From CNNMoney.com...not that I agree with all of it, this article raises some good points, especially the "F-word"! : )
http://finance.yahoo.com/insurance/article/108074/5-things-never-to-say-to-your-insurers?mod=insurance
Some words are red flags to insurers and using them could mean that your claim might be delayed or even denied.
1. "I Think ..."
Never begin a statement regarding a claim with these words. If you aren't sure, don't guess. What you say could cause your claim to be delayed or denied, says attorney Vedica Puri. And if you're wrong -- say, you report driving at 30 miles per hour before an accident but police later prove you were going 50 -- it could hurt your credibility.
Particularly beware of speculating on blame or causation. For example, if you suggest that a water leak is due to a construction defect, you could give the insurer an out if that's a policy exclusion.
Stick to the facts. Should the insurance rep ask you a question you can't answer, simply say, "I don't know." If the person is taking a written or recorded statement, ask for a transcript to review for misstatements.
2. "I Got Whiplash"
Fraud costs auto insurers up to $6.8 billion a year, reports the Insurance Research Council. And suing for damages caused by whiplash is a fraudster favorite ("Oh, my neck!"). Merely mentioning the term is likely to get your claim flagged for further investigation, says Amy Danise of Insure.com.
Whiplash is a specific diagnosis. If a doctor says that you have it, then you should report it as such. Other wise, if you feel neck pain, just refer to it that way.
3. "It's an Experimental Treatment"
Truly experimental or investigational medical procedures are typically not eligible for health insurance coverage. So if a doctor tells you he wants to experiment with a treatment, don't represent it using those words. "In medical terms it may not actually be experimental or investigational," explains Danise. "If it's proven effective, your doctor deems it medically necessary, and it's not an exclusion, it should be covered." Verify with your doctor that it meets the above litmus tests before going to the insurer.
4. "My Basement Flooded"
With homeowners insurance, "flood" is a red flag. "The word refers to an act of weather or an overflow from a nearby body of water," says Danise. "And a standard homeowners policy doesn't cover it. You'd need flood insurance."
So don't use the f-word if your basement is knee-deep in water because of a burst pipe. Damages from such an incident should be covered by a homeowners policy. But calling it a "flood" could muddy the waters, so to speak.
5. "Just Send Me a Check"
When filing a home or auto claim, don't emphasize that you're just looking for the cash.
"If you were to say, 'I don't care about the roof leak, I just need the money,' that admission could slow things to a halt," says Puri. Technically, you're supposed to use the payout to make the repair for which you filed. While it's true that most insurance companies aren't going to check up on you, you'll certainly raise the fraud unit's suspicions if you imply that you won't. And then you might lose out on the money altogether.
Copyrighted, CNNMoney. All Rights Reserved.
Wednesday, November 4, 2009
Friday, August 21, 2009
Biking through the Drive-through?
From Hank Stern: http://insureblog.blogspot.com/2009/08/two-wheeled-risk-you-want-fries-with.html
Friday, August 21, 2009
Two-wheeled Risk (You Want Fries With That?)
[Welcome Industry Radar readers!]
While not strictly an insurance issue, this story does pose some interesting risk-management questions:
"Sarah Gilbert stepped off her bicycle long enough to send one angry tweet via Twitter — and it's changed the way one fast-growing burger chain treats bike riders ... after biking last week into the drive-through of the local Burgerville — an eco-conscious burger chain that even recycles its used cooking oil into biodiesel — she tried to order four cheeseburgers ... She was refused service at the drive-through for, of all things, ordering from a bike."
[ed: we'll table the discussion about the seeming contradiction between eschewing a car for a bike but ordering a cheeseburger instead of a salad]
The gist of the story is that this particular chain, known for its "green policies," banned bike riders from using the drive-through, citing safety concerns. Other national chains also do this, but Burgerville has decided, as a result of Ms Gilbert's experience and response, to delete (or at least modify) that policy. One supposes that's good news, at least for the bicyclists.
But is it sound risk management?
