September 15, 2017

Most business owners are at least passingly familiar with the concept of an insurance audit.  Many insurance policies are priced based on some factor that cannot be determined with certainty until after the policy term has expired.  Workers compensation insurance is based on payroll, many general liability policies are based on either payroll or gross sales.  For this reason, in order to determine a price for these kinds of policies, the insurance buyer must make an estimate for that unknown amount of sales or payroll.  The rating basis, either payroll or sales, is then audited at the end of the policy term and if the estimated payroll was higher than the actual payroll, the business owner will be due a refund, if the estimated amount was too low, then the business owner will owe an additional amount to the insurance company.  This is all pretty straight forward and most experienced business people are familiar with this process.

Enter the one way audit. Depending on your perspective, this is either a way to protect the insurance companies from unpaid audits, or it is a nasty scheme to take advantage of business owners by using their familiarity with the audit process against them.  Maybe you will come down somewhere in between these extremes when you judge the one way audit technique; I for one think it is much the latter.

So what is this one way audit technique? Simply put, policies with one way audit features have special wording in them that states that if the audit results in an additional amount due to the insurance company, then the customer must pay this amount.  However, should the audit reveal that there is a refund due the business, then the estimated amount paid in advance will be deemed to be a minimum earned premium, thus no refund will be due to the insured.  What?  How is this a fair way to treat your clients?  Asking them to estimate their gross sales, then keeping the money if they over estimate and charging them for the shortage if they underestimate is one sided and disingenuous in my opinion.  But I can accept this procedure if it is spelled out in large, colorful print on the top page of the policy and perhaps attaching a brochure that explains how this is different from every other insurance audit that the client will have ever seen.

Liquor liability insurance policies are particularly vulnerable to the one way audit clause. Many of them sneak this wording into their policy and usually bury it deep in the policy language.  I have never seen a one way audit based policy that attempted to bring this nasty clause to the buyer’s attention on the front page of the policy.  With more states like South Carolina and Rhode Island now making the purchase of liquor liability insurance policies mandatory, more and more business owners will be trapped by this sneaky clause and will lose money that they expected to have refunded to them at the end of the policy term.

So how do you protect yourself from the one way audit? First of all, you must know how to recognize it when you have this clause in your policy.  Your insurance agent should be able to help you with that.  Secondly, when setting up a policy with a one way audit feature, you should under estimate the gross sales for the policy period.  I would advise using 75% or so of what you think your sales will be when you make your initial estimate to the insurance company.  Remember, any amount that you over estimate will not be returned to you at the end of the policy term.  Now this under estimate will now mean that you will probably face an additional premium due at the end of your policy term.  If this will create a cash flow problem for you then, then I suggest that you plan for that in advance and put that money in a safe place to pay the audit at the end of the policy term.

For help and advice with your liquor liability insurance needs, and with your other insurance policy needs, please feel free to call us, toll free, at 877-687-7557, or visit us on the web at www.clinardinsurance.com.  For more information about South Carolina liquor liability insurance, please visit us at www.SCLiquorInsurance.com.

September 1, 2017

On July 1^, 2017, South Carolina passed a law requiring businesses with certain alcohol permits to prove that they have liquor liability insurance coverage in place with at least $1 million coverage in order to renew their alcohol permit.  The permits that fall under this new rule are those that allow on premises drinking after 5 pm.  If you hold one of these permits, then you will need to prove that you have liquor liability insurance in place in order to renew your permit.

This new ruling seems to be a reaction to an event that happened in South Carolina. A Dillon police officer was paralyzed and brain damaged after being hit by a drunk driver.  The driver had no insurance coverage and the bar that served this driver carried no liquor liability insurance.  Neither of these two parties had the assets needed to cover the losses to this police officer and his family.  As a result, the city of Dillon found itself next in line for the liability expenses of this accident.  This soon proved too high a price even for the town of Dillon to absorb.  This case inspired the SC legislature to respond with a new law that requires business that serve alcohol after 5 pm for consumption on their premises to have $1,000,000 of liquor liability insurance in place before they can renew their alcohol permit.

