance to spread the risk.  So, in order to make a market for flood insurance, the federal government created the National Flood Insurance Program (NFIP) and either over time or perhaps even from the beginning and by design, they allowed the rates to be set far below what is needed to pay the losses generated in the program.

These subsidies made the NFIP a real target in these days of federal budget cutting.  And since the NFIP has to be reauthorized from time to time, it’s reauthorization now became contingent on these subsidies going away.  Enter the Biggert-Waters Flood Insurance Reformation Act of 2012, which reauthorizing the NFIP through September 30, 2017, but also included a mandate to eliminate the subsidized premiums.  The result of this legislation is that  many who buy flood insurance can now expect to pay quite a bit more for flood insurance.

This unwinding of subsidies means that rate increases will happen for consumers in one of two ways.  They will either see 25% rate increases each year for an undetermined number of years into the future, or they will see immediately higher rates as their policy is forced into a post-firm conversion to post-firm rates.  Either way, if you buy flood insurance then, you will likely be facing much higher rates for all renewals and changes that take place after October 1, 2013.

Earlier I mentioned pre-FIRM and post-FIRM rating programs and this needs a brief explanation.  These terms simply describe the rating table from which the rates for flood insurance are taken.  Pre-FIRM buildings are those built before January 1, 1975 or built before their community adopted its first Flood Insurance Rate Map (FIRM).  And while there are some exceptions to the rule, if your home is a pre-FIRM home, located in flood zones A, V, or D, then you should expect 25% rate increases on your flood insurance policy each year for the foreseeable future.  I assume that these rate increases will stop once your rates have gradually increased to match post-FIRM rates.  If your building or home is a pre-FIRM building and located in flood zones A, V, or D and the building was not insured on a NFIP policy prior to July 6, 2012, or was purchased by a new owner after July, 6, 2012 or have experienced a lapse in flood coverage on or after October 4, 2012, then that building will be immediately reclassified into the higher cost post-FIRM rating.  If this happens then your policy will take on all of the rate increase needed to remove all subsidies immediately.

If you have a home or building that will need to be moved from pre-FIRM to post-FIRM categorization,  then you will do a few things to make sure that you maintain your eligibility for flood insurance.  This means that you must submit a new elevation certificate on your property along with current photos of the front and back of your building. 

As the federal government eliminates flood insurance subsidies, some homeowners will find themselves facing higher premiums and perhaps even additional paperwork and eligibility issues.   If you buy flood insurance now, then you can expect to receive some notifications of the rate changes, along with instructions on what you must do to remain eligible to continue to purchase flood insurance.  Please read all of this information carefully, and pay attention to deadlines to make sure that you can continue to buy this insurance for your flood risk building.  If you need any help with your flood insurance or have questions about this program, please feel free to call us, toll free, at 877-687-7557.

Clinard Insurance Group is an independent insurance agency located in Winston Salem, NC.  We insure thousands of families and businesses all across NC, GA, TN, and SC.  We can help you with your auto insurance, home insurance, life insurance and business insurance with specialized niche programs for artisan contractors, landscapers insurance, restaurant insurance, used car dealers insurance, painters insurance and auto repair shop insurance.  If we can help you in any way, please call us, toll free at 877-687-7557.

Obesity Classified As A Disease – This Presents New Problems For All Employers

The American Medical Association (AMA) has recently chosen to classify obesity as a disease instead of a medical condition.  This new classification may have implications for all employers.  Now carrying the label of disease, obesity suddenly becomes a major risk liability for employers on many different fronts.  Employers now must better understand what this means vis-à-vis the ADA Amendment,  federal disability law and the Equal Opportunity Employment Commission (EEOC)law suits.  And keep in mind that since one third of all Americans are considered obese, with another one third considered overweight, this dramatically increases the number of people that can now be recognized as disabled with rights under the 2008 amendments to the Americans with Disabilities Act. 

In defense of this new classification, the AMA says that recognizing obesity as a disease will likely help change the way the medical community tackles this very complex medical issue.  And this could offer hope to those that suffer from this disease.  And while the AMA’s new definition does not carry the force of law, it might make it easier for an obese employee to argue that he or she is disabled.  Disability law says that an impairment is something that affects a major life function.  This could include walking or sitting.   Next up is the EEOC.  Will they change their definition of disability to include limitations caused by obesity?   Currently their definition of disability due to obesity is limited to the category of morbidly obese. 