Here's why I ask: if you're on a bike going through the drive-through, aren't you at greater risk of being run-over than if you simply parked the bike out front and walked on in? I don't know the answer to that, and I spent quite some time Googling around trying to find stats to prove the case either way.
No luck; perhaps one of our resourceful readers has access to this info and would be willing to share it?
Of course, this same principle would apply to drive-up ATM's [ed: and BTW, what is it with braille markings on drive-up ATM's? Isn't that oxymoronic?], and I didn't see any stats on that either.
While I understand how riders must feel when they find themselves barred from the drive-up, how big is that lawsuit going to be the first time one gets creamed by a Caddy? Which also begs the question: is this policy driven by insurance company rules as much as common sense?
It's funny how things snowball: when I began to write this post, I had two questions that were still unanswered: one, stats on bikes and drive-throughs and two, whether or not insurance carriers played a role in the "no bike" rule. Since this falls under the general aegis of "P&C," I called on my colleagues in that field. There seems to be a mixed bag of answers: it doesn't appear to be a general industry rule that Wendy's et al post and enforce a "no bikes" rule. There may well be carriers which include that verbiage, but it doesn't seem to be a standard policy clause.
One colleague suggested that it may have to do with the inherent risk of letting people walk up to the window: if they pull a gun and ask for money, they can be gone pretty quickly. If they're in a car, they're likely blocked front and rear (and, of course there's the license plates). There's also a slippery slope here: in my research, I noted that there were at least a few incidents where folks on "Rascals" (motorized wheelchairs) were also turned away, presumably for the same "safety concerns" as the bikers. If Burgerville lets bikers use the drive-through, what can they say to Granny in her Rascal. Or Joe in his "regular" wheelchair?
The other concern regarding safety is this: at drive-through speeds, if my Honda hits your Buick, there are some scrapes and dents, but no one's getting care-flighted. But if my Ford hits you on your Schwinn, there could be some major injuries.
The bottom line, such as one exists here, is that this really isn't as cut-and-dried as it might at first appear. Risk management means taking into account all the variables (or at least as many as possible), and sometimes we don't like the answers.
Friday, August 21, 2009
Two-wheeled Risk (You Want Fries With That?)
[Welcome Industry Radar readers!]
While not strictly an insurance issue, this story does pose some interesting risk-management questions:
"Sarah Gilbert stepped off her bicycle long enough to send one angry tweet via Twitter — and it's changed the way one fast-growing burger chain treats bike riders ... after biking last week into the drive-through of the local Burgerville — an eco-conscious burger chain that even recycles its used cooking oil into biodiesel — she tried to order four cheeseburgers ... She was refused service at the drive-through for, of all things, ordering from a bike."
[ed: we'll table the discussion about the seeming contradiction between eschewing a car for a bike but ordering a cheeseburger instead of a salad]
The gist of the story is that this particular chain, known for its "green policies," banned bike riders from using the drive-through, citing safety concerns. Other national chains also do this, but Burgerville has decided, as a result of Ms Gilbert's experience and response, to delete (or at least modify) that policy. One supposes that's good news, at least for the bicyclists.
But is it sound risk management?
Here's why I ask: if you're on a bike going through the drive-through, aren't you at greater risk of being run-over than if you simply parked the bike out front and walked on in? I don't know the answer to that, and I spent quite some time Googling around trying to find stats to prove the case either way.
No luck; perhaps one of our resourceful readers has access to this info and would be willing to share it?
Of course, this same principle would apply to drive-up ATM's [ed: and BTW, what is it with braille markings on drive-up ATM's? Isn't that oxymoronic?], and I didn't see any stats on that either.
While I understand how riders must feel when they find themselves barred from the drive-up, how big is that lawsuit going to be the first time one gets creamed by a Caddy? Which also begs the question: is this policy driven by insurance company rules as much as common sense?
It's funny how things snowball: when I began to write this post, I had two questions that were still unanswered: one, stats on bikes and drive-throughs and two, whether or not insurance carriers played a role in the "no bike" rule. Since this falls under the general aegis of "P&C," I called on my colleagues in that field. There seems to be a mixed bag of answers: it doesn't appear to be a general industry rule that Wendy's et al post and enforce a "no bikes" rule. There may well be carriers which include that verbiage, but it doesn't seem to be a standard policy clause.