What does this mean for you? If you are a resident of SC, then over time as more bars and restaurants are forced to purchase liquor liability insurance, you should be less likely to suffer an uncompensated loss if you are hit by an intoxicated driver.  If you are a bar or restaurant owner, then this is a wake up call to double check your coverages to be sure that you have this protection in place.  If not, you can technically wait until your alcohol permit expires before you will be forced to purchase this coverage.  But in reality, going a day without it seems like too much risk.  This is the kind of loss that can absolutely run you out of business should it happen to you.  Liability risks are unpredictable, both in timing and scope and insurance is the only sure way to provide your company with some protection.

How does it work?  Liquor liability insurance is rated based on your gross sales of alcohol.  Ultimately, most policies charge a stated rate per $1000 of gross alcohol sales.  We have seen rates as low as $2 per $1000 of sales and as high as $25 per $1000 of sales.  The reasons for this wide discrepancy in rates are really based on the different kinds of situations in which those businesses with on premises alcohol consumption find themselves.  For instance, if your ratio of alcohol sales to food sales is relatively low, then you can expect a much lower liquor liability insurance rate.  If you are a bar that closes earlier, your rates will be lower than on that stays open later.  Live entertainment can often contribute to a higher rate.  If you would like to learn more about exactly how much this coverage will cost your restaurant or bar, please feel free to call us at 877-687-7557 or visit us online at www.scliquorinsurance.com.

August 31, 2017

Liquor liability insurance is an important but underutilized insurance protection that any establishment that sells alcoholic drinks for consumption on their premises should consider purchasing. Many bars and restaurants do not fully understand this insurance policy and as such go without this important protection.  Some don’t purchase liquor liability because of the cost of the coverage, others mistakenly believe that their general liability insurance provides this protection and still others are just unaware of this kind of insurance policy in the first place.  We are seeing a trend in states where several are now requiring proof of liquor liability insurance in order to renew your alcohol permit.  States where this is in force include Massachusetts, Rhode Island and South Carolina.

 

So what kind of loss does liquor liability protect for the bar or restaurant owner? Simply stated, if you serve alcohol to a patron who then goes out and causes property damage or bodily injury to a third party, and if you are held liable for these damages because you over- served this patron, then liquor liability insurance is the insurance coverage that you need in place to protect you from this third party liability.

 

Many bar owners might say that they are very careful and do not over serve their customers and therefore they don’t need to purchase this kind of insurance policy. Sadly though, that is not the only determining factor in who might face lability and lawsuits.  I have seen several different cases where a patron leaves one bar, relatively sober, and then visits two other bars as the evening goes on, leaving each one progressively more intoxicated than the last.  The drunken patron later causes an automobile accident and kills a young driver and all three bars that served the drunken patron over the past 8 hours are sued.  Often they all end up having legal bills and a liability judgement against them.  So this exposure is not just one that you can control with your internal procedures.  When a loss exposure is this far out of your control, insurance is the best way to protect your business and personal assets.

 

Once you have determined that liquor liability insurance is needed, how do you decide what limit of coverage to purchase? Generally I would advise that you purchase as much as you can afford.  The problem here is that your exposure to loss is essentially unknown and unlimited.  There is no way to predict the extent of your liability to an unknown third party before an accident happens.  Given that, buying more than you need would certainly be safer than buying less.

 

Your liquor liability insurance policy will be rated based on your gross sales for alcohol. You will need to make an estimate of those sales for the 12 month period of time that the policy will be in force.  At the end of the policy term, the insurance company will ask for your actual alcohol sales during that time period.  If you had underestimated this sales number, then you will owe the insurance company an additional premium.  If you had overestimated your sales, then you will be due a refund.

 

If you want more information, or if you need help setting up a liquor liability insurance policy for your restaurant or bar, please feel free to call us, toll free, at 877-687-7557 or visit our website at www.clinardinsurance.com or www.SCLiquorInsurance.com.

Your Scaffolding Policies Can Affect Your Workers Compensation Insurance Rates December 2, 2011

Painters, stucco installers, masons, carpenters and many other types of contractors from time to time need to build scaffolding to perform their work work.  Most of these workers think of scaffolding as a tool to get at high work sites.  But the truth is that scaffolding should be first and foremost a safety tool in itself.  This article will discuss the safety features of scaffolding as a refresher and to help you keep your workers safe while working on and around scaffolding.

So many different kinds of workers compensation insurance claims arise out of improper use or improper building of scaffolding.  We see  injuries and death on scaffolding due to poor planning for assembling and dismantling as well as collapse due to missing tie-ins or bracing or because of loads that are too heavy, or due to slippery surfaces.

