Freeze claims and how or if they are covered under a standard insurance policy. http://www.tdi.state.tx.us/consumer/cbo11.html

Personal -

Shopping for Insurance is boring. . .

    But there are a few things you need to know when shopping for insurance.  What is the first thing that you ask your agent?  Most people will ask can you get me a better rate?  Your first question should be; are you licensed to sell this type of insurance?  May I see your license?  Have you had any customer complaints filed against you?  It does little good to get a better rate if your insurance agent pockets your money.

    The main thing to remember is, know your agent!  You can verify an agent's credentials as well as check for complaints, by calling the Texas Department of Insurance Consumer help line at 1-800-252-3439. 

    If you really thirst for information, you can also access the Texas Insurance code at www.capitol.state.tx.us/statutes/intoc.html .  Or the Texas Administration Code at www.sos.state.tx.us.

    Now let's talk about RATES.  Rates can change from company to company, day to day.  Most insurance companies offer access to rates via the Internet.  This makes it easy for the consumer to compare and shop.  Some sites to try - www.switchboard.com - for auto and term life insurance.  This site has an icon in the upper left-hand corner that will take you to a comparative rater located at www.InsWeb.com .  You can also find a local agent with this program.  At www.Insuremarket.com the consumer can actually purchase an auto policy online, this can also be done at www.progressive.com .  Both are good resources for the consumer, and Progressive offers a site en español.  To find a list of agents in your area, check the membership of Independent Insurance Agents of Texas. You may find it at www.iiat.org .

    If all of this is too much information or all you have is a simple question, you may email me with you questions at bcrocker@crockerinsurance.com .  Be an educated consumer, it will save you

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Free Quotes. . .

FREE QUOTES!!!  How often do you see or hear that one?  Well the fact is all quotes are free.  If you have an agent that charges for a free quote, well it's time to go change agents.  Here is another one that I am sure you have heard; "we will give you a quote over the phone, no waiting."  While it is true that most agents can offer you quotes, that quote is not always going to be their best price.  An agent that works for one company will almost always quote you their highest price first.  It is to your advantage to use an "independent" agent.  An independent agent represents several companies, and can get you the best price to suit your needs. Not a one size fits all instant type quote.  I often hear people say that they do not have time to shop for insurance.  In today's market, you should find time.  On May 1, the state of Texas approved an increase in homeowner's rates, some as much as 20%.  Also on May 1, many of the companies switched to a new rating system using personal protection class (PPC's) instead of the old key rating system.  While some cities will experience a rate reduction, most will see an increase.  It is a given fact that your homeowner's insurance will go up.  The average homeowner can expect an increase of around $200.00 over last year.  The good news is Personal Automotive rates have gone down.  Auto insurance is extremely competitive now.  Many of the restrictions have been eliminated.  So, it pays to shop your insurance.

The state has also approved discounts for hail resistant roofs.  Ask your agent for the discount certificate before you hire a roofer.  The certificate must be completed and signed by the roofing contractor to qualify for the discount.  Hail resistant roofs are classed 1-4 with a class 4 offering the greatest protection and highest discount.  Discounts vary by territory or county.  Denton and Collin counties qualify for some of the greatest discounts.  If you installed a hail resistant roof prior to 2-17-98, you may still qualify for the discount.  This varies from company to company.  If you plan to install a hail resistant roof, ask your roofing contractor to quote the prices for coverings that are U.L. Standard 2218 tested.  To find out what discounts are available in your area, you may cal the Texas Department of Insurance at 1-800-252-3439, or visit their web site at www.tdi.state.tx.us .  It could well be  worth any extra expense involved as discounts range up to 35%.  Metal roofs are included in those eligible for the discount but a metal roof may be excluded for any "cosmetic" damages.  Some roofing materials that qualify for the discount are; recycled resin formed shingles (class 4), fiber cement shingles (class 2), urethane foam (class 3), certain asphalt shingles (class 1, 2, 3, & 4) and molded reinforced plastic (class 4).  Two Texas manufacturers meet the discount requirements.  They are; Atlas Roofing, Dangerfield, TX 800-270-2852 (class 4 asphalt) and GS Roofing Products Company, Irving TX 800-999-5150 (class 1, 2 & asphalt).

