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Commercial Insurance Blog

What is the ERM-14 form in Massachusetts?

Posted by Geoffrey Gordon

Tue, Sep 03, 2019 @ 03:44 PM

What is the ERM-14 form in Massachusetts?

The ERM-14 form is a form required by the Massachusetts Workers Compensation Board whenever there is a change in an entity’s name, structure or ownership.   The form discloses owners of an entity, such as members of an LLC, major shareholders (5% voting interest) or partners.  It is used whenever there is a change in ownership, including a sale or transfer of assets.

Download our fillable version of the ERM-14
picture of ERM-14

 

 

 

 

 

 

 

 

 

or download the form from the Commonwealth of MA here:
https://www.wcribma.org/mass/ToolsAndServices/UnderwritingToolsandForms/ApplicationsForms/MA_ERM_Form_2017.pdf

 

Why does the Workers Comp Board make you disclose all this?

Workers compensation insurance is one of the most sensitive lines of insurance to past experience.  Before this form was used, an owner of a company with a poor history of worker safety (and increasing workers compensation costs) could transfer assets of one company into another to start fresh, with no bad experience to increase those costs.  Particularly in higher risk industries, the difference in companies “experience modification factor” can have a significant impact on costs.  So transferring assets to another company to get a fresh start made sense, when this was legal.

The purpose of the ERM-14 form is to keep track of significant shareholders movement from entity to entity.  An officer from a high workers compensation experience modification factor (the mod) now may bring that high mod to his or her new company. 

How hard is it to fill out the form?

That depends on the simplicity or complexity of ownership., but we won’t sugar-coat it.  It’s intrusive and looks for lots of entity structure details that may be tedious to find.   One thing we do know: if an officer / shareholder of a company with bad workers comp experience becomes an officer / shareholder of another company, the experience may follow from one entity to another.

Aside from entity gymnastics, how else can a company reduce workers compensation costs?

Workers comp is the most experience-sensitive line of insurance.  At Gordon Atlantic we can project the impact of claims, or no claims, on future workers comp costs, providing a compelling economic message for instilling a culture of safety.  We work closely with companies on industry specific risk reduction and safety programs.  A safe workplace is a competitive workplace, because lower workers comp costs mean lower labor costs relative you your peers, which translate to pricing advantages.

INSURANCE QUESTION?

Tags: ERM-14, ERM-14 MA, ERM, ERM14, ERM-14 MA workers comp, ERM14 MA entity change

When does my builders risk coverage end?

Posted by Natalie DiCecca

Thu, Jul 11, 2019 @ 12:25 PM

Most insurance policies have a clear beginning and end date (also called the effective and expiration dates). Builder’s Risk coverage, however, can be different.  Builder’s Risk coverage is placed for construction operations to cover a building during the course of construction.  Built into the pricing is the changing value, recognizing that early in the project, a million dollar finished building has only $250,000 in it; as the project continues and more labor and materials are added, the value increases accordingly.   Unlike many other insurance policies, in addition to the effective dates, there are 5 other situations in which insurance coverage can end:

  1. The project is accepted by the purchaser

Often, the builder is responsible for the insurance – the builder’s risk policy - during construction.  Once the purchaser closes the deal with the builder, it becomes their responsibility.

  1. Insurable Interest ceases

Insurable interest is similar to and includes ownership as in the first example.  Other insurable interest could include debtors on the property, such as a bank.  When the bank changes, the former bank no longer has an ‘insurable interest’; if they’re holding the builder’s risk policy, someone else – with an insurable interest, such as a replacement bank - needs to place coverage.

  1. The project is abandoned without intent to complete

If the builder walks away from the project for whatever reason, the insurance company has an escape path too.   Abandoned buildings pose a greater risk for vandalism, arson and other problems, so insurance companies have a way to avoid these.  But people with remaining interests may need to place their own coverage if this happens.

  1. The project has been completed for 30 days

Once a occupancy permit or similar completion confirmation has been granted, a builder’s risk policy is no longer the right kind of insurance.  Either the building or the owner can place property coverage easily and usually less expensively, as a replacement.

  1. The covered property has been put to its intended use

Similar to completion example above, once construction is done and the building begins its intended use as a factory, retail or other operation, different insurance (property) makes more sense, and is often less expensive anyway. 

If any of the above applies, regardless of the dates on the policy, the builders risk coverage ceases.  There are always other ways to insure these properties, depending on the construction phase or new use.   If you have questions about your current builders risk policy, or need to obtain cost estimates for a new project, please contact us.