Fall protection is an important part of scaffolding and should be incorporated into any scaffolds which put the worker at a height of more than 10 feet above a lower level.  To protect the worker from falls, top rails should be installed at about 42 inches in height.  Mid-rails should also be used and should be installed about halfway between the top rail and the platform surface.  If cross bracing is used instead of a mid-rail, than the X should fall between 20 and 30 inches above the work platform for that level.  Alternatively, screens or mesh can be used in place of the mid-rail but they should extend from the top rail all the way down to the working level.  And remember, if you plan to build scaffolding to a height of 125 feet or more, then your scaffolding must be designed by a registered professional engineer.

In addition to protecting the workers on the scaffolds, they also should function to provide protection to workers below from falling tools or debris.  Every scaffold should have toe boards installed.  The toe boards should be a minimum of 4 inches high and should be installed on all sides and at all levels.    All workers in this environment should also wear hard hats at all times.  Be sure that all scaffold footings are level and are capable of supporting the loaded scaffold and 4 times the expected weight that will be put on the scaffold at any one time.

For more information on scaffolding and the regulations associated with using them, read the OSHA 1910.28 regulation by clicking here.   If you take the time to carefully and safely construct and maintain scaffolding and enforce safety procedures for how to use them, then you will probably reduce the claims against your workers compensation insurance and your general liability insurance policies.  Doing this will help to keep your insurance rates lower and reduce the associated costs of job interruption that always occur with an on the job accident.

Clinard Insurance Group has niche insurance programs designed for many types of contractors who use scaffolding in their work.  We have a painters insurance program, a carpenters insurance program, a masons insurance program and many others.  If you would like help with your contractors insurance, please call us, toll free, at 877-687-7557.

Workers Compensation Insurance – Crossing A State Line Could Leave You With Huge Bills November 28, 2011

Workers compensation insurance was and is by its very nature a compromise.  In agreement for not allowing your employees to sue you for injuries that occur on the job, these same workers gain the benefits for injuries and accidents that are spelled out in your state’s workers compensation statute.  Whatever the statute says determines when and how much the injured worker will receive.   And this compromise keeps business and commerce humming along with much less disruption.  But we have 50 states in this country and thus 50 different sets of statutes and rules.  So what happens when you cross state lines to do work or to hire other employees?   That’s when things become more complicated.

First of all, as you read this article, bear in mind that our starting point and our vantage point  is North Carolina and North Carolina workers compensation insurance rules.  If your business is located in some other state,  then some of what you read in this blog may or may not apply to you.  Please keep that in mind as you read further.

There are several ways in which going out of state can get a company in trouble with workers compensation rules and laws.  The most vulnerable businesses are those who can pick up and go to another state to perform work there.  Usually this applies most to artisan contractors whose work opportunities here in North Carolina may be diminished by the economy and so they chase storms and other natural disasters to find work in other states. 

If a contractor with a NC workers compensation insurance policy takes their North Carolina employees (those who live in NC and were hired in NC by your NC based company) to do work in other states, then their North Carolina workers compensation policy will protect them from losses that may happen on these out of state jobs.  But, if a contractor hires new employees who live in this other state, then that contractor is risking a coverage gap.  You see, some states have more generous benefits to injured workers.   Some will allow injured workers  to choose which state (either the state they live in or the state they worked in or the state where your business is domiciled) work comp rules they want to file their claim under.  Of course these newly injured employees of yours will choose the state with greatest benefits for them and their claim.  If that happens to be a state other than NC, then you may be paying some of the claim yourself.  This is because your NC workers compensation policy could be limited to the benefits stipulated by NC workers compensation law.

There are several  solutions to this problem.  The safest solution  is to let your insurance company know who is working where and let them add the appropriate state rates and class codes for those workers to your policy.   A catch all type of solution which is less fail safe, is to endorse the all states endorsement on to your workers compensation policy.   The all states endorsement on a NC workers compensation policy will extend benefits for your policy to match those of the states listed on the endorsement. 

Another  area where employers can run into trouble is with the employees who live in a different state from the one in which the business is located.  This often happens with businesses located near state lines.  If your business is based in NC but you are near the Virginia border for instance, you may  hire employees who live in Virginia.   If this happens, then you should add Virginia rates and class codes to your NC workers compensation policy for those employees on your staff.

