Don't get blind-sided!

In this economy, one of the most frequent liabilities that small businesses are running up against are employment related charges and lawsuits.  In fact the EEOC recently announced that 93,277 workplace discrimination charges (wrongful termination, age, race and sexual discrimination, sexual harassment, retaliation, etc.) were filed in 2009.  These alone resulted in $376 million in monetary awards obtained for plaintiffs via enforcement, mediation and litigation.

But these are targeted towards big businesses, right?

Sorry to be the bearer bad news, but over 50% of these Employment Practices Liability charges are brought against smaller firms.  Furthermore only 1.2% of small businesses have EPLI (Employment Practices Liability Insurance) protection.  Here are some more facts on this disturbing trend:

  •   81% of related charges are settled for an average of $22,400 to $40,500 even when the claim is found to be groundless! (I know it’s nauseating, but legal fees are not getting any cheaper).

 

  •    Claims that go to trial cost over $180,000 on average.

 

  •   A recent survey conducted by the Hartford indicates that 2 out of 3 business owners are concerned that employees might bring employment-related charges against them.

So what’s the good news?  The good news is that there are several carriers who are offering great coverage that will not only pay damages, but will pay for legal fees to defend as well as  providing front end legal advice that can be vital in heading off potential lawsuits.  Minimum premiums start at $450 a year.  Shoot us an email or call (512) 257-3773 to get a quote.

Please forward this to two of your colleagues that you like and hide it from the ones you don’t!  You can get more information by visiting Austin Insurance or Cedar Park Insurance .

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Time to change the batteries

The result of wrestling with a smoke detector at 3am

(Or in my case actually reinstall it).  Yes, I’m busting myself…  I pulled this out of the ceiling about 10 months ago when that devious little beep programmed to alert me that the battery is low started screaming at me at 3am. 

Of course I just happened to be right in the middle of the most magnificent slumber… You know, the kind where you’re smack dab in the middle of one of those blissfully sublime dreams:  Laying on the beach in Bora Bora (having just won the lottery, naturally), while sipping some refreshing coconut-smelling concoction with obligatory umbrella, all while my beautiful wife is telling me how smart and amazing I am and that she would find me sexier if I would only watch more football! Wait a minute… where was I?  Oh right… Risk Management tips!

So for all of my “smoke-detector-neglector” brethren, do yourself a huge (and easy) favor. Change the batteries this weekend.  Protect your blissful slumber and more importantly your family!

Note to aforementioned beautiful wife–(that part of the dream is actually true!  Yea me!):  Honey, we can add the NFL network to our cable package if you insist 🙂 )

Do your neighborly duty and pass this along to  at least two of your friends to remind them to change their batteries.  Also make sure you subscribe to this blog to get periodic tips on protecting your family and business.  Inspire Insurance Solutions is an independent insurance broker with access to over 100 carriers and routinely saves people money on business, home and auto insurance.  Get a free rate quote at Austin Insurance or call us at 512-257-3773. We can save you money anywhere in Texas.

And what can you reasonably do without?

In an ideal world entrepreneurs could afford a comprehensive insurance program that would protect you from any conceivable exposure. (I think this is the same world where you have unlimited funding, 48 hours in a day, and customers that would crawl over hot coals to buy from you)!

In case you’re not quite in that situation some important decisions have to be made. Make sure you make educated ones. Most companies that are bootstrapping don’t have the cash flow to transfer every risk via an insurance policy.  So what insurance coverage does a startup (or any business for that matter) really need?

That obviously depends on your business. We need to make sure you diagnose before you prescribe.  The first step is to start with an assessment of potential risks.  This process helps uncover a range of issues including regulatory compliance, risks associated with employees, potential third party liabilities, property risk, contractual risk, and threats to net income.

