Monthly Archives: February 2014

General Liability Insurance Does Not Mean Total Liability Protection

More than half of the private companies interviewed for the new Private Company Risk Survey by Chubb Corp. said that they chose to forego certain types of liability insurance because they felt they were already covered through their Commercial General Liability Insurance policy.   Click on the link below to view the video:

General Liability Insurance Does Not Mean Total Liability Protection

While it is true that General Liability Insurance covers a lot of business liability exposures, it does not and cannot cover all forms of liability. For example, a typical Commercial General Liability policy does not cover…

  • Contractors pollution liability (CPL) This is a contractor-based policy, offered on a claims-made or occurrence basis, that provides third-party coverage for bodily injury, property damage, defense, and cleanup as a result of pollution conditions (sudden/accidental and gradual) arising from contracting operations performed by or on behalf of the contractor.
  • Directors and Officers Liability. This would be a situation in which someone accuses one of your directors or officers of foul play that resulted in a financial injury. (This is most often a concern for nonprofit businesses.)
  • Employment Practices Liability. This includes harassment, discrimination, or retaliation related to employment.
  • “Expected or Intended” Incidents. Once example of this is workplace violence and the related expenses. Specialized coverage is usually available on its own or as an addition to an EPLI policy.
  • Fiduciary Liability. This includes breaches of fiduciary duty.
  • Errors & Omissions Liability. Expenses related to professional errors or mistakes.
  • Employee Theft / Dishonesty Liability. Sometimes your employees take advantage of their position to commit crimes. This liability involves incidents related to employee fraud.
  • Cyber Risk Liability. The costs associated with data breaches – when private company information is compromised.

Here’s the really troubling thing about the report: 44 percent of the surveyed companies experienced at least one of the above loss events in the past three years, meaning that lots of business owners likely found out the hard way that their General Liability Insurance didn’t protect them as fully as they thought it did.

What Contractors and Small-Business Owners Need to Know About Their Liability Exposures

It’s not that business owners don’t understand the existence of their liability exposures – they just tend to think that their Commercial General Liability Insurance can do more than it can. Take a look at some of these numbers from the Chubb report. They represent the number of surveyed “non-buyer” business owners who mistakenly thought their liability exposures were remedied by CGL policies:

  • Contractor Pollution Liability:  Losses involving mold exposure, naturally occurring hazardous substances (NOHS) such as asbestos, mercury, arsenic, radon, and pyrite are not covered by general liability insurance.  For example, a general contractor in Connecticut who was building a “box store” hired a subcontractor to excavate and remove fill material from the job site. The subcontractor subsequently used the material as fill at three other project sites. The material they removed was soil containing remnants of an asbestos-containing mineral called Actinolite. They exposed third parties to asbestos, and they also exposed their own work force. It is important to note that the asbestos in naturally occurring minerals is much less concentrated than the asbestos utilized years ago as a fire retardant for insulation around piping and ceiling and floor tiles. It still poses unique exposures for intrusive type work.
  • Directors & Officers Liability: 65 percent. According to the report, the average lawsuit against a director or officer costs business owners nearly $700,000.
  • Errors & Omissions / Professional Liability: 52 percent. It’s important to realize that if your business provides a professional service, it can be sued for errors & omissions.
  • Fiduciary Liability: 51 percent. About 75 percent of private companies use third-party services for employee benefit plans – but only 25 percent carry fiduciary liability protection.
  • Employment Practices Liability: 60 percent. Every single business is at risk for an EPL lawsuit, but only about 30 percent but businesses carry the insurance that would cover related costs.
  • Cyber Liability: 39 percent. It’s estimated that only 5 percent of private companies carry Cyber Risk Liability Insurance, despite the uptick in data breaches across the country.

In all cases, the number of businesses who thought they had coverage is close to half. But business owners need to add the corresponding (and specially designed!) insurance policy to their small business insurance plans if they want protection for the above exposures.

As a small-business owner, are you certain that all your liability exposures are covered by the appropriate insurance policies? According to the Chubb report, there are a few common situations that can leave businesses unwittingly at risk for liability claims, including…

  • Using a cloud provider. Whenever you enlist the help of a third-party technology company, your business is still ultimately responsible in the event of data loss or a privacy breach. So the data you store in the cloud is under your jurisdiction. And making sure electronic equipment like point-of-sale systems have proper firewall and privacy protection is also up to you.
  • Maintaining a hiring policy that excludes those with criminal backgrounds. An EEOC investigation or EPL suit could easily result from a broad policy that excludes people with criminal backgrounds from employment opportunities.
  • Increasing or decreasing your workforce. Whenever you make major changes to your staff, you increase your risk for an EPL lawsuit that alleges discrimination, wrongful termination, etc.

