Author: Addi Sickels

Winter is approaching – are you ready?

As a business owner, we may not think about winter months approaching and little things that are important to think about to prepare for the harsh, cold months ahead for both our businesses and our employees. Things like freezing temperatures, snow, and ice can cause business interruptions and safety concerns as well as property damage. The best way to reduce risk is to be proactive and prepare! Here are some tips to help prepare both your business and employees for the upcoming winter months:

Building and Property: Take time to inspect and repair roofs, gutters, and downspouts. Seal windows and doors to prevent drafts, and check insulations in walls, attics, and crawl spaces. These things help to prevent water intrusion, ice dams, and heat loss.

Plumbing: Insulate exposed pipes, especially in unheated areas, and know how to shut off water in case of burst pipes, reducing risk of frozen or burst pipes and water damage.

Heating Systems: Service and test heating equipment before cold weather sets in, replace filters, and check thermostats for accuracy. Regular maintenance ensures reliable heat and energy efficiency throughout the year, but especially during harsh winter months.

Snow and Ice Removal: Establish a snow and ice removal plan for walkways, parking lots, and entrances early, and stock up on salt, sand, and shovels or contract with a removal service early. This helps prevent slip-and-fall accidents and keeps your property accessible.

Emergency Preparedness: If you have them, test backup generators, and emergency lighting, review your business continuity plan with staff, and update emergency contact lists, minimizing downtime during power outages and severe weather events.

Employee Safety: Train employees on winter safety protocols (slip and fall prevention, property footwear, reporting hazards) and encourage safe driving for employees who travel for work. Have regular safety meetings. This protects your team and reduces liability risks.

Involving and communicating with your employees is essential to being proactive in preparing for winter months as well. Communicate your winter safety plan and expectations clearly to everyone and make sure everyone is aware. Provide training on identifying and reporting hazards such as icy walkways or leaks. Encourage employees to dress appropriately for the weather and use provided safety equipment. Assign responsibilities for snow and ice removal or emergency response as needed and foster a culture of safety where employees feel empowered to speak up about concerns. Have safety meetings or competitions or offer prizes and make it fun!

Regularly review your insurance program with your agent as well. Ensure your property and liability policies are up to date and provide adequate protection for winter-specific risks. Keep records of maintenance and safety measures in case you need to file a claim. These records can assist in documentation if needed. Understand how to report a loss quickly should an incident occur. Your team at Dimond Bros. is here to help you prepare for winter and respond to any questions you may have. We offer guidance on risk management and loss prevention, assistance with claims reporting and resolution. Remember early preparation is the best defense against winter hazards. Protect your business, your employees, and your peace of mind by being proactive – and we are here to help you.

FOR OCIP QUESTIONS OR INQUIRIES – EMAIL OCIP@DIMONDBROS.COM

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.

If you desire the freedom of a self-funded insurance plan but need a little more certainty for your budgeting concerns, level funding might be an option for you. Weigh the advantages and disadvantages and decide what’s best for your company.

What is a Self-funded Plan?
In a self-funded health plan, the employer assumes the risk and responsibility of medical claims instead of contracting with an insurance carrier to pay claims. The employer sets premium rates based on claims history and typically benefits from lower administration costs and greater flexibility both in plan design and cash flow within the business.
A self-funded plan may contract with a third party administrator (TPA), but it is still a self-funded plan because the company is responsible for funding the claims payments. Stop-loss insurance can be obtained to pay for excessively high claims, but the employer is responsible for the majority of the costs and the stop-loss insurance is simply a protection against extremely high, unpredictable claims.
Self-funded plans are not right for every company. One of the downsides to a self-funded plan is that the employer must pay out claims as they come in, leaving itself exposed to fluctuating expenses. Level funding is an option that can add predictability back into the equation if your company decides to implement a self-funded plan.

What is Level Funding?
Level funding is an option that can accompany a self-funded plan, aiding employers in their health coverage budgeting efforts. With level funding, employers pay a set amount each month to a carrier. This amount typically includes the cost of administrative and other fees and the maximum amount of expected claims based on underwriting projections, as well as embedded stop-loss insurance.
The carrier facilitating the level funding will pay your employees’ claims throughout the year. At the end of the year, if your payments exceeded claims, you will receive a refund from the excess you paid in monthly claim allotments. If the claims exceeded what you paid into the program, in most cases your stop-loss insurance will cover the overage amount.

