why auto insurance premