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Business
Insurance
Insurance Brokerage
Services
An
insurance broker has the ability to obtain
for his or her clients, quotes from various
insurance companies. The insurance
companies appoint a broker to sell their
insurance policies and register the
appointment with the state’s insurance
commissioner. On the other hand, the
“captive insurance agent” contracts with
only one insurance company and sells only
their products. The insurance agent cannot
contractually sell other insurance
companies’ products. The only exception is
that the agent may sell other insurance
products in the event the contracted
insurance company does not sell a certain
policy sought by he agent’s client. In
this case the agent needs to offer the
contracted insurance company the right of
first refusal before selling other
companies’ policies. We are insurance
brokers and we provide our clients policies
from reputable companies at competitive
prices. We typically obtain no less than
three quotes from different insurance
companies and present these quotes to our
clients. An agent can only offer one quote
from the contracted insurance company,
thereby not providing their clients with
competitive quotes.
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Car Insurance – Personal Auto Policy (PAP)
An
insurance policy that covers incidents
involving your car. The most common
coverages are basic liability coverage that
pays other people's expenses for accidents
caused by drivers covered under your policy;
and collision and comprehensive coverage
which covers the cost of repairing or
replacing your car after an accident, cost
of replacing or repairing your car if it is
stolen or damaged by fire, vandalism, hail,
or another cause other than collision.
Under California Law the
minimum amount of financial responsibility
required is:
$15,000 for bodily injury to
one person
$30,000 for bodily injury to
all persons
$5,000 for property damage
Vehicles not customarily covered by the
PAP include:
Vehicles rented to others
Vehicles used to carry
passengers for a fee
Motorcycles and other
vehicles with fewer that four wheels
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Health
Insurance
Find the
best health insurance for yourself, your
family or your small business. View standard
plans, HMOs, PPOs and short term plans. You
can choose from low to high deductibles.
We also offer catastrophic high deductible
as well as hospital only coverage. An
insurance policy that will pay specifies
sums for medical expenses or treatments.
Health policies can offer many options and
vary in their approaches to coverage.
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Group
Health Insurance
A
medical insurance plan by which employees
and their dependents or other homogeneous
group, are insured under a single policy,
issued to their employer or group with
individual certificates given to each
insured individual or family unit.
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Individual Health Insurance
For
those individuals not covered by employer’s
health insurance, there is an individual or
family policy available
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Homeowners
Insurance
Protect
your most valuable assets — get home, condo
or renter's insurance quotes. Homeowners
insurance is designed to pay for damages to
your home and its contents. Homeowners
insurance is a package policy consisting of
different types of coverage for the house,
its contents, additional living expenses,
personal liability claims against the
policyholder and other members of the
household, and medical payments to others.
Insurance policies are also available for
Condos and Town homes.
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Renters
Insurance
No
matter where you live, renters insurance is
economical and worthwhile: for as little as
$10 a month, you can protect your
belongings. Insurance rates vary depending
on the amount of coverage and additional
features. Some things to consider before
signing your check:
Before buying renters
insurance:
Take an
inventory of your belongings. Videotaping
works well to jog your memory if items are
lost. When taping, read off brand names, and
serial and model numbers. Also, use a ruler
to determine size.
Document
approximate costs and purchase dates of
household goods. This will give you an idea
of how much coverage you need and assist you
with filing a claim if disaster strikes.
When figuring how much coverage you need,
many companies offer a “contents evaluation
guide” to assist you. Keep a copy of
inventory in a safe place away from your
home.
There
may be discounts for security systems, smoke
detectors or deadbolt locks.
Some
items, like wedding rings and art, may need
separate coverage.
You may
choose replacement versus cash value
coverage. Cash value covers only the value
of the item — taking depreciation into
account — at the time it’s lost. Although
they cost more, replacement value policies
reimburse the cost to buy the item new.
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Long
Term Care Insurance
Long
Term Care Insurance protects you, as well as
your loved ones in the advent that extended
care is needed during your life. The chance
of requiring long-term care services is
roughly 50 times the chance of sustaining a
major loss from an automobile accident.
Americans are becoming more sophisticated
about long-term care insurance. As the
knowledge of this financial product has
broadened, the insurance carriers have
designed additional options and riders for
the more savvy customers. These additional
options include accelerated pay riders,
indemnity payments, enhanced daily benefit
maximums, waiver of home health care
elimination periods, multiple inflation
protection choices, enhanced survivorship
benefits, greater elimination period choices
and expanded home health care benefits.
