“You’re Fired!”

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Being fired can be a traumatic experience for an employee – and also for the employer if there are repercussions from the event. The process of letting an employee go should be well thought out and the reason for termination documented as much as possible. Wrongful termination can be a costly backlash to a Firm and it is hard to defend against because the evidence is often subjective. The reason for a termination may be justified such as incompetence, bad work habits, or the person may no longer be needed. The retaliation from the employee could be in the form of alleged discrimination or even harassment. The charge of sexual harassment is most insidious since it is difficult to defend and disprove. Often these cases are settled even if the charge is bogus. Businesses can protect themselves from the allegation of wrongful termination through the purchase of Employment Practices liability Insurance. This coverage is especially important for Firms that primarily have clerical personnel and where turnover may be frequent. However, any business is vulnerable and should consider purchasing insurance. Many employment litigation cases are settled-often for high amounts and therefore the defense cost element of the insurance program is critical. My advice would be to have a competent labor attorney as an ongoing resource to help prevent any unpleasantness resulting from a firing. Early counseling on a prospective firing would be much less expensive than defending an actual employment lawsuit. Legal advice coupled with insurance protection will help take the fear out of saying “you’re fired”.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

Unwanted Interruption

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Most business owners grasp the concept of losing tangible assets through a calamity such as a fire, explosion, windstorm, water, and other unexpected and unwelcome events. Equally important is the protection and preparation for the amount of time lost from a business disruption. Purchasing “business interruption” is just as crucial as insuring buildings and personal property. During the restoration process it is essential that one keep their business going so it will still be there when all the repairs are completed. Factories and manufacturers have to wait out the process since their operations cannot be easily moved. They should purchase a limit sufficient to pay lost profits plus ongoing expenses for the maximum expected down time- to include payroll. Other businesses such as law offices and retail would purchase insurance to provide the “extra expense” to relocate either permanently or temporarily while still operating their businesses as the claim is being settled. Business Interruption for apartment houses would be lost rents. For schools it is tuition. Insurance can handle most of the financial set back but it is also wise to do some preliminary planning as well. Businesses should have a disaster plan that includes key contacts and vendors and emergency procedures. There are enterprises that are ready to provide make shift offices to a disaster victim. An effort should be made to establish mutual agreements with friendly competitors to assist if needed. Any business that fails to plan for a business interruption is planning to fail if they have one.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

Where’s the Necklace?

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No insurance professional ever wants a call from a client who has just lost an expensive piece of jewelry or some other expensive item that was not properly insured. The homeowner policy provides very little coverage for items such as jewelry, watches, furs, money, silver, guns, precious gems, and stamp and coin collections. One can, however, increase the sub limits in the policy or specifically insure the items with a special policy called a “Scheduled Floater” or “Valuable Items Floater”. The floaters are useful because they are “all risk” and there is no deductible to contend with. Most people think that the primary reason to insure a valuable item is for theft. There are many other things that can happen. A stone could fall out of a setting or a ring could slip off a finger or be accidentally flushed down the drain. Someone could spill a glass of wine while admiring your stamp collection or a child could decide to change the color of your mink. Some people schedule items that are not restricted on the homeowner policy such as cameras, musical instruments, and fine arts. Again, the appeal is that there is no deductible and the coverage is broad. Also, by placing a value on the item, you establish its worth up front so there is no dispute if there is a claim. We often advise our clients to consider not insuring valuable items that are inherited. The sentimental value can’t be replaced and since there is no monetary investment, paying a premium to protect them may not be worth it. Since many are using higher deductibles on their homeowner policies to save premium, the use of floaters for singular items of value makes even more sense. By having a scheduled floater, you can relax a little- knowing that if that Rolex you got for Christmas is missing, you will get another one without despair, tears, and regret.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