Advantages of Level Funding
Level funding offers several advantages. Like other self-funded plans, you don’t have to pay premiums that are based on community rates, which might be higher than your employee group’s risk. Instead, you only pay the actual claims and an additional administrative fee. Another benefit of level funding is that if all the money you set aside each month to cover claims is not used, you will receive a refund at the end of the year from the surplus, instead of paying expensive premiums for a fully insured plan and essentially using or losing that money. If you are already self-funded, then you will enjoy a more budget-friendly method of monthly claims payment, with stop-loss insurance to protect you from unexpected high costs.
Generally, the monetary advantages of level funding are that you are better able to manage your budget and prepare for claims costs. You will benefit from a smoother cash flow and not worrying that a high claim near the beginning of the year will impact your business.
Additionally, many level funding plans provide detailed reporting on utilization trends, giving you important information on where employees may be causing overspending (such as unnecessary use of emergency room visits instead of urgent care).
Another advantage of level funding is having fewer governmental regulations than fully insured plans are subject to. Check with your legal counsel about regulatory benefits specific to your state and business.

Disadvantages of Level Funding

Although there are upsides to level funding, there are also some disadvantages. One is that when you choose to self-fund you are likely looking to cut costs—and with level funding, part of your monthly payment is to cover administrative fees. Depending on the plan and your other options, these fees have the potential to cut into the savings you hope to gain from running a self-funded plan. You’ll need to weigh the cost effectiveness of administering your self-funded plan in-house, hiring a TPA or choosing a level funded option with the attached administrative fees.
Additionally, you still have to pay the claims. With level funding you’re paying for the convenience of having equal payments throughout the year and the security of stop-loss coverage.
Another challenge of level funding to consider is the terms of the contract; make sure you understand how the contract will impact a business of your size—companies with smaller numbers of employees may benefit differently than those with larger numbers. Also, many level funding plans restrict their offerings to companies with a certain minimum or maximum number of employees, which may affect your ability to contract with your desired carrier.

Making Your Decision
Ultimately, if you want to operate a self-funded health plan, level funding is an option that must be considered in light of your company’s cash flow, risk tolerance, employee numbers and preferred budgeting methods.

Contact Dimond Bros. Insurance for more information about coverage options.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.

In spite of the ambiance and relaxation that a fireplace provides, there are also inherent fire dangers. To combat the risk of fire or inhalation of dangerous carbon monoxide (CO) gas, it is important for you to make chimney care part of your home maintenance plan. Follow these tips to keep your chimney in good shape and prevent fire hazards.
General Maintenance Tips
Both metal and masonry chimneys require maintenance so that smoke and flue gases are ventilated properly. At the very least, you should have your chimney inspected annually before each heating season. In addition:

• Have your chimney cleaned on a regular basis to reduce creosote buildup.
• Make sure your masonry chimney has a flue liner in place to reduce the possibility that the masonry could absorb creosote.
• Replace damaged liners, as they will allow creosote to accumulate and heat to escape.
• When hiring someone to reline your chimney, only allow the contractor to use a product that has been tested and listed by a nationally recognized testing laboratory.

Specific Maintenance Tips
There are two types of chimneys that require specific maintenance to limit the risks in your home.

1. Fireplace inserts—Make sure the vent is connected to the flue of the chimney.
2. Factory-built metal chimneys—Do not use natural gas, fuel oil vents, well casing, stovepipe or other material in the chimney, as they cannot withstand the heat in the wood burner.

Keep These Precautions in Mind
Do not vent more than one heater or appliance into a single flue, as major complications can arise. If one fuel-burning appliance is connected to a flue and then you attach another appliance, such as a water heater, you are running the risk of various problems—including heavy creosote accumulation, deterioration of the flue or CO gas drifting into your home.

For additional home maintenance guidance and homeowners insurance solutions, contact us today.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.

Electrical contractors are trained professionals who typically perform a range of operations related to installing, maintaining, repairing and replacing electrical systems and machinery. They may provide residential or commercial services and conduct their work in various settings, such as their office spaces and customers’ homes or businesses. Common tasks for electrical contractors include reading blueprints or other technical diagrams associated with electrical elements; installing and maintaining electrical wiring and lighting systems; inspecting electrical components (e.g., transformers and circuit breakers) for potential issues; identifying electrical problems through the use of certain testing devices; repairing or replacing broken, damaged or malfunctioning electrical wiring, equipment and fixtures; and ensuring electrical features remain compliant with applicable federal, state and local building regulations.