Take a good look at your General Liability Insurance policy and your liability exposures. You may find that it’s time to discuss your small business protection plan with your insurance agent, or call Marc Perez, licensed insurance agent and contractor insurance specialist for Washington State and Oregon, at 253-252-2533.  I will gladly listen to your concerns and learn about your business and find the right insurance solutions that will provide better protection and value to your business.

Money-smart, energy-saving tips

 

Farmers Friendly Voice
 

Along with the cost of other consumer goods and services, energy costs are on the rise.1        Are you looking for ways to be more energy efficient?   Here are seven money-smart moves to consider:

  • Anything “low flow.” Did you know that two faucets or shower heads can produce water streams that feel almost the same yet one uses up to three times more water than the other? Low-flow fixtures and aerators use high pressure and aeration to produce a comfortable flow without using nearly as much water.2 Inexpensive and easily installed, low-flow fixtures can reduce your home water consumption and your utility bill.
  • Insulation. Sealing air leaks around your home and adding insulation can help keep your house warm in the winter and cool in the summer, and help you capture meaningful savings on your energy bill. Some estimates run as high as 10 percent annual savings depending on where and how effectively you insulate.3
  • Compact fluorescent light bulbs. Fluorescent light bulbs use about 75 percent less energy than a traditional incandescent bulb. Although they’re initially more expensive than their incandescent counterparts, they last 10 to 25 times longer and you’ll save about $6.00 per year on energy bills.4
  • A newer or cleaner dishwasher. Modern dishwashers use an average of 5.8 gallons of water per cycle — older models can use as much as 10 gallons per cycle. Either clean and repair your dishwasher or consider replacing it with a newer model.5
  • A programmable thermostat. These devices are ideal for people who work or are otherwise away from home for a set period of time throughout the week. According to ENERGY STAR a programmable thermostat can save you about $180 annually in energy costs.6
  • A tankless water heater. By heating water only when it’s needed, tankless water heaters cut water-heating expenses and provide continuous hot water delivery. They can save the typical family more than $80 per year, or $1,700 over the 20-year+ life expectancy of the water heater.7
  • Ceiling fans. A ceiling fan will help keep your home at a comfortable temperature year round and help to reduce your energy bill.
  • Energy efficiency audit
    There are many steps you can take to make your home more energy efficient. You can click here to take ENERY STAR’s room-by-room tour to learn what you can do to save in your own home. You can also have an energy professional inspect your home — he or she may be able to find more ways for you to save on energy costs. Check with your power company — they may perform a complimentary audit. Whether it’s installing solar panels or simply turning off the lights, when you cut back on how much energy you use you cut back on your energy costs. Get smarter about how you use energy.

If you are a contractor in the State of Washington or Oregon, then you can save money on your contractor insurance by calling Marc Perez at 253-252-2533.

1Source: http://www.eia.gov/forecasts/steo/report/electricity.cfm
2Source: http://sustainablechoices.stanford.edu/actions/in_the_home/lowflowfixtures.html
3Source: http://www.energystar.gov/index.cfm?c=home_sealing.hm_improvement_methodology
4Source: http://www.energystar.gov/certified-products/detail/light_bulbs
5Source: http://money.usnews.com/money/personal-finance/slideshows/8-thrifty-home-improvements/5
6Source: http://www.energystar.gov/index.cfm?c=heat_cool.pr_hvac&s=mega
7Source: http://www.energystar.gov/index.cfm?c=gas_tankless.pr_savings_benefits

 

The Importance of Contractor Insurance

Contractor insurance holds great importance for both the client and the service provider.

When working on a jobsite, contractors should obtain workers’ compensation insurance and at least one type of liability coverage.  A contractor with insurance is also more likely to obtain the necessary permits and do professional work. To avoid the financial risks of hiring uninsured contractors, individuals and businesses can use contractor screening services, or at the very least, designate a member of your staff to ensure that all subcontractors have provided adequate certificates of liability insurance naming your company as an additional insured.

Take Precautions

Accidents happen. A contractor can accidentally damage a building, drop a hammer, rupture a pipe, or break a window.  An uninsured contractor could lose their business and future earnings in the event of an accident. Unfortunately, as we see in the construction industry, general liability coverage does not cover the cost of faulty workmanship.