The last trip wire to watch for in all of this is the monopolistic state fund states.  These are states that require that all workers compensation insurance in their state be written by the state government workers compensation program.  This means that no private insurance companies are allowed to write workers compensation insurance in these states.   If you operate in one of these states and have a claim there, your only protection on your NC workers compensation insurance policy will have to come from the employers’ liability insurance section on your workers compensation insurance.  This may be suffice if your exposure is only incidental but if you are running ongoing projects and operations in that state or hiring employees that live in that state, my advice is that you purchase a policy from that state’s monopolistic state fund.   Don’t take chances here, the risks are just too great to ignore.

When it comes to workers compensation insurance, all of the simplicity of the policy disappears as soon as you start crossing state lines for work or for hiring.  You should make sure that you keep your agent informed of what you are doing and where you are doing it.  Clinard Insurance Group, located in Winston Salem, is an agency with a great deal of experience in the North Carolina workers compensation business.  If we can help you with your workers compensation insurance questions in NC, please feel free to call us, toll free, at 877-687-7557.

Experience Mod Formulas Are Changing – How Will This Affect Your Workers Compensation Insurance? October 18, 2011

One unique feature of work comp insurance is that there is a direct link between the rates that you pay and the losses you’ve had in the past.  The conduit for this process is the experience modification factor, a rate modifier on your work comp policy that increases or reduces the rates you pay based on your past loss experience.   You can learn more about experience modification factors and how they are calculated, by clicking here.

The NCCI (National Council on Compensation Insurance) is the entity that maintins the experience modification factor process.  The current mod formula has been unchanged for many years.   This formula estimates what the expected losses will be for each company, based on their class codes and their payroll levels.  Next it compares your expected losses with your actual losses to see where you stand in the spectrum of all businesses.    There are two parts to this formula; one that measures loss frequency and another that measures loss severity.  The loss frequency side of the equation is what is changing the most with the new rules.  This portion of the formula caps the maximum amount of all losses at $5000.   So, for instance,  if your company has a $5000 loss and another loss that is $100,000, they will both carry the same weight on this side of the modification formula.   This means that a company with several small losses may have a higher mod factor than one with one large loss, even though the company with the one large loss may have had a greater total loss payout that year.   

The new modification calculation formula  will change the $5,000 cap on the frequency side of the equation.  The cap changes will be phased in over time between 2013 and 2015, and by the time the phase in is complete; the cap will have been increased to $17,000.  After 2015 this cap will be indexed annually for inflation. 

So what should you do to get ready for these new rules?   The information that I am seeing seems to indicate that if your mod is less than 1.0, then you will probably see an even lower mod under the new formula.   This impact is greatest for the lowest mods.  For example, it is expected that a mod of .83 today would translate to roughly a mod of .77 in 2013, but one of .99 will only reduce to .98.  This same dynamic works in the opposite direction as well.  Mods above 1.0 are expected to go higher under the new formula.    A 1.14 mod should turn into a 1.18 while a 1.69 mod will become a 2.01 mod.  In the final analysis, with this new formula in place,  those with losses are going to pay more for their work comp and those that control and reduce their losses will see lower mods.
So what does this mean for you?  Well now you have even more reason to control you loss costs.  You have both more to gain and more to lose.  When shopping for workers compensation, it is even more important now that you select an insurance company with significant loss control and return to work programs.  Workers compensation insurance in NC is a specialty line and there are companies here  that do nothing except workers compensation insurance.  The advantages that these companies will have in loss control and back to work support  will now mean even more to you over the long run.

At Clinard Insurance Group, in Winston Salem NC, we are an independent insurance agency handling hundreds of workers compensation policies for our clients all across North Carolina.  Our knowledge and experience with   workers compensation insurance can save you big money on your workers compensation policy, both today and 5 years from now.  Give us a call today, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com and let us get to work for you right away, helping you carve away some of your workers compensation expenses.

Imprelis – Landscapers Using This Product Should Follow Dupont’s Web Site September 2, 2011

As a landscaper’s insurance niche agent with many landscaper clients, I felt it would be important to share information about the herbicide known as Imprelis.  Lots of landscapers and turf management firms in our area use Imprelis, but recently it has  been linked to damages to evergreens on lawns and golf courses in the North Carolina area as well as other states along the Eastern seaboard.