One more area of concern for employers is the federal disability law.  Under this law, employers’ actions in dealing with an obese employee could come back to haunt them.  An employee who isn’t morbidly obese and who isn’t limited in any major life functions might still qualify as disabled if the employer treats him or her as impaired.  A worker who is passed over for promotions or hiring because of obesity, may be able to show that he was denied work because the employer acted in a way that indicated that the employer considered him impaired.

So what should a business owner do to protect the company from the risk of lawsuits and disability claims due to obesity?  Start by getting a clear understanding of whether or not your company falls under the rules of the ADA amendment.  If so, then keep in mind that by their definitions, you may have a disabled person working for you and you may need to modify the work environment to accommodate them.  Next, remember that if you don’t treat the person as disabled in terms of the work that you give them or the promotions that they receive, then you will have made a step in the right direction in terms of making it harder for them to prove that they are disabled because of the way that they are treated in your company.  And if you don’t carry workers compensation insurance, then get that taken care of immediately.   Last of all, make sure that you have purchased and have in force, an Employment Practices Liability Insurance(EPLI)  policy and be sure that your protection provided by this insurance policy will extend to discrimination against obesity.  Treat all of your employees fairly in all hiring, firing and promotions, without regard to physical attributes and you will have gone a long way toward protecting your business.  But bear in mind that you must stay on top of changes to rules and definitions like this or you may suffer damages for ignoring them.

At Clinard Insurance Group, located in Winston Salem, NC, we insure thousands of businesses all across North Carolina, South Carolina, Georgia, Tennessee and Virginia.  We want all insurance buyers to be educated and informed consumers.  If you would like to discuss an Employment Practices Liability Insurance (EPLI) policy, or any other insurance need for your business, please give us a call.  We will take as much time as you need to help you understand your risks and your options for insurance protection.  You can reach us, toll free, at 877-687-7557.

Cyber Liability Insurance – Can You Afford To Ignore This Protection Any Longer?

These days most every business, no matter how small or what kind, is in the business of collecting data and information about its customers.  We do this for many reasons, from collecting payments from clients to establishing ways to stay in touch with them and help generate repeat business with them.  And these days there are so many client data driven business applications for smart phones and tablets and computers that data collection processes are now showing up in even the smallest organizations.  So what can you do to keep this data safe, and by implication, protect the privacy of your clients?  What will be your responsibilities to them if your database is hacked or stolen?  Have you tried to understand and measure the costs to you and your business if you have to pay for the losses and damages from a cyber-intrusion into your network?

Cyber attacks can happen fast and leave behind long lasting negative effects for your company.  A data breach can be caused by something as simple as misplacing or losing a laptop computer, smartphone or a tablet computer.  And while this sounds a bit scary and overwhelming, the good news is that the insurance industry has recognized this risk and has begun to offer insurance protections for this type of loss.     I have listed below a short list of reasons why you need cyber liability insurance coverage in place for your business. 

Here are 5 top reasons why you should purchase a cyber liability insurance policy for your company:

1.        Breach of Network Security/Privacy  -   While we tend to think of a data breach affecting our clients, it can also involve the loss of the personal information of your employees of information about your vendors.  You could also lose company data for your own company such as proprietary information; let’s call it the secret sauce to what makes your business unique and successful. 

2.       Data Recovery Costs – Among the many costs of recovering from a cyber theft will be the costs to recover data that is stolen.  You may have to spend quite a bit to pay for your clients’ or your employees’ costs to rehabilitate their individual financial identities.  This could be a very long and expensive process, depending on what damage has been done by the thieves. 

3.       Breach Notification – You will be required to notify anyone who might be affected by the data breach.  The costs of communicating with so many people at one time could be quite expensive for your company.

4.       Regulatory Fines/Penalties – Different governmental entities may have fines that you will have to pay as a result of the cyber theft of your data.

5.       Your Loss of Income – Don’t discount the damage to your business of this type of theft.  Your reputation will need to be repaired and this will take time.  In addition, the time and effort that you spend in recovering from a data breach loss could completely cripple your ongoing operations and generate a huge loss of income for you.

Cyber liability losses to businesses are increasing in both frequency and scope.  Because this liability exposure is so new, many businesses have overlooked the negative financial impact that this kind of loss might have on their organization.  My advice is that you sit down with your insurance agent and take as much time as is needed to make sure that you have the cyber liability coverage in place that you feel is required to adequately protect the health of your organization. 

