Technology creating a real auto safety issue

Driving under the influence has been a problem for several years, but it seems that the influence has changed over those same years.  At first “driving under the influence” pretty much meant that you were drunk while you drive, then with the onslaught of illegal drugs, the drugs became an influence.

Now it seems that there is a new influence that is creating quite a problem and it is texting while driving.  Instead of being intoxicated now then they are intexticated.  To read about this study click here , there are some very sobering statistics.

-Alabama Workers Compensation Challenges

Although Alabama Workers Compensation presents some challenges, it also presents some opportunities as well,  just as long as you know how to approach workers compensation in the State of Alabama.  Alabama is one of the few states in the United States that has a large percentage of the market share of workers compensation premiums in self insured funds.  The proliferation of these funds was brought about as a result of a  lack of availability of Workers Compensation that was experienced during the decade of the 1980’s.

If you talk to “people in the know” the lack of Workers Compensation availability in the 1980’s was brought about many things but there are two main areas of thought.  Some would say that it was brought about by an “out of control” judicial system while others w0uld say that it was brought about by greedy insurance companies.  Whether you believe one side or the other, the fact remains there was a Workers Compensation availability crisis in Alabama during this time.

During the 80’s several different associations and other groups formed Self Insured Funds.  The concept behind the fund was that as a participant in the fund you would share in the surplus’ , or profits of the various funds so you would be motivated to run a safe operation.  The percentage of the surplus that you were able to participate in was based upon several variables.  Some of those variables included profitability of the customer, profitability of the fund itself, adherence to safety programs as well as many other variables. During the 80’s and 90’s the funds were quite successful not only in reducing premiums but also returning the profits of the fund (which are refereed to as dividends) to the fund participants.  The overall reduction in insurance cost was dramatic.  How could this happen you may ask.

• Fund immaturity-  Because the newly formed insurance funds did not have old claims hanging over their head they were able to offer premiums at much lower cost than the traditional insurance company.  Some Workers Compensation claims will stretch out for years.  There has been evidence in recent years that some of the funds have begun to mature.  This is indicated by the  reduction in the gap between what a fund will charge for premiums and what the traditional insurance company will.  Eventually this advantage will disappear if it has not already occurred with some of the funds.
• Insurance Premium Tax- There is a disctinct advantage that the funds have in the State of Alabama and probably will always have,  that being the advantage they have in the insurance premium tax.  The funds are not required to pay the full insurance premium taxes that are required of the insurnace companies.
• Industry Specific Safety-  During the time that the funds have been in existence in the state of Alabama they have for the most part been affiliated with some type of a trade group.  This allowed the insurance funds to structure the funds so that they were homogeneous funds.  In other words they are industry specific.  This allows the association and the fund to produce industry specific safety programs, and do the research into the specific claims to learn how to manage the claims, as well as how to implement safety procedures that can more practically be implemented.
• Association Camaraderie- Because many of the funds are affiliated with some type of  Business Association there is a camaraderie that goes with the association.  Many folks feel an allegiance to the group because of their affiliate with an industry group.  Because of the Association affiliation and other benefits that come as a result of being a part of that group Companies will often choose to participate in the self-insured fund.
• Regulatory Advantage- Insurance Companies are required to submit themselves to the Alabama Department of Insurance for regulation, the Self Insured Funds are not.  The funds are regulated by the Department of Industrial Relations.  If disputes should arise with regard to claims, premium payments, dividend distributions etc., those disputes would be handled by the Deparment of Industrial relations rather than the Deparment of Insurance.  The question is, would they become involved, or would they defer to the Court System.
• Joint and Several agreement-  The funds in Alabama are Joint and Several with regard to the liabilities of the fund participants.  We have the good fortune of having funds that are for the most part well managed.  Although they are well managed Joint and Severabiliy remains a posibility.  Should one of the funds experience financial difficulty, the fund members are jointly, and severally obligated to the remaining liabilities including existing claims and potential future claims.

That brings us to this question,  should I be insured with an Insurance Company, or should I be insured with a self-insured fund?  That’s where you need the advice of someone who works with this issue every day.  If you do not know someone who can guide you through this process, please feel free to give one of our insurance professionals a call.

Ladder Safety Tips

According to the Occupational Safety and Health Administration (OSHA), falls from portable ladders (step, straight, combination and extension) are a leading cause of occupational fatalities and injuries.  The U.S. Consumer Product Safety Commission reports that more than 180,000 people received medical attention in 2006 due to injury from ladder use and 150 people were killed in ladder-related falls.

