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Commercial Insurance Blog

Hurricane Season Preparation Guide

Posted by Geoffrey Gordon on 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.

Tags: hurricane prep, storm prep checklist

What is Contractual Risk Transfer?

Posted by Geoffrey Gordon on Thu, Aug 30, 2018 @ 11:25 AM

Contractual risk transfer is a risk strategy to reduce the cost of risk for a business by transferring the cost of certain

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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.

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 blog)

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 Subrogaation blog)

Many B2B contract 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 good specialist, we probably know a good one. Don't hesitate to ask if you need specialized help.

For our video on the topic, click below:

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

New 2018 Massachusetts regulations for most commercial trucks

Posted by Geoffrey Gordon on 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 on 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Directors & Officers Risk for Non-Profit Organizations

Posted by Jeff Helm on Thu, Jun 28, 2018 @ 04:58 PM

Directors and Officers coverage (D&O) may be as important to non-profit companies as it for other (for-profit) entities. People who volunteer their time and talent often want to know that their "volunteer" efforts don't end up in court...so knowing the landscape is important.

The most common areas of exposure for directors and officers include

  • employment practices
  • conflicts of interest
  • government enforcements
  • fiduciary duty breaches

The first, employment practices, is similar to that found in the for-profit world. This includes legal action arising out of discrimination claims, unfair termination, sexual harassment claims and similar employer/employee conflicts. The problem with many non profits is focus; many are too small to have

D&O Gordon Boardroom Pichuman resources departments or even an HR risk awareness. These can be mitigated with an attention to this area; more on things to do and what to watch out for is available here.  

Conflicts of interest are more common in the non-profit area than in private business because profit for the business often passes directly to its owners. Not so here. When an officer or director puts their personal interests ahead of the organization, that's a violation of trust and when big enough, can result in financial or reputational loss.

Government enforcement includes provisions from laws, such as Sarbanes Oxley (Sarbox), which required many new obligations on both public and private companies. This law pertains to publicly held organizations, but two provisions apply everywhere:  the Whistle Blower Law which protects people who blow the whistle on bad actors; and document retention rules. Clearly deleting documents which might be found embarrassing or evidential still fall under document retention rules (you can't just shred at will). Other government enforcement includes the requirement to file tax forms. The 990N for small organizations (less than $50,000 in revenue) and the 990 for larger ones.

Fiduciary duty breaches include: duty of care (working responsibly); duty of loyalty (closely related to conflict of interest); and duty of obedience (such as filing tax forms or working within Sarbox regulations).   

There is some statutory immunity provided for directors and officers, particularly if unpaid. And many homeowners policies and personal umbrella policies provide liability protections for individual participating in these non-remunerated positions. But fraud and gross negligence will rarely get this coverage, nor legal immunity.

One solution for directors and officers is an offer of indemnification:  where the organization agrees to cover or indemnify for legal expenses including judgments.  This is usually funded by D&O insurance. 

To discuss and quantify the cost of Directors & Officers insurance further, call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252.  Prefer to type versus talk? Use the form to the left of this blog.

Legal & technical disclaimer:  Any advice provided here is not legal advice. Statements or advice are based on our experience in risk control, mitigation and transfer, and is believed to be effective and valid when provided. All legal or contractual wording, including any suggestions offered in a legal context, should be reviewed by qualified legal counsel. 

 

Tags: directors and officers, directors and officers insurance, d&o, non-profit companies, insurance for nonprofits

Lowering your Insurance Costs

Posted by Val Feeney on Thu, Jun 28, 2018 @ 11:55 AM

Selling your product to a consumer is your forte. Selling the risk of your operations to underwriters is ours. Having done this for years, we know that establishing a coherent risk program before going to the insurance market can make a huge difference in your short term (insurance) and long term (labor and fleet costs, especially) risk costs .  

 

manufacturing pic 

Utilizing an independent insurance broker provides the manufacturing company with an expert advocate when purchasing property and liability insurance. Presenting what you do and how you do it through a risk lens can affect what carriers say "yes," the limits and types of coverage available to you, and of course price.  Here's how we do it...

An in-person visit affords important information that is useful when negotiating with an underwriter. Walking through your plant and learning your company's history, as told from your lips, paints a narrative that can be shared. Experience gives us insight into what an underwriter will be looking for in terms of exposures, hazards, safety measures and employee training. Some areas risk professionals focus on are different from yours:  the year built, number of stories, construction material, the presence of a sprinkler system, and the roof type of and in your building; the square footage of your parking lot; your neighbors (no kidding); and the age and capacity of electrical systems will all affect an underwriter's appetite.

