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.

Painters Workers Compensation Insurance – How To File A Workers Compensation Claim February 4, 2011

If you are a NC painting contractor with any employees at all, there is no question that you should purchase a workers compensation policy.  If you don’t and you are paying someone to work for you, whether you consider them a subcontractor or not, then you shouldn’t go a day more without a policy. To learn more about the NC rules on who must buy a policy and who can go bare, click here.   But assuming you already have a workers compensation policy, how exactly do you file a claim?

Filing a workers compensation claim is really pretty simple.  You should be sure to move quickly and file the claim as soon as possible after the employee is injured.  In NC the claim form states that you must file the claim within 5 days of the injury.  So, to file the claim you must complete a Form 19 claim form and mail, fax, or email it to your insurance company claims department.  The Form 19 is a standardized claim form to be used for all workers compensation claims in North Carolina.  The reason for this is that the policy and claims payments are all overseen by the NC Industrial Commission.

If you don’t have a form 19 on hand, check your policy as most insurance companies will insert a few blank ones in the policy that they send to you.  It’s ok to make copies of this form when you run out.  You can also get one in pdf form from the NC Industrial Commission website.

The Form 19 will ask for contact information for you and for your injured employee.  They will also need to know the details of the injury, how and when and where it occurred.  This information usually comes from the injured employee’s supervisor.  Also,  you will need to fill in the occupation of injured person and information about how many hours they work each week and what their wagers are per hour and per day.  This information will help settle the disability portion of the claim.

The rules require that you provide a copy of the completed Form 19 to the injured employee or the employee’s representative (read lawyer) at the same time that the Form 19 is submitted to the insurance company.  Last of all, you must give your injured employee a blank Form 18 which is a form they can use should they wish to contest the claim settlement.  You can obtain blank Form 18 copies the same way you got the form 19, by clicking here,  or you may call the NC Industrial Commission at 800-688-8349.

At Clinard Insurance Group, in Winston Salem, NC, we work hard to help our clients be informed insurance consumers.  As a painting contractor it is important for you to know in advance just how to properly file a workers compensation claim.  Trying to figure all of this out after an employee is injured will just slow things down for you and downtime can only cost your company money.

Should you need help with  your painters insurance policies, from workers compensation to your general liability, commercial auto and equipment insurance, please consider us as we specialize in insuring painting companies of all types and sizes all across North Carolina and South Carolina.    We can put our extensive knowledge to work for you with one quick phone call.  Call us, toll free, at 877-687-7557 or visit us online at www.LowRatesForPainters.com.

The source information for this article was pulled from articles which can be found in their entirety at www.InsuranceAnswerGuy.com.

Painting Contractor’s Insurance – Don’t Forget The Workers Compensation Policy November 29, 2010

NC Painter’s insurance plans can be found in many different forms.  One coverage that every painting company with employees should have is workers compensation.  In North Carolina, the law states that if you have fewer than 3 employees you don’t have to purchase workers compensation insurance.  But what this rule doesn’t tell you is that not buying a policy could wipe you out.

In NC, the workers compensation rules and regulations are controlled by the NC Rate Bureau.  And the rules do give you an out  when it comes to buying a workers compensation insurance policy if you have less than 3 employees.  In fact, there are no real teeth in the law that will catch and find employers who have 3 or more employees who also don’t purchase a workers compensation insurance policy.  So, yeah, you could go years without purchasing a workers compensation policy for your painting business.   But that would be a very dangerous choice.  Here’s why:

Although the law may not require that you actually purchase a workers compensation insurance policy, it will require that you pay all of the claims yourself just as if you were the insurance company.  Workers compensation benefits in North Carolina are statutory and claims are governed by the NC Industrial Commission.  That means that exactly how much gets paid for each type of illness or injury has already been determined by state law.   Therefore, if you are paying out of your own pocket for a claim, you will not have the opportunity to determine how much you are going to pay.  And in the case of a long term disability the amount you might have to pay out is staggering.