Unfortunately, despite an overall knowledge
of long-term care, too many Americans remain
reticent to make decisions on whether they
will purchase a policy. Far too often,
people remark that their uncertainty is
based on a perception that they "may" never
use the benefits. This perception, while
true in many cases, is completely
irresponsible when evaluating one's
financial planning.
As
Americans continue to live longer and
longer, long-term care insurance will become
even more critical than it is today. Despite
the fact that many Americans still believe
that they will never require long-term care
services, the statistics show otherwise.
Today, the chance of requiring long-term
care services is roughly 50 times the chance
of sustaining a major loss from an
automobile accident. Most consumers would
never dream of driving an automobile without
owning automobile insurance, but yet they
have not planned accordingly for the time
when they will require long-term care
services. According to the Society of
Actuaries, for every 1,000 people, nearly
600 will require some form of long-term care
(LTC). Many people are relying on a flawed
belief that Medicare or Medicaid will
provide the care at the time of need,
thereby eliminating the need for private LTC
insurance. This misconception is extremely
naive and quite dangerous when considering
the numbers of people who truly believe that
LTC insurance is a luxury. Actually,
Medicare only covers six percent of
long-term care costs nationally, and
Medicaid provides benefits only to those
people who have depleted enough assets to
qualify for the aid, as reported in The
Western Journal of Medicine, January 1994.
This gross miscalculation will only worsen
in the future, as Medicare becomes more
exclusive to medical-related services, with
lesser coverage for custodial care. As more
facilities sell a larger percentage of their
space to private-pay patients, these
facilities will terminate existing
relationships with federal and state
programs. Ultimately, this will leave
Medicaid patients with fewer options than
they have today. In fact, the last nine
months have already brought about
significant restrictions for Medicaid
eligibility in many states.
Additionally, more consumers are becoming
more adamant about receiving assisted living
and home-based care, which is evidenced by
the fact that, for every person living in a
nursing home, there are four others
receiving care in the home, according to a
1998 report, "Group Long Term Care ?
Flexibility, Innovation, Experience."
Unfortunately, neither Medicare nor Medicaid
pay for any assisted living facility and
home-based health care. Perhaps more
importantly, is the fact that the federal
government has made it clear that long-term
care is not the responsibility of the
government, so private insurance will be the
only definitive assurance that benefits will
be available in the future. These people,
who are waiting on the "sidelines" for the
government to step-in and provide coverage,
will be left with few options. As the baby
boomer generation will soon be retiring, the
passive planning in this country is paving
the way for a crisis of nightmarish
proportions.
The
statistics from the May 2003 Roper Study are
even more alarming. According to the report,
approximately 75 percent of those surveyed
were families currently aware of the major
long-term care options in the marketplace.
Of those who were surveyed, 71 percent
believed that is was very important to have
some type of private or government coverage
for LTC services, but only 17 percent stated
that they currently have LTC insurance to
cover these costs. Despite what the
remaining 54 percent may believe, most of
them will not be eligible for Medicaid, and
few will have the assets to fully pay for
these necessary services. Astonishingly,
nearly 67 percent of those surveyed stated
that choosing the long-term care facility
for themselves or someone close to them was
very important. Under Medicaid, only the
government decides where the patient will
receive care. Even more shocking was the
fact that 46 percent of those who currently
have health insurance believed that their
health insurance would cover most of the
costs associated with long-term care.
Finally, 30 percent of the respondents were
unaware that Medicaid was provided only to
applicants who had depleted nearly all of
their financial resources.
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Life Insurance
Life
insurance is designed to provide funds to a
survivor, family or business in the event of
a death. It is used to help replace income,
pay off mortgages, debts or estate taxes,
provide cash to buy out a partnership or
acquire stock owned by the deceased.
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Whole Life
Insurance
A life
insurance policy (also known as straight
life, ordinary life and traditional
permanent insurance) which has guaranteed
premiums and guaranteed death benefits
payable to a beneficiary at the time of the
death of the insured, and a minimum interest
rate which will be credited to the funds
accumulated in the policy. One type of whole
life insurance is variable life insurance,
in which the death benefit and cash value
benefits vary in relation to the value of
the investments underlying the policy.
Another type of whole life insurance is
universal life insurance, which allows the
policy owner to vary the amount and timing
of premium payments and the death benefit.