Dupont manufactures Imprelis and they have publicly communicated their desire to promptly and fairly resolve problems associated with it.  You can visit the web site that Dupont set up for help with Imprelis at  www.imprelis-facts.com.  Dupont also set up a toll free hotline number, 866-796-4783, so that people with damages can report them more easily.   If you have any clients that have experienced damage to trees or shrubs due to the use of Imprelis, encourage them to contact Dupont through the website or the hotline phone number.  Also, the web site states that by mid-August, Dupont will start a product return and refund procedure and you may want to follow the news for your refunds there.

With this information provided by Dupont regarding potential damages posed by the use of Imprelis, you might decide to discontinue its use.  I would recommend that you retain any unused Imprelis product that has been prepared as it might be important for any possible refunds.  As I stated earlier, the website can keep up to date on any product return and refund procedures.

Here at Clinard Insurance Group,  in Winston Salem, NC, we insure landscaping companies of all stripes, from lawn maintenance companies to landscape architects to nurseries.  We want all landscapers to be informed insurance consumers and that mission extends here to helping you  with information that you may not have discovered yet regarding Imprelis.  If we can help you with your landscaping insurance needs, please call us, toll free, at 877-687-7557, or visit us on the web at www.LowRatesForLandscapers.com.

The Work Comp Experience Mod – A Quick Look At What Every Small Employer Should Know August 19, 2011

In NC, employers with 3 or more employees are required to buy a  workers compensation insurance policy.  Most employers will  also eventually learn about the experience rating plan in NC and the tool that implements it,  called the experience modification factor.  We call it the experience mod for short and this little tool will leverage your attitude about employee injuries to either become a huge money saver or cost your company big money.  Understanding how your mod works and how it is calculated will load the odds in your favor that the leverage here works in the right direction for you.  This article is can help you do just that.

The experience modification factor is the tool that puts into action the concept of experience rating in North Carolina workers compensation insurance.  Experience rating is simply allowing each company to have their own workers compensation rate that reflects their past loss experience.  This kind of rating plan is generally a very good thing for employers who want to protect their workers and keep injuries at a minimum.  For those who aren’t, the experience mod can be a brutal punishment.  But when you think about it, it is a much fairer system to reward careful employers and not force them to pay for all those losses that the careless ones generate. 

Your experience mod is simply a modifier on your policy  that is applied to your total premium to better reflect the loss experience that you have had in the recent past/  With a  mod that is larger than 1, you will be paying an additional surcharge on your policy for your past losses.  If your mod factor is lower than 1, and then you are receiving a discount for good past loss experience.  With mod factors running as high as 3.25 and as low as .72 or even lower, the range from reward to punishment can be huge.

Not all workers comp policies in NC are eligible for experience rating.  There are two factors involved, time, and premium size.  First of all, the experience must develop over time, so your policy must be in place for at least 2 years before an experience period can be evaluated.  Companies that are new in business and buying their first workers compensation policy, won’t be experience rated during the first two years.  The second criterion is size of the business, measured by workers compensation premium.  Very small work comp policies may never reach a large enough size to be eligible for experience rating.   This is due in part to the costs of experience rating a company and the unlikelihood that past experience will accurately predict future experience with very small companies.  Therefore, employers are not experience rated unless they have had an average annual work comp premium of more than $2500 for the past two years, or have payrolls in the last year, or two years that would develop a premium that exceeds $5000.  But once those thresholds are hit, your workers compensation policy will be experience rated by the NC Rate Bureau.

The experience rating process looks at losses during the experience period.  That period is usually 3 full years, ending one year prior to the effective date of the modification.  For example, a modification done on January 1, 2010, would look at the payrolls and losses for the prior policies effective January 1, 2006, January 1, 2007 and January 1, 2008.   As you may have already guessed,  a year of bad losses on your is going to hang around and increase your mod and thus your total work comp costs for a long time to come.

One more important aspect of experience rating for you to understand is just how your modification factor is calculated.  The formula for deriving the mod itself is fairly complex so I won’t get into much detail, but as an employer, you should know a few important things about this process.  First, small losses have the greatest impact on driving your mod higher.  The formula classifies all losses under $5000 as primary losses and these losses carry the greatest weight in the formula, especially for small employers.  Larger losses are capped and then given increasing importance for larger employers, but for the little guy, the small losses will sting the most.  The message to small employers is clear  – loss frequency is the strongest measure by which the NC Rate Bureau will punish you via your experience modification factor.

