Mono-line Workers Compensation Insurance Companies – What Is It They Can Do Exactly?

Readers of my blog know that preach buying your workers compensation insurance policy from an insurance company that sells only workers compensation and no other types of policies.  This is because I have found that with their expertise and understanding of this insurance product they can reduce claims costs, and help get your employees back to work more quickly.  All of this helps them keep their rates low and save you money on your first policy with them as well as on your renewal policy.      Today I want to drill down deeper into this issue and help you understand what these extra services are and why they will cut your claims costs and save you money on your workers compensation insurance rates.  That way, when you are considering one of these insurance companies for your business, you will know which questions to ask.  Take it from me, not all of these mono-line workers compensation insurance companies are created equally.

To start, consider how these insurance companies often have an in depth medical bill review process for all medical claims.  The most talented at this have found that there are huge savings to be found simply by reviewing and challenging the medical bills themselves and their tricky coding.  Applying national guidelines for coding edits can often reveal huge savings by stopping some of the catch all codes where billing inaccuracies are often dumped.  One insurance company recently reported that unbundling overcharges found by in house bill reviews saved 49.8% on medical costs for an average claim.  Carefully applying medical limits and rulings to fees also generated savings of 38.46% on physician fee schedules.    Verifying the diagnosis according to medical records and examining medical records to ensure bill coding accuracy saved additional money on the medical portion of claims.

Now let’s take a look at some of the service options that have also proven to reduce the costs of workers compensation claims.  Companies that offer an online notice of injury and fast claims reporting have seen huge reductions in claims costs.  To learn how fast reporting cuts claim costs, read my blog on that topic here.   Another money saving approach has been to assign one claims adjuster to each company for all claims.  Imagine how having the same claims adjuster on every claim will cut down your time in claims processing and help you build a relationship with someone who will be working hard to help you reduce your claims costs and prevent claims from happening in the first place.  Implementing  proactive return to work programs that get the employee back to work in some kind of capacity sooner have proven to save the employer money both in terms of claims costs but in down time and replacement worker costs.  This not only shows other employees that you care about them, this also has the added benefit of getting the injured employee back to work full time much more quickly.    And many of these insurance companies employ highly trained and very experienced special investigation units.  These units investigate possible fraudulent claims to control unnecessary expenses associated with these kinds of claims.

Many employers who stumble on to a mono-line workers compensation insurance company to protect their business may only see the lower price on the front end.   And that can be a trap as often a mono-line workers comp company may come into a state with lower rates in an attempt to buy up business before raising their rates in years 2 and 3.  But to save you money today and tomorrow, an insurance company needs to be proactive in implementing techniques and training that will help reduce the frequency and severity of future claims as well as to reduce the costs of a claims that have already occurred.   

At Clinard Insurance Group we represent several fine mono-line workers compensation insurance companies that can save you money on your workers compensation insurance both today and tomorrow.  We insure hundred and hundreds of small businesses all across North Carolina and South Carolina.    If you would like help with your workers compensation insurance policy, please feel free to call us, toll free, at 877-687-7557.  

Work Comp Insurance Claims – Quick Filing Save You Money

Recently a study by The Hartford Financial Services Group found that the longer a business waits to file a workers compensation claim, the more that claim will cost.   This direct correlation is no surprise to me; I work in the insurance industry and see the effects of delayed claim reporting frequently.   However, for many businesses this correlation may not be so obvious.  And an even greater number of companies may not understand how higher claim costs will come back to bite them in insurance premiums down the road.  

A common first reaction to this study by many business owners and CEOs might be that they don’t really care about inflated claims costs because the insurance company is paying the claim, not them.  But higher claims costs in workers compensation will affect your rates both directly and indirectly and with delayed reporting also come lower productivity and fines levied against your company.    The indirect cost to your company are driven by the simple formula that the more money that every insurance company has to pay out in claims each year, the higher the rates will be for everyone the next year.  There is a more direct impact for business though.  Workers compensation is an experience rated insurance policy so this means that your loss results this year will show up in your own rates in future years by way of your experience modification factor.  The truth is, the higher your claims costs are now, then, the higher your work comp premium will be in the future.   The link to your experience modification factor is direct and undeniable.   It is important then for you to understand every way that you can reduce the amount paid out for your company’s workers compensation insurance claims.  And quick reporting is a simple fix for most companies.