Standard life insurance is for those who
fulfill the physical, occupational, and
other requirements on which most of the
company’s policies are issued. Someone whose
requirements are more favorable may be
eligible for a "Preferred Risk." When the
applicant's characteristics are less
favorable, they may be characterized as
"Rated" or refused coverage altogether.
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Term Life
Insurance
Life
insurance issued for a stated temporary
period of time. These policies provide
benefits in the event of death, but they
generate no cash value. If you have a
limited amount to spend, and only need
insurance for a finite period of time, you
may be able to get more coverage by buying
term insurance than by buying cash value
insurance. Standard life insurance is for
those who fulfill the physical,
occupational, and other requirements on
which most of the company’s policies are
issued. Someone whose requirements are more
favorable may be eligible for a "Preferred
Risk." When the applicant's
characteristics are less favorable, they may
be characterized as "Rated" or refused
coverage altogether.
Mortgage Life Insurance
(click for Application)
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Disability
Insurance
Disability Insurance provides a preset
income to an insured person who is unable to
work due to injury or illness income
payments to an insured wage earner when
income is interrupted or terminated because
of illness, sickness, or accident.
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Burial Insurance
Burial
insurance is insurance whose terms
specifically provide that the proceeds can
be used only to pay the burial expenses of
the insured.
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Long Term
Care Insurance (LTC)
Long-term Care Insurance pays for nursing
home, home health or adult day care when
people need help with "activities of daily
living," such as bathing, dressing and
walking, or have a "cognitive impairment"
such as Alzheimer's disease. Medicare and
Medicare supplement insurance policies
generally don't pay for such services. A
Long Term Care (ltc) policies pay a specific
dollar amount for each day you spend in a
nursing facility or for each home health or
home care visit. Some of these policies pay
the daily benefit amount regardless of the
charges, others will pay covered charges, or
a percentage of covered charges up to the
daily benefit amount. Long Term Care
insurance should definitely be considered,
since at age 65, about 33% of men and 52% of
women will spend some time in a nursing
home.
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Other Insurance / Dental Plans
Motorcycle, ATV, Boat, Watercraft, RV,
Flood, Mortgage Protection, Smokers &
Tobacco Users, Fixed Annuities, Travel,
Renters Insurance, Dental Plans and more.
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Umbrella
Insurance
Any
number of occurrences could wipe out your
primary liability limits and leave your
assets vulnerable. You work too hard to let
that happen! Protect yourself with Umbrella
coverage.
Umbrella
liability insurance provides excess
liability coverage over several of the
insured's primary liability policies. Most
umbrella policies provide coverage that is
broader than the insured's primary
policies. An excess liability policy may be
what is called a following form policy,
which means it is subject to the same terms
as the underlying policies; it may be a
self-contained policy, which means it is
subject to it's own terms only; or it may be
a combination of these two types of excess
policies.
Umbrella
policies have three functions: (1) To
provide additional limits above the "each
occurrence" limit of the insured's primary
policies; (2) To take the place of primary
insurance when primary aggregate limits are
reduced or exhausted; and (3) To provide
broader coverage for some claims that would
not be covered by the insured's primary
insurance policies, which would be subject
to the policy retention.
Most
umbrella liability policies contain one
comprehensive insuring agreement. The
agreement usually states it will pay the
ultimate net loss, which is the total amount
in excess of the primary limit for which the
insured becomes legally obligated to pay for
the damages of bodily injury, property
damage, personal injury and advertising
injury.
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Limits of
insurance
All
umbrella liability policies contain an each
occurrence limit of insurance. Some umbrella
liability policies may have a separate limit
that applies to all personal and advertising
injury for one person or for the
organization. Also, some policies are
written with aggregate limits for only one
type of loss. Other policies may have one or
more aggregates for all losses. Umbrella
policies can be written with several
different variations of the aggregate
limits. There are no standard umbrella
policies.
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Pay on behalf
This is
the insuring agreement used in some umbrella
policies. The agreement promises to make
direct payment on behalf of the insured for
those sums of money the insured becomes
legally obligated to pay because of
liability imposed upon the insured by law,
or assumed under contract.
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Indemnity
This is
the insuring agreement clause found in most
umbrella policies as opposed to the pay on
behalf agreement. When the indemnity
insurance clause is used, the insurer will
indemnify or reimburse the insured for those
sums of money the insured becomes obligated
to pay by reason of liability imposed upon
the insured by law, or assumed under
contract.