One colleague suggested that it may have to do with the inherent risk of letting people walk up to the window: if they pull a gun and ask for money, they can be gone pretty quickly. If they're in a car, they're likely blocked front and rear (and, of course there's the license plates). There's also a slippery slope here: in my research, I noted that there were at least a few incidents where folks on "Rascals" (motorized wheelchairs) were also turned away, presumably for the same "safety concerns" as the bikers. If Burgerville lets bikers use the drive-through, what can they say to Granny in her Rascal. Or Joe in his "regular" wheelchair?
The other concern regarding safety is this: at drive-through speeds, if my Honda hits your Buick, there are some scrapes and dents, but no one's getting care-flighted. But if my Ford hits you on your Schwinn, there could be some major injuries.
The bottom line, such as one exists here, is that this really isn't as cut-and-dried as it might at first appear. Risk management means taking into account all the variables (or at least as many as possible), and sometimes we don't like the answers.
Tuesday, August 18, 2009
Hurricane-Proof your Roof!
Hurricane-Proof your Roof: Insurance, Inventories and Adjusters
Roof after Hurricane
It goes without saying that hurricanes are one of the most destructive and deadly of forces on the planet. In 2005, Hurricane Katrina alone accounted for more than 1,500 deaths and $81 billion in damage; the repercussions of Katrina are still being felt today throughout the Gulf States and particularly in New Orleans.
It is also true that hurricanes can hit with devastating force nearly anywhere in the Gulf States and Atlantic seaboard as far north as New England (many on Long Island, NY, remember the deadly hurricane of 1938). And even if you live in a state such as Florida, which has some of the strongest building standards when it comes to hurricanes of anywhere in the U.S. and the world, homes are routinely damaged and destroyed by these massive storms.
Therefore, being prepared is about making sure your roof is sound -- it is the key that holds the rest of the house together (see Building a Better Roof for more information) -- and that you are properly insured before clouds even darken the horizon. In this story we will look at insurance-related issues you need to address before a storm strikes -- how do I find a good company and how can I be sure I have enough coverage, among others -- as well as what to do after the weather has cleared and it's time to put your insurance policy into action.
Insurance: Am I Covered?
While any insurance coverage you purchase needs to match your unique needs and your home, there are a handful of questions that should be asked by anyone worried that a hurricane or other large storm might damage their property. They are:
How do I find a good company?
Finding the right insurance company requires doing some research on the companies offering policies in your state. In addition, it is a good idea to gain an understanding of the different requirements and limitations imposed by government regulators in your state.
There are, of course, quite a few resources to help find insurers in your area, but perhaps the best places to start are the American Insurance Association, the Insurance Information Institute and the Independent Insurance Agents Association. All three of these sites will provide useful information as well as tools to help you find a reliable insurer near you.
AM Best Company and the Better Business Bureau are also great resources. AM Best will provide you with ratings and pertinent information while the Better Business Bureau provides an online tool to help search for an agent with a BBB rating.
"Companies are typically rated by AM Best based on their financial strength," said Julie Pulliam, public affairs director for the American Insurance Association. "You can go onto their website and find out the financial strength of your insurance company, which is important because you don't want somebody that comes by and offers the lowest premium. You want to do your homework."
There are also issues related to the state and region of the state you live in. "Coverage could be different in Florida from North Carolina or South Carolina or Alabama," said Pulliam. "In Florida, for example, some people may have insurance from company X, but company X may not offer wind and hail [e.g. hurricane coverage] in Florida or certain parts of the state. Companies are constantly readjusting their exposure in a state or area, so some insurers have pulled back because Florida is at such high risk for hurricanes."
If you live in an area where coverage may not be offered or its terms are limited, Pulliam said you should then be able to purchase a policy in your state's residual market (a state insurer of last resort). In Florida this would be Citizens Property Insurance Corporation.
Will homeowner's insurance alone cover wind and water damage?