In the past, some employers would pay the small medical only claims out of their pocket, just to keep from reporting them to their workers comp company and risk driving up their mods.  This practice is dangerous for both the employer and the employee and to remedy this, NC now only applies 30% of the medical only losses to the rating formula.  Those still engaging in this practice probably don’t even know the risks that they are taking and how the mod rating process has changed.   Please file all work comp claims with your insurance company promptly.  Paying them yourself could leave you vulnerable if the claim spirals out of control and the insurance company decides that you prejudiced their ability to control the loss.

Your best approach to your experience modification factor is to work to help keep claims from happening, and then if they do happen, take appropriate action to help your employee get healed and get back to work as quickly as possible.  You can go a long way toward both of these goals if you purchase your workers compensation insurance policy from a specialty insurance company, one that writes only workers compensation insurance.  These companies usually have a more streamlined claims process and many also have on staff doctors, nurses and case managers.  This kind or proactive approach to reducing your claims costs will help you keep your experience modification factor as low as possible.  Also, these specialty workers compensation insurance companies will also have loss control services that you can implement right away to prevent some claims from happening in the first place.

Your experience modification factor is a way to even the playing field and to help make sure that those causing the accidents and injuries are the ones who pay the greatest share of their costs.  Take advantage of your new awareness now to make sure that you move yourself and your company to the credit side of the experience mod equation.  Here at Clinard Insurance Group, we help employers all across NC save money on their workers compensation insurance.  We understand this complicated insurance policy and we will take as much time as you need to understand all of your options so that you can best leverage the marketplace to better protect your employees while reducing your insurance expenses.   If we can help answer your questions about NC workers compensation insurance, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

Code 59 – Is This Little Number Driving Up Your Work Comp Rates? August 12, 2011

The Office of Inspector General (OIG) recently investigated Medicare and Medicaid medical providers suspected of overbilling the system by using billing override code 59.  Code 59 is just one of 35 different coding edits used to bypass Medicare’s National Correct Coding InitiativeThe OIG audit showed that 40% of all code pairs billed with the code 59 modifier resulted in overpayments to medical providers.  And these overpayments totaled $59 million.  Worse yet, code 59 is  just one of 35 modifiers used to override coding edits on bills submitted.   The OIG audit also indicated that computer billing programs did not detect overbilling errors cause by the use of these modifiers.  The errors were only found in the rare instance that the bill was reviewed independently by a human being.   We all know that there is fraud in the government medical systems, but what does that have to do with you and your workers compensation insurance rates?

In North Carolina, workers compensation policies are experience rated policies.  This means that your claims experience, either good or bad, will affect the rates that you pay each year.  This is accomplished through the use of an experience modification factor on each policy.  Your experience modification factor, referred to in the business as your mod, is an extra multiplier on your rate.  Good loss experience over time can result in a modifier that is less than 1.  When that happens it means that you are receiving a discounted rate below what you would have otherwise had without the excellent record.  But when your mod increases to numbers above 1.0, then you are paying an more for your workers compensation policy due to your past claims experience.  Experience mods are calculated based on the frequency and severity of claims.  So if you can avoid severe losses and reduce the amount that is paid out, then you can help to keep your experience modification factor lower.  It is an important maxim to remember that money paid out for your workers compensation claims is almost always going to cost you more in premiums later.  So you must do all that you can to reduce and control workers compensation losses.

Here are some important facts to keep in mind.  First, workers compensation insurance companies face the same mult-billion dollar challenges as the Medicare and Medicaid system face when it comes to avoiding fraud and billing errors.  Most workers compensation insurance companies rely solely on computer technology to find and correct billing errors and most do not conduct reviews of modifier 59.   More often than not, they just apply the fee schedule discount and pay the bill without investigating the accuracy of the medical bill.

So what can a business owner do to protect his or her business from intentional and unintentional billing errors that will mean rate increases in the future?  The best plan of action is to carefully select the insurance company you buy your work comp insurance policy from in the first place.   I generally recommend that businesses buy their workers compensation insurance policy from a company that writes workers compensation insurance only.  These specialty companies tend to have lower rates to begin with, but beyond that, since workers compensation claims are the only type that they handle, they generally have a better system for watching for fraud in the billing process.  They also will often provide on staff nurses to manage a case as well as more systematic and careful review of all medical bills.  Thes additional claims services will almost always result in lower claims costs and will generally get your injured employees back to work sooner.  These techniques will not only show up in lower initial rates, but will also help you keep your experience modification factor lower, thus keeping your costs lower over time. 