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Self Insured
Retention
The
self-insured retention is the amount of the
loss an insured must pay before the umbrella
policy would be required to respond. The
self-insured retention would only apply when
a loss is excluded from coverage under the
primary policy, but not excluded under the
umbrella policy.
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Required Underlying Limits
Required
underlying limits are a requirement of the
Insurer. It requires the Insured to have
certain types of coverage, minimum limits
and carriers that meet a specific Best
rating.
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Business
Insurance
Business
insurance protects the contents of your
business against fire, theft and other
losses. It is prudent for any business to
purchase a number of basic types of
insurance. Some types of coverage are
required by law, other simply make good
business sense.
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Business Owners
Package policy
This is
referred to as BOP for short, is a
combination of liability and property
insurance. It is designed to save the small
to medium-sized business owner money when
compared to buying policies separately. A
BOP ordinarily provides building and
contents coverage, business income and extra
expense coverage and can provide crime,
boiler and machinery, inland marine and
liability coverages.
As a
general underwriting guideline, BOP
insurance is for small businesses and annual
company revenues must be under $1 million.
Actual guidelines will vary from carrier to
carrier.
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Liability Insurance
Businesses may incur various forms of
liability in conducting their normal
activities. One of the most common types is
product liability, which may be incurred
when a customer suffers harm from using the
business product. Liability insurance also
provides protection in case someone gets
hurt using your services or falls down the
stairs. There are many other types of
liability, which are frequently related to
specific industries.
Comprehensive general liability coverage
insures a business also against accidents
and injury that might happen on its
premises. It will protect you from payments
for bodily injury or property damage to a
third party, for medical expenses accruing
to the underlying incident, for the cost of
defending lawsuits including investigations
and settlements, and for any bonds or
judgments required during an appeal
procedure.
No
matter how diligently you remove all
possible hazards from your business, you
could be sued successfully for accidents
resulting from simply the carelessness of a
customer. General liability insurance is
your last line of defense against
devastating claims for things over which you
may have little or no control. Liability
law is constantly changing. An analysis of
your liability insurance needs by a
competent professional is vital in
determining an adequate and appropriate
level of protection for your business.
How much
liability coverage do you need? Generally,
experts say, $2 million to $3 million of
liability insurance should be plenty. The
good news is that liability insurance isn’t
priced on a dollar-for-dollar basis, so
twice the coverage shouldn't be twice the
price. The price you pay for coverage
depends on the size of your business
(measured either by square footage or by
payroll) and the specific risks involved.
Limitations will be akin to those on your
personal auto policy; for example $100,000
per person and $300,000 per accident.
Exclusions
One item
of note with general liability insurance is
that it tends to have a lot of exclusions.
Be sure to make sure you understand exactly
what your policy does and doesn't cover.
You may want to purchase additional
liability policies to cover specific
concerns. For example, many consultants
purchase errors and omissions liability
which protects them in case they are sued
for damages resulting from a mistake in
their work.
Companies with a board of directors may also
want to consider directors and officers
liability (D&O). This type of insurance
protects top executives against personal
financial responsibility due to actions
taken by the company.
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Business
Property Insurance
There
are many different types of property
insurance and levels of coverage available.
It is important to determine the property
you need to insure for the continuation of
your business and the level of insurance you
need to replace or rebuild. You must also
understand the terms of the insurance,
including any limitations or waivers of
coverage. Property Insurance is not just
insurance for physical property like a
building, it protects your business against
physical damage and loss of assets. Assets,
broadly defined, include the area in which
your business operates and the property
housed there. Good examples of property
within a building are desks, chairs and
merchandise. In the case of catastrophes
like fire, explosion, theft, or vandalism,
property insurance helps cover your costs —
whether it's to repair damaged property or
replace what you've lost. It is important to
review your property insurance every year
because the value of your property can
change from year to year.
Commercial property owners, both those
operating a business on their property and
those leasing property to another entity,
may purchase policies that protect the
building and associated structures. A
property owner’s policy will not protect
tenants from loss. Business owners who lease
their property may buy policies that protect
the building’s contents, such as machinery,
furniture and stored or displayed
merchandise.