The Hartford Study shows that the costs of delaying the reporting of a claim beyond the day of the accident increases the costs of the claim by greater and greater amounts as more time passes.  For example, the study reports that filing a claim between 7 and 14 days after a an accident occurs results in an average of 18% more paid for that claim than if the claim had been filed on the day that it happened.  Waiting 15 to 28 days will increase the costs of that same claim by an average of 30%.  Wait 29 or more days and you will see claims costs jump by 45%. 

To better understand why this happens, let’s take a quick look at some of the reasons why early reporting reduces the costs of claims.  Early reporting allows the insurance company to control the medical costs of the claim by directing the appropriate treatment and care for the injured worker.  Early reporting also reduces the duration of a claim’s total activity, which cuts down on the claims handling costs incurred by the insurance company for that claim.  By shortening the claim cycle, the insurance company can get your employee back to work sooner and this reduces your lost productivity.  Quick reporting also allows for better fraud detection and also reduces the chances of attorney involvement.  I don’t have to tell you why involving an attorney almost always drives up claims costs do I?

Looking at it from the other side, there are also a number of reasons why late reporting increases the totals costs of a workers compensation insurance claim.  Late claims reporting can often turn minor injuries into much larger ones with higher settlement costs.  If the insurance company is brought in late on a claim, then often you miss out on the chance to take advantage of the insurance company’s negotiated medical provider fees.  This almost always results in higher medical costs.  And don’t forget that you as the employer could face significant state fines for delayed claim reporting.

You should take some time to make sure that your managers have an established claims reporting process that kicks into action the minute you have a workplace accident that injures an employee.  Setting this up in advance and monitoring it to make sure that it is functioning effectively can save your company in lost productivity, fines and higher work comp insurance rates.  This is a simple way to save your company significant money.

At Clinard Insurance Group, we are  a full line, independent insurance agency located in Winston Salem NC.  We are very active in the workers compensation insurance market and we insure hundreds and hundreds of businesses all across North Carolina and South Carolina.  We would be happy to answer your questions about workers compensation and help you find a policy that will save you money, not only today but for years to come.  Please call us toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

Hidden Costs Of Workplace Accidents and Injuries

If you own a business that has operations in North Carolina, then you should buy workers compensation insurance to protect your company from financial losses caused by workplace accidents.  Buying a work comp insurance policy should not be the end of your analysis of  the risks associated with workplace injuries.  As a business owner, you should understand the hidden costs that are associated with workplace accidents as these hidden costs can be enormous.  If you take the time to understand the hidden costs, you will better understand the importance of implementing safety procedures to try and reduce both the frequency and the severity of on the job accidents.

So what is the difference between direct costs and indirect costs related to workplace injuries?  Let’s take a moment to explore each of these costs and how they can impact your bottom line.

We can start with direct costs since they are  the easiest to measure and understand.  Direct costs can include the medical costs for the injured employee, from hospital and physician expenses to pharmacy and physical therapy outlays.   We must also include the compensation payments to the injured worker for loss of income as well as dependent payments and death benefits.  When a claim turns ugly, you can add in legal fees and settlement costs as well.   The workers compensation insurance company will bear most all of the direct costs we have mentioned so far.

The other category of direct costs is the costs that are borne by the employer.  The most obvious of these is the workers compensation insurance premium.  Your company has some limited control over this direct cost when you find lower insurance rates and are able to keep your payroll numbers low.  The other direct cost that an employer could face here are the increase in workers compensation premiums due to past losses.  This is the additional premium that is associated with an increase in your experience modification factor.

What about the indirect costs associated with workplace accidents and injuries?  These  cost will certainly vary from one kind of business operation  to another.   Your business could face higher costs in terms of lost productivity and service standards, the additional costs of hiring temporary labor to replace the injured worker or the costs of paying non-injured workers overtime pay to bridge the gap while your injured worker is recovering.  Your company  might also face the additional costs of hiring and training replacement workers for the injured ones.  And there are accident investigation and administrative follow up costs associated with any work place injury claim.  Last of all, a workplace accident could force your company to face lost sales.