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Tags: commercial insurance, builders risk coverage, builders insruance

Did we accidentally void our crime policy?

Posted by Natalie DiCecca

Tue, Jul 09, 2019 @ 12:13 PM

Crime insurance policies, part of what is broadly known as fidelity coverage, include many kinds of theft, often of money, and can include theft by employees as well as external sources like burglary.  That means an employer can file a claim for loss of money, securities, or property resulting directly from theft committed by an employee – acting alone or in collusion with someone else.  However, policies won’t cover employees that committed a theft prior to a policy taking effect, and this provision may have ripple effects.  Here’s a tragic example:

John owns a small retail shop. In 2010, his employee Mary stole $100 from the register and John found out.  Mary confessed, paid John back, and promised never to do that again.  In 2019, Mary stole $10,000 of inventory over several months.  John fired Mary and reported the claim to his carrier.  The carrier denied the claim because John knew of the first theft, prior to the policy period, and decided to keep Mary on staff.  Crime policies include an exclusion for any employees who have stolen from the employer before.  On its face, this makes sense: insurance companies don’t want to provide financial backup for employees known to have stolen from their employers in the past.    By allowing Mary to remain employed, John unintentionally voided his crime policy for coverage to any future acts by Mary.

Exclusions are important details to know before placing insurance coverage so that management can take steps to mitigate losses that insurance won’t cover.  Mary should have been let go after the 2010 event, or certainly once John decided to buy crime coverage for employee theft.

If you have questions about your current crime policy, or want to discuss which business risks you want to insure, contact us.

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Tags: crime prevention, crime, employee theft, employee theft insurance

The top 5 insurance claims during summer months

Posted by Gordon Atlantic Staff

Thu, Jun 27, 2019 @ 09:26 AM

BBQ Grill Fires- Cooking out with friends and family can be a great time, but can turn catastrophic in an instant if you aren’t cautious. To reduce the risk of a cookout calamity, never place your grill near flammables and never leave it unattended. If using a charcoal grill, make sure the embers are completely extinguished before leaving it.

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Boating Accidents- Owning a boat is a huge pleasure, but also a huge responsibility. Boating accidents increase during the summer months for obvious reasons, but what this means for you is that each time you get on the water, you run the risk of having a mechanical break down, collision with another boat, or hitting an object(s) or people. Before you hit the waters, make sure your boat is in good mechanical running order, reacquaint yourself on boat safety rules/regulations, AND make sure you have the adequate Massachusetts boat insurance protection that you need.

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Car Accidents- Summertime travel plans typically involve spending more time on the road in your car. What this means is an increase in the number of auto accidents/incidents on the highways during the summer months. To increase your safety and reduce your risk to this type of exposure, make sure you stay on top of your car maintenance to avoid an overheated vehicle, tire blowout, or impact with another vehicle. Also, review your level of auto insurance coverage with your Florida independent insurance agent for your own safety and protection should you be involved in a car accident.

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Drownings- There is a direct correlation between the soaring temperature outside and the number of pool drownings. During the summer months, more people are swimming which can turn disastrous if certain precautions are not taken. If you are a pool owner, make sure your gates are always locked and inaccessible so that neighbors/kids cannot slip into your backyard and jump into the pool. Being the owner of a pool comes with a lot of accountability so make sure you do the responsible thing and have adequate Massachusetts homeowners insurance protection. Our independent insurance agency is here to assist you so that should a terrible accident like this happen, you will be adequately protected.

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Home Burglary and Break-Ins- During the summer months, people tend to vacation more, leaving their homes unoccupied. An unoccupied home is a target for burglars and that is when break-ins are more likely to occur. You can reduce the risk of this happening to your home by following some easy tips, such as installing security alarm system, motion detection lights, and having neighbors collect any mail, newspapers or packages left at the door.

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To discuss your exposure with an experienced professional at Gordon Atlantic Insurance, please call our office at (800)-649-3252.  If you have a quick question to pose, click below!HAVE A QUESTION?

Tags: home insurance, car insurance, boat insurance

What is Commercial Umbrella Insurance?

Posted by Val Feeney

Wed, May 22, 2019 @ 11:38 AM

Most businesses have several different insurance policies in place to protect themselves, from General Liability to Workers Compensation to Business Auto Insurance, to name a few.  