So, using the loophole in the law to avoid buying a workers compensation policy only gets you out of paying the policy premium.  In fact, it puts you in the unenviable position of being the insurance company and on the hook for all claims.  And these claim costs can be enormous.  Imagine coming up with $100,000 to pay for injuries that resulted in permanent disability, then paying disability payments for years after that for one of your employees.  Pretty scary huh?  So even if work comp insurance seems expensive, you should realize that purchasing it is a no brainer because going bare means you are pretending to have the assets of an insurance company.  For most painters, that just isn’t the case.

At Clinard Insurance Group in Winston Salem, NC, we specialize in helping painters with their insurance needs.  If you have any questions about your general liability insurance, your workers compensation insurance, your business auto insurance or any other insurance policies, please call us toll free at 877-687-7557 or visit us on the web at www.LowRatesForPainters.com.

The source information for this blog can be found in articles located at the blog found at www.InsuranceAnswerGuy.com.

Painters Work Comp Insurance – Pay As You Go, Saves The Cash Flow August 3, 2010

Painting Company Insurance plans should all include a workers compensation policy for your employees and subs,  unless of course you work alone and have no employees.  And if handled incorrectly,  work comp policies can tear a huge  hole in your cash flow.  For more information on how this can happen, please  read my blog on the audit trap.  So it is important to understand your cash flow process vis-à-vis your payroll.    What if you could time your workers compensation policy to match the slower cash flow and lower payroll times?

In fact you can.  With a little understood tool called pay as you go.  Now  you need to know that not every insurance company that insures painters can or will offer this feature, but if you can find one that does and their price is right, this can be a nice benefit for painters and painting companies. 

So how does it work?  Well, these plans vary some from company to company,  but the very best of them will send you an email or a mail reminder each month.   You then log on to their web site and enter your payroll totals for the past month.  The web site will then calculate your premium for that month and you can pay your bill on line right then and there with a credit card.  What this means for you is that now your workers compensation expense tracks your payroll with only a 30 day delay.  And since your revenue from jobs is always running just a bit behind your payroll costs, now your workers compensation expenses will more nearly track your revenue and this means you will have less wild swings in your monthly cash flow.

There are a few things to watch out for here.  First of all, there are some payroll service companies out there offering pay as you go workers compensation to go with their payroll service.  On the surface this sounds great but there is a problem with this approach.  One huge factor in your workers compensation insurance costs is your experience modification factor.  And you need to work proactively to protect that mod to keep future costs lower.  Companies that specialize in payroll services and sell work comp as a sideline are rarely as good at keeping claims costs low as companies whose prime mission is workers compensation insurance.  These dedicated work comp insurance companies by contrast, will often have nurses and case managers on staff to help reduce your overall claims costs.  And keeping your claims costs low will keep your rates low over time.  To learn more about this read my blog on protecting your experience mod.  In addition, if you purchase your workers compensation insurance through a payroll processing company, you will usually have only one choice in terms of the insurance company that handles it.  This is stripping you of your free market shopping tool as a way to reduce the overall costs of workers compensation insurance.  Instead, consider finding an independent insurance agent who represents many insurance companies, and more importantly, find one who specializes in insuring painting contractors so that you get the expertise that you need for your business.

One last thing to mention here is that the pay as you go feature offered by some companies is often only available to painters whose premium exceeds a certain level, often as high as $5000.  There are a few companies out there who can offer this feature at a much lower premium level, but you will need to find an agent who specializes in painters insurance to find them.

At Clinard Insurance Group, in Winston Salem, NC, we are the Painting Contractor Insurance Specialists.  We have companies that can write pay as you go workers compensation policies for painters with annual premiums as low as $1000.  If we can help you with any of your painters insurance policy questions, please call us, toll free at 877-687-7557 or visit us on line at our Painting contractors’ insurance program policy page.

Some of the source material for this article was drawn from other blog articles which can be found at www.InsuranceAnswerGuy.com.

Auto Repair Shops Workers Compensation Insurance – Protect Your Mod March 12, 2010

Most automotive repair and body shop owners have at least a general knowledge of workers compensation insurance.  They know that they need it and they know it can cost a lot of money.  But only a few really understand the experience modification factor and what it could mean for their future work comp insurance policy costs.  This little primer will help you understand just how important it is to protect your mod and how to do it.