Loss history on paper provides only numbers, no context. Knowing the circumstances behind losses and measures taken to minimize recurrence tell another story.  We love to talk about continuous improvement with underwriters.  Does your focus on continuous improvement include safety?

Workers Compensation requires information about employee accidents. When we recommend training courses for staff, or filters for new hires, this can mean the difference between a "yes" and a "no" in terms of competitive carrier willingness to offer customized insurance.

There are other factors common to risk in the manufacturing sector:

Intellectual property including patents, formulas and designs has great value. Are these adequately protected?

If you have a retail component, payment card information may include a data breach exposure. Data theft is a real thing and steps taken to protect yourself can mean the difference between moving on from a hack attempt and having to close your doors. Educating employees on confidential data, and establishing best practices with your IT partners, can drive down the cost of this risk substantially (for more, download our Cyber Whitepaper).

Transporting your product and transporting your salespeople is another area to focus on. Running prospective employees' driving records under a "conditional offer" can help ensure fewer accidents, affecting both fleet and labor costs.

Finally, you may have exposures to other risk such as service interruption or product recalls. Talking through your daily operations with us, along with any perceived vulnerabilities, allows us to tailor the most fitting coverage while simultaneously assuring the company underwriter you are a good risk.

To discuss your business with a Gordon Atlantic Insurance professional, please call us toll free at 1-800-649-3252. Prefer to type versus talk? Use the form at the left of this blog.

 

 

Tags: should I use an agent, risk program, insurance, insurance cost, selling, buying, manufacturing, property insurance, general liability insurance, cyber insurance

Cannabis Dispensary Roll Out Will be Slow

Posted by Jeff Helm on Wed, Jun 27, 2018 @ 01:32 PM

Massachusetts is still looking for a bank to step up as a participant in the fledgling recreational marijuana industry. July 1st is the expected start date, but the roll out may be much slower than Legal Cannabis Picanticipated. According to Globe Staff writer Dan Adams, "industry executives predict that fewer than a dozen retail pot shops will open in July."

The main issue is that marijuana remains illegal under federal laws, preventing banks that operate across state lines from accepting customers involved in the cannabis business. At its core, it's still nearly impossible to get a checking account if you're in this industry. This financial constraint is holding many nascent companies up.

This will dishearten consumers who have been waiting since 2016 when voters elected to legalize recreational cannabis. 

It's not only banks who are still turned off from aligning with dispensaries...most likely the first to get licensing. Town were recently given additional time to sort out zoning by-laws in a ruling by Attorney General Maura Healy. Town are taking careful, measured steps in finalizing these zoning by-laws, or are "demanding large payments from prospective operators in exchange for signing so called host community agreements." (Boston Globe, 06/17/2018)

Financial hurdles and zoning restrictions aside, research into delivery of cannabis products, including edible delivery, tinctures and oils for muscle therapy, and many other innovations are moving quickly. We are in a period similar, in many ways, to post-prohibition alcohol. Sorting out the rules will take more time, but cannabis products will be here in Massachusetts before you know it.

 

 

Tags: cannabis license, cannabis business insurance, marijuana, bank

What is a Waiver of Subrogation?

Posted by Geoffrey Gordon on Thu, Jun 07, 2018 @ 03:57 PM

In one of our previous blogs, What is an Additional Insured?, we discussed additional insureds in contracting.   When subcontractors work for general contractors they need to show that they carry their own insurance so if something goes wrong, and sub’s insurance company will ultimately be paying first.   The GC will ask be an 'Additional Insured' to get coverage under the sub’s insurance program.   In addition, the general contractor will often require a 'Waiver of Subrogation' clause.  This waiver gives up rights of the subcontractor insurance program, so usually comes with a cost.  This is classic Contractual Risk Transfer at work.

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Often required by larger, mopre sophisticated contractors, the Waiver of Subrogation shifts costs on any event entirely to the subcontrtactor: regardless of fault.   Suppose an electrical subcontractor hired by a GC is hurt on a job site due to negligence of the hiring contractor.  Without a waiver in place, the worker's compensation company will demand reimbursement through the general contractor’s liability insurance in a process called Subrogation.  

If a Waiver of Subrogation is in place, the electrician's insurer agrees NOT go after the GC's insurance, even if he's negligent, completely at fault.  The worker's compensation claim goes entirely on the electrician’s insurance history, increasing  the experience modification factor, and thus their future costs.   Nothing fair about that.

But the general contractor has shifted that risk off his own program, onto the subcontractor's, in a tactic known broadly as contractual risk transfer.  Because your insurance company knows it can't recover against a responsible party, they commonly charge more when granted.   