It was recently announced that Farmers Insurance has been granted permission to cover roofs on an actual cash value basis in lieu of replacement cost on new policies.  Be wary of this endorsement, while they do offer a discount for this endorsement, in the event of a claim they can depreciate the cost of your roof as much as 50%.

With the state of Texas', acceptance of ISO (Insurance Service Office) forms, which are a national standard as opposed to Texas forms some coverage's will be reduced while others will be improved.  Some noticeable changes to the homeowners coverage can be found on forms regarding watercraft, trailers, silverware, firearms, animals, birds and fish, business records, tree removal and consequential losses under the property form.  Under the liability limit section the most significant change is in the duty to defend clause.  With the ISO form a company can withdraw from defense of a liability claim if the liability limit on the policy was used up.  ISO also excludes liabilities arising from any business operated by the homeowner as well as other exclusions not previously included under Texas forms.

There are many changes that will affect the way you purchase insurance in the immediate future.  If you have any questions about the changes I have mentioned above, or any insurance related questions, please send me an email.  I will be happy to help you sort out the differences.

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Commercial -

A few words about business Insurance. . .

Only an agent can tailor your coverage to suit your individual needs.  A recent survey shows that of the 29% of Americans with Internet access only one third of those use the Internet to purchase insurance.  Why, because they prefer the personal relationship that only an independent agent can provide. 

Be prepared to answer a few basic questions when shopping for personal or business insurance.

1.    How did you hear about my agency?
2.    Who provides your current coverage?  How long have you been with this agent/company?  When do your policies expire?
3.    Why do you want to change agents/companies?
4.    May we look at your current policies?
5.    Have you contacted any one else?  Who?

 For your business coverage you may also be asked; 

1.    May we pre-inspect your premises?
2.    What will it take from us for you to move your business?
3.    Be prepared to answer questions concerning you background. History, finances ownership, etc.

How many of us have even heard about Employment Practices Liability or Product Recall Liability, or even coverage to protect us for changes in City Ordinance?  Did you ever think insurance would influence what you build your home out of?  Many insurance companies exclude EIFS as an exterior finishing material.  Do the advances of technology (or lack of) influence your insurance coverage? Have you heard about the year 2K exclusions? 

Commercial coverage is extremely complicated.  It is because of the many variables that you should consider an agent knowledgeable in this area.  Here are a few questions you should ask your agent; 

1.    What percentage of your business is commercial?
2.    How many years have you sold/serviced commercial insurance?
3.    Do you check out your providers, and if so, what type of information do you obtain?

An agent should know the providers A.M. Best rating.  This is a financial scoring method accepted widely in the insurance industry.  Companies rated A or B are considered good with A being the best rating.  Try to avoid companies with a lesser rating or those rated "NR" or not rated. 

You should also question an agent who only uses surplus lines or "non-admitted" companies.  Texas law states that if you have an offer to renew a policy in a standard market, or you are not eligible for coverage in a surplus lines company.  You must be rejected by a standard market to be eligible for surplus line coverage.  One way for you to tell is to look for a charge for a fee or tax.  Surplus lines companies are taxed by the state of Texas for the privilege of selling insurance in the state with out a Texas license.  This should also be clearly stated on your policy.  This does not mean that they are a bad company, but for whatever reason they do not want to be licensed in Texas and are most likely licensed in their state of domicile.  Coverage forms may differ however, and it is important that you read your policy. 

An agent that will only offer you a quote with a surplus lines market may have problems of his/her own.  This often means that they do not have the strength or stability to provide the accounts that a standard market requires. 

Ask your agent to see all quotes and/or declinations received on your behalf.  A good agent will submit your account to a variety of markets.  What you see may tell you a lot about your agent. 

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Business Basics. . .

There are all types of coverage available to all types of business, including non-profit and home based businesses.  The next couple of columns will provide you with a brief description of some of the coverage's that are available. 

Bonds 

You may know that many non-profit groups handle money.  This comes in the form of dues, grants, and contributions.  But did you know that as a result, embezzlement losses are not uncommon.  For these types of civic and volunteer groups, a Fidelity bond along with crime coverage can protect these groups against the loss of their hard-earned funds. Some of the groups that could benefit from this type of coverage are: Chambers of Commerce, Merchant Associations, Social Service Organizations, Development Associations, Service Groups and Homeowners Associations.  It is recommended that each officer handling funds for the group be covered by the bond and a crime policy.  Other individuals that may require bonding include Public Officials, Contractors; those ordered by a judge to be bonded such as probate bonds for those handling an estate and court litigation bonds. 

