In most aspects of life there exists insurance to help in protecting assets in the case of damage or unfortunate loss. When it comes to farms this is no exception; however, the typical business insurance or ordinary car insurance will not meet the bar when it comes to insuring the farm and tractors. It is advisable that if your business is farming or you are thinking about purchasing a weekend farm getaway that you consult with an insurance professional with experience in farming.
There is a famous saying that “knowing is half the battle,” so our goal is to review a few areas that have specific insurance needs. This way when you meet with an insurance professional you can get on the right track. As a general rule farm property is covered under specifically qualified policies to include farm machinery, livestock, farm trailers and even irrigation equipment. Depending on the coverage there may even be automatic coverage for new equipment up to $100,000 for the first 60 days – similar to a new born child being under the parents insurance until the child is individually registered. There are other types of equipment such as antennas and satellite radio devices typical on farms in extremely rural areas. In addition to coverage for these types of items there are other optional coverages that should be considered.
Depending on the exact type of farm things like chicken coups, silos, fences and feed racks have the ability to be covered under a farm policy. For those living in the city the details of a chicken farm and the equipment to keep it functioning are just not a reality. However for the farmer, these are essential aspects to their daily life. This is precisely why insurance companies carefully address all the details involved in farm life. Additional coverages are even defined as to the type of use of the equipment, because farm life can vary drastically.
One of our insurance professionals will review your farm and equipment to explain all available coverages and its intricacies.
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One of the most troublesome environmental issues is water shortage. As the population increases, industries develop, and weather patterns change, the issues of water shortage become more prevalent. The agricultural industry requires a tremendous amount of water to operate and it is in the top industries for water consumption. Everyone knows that crops require soil, sun, and water. In some cases of hydroponics soil in not even utilized, it is solely reliant on water. Since an industry is hinged upon the variable of the existence of water, the insurance industry has developed a form of protection for those in the agriculture industry – agricultural insurance.
Crops are the predominate victim in a water shortage and depending on the crop will determine the sensitive to water issues. Farmers should immediately discuss the specifics of crop insurance to account for potential water shortage issues. Typically, the farmer must select the percentage of the crops covered and at a specific price point. A common range can vary from 50% – 85% of a crop. In order to meet necessary criteria for each crop, there are guidelines specific to time of year, type of crop, and deadlines to applying to obtaining coverage. This is a simple process, but because there are many intricacies it is always advisable to connect with and insurance expert to help navigate individual needs.
The reason for the many variations and deadline surrounding crops is directly connected to the federal laws and regulations that spearheaded the industry to protect farmers and food protection in the United States. Some of the information that is weighed when obtaining the right coverage for water shortage risk are things like the type of harvest, production history, yield, and environmental history. These factors are important in determining type of policy and when reporting of water shortage damage. A specific accounting and log of crop damage is vital to maintaining in line with an agricultural policy, due to the already sensitive nature of crops.
Don’t make the mistake at going at this alone. Contact one of our agents today.
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To be in business means to sign contracts – and every one of those contracts requires that you agree to provide some guarantee. A common question is “will my insurance back me up on those guarantees?”
The answer can be complicated. For one thing, it’s essential to determine if the contract is one of the types that your Liability coverage specifies as an “insured contract.” Although other policy provisions can also apply (such as exclusions and limitations), if a particular contract isn’t considered an “insured contract,” look no further – your policy won’t apply.
Standard Commercial Liability policies usually define “insured contracts” to include:
- Leases.
- Sidetrack agreements (made with a railroad if you have tracks crossing your property).
- Easement or license agreements.
- Obligations required by ordinance to indemnify a municipality.
- Elevator maintenance agreements.
Almost all Liability policies also include a broader provision that covers contracts under which your businesses assume the “tort liability” of another party for bodily injury or property damage. “Tort liability” is defined as liability that would exist in the absence of a contract or agreement. In other words, the liability you’re assuming must arise from the negligence of the other party to the contract. If the injured person can sue this other party without reference to any contract or agreement (“tort liability”), then a contract under which your business agrees to assume this liability will be considered “insured.”
Although it’s important, the definition of “insured contract” is only the starting point for determining if Liability coverage applies. Instead of assuming that your policy covers your contractual agreements, give one of our specialists a call. We can review the specific provisions of your current coverage as they might apply to your proposed contract and advise you about possible gaps.