The experience modification factor of workers compensation policies, referred to as the experience mod or just mod for short, is the insurance industry’s way of assigning higher rates to businesses with poor loss experience and lower rates to those who have had more favorable loss experience.  Each business has its own unique experience modification factor and this factor is applied to the rates on their policy.  For example, if you have had a lot of losses, or perhaps a few large losses, you might find yourself with a mod of say, 1.35.  If this is the case, then your workers compensation insurance policy premium will be adjusted upward by 35% to reflect your bad experience.  Likewise, if your company hasn’t has a work comp loss for several years, your mod might drop as low as .80 and this would mean a 20% reduction in your overall workers compensation policy premium.

So how is this mod calculated?  Well, the first thing you need to know is that the mod is calculated based on past experience.  That means what happens today will take several years to come back and bite you.  Also, the experience period for the mod in North Carolina is 3 years, so once you get some losses in your mod calculation, they will stay there  for a while.  I want to leave a more detailed explanation of how the mod is calculated to a later blog, but for now, understand that it is not only the number of losses (called frequency) that plays a part, but also the amount paid out (called severity) that impacts the mod calculation.  And a little of both, frequency and severity can really run up your mod.

So what can you, as a business owner, do to protect your mod?  A lot of how your mod will affect you, both good or bad will be determined by which insurance company you choose for your workers compensation policy.  I say this, because, although you may be as careful as you can to avoid injuries among your workers, there is no substitute for an insurance company that is actively working for you to help you prevent claims and reduce the severity of existing claims.  So when evaluating which workers compensation policy to purchase, you should consider more than just the cost on the first policy.  Find out what that insurance company and that agent are going to do to keep your costs low over the long term.

Choose a workers compensation insurance company that will work with you to help you with both prevention and severity reduction.   Prevention can come in the form of safety inspections, and loss control techniques that the insurance company can share with you.  Reduction can come in the form of programs that help your injured workers get back to work more quickly.  Some of the best workers compensation insurance companies even have their own nurses and doctors.  Also, you want to purchase your workers comp coverage from a company that assigns case managers to each claim to stay on top of all the medical bills and the disability payments to keep the payout as small as possible.

At Clinard Insurance Group, in Winston Salem, NC, we specialize in helping the owners of automotive repair and body shops navigate the complex waters of insurance policy and insurance company selection.  We can help you find a pro-active insurance company that will help you reduce the number of work comp claims and keep the claims that happen from spiraling out of control.  We can also help you with your other insurance needs from garage insurance to commercial auto insurance for your wreckers or company trucks.  If you would like help with any of your business insurance needs, please call us, toll free, at 877-687-7557 or visit our garage owners insurance help page.

The source information for this article was taken from other articles which can be found in their entirety at www.InsuranceAnswerGuy.com.

Contractors Workers Compensation Insurance – Protect Your Mod February 2, 2010

Most contractors have at least a general knowledge of workers compensation insurance.  They know that they need it and they know it can cost a lot of money.  But only a few really understand the experience modification factor and what it could mean for their future construction company insurance policy costs.  This little primer will help you understand just how important it is to protect your mod and how to do it.

The experience modification factor of workers compensation policies, referred to as the experience mod or just mod for short, is the insurance industry’s way of assigning higher rates to businesses with poor loss experience and lower rates to those who have had more favorable loss experience.  Each business has its own unique experience modification factor and this factor is applied to the rates on their policy.  For example, if you have had a lot of losses, or perhaps a few large losses, you might find yourself with a mod of say, 1.35.  If this is the case, then your workers compensation insurance policy premium will be adjusted upward by 35% to reflect your bad experience.  Likewise, if your company hasn’t has a work comp loss for several years, your mod might drop as low as .80 and this would mean a 20% reduction in your overall workers compensation policy premium.

So how is this mod calculated?  Well, the first thing you need to know is that the mod is calculated based on past experience.  That means what happens today will take several years to come back and bite you.  Also, the experience period for the mod in North Carolina is 3 years, so once you get some losses in your mod calculation, they will stay there  for a while.  I want to leave a more detailed explanation of how the mod is calculated to a later blog, but for now, understand that it is not only the number of losses (called frequency) that plays a part, but also the amount paid out (called severity) that impacts the mod calculation.  And a little of both, frequency and severity can really run up your mod.