The
Independent Insurance Agents of America
offers a coverage checklist for commercial
property insurance that's useful even if
your business doesn't own all of these types
of property. Use this checklist to aid you
in making a complete inventory of all your
business property.
Buildings and other
structures, leased or owned
Furniture, equipment, and
supplies
Leased equipment
Inventory
Money and securities
Records of accounts
receivable
Improvements and betterments
you made to the premises
Machinery
Boilers
Data processing equipment
and media, including computers
Valuable papers, books, and
documents
Mobile property, such as
automobiles, trucks, and construction
equipment
Satellite dishes
Signs, fences, and other
outdoor property not attached to a building
Intangible property
(goodwill, trademarks, etc.)
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Business
Interruption Insurance
While
property insurance may pay enough to replace
damaged or destroyed equipment or buildings,
how will you pay costs such as taxes,
utilities and other continuing expenses
during the period between when the damage
occurs and when the property is replaced?
Business Interruption (or "business income")
insurance can provide sufficient funds to
pay your fixed expenses during a period of
time when your business is not operational.
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Key Man
Insurance
If you
(and/or any other individual) are so
critical to the operation of your business
that it cannot continue in the event of your
illness or death, you should consider "key
man" insurance. This type of policy is
frequently required by banks or government
loan programs. It also can be used to
provide continuity in operations during a
period of ownership transition caused by the
death or incapacitation of an owner or other
"key" employee.
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Directors and
Officers
Under
some circumstances, officers and directors
of a corporation may become personally
liable for their actions on behalf of the
company. This type of policy covers this
liability. Directors and Officers
Liability Insurance provides financial
protection for the directors and officers of
your company in the event they are sued in
conjunction with the performance of their
duties as they relate to the company. Think
of Directors and Officers Insurance as a
management Errors and Omissions policy.
Directors & Officers Liability Insurance can
usually include Employment Practices
Liability and sometimes Fiduciary Liability.
The former involves harassment and
discrimination suits, and is where the
majority of your exposure will be.
Directors and Officers Insurance is often
confused with Errors & Omissions Liability.
The two are not synonymous; Errors &
Omissions is concerned with performance
failures and negligence with respect to your
products and services, not the performance
and duties of management. Generally it is a
good idea to carry both Directors and
Officers Liability Insurance and Errors and
Omissions Liability Insurance.
When do
I need Directors & Officers Insurance?
You need
Directors and Officers Liability insurance
when you assemble a board of directors. They
will frequently make the requirement.
Investors, especially Venture Capitalists,
will also usually require that you show
evidence of Directors & Officers Liability
insurance as part of the conditions of
funding your company.
Why do I
need Directors and Officers Liability
Insurance?
First,
you need Directors & Officers Insurance
because claims from stockholders, employees,
and clients will be made against the
company, AND against the directors of the
company. Since a director can be held
personally responsible for acts of the
company, most directors and officers will
demand to be protected rather than put their
personal assets at stake.
Secondly, you need Directors and Officers
Insurance because: Investors and members of
your board of directors will not be willing
to risk their personal assets to serve as a
corporate director or officer, no matter how
heartfelt their belief in your company.
Lastly,
employment practices suits constitute the
single largest area of claim activity under
D&O policies. Over 50% of D&O claims are
employment practices related.
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Errors and
Omissions
While
not referred to as “malpractice” insurance,
much like a legal or medical malpractice
liability policy, Errors and Omissions (“E &
O”) insurance covers businesses for errors
and omissions committed in the course of
providing advice, expertise, or other
services to their customers. Such a policy
can be purchased for a wide range of
businesses and can cover a wide range of
activities, from an insurance agent who
purchases a policy to protect him in the
event he makes an error in securing
insurance for a customer to a computer
consultant who purchases a policy to cover
her in the event she provides incorrect
advice to a customer regarding a computer
network.
Many
businessmen assume that they are insured for
their misdeeds by the Comprehensive General
Liability (“CGL”) policies that cover their
businesses – their assumption is incorrect.
Most CGL policies do not cover claims
related to professional services that a
business provides; indeed, CGL policies
almost always expressly exclude coverage for
claims related to the rendering of such
services. E & O policies pick up where CGL
policies leave off – while most CGL policies
explicitly exclude liability for
“professional services” from their scope of
coverage, most E & O policies are defined to
cover only errors and omissions committed
during the provision of professional
services.”