Indirect costs of a workplace accident are generally thought to calculate at 4 times the amount of direct costs in a workplace accident.  We can run a quick calculation that might help shed light on the  magnitude of the indirect costs problem.  Let’s say you have a workplace accident that generates a workers compensation claim of $20,000.  While this seems like a large number, this is not unusual.   This means that your indirect costs would run at about $80,000.  Now if your company has a profit margin of 5% (which is pretty close to an average), then you will need to generate additional sales in your business of $1.6 million to cover the indirect costs of this claim.   These numbers just cannot be ignored.

Your takeaway as a business owner is that reducing the frequency and severity of workers compensation claims is a critical link in your profit equation.  So what should you do?  I would suggest that you choose an insurance company that specializes in workers compensation insurance only when you buy your next workers compensation policy.  These specialty companies have real world expertise in claims management as well as loss control programs.  Often they offer these loss control programs at no charge to their policyholders.   At Clinard Insurance we write workers compensation insurance for hundreds and hundreds of small businesses all across North Carolina and South Carolina.   If you would like help with your workers compensation insurance as well as help getting your workplace accident indirect costs under control, please call us, toll free, at 877-687-7557 and we will put our experience and know how in this area to work for you, saving you money and helping you reduce your workplace accidents.

Garage Liability vs Garage Keepers Insurance – Confusing Terminology?

Most auto dealers are scrappy entrepreneurs with a lot on their plate.  These are independent business people with no real safety net beyond their own wits and cunning.   To survive and prosper, they need to understand the market value of many different types of vehicles and be able to find and deliver those cars to a fickle public who rarely trusts them.   With all of this going on, they still have to be garage insurance experts at the same time.  That’s a pretty tall order and confusing terminology doesn’t make things simpler for them.

Garage insurance is an outlier type of policy in the insurance world.  Garage insurance has such a specific function and is used for such a small percentage of businesses out there that most insurance agents just don’t understand it well.  A great example of this is the terms garage liability and garagekeepers insurance.   These terms, though they sound similar, have very different meanings and it is important for the savvy car dealer to clearly know the difference between these two terms and how these coverages may or may not be needed to properly protect his or her dealership.

 Garage liability is the term that applies to the liability exposure associated with your autos and your inventory.  For dealers who are only involved in the sale of cars, this is the protection that you must have in order to obtain your dealer tags.  This should be the cornerstone of your dealers insurance program.  The most common insurance claim falling under garage liability happens when someone test drives one of your cars and causes an accident that injures someone else, or that damages some property.  It is easy to imagine how one bad wreck that puts a few people in the hospital could bankrupt most small dealers.  So you should always purchase the highest limits that you can afford when you are considering your garage liability insurance for your dealership.

Garagekeepers insurance is quite different from garage liability insurance.  Garage keepers insurance is for those dealers and repair shops that take in cars owned by others and perform repairs on those vehicles.  While both repair shops and dealers will need garage liability, the garagekeepers insurance is only needed if for those companies who work on vehicles that are owned by others.  While these cars are in your care, custody, or control, you can be held liable for damages to these vehicles.  For instance, if you work on a vehicle, then test drive it to discover the problem or to listen to a noise, then you could be involved in an accident that damages the customer’s car.  In that case you would need garagekeepers collision insurance coverage on your policy to protect you from having to pay for these damages out of your own pocket.  Garagekeepers insurance also has another subcategory of protection, called garage keepers comprehensive coverage.  This is protection for losses to the vehicles in your care custody and control that are not caused by collisions.  There are exclusions to this coverage, so be sure that you are familiar with them but  basically this is wind, hail, fire, theft and other losses of that nature to your customer’s cars that are left  with you for repairs.

Garage insurance is complex with many options to be understood.  And the number of insurance agents out there who will pretend to understand this coverage and will be happy to try and learn about it at your risk is astounding.  It is truly a mine field out there for dealers.  You need to select and agent who understands this complicated sector of the business insurance world and who already insures lots of other dealerships like yours.  Clinard Insurance Group currently insures over 300 used car dealers across the states of North Carolina, Georgia, South Carolina, Tennessee and Virginia.  Our experience in this area, along with our volume of accounts means that we can help you get the protection you need at rates that will astound you.    If you would like help with your dealers insurance, please call us, toll free, at 877-687-7557 or visit us on the web at www.TheAutoDealersHelper.com.