OSHA provides the following tips for preventing injury or death from improper ladder use:

• Read and follow all labels/markings on the ladder
• Always inspect the ladder prior to using it.  If the ladder is damaged, it must be removed from service and tagged until repaired or discarded
• Use ladders and appropriate accessories (ladder levelers, jacks and hooks) for their designed purposes only.
• Ladder must be free of any slippery material on the rungs, steps or feet.
• Do not use a self-supporting ladder (e.g., step ladder) as a single ladder in a partially closed position.
• Do no use the top step/rung of a ladder as a step/rung unless it was designed for that purpose
• Use a ladder only on a stable and level surface, unless it has been secured (top to bottom) to prevent displacement.
• Do not place a ladder on boxes barrels or other unstable bases to obtain additional height.
• A ladder placed in any location where it can be displaced by another work activities must be secured to prevent displacement, or a barricade must be erected to keep traffic away from the ladder.
• Be sure that all locks on an extension ladder are properly engaged.
• Do not exceed the maximum load rating of a ladder.  Be aware of the ladder’s load rating and of the weight it is supporting, including the weight of any tools or equipment.

Best Practices Coalition for Underground Work

Contractors often find themselves digging, and that can pose a threat to underground pipes and cables, as well as to the foundation stability of nearby facilities, utilities and buildings.  Improper underground work can cause enormously costly damages to the surrounding environment as well an area that could be as small as a few square feet or as broad as a city street.  Depending on the nature of the damages, cleanup could take weeks and cause job delays and massive expenses that, in some cases are not covered by insurance.

To aid in damage prevention, experts representing several groups, including excavators, locators, public works, road builders and insurance companies, formed the Common Ground Alliance (CGA).  The CGA’s mission is to encourage best practices and protect underground facilities in North America from harm.  The organization conducts research and provides information for its members as well as the general public on protection best practices.

The CGA offers a downloadable best-practices guide that is broken down into eight chapters, each focusing on a difference specialty in underground work.  It covers planning and design, location and marking, excavation, mapping, compliance and more.  Get a copy or find more information at www.commongroundalliance.com.

Audits Seek Misclassified Workers

Trouble is on the way for companies that misclassify workers as independent contractors rather than employees.  According tothe “Kiplinger Tax Letter”, the IRS is equipped with an “arsenal” of tools it will use to pinpoint audit leads.

Most states are now working with the IRS to share payroll tax examination data. This cooperation is expected to result in thousands of additional audit referrals.  New document-matching programs will assist regulators in audits and lessen the change of a no-change examination.  For example, an electronic matching system will help the IRS spot businesses issuing 1099 forms with payments of $25,000 or more to at least five workers with no alternative source of income.

Employees reporting will also help the IRS.  Form 8919 can be filed by taxpayers along with their tax returns to inform the IRS that they believe they have been misclassified by employers as contractors.  The component of the tax code that permits filers of 8919 forms to avoid paying self-employment tax could encourage workers to make reports.

Misclassification can result in penalties and additional audit premium due to your workers compensation and general liability insurance.  For more information on proper classification of contractors and employees, visit www.irs.gov

Reduce Heavy Equipment Theft

Theft of heavy equipment continues to plague the construction industry. The National Equipment

Register (NER) offers the following tips to combat this billion‐dollar crime industry:

* Fence in all job sites and secure gates with locks and heavy chains.

*Install and frequently test lighting at the storage site to be sure it is sufficient to light both the job site

and its surrounding areas/exterior grounds.

*Use mechanical means to secure heavy machinery. Examples include ignition and hydraulic bypasses,

as well as drive‐control and trailer‐hitch locks.

*Store smaller equipment in lockable containers.

*Keep smaller or more valuable equipment between larger pieces of secured, idle equipment, thus

making its removal more difficult.

*Invest in a GPS system for heavy equipment to aid in location if theft occurs.

It is also important to be sure all equipment is adequately insured in case it is stolen. Some of the

measures suggested above as well as other loss‐control measures may qualify you for premium

discount.