Windfall

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I am just finishing up on the claims from Hurricane Sandy. A lot of the claims had do with trees and the damage they did-or didn’t do. One of the concepts that homeowners have difficulty with is who is responsible for a fallen tree. If a neighbor’s tree falls on your lawn, fence, or house, it is your responsibility to pay for the repair and/or removal. A tree is considered by the insurance industry as a neutral item of nature and therefore you are not responsible for damage it does to others. The only exception is when the tree in question was obviously rotted and the neighbor knew of the condition. If this were the case the neighbor would be “liable” and obligated to pay the claim. If a tree lands on a “structure” your insurance will pay for the removal of the tree and the damage to the structure. Driveways, walkways, fences, garages, as well as the house are considered structures. If there are trees that just fall on the lawn, there is usually a small amount of compensation (usually $1000) to get rid of it-after the deductible is expended. There is compensation of usually $1000 for lightning strikes even if the tree is left standing. Lightning normally kills the tree and the insurance company wants to encourage its removal. I often get inquiries regarding “preventative maintenance”. “My tree has gotten so big and I think it may fall on the house if there is a storm”. The insurance industry expects people to take care of their house and property that includes appropriate tree trimming. They won’t pay you to possibly avert a claim. A tree is a beautiful thing but costly to maintain and dispose of. In our early history the tall majestic trees were cut and sold to the British for use as masts on the warships. If a tree happened to fall on its own, the owner could keep it for his own use-hence the derivation of the word “windfall”.

The Price is Right

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On occasion I get complaints from my clients about the cost of homeowner insurance and they ask that I shop around for a better price. I tell them I will look into their premium but I also remind them that homeowner insurance policies are not a commodity. It is not like buying a bag of potatoes where the product is homogeneous and easily discernible.

There are many homeowner insurance companies with varying degrees of premium. if you look long enough, you will find one that is a comparative bargain -but at what price?, pardon the pun. What is behind that piece of paper that seemingly is available at an attractive cost? Are there hidden exclusions and sub limits of coverage? Is the carrier experienced in homeowner claims? Do they get a good grade from consumer reporting agencies? Will they let you use a contractor of your choosing in the event of a major fire? Will the replacement materials allowed be the same as what was lost or ones of “similar” quality?

Most people will concede that their home is their most valuable asset. it should be protected by an insurance company that is prepared to restore it properly. The premium charged should be a fair one. If you are insured by an insurance carrier known for their reliability, fairness, and attention to detail in settling claims, the price that you will pay for the policy will be the “right price”.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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Beware of the Fine Print!

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I have written in previous articles about the need to become familiar with one’s insurance policy. I don’t expect everyone  to read the document cover to cover but it is important to at least review the exclusions and limitations as well as the limits provided. A good insurance professional will alert you to many of the important restrictions but as the old saying goes “two heads are better than one”in any review.. In the homeowner policy be aware of the listing of sub-limits for jewelry, furs, silver, guns. coins, and other similar items. Note that there is no liability protection for businesses even if they are conducted in the home. Flood and earthquake are excluded but can be purchased independently.Your auto policy won’t do you any good if you rent a car in Europe and take particular note of the importance of uninsured/under-insured motorist protection in the auto policy. Yacht polices are particularly diverse in coverage-especially in the definition of what is determined to be a “latent defect”. Insurance documents are tricky and hard to read. Don’t be shy in directing questions to your insurance representative who hopefully is knowledgeable-and available.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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It Takes Two to Tango!

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In one of the cases I worked on as a consultant/expert witness, the expert for the other side stated that insureds don’t usually read their policies and therefore the agent/broker is responsible for explaining and ultimately any misunderstandings regarding the insurance coverage. This is nonsense in my opinion. The insurance mechanism is a collaborative effort. The insurance professional provides the product and the expertise that goes with it. The client, in turn, is responsible for providing information and insights into exposure as well as familiarizing themselves with the coverage and limits of the policy. The insured cannot just acquiesce and expect the insurance broker to take care the whole matter. The insurance purchaser is the one that has the understanding of his or her business or personal insurance needs- and has to take the process seriously and have a dialogue with their insurance representative. Failure to do this may result in gaps or inadequate coverage and more times than not it is not the fault of the broker but rather the disinterest of the client. Both parties have to go to the dance floor in designing and implementing a logical need based insurance program.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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