Hurricane Damage
The answer depends on whether your insurance company considers certain types of water damage as being primarily caused by wind or flood, said Pulliam, because damage caused by a hurricane is part wind and part flood. "Is it wind-driven water or[flooding]? It really depends on the way your policy is written and there are a lot of independent variables there," she said. "After Hurricane Katrina, there was a lot of education that had to go on because a number of homeowners assumed that their policies would cover wind driven water damage. For example, if the wind started blowing and you are starting to get storm surge due to the wind, and it comes into your house, no matter where it comes from -- ground floor, soffits, and so on -- people assumed that since it was from the wind that they would be covered, but that is not the case."
What your homeowner's will cover, Pulliam added, is damage to the roof caused by wind that then enables rain water to harm the interior of the home. "It is important to talk to your agent as to exactly what coverage you would have for wind damage and all other perils, as it is called in the industry," said Pulliam.
Loretta L. Worters, vice president of the Insurance Information Institute agrees that water damage can be tricky. "Homeowner's covers wind," she said. "There is some coverage for water, but that depends on the circumstances."
Therefore, it is important to not only determine the type of water damage that is covered by your policy, but whether or not you have flood insurance as well. This type of insurance is generally provided by the federal government's National Flood Insurance Programs (go to FloodSmart.gov for more info), which is administered by many insurance companies offering homeowner's coverage. "Flood policies are fairly plain vanilla," said Pulliam. "They cover the water issues for the most part."
Worters adds that it is also very important to make sure that you have the right amount of coverage. "You need enough insurance to rebuild your home and to replace all of your personal belongings," she said. "If you have made a major alteration or improvement to your home or have made significant purchases, notify your insurance agent so that the increased value is reflected in your policy."
What documentation do I need now to be prepared for the worse?
Both Pulliam and Worters said it is important to create some accounting of the value of your home and the possessions in it. This could be as simple as a list written on a legal pad with some photos, but probably should be more detailed and kept in a remote and/or safe place.
"A home inventory will help ensure that you have purchased enough insurance to replace your personal possessions," said Worters. "It can also speed the claims process and substantiate losses for income tax purposes. A detailed home inventory is also helpful should you need to apply for disaster aid."
The Insurance Information Institute provides free Web-based software at KnowYourStuff.org, which allows users to create organized lists of possessions, include digital photos, and save scanned receipts.
What about the Deductable?
It is also important to understand your policy's deductable (e.g. the amount you will pay before your insurance kicks in). Generally, said Worters, most people living in coastal areas, especially those prone to large storms, will have percentage deductibles for storm damage rather than traditional deductibles of a set amount.
Pulliam adds that these vary and can range from one to two and even ten percent of the cost of the damages. "It really depends on how much risk you want to take on," she said. "If the consumer is going to take on a higher deductible it will allow the company to write more policies because they know the policyholder is going to pay more themselves."
Both Pulliam and Worters said that selecting the right deductable should be based on a balance of your home, belongings, and income.
barometer
What If a Storm Hits?
No matter how well prepared you may be for the storm -- the strongest roof and best insurance coverage available -- there is little you can do if a storm tracks over your community and hits close to home. The following should help you understand how to react so that you are covered and can quickly find temporary shelter, if you need it, and protect your home from further damage.
What do I do after the Storm?
According to Worters, it is important to call your insurance company as soon as possible after the storm as many companies place a time limit on filing claims and state laws on deadlines differ by state.
Once you have called, adds Pulliam, the process insurers go by can vary, but the company will likely send an adjuster out immediately to document the damage and file the necessary paperwork. If there has been widespread damage, it may take a few more days, which means you should try and take your own photos of the damage to show the adjuster when s/he arrives.
Worters and Pulliam add that the insurer will pay for alternative housing at a hotel or motel and will even issue a check a debit card on the spot in order to get money in your hands so you can purchase accommodations, food, and take care of other immediate expenses. "If your home is severely damaged and you need to find other accommodations while repairs are made," said Worters, "keep records of all additional expenses incurred. Homeowner's insurance policies provide coverage for the loss of use of your home if it is damaged by an insured disaster."