Preventative action must be taken ahead of time to ensure that you are covered. Be prepared. Know the work that you need completed and the possible accidents that could occur as a result of something going wrong. Verifying that contractors are insured and requiring certificates of insurance with an additional insured endorsement in your favor will help to protect you against lawsuits in the event that an accident occurs. The millions you can save as a result, make the effort worth your time.

Make sure the job is done safely by your subcontractors. Contractor screening should be considered, in addition to insurance verification.  Designate a member of your staff to verify any potential subcontractors and vendors are compliant with project-specific requirements, guidelines and standards. Worker injuries are less likely to take place when you have a health and safety plan in place. More fatal injuries take place in the construction industry than in any other American industry[1].

Protect Your Company

When these injuries occur, it can translate to millions of dollars in hospital bills, particularly for contractors who work in high-risk fields. The issue is amplified when the injured lacks insurance. That lack of insurance, typically leads to a lawsuit against their clients – which could be your company.  Again, having a member of your staff designated to verify that your subcontractors and vendors are maintaining proper contractor liability insurance and workers’ compensation coverage will reduce the financial risk of injuries.

Marc Perez of All Contractors Insurance and Bonds specializes in the contractor liability insurance needs of contractors throughout the States of Washington and Oregon, as well as contractor license bonds, business auto insurance, and inland marine insurance for mobile equipment and tools.  Call Marc Perez at 253-252-2533 for a friendly, no obligation review of your contractor insurance and bond needs.

References: [1] Source: Centers for Disease Control (CDC). Workplace Safety & Health Topics. 2011.

How To Get The Best Price for a Bad Credit Contractor Bond

Sometimes things happen in life outside of our control. The Washington construction industry has suffered over the past several years and as a result it has impacted the credit of thousands of contractors throughout the state. The good news is that several of our bond companies have lowered their rates.   These simple tips will help you get the lowest price for your bad credit contractor bond. 

Credit problems occur for a number of reasons, but understanding why your credit has suffered is an essential element of improving it. Even if you think you know the reason, take advantage of the free credit reports that you can get yearly (courtesy of the federal government mandate).  Sit down and look at what you’re dealing with and look for a

Important credit rating factors:

  • Do you have a large number of outstanding loans?
  • Do you have too many credit accounts in your name?
  • Have you ever had to file bankruptcy?
  • Do you have a credit card that is over the balance or has not been paid in a while?

If you get your credit report and find mistakes, get them fixed as quickly as possible. Mistakes can cost you a lot, especially if you’re looking to become bonded. Be sure to look at each part of the credit report(s) in detail and see if anything odd stands out If it does, then you have the right to correct possible wrongs. It could be charges that were never made, or companies failing to report that you’ve paid off a debt.

Sitting down and figuring out your budget is important at this point in the process.  How much can you afford to pay for bonding? Are you prepared to pay a large amount if you just can’t find an agency that will give you a lower rate?   The good news is that several of our bond companies have lowered their rates.  Contact Marc Perez at 253-292-6822 for the lowest bad credit contractor bond rates in the industry!

allcontractorsinsurancenw.com specializes in providing contractors with bad credit the lowest prices in the industry.

Call us for a FREE quote at: 1-253-292-6822

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More Public Contracting Bills Introduced in Washington Legislature

The following additional bills impacting public contracting in the State of Washington have been introduced to the Legislature:

Allow local agencies to waive prevailing wages:  House Bill 2299 would allow “a county, municipality, or political subdivision of the state” to waive prevailing wage requirements for public works contracts estimated to cost less than $5 million dollars.  The waiver could also apply for public building service maintenance contracts (janitorial, shampooer, window washer, waxer).  In order to opt out of the prevailing wage requirements of Chapter 39.12 RCW, the governing body of the public agency would need to approve such a waiver by a majority vote.  The legislation specifically would permit public agencies to subdivide public works projects in order to come in under the $5 million threshold.  

Require certified payrolls prior to paying contractors: House Bill 2331 would require a public agency to obtain certified payroll records from the contractor and all subcontractors prior to making any payment to the contractor, and would also require the payrolls prior to final payment and release of retainage to the contractor. 

Relax various prevailing wage requirements:  Senate Bill 6186 would do the following:

  • Apprentice use on WSDOT projects:  Reduce apprenticeship percentages required on WSDOT projects from 15% to 13% and increase the threshold of which projects apprenticeship applies to from $2 million to $4 million.
  • Electronic surveys:  Require the Department of Labor and Industries to provide contractors with the option of completing prevailing wage surveys electronically.
  • On-Site work only:  Restrict the applicability of prevailing wages only to workers “employed directly on the site of work,” eliminating the impact of court decisions requiring prevailing wages for off-site prefabrication of work performed specifically for a public works project.

Change methodology for establishing prevailing wages:  The following three bills address how the Department of Labor and Industries should establish the prevailing wage rates:

  • Statistical analysis vs. wage surveys:  House Bill 2210would require the Department of Labor and Industries to use a “stratified random sampling methodology,” instead of the “wage surveys” currently conducted to establish prevailing wages.  It would also exempt data collected by Labor and Industries through this process from disclosure under the state’s public records laws.
  • Survey only non-public works projects:  House Bill 2209would restrict prevailing wage surveys conducted by the Department of Labor and Industries to only “nonpublic work” projects.  Behind this bill is the assertion that public works projects, on which prevailing wage must already be paid, artificially inflate prevailing wage rates.  The bill would also exempt data collected by Labor and Industries through wage surveys from disclosure under the state’s public records laws.
  • Use only union wage rates to establish prevailing rates:  House Bill 2527 would require the Department of Labor and Industries to establish prevailing wages based on collective bargaining agreements, instead of through conducting wage surveys.  For trades where there are no collective bargaining agreements, L&I would be required to conduct wage surveys or use “other appropriate methods” to establish the prevailing wage rates.

Civil construction on GC/CM projects:  House Bill 2208would define a “heavy civil construction project” for GC/CM (General Contractor/Construction Manager) projects and permit the GC/CM to self-perform as a negotiated amount up to 50% of the cost of the work, and to bid on other portions of the work agreed to with the public body, provided that at least 30% of the work is competitively bid.  The current law requires that a GC/CM must bid to self-perform any of the work and such self-performed work is limited to 30% of the construction cost.
 
Exempt Proposals from Public Records Disclosure:  A bill (House Bill 2578) introduced to the Washington State Legislature would exempt from public records disclosure the proposals submitted by contractors for alternative public works delivery methods (Design-Build, GC/CM, and Job Order Contracting) and related evaluation documents until after a contract is executed or the selection process is terminated. 

Expand Prevailing Wages to Public-Private Partnerships:  Substitute House Bill 1025S would create a new definition of a “subsidized public works” project and would require that prevailing wages be paid on such projects.  Similar bills have been introduced in past years, but have not been successful.  Adoption of this bill would have the impact of limiting the number of public-private partnership projects constructed.  See my previous blog on legislation introduced in earlier years. 

Expand Apprenticeship Utilization Requirements:  House Bill 2526 would establish penalties for contractors failing to comply with the apprenticeship utilization requirements ofRCW 39.04.320 for public works projects of the State Department of Enterprise Services, the State Department of Transportation, institutions of higher education, and all school districts.  The bill would also significantly expand requirements for use of apprentices on all public works projects of the state and all municipalities.  Here is a summary of the provisions of this bill:

  • Debarment:  HB 2526 would add to the list of reasons for contractor debarment the failure of the contractor to comply with the apprenticeship utilization percentages required by RCW 39.04.320.
  • Bidder Responsibility:  HB 2526 would also add to the list of mandatory bidder responsibility criteria in RCW 39.04.350 the failure of the contractor to meet apprenticeship percentage utilization requirements under RCW 39.04.320.
  • State Monitoring of Compliance:  The State Department of Enterprise Services would be required to maintain on its website a list of contractors that failed to meet apprenticeship percentage utilization requirements on public works projects.
  • Bid Preference for Contractors with Apprenticeship Programs: HB 2526 would provide a 5% bid preference to be used in bid evaluation for contractors with a registered apprenticeship training program approved by the Department of Labor and Industries for trades to be used on the public works project.
  • Expand Apprenticeship Utilization Requirements for all Public Agencies: HB 2526 would require that “the bidder must be a party to an apprenticeship agreement for each trade it is employing that has a registered apprenticeship training program” if the “bidder will employ more than one trade on the public work.”  This provision appears to have the impact of requiring apprentice utilization for all municipalities, and not just those agencies named in RCW 39.04.320.

Permit Electronic Public Works Bidding for State Agencies:  Substitute House Bill 1841 would permit state agencies to conduct competitive bidding for public works projects electronically or accept electronic signatures as part of the bidding process.

Permit Fire Districts to Perform Public Works Without Bidding:  House Bill 2266 would permit a fire department or regional fire authority to “use fire service personnel, either employed or volunteer, to perform” public works projects less than $20,000 without obtaining competitive bids.

Call Marc Perez of All Contractors Insurance and Bonds NW at 253-252-2533 to go over your business’s specific general liability insurance needs today!   You can also request a quote by visiting www.allcontractorsinsurancenw.com.

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