Here at Clinard Insurance Group, located in Winston Salem, NC, we want all insurance buyers to be informed consumers.  We insure thousands of small businesses all across North Carolina, South Carolina, Georgia, Tennessee and Virginia.  If you need help with your small business insurance, or if you want to explore cyber liability coverage in more detail, please feel free to call us, toll free, at 877-687-7557.

Homeowners Insurance And Dog Bites

There are a lot of dog lovers in this world.  I know I am one.    And that makes it easy to be blinded to the risks that they pose to me as a dog owner and a home owner.  If your dog bites or attacks someone, either in your home or off of your premises, do you have any insurance protection?    What steps should you, as a dog owner and dog lover, take now to reduce the possibility that your dog will hurt someone else?

In NC, if your dog injures someone and if you are held responsible for that injury, then your North Carolina Homeowners Insurance Policy will pay that loss.  This falls under the liability section of your homeowners insurance policy.  But bear in mind that once the claim is settled, your insurance company may refuse to renew your homeowners insurance policy unless you remove the dog from your home.   And depending on where you live, your local government may require that the dog be destroyed.   So it makes a lot of sense for you to be clear about some of the facts of dog bite claims and injuries.  In addition you should be thinking about things that you can do to keep your loved family pet from hurting someone.

Here’s a quick review of some recent dog bite statistics.  In 2012, insurance companies paid out an estimated $489 million on dog bite claims.  The US Postal Service reports that in 2012, a total of 5879 postal workers were bitten or attacked by dogs.  The 2012 number reflects an increase of 274 attacks over the 2011 totals.  And the American Humane Society estimates that unsupervised newborns are 370 times more likely than an adult to be killed by a dog.  And consider that the average cost of a dog bite claim in 2012 was $29,752.

So what can you, as a dog lover and dog owner, do to reduce the chance of your dog biting someone?  Well, keep in mind that any particular dog’s tendency to bite will depend on a number of factors such as heredity, training and socialization, as well as the victim’s behavior.  Many people don’t realize this but under the right circumstances, any dog might bite.  Here are a few tips that might help:

·         Remember that a sick or injured dog is much more likely to bite. Stay on top of your dog’s health needs to reduce the chance of a bite due to poor health.

·         While your dog is still young, make an effort to socialize him or her to as many different situations with other animals and people as you can.  If your dog feels at ease in a situation, he or she is much less likely to bite.

·         When you play with your dog, do so with nonaggressive games.  A good example of this would be fetch.  Playing tug of war type games can encourage inappropriate behavior that could lead to a bite later.

Taking a bit of care to work with your dog early might save the dog’s life later.  And it could prevent someone from being hurt by your dog.  And all of that prevention just might preserve your ability to continue to buy insurance for your home by preventing a claim later.

At Clinard Insurance Group, we insured thousands of families, all across North Carolina.  If you would like help or questions answered about any of your insurance policies, either home insurance, auto insurance, business insurance or even life insurance, please call us, toll free, at 877-687-7557.

The Coverage For Your Roof On Your Homeowners Insurance May Be Changing

Scientists tell us that 2012 was the hottest year on record in the United States.  Global warming is here and we are seeing more frequent and more intense storms. This puts a lot of pressure on rates for property insurance in general and homeowners insurance in particular.   In North Carolina that means more frequent and more intense windstorms and hailstorms.  Wind and hail losses in North Carolina in 2011 sent the homeowners insurance marketplace into a tailspin.  One the one hand, insurance companies were taking huge losses in home insurance while on the other hand the insurance commissioner was unwilling to allow them the rate increases that they needed as he was facing re-election.  The result has been a continued chaotic home insurance marketplace in our state.

To protect themselves from further losses and without any chance of getting rate increases the insurance companies started to look at other options.  The first and most obvious move was to require that a client included their more profitable auto policy in order to qualify for home insurance.  Next, the insurance companies drug out an old and arcane technique known as  the consent to rate letter, to try for rate increases on a policy by policy basis.  Along with that came mass cancellations and nonrenewals of existing home insurance policies and a few insurance companies cancelled all of their policies in our state and left the state entirely.

Now we all know the old saying that you can’t squeeze water out of a rock.  So if an insurance company can’t get the rates they need to be profitable but want to stay in the home insurance business, what are their options?   Well the next place they have to look is at the coverage they provide in the policy with an eye toward reducing that coverage.  In North Carolina, the cause of the most losses on home insurance has been wind and hail claims, especially to roofs.  So we are now beginning to see some of the larger insurance companies in our state taking action to reduce the coverage in their policies for these kinds of claims. 