What happens in the event a claim quickly exhausts, or spends, the coverage limit on an insurance policy?  What happens next?  For example, a company vehicle causes an accident that severely injures multiple victims, and the $1,000,000 limit on the auto policy is just not enough.  Or, a product ships out with unknown problems and customers are injured, and the liability limits are quickly absorbed by lawsuits. gavel image

If the business has a commercial umbrella policy, once the limits on a primary policy are exhausted, the umbrella kicks in, covering the remainder of the claim, up to the umbrella policy limits.  These start at $1 Million and increase in $1 million increments, to 3, 5, 10 and higher limits.  If the business does not have a commercial umbrella policy, and the primary (known as “underlying”) policy is exhausted, the business itself is on the hook for the remainder of the claim, including defense costs, exposing the business to potential bankruptcy. 

The commercial umbrella is the last line of defense for a business during a very severe & large claim.  The standard limits in most policies will cover the majority of claims a business may face, but even standard policies can be inadequate in severe situations.  Insurance is about when really bad things happen unexpectedly.

It is important that the business works with risk or insurance professionals to meet integration requirements between underlying and umbrella policies   The underlying policies must have certain minimum limits of coverage in place in order to have the proper transition, without gaps, to ensure a cohesive and integrated program. 

In addition, umbrellas come in different flavors, including form-following, or excess over specific policies only, topics broader and deeper than can be covered here.

For a quick overview, click the video below.

 

 

Umbrella coverage provides tremendous value to a business, and may be the insurance backstop to keep the business alive after a bad claim. 

Speak with us today about your commercial umbrella needs

INSURANCE QUESTION?

Tags: commericial insurance, umbrella policy

Insuring Your Home for Weekly or Temporary Rentals

Posted by Val Feeney

Tue, May 21, 2019 @ 02:51 PM

Insuring Your Home for Weekly or Temporary Rentals

Perhaps you have a second home in a beach side destination, or near a ski resort.  Maybe your home is near a stadium that is hosting a big game or event that people from all over the world will be traveling to attend. Many people are turning to short term rentals to make extra income from their homes. 

Online platforms such as Airbnb, Vrbo, HomeAway, and many others make it easy to rent out your home online and make supplemental income.  Whether it’s for a night, a weekend, or longer, renting your home online has never been easier. 

Renting your home may be easy, but it’s important to understand the liability ramifications in doing so.  The online platforms are not responsible for any injuries or damages that may take place at your home while it is rented out.  That is the responsibility of the homeowner.  What if a short term renter accidentally starts a fire and damages the home?  What if a short term renter slips and falls in the home? 

Most insurance companies have decided that their policies will not cover short term rentals.  Meaning, if you do not speak to your agent or insurance company prior to renting out your home, you may not have any insurance protection in the event something goes wrong. 

Further, when you first purchased your homeowners, condo, or secondary home insurance policy, you may have signed an application that stated the house was to be occupied by the owner (you), and not tenants. 

Many states, including Massachusetts, have filed regulation that requires short term rentals to carry certain insurance coverage that the standard homeowners & condo policy may not provide.   

Before you place your home on a short term rental site, speak with an insurance agent.  Knowing the landscape and having proper insurance will let you earn that extra income while being protected if something does goes wrong. 

INSURANCE QUESTION?

Tags: homeowner policy, rental

Hurricane Season Preparation Guide

Posted by Geoffrey Gordon

Thu, Sep 27, 2018 @ 10:19 AM

A storm is coming. What to do?

Natural disasters and extreme weather events bang our homes and community infrastructure so critical to our way of life. And they're going to continue to happen so being prepared by following a few simple steps can make a huge difference between being inconvenienced, or being overwhelmed. In this blog we will break down our suggestions with a timeline: before, during and after.

So before anything else, make sure you have a...

GO BAG

Preparation for the unexpected begins with an escape plan. For natural disasters, part of that plan is a Survival Kit; a group of portable items packed and ready. It should contain the following:

  • Three days of canned or foil-sealed, non-perishable food
  • Can opener, either a standalone or even better, part of a utility tool such as a Leatherman.
  • First aid kit and manual
  • Portable radio and/or laptop or tablet
  • Flashlights and battery illumination
  • Extra (AA/AAA) batteries
  • Smart phone or tablet battery charger; good for a couple full charges
  • Bottled water in sealed plastic containers; 1 gallon/person for three days
  • Prescription medicines; at least a one week supply
  • Personal toiletry kit 
  • Sealed pet food for your pet(s)
  • Extra clothing and blankets
  • Cell phone, cash and credit/debit cards (best kept on your person)