Electrical contractors have a number of risks to consider, including property concerns, employee safety issues and liability exposures. As such, it’s crucial they protect both themselves and their operations against possible losses by securing proper insurance. Keep reading for an outline of common exposures within the electrical industry and associated coverage considerations. Take note that this document only applies to electrical contractors who work within residential and commercial buildings, not those who work outdoors to erect and maintain underground or overhead high-voltage power lines.

Common Exposures

Here’s a breakdown of key exposures electrical contractors may face in their operations:

Property—Electrical contractors often leverage several types of tools and equipment (e.g., nonconductive hand tools, portable power tools, circuit testing equipment, soldering and welding equipment, ladders, scaffolding, forklifts and portable generators and heaters) to perform their services. These professionals also tend to have office spaces and storage areas where they carry out general business activities and keep important job materials (e.g., electrical tape, drop cloths, utility belts, cables, connectors, anchors, switches, plates and fuses). However, a range of unexpected events—including theft, vandalism, accidents, fires and inclement weather—may result in this property becoming damaged, stolen or destroyed, potentially leaving electrical contractors with significant recovery expenses. In addition to repairing and replacing their affected property, these professionals may experience business interruptions (e.g., lost productivity, temporary closures and delayed projects) amid the recovery process, compounding losses.

Auto—These professionals frequently use vehicles to travel between job sites and transport their materials, tools and equipment. Whether it’s a single vehicle or a large fleet, owning and operating vehicles carries various exposures. After all, it only takes one accident on the road to cause major losses. Following auto accidents, electrical contractors could encounter substantial expenses stemming from vehicle repairs and bodily injuries.

mployee safety—Even if electrical contractors take proper precautions to protect their employees at work, job-related injuries and illnesses can still happen. Common occupational ailments in the electrical sector include musculoskeletal disorders from performing repetitive tasks; contact stress injuries related to using vibrating hand tools; sprains and strains from lifting heavy materials; hearing loss due to prolonged exposure to loud equipment; slips and falls stemming from working at heights; impact injuries related to auto accidents; and electric shock or electrocution from handling hazardous energy sources. If their employees get injured or become ill on the job, electrical contractors could be held responsible for costs stemming from their workers’ hospital bills, treatment expenses and lost wages.

Liability—If any third parties (e.g., customers, suppliers or passersby) experience injuries or damages on electrical contractors’ premises or as a result of their operations, these professionals could be held liable for the associated losses. For example, a supplier may file a lawsuit against an electrical contractor if they slip and fall while visiting the contractor’s storage area. Furthermore, electrical contractors could face completed operations losses if customers allege any finished services or projects injured them or damaged their property.

Cyber—Many electrical contractors have begun relying on digital systems and software to store customers’ personal and financial data, such as their names, phone numbers, addresses, credit card numbers and bank information. Yet, amid growing cyberthreats, using such technology could make these professionals increasingly vulnerable to data breaches and other digital attacks. Following such incidents, electrical contractors could encounter costs related to notifying impacted individuals, recovering lost or damaged data and technology, handling associated legal ramifications and reputational losses, and implementing additional cybersecurity measures to prevent future incidents.

Coverage Considerations

To help address their exposures and stay protected from potential losses, electrical contractors should consider the following forms of coverage:

• Commercial property insurance—This coverage can help pay the resulting repair or replacement costs if an electrical contractor’s commercial property—such as their office area, storage space, tools and equipment—gets damaged, stolen or destroyed due to a covered event.
• Commercial auto coverage—If any vehicles in an electrical contractor’s fleet end up in an accident on the road, this type of insurance can assist with the associated vehicle repair and bodily injury expenses.
• Inland marine/installation floater insurance—Such coverage can help pay for losses stemming from an electrical contractor’s materials, tools and equipment getting lost, stolen or damaged while in transit.
• Workers’ compensation coverage—If an electrical contractor’s employees get injured or become ill on the job, this coverage can help pay for hospital bills, treatment costs and lost wages.
• General liability insurance—This coverage can assist if an electrical contractor is held legally or financially liable for injuries, harm or damage to another party or their property.
• Completed operations coverage—If a customer holds an electrical contractor responsible for injuries or property damage that occurred due to the faulty completion of a project, this type of insurance can help pay the related costs.
• Cyber liability insurance—Such coverage can assist with various first- and third-party expenses that may result from an electrical contractor experiencing a data breach or other cyber incidents.
• Errors and omissions (E&O) coverage—E&O insurance can help pay expenses if a customer claims an electrical contractor provided negligent services, didn’t uphold contractual promises, conducted incomplete or substandard work, or made other professional mistakes or omissions.
• Employment practices liability (EPL) insurance—In the event an electrical contractor is faced with employee lawsuits alleging workplace discrimination or harassment, wrongful termination or discipline, or failure to employ or promote, EPL coverage can assist with the associated defense costs.
• Umbrella and excess coverage—If an electrical contractor’s claim costs exceed the limits for their primary liability policies (e.g., commercial auto and general liability insurance), this coverage can increase those limits. Additionally, umbrella policies can help broaden existing policy coverage.