One way to reduce the costs of claims from roof damage is to change the policy language so that when a roof is damaged the amount paid out for the claim is based on the depreciated value of the roof instead of the replacement value of the roof.  At this time, most policies in NC still provide replacement cost protection on roof damage claims but that is changing quickly.  Several big companies have already begun to change their policies to pay claims based only on the depreciated value of the roof.  And as the big boys go, so goes the entire market when it comes to this kind of thing.

Let’s take an example to help illustrate what this might mean for you, a NC homeowners policy holder.  Assume that you have a 20 year roof on your house that is 15 years old when a hailstorm blows through your neighborhood and damages your roof.  With a traditional replacement cost policy your claim would equal the cost of putting on a new, 20 year roof.  For the sake of this example, let’s assume that new roof will cost $20,000.  Now, if your policy coverage has been modified to limit roof claims to the depreciated value of the roof instead of replacement cost, then your claim will be for only $5000.  This is because your roof only has ¼ of its value left on it based on its age so you only receive ¼ of the replacement cost of your roof.  Imagine having to come up with $15,000 right away to repair your roof after a bad hailstorm.

Some insurance companies are taking an alternate approach to this problem.  Their strategy is to have a different, much higher deductible for wind and hail claims while leaving the replacement protection for your roof intact.  Already we see some companies implementing a mandatory $2000 deductible on all home insurance policies for all claims related to wind or hail.  While I find this usually to be better for the consumer than restricting the roof valuation, it is still another bite out of the consumer’s pocket.

For the sake of the consumer, I would prefer that all policies have the same coverage language.  But with these changes, now a consumer must carefully watch his mail for notices regarding changes to his or her homeowners insurance policy.   If your roof is failry new then depreciated value may be better for you than a large wind and hail deductible.  However, if your roof has some age on it then you would be better served taking on a larger wind and hail deductible and keeping your replacement coverage on your roof.

At Clinard Insurance Group, we represent a number of insurance companies that have not changed either their deductible plan or the valuation for roof claims.  But, as the bigger insurance players in our market begin to make these changes, you can bet that those will smaller market share will take notice and start to make changes to their coverage language in their policies.  This makes it more important than ever that you stay in touch with your insurance agent and that you fully understand exactly how your policy will work in a wind or hail claim.  If you would like our help with your home insurance, your auto insurance, your business insurance or even your life insurance, please call us, toll free, at 877-687-7557.

Certificates of Insurance And Your Contractors Insurance Policies

Contractors work often involves close coordination with other entities from other artisans to general contractors to even banks and architects involved in a project.   Keeping the information flowing freely between all of these parties on the same job is critical but does require some front end knowledge and planning on your part.  The more hurdles you can jump before you start the job, the easier it will be for you to get your work done without interruption and the easier it will be to get paid once the work is done.

General contractors, or any other contractors above you in the food chain who hire you will need to be able to prove that you have the necessary levels and types of insurance protection.  Failing to do so could mean that you can’t get on the job site in the first place or it may mean you have difficulty collecting payments for your work once it is completed.   So anything you can do to smooth out this process should be done before you start trying to collect the pay for your work, or better yet, before you sign the contract itself or take the job in the first place.

Every construction job is different and each one will carry different requirements for insurance for subcontractors.  If your general contractor is organized and efficient, then they will probably want to have all of your insurance proof documented before you are allowed on their job site.  Typically these general contractors will need details about your commercial auto insurance policy, your general liability insurance policy, your workers compensation insurance policy, and sometimes even require you to carry a commercial umbrella insurance policy.  Your contract with them will likely spell out exactly how much insurance coverage is required for each line of insurance.  So, one step you can take in advance is to share the contract wording relating to insurance requirements with your insurance agent.  This way your agent can help make sure in advance that you will be able to satisfy these requirements.  Once this has been done, have your agent send a certificate of insurance to your general contractor before you start work.