PRIOR TO THE STORM

  • For tropical storms, know the difference between a hurricane watch and a hurricane warning. A hurricane watch means that a hurricane may arrive in 24 to 36 hours (check your Go Bag).  A hurricane warning means that a hurricane will arrive even sooner, as in less than 24 hours.
  • Plan your evacuation route in advance of the storm. Expect heavy traffic. If your family is in different places, select a meeting place.
  • If near the shore, close storm shutters and board up windows.
  • Stock up on drinking water and several days of non-perishable foods.  Foods should be edible without heating (i.e. tuna fish, protein bars and nutritional supplements). 
  • Have a supply of batteries, flashlights, and a portable radio in good working condition
  • Check your fire extinguishers for location and pressure in case you need them during or after the storm.
  • Test your generator if you have one.
  • Review how to shut off utilities – water valve, gas main, and electrical panel - with qualified family members.
  • Secure all outdoor furniture or move inside
  • Fuel your car in case you must leave immediately.

Inside your home, check that doors and windows are closed and locked. Outside your home be sure to bring in garbage cans, bicycles, furniture and grills.

Stay tuned in to the news/weather stations so you are aware of updates, changes to evacuation plans, and any State of Emergency situations affecting your town.


DURING THE STORM

  • Listen to the radio or TV while it lasts for important storm information and instructions.
  • On your smartphone or tablet, monitor weather intensity.  Our favorites for this area are wunderground.com and weather.com. But be realistic about battery usage.
  • If you must evacuate, leave as soon as possible and alert someone outside of the storm area where you will be.
  • Keep windows and doors securely shut during the storm. Windows open to high winds can literally cause the roof to blow off.
  • If at home, stay inside and away from windows, skylights and glass doors. Do not go outside, even if the weather appears to have calmed. The "eye" of the storm can pass quickly, leaving you outside when strong winds resume.
  • While phones still work, check in with vulnerable neighbors or friends to keep them calm and assured.

 

AFTER THE STORM

  • Inspect your property for damage. Wear protective clothing and be cautious as debris may be scattered around the property.
  • If you have any claims to report, contact Gordon Atlantic by calling (781)-659-2262 or visit http://www.agordon.com/claim to report to your carrier directly.

 

MITIGATION

  • Make any necessary temporary repairs to secure your property. Tarp over openings in roofs and windows.  Do it yourself if qualified, or hire a contractor if not. Here are some we've worked with: http://www.agordon.com/home-repair-service-providers
  • In case water still manages to get into your house by means of wind or flood, move your rugs and drapes off the floor, as wet fabric can lead to mold growth.
  • When the weather dries out, open windows and doors and run fans to dry everything; if you have air conditioning or dehumidifiers AND power, run these also for additional drying. Water is the enemy whenever it penetrates the house.
For more, visit our hurricane resources page including videos, checklists, and other resources, click here.

By taking these precautions, you reduce your risk of injury and damage. An ounce of prevention is worth a pound of cure.

INSURANCE QUESTION?

Tags: storm prep checklist, hurricane prep

What is Contractual Risk Transfer?

Posted by Geoffrey Gordon

Thu, Aug 30, 2018 @ 11:25 AM

Contractual risk transfer is a business strategy designed to reduce the cost of risk by transferring certain risks to another entity's risk program. This transfer takes many forms, but is common when a hiring company engages a sub-contractor, or when one entity rents or leases property to another and wants the lessee, or renter, to be responsible while they have use and control of it. We'll address a few of the more common ones here.

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A common insurance requirement is the Additional Insured. A hiring company will often ask the subcontractor to name the hiring company as an additional insured, so if something goes wrong, the sub contractor's insurance program will take care of the claim. By off-loading these from the hiring company's risk program, they transfer the cost too.  (More here in our Additional Insured page)

Landlords will often ask tenants to name them as additional insureds, so that if a guest of the tenant is injured, the tenant's insurance takes care of the claim. Again, the cost has been transferred.

