The Rigg Darlington Group - Newsletter (Vol. 44, Issue 1) TOPICS: PEO's, Drone Use, Cyber Insurance, Commercial Property, OSHA Website, Understanding "value" of Property, Issues with Alcohol, E-Commerce Interruption

1. Drone Use Might
Not Be Covered
Professional Employer Organizations -
An Attractive Business Strategy?
Most small to mid- size businesses today are constantly looking
for ways to control the costs of business, reduce the
overwhelming administrative burden placed on them by laws
and regulations while trying to increase efficiencies within their
organizations. Any business today knows you can not pass on
the full cost of health insurance premiums, compliance and
increased labor costs to your customers. In order for most
businesses to maintain status quo costs must be either
absorbed, service curtailed and or profitability reduced. The
idea we’re going to talk about today should at least be
considered in your short and long term business planning. It
may not be for everyone, but it can certainly be a viable
strategy for many companies. We’re going to give you an
overview of organizations called Professional Employer
Organizations (PEOs) and describe how they may enable you to
focus on your core business functions while shifting some of the
business functions of payroll, human resources, employee
benefits and risk management to an outsourcing partner.
So what is a PEO and is it something you should consider
looking into for your company? A PEO is an organization which
provides human resource and services including (health
insurance, workers’ compensation and professional liability),
payroll administration and HR management and administration
to client organizations on an outsourced basis. The PEO
becomes the employer of record for all the employees of the
client organization covered by the PEO. In other words, the
employees’ paychecks are by and from the PEO and they are
covered under the benefit plans provided by the PEO. The legal
relationship between the organization and the PEO is considered
to be a co-employment arrangement. Employers usually
consider PEOs for two primary reasons. The first is to reduce
their insurance premiums for medical, workers’ compensation
and professional liability. Because PEOs bundle many groups of
small employers together they can, in some circumstances,
negotiate better rates than an individual small group can do on
their own. The second reason is to reduce HR administrative
duties. The onboarding, enrolling and de-enrolling in benefit
plans, processing of paychecks and tax filings are handled by
the PEO. In addition, the HR function of the PEO now becomes
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2. The rapid increase of
unauthorized drone sightings
reported by the FAA is an
indicator that the use of such
equipment is on the rise. To
control the dangers
presented by a crowded
airspace, the federal
government is creating
standards for lawful drone
use to apply to both personal
and commercial use. While
some drones are used by
hobby aircraft enthusiasts,
many businesses are finding
creative ways to incorporate
their use. Examples include
construction, land
development, education and
investigation services.
Wary of the exposures
created by drones, many
commercial liability
insurance companies are
significantly limiting or
removing coverage for bodily
injury and property damage
caused by their use. Further,
such policies might not
address important
exposures, such as personal
injury, resulting from a
violation of privacy.
It’s unwise for a business
incorporating drone use to
assume that resulting losses
are covered by general
liability insurance. A policy
from an insurance company
that specializes in aircraft
liability should be considered
before the drone’s first flight.
For more information on
insurance for this unique and
growing exposure, call your
insurance agent today.
an outsourced function of the organization allowing you to focus
and grow your core business.
There are several areas of concern that you should be aware
while investigating a PEO. First, the employer must understand
the co-employment arrangement between the PEO and your
organization. For certain business functions you have been
handling, the PEO will now control and be financially
accountable. Secondly, although you may see the financial
benefit of bundling your benefits you may also be limited in the
inability to customize your plan designs. A third concern is that
services that are typically bundled are very difficult to be
unbundled. This may be a concern when you go to evaluate the
cost of a PEO in comparison to more traditional ways of
providing benefits and or business functions. As mentioned in
the article PEOs can be an attractive partnership for certain
organizations. They should be analyzed very thoroughly for
their transparency, payroll, benefit and HR services. You should
also ask if the PEO has the ESAC Accreditation. This is the
industry standard and the most reliable source that PEOs meet
broad certification and bonding requirements. Does the PEO
concept sound attractive or worth an evaluation? Please contact
Jeff or Pete Darlington at The Rigg Darlington Group for more
information.
Cyber Insurance Surges
Tired of the seemingly endless barrage of reports concerning
vulnerability to cyber attack? You are not alone, according to
a recent report from Marsh. While a variety of insurance
policies designed to cover the expenses resulting from cyber
crime have been available for several years, many firms have
chosen to disregard them. It now appears that risk is no
longer being ignored.
The number of U.S.-based businesses purchasing stand-alone
cyber insurance increased 32% in the first half of 2015
compared to the first half of 2014. Furthermore, the limits
purchased on such policies have risen more than 16% across
all industries, and limits are now at an average of $12.7
million. The sectors seeing the most substantial increases in
number of firms insured are healthcare organizations,
educational institutions and power/utility companies.
Cyber insurance can be confusing. We can provide important
guidance to get you the right coverage at the right price.
Hidden Benefits of Commercial
Property
A commercial property insurance policy may do more than
simply pay for damaged or lost business property. For example:
Are you planning to put up (and eventually take down) boarding
to protect building glass? Many property insurance policies will
contribute to this potentially expensive cost.