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Most medium-sized and smaller companies protect themselves against their property and liability exposures by purchasing Commercial insurance, while large corporations and government agencies prefer to use some type of alternative risk financing. However, businesses of any size can employ this tool to enjoy such benefits as improved cash flow and a lower total cost of risk.
Insurers have developed a number of colorful terms for alternative risk financing techniques. These methods include:
- Excess insurance
- Reinsurance
- Guaranteed cost
- Retrospective rating
- Large deductible
- Self-insurance
- Captive insurance
Using alternative risk financing requires management discipline and a willingness to commit resources. Size isn’t that important. The main criterion is losses. As a rule of thumb, alternative risk financing makes sense for a business whose claims have these characteristics: (1) Reasonable predictability; (2) moderate volatility; (3) minimal exposure to a catastrophic event; and (4) high frequency and low severity. For example, a large hotel or bank would probably experience a number of small Workers Compensation claims, but few large claims.
Casualty insurance products (such as Workers Comp, General Liability, and Auto Liability) are the best candidates for alternative risk financing. Because Comp and Liability claims tend to be paid over one to five years or more, insurance companies that write these policies generate substantial investment income on their premium reserves until losses are paid fully. By using alternative risk financing, your company can invest your funds elsewhere, rather than paying premiums.
Our specialists would be happy to review your business and see if alternative risk financing make sense for you.
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If you’re using “contingent workers” — on a part-time, temporary, or contract basis — be aware that these employees face a greater risk of occupational injuries and illness. According to the National Institute for Occupational Safety & Health (NIOSH) reasons for this higher vulnerability include the tendency to outsource more hazardous jobs, lack of experience and familiarity with operations in a dangerous workplace, inadequate protective equipment, and limited access to such preventive measures as medical screening programs. The chances are that temporary workers have a wide variety of experience levels (due to high turnover) or have had the benefit of formal safety programs.
Also, bear in mind that even though the safety of contract workers is the legal responsibility of the contractor, the OSHA General Duty Clause could be interpreted to make you responsible for protecting everyone in your workplace. To help meet this obligation, and bolster workplace safety compliance we’d recommend that you take these steps:
- Include safety requirements in the contract, even if only to state that the contractor must comply with OSHA requirements. If the contractor doesn’t follow safety rules, you can force compliance or stop work for breach of contract.
- Set the safety compliance ground rules up front, during orientation or before they start work.
- Share accountability. Although an accident caused by a contract worker might not be your legal responsibility, it’s still your problem. Don’t leave safety compliance problems for the contractor to solve alone.
- Offer assistance. Explain all hazardous conditions or processes during the initial project orientation and stress any rules and restrictions, such as hot-work permit requirements, lockout/tagout, and confined spaces situations and needs.
- Document communications with contractors. Give the contractor(s) a document or form to sign when resolving specific safety problems or for conducting inspections.
- Read the OSHA Multi-Employer Citation Policy. OSHA published an enforcement and compliance directive (CPL 02-00-124, December 10, 1999) laying out its citation policy for multi-employer worksites, which includes contractors.
Finally, don’t forget that most contingent workers will only be in your workplace for a relatively short time. This only adds to the urgency of getting them up to speed on your company’s safety policies and practices as quickly as possible.
Contact our office today for more information.
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There are often benefits to middle-market companies emulating their larger counterparts’ risk management examples.
“There is a basic risk management process, methodology that has been around for years,” said Patrick Donnelly, co-leader of U.S. broking at Aon Risk Solutions in Chicago. “But only larger companies have been able to make the investment to create the framework to go through those steps.”
Carol Fox, director of strategic and enterprise risk practice for the Risk & Insurance Management Society Inc. in New York, said it’s critical for midsize firms to focus on how they’re embedding risk management in the organization.
Here are 10 risk management lessons middle-market companies should heed in 2014:
1. Business continuity planning
One of the steps many larger companies have taken that middle-market companies could benefit from is business continuity planning.
“In order to have a good business continuity plan, you really need to understand your business — and that’s inside and out,” said Jim Hedrick, area vice president of business continuity planning at Arthur J. Gallagher & Co. in Cincinnati. “A middle-market company may not have the bandwidth to do that,” he said.
