Monthly Archives: May 2014

Equipment Breakdown and New York Manufacturer Insurance

The manufacturing industry provides so many important products for consumers. Many of these operations require complex and vital machinery to produce their goods. Something simple, such as a power surge, could quite possibly cause extensive damage to an important piece of equipment that would require expensive repairs, not to mention the loss of production while the equipment is out of commission.

Manufacturer insurance in New York, and specifically an equipment breakdown insurance policy for businesses, will help to pay the costs for equipment failures. Don’t mistakenly think that regular property/casualty coverage will cover the costs, as most insurance brokers will explain that this policy actually doesn’t cover damage from internal causes such as mechanical failure, electrical short circuit or “arcing” (faulty wiring or motor burnout).

A property/casualty policy only covers damage to equipment from “external causes.” For example, damages that are the result of a fire, a flood or a tree falling on the roof of the building that causes damage to property owned by the company would be covered.

This is why it is so important to understand the different types of coverage available and what they will, and will not, cover. While mostly large manufacturers were the major purchasers of equipment breakdown insurance (formerly referred to as “boiler and machinery insurance”) it has become an increasingly important part of any sound small-business insurance package.

With new technology (which often consists of a lot of fragile electronic and computerized circuits and parts), computers, machines and equipment are subject to breakdowns that can be more frequent, as well as much more costly than the older, more traditional mechanical equipment. Current business practices, such as Internet marketing, make all businesses more dependent than ever on computer systems, along with other valuable manufacturing equipment.

Critical business information often exists only on the Internet, or in online databases, that cannot be accessed during periods of equipment breakdown. So there are several ways that a business can be impacted due to equipment failure or breakdown. Adding to the concerns is the fact that employees are now traveling with many types of equipment that were once permanently attached to a fixed location, so breakdowns often occur in places other than the ones insured under traditional property/casualty policies.

Don’t let the unexpected power outage become both, an inconvenience and a financial catastrophe. Speak to an agent today and get the facts about the specific New York manufacturer insurance coverage needed.

Captive Solutions Offer an Effective Alternative

When you and your company are faced with difficulties in acquiring insurance, it is quite daunting to arrive at a cost-efficient resolution. Traditional avenues for the acquisition of insurance may be far too costly due to the inherent risks associated with your business, making it necessary to explore the alternatives. One such alternative — captive solutions — has proved to be quite an effective and cost-efficient means to solve any number of issues relating to insurance, including:

  • Rising premium costs
  • Difficulty acquiring coverage
  • Variable coverage across geographic locations
  • Credit rating structures that are inflexible

There are, of course, significantly more issues that captive solutions may be able to resolve, but there are certain issues that seem to crop up with greater frequency. These issues require an alternative solution that enhances risk management while allowing you to exert a greater deal of control with regard to your insurance.

Resolve a Number of Difficult Issues

Captives are owned by private entities, meaning that you and your company can reap significant benefits through the reduction of the policy’s cost. Traditional insurance markets may offer a premium that is significantly higher than what the captives can offer, if the traditional insurance market can even offer a policy at all. If you are involved in a business with significant risks, turning to captives may be the best option for you and your company.

The Impact of the Affordable Care Act on the Insurance Industry

The much-debated Affordable Care Act has just recently implemented some of its major changes. While many are focused purely on the effects it will have on the health care industry, it changes enacted by ACA could have an effect on the cost of other types of insurance, such as Property/Casualty Insurance and the data seen on insurance lists.

According to a new study by RAND researchers1, the cost of auto insurance, workers’ compensation, and general liability insurance could potentially go down as a result of ACA because these insurers will have to pay less for treating injuries. However, there is also a possibility of medical malpractice premiums going up as a result of the same changes.

Because of this, insurance lists, particularly Property/Casualty insurance lists could change noticeably in the next couple years. Some of the expected positive effects include:

  • Increased wellness
  • Decreased incentive to file questionable P&C claims
  • Increased fraud detection supported by government funding
  • Fewer emergency room visits
  • Decreased need to over treat patients

However, there are also several potential negative effects that ACA could have on the Property/Casualty insurance industry, including:

  • Decreased access to care, increasing indemnity costs as immediate access to physicians is reduced and return to work is delayed.
  • A cost shift from Medicare to Property/Casualty insurance consumers by physicians and hospitals because of declining Medicare reimbursement rates.
  • Increased pharmacy costs
  • Increased DME medical costs due to new taxes for consumers
  • Decreased network discounts because of the increased bargaining power of physicians and hospitals, as well as the decreased need to drive volume, which will increase medical costs.

These changes come as a result of having potentially more Americans covered by health insurance under ACA who were previously going without any health insurance. Because the cost of providing the insurance could go down, consumers could see drops in their premiums.

There are also many variables that could affect these changes below the federal level, however. This includes whether states require medical costs to be deducted from liability awards or if they choose to implement ACA’s optional Medicaid expansion.

These effects are, in essence, all focused on the short term. When looking at the potential long-term effects of the Affordable Care Act, there could be even more significant changes seen in insurance lists and the industry as a whole. The next few months will be crucial in seeing the beginnings of these changes and determining how to adapt to help improve the insurance industry.

1http://www.rand.org/pubs/research_briefs/RB9768.html

Staffing Agencies and Employment Practices Liability Issues

Your staffing agency has the same concerns as other businesses when it comes to employees claiming they received improper treatment by people within their own organization. Employment Practices Liability (EPL) insurance policies protect businesses from the financial costs incurred from these employment-related lawsuits, many of which are filed for any number of reasons, from wrongful termination to harassment to discrimination and so on.

While every EPL policy is different, typically a company with $1 million in sales and 50 employees can likely get a policy for about $7,000 per year – $10,000 if they also take out coverage protecting directors and officers in the event of liability lawsuits against them.

Protecting your agency against EPL lawsuits

In general, the more protections you put in place against EPL claims, such as internal policies and procedures that are implemented, the lower the business’s premiums will be for EPL coverage and the more likely your business will be considered a candidate for coverage.

It’s essential that you have a written employee handbook with strong anti-harassment and anti-discrimination policies, and that each employee receives a copy upon orientation. If the employee doesn’t use that procedure, your business may be able to use that as part of its defense against any suit that is filed.

Training supervisors in HR procedures and policies is equally important, and you might want to include training that involves discharge procedures for employees who are being terminated or procedures for how to handle and prevent harassment or discrimination in the workplace.

In addition, develop a code of ethics policy – this tells employees that they shouldn’t do certain things, like giving kickbacks and engaging in other ethical violations. Having an anti-retaliation provision statement says that it’s the policy of the business not to retaliate against employees over accusations of unfair treatment.

Your company is vulnerable to disgruntled employees (or candidates) that, for whatever the reason, feel they received unfair treatment. Employment practices liability coverage is your first and last line of defense.