Worters and Pulliam also said you should attempt to make temporary repairs to your roof if it is safe to do so. "If it is something you can do safely and it will prevent further damage, then by all means do that," said Pulliam. "For example, if you can safely get up on your roof and put a tarp up to protect your property; then yes do it."
As with any thing you do prior to the arrival of an adjustor, save any receipts for items you have purchased.
Can I be sued if my roof comes apart and damages someone else's property?
The answer to this question may vary on certain circumstances, but the best means to prevent and protect yourself is to ensure that all roof maintenance is up to date. "In today's litigious society, anything is possible," said Worters. "It is more likely that if roof tiles fly off and hit someone, you might be sued for negligence if your roof needed repair. That's why it is important to maintain your home and to carry liability insurance to protect you and your neighbor's property."
In all, ensuring that your insurance will cover you if a storm should damage your home requires due diligence on your part. However, there is nothing like a good night's rest knowing that if the worst should happen, you and your family will be financially protected.
Chris Brooks
http://www.roofery.com/hurricanes-and-insurance.html
Roof after Hurricane
It goes without saying that hurricanes are one of the most destructive and deadly of forces on the planet. In 2005, Hurricane Katrina alone accounted for more than 1,500 deaths and $81 billion in damage; the repercussions of Katrina are still being felt today throughout the Gulf States and particularly in New Orleans.
It is also true that hurricanes can hit with devastating force nearly anywhere in the Gulf States and Atlantic seaboard as far north as New England (many on Long Island, NY, remember the deadly hurricane of 1938). And even if you live in a state such as Florida, which has some of the strongest building standards when it comes to hurricanes of anywhere in the U.S. and the world, homes are routinely damaged and destroyed by these massive storms.
Therefore, being prepared is about making sure your roof is sound -- it is the key that holds the rest of the house together (see Building a Better Roof for more information) -- and that you are properly insured before clouds even darken the horizon. In this story we will look at insurance-related issues you need to address before a storm strikes -- how do I find a good company and how can I be sure I have enough coverage, among others -- as well as what to do after the weather has cleared and it's time to put your insurance policy into action.
Insurance: Am I Covered?
While any insurance coverage you purchase needs to match your unique needs and your home, there are a handful of questions that should be asked by anyone worried that a hurricane or other large storm might damage their property. They are:
How do I find a good company?
Finding the right insurance company requires doing some research on the companies offering policies in your state. In addition, it is a good idea to gain an understanding of the different requirements and limitations imposed by government regulators in your state.
There are, of course, quite a few resources to help find insurers in your area, but perhaps the best places to start are the American Insurance Association, the Insurance Information Institute and the Independent Insurance Agents Association. All three of these sites will provide useful information as well as tools to help you find a reliable insurer near you.
AM Best Company and the Better Business Bureau are also great resources. AM Best will provide you with ratings and pertinent information while the Better Business Bureau provides an online tool to help search for an agent with a BBB rating.
"Companies are typically rated by AM Best based on their financial strength," said Julie Pulliam, public affairs director for the American Insurance Association. "You can go onto their website and find out the financial strength of your insurance company, which is important because you don't want somebody that comes by and offers the lowest premium. You want to do your homework."
There are also issues related to the state and region of the state you live in. "Coverage could be different in Florida from North Carolina or South Carolina or Alabama," said Pulliam. "In Florida, for example, some people may have insurance from company X, but company X may not offer wind and hail [e.g. hurricane coverage] in Florida or certain parts of the state. Companies are constantly readjusting their exposure in a state or area, so some insurers have pulled back because Florida is at such high risk for hurricanes."
If you live in an area where coverage may not be offered or its terms are limited, Pulliam said you should then be able to purchase a policy in your state's residual market (a state insurer of last resort). In Florida this would be Citizens Property Insurance Corporation.
Will homeowner's insurance alone cover wind and water damage?