Once this assessment has been completed (and you’ve had a chance to practice some of those breathing exercises… you know… the ones that are supposed to calm you down and reduce your blood pressure) you can then, with the help of a Certified Insurance Counselor, make educated decisions that will help prioritize these exposures and help answer the following questions:

 
Which risks pose an immediate threat?

Which risks are the most likely to occur?

Which risks would be the most severe?

Which risks can we afford to retain or self insure?

Which risks can be reasonably be avoided?

Which ones can be mitigated or reduced?

Which ones can be transferred contractually?

What risks do I need to transfer via insurance?

Insurance is only one piece of managing risk and protecting your business.  Other avenues should be explored before blindly buying an insurance policy.

The good news is that getting professional help, (wait… that doesn’t sound quite right…), is available and in most cases costs no more than randomly buying insurance from someone over the internet.  For more information or to get a primer on types of business insurance available go to Austin Business Insurance.

In Texas, the host of a party can incur severe liabilities in the event that a guest gets intoxicated and then, heaven forbid, injures themselves or someone else because they got behind the wheel. Make sure you take precautions to prevent drinking and driving incidents.

Have a safe holiday season!

A couple of simple ways you can avoid these liabilities are:

  •  Outsource the serving of alcohol. It’s a great idea to hire a bartender or catering company, who has undergone TABC training. Not only can this help limit the amount served, but the bartenders are trained to spot if someone is intoxicated and take appropriate measures.  Make sure they carry general liability and liquor liability coverage. It’s a good idea to have them name you as an additional insured on these policies. (Some policies will allow this, but this is not always an option).   
  •  Designated drivers made easy! Remind guests to use a designated driver in the invitation and as they are leaving the party.  There are services such as Zingo who will have a driver ride out to you on a foldable motor scooter and then drive you home in your own car. Rates for this are $20 plus a couple bucks for additional miles. You can call them 30 minutes before you’re ready to go at 877-OK ZINGO.  That’s 877-659-4646 (OK, I translated this because it took me about a 45 seconds to decipher and dial the number at 10am this morning because I got the “O” and the zero confused so dialed the wrong number…  I then had visions of some exuberant partygoer fumbling with the numbers trying to spell ZINGO on their blackberry in the middle of the night…)  
  • Don’t over-serve your guests and don’t let someone drive who is visibly intoxicated.  You don’t have to be a party Nazi to make this happen, just pay attention and if someone is over their limit call them a cab or find them a designated driver.
  • Insurance is a last resort!  Insurance (risk transfer) and is not a substitute for trying to prevent, avoid and reduce any risks… especially this one.  Even though most General Liability policies for businesses and most homeowners policies do provide some “host” liquor liability coverage” it is often limited and in the case of a homeowners policies the limits are typically way too low.  This is not a road you want to go down so take some simple steps to avoid and prevent these risks!  

With a little bit of forethought and awareness, we can all help prevent some potentially disastrous things from happening. Please pass this on to two friends as a reminder to be safe this holiday season and subscribe to this blog for more tips and ideas on how to protect your family and business. If you have questions feel free to shoot me an email at cbaumli@inspire-insurance.com or go to Austin Insurance.

Workers comp isn’t required in Texas, Do I really need it?

Texas is the only state in our great union that doesn’t require employers in some form to carry workers comp coverage.  Is this good news?

I run across many Texas businesses that choose to go bare.  I hear things like,

 “Hey, my employees work in an office, what’s going to happen?  If someone gets a vicious paper cut, I can write a check to the urgent care center. Problem solved, right?”

Educate Yourself on the Risks

Maybe. As long as you are comfortable with the risks.  What else can happen to your office employees?  Do they ever drive their own vehicles for business purposes?  Ever drive to the bank to do a deposit or make a run to Office Depot?  Ever go on a sales call?  (I know after last quarter’s numbers you sometimes wonder, huh)?  What happens if your employee gets in an at-fault accident and sustains serious injuries? Who pays for hospital stays, medications and lost wages if you don’t have Workers Comp?  Well let’s see:

Health insurance? Nope.  Automobile insurance? No again.  General Liability? Excluded.  You guessed it.  You do!