Now let’s take a quick look at this process from the perspective of your communication with your insurance agent.  In order for your agent to issue a certificate of insurance to the general contractor or some other party, you will need to be able to provide them with the name and address of the certificate holder.  Have this information in hand before you call your agent to request the certificate of insurance.   Also, look through your contract to check and see if any special wording is required on the certificate of insurance.  Some contracts will require that you add the general contractor as an additional insured to each policy.  This may be something that your insurance company is willing to do or they may require an additional premium from you for this policy change.  In some cases your insurance company may even say that they will not add this additional insured to your policy.  Other contracts may require or request special wording that may change the nature of one of more of your insurance policies.  These special wording certificates often require the approval of the insurance company underwriter.  No matter which way this goes, you can speed up the process if you discover any special wording requirements ahead of time and let your agent know about them when you first call.

By doing this advance work on your insurance certificate requests, you may be able to save yourself time and often a lot of trouble in the certificate ordering process.    You don’t want to find out, late on a Friday afternoon, that you don’t have the correct insurance policies in place to satisfy your contractual obligations to your general contractor.  Failure to do so could delay when your general contractor is able to pay you. 

At Clinard Insurance Group, in Winston Salem, North Carolina, we insure hundreds of contractors of all stripes, located all across North Carolina, South Carolina, Georgia and Tennessee.  We have insurance programs in place for carpenters insurance, plumbers insurance, landscapers insurance, electricians insurance, painters insurance and many others. We work very hard to fulfill all certificate of insurance requests from our clients in under 30 minutes.  We also have a free phone app for your Android or Iphone that will allow you to request certificates of insurance from us with a few keystrokes on your phone.  If you need help with any of your business insurance policies, please give us a call, toll free, 877-687-7557.

Driving Without Car Insurance In NC Might Soon Cost You Your Car

A bill, recently introduced in the NC House of Representatives by Representative George Cleveland, referred to as house bill 602, proposes to confiscate uninsured vehicles operating on NC highways. Cleveland is frustrated with the number of uninsured drivers on our highways and wants to step up the costs of noncompliance to get drivers’ attention.  If passed into law, then these rules would take effect December 1 2013.

In NC car owners cannot renew their license plates without first proving insurance is in place on the car associated with that tag.  However, once past this hurdle, some insurance policies are later cancelled while the driver continues to operate that vehicle on the highways.  The NC State Highway Patrol issued 24,436 citations last year to drivers without insurance.  Some estimates put the number of uninsured drivers on our highways as high as 15% of the total of all vehicles on the road.

As an aside, when I first became an insurance agent in the early 1980’s, uninsured motorists insurance coverage cost the average driver about $3 per year per car.  Now, that number has skyrocketed to nearly $150 per vehicle.  Part of this explosive increase in costs has been related to the introduction in the mid 1980’s of underinsured motorists coverage, but there is no doubt that the costs of uninsured drivers in our state is something that everyone who buys insurance here has to bear. 

The bill says that the confiscated vehicle will be placed under the possession of the sheriff of the county in which the violation occurred.  It goes on further to state that the sheriff shall restore the motor vehicle to the owner, only after proof of insurance is obtained.  In addition, this bill would require the owner to pay the sheriff for costs actually incurred by the sheriff towing, processing, and storing the vehicle.  There is no mention of limitations on these fees and expenses so we could see widely differing costs for uninsured motorists from one county to the next.

One other area of consideration in this bill deals with the rights of the lienholders to a confiscated vehicle.  After all, they actually hold title to the car until the loan is paid off.  Section 3 says that the lienholder may petition the court to reclaim the vehicle for sale to satisfy the lien.  The allowance of this reclamation is up to the discretion of the court however and if the vehicle is returned to the lienholder then that party has to return to the state any proceeds of the sale over and above the balance remaining on the loan on that vehicle. 

This bill is a drastic measure and may seem a bit heavy handed but there are some additional provisions in the bill that will soften the blow for some violators.  There are exceptions that can be made for technical errors that may have led to a lapse in insurance coverage.  Also, there is a grace period that allows the driver to obtain insurance in order to avoid the vehicle being sold by the state though during that time they will not have access to their vehicle.  I think it is clear that the state of North Carolina would rather not get into the used car or car auction business so they will hope that most people will purchase insurance right away to get their car out of the impound lot.  But I think it is a useful consideration that a violator that has no insurance is not allowed to just drive off from the traffic stop and endanger others with no means of paying for the accident that he or she may cause.

You have to believe that if the bill does become law, and if its successfully force more uninsured drivers to purchase insurance on their vehicles, then over time the rest of us will see reduced uninsured motorists insurance rates.  And that is only fair.