Hurricane Damage
The answer depends on whether your insurance company considers certain types of water damage as being primarily caused by wind or flood, said Pulliam, because damage caused by a hurricane is part wind and part flood. "Is it wind-driven water or[flooding]? It really depends on the way your policy is written and there are a lot of independent variables there," she said. "After Hurricane Katrina, there was a lot of education that had to go on because a number of homeowners assumed that their policies would cover wind driven water damage. For example, if the wind started blowing and you are starting to get storm surge due to the wind, and it comes into your house, no matter where it comes from -- ground floor, soffits, and so on -- people assumed that since it was from the wind that they would be covered, but that is not the case."
What your homeowner's will cover, Pulliam added, is damage to the roof caused by wind that then enables rain water to harm the interior of the home. "It is important to talk to your agent as to exactly what coverage you would have for wind damage and all other perils, as it is called in the industry," said Pulliam.
Loretta L. Worters, vice president of the Insurance Information Institute agrees that water damage can be tricky. "Homeowner's covers wind," she said. "There is some coverage for water, but that depends on the circumstances."
Therefore, it is important to not only determine the type of water damage that is covered by your policy, but whether or not you have flood insurance as well. This type of insurance is generally provided by the federal government's National Flood Insurance Programs (go to FloodSmart.gov for more info), which is administered by many insurance companies offering homeowner's coverage. "Flood policies are fairly plain vanilla," said Pulliam. "They cover the water issues for the most part."
Worters adds that it is also very important to make sure that you have the right amount of coverage. "You need enough insurance to rebuild your home and to replace all of your personal belongings," she said. "If you have made a major alteration or improvement to your home or have made significant purchases, notify your insurance agent so that the increased value is reflected in your policy."
What documentation do I need now to be prepared for the worse?
Both Pulliam and Worters said it is important to create some accounting of the value of your home and the possessions in it. This could be as simple as a list written on a legal pad with some photos, but probably should be more detailed and kept in a remote and/or safe place.
"A home inventory will help ensure that you have purchased enough insurance to replace your personal possessions," said Worters. "It can also speed the claims process and substantiate losses for income tax purposes. A detailed home inventory is also helpful should you need to apply for disaster aid."
The Insurance Information Institute provides free Web-based software at KnowYourStuff.org, which allows users to create organized lists of possessions, include digital photos, and save scanned receipts.
What about the Deductable?
It is also important to understand your policy's deductable (e.g. the amount you will pay before your insurance kicks in). Generally, said Worters, most people living in coastal areas, especially those prone to large storms, will have percentage deductibles for storm damage rather than traditional deductibles of a set amount.
Pulliam adds that these vary and can range from one to two and even ten percent of the cost of the damages. "It really depends on how much risk you want to take on," she said. "If the consumer is going to take on a higher deductible it will allow the company to write more policies because they know the policyholder is going to pay more themselves."
Both Pulliam and Worters said that selecting the right deductable should be based on a balance of your home, belongings, and income.
barometer
What If a Storm Hits?
No matter how well prepared you may be for the storm -- the strongest roof and best insurance coverage available -- there is little you can do if a storm tracks over your community and hits close to home. The following should help you understand how to react so that you are covered and can quickly find temporary shelter, if you need it, and protect your home from further damage.
What do I do after the Storm?
According to Worters, it is important to call your insurance company as soon as possible after the storm as many companies place a time limit on filing claims and state laws on deadlines differ by state.
Once you have called, adds Pulliam, the process insurers go by can vary, but the company will likely send an adjuster out immediately to document the damage and file the necessary paperwork. If there has been widespread damage, it may take a few more days, which means you should try and take your own photos of the damage to show the adjuster when s/he arrives.
Worters and Pulliam add that the insurer will pay for alternative housing at a hotel or motel and will even issue a check a debit card on the spot in order to get money in your hands so you can purchase accommodations, food, and take care of other immediate expenses. "If your home is severely damaged and you need to find other accommodations while repairs are made," said Worters, "keep records of all additional expenses incurred. Homeowner's insurance policies provide coverage for the loss of use of your home if it is damaged by an insured disaster."
Worters and Pulliam also said you should attempt to make temporary repairs to your roof if it is safe to do so. "If it is something you can do safely and it will prevent further damage, then by all means do that," said Pulliam. "For example, if you can safely get up on your roof and put a tarp up to protect your property; then yes do it."