A Risk Management Axiom 

There is a risk management axiom that you should only retain the level of risk you can pay for. To throw in a little perspective on medical expenses, one of my ten year old twins recently had a little ER visit for doing a head-gravity-ground experiment while playing “touch” football.  We were there for an hour and a half.  The bill…  Over $16,000!  How much for a serious auto accident?  Hundreds of thousands of dollars?  More? Can you write a check for that?

Statutory Compliance

There are a couple of other issues you need to be aware of if you choose to go without workers comp coverage (this is called non-subscription).  If you are a non-subscriber, then you are by law required to file a “Form 5” with Texas Department of Insurance every year.  Failure to do so carries potential administrative penalties and fines. You can get a copy of a form 5 on the TDI website http://www.tdi.state.tx.us/ or shoot me an email  at cbaumli@inspire-insurance.com and I’ll be happy to send you one.

The Realistic Risk 

Perhaps the most realistic exposure to non-subscription is the cost of being sued by an employee for on the job injuries. Even if you are vindicated in court, you will still incur potentially substantial legal fees.  Now my attorney is a nice guy, but at $300 an hour I tend to forgo the chit chat. 

Furthermore if you are sued by an employee for negligence, then you are severely hamstrung in any legal defense you employ because your attorney will not be able to use many common law defenses that are typically critical in defending negligence suits.

The Solution

I’m sure this comes as no surprise, but yes, Workers Comp is a critical component of any viable business insurance program. Having part B of workers comp coverage in place, (called Employer’s Liability) in place prevents these lawsuits from happening because it is the sole remedy in all but a very few cases.

The good news is that the level of workers comp fraud has diminished over the last few years and rates have come down. In fact for office workers annual rates are as low as 35 cents per $100 of payroll.  Make sure you are protected.

We’d love to hear from you at www.inspireinsurancesolutions.com.

Larger businesses have dedicated Risk Managers and even entire departments that diligently survey the landscape and come up with ways to mitigate risk. How much time do you spend performing risk management activities for your business? Do entrepeneurs and small businesses have less risk than larger organizations?
There is a school of thought that small businesses are actually exposed to greater risk than the big boys because they don’t have the balance sheet to withstand a major incident. So I’ll ask again… How much time to you spend on proactively managing risk for your business?

Yes, I know that entrepreneurial budgets don’t allow for a full-time risk manager. Even with budget constraints, there are myriad things you can do to protect yourself without breaking the bank. At the very least you need to be able to identify common exposures that face your business and then make an informed decision as to how to either avoid, mitigate or transfer these risks.

In most cases there are things you can do to protect yourself that won’t cost you a dime!  And if you get connected with the right Risk Manager/Insurance Broker, they can not only assess and help you manage risk, but save you money by placing you in the optimal insurance program.

About Us

Chris J. Baumli, CIC

Chris J. Baumli, CIC

Chris is a Certified Insurance Counselor with Inspire Insurance Solutions in Cedar Park, Texas. He educates entrepreneurs and families on affordable risk management strategies as well as helping them secure the optimal insurance programs.

He lives in Austin with his wife, five (yes five) kids,and two “manly” Chihuahuas named T-Bone and Bodhi. If you’ve found this post helpful, please share with your friends and colleagues that you like and hide it from the ones you don’t! Chris can be reached at (512) 257-3773 or cbaumli@inspire-insurance.com.

Inspire Insurance Solutions, Inc. is an independent insurance agent with access to over 100 A-rated carriers. In addition to shopping your coverage to find you the best alternatives for your business, home and auto insurance, Inspire Insurance Solutions will take the time to understand your needs and prescribe the insurance solution that is perfect for you, not the insurance company! Call us at (512) 257-3773 or get an online quote at www.inspireinsurancesolutions.com.

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