At Clinard Insurance Group, located in Winston Salem, NC, we help thousands of families each year with their NC auto insurance.  We would love to help answer any questions you may have about this or your home insurance.  We can also help you with your life insurance and business insurance, so feel free to give us a call today at 877-687-7557.

NC Auto Insurance Modernization Act – An Interestingly Political Fix

Right now there is a bill that is under debate in the NC House of Representatives.  This bill attempts the change the way that auto insurance rates in NC are made, allowing each insurance company to come up with their own rates as opposed to the current system of having the NC Rate Bureau propose maximum rates to the insurance commissioner for approval or denial.  This bill, called House Bill 265, in my opinion, is a step in the right direction and would allow for more of a free market approach to rate making but also includes some proposed changes that might generate huge problems for the auto insurance consumer down the road.  And I am left wondering why our legislature is working so hard to fix our auto insurance system that is stable and competitive, while ignoring the exact same rate making problems for home insurance that is actually causing homeowners in our state such difficulty when they try and buy or even renew home insurance.  Trying hard to fix something that isn’t broken while ignoring a crisis going on around them must just be a talent found only in politicians.

House Bill 265 has at its heart a more free market approach to auto insurance rate making in North Carolina.  And I can certainly support that.  Currently our system of rate making is a two-step process.  First of all, the NC Rate Bureau, an entity owned and supported by all of the insurance companies that do business in our state, proposes maximum rates that could be charged for auto insurance.    These proposed maximum rates are sent to the insurance commissioner who can approve them or partially approve them or even modify them or reject them entirely.  Ultimately then, the insurance companies can charge the maximum rates, or provide discounts from these rates to charge something below the maximum rate.  This works just fine as long as the maximum rates are nowhere near the break even point for the insurance company on that kind of insurance.  In auto insurance the rate that you pay is almost certainly somewhere far below the maximum.  But with home insurance in NC right now, the maximum rates are just too low for most insurance companies to make money.  And if they can’t make money then they leave or they start trying to find ways to reduce coverage.  And getting a rate increase out of an elected commissioner during an election year is nearly impossible.  So the current system can hamstring itself sometimes. 

Right now, the NC, our homeowners insurance marketplace is in crisis. Weather related losses have left insurance companies losing money on home insurance.  Rates have been held down by the insurance commissioner and some insurance companies have left the state entirely while others are cancelling huge blocks of homeowners policies from their books.   To prove a point regarding which rate making process should actually be under the legislature’s wish list for change,  a homeowner in NC will find it very difficult to buy home insurance in North Carolina without also purchasing auto insurance from that same insurance company.  Why?  Well because the insurance company knows that it will make money on the auto while losing it on the home insurance.    

I can support the portion of this bill that allows insurance companies to make their own rates, whatever they may be, for North Carolina Auto Insurance.  I trust that a free and open rate making marketplace will probably generate much better results for all consumers than will one that is dependent on the political will of an elected insurance commissioner.  But I have one huge concern with this new bill.  The current wording would allow insurance companies to develop their own coverage forms for auto insurance.  This could be a huge change from our current law which requires all insurance companies to sell the same auto insurance form.  Differing policy forms could make comparing one auto policy to another unreasonably complicated for the average consumer.  Apples to apples quotes will be a thing of the past, though the real problem could be that most consumers may not realize this.  The dark side of this kind of change is that at least some auto insurance buyers will purchase their insurance based solely on the lowest price offered.  This might mean that they don’t have the protection that they need after an accident happens.  I have been advised by some insurance company personnel that in the states where differing policies are allowed, most insurance companies tend to sell the same basic coverage to everyone.  So this may not be a big concern though the risk to the consumer seems pretty large from my perspective.

There is also one other possible bad consequence of this legislation.   This bill would make insurance company membership into the NC Rate Bureau voluntary.  Might this mean that the large auto only insurance companies would leave the bureau and as a result leave this organization without the funding that it needs to survive?  And if this happens, what then will become of our home insurance market which is currently in crisis due to rates that are too low?  Might  this deepen the homeowners insurance crisis in NC?  These are questions for which I can find no concrete answers.

At Clinard Insurance Group, located in gorgeous Winston Salem, NC, we work hard to help all insurance buyers become informed consumers.  We currently insure thousands of families all across NC and we can help you with any of your insurance needs from home insurance and auto insurance to business insurance or life insurance.  Give us a call, toll free, at 877-687-7557 and we will be happy to put our expertise to work for you to help you find the coverage you want and need at the lowest possible price.