For more information on insuring heavy equipment, call our service team today

Theft of heavy equipment continues to plague the construction industry. The National Equipment Register (NER) offers the following tips to combat this billion‐dollar crime industry:

• Fence in all job sites and secure gates with locks and heavy chains.
• Install and frequently test lighting at the storage site to be sure it is sufficient to light both the job site and its surrounding areas/exterior grounds.
• Use mechanical means to secure heavy machinery. Examples include ignition and hydraulic bypasses, as well as drive‐control and trailer‐hitch locks.
• Store smaller equipment in lockable containers.
• Keep smaller or more valuable equipment between larger pieces of secured, idle equipment, thus making its removal more difficult.
• Invest in a GPS system for heavy equipment to aid in location if theft occurs.

It is also important to be sure all equipment is adequately insured in case it is stolen. Some of the measures suggested above as well as other loss‐control measures may qualify you for premium discount.

For more information on insuring heavy equipment, call our service team today

On the Hook for the Builders Defense?

If you are a subcontractor, it is likely you have signed a contract at some time in which you agreed to “indemnify and save the builder harmless” (or similar language to the same effect) against claims for damages emanating from your work.  The contract probably also contained language by which you agreed to defend the builder from such claims.  If the contract provides for defense of the General Contractor, you will probably be on the hook for the General Contractor’s defense cost regardless of proof of your negligence.

It is important to note that the interpretation of the contractual language may vary by jurisdiction; however, subcontractors must be prepared.  The good news is that most general liability insurance policies will cover expenses you agree to in an “insured contract,” which a majority of subcontractor agreements are.  Nonetheless, it is important to review all potential contractual obligations with your insurance coverage in mind so you don’t find that you are not covered when a claim is filed.

Consult with our insurance specialist to find policy options that can reduce your risk exposure for indemnity and defense cost.

-Why do I need Vacant Lot Insurance

Much of a contractor’s insurance needs focus on general liability, workers compensation and auto.  Property insurance concerns tend to focus on tools and equipment and, in some cases, office and warehouse space.  A discussion that is often overlooked is what insurance concerns accompany vacant property.

Many contractors own vacant property with the intent of using  it as a storage yard or for possible future development.  Often the property sits idle for months or years, serving as the occassional spillover storage area for waste, supplies or old equipment.  Due to the nature of the property kept there, many of the lots are often unsecured.

This type of property can pose a serious liability risk if someone ventures onto the lot and is injured or if materials stored there cause damage to an adjacent property or violate environmental regulations.  In any case, the owner of the property might be held responsible for cost arising out of bodily injury, property damage and litigation defense.

Some general liability policies automatically provide insurance for a vacant lot.  With others, its relatively simple to add the location to an existing policy.  other insurance companies may be more restrictive and require a separate policy.

If you own or are considering purchasing a lot, no matter what the current or intended use, call our service team, and we can help you with your insurance options.

-Inspect the Equipment Your Subs Bring to the Job

Contractors performing any aspect of a job for you represent you to the project owner, general contractor and anyone else with whom you may be working on the job site.  Often, subcontractors will provide their own equipment to conduct the service for which they have been hired.  Old, worn or faulty equipment can lead to costly delays and serious accident that do significant bodily injury or property damage – accidents for which you might share in damages liability if you hired the sub.

How do you verify that the equipment being used by the sub is capable of performing the job without  flaw?  Do you personally inspect the equipment?  Do you conduct a safety walk-through with the contractors so they can show you how the equipment works and allow you the opportunity to look for obvious signs of danger, such as unguarded motors, missing bolts or cracked support systems?

It may be impossible to determine if a piece of equipment with which you are unfamiliar is in a condition worth of use during the project.  But having a consistent inspection method in place for every piece of equipment can help identify obvious issues, as well as let the sub know that poorly maintained equipment is unacceptable.

For more information on the value of this practice and for ideas on how to go about establishing an inspection program, visit www.osha.gov .

-Look Again at Those Certificates of Insurance

As economic conditions worsen, it is important for you to take a second look at the insurance coverage maintained by independent contractors, subcontractors and other partners with whom you normally do business.

Contractors struggling with a growing level of inactivity may attempt to save money by changing insurance companies, rolling back insurance coverage or canceling policies.  This could have a direct impact on your business if the insurance they are currently maintaining does not satisfy a contractual obligation or, worse puts your firm’s liability insurance at risk.

If there is a contractual obligation to maintain specific insurance coverage, consider issuing a reminder to your subs and partners that any changes to their insurance must be communicated to you for the purposes of obtaining updated certificates of insurance as well as additional insured endorsements.

For more information, call our service team today.

Next month we are pareparing an article on fradulently issued certificates of insurance which is becoming more of a problem in recent days.