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May 2007

Make Sure You Have the Right Insurance to Protect Your Business

By Joyce M. Rosenberg, Associated Press

When many small-business owners think about insurance, it's often about property and casualty coverage. But there are many other kinds of insurance, including some that apply to specific industries or professions, that owners should consider.

Many small businesses do not buy enough insurance -- not only are they underinsured in dollar terms but also in the types of insurance they buy, said Loretta Worters, vice president for communications of the Insurance Information Institute, a New York-based trade group.

"You have to look at the vulnerabilities and think what would be the worst thing that would happen to my business right now and plan for those possibilities," Worters said.

The organization's Web site, www.iii.org, has a section on small-business insurance that explains various kinds of coverage that small companies should consider, starting with basics such as property and liability insurance available in many commercial policies. There also is information on business interruption insurance, critical to helping many small businesses survive in the event of a disaster, and the types of insurance that owners with employees need to buy, such as workers compensation insurance.

The site also has sections about some of the industry-specific coverage that is available. For example, the section of the site dedicated to food-service businesses details coverage for spoilage -- so if your refrigeration breaks down and you are not at fault, you can recover the cost of the inventory lost -- and for mechanical breakdowns.

It also discusses employee dishonesty insurance, something that a restaurant owner might want to consider; unfortunately, not everyone with access to the cash register is law-abiding.

There is also a section about insurance for home-based businesses. Many people who operate businesses out of their homes might not realize that their standard homeowners' policy will not cover all their business equipment, and it most certainly will not provide coverage in case of a business-related accident on the premises.

And such an accident is not far-fetched -- if someone delivering a package for your business or a customer dropping off a check falls on your steps and is injured, your homeowners' policy will not protect you.

Other business owners are also a great resource. An owner of a similar business can tell you the kinds of insurance you need -- and give you a referral to a good insurance agent.

There is likely to be plenty of information available from a trade group representing your industry or profession, and it also is likely to have names of agents.

But, keep in mind, some organizations might operate their own insurance agencies or be affiliated with specific insurers or brokers; that's not necessarily a problem, but it does mean they might be biased in favor of those concerns.

You also can learn more about insurance by contacting SCORE, the organization of retired executives who dispense free advice to small-business owners on a wide variety of topics, including insurance. If you visit www.score.org and type in your request in the section called "Ask SCORE for Business Advice," you'll get a list of SCORE counselors you can contact by e-mail who are likely to have expertise in the area you are trying to learn about.

You can also reach SCORE at 800-634-0245.

Source: InsuranceNewsNet

Maryland Workers' Comp Writer Offers Free Anti-Fraud Kit

Maryland workers' compensation insurance carrier IWIF is offering a fraud-fighting toolkit designed to help its policyholders, insurance agents and business owner’s combat fraud.

The free kit defines the various types of workers' comp fraud. It includes 'Red Flags of Fraud,' a list of warning signs of possible claimant fraud; actual case summaries of recent fraud convictions; and two anti-fraud posters for employers to post in their workplaces.

Furthermore, the kit explains how the law distinguishes between fraud and betterment. "Sometimes, what appears to be fraudulent activity, especially pertaining to claimants, turns out to be a case of betterment, not theft," explains Jerry Landsman, IWIF director of fraud.

Source: Insurance Journal

Ga. Supreme Court Cites 'Continuous Employment' in Workers Comp Award

In a narrow margin to approve workers compensation benefits for the family of a deceased Florida resident, the Georgia Supreme Court cited a doctrine of "continuous employment" in its 4-3 decision, voiding two previous rulings.

The State Board of Workers' Compensation affirmed the court's decision in case number S06G0891, a construction co. et al v. the individual.

The employee died from injuries sustained in an auto accident that occurred on Aug. 11, 2002, while he was driving a truck provided by his employer. He lived in a Fayetteville, Ga. apartment while employed there, also provided by the construction company as a condition of employment while working as a superintendent of a construction project in Jackson, Ga.

When the employee’s former wife sought dependency benefits for his now 11-year old son, the employer and its insurer refuted the claim saying that the individual’s death did not occur in the course of his employment.

Off duty at the time of the accident, the individual was using the company vehicle to move furniture from Tennessee to a storage facility in Georgia, according to the ruling.

However, the appellate division of the State Workers' Compensation Board determined the individual suffered a compensable injury because "at the time the injury was sustained, he was an employee in continuous employment driving an employer-provided vehicle who had concluded a personal mission and had resumed the employer's business because he was driving to either his job site or to his employer-provided housing."

Under Georgia's doctrine of continuous employment there is broader workers' compensation coverage afforded an employee who is required by his employer to live near a company work site.

The ruling stated that the employee is "in effect, in continuous employment, day and night, and activities performed in a reasonable and prudent manner for the health and comfort of the employee, including recreational activities, arise out of and are in the course of the employment."

It was undisputed that the employee was engaged in a personal mission unrelated to his employment when he delivered family furniture to his storage shed. However, the appellate division of the State Board of Workers' Compensation found that his deviation from his employment had ended and he had resumed his employer's business by the time he sustained the injury.

Source: Insurance Journal

Kentucky Mine Owner Pleads Guilty to Workers Comp Fraud

The owner and operator of a mining company in Perry County, Ky., pleaded guilty to mail fraud in U.S. District Court after special investigators with Kentucky Employers' Mutual Insurance discovered he was misrepresenting the size of his company in order to reduce the amount of the workers' compensation premium his business would have to pay, the insurer reported.

A U.S. Postal Inspection Service investigation confirmed the owner mailed fraudulent payroll records to KEMI and other insurance providers.

