Injury at Work – The Risk and Cost

Insuring your business and the people who work for you is just common sense. Besides, the obligation you have towards your employees, claims for compensation for sickness or injuries in the workplace, can be huge. But your employees may not be the only ones who work in your business premises. What about contractors and their subcontractors?

It Could Happen To You

Compensation to employees of contractors and their sub-contractors who are injured while working at site is a complicated and often contentious issue. The contractor may claim that all the required coverages are in place, but if an accident occurs and they are not, the liability could fall on you, and the primary employer. That is what happened recently at the new Tesla electric vehicle plant. A worker of a subcontractor working on the expansion of the factory was injured while on the job. It soon emerged that the subcontractor was in violation of employment laws and in breach of regulations regarding wages, overtime and workers comp.

Tesla had no knowledge of this, but when the facts came to light, they were dragged to court along with the subcontractor. The end result? The injured employee was awarded a $550,000 settlement.

Tesla is a huge organization with a vast amount of financial muscle. They will be able to absorb the monetary shock of the settlement. But what if something similar happened to you? The courts do not award settlement based on the ability of the employer to pay. It is on the basis of the amount of injury and the liability for it. In the Tesla case, the worker had fractured legs and ribs and a concussion. These are major injuries but, sadly, not uncommon in such cases. Would you be able to absorb a half million dollar payout? Or would that ruin you?

Get the Protection You Need

The vast number of insurance products available can be confusing to anyone who is not an insurance professional. Many business owners think they have the coverage they need when they do not. Part of the reason is the confusion that exists about coverage types. For example a person may read about employment practices liability insurance (EPLI) coverage and presume that since he has liability coverage, he is already protected. Not so. Liability coverage and EPLI are different and both are critical to protecting your business.

Remember that insurance is not a gamble, a luxury or just an expense. It is the shield that will protect you when you are faced with liabilities that could ruin you and your business.

When business imperatives demand that contractors need to be employed, the amount of paper work involved can be voluminous. Issues like workers compensation can easily fall through the cracks.Therefore, you as the principle employer must ensure that the contractors provide proof of their insurance coverage and that they add you as an additional insured party on the policy so that you are not in the firing line if things go wrong. In addition talk to your insurance agent to understand your possible liability and the claims that could be raised against you and get the insurance coverage you need to protect yourself and your business. If you do not have workers comp, liability coverages and EPLI you are leaving yourself dangerously exposed.

Commercial Insurance Rates on a Steady Rise

Commercial insurance rates has been on the decline for the past few years. This trend has now reversed and rates have been on the upswing for the last 4 months with June showing a 5% increase. This had to happen sooner or later – what goes down must come up. The current rise has been sparked by the impact of natural disasters, fraud, general issues of theft and changes in regulations.

The biggest increase has been in commercial auto insurance where rates have increased by over 6%. Property, directors and officers, general liability and employment practices liability insurance (EPLI) came next at over 5%.

What Next?

At present the commercial insurance market is relatively stable and the indications are that it will remain this way. There were no surprises or unexpected increases in commercial insurance rates in June and there are no signs of any drastic changes happening soon. Even the effects of Hurricane Sandy seem to have had little impact on commercial insurance. One reason for this could be that the bulk of the damage and losses were caused by flooding which is not something that the American insurance industry is responsible for.

According to insurance market analysts, the way ahead is that of slow and steady rate increases. Some months may show a decline in rates but it would be a mistake to read too much into that as these are going to be only small bumps in a regular upward movement. What could affect market dynamics and prove the predictions to be wrong are the recent moves by Berkshire Hathaway to make an entry into the primary casualty and property insurance markets. The company has not yet revealed its plans or the size of its entry vehicle. If the entry is on a large scale then whatever action it takes will have a significant impact on insurance rates.

A steady rise in insurance rates is not good news for businesses. Overheads are already high and any increases will be hard to absorb. But there is no point is a business owner burying his head in the sand. It makes sense to examine the possibilities and options available and plan on ways to minimize the impact without reducing the coverage. In fact this kind of analysis could even reveal where additional coverage is called for – another cost perhaps, but one that is worth incurring.

What Is Your Insurance Costing You?

The rising commercial insurance rates will, in all probability, continue to move upwards in the foreseeable future. Now is a good time to review your commercial insurance policies to see if your coverage is adequate and if there are ways in which you can cut your insurance costs without compromising on the coverage you have. Even if you have been insured for a long time with no problems, revisiting your policies to see if they reflect the changes in your business is a good idea. Contacting your broker to provide you with a professional analysis of the coverage you have vis-à-vis your present insurance needs will help you to make the changes required, if any. And a broker’s expert knowledge of insurance will help you to find the most cost effective solutions.