For additional risk management guidance and insurance solutions, contact us today.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.

A serious accident can put far more than this year’s income at risk. If a visitor is injured, a delivery vehicle is involved in a crash, livestock leaves the property, or a farm activity causes damage beyond your property line, legal defense costs and a settlement can quickly exceed the liability limit on a farm policy. An umbrella policy adds another layer of protection after an underlying policy reaches its limit—but the right amount depends on your operation, not a one-size-fits-all rule.

Start With What You Could Lose

Begin by taking inventory of assets that could be exposed in a lawsuit: land equity, buildings, machinery, livestock, stored crops, vehicles, investments, and cash reserves. Also consider future farm income. Your umbrella limit does not necessarily need to equal every dollar of farm value, but a large difference between your net worth and liability protection deserves a deliberate conversation with your insurance professional and attorney.

Measure the Operation’s Risk Threshold

Risk rises when your farm has frequent road travel, employees, custom work, leased acreage, multiple entities, agritourism, direct-to-consumer sales, hunting access, boarding, manure application, chemical use, large livestock numbers, or regular visitors. Contracts may also require specific limits. Think beyond how often a loss might happen and focus on how severe the worst credible event could be. A low-frequency accident involving several people can produce a much larger claim than a common property loss.

Choosing $1 Million, $3 Million, or More

A $1 million umbrella may be a starting point for a smaller, lower-traffic operation with limited payroll, modest road exposure, few visitors, and assets that are reasonably aligned with total liability protection. Confirm that underlying farm and auto policies meet the umbrella carrier’s required limits.

A $3 million umbrella may fit a growing or diversified farm with employees, several vehicles, significant land or equipment equity, livestock near public roads, custom operations, or routine public interaction. It creates a larger buffer when one incident could injure multiple people or involve prolonged litigation.

Limits above $3 million merit consideration when the farm has substantial assets, a large workforce or vehicle fleet, high visitor volume, hazardous activities, contractual obligations, or ownership structures that create broader exposure. Higher limits may also be appropriate when several risk factors overlap. Ask for quotes at multiple levels; the incremental premium for added umbrella capacity may be modest compared with the protection gained.

Review the Limit, Not Just the Price

Review liability limits annually and whenever you buy land, add employees, expand trucking, open the farm to guests, sign a major contract, or start a new enterprise. Give your agent a complete picture of all entities, vehicles, drivers, locations, and activities so coverage gaps can be identified. The goal is not to predict the exact size of a future claim; it is to choose a limit that lets the farm withstand a severe event without threatening the family’s long-term plans.

This article is for general educational purposes only. Coverage availability, exclusions, and requirements vary by insurer and jurisdiction. Consult a qualified insurance professional and legal or financial adviser about your specific operation.

Sources

• National Association of Insurance Commissioners, “What’s an Umbrella Policy?” — explains that umbrella coverage can pay covered liability and legal-defense costs beyond primary policy limits.
• Insurance Information Institute, “What Is an Umbrella Liability Policy?” — describes how umbrella coverage applies after underlying liability coverage is exhausted and notes that insurers commonly require minimum underlying limits.
• Penn State Extension, “Farm Owner’s Insurance” — identifies farm-specific factors to review with an insurance professional, including acreage, livestock, machinery, stored crops, rental property, and transportation exposures.
• Penn State Extension, “Understanding Agricultural Liability” — outlines liability exposure tied to farm property, visitors, tenants, and operators, and recommends operation-specific advice from an attorney and insurance agent.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.