As with any thing you do prior to the arrival of an adjustor, save any receipts for items you have purchased.
Can I be sued if my roof comes apart and damages someone else's property?
The answer to this question may vary on certain circumstances, but the best means to prevent and protect yourself is to ensure that all roof maintenance is up to date. "In today's litigious society, anything is possible," said Worters. "It is more likely that if roof tiles fly off and hit someone, you might be sued for negligence if your roof needed repair. That's why it is important to maintain your home and to carry liability insurance to protect you and your neighbor's property."
In all, ensuring that your insurance will cover you if a storm should damage your home requires due diligence on your part. However, there is nothing like a good night's rest knowing that if the worst should happen, you and your family will be financially protected.
Chris Brooks
http://www.roofery.com/hurricanes-and-insurance.html
Sunday, July 5, 2009
10 Things Your Home Insurer Won't Tell You...
Very good article:
http://www.smartmoney.com/personal-finance/insurance/10-things-your-home-insurer-wont-tell-you/
http://www.smartmoney.com/personal-finance/insurance/10-things-your-home-insurer-wont-tell-you/
Sunday, June 28, 2009
Worker's Comp Issues for the Real Estate Investor
Worker's Compensation Issues for the Real Estate Investor
Though frequently overlooked by many real estate investors, worker's compensation (WC) and related issues should certainly be addressed early in your business planning stages. Bear in mind, that advice from your attorney, accountant and/or from the State Department of WC (if applicable) certainly trumps what I communicate here.
The most important consideration is to understand that how you compensate your labor may or may not excuse you from carrying WC coverage on them. In effect, just because you pay them on a 1099/independent contractor basis, doesn't mean that the courts or WC commission will agree. Be sure you understand (seek legal advice) on what constitutes an “independent contractor” relationship. It may not be what you think (and may vary from state to state, as well).
Be wary not to create an unintentional employer-employee relationship, which could create a WC exposure for your business. Having tenants do odd jobs, such as clean-up, grass-cutting, or landscaping as a way to reduce rent may be construed as “consideration” and potentially subject you to carrying WC insurance. Do not confuse this with upkeep and maintenance requirements of your lease. What I am addressing here is the reduction, discount, or even waiver of rent in exchange for labor provided by a tenant, especially when such labor takes place on/at locations other than the tenant's residence. The last thing you want/need is this tenant to be injured while doing such work, only to find your liability insurance will deny the claim based upon such an “arrangement”.
Pertaining to hiring contractors and third-party service providers, be certain that they carry not only “General Liability” (GL) coverage, but also current WC coverage, whether State-sponsored or from a private insurer. The best time to obtain such validation of coverage is at the onset of the bidding process. Once Certificate(s) of Insurance (COI) are secured from the contractor or service provider a quick phone call (or email, which I prefer as it creates a “paper trail”) to the carrier or Agent can confirm the coverage(s) are current and valid. Being named a “certificate holder” is typically sufficient for most scenarios, especially when you do not utilize a contractor more than a few times a year. For larger/longer term jobs and projects, being named as an “additional insured” may be preferred. Put simply, a certificate holder is simply notified in the event the policy cancels. An additional insured not only is notified when the policy cancels, they are actually protected by the coverage/policy. Review with your legal advisor, and be advised that being named as an additional insured may cost the contractor some additional premium, usually no more than $50-100 per year. Depending on the situation, it may behoove you to pay this additional premium, if the contractor “balks”. My attitude is “no insurance, no project award”. If the contractor or service provider decides to cut expenses by sacrificing these vital coverages, then I do not want them doing any work for my business.
Understanding that the relationship between you/your business and those that provide labor and services is not simply a by-product of how you compensate them is the first step in making sure your real estate (and any other business) is protected appropriately from WC (and GL) exposures. Securing and confirming coverages is a must when dealing with any and all contractors and service providers. Unfortunately, in today's litigious world, the risk of using uninsured “spot labor” far outweighs any short-term time or financial benefit. If you are currently using and satisfied with such labor, review with your legal and accounting advisors and consider securing coverage for them, in the most appropriate and efficient manner they/you decide. It only takes one uninsured claim to put you out-of-business.