So what can you, as a business owner, do to protect your mod?  A lot of how your mod will affect you, both good or bad will be determined by which insurance company you choose for your workers compensation policy.  I say this, because, although you may be as careful as you can to avoid injuries among your workers, there is no substitute for an insurance company that is actively working for you to help you prevent claims and reduce the severity of existing claims.  So when evaluating which workers compensation policy to purchase, you should consider more than just the premium on the first policy.  Find out what that insurance company and that agent are going to do to keep your costs low over the long term.

Choose a workers compensation insurance company that will work with you to help you with both prevention and severity reduction.   Prevention can come in the form of safety inspections, and loss control techniques that the insurance company can share with you.  Reduction can come in the form of programs that help your injured workers get back to work more quickly.  Some of the best workers compensation insurance companies even have their own nurses and doctors.  Also, you want to purchase your workers comp coverage from a company that assigns case managers to each claim to stay on top of all the medical bills and the disability payments to keep the payout as small as possible.

At Clinard Insurance Group, in Winston Salem, NC, we specialize in helping the owners of small contracting companies navigate the complex waters of insurance policy and insurance company selection.  We can help you find a pro-active insurance company that will help you reduce the number of work comp claims and keep the claims that happen from spiraling out of control.  Because contractors insurance is our specialty, we can help you with your insurance needs whether you need help with carpentry insurance, carpet cleaner insurance, electricians insurance, flooring insurance, HVAC insurance, grading and excavating insurance, insulation insurance, landscaping or lawn care insurance, masonry insurance, painters insurance, plumbers insurance, siding insurance or  even guttering insurance .  We have built special niche programs for many different types of contractors and we encourage you to call us, toll free, at 877-687-7557 or visit us on the web at  www.TheContractorsHelper.com. 

The source information for this article was taken from other articles which can be found in their entirety at www.InsuranceAnswerGuy.com.

Construction and Building Contractors – How should you define an Independent Contractor? October 21, 2009

It’s really the nature of the business in construction.  Whether you are a brick mason, a carpenter, a painter, a plumber, or even a landscaper, from time to time you will find yourself in the position of  needing to hire a subcontractor.  But how you define an independent contractor and the way the law and the insurance industry define this term might be very different.  It is important for you to get this right, not only for your workers compensation and general liability insurance, but also for the protection of your business and perhaps your personal assets.  And here is a clue – you don’t get yourself off the hook simply by providing a 1099 instead of a W2.

It is very important that you handle the interaction of your general liability insurance policy and your workers compensation insurance policy with your subcontractors.  I have covered strategies of this type in previous blogs, whether it be the impact on your insurance audits, or the increased risks that subcontractors add to your business.  This article is not intended to tackle those areas.  Instead, here I want to really focus on the definition of an independent contractor so that you don’t make the mistake of treating an employee as an independent contractor and increase your business risks as a result.

While there is no clear basis for making the determination of who is an employee and who is an independent contractor in the eyes of the law, here are a few relevant factors that you should consider.

Who sets the hours of work?  If the employer does, then it is more likely that the worker will be determined to be an employee.  Does the employer provide training for the job?  If so, this points more to an employer/employee relationship.  Is the worker paid by the job, or paid by the hour.  Hourly workers are much more likely to be viewed as employees.  Can the person work for more than one firm at a time?  If not, perhaps they are really an employee.  Who furnishes the tools or materials needed for the job?  If it is your company, then you may be dealing with an employee, rather than an independent contractor.  Is the work part of the regular business of the employer?  This one seems a bit vague but if you are hiring people to do the regular and usual work of your company, then they are most likely employees.

At Clinard Insurance Group, in Winston Salem, NC, we specialize in helping all types of construction contractors with their general liability insurance, workers compensation insurance and all other business insurance needs.  We want our contractors to be informed consumer and help them run their business using best practices that help reduce risks to their assets.  If you are in the construction business and would like help with your business insurance needs, please visit us on the web at www.TheContractorsHelper.com, or call us, toll free at 877-687-7557.

The source information for this article was drawn from articles which can be found at www.InsuranceAnswerGuy.com.