Home Insurance And Your Vacation House – Some Issues To Consider

Not many families can afford to own a second home, so kudos to you if you are one of the lucky ones.  If you are beginning to consider the idea of purchasing a second home, or even if you already own one, then I hope the information in this article will help you identify problem areas with this type of home ownership so that you can take care of them before they bite you with an uncovered claim or an insurance unavailability problem. 

Secondary home ownership can create quite a few unique insurance issues.  These problem areas can sometimes be attributed to the location of the house or how the property may be used.  The way the property is titled can also create insurance problems.  In some areas there is a wide discrepancy between the market value of the home and the replacement value of the home.  The personal property which is kept inside the home can also create insurance confusion that is best solved before there is a loss.   Let’s take a closer look at each of these kinds of issues.

Let’s start with location issues.  Many vacation homes are found at the coast, or in the mountains or near rivers and lakes.  Each of these kinds of places can present geography based insurance issues.  Beach homes of course face huge property risks to wind and flood loss from hurricanes.   Vacation homes located in the mountains may have poor fire protection.  Many mountain homes face the prospect of waiting on a fire truck full of water to climb the mountain to save them as they are burning. Homes located near  rivers or lakes need to be aware of flood zones and understand their flood risks very carefully.  All of these geography risks can mean a huge insurance price tag and might even lead to insurance unavailability at any price.  Carefully review these risks with your agent before you purchase your secondary home.

The way that a vacation property is used must also factor into the insurance equation.  Is the property going to be rented to others?  If so, then a dwelling fire policy might be more appropriate than a homeowners insurance policy to insure this property.  Dwelling fire insurance is generally more restrictive in coverage and often more expensive to buy than homeowners insurance.  But more importantly, buying the correct policy here might mean the difference between being paid and facing a denied claim after a loss.

A more recent insurance problem with vacation homes is caused by the way in which they are titled.  The latest trend is for several families to purchase a property together and own it through an LLC.  At this time, most insurance companies are not willing to write a homeowners policy for an LLC so this structure could limit your marketplace choices and thus force you to pay more for insurance on this secondary home.

Then there is the problem of market value versus the replacement value of the home itself.   Many vacation homes sit on land that is much more valuable than the house itself.  A great example of this is a NC beach house sitting on land that could be valued at more than $2,000,000 per acre.  Imagine that you want to build a $500,000 beach house on a lot that costs $1,000,000 to buy.  Say you need to borrow $1.3 million to do the deal.  The bank might want you to have more than $500,000 insurance since your loan is way above that amount, but the insurance company will not insure the house for more than its replacement value.  These issues will be easier to resolve if you get your insurance agent involved early in the process.

Last of all, consider the personal property left in the vacation home.  Who actually owns it?  Are the renters allowed to use it?  How will you insure it?  Special care should be taken to make sure that the insurance company understands the answers to these questions and that the insurance is set up to handle this situation correctly.

Insuring your vacation home is best done with an independent insurance agent who understands these issues and how to help you through them.  At Clinard Insurance Group, in Winston Salem, NC, we insure hundreds of vacation homes all across NC from the mountains to the sea.  We understand these issues and we have access to the marketplace that you need to make sure that you don’t pay too much for your vacation home insurance.  We can also help you with your auto insurance, your life insurance and even your business insurance.  Just give us a call, toll free, at 877-687-7557 and let us go to work for you today.

Your Car Has No Insurance And You Loan It To A Friend – Who Will Pay For An Accident?

Not long ago I was buttonholed at a party and asked this question:  If I were to loan out my car with no insurance on it and my friend had a wreck, who would be responsible for paying for the damages?  My first response was to blanche at  the question of course since driving any uninsured vehicle on the road would be counter to any advice I would ever give someone.  But to avoid being rude, I tried to lay out for this person just how this deal might go down.

I want to begin my answer here by stating that I am not an attorney and so I can’t give legal advice.  What follows is just my opinion and thoughts about the answer to this question.  I want to make is clear that I feel that no one ever drive an uninsured vehicle on the roads in North Carolina.  Having said that, I understand that at any given time,  up to 15% of the cars on our NC highways have no valid insurance in force.  This happens inadvertently when people forget to pay their car insurance bill or the payment gets lost in the mail or the check that they sent to the insurance company bounces.  And of course there are also a number of drivers out there that simply choose to be uninsured for all kinds of other reasons.