"Employers who under report payroll to their workers' compensation insurance company are engaged in an illegal practice that gives them an unfair advantage over others in their respective industry," stated Roger Fries, president and CEO of KEMI. "KEMI is very serious about ensuring that payrolls are accurately reported and that policyholders who operate with integrity are protected from businesses that use these types of illegal tactics to gain an edge in the marketplace."

Source: Insurance Journal

Mass. Employer Sentenced to Read Book for Lying About Work Safety

Worcester (Massachusetts) Superior Court Judge Francis Fecteau has sentenced a Templeton man to two and one-half years for committing perjury in a workers' compensation claim proceeding at the Department of Industrial Accidents.

The judge also ordered the man to read the book "Integrity" by author Stephen Carter and write a 1,000-word essay.

The man was found guilty of forging a document to show he had provided employees with safety goggles, according to investigators.

The individual, age 43, was sentenced to two and one half years in the House of Correction, with the sentence suspended for three years. The state had requested that he be sentenced to serve 18 months in the House of Correction.

Judge Fecteau also ordered the individual to read the book "Integrity" by author Stephen Carter, to write a 1,000-word essay on the book and to publicly speak three times about his wrongdoings.

In July 1998, an employee at the individual’s company sustained a serious eye injury causing him to lose his eye on the job. The employee filed a claim for workers' compensation benefits but that claim was denied, and the employee subsequently commenced a suit at the DIA.

One of the issues before the DIA was whether the company provided its employees, including the injured worker, with safety glasses before he injured his eye in the 1998 accident. In preliminary proceedings before the DIA, the company owner argued that he had provided safety glasses to all his employees before the accident. In support of his position, he submitted an apparent invoice from a safety supply products company which was dated July 28, 1997.

However, before the DIA trial commenced, the employee's attorney obtained evidence which demonstrated that the 1997 invoice was forged. During his testimony under oath at the DIA, the owner falsely stated that he never looked at, touched, or altered the 1997 invoice.

At trial, a former employee testified that the owner altered the date on the invoice for an order of safety glasses by using white-out and making copies of it so the alteration was not visible.

Judge John G. Preston of the DIA ultimately ruled in favor of the injured employee and ordered double damages in the case.

The company owner was indicted by a Suffolk County Grand Jury on Sept. 12, 2005. His trial began on March 5 and continued over four days

Source: Insurance Journal

Texas Workers' Comp Claimant Works 3 Jobs After Reporting Injury

Texas Mutual Insurance Company reported that an individual residing in Houston, has pleaded guilty to workers' compensation fraud-related charges. He worked for three different employers while collecting workers' comp benefits, Texas Mutual said.

A Travis County District Court ordered the employee to serve a five-year probated sentence, repay $8,893 in benefits and pay a $250 fine.

The employee reported a job-related injury while working as a chemical blender for a company in Houston. He claimed he was unable to work as a result of the injuries, and Texas Mutual began paying him disability income benefits.

An investigation found that the injured employee was working for three different employers while collecting benefits. State law requires injured workers to contact their workers' comp insurance company when they return to work.

Source: Insurance Journal

Fla. Tree Service Owner Charged with Workers' Comp Fraud

The owner of a tree service company in Florida is facing a charge of operating without workers' compensation insurance.

The owner allegedly admitted to operating for eight years without the state-mandated coverage, after an employee incurred a staggering medical debt due to an injury he received on the job.

The owner, was arrested on the charge on March 29 and was booked into the Sarasota County Jail. If convicted on the charge filed against him, he could be sentenced to up to 15 years in prison in addition to restitution and fines.

Detectives with the Department of Financial Services (DFS), Division of Insurance Fraud, began investigating the company after an employee suffered a catastrophic injury on the job nearly two years ago and incurred more than $255,000 in unpaid medical bills.

Detective Steven Firestone was the division's lead investigator and the Sarasota County Sheriff's Office assisted with the arrest.

"Workers' compensation insurance is required by state law to protect workers, and is especially crucial to those serving in high-risk jobs," said Florida CFO Alex Sink. "This individual knowingly put his employees at risk, and we believe he deserves the maximum penalty under the law."

On July 1, 2005, the employee’ left arm and hand were crushed by a falling 12-foot section of tree. He incurred $255,759 in medical expenses.

Detectives said because the owner operated outside of the law, the employee found himself solely responsible for all injury-related bills. However, if convicted, the owner could be held responsible for all expenses that would have been covered by the workers' compensation insurance, including the employee’s medical bills, rehabilitation expenses, and loss of wages

Source: Insurance Journal

Mass. to Hear 13.4% Workers' Comp Rate Cut

Massachusetts Insurance Commissioner Nonnie Burnes will convene a public hearing on a proposed 13.4 percent reduction in workers' compensation rates at 10:00 a.m. on April 5, at the Division of Insurance, One South Station, Boston.

The Workers' Compensation Rating and Inspection Bureau of Massachusetts (WCRIB) submitted a bid for a 13.4 percent rate decrease effective Sept. 1, 2007.

If the WCRIB's filing is approved, workers' compensation rates in Massachusetts would be 64 percent less than they were in 1991 when the state's workers' compensation reform law was passed, according to WCRIB, which is the licensed rating organization that files rates with the Division of Insurance on behalf of insurers.

Rates can go down because workplace injury claims have, according to Paul Meagher, president of the WCRIB. "From the combined efforts of insurers, employers, workers and regulators, the frequency of workplace injuries has continued to decline in Massachusetts. As a result, overall costs for both indemnity and medical claims in Massachusetts have declined in spite of continual increases in average claim severity and medical cost inflation."

Meagher credited insurers for contributing to the decrease in claim frequency "by working with employers to provide safe work environments for employees."

Source: Insurance Journal

"Truth has no special time of its own. Its hour is now – always."
– Albert Schweitzer