For a video on the topic that appears in BusinessTown, click to watch the vid.

 

If you have a question regarding your own personal insurance circumstances, please call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252.  Prefer to type versus talk?  Use the form to the left of this blog for a return phone call or email.

For other pertinent commercial insurance topics, check out our commercial insurance blog


Geoff Gordon

Tags: insurance, contractors, Business, insurance waiver, commercial, construction, waiver, subrogation, additional, insured, certificate

What is an Additional Insured?

Posted by Geoffrey Gordon on Thu, Jun 07, 2018 @ 01:50 PM

When subcontractors perform work for general contractors, they usually need to show the general contractor that they carry their own insurance.  The same principle is true with resellers of someone else's product and in other close business relationships.  In addition to expecting a Certificate of Insurance showing insurance, the contractor often asks to be named as an Additional Insured (AI) in order to be protected in case of an accident or other loss and potential claim. This is a common tactic of contractual risk transfer.

An Additional Insured is a person or entity that enjoys the benefits of being insured under someone else's insurance policy, in addition to whoever purchased the policy (the Named Insured).

As an example, say a General Contractor (GC) hires an electrician on a project they're doing, as a subcontractor.  The GC will require the electrician to name the GC as an 'Additional Insured' on his or her General Liability policy.  In the event of a claim that happens because of something the electrician did (or didn't do), the electrician’s insurance now includes the general contractor in its defense coverage, plus judgments.   If the electrician caused the damage, the GC keeps the loss off his or her own claims experience. lowering their overall cost of risk.  

Continuing with the above scenario, when we are the electrician’s broker, we often discourage granting Additional Insured status to others since you're now sharing your limits with others.  Getting AI status is good, granting it to others, not so much.  That said, this kind of contractual risk transfer is normal business practice; the CG knows he can find a subcontractor who will grant AI status to anyone willing to hire them.


Why should the electrician push back (if he can)?  Suppose there are two judgments for $600,000 after an incident and the electrician has a $1,000,000 policy; the electrician runs out of insurance when the claim reaches a million dollars...but the GC can still turn to his own policy.   Bear in mind, when we are insuring general contractors, we encourage them to get Additional Insured status from everyone who comes on a job site.  After all, each should be held responsible for their own work, and the general contractor wants to shift costs and exposure downstream whenever possible.

For other commercial insurance topics relevant to your business practices, check out other topics on our commercial insurance blog.  If you have a specific question or concern, please call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252.  


Geoff Gordon

Tags: Additional Insured, general liability insurance, Certificate of Insurance, insurance claim, contractual risk transfer

What is Coinsurance on a Commercial Property Policy?

Posted by Rachel Tierney on Mon, Jun 04, 2018 @ 02:19 PM

Coinsurance clauses are found in a wide range of insurance policies, but serve varying purposes depending on the area of insurance. When used in the context of property insurance, coinsurance is defined as "the percentage of the value of the property that a policyholder is required to insure." Coinsurance clauses are included in commercial property policies in order to ascertain that policyholders are purchasing a sufficient limit of insurance, and penalizes those who do not. If the policyholder fails to purchase an adequate amount of the value for their insured property, then their claim payment is reduced and they may not be fully covered in the event of a disaster. When this happens, the insurer compares the policy’s limit at the time of the loss against the amount required by the coinsurance percentage to calculate what will be paid out on the claim.
 
Let's illustrate this in an example:
 
Say a building is valued at $1,000,000 and the insurance policy contains an 80% coinsurance clause. This clause would specify the policyholder insures the building for $800,000. If the policyholder were to only purchase $600,000, they would be subject to penalty in the case of a property loss.
 
Continuing the above scenario, if only $600,000 of property limit is purchased and a fire occurs that causes $300,000 in damage repair, the claim payout would be calculated by dividing the actual insured amount ($600,000) by the required insured amount ($800,000), or 75%.  That percentage is then multiplied against the $300,000 loss, so the policyholder would only receive $225,000 minus any applicable deductible. Insuring the property at an amount less than the coinsurance clause percentage detracts from the claim payout.
 
Coinsurance Pic 2
 
Coinsurance does not affect you until a loss is suffered, but it is essential to be aware of the inclusion of this clause when purchasing a policy as it will directly impact the coverage you receive in the event of a disaster.
 
To discuss this topic further call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252.  Prefer to type versus talk?  Use the form at the left of this blog.
 
Geoff Gordon has a great whiteboard video on this topic that you can view by clicking HERE!

 

Tags: commercial property, coinsurance, insurance claim, property damage, coinsurance percentage

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