Another is "waiver of subrogation." Subrogation is the process whereby insurance companies go after each other based on who was ultimately responsible for a loss. A simple example is when my fleet insurance company pays a collision claim, then goes after the company of the driver that actually caused the accident. Agreeing to waiver of subrogation means that the subcontractor's insurance cannot go after a hiring contractor's insurance, even if they are responsible for whatever happened. If an electrician's employee is hurt at an unsafe contractor's work site, the claim still goes on the electrician's experience, not the responsible contractor's.  (More here in our Waiver of Subrogation page)

Many B2B contracts include "hold harmless" and "agree to indemnify" language, which are corollaries to the insurance provisions described above. For deeper details on these legal terms, always consult an attorney. Gordon Atlantic networks broadly with other professionals, including construction attorneys, contract specialists, employment practices attorneys and litigators. If you need a specialist, we usually know a good one. Don't hesitate to ask if you need specialized help, and particularly on legal matters.

For our video on this topic, click below:

 

INSURANCE QUESTION?

Tags: waiver of subrogation, Additional Insured, subcontractors, contractor, independent contractor, contractual risk transfer

New 2018 Massachusetts regulations for most commercial trucks

Posted by Geoffrey Gordon

Wed, Aug 29, 2018 @ 12:02 PM

The Registry of Motor Vehicles has announced a new regulation {540 CMR 2.22(1)} that will affect MOST commercial vehicles, effective September 1, 2018… (but NOT including private passenger vehicles).  This is for trucks used in business:  Just about all of them.  There are two levels of new requirements, based on GVW:

Vehicles over 2000 lbs GVW, carrying property, MUST

Display the owner’s / company’s name on the truck, plainly visible, on both sides OR front and rear, in permanent letters that contrast sharply in color with the background on which the letters are placed, legible during daylight hours from a distance of 50 feet while the motor truck is stationary.  You really have to show your name clearly.

Vehicles with 10,001 GVW or more; OR

  • are used in the transportation of hazardous materials in a quantity requiring placarding; OR
  • are designed to transport more than 15 passengers, including the driver, used in intrastate commerce in Massachusetts...

Must obtain and display a United States Department of Transportation (USDOT) number. 

 Truck

"Display" means permanently marked with a USDOT number assigned in a manner conforming to the provisions of 49 CFR 390.21

You can apply for a US DOT number here: https://www.fmcsa.dot.gov/  and Federal phone assistance is available from the Federal Motor Carrier Safety Administration (FMCSA) at 1-800-832-5660.

Penalties for failing to comply with either of these new regs may result in fines and placing the vehicle "Out-of-Service".  We don't know if this really means they'll tow it, but act as if they can.  

These regs apply even if your company is operating only intrastate, meaning you conduct business only within Massachusetts; also applies if you operate interstate, conducting business in other states.  For either, you must obtain your DOT number directly online.

There are exceptions for farmers transporting their own produce, in state, and plenty of other details. 

For other details,here is the MASS GOV link to the new regulation:   https://www.mass.gov/files/documents/2018/03/14/540cmr2.pdf

 

HAVE A QUESTION?

Tags: fleet, regulation, MA vehicle regs

Startups and Insurance

Posted by Val Feeney

Mon, Jul 09, 2018 @ 04:28 PM

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No matter how amazing your business idea may be, startups are inherently risky. Securing insurance for your great idea may prove to be a heavy lifting event, too. Many startups in today’s business environment don't end up making it, which is why insurance companies are much more hesitant to try and work with a business with no proven track record, and no guarantee of existing in the near future. Both carriers as well as brokers prefer to develop long term relationships with those they insure, and so the uncertainty that accompanies new businesses is often a deal breaker. Or, it results in insurance companies charging more for these newer businesses who have yet to figure out how they are going to manage and control risk costs.

So how can you make your startup business attractive to an underwriter?

It is important to show good credentials. Share information about your successes and provide detailed information about your business plan. A thorough plan outlining how you intend to address various challenges and obstacles, and ultimately find success, is an effective way to communicate to underwriters that your business has reduced risk and high potential.

Additionally, always tell the truth. Tell an accurate story and provide truthful, non-misleading information on your company website or when communicating with underwriters. A good underwriter will do their research, so honesty is the best policy if you want insurers to be willing to take on your startup. 

Lastly, to develop an insurance program for your business, work with a professional who has worked with other startups in order to get other risk management advice beyond insurance. Learning how to manage and minimize risk across the board will make your business more attractive to risk-averse underwriters, and the premium charged will then hopefully reflect your risk navigation skill set.

Prefer to hear an explanation? Watch the video below as Geoff Gordon explains the steps you can take for the best chance of getting your startup business insured! If you have a question regarding your personal situation, use the form at the left of this blog for return call or email. Want to get straight to talking? Call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252.

 

 

 

INSURANCE QUESTION?

Tags: startup, insurance program, underwriter, new business, fledgling business

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