Because
E & O policies generally pick up where the
CGL policies leave off, much of the case law
interpreting the coverage for E & O policies
stems from disputes regarding the scope of
coverage of CGL policies and the meaning of
the “professional services” exclusion in the
those policies.
Like
most other professional malpractice
policies, E & O policies are generally
“claims made” policies. Coverage is
determined by reference to the policy in
effect when the claim is first made, rather
than when the alleged wrongful act occurred.
Common exclusions in E & O policies,
regardless of the type of business insured,
include those for claims related to acts
occurring prior to the effective date of the
policy of which the insured was already
aware; claims for bodily injury or death;
claims arising out of an assault and
battery; claims between insureds; claims for
wrongful employment-related practices; and
claims for willfully dishonest, fraudulent,
malicious or criminal acts.
In addition to these common
exclusions, most policies also have
exclusions that
are specific to the business
activity being covered. For example, an E &
O policy issued to an insurance broker might
contain an exclusion for claims related to
the collection of premiums; an E & O policy
issued to a securities broker-dealer might
exclude claims against or fines or penalties
levied against by a state or federal
regulatory agency; and an E& O policy issued
to a car dealership might exclude claims
alleging a violation of the Federal Odometer
Statute.
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Fidelity,
Surety & Crime
Surety-Bonds: Most commonly referred to as
Bonds, Bid Bonds and Performance Bonds. A
bond covers the fulfillment of an
obligation. The obligations can range from
performance of a contract to following laws
related to an operating license. Other
obligations include paying taxes or lease
fees, supplying goods, paying a court
judgment, or performing duties as a public
official, etc.
Fidelity-Crime: If there is a crime against
your business a Fidelity-Crime policy
protects you. Commercial crime insurance
protects businesses from the loss of money,
securities or inventory resulting from risks
such as theft, embezzlement, forgery or
alteration of checks, robbery, counterfeit
currency and documents, disappearance and
destruction of money, securities and
documents, employee dishonesty, safe
burglary, computer fraud, wire transfer,
audit and investigation expense. Reduce your
risk from crime and obtain Fidelity-Crime
coverage.
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Business
Automobile Insurance:
It is
obvious that a vehicle owned by your
business should be insured for both
liability and replacement purposes. What is
less obvious is that you may need special
insurance (called "non-owned automobile
coverage") if you use your personal vehicle
on company business. This policy covers the
business' liability for any damage which may
result for such usage.
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Home Office
Insurance:
If you
are establishing an office in your home, it
is a good idea to contact your homeowners'
insurance company to update your policy to
include coverage for office equipment. This
coverage is not automatically included in a
standard homeowner's policy.
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Professional
Liability
Professional liability insurance protects
against claims arising from your acts,
errors or omissions in rendering services of
a professional nature. Businesses involved
in everything from advertising to
engineering need to consider this coverage
seriously. It is common for customers to
require Professional Liability coverage from
their providers of services such as those
provided by lawyers, architects, accountants
before contracting for their professional
services. Medical Professional Liability
is referred to as malpractice insurance
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Inland Marine
Inland
Marine is the oddball of insurance policies,
it does cover goods in transport, but it
also includes diamonds and information
technology equipment. If you are having
difficulty identifying the proper type of
coverage for something you wish to insure
there is a good possibility it will fall
under Inland Marine coverage.
These
policies cover property while in transit or
in the custody of bailees, “floating”
property, dealer stock, property sold on
deferred-payment basis, instrumentalities of
transportation and communication, and
electronic data processing equipment. Some
of the major categories of Inland Marine
insurance are, builder’s risk, contractor’s
equipment floaters, installation floaters,
dealer’s policies, electronic data
processing equipment, bailee coverage,
property in transit and instrumentalities of
transportation or communication.
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Sexual
Harassment
As more
lawsuits are filed, corporate American has
sent sexual harassment insurance sales
catapulting
An
estimated 60 percent of companies have been
the target of at least one
employment-related lawsuit in the past five
years and more businesses are turning to a
relatively new form of insurance designed to
protect them against workplace liability.
Employment Practices Liability Insurance (EPLI)
was developed in the 1980's to protect
employers who find themselves the target of
work-related lawsuits, including harassment,
wrongful termination and discrimination.