Boiler and Machinery Coverage 

Somewhere in your business you have a vital piece of equipment that is on its way to letting you down.  Perhaps it is only a frayed wire or a loose switch.  A small repair?  Not when you consider the cost of replacement parts and lost income.  When essential equipment breaks down you may lose income as well.  Many business owners do not realize that their all risk policy does not cover equipment breakdown.  Equipment breakdown insurance can fill the protection gap simply and inexpensively.  With it you can protect your property against damage and loss of income from; air conditioning failure, refrigeration breakdown, short circuits or burnout's, and mechanical breakdown of motors, fans or pumps.  In addition an equipment breakdown policy can also provide coverage to replace damaged equipment with modern technology.  It can provide coverage for off premises power failures.  So, when a utility transformer fails no matter how far away, and you suffer loss of income you are covered.  This policy also provides coverage for spoilage and damage to property of others if caused by an equipment accident.  As an example of how this coverage may be applied. A restaurant heating coil ruptured, insurance paid $18,000.00.  An apartment building's electrical system burned out, the insurance paid over $12,000.00.   These are only a few examples.  If you are like seven out of ten small business owners, you are probably not covered for this type of loss. 

Builders Risk 

There are two types of builders risk coverage.  One type covers construction of a new building or dwelling, or the renovation of an existing structure.  The other type covers installation of various items such as, carpeting, wiring, plumbing, painting or interior finish out.  Often coverage is provided for building materials on site and in transit.  Coverage is provided for damage from fire, wind, hail and theft while the structure is under construction.  Once the construction is complete, permanent coverage is placed on the building in the form of a homeowner's policy, dwelling fire, and/or a commercial package or business owner's policy. 

Next month we will review Workers Compensation Coverage including the new non-subscriber options.  We will also discuss home businesses, and the differences between a General Contractor and an Independent sub-contractor.

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Businesses of Today. . .

Require agents to be more knowledgeable in a variety of areas. Do you run a business from your home? Many standard homeowners' policies exclude liability for business pursuits. Let's say that you are a distributor of a product. You hold a party in your home to sell this product. A guest at the party trips over the display and breaks an arm. Your homeowner's policy will not pay the medical bills of this guest as they were injured as a result of your pursuit of business. The same would apply if you were to watch a couple of children in your home for extra money. If one of the children were hurt, your homeowner's insurance would not cover their injuries.

Do you repair cars in your garage and sell them? Did you know that you are considered a motor vehicle dealer? You are required by the state to register as a dealer and to post a bond. Do you clean homes for extra money? There is a business services bond that you can purchase to cover the loss or mysterious disappearance of money or valuables from the homes that you clean, but what if you break something? General liability insurance would cover you in the event that you broke or damaged a $60,000.00 piece of artwork.

Personal auto policies also exclude liability if you use your vehicle in business, transport passengers for a fee, use it to deliver pizzas or as a courier service. Occasional business use is acceptable such as taking a client to lunch, if your vehicle is rated for business use. However, if the type of use can be covered under a business auto policy, such as delivery of pizzas, claims that occur while used in this manner are not covered under the personal auto policy.

Businesses of today come in all sizes. Changes in our society have broadened the types of coverage needed to protect your business investment. Many businesses today will need to purchase coverage that will protect them from workplace violence, and discriminatory employment practices. According to the Bureau of Labor Statistics, homicide was the second leading cause of job-related deaths and is the leading cause of death in the workplace for women. Each week, an average of twenty people are murdered and 18,000 are assaulted while working (National Institute for Occupational Safety and Health, 1996). Workplace violence is a serious social ill. If you are an employer in a retail trade or service based industry you need to be sure you and your employees are protected. Over 50% of workplace homicides occur in this field (National Institute for Occupational Safety and Health, 1996).

Non-Subscriber Coverage vrs. Workers Compensation

Non-Subscribers (employers that don't carry workers compensation) lose the common law defense of Contributory Negligence. This is replaced with the Comparative Negligence defense. Contributory Negligence apportions blame among the various parties involved in litigation. With Comparative Negligence, a verdict is rendered for you the employer, eliminating liability on your part, if the employee's own actions contributed 50% or more to the injury. In addition, ERISA coverage can be added to a non-subscriber policy. Under the ERISA, coverage can be added to protect the employer from employee law suits that would include discrimination, sexual harassment, violations of the Americans with Disabilities Act or the American Family Medical Leave Act. You should read your non-subscriber policy carefully however, as some of the major carriers exclude assault and battery. This may be a necessary coverage and is available.