Brought to you by: Dimond Bros. Insurance

Employee Medical Benefits: Self-funded vs. Fully Insured

Group medical benefit plans typically fall into one of two categories: self-funded or fully insured. The choice of one over the other should not be made arbitrarily. Each type carries its own set of administrative rules and legal constraints.

What is Self-funding?

Under an insured health benefit plan, an insurance company assumes the financial and legal risk of loss in exchange for a fixed premium paid to the carrier by the employer. Employers with self-funded (or self-insured) plans retain the risk of paying for their employees’ health care themselves, either from a trust or directly from corporate funds.

Most employers with more than 200 employees self-insure some or all of their employee health benefits. Many employers with fewer than 200 employees also self-fund, but these employers require greater stop-loss insurance protection than larger employers (stop-loss insurance is discussed in greater detail later). As a general rule, employers with fewer than 100 employees fully insure their group medical benefits.

The risk assumed in either situation is the chance that employees will become ill and require costly treatment. When employees have few claims and few expensive illnesses, the self-funded employer realizes an immediate positive impact on overall health care costs. Conversely, if the employee group has unfavorable claims experience, a self-funded employer would incur an immediate expense beyond what may have been expected. Insured plans have a more predictable cost for the year; however, large employee claims costs from one year can affect future premium amounts.

ERISA vs. State Regulation

Self-funded health plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA). ERISA preempts state insurance regulations, meaning that employers with self-funded medical benefits are not required to comply with state insurance laws that apply to medical benefit plan administrators. On the other hand, insured plans must comply with some of ERISA’s requirements, but are primarily governed by the state where covered employees reside.

The distinction between state and ERISA regulations is important when determining if self-funding is right for your organization. Multi-state companies with insured health plans must comply with the regulations of each state in which they have plans and covered employees. Multi-state self-funded plans need only comply with ERISA.

Premium vs. Unbundled Fees

The risk an insurance company takes with an insured plan can be translated into a dollar amount for the employer. That dollar amount is the premium an employer pays each month for the insured group medical benefits. The premium amount includes the following:

• Current and predicted claims cost

• Administrative fee

• Premium tax paid to the state

• Insurance company profit

Employers who self-fund their medical benefits do not pay the premium tax or insurance company profit. They do, however, assume the costs of paying for claims and administrative functions. Typically, employers with self-funded health plans will outsource plan administration to a third-party administrator (TPA) or insurance company who charges the employer a fee for performing administrative services.

Stop-loss Insurance

Employers with self-funded health plans typically carry stop-loss insurance to reduce the risk associated with large individual claims or high claims from the entire plan. The employer self-insures up to the stop-loss attachment point, which is the dollar amount above which the stop-loss carrier will reimburse claims. Stop-loss insurance comes in two forms: individual/specific stop-loss and aggregate stop-loss.

Individual/Specific Stop-loss Insurance

This protects a self-funded employer against large individual health care claims. Essentially, it limits the amount that the employer must pay for each individual. For example, an employer with a specific stop-loss attachment point of $25,000 would be responsible for the first $25,000 in claims for each individual plan participant each year. The stop-loss carrier would pay any claims exceeding $25,000 in a calendar year for a particular participant.

Aggregate Stop-loss Insurance

This protects the employer against high total claims for the health care plan. For example, aggregate stop-loss insurance with an attachment point of $500,000 would begin paying for claims after the plan’s overall claims exceeded $500,000. Any amounts paid by a specific stop-loss policy for the same plan would not count toward the aggregate attachment point

Nondiscrimination Rules

Nondiscrimination rules require employers to offer employee benefits that do not favor certain employees. Employers with insured plans do not have nondiscrimination rules for group medical benefits, provided they follow the policy requirements of the sponsoring insurance carrier. However, employers with self-funded plans are required to comply with nondiscrimination rules. Generally these requirements are not difficult to meet, but failure to comply can result in some employees having their benefits treated as taxable income.

Employers with either type of group medical plan are required to comply with certain reporting and disclosure requirements, usually by providing tax and other pertinent documents to the United States Department of Labor or to their particular state.

Typically self-funded plans are required to provide copies of plan communications such as summary plan descriptions (SPDs) and summary of material modifications if the plan language changes.

Employers with insured plans that require employee contributions must file certain financial documents with the IRS. IRS filings are also required of self-funded plans, including Form 5500 and any accompanying documents.

This Benefits Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice. © 2015, 2018 Zywave, Inc. All rights reserved.