Though frequently overlooked by many real estate investors, worker's compensation (WC) and related issues should certainly be addressed early in your business planning stages. Bear in mind, that advice from your attorney, accountant and/or from the State Department of WC (if applicable) certainly trumps what I communicate here.
The most important consideration is to understand that how you compensate your labor may or may not excuse you from carrying WC coverage on them. In effect, just because you pay them on a 1099/independent contractor basis, doesn't mean that the courts or WC commission will agree. Be sure you understand (seek legal advice) on what constitutes an “independent contractor” relationship. It may not be what you think (and may vary from state to state, as well).
Be wary not to create an unintentional employer-employee relationship, which could create a WC exposure for your business. Having tenants do odd jobs, such as clean-up, grass-cutting, or landscaping as a way to reduce rent may be construed as “consideration” and potentially subject you to carrying WC insurance. Do not confuse this with upkeep and maintenance requirements of your lease. What I am addressing here is the reduction, discount, or even waiver of rent in exchange for labor provided by a tenant, especially when such labor takes place on/at locations other than the tenant's residence. The last thing you want/need is this tenant to be injured while doing such work, only to find your liability insurance will deny the claim based upon such an “arrangement”.
Pertaining to hiring contractors and third-party service providers, be certain that they carry not only “General Liability” (GL) coverage, but also current WC coverage, whether State-sponsored or from a private insurer. The best time to obtain such validation of coverage is at the onset of the bidding process. Once Certificate(s) of Insurance (COI) are secured from the contractor or service provider a quick phone call (or email, which I prefer as it creates a “paper trail”) to the carrier or Agent can confirm the coverage(s) are current and valid. Being named a “certificate holder” is typically sufficient for most scenarios, especially when you do not utilize a contractor more than a few times a year. For larger/longer term jobs and projects, being named as an “additional insured” may be preferred. Put simply, a certificate holder is simply notified in the event the policy cancels. An additional insured not only is notified when the policy cancels, they are actually protected by the coverage/policy. Review with your legal advisor, and be advised that being named as an additional insured may cost the contractor some additional premium, usually no more than $50-100 per year. Depending on the situation, it may behoove you to pay this additional premium, if the contractor “balks”. My attitude is “no insurance, no project award”. If the contractor or service provider decides to cut expenses by sacrificing these vital coverages, then I do not want them doing any work for my business.
Understanding that the relationship between you/your business and those that provide labor and services is not simply a by-product of how you compensate them is the first step in making sure your real estate (and any other business) is protected appropriately from WC (and GL) exposures. Securing and confirming coverages is a must when dealing with any and all contractors and service providers. Unfortunately, in today's litigious world, the risk of using uninsured “spot labor” far outweighs any short-term time or financial benefit. If you are currently using and satisfied with such labor, review with your legal and accounting advisors and consider securing coverage for them, in the most appropriate and efficient manner they/you decide. It only takes one uninsured claim to put you out-of-business.
Monday, May 25, 2009
Kiyosaki coming to Cincinnati this week...
http://www.myeducationnetwork.com/learn_to_be_rich/OH/cincinnati/46639/
Saturday, May 9, 2009
"Business" Insurance for Vehicle(s) Utilized in your Real Estate Endeavors...
If you are a real estate investor and use your personal vehicle to service your properties, make sure your insurance is "correct" for it. Many insurers may consider the vehicle used in the course of your real estate business to be just that: "business use" (regardless of whether it is titled to you OR your business entity). Check with your agent to ensure the coverage you have in place is appropriate. The trips to the hardware/improvement store and the hauling of equipment and materials may merit a commercial policy. Don't fret, many times the commercial policy for such usage is less expensive than typical "personal" auto insurance...
tim@nreinsurance.com
http://nreinsurance.com
http://reiainsurance.com
tim@nreinsurance.com
http://nreinsurance.com
http://reiainsurance.com
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