To become a non-subscriber you must file form TWCC-5 annually with the Texas Department of Insurance. You must post on your bulletin board or other visible area, in English and Spanish, the required non-subscription form, and you must advise your employees that you do not carry workers compensation coverage.

For more information regarding non-subscriber coverage, you may want to check out the June 4, 1998 edition of The Insurance Record for the article Non-subscription in Texas: Past, Present, and Future. You may e-mail The Insurance Record at insr@earthlink.net. 

Since this column is a little long, we will explore Employment Practices Liability in our next column. If there is an issue that you would like to see discussed in future columns, please send me an email.

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Employment Practices Liability. . .

A recent Supreme Court ruling states that employers can be sued for sexual harassment in the work place even if they are not aware that it is taking place.  What does this mean to you?  Well, do you have a tough anti-harassment program and grievance procedure in place?  If you don't, you should consider implementing such a program.  At the very least, you should update your employment manuals to address guidelines for filing a complaint. 

If you are a large or small employer you may want to purchase an Employment Practices Liability (EPL) policy.  Such a policy would defend you against claims involving:

Recently, Judge Jerry Buchmeyer awarded $700,000. In actual damages and $7.4 million in punitive damages to an employee of Waffle House.   This person was sexually harassed by her supervisor and stated that her supervisor had created a "hostile environment" for female employees of that establishment.  In this case and two similar cases, one in Boca Raton, FL and the other in Chicago, IL the employer was held liable for the actions of the supervisor. 

What this company needed was a suitable anti-harassment policy.  Accompany this policy with training sessions for supervisors and grievance procedures written and in place, they may still have been sued but the EPL policy would have covered the cost of their defense.  With such procedures in place chances are good that the business would defeat the suit quickly without great expense.  The days are gone when employers can police their own personnel. 

Employee, Contract Labor or Sub-contractor? 

A sub-contractor is self-employed, assumes his own tax responsibilities, carries his own insurance and hires his own employees.  The sub-contractor is usually paid on a "per job" basis.

Contract labor is not defined under the law, but is generally believed to be someone who is employed by the hour and is not insured.  The employer may or may not be responsible for the contract laborer's taxes.

An employee works directly for you the employer.  You pay and report all salary and wages.  You assume the tax liability and may or may not be required to provide insurance.

So, it does not matter what both parties call their arrangement, contract labor or not.  The determining factor is their employment relationship.  The issue depends on direction and control.  A detailed explanation for all employment categories can be found on the Texas Workforce Commission  web-site at http://www.twc.state.tx.us. When considering whether or not a worker should be covered under your company general liability and workers compensation policy, the easiest way to separate the two is this:

You should report the sub-contractor on your policy as "cost of sub-contracted work" and you should request and retain certificates of insurance from them.  When your policies are audited, and sub-contractor for which you do not have adequate proof of insurance, you will be charged for.  Costs paid to him will be considered payroll for audit purposes. 

A new trend in contractors insurance is popping up in Texas.  The trend is toward OCIP's or, Owner Controlled Insurance Programs.  Basically, the owner of a large construction project purchases workers compensation, general liability, builder's risk and umbrella coverage for all contractors working on the site.

This accomplishes three things, 

1.    The owner controls the losses by employing a safety manager to implement loss control programs thereby reducing losses.
2.    The owner eliminates the risk caused by gaps in coverage from sub-contractors that are not adequately insured.
3.    Insurance costs are reduced due to the high volume of insurance being bought. This lowers the cost to the sub-contractor, which lowers their bid and increases their profits.

This type of program can work for small contractors as well.  For many, it provides a way to be sure your subs are covered at a fraction of what it would cost the sub to obtain insurance individually. 

A program like this can work for other types of entities and not just contractors.  Many insurance companies provide safety engineering and loss control as a service to their clients.  Such an arrangement would enable you to participate in this type of program with out having to hire those services out.  It makes sense to seek out companies that provide this service as it is yet another way to keep your costs down while increasing your profit.