According to the Western Insurance
Information Service, between 1992-1996 the
number of civil rights cases filed in
federal court more than doubled from 10,771
to 23,152. In 1995 the medium compensatory
award nationally for a wrongful termination
case was $219,000. In California, the
average was only slightly lower at $210, 700
in 1996. EPLI covers defense costs,
judgments and settlements for the corporate
entity, employees, former employees as well
as directors and officers. Depending on the
type of business, coverage is provided up to
a limit of $50 million.
Deductibles range from $10,000 to $25,000.
On the average, companies are spending
$100,000 annually for EPLI coverage.
Workers' compensation, bodily injury and
property damage are not covered by EPLI.
Insurance coverage for each of these
wrongful actions has also transformed from
nonexistent to many companies now providing
some special type of coverage. The standard
liability insurance policy that most
businesses purchase specifically excludes
claims arising out of "employment
practices." The North Carolina Court of
Appeals in Russ v. Great American Insurance
Co., very recently ruled that an employer
held liable for sexual harassment of his
employees could not recover from his general
liability insurer, because the acts were
intentional efforts to harm the harassed
employees and thus not covered as
"accidents" under the general liability
policy. Coverage under standard business
liability policies was barred, even though
the employer testified that he did not
intend to injure the employees by the
wrongful sexual conduct.
In order
to obtain coverage for this type of conduct,
business owners must find a company willing
to accept some, if not all, of the financial
risk associated with wrongful termination,
discrimination, and/or sexual harassment.
Increased premium costs for these type
policies will range from $500 for a small
employer (three to six employees) to several
thousand dollars for larger employees. Is
the higher cost worth the coverage? Look at
the following court awards, remembering that
this does not include the legal costs to
defend a law suit:
*A jury
awarded $2.7 million to a woman forced out
of her job because company officials wanted
someone "younger and cuter."
*A
cancer patient received $220,000 in back pay
from the employer who had wrongfully
discharged him.
More and
more businesses are seeing the need to
purchase this special insurance coverage --
even those companies that have all the
correct policies and procedures in place to
avoid sexual harassment or discrimination.
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Workers
Compensation
Workers
compensation insurance covers the cost of
medical care and rehabilitation for workers
injured on the job. It also compensates them
for lost wages and provides death benefits
for their dependents if they are killed in
work-related accidents, including terrorist
attacks.
Workers
compensation systems vary from state to
state. State statutes and court decisions
control many aspects, including the handling
of claims, the evaluation of impairment and
settlement of disputes, the amount of
benefits injured workers receive and the
strategies used to control costs.
Workers
compensation costs are one of the many
factors that influence businesses to expand
or relocate in a state, generating jobs.
When premiums rise sharply, legislators
often call for reforms. The last round of
widespread reform legislation started in the
late 1980s. In general, the reforms enabled
employers and insurers to better control
medical care costs through coordination and
oversight of the treatment plan and
return-to-work process and to improve
workplace safety. Some states are now
approaching a crisis once again as new
problems arise.
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RECENT
DEVELOPMENTS
State Activities
California: Workers compensation costs are
still dropping as a result of reforms in
2003 and 2004. The state Workers
Compensation Insurance Rating Bureau
recommended a 16.4 percent drop in workers
compensation “pure premium” rates starting
in July 2006, bringing the cumulative
reduction to 55.1 percent since July 2003.
In September it recommended a further
decrease of 6.3 percent to take effect in
January 2007. Pure premium is the cost of
coverage without any additional charges for
such things as overhead expenses and taxes
and without a margin for profit. A report on
insurance industry profitability from the
National Association of Insurance
Commissioners shows that 2004 was the first
year in a decade that average returns for
workers compensation insurers doing business
in California did not lag behind those in
other states. The ten-year return on
policyholder surplus, or capital, for
California workers compensation insurers was
0.5 percent, compared with 7.9 percent
nationwide.
California Governor Arnold Schwarzenegger
has vetoed SB 815, a bill that would have
raised permanent partial disability
benefits. In explaining his veto, the
governor said that the proposed changes were
not based on a comprehensive analysis and
that he was awaiting the results of an
18-month study by the insurance department
on the adequacy of current benefits and on
the process through which medical care is
provided. Critics say the reforms have gone
too far and some injured workers are being
denied proper treatment. Among other things,
labor attorneys are seeking to roll back
provisions that require the adoption of a
more objective system for assessing the
degree to which injured workers are
permanently disabled. Determinations of
physical impairment must now be based on the
American Medical Association guidelines, a
publication used in may other states as
well, to help ensure evaluations are fair
and consistent.
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