2. Establishing a crisis plan
Hand in hand with the business continuity process is establishing a crisis management plan. A crisis management plan helps drive decision-making when a crisis occurs and helps ensure that information gets to the right people.
3. Testing the crisis plan
A crisis management plan alone isn’t enough; it needs to be regularly tested. “To me, if you don’t test your plans you might as well not have them,” Mr. Hedrick said. “Not only does it test the validity of the plan, but also it’s a terrific training mechanism.”
Testing the plan also helps identify “who should be in your plan and shouldn’t be in your plan,” he said. “Sometimes you have people in these events who just melt down because they can’t handle the stress.”
4. Managing supply chain risks
While the effort can be challenging, large companies have increasingly recognized the need to identify and address supply chain risks. Middle-market companies that haven’t should do so as well, experts say.
Supply chain risk is “the one exposure that I believe has changed significantly since the credit crisis,” said Mark Moreland, executive vice president for strategic consulting at Lockton Cos. L.L.C. in Kansas City, Mo. In trying to squeeze costs out of their supply chains some companies have taken steps to narrow their supply chains, reduce the number of suppliers and change their risk profile in the process, something that must be addressed, he said.
5. Defining a risk appetite
Mid-market companies should develop a clearly defined risk appetite. “This is the one thing that we are trying to do with all our clients and prospects: establishing a very clear risk appetite,” Mr. Moreland said.
“What may happen in a middle-market organization is they believe, “We know what our risk appetite is because we aren’t that large an organization,’” Ms. Fox said. But middle-market companies can find value in having that conversation, clarifying their risks and specifying how much risk they’re willing to assume and how much insurance to buy.
6. Benchmarking risk management performance
The process of defining a risk appetite also could help middle-market companies recognize how they might differ from companies they’re benchmarking their risk management efforts against.
“It allows them to benchmark on areas that are different from just insurance buying,” RIMS’ Ms. Fox said. “It gives them more data points.”
“Benchmarking is always something that clients are interested in. I think the real challenge is to get benchmarking that you can draw clear conclusions from,” Mr. Moreland said.
“Benchmarking is one of those underrated tools that I think midsize companies can use in understanding their risk,” said Mark Moitoso, executive vice president and general manager national accounts casualty at Liberty Mutual Holding Co. Inc. in Boston. “What’s really nirvana in this is it helps them establish goals.”
7. Using captives to self-insure risks
As middle-market companies become more familiar with their risks and their risk appetites, they may choose to retain more risk or find risk financing alternatives and captives can be a useful tool. Middle-market companies are increasingly embracing alternative risk transfer.
“The big growth is with the middle-market companies,” said Karl Huish, president of the Captive Services Division of Artex Risk Solutions Inc. in Mesa, Ariz. “These businesses are recognizing they have exactly the same sorts of risks that the larger companies have, they’re just smaller in size.”
Middle-market companies are starting to use captives both for risks they didn’t previously insure and in financing large-deductible workers compensation, automobile liability, general liability and property programs. And the larger middle-market companies are often doing that through stand-alone captives, while smaller middle-market firms frequently opt for group captives.
8. Addressing cyber risks
With cyber threats cutting across companies of all sizes, middle-market companies also are increasingly aware of the need to address those risks.
When insurers first introduced cyber risk policies, many buyers questioned their value, recognizing the number of incidents that were occurring but not sure about the extent of potential damage, said Patrick Donnelly, co-leader of U.S. broking at Aon Risk Solutions in Chicago. Now nearly every company is recognizing that they have some sort of exposure.
“That’s extended into the middle markets more in the past 18 months or so,” Mr. Donnelly said.
9. Return-to-work efforts
Middle-market companies can also benefit by following larger companies’ example in adopting return-to-work programs. Such programs can produce significant workers compensation savings while allowing injured workers to participate in modified work assignments while they recover from injuries.
10. Continuing education
Middle market companies always can benefit from following many large company risk managers’ lead in looking for continuing education and networking opportunities through organizations like RIMS.
“It’s not just the courses, the workshops, the online webinars, they can benefit from but the conferences and the networking by belonging to an organization,” Ms. Fox explained.
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