At Clinard Insurance Group, we are an independent insurance agency that is actively engaged in helping businesses all across North Carolina with their work comp and business insurance.  We can show you how to cut your workers compensation costs dramatically with very little effort on your part.  If you have questions about your business insurance policies, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

Painters Insurance – Be Sure You Understand The DOC Gap August 1, 2011

If you own a painting company, then you have probably had to purchase trucks and other vehicles to get your jobs done.  Often there are some very nice tax advantages to putting the titles in the company name.  Hopefully you have bought the correct insurance policy for them, using a commercial auto insurance policy.  Relying on a personal auto insurance policy for a truck titled in a business name can create big problems for you inNorth Carolina.  But assuming you have jumped over those hurdles correctly, there may still be one last hole to plug  –   I call it the DOC trap.

 

The DOC trap is caused by the fact that a commercial auto insurance policy is designed to protect the business itself from losses. Again, the business itself, but not necessarily you. Often the business is an LLC, a corporation or even a partnership.  So, if you have a bad accident in your company truck that is your fault,  the insurance protection applies to the corporation, not you.  The most common way to fix this problem is to rely on a personal auto policy that you bought to protect the cars that you own in your own name, or the name of your spouse.   But there are some painting contractors that get into a bit of trouble with their insurance policies when they overreach and title all of the cars that they own in the company name.  Sure, this can generate nice tax breaks, but, without a personal auto policy in place and in your name, when it comes to a claim against you personally, you could be left holding the bag.  This is because your corporation has rights to sue you and the corporation will be giving up those rights to its insurance company after they pay a claim on behalf of your corporation.

 

An example might help to explain just how this can work..  Let’s assume that you are a painting contractor with 4 employees and your painting company is set up as a corporation.  Next assume that you are single and you only need that one work truck that you drive and you have that titled and insured in the corporate name. Pretty sweet deal; with the corporation now paying for the gas, maintenance and insurance on that truck and Uncle Sam not getting a dime of tax on that money.   Now, one day you run a stoplight and you crush a van full of lawyers, (ok, this story has to have some good parts) all on their way to court to take money from a poor widow.  Several of the passengers are badly  injured and the hospital bills alone run up to $235,000.   So you call your insurance company (actually you call your company’s insurance company) to file the claim it all seems great and they pay for the injuries and settle the claim.  But, NC commercial auto insurance policies have a clause that says that the insurance company owns the rights of any claims that they pay.  So now they own the right of your corporation’s claim against you for causing that accident. After all, it was you and your driving that was negligent here and caused the accident.   So now, your own insurance company (well, actually your company’s insurance company) is now suing you for the damages caused in your accident.  Where are you going to get your protection?  This is where DOC protection becomes so important. 

 

DOC stands for drives other car and this coverage allows you to personally stand in the same position on the commercial auto policy as your corporation in the event of a claim.  Remember now,  if you already have a personal auto policy, then your that policy will protect you personally. The problem is we often we see painting contractors whose only vehicle is the work truck that they have titled in the business name.   And this truck is insured by a commercial auto policy not in the painter’s name, but in his or her business name. DOC coverage is an add on endorsement to the commercial policy but it rarely costs more than $200 per year and at that price you usually get to include your spouse.  This is particularly handy for those who title their truck as well as their spouse’s vehicle in the company name.

 

The DOC trap is just one of many examples of why it is so important for you to chose the right agent when you are shopping for your painters business insurance program..  You should choose an insurance agent who understands painting contractors and who insures dozens of them.  Doing business with an insurance agent who is a specialist in your field will almost always cost you less money.  This is because agents who write high volumes of accounts like yours are more likely to be able to get you the lowest rates, and also because their advice and help should be superior to an agent who has only insured a few painters in the past.  Avoiding one $235,000 loss out of your pocket will cover years and years of budget rate insurance savings.

 

Clinard Insurance Group, located in Winston Salem, NC, is an independent insurance agent.  We are a niche player in the business of insuring painting contractors.  We insure dozens of painting companies all over North Carolina and we understand your needs and speak your language.  We would love to help you with your painter’s insurance questions, just give us a call at 877-687-7557 or visit us on the web at www.LowRatesForPainters.com.