So, how will it play out if you loan an uninsured car to a friend and they have a wreck that is their fault?  Who will pay for the damages?  Well, keep in mind that different circumstances may generate different results but in general both the driver and the vehicle owner can be held liable for the damages.  Can you demand that your friend pay for the damages and leave you out of the matter?  Of course you can but whether or not you succeed will probably depend on if your friend knew the car was uninsured when he borrowed it, as well as the nature of what caused the accident and the degree to which your car’s condition had an impact on the accident happening in the first place.  Either way, I would advise that both parties hire counsel to help sort this out.

Your friend may have some insurance protection that from his own personal auto insurance policy if he has one in place on his own cars.  If that is the case, then he has protection for himself, but not for you.  If he relies on his insurance company to step in and pay the first dollar damages, then probably his insurance company will sue you for the damages that they paid out on his behalf.

Now, if you are choose not to insure your vehicle and you loan it to others, you should know that you are increasing your own financial risks by adding another driver and his or her skill to your uninsured liabilities.  What I said to the person at the party who asked me this question is that if you are taking the time to worry about this before you loan out your car, then why not  take the time to buy an insurance policy for your car before you loan it or even drive it yourself. 

If you find yourself without insurance on your car, please don’t drive it until you have insurance in place.  If you would like help with your auto insurance policy, or if you just have questions about car insurance in North Carolina, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.  We can also help you with your home insurance policy, your life insurance needs or even your business insurance.

Changes To The NC Personal Auto Insurance Mult-Car Discount

The multi-car discount is one of those discounts that is nearly universal for families and as such, no one thinks much about it.   The savings presented by this discount generally runs in the 20% to 25% range but for the most part, most people won’t notice it unless it is taken away.  And for some families in NC this is just what is about to happen.

There is a strong underwriting logic behind the multi-car discount which has been part of the NC personal auto insurance policy for more than 40 years.  This logic is that when you have more than one car in the household, then there will be times when both of drivers will be riding together in the same car.  That means that the other cars on the policy are not being used at that time and for that you deserve a lower rate than the policyholder who only owns one car and that car is used for each and every errand.

As times have changed and more households have become two income households, one phenomenon that has occurred is that some households wanted separate policies for their own cars so that they could pay their bills separately from one another.  This approach of I pay for mine and you pay for yours has created  the need for two different auto policies in the same household.   If you think about it though,  even when this happens, the underwriting logic of the multi-car discount is still and so this household still deserves the multi-car discount on both auto insurance policies. And  Insurance companies have generally adapted to this new financial reality and happily applied the multi-car discount to both policies even though each policy may only have one car listed on it.   But those rules have now changed.

Effective March 1, 2012, the NC Rate Bureau has issued a revision to Rule 4.D which clarifies the intent of the multi-car discount.  The Rate Bureau now requires that there be two or more cars listed on a North Carolina personal auto insurance policy in order for the discount to be allowed.  So the two budget households with two different auto policies will be in for some sticker shock when their auto insurance policy renews the next time.  Losing this discount will generate an additional rate cost of up to 25% on each policy!  Will the additional costs of insurance force the separate budget households to cozy up a bit more with one another?  I’m betting that it will.

This new rule change does have a few exceptions.  For instance, in NC, state law limits then number of vehicles that you can put on a personal auto insurance policy to 4.  So, households with a 5^th car or even more, will have to purchase a second auto insurance policy.  When this happens, the multi-car discount is allowed to be applied to both policies as one of the rule exceptions.  The other exception happens when one of the cars is co-titled in another name of a policyholder in the household.  If this exception exists, then the multi-car discount can be allowed on both policies.

At Clinard Insurance Group, located in Winston Salem, NC, we insure thousands of vehicles for families all across North Carolina and South Carolina.  We try very hard to keep the insurance buying public informed of changes in the industry so that they can be more informed consumers of insurance.  If you would like help or advice with your auto insurance, your home insurance, your life insurance or even your business insurance, I hope you will call us toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.