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3. OSHA Website Is a
Treasury of
Assistance
Business owners, have you
visited the website of the
Occupational Safety & Health
Administration (OSHA) lately?
If not, here’s what you’re
missing:
Safety and illness protection
tips. Regardless of the type of
business you’re in, OSHA has
prepared materials to help
your business stay productive
in the safest and healthiest
ways possible.
Labor law updates.Changes to
these important rules occur at
the state and federal level.
Look for updates to
requirements to ensure
compliance.
Personal protective
equipment.Review the latest
technology and standards to
ensure compliance and
employee wellness.
Services.Review inspection
information concerning your
workplace and jobsites to
ensure compliance.
Advice, statistics, videos,
newsletters, interesting
articles and examples of what
not to do are all available and
constantly updated for
relevance. And did we
mention that it’s free? Take
the first step to prevent
serious workplace injury or
illness from occurring: add a
reminder to your calendar to
regularly visit www.osha.gov.
Thank you for your
referrals.
Have you received a bill from your local fire department? Many
communities charge property owners when the fire department
is deployed whether or not their services are ultimately
required. Many property insurance policies will cover some or all
of this cost without requiring payment of a deductible.
Did an employee have damage to personal items while kept at
your office? If the damage resulted from a covered occurrence,
such as fire or water damage, many property insurance policies
will provide limited coverage for personal effects owned by
employees. Note that most policies will not cover theft of
personal effects.
Have you made improvements (such as upgraded floors, doors
or fixtures) to the space you rent? If so, you may be required
by your landlord to insure those improvements against damage.
Most property insurance policies will offer some coverage for
damage to your improvements and betterments.
Understanding the “Value” of Your
Property
Replacement cost?
Actual cash value?
Agreed value? What
does it all mean?
A look at your policy’s
declarations page (the
policy summary page)
should indicate its
“value”—that is, how your
insurer will calculate your
payout after a covered
loss. A majority of commercial property policies offer
“replacement cost,” meaning the loss payment is calculated as
the cost to replace the damaged items in today’s dollars. Note
that certain items, such as antiques, leased property and floor
coverings, are not automatically valued at replacement cost.
Other policies offer “actual cash value,” often called “ACV.”
Such policies typically calculate the loss payment in the same
manner as “replacement cost” but include a deduction for
depreciation. Age, wear and tear, and obsolescence can all
contribute to an item’s depreciated value at the time of
damage.
A less common option is “agreed value.” This option allows for
the property owner and insurance company to review the value
of the items requiring coverage before the policy is finalized,
reach an agreement on an amount of insurance considered
adequate, and sign a policy in that amount.
While the three choices above are the most common, there are
other valuation options that might better suit your specific
insurance needs. For more information, give your agent a call.
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4. If you're pleased with us,
spread the word! We'll be happy to
give the same great service to all of
your friends and business associates.
Issues with Alcohol
A recent jury award in South Carolina provides
further proof that, if you serve alcohol to an
intoxicated person and that person causes an
accident that injures someone else, you could be
deemed a liable party.
A South Carolina bar has been ordered to pay $3.85
million for contributing to a patron’s intoxication, which
led to an accident that killed a six-year-old child.
Even if you are not in the business of selling alcohol but provide it to guests at functions, you could
be held responsible for resulting injury. Before your next function, consider the following:
Hire a professional service to serve alcohol. Should you choose this option, require proof of
insurance and consult your legal counsel concerning the application of a hold-harmless
agreement with the service.
Review your general liability insurance policy. Many general liability insurance policies will
cover losses resulting from alcohol service, provided you are not in the business of
manufacturing or selling alcohol. Others might not, so review your policy before serving.
Review your commercial umbrella insurance policy. Make sure this policy does not contain
any exclusion for alcohol-related injuries.
E-Commerce Interruption: A Quiet Killer
What plans do you have in place should you lose your primary e-commerce function?
For many business owners, the inability to access a physical workplace due to damage from a
fire, windstorm or other event may not inhibit the business’s ability to earn income. However, a
shutdown of that same business’s e-commerce function would. This begs the question: Why do
so many businesses focus only on insuring lost income due to damage to a physical workplace?
Interruption to a computer network—whether internal or external— caused by a virus, malicious
code, utility shutdown or other reason can hinder earning income. Business owners relying on
online services to collect income for products or services could be left scrambling to find the
source of the issue, find resources to resolve the issue and do everything possible to prevent
customers from taking business elsewhere.
What contingency plans do you have in place should your primary e-commerce function cease
service for any reason? Those plans could include efforts to diagnose and fix the problem, capital
backup to pay for such efforts, reserves to cover basic costs like payroll despite the lost income,
and ways to serve customers during an outage—or at least notify them of the problem and route
them to a backup service portal.
Business interruption insurance that deals with equipment breakdown, a cyber incident or utility
failure is available. The question is, can you get the coverage you need at a price you can
afford? Let us show you your options. There may be an easy solution you like!
COPYRIGHT ©2016. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is understood
that the publishers are not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert advice is required, the
services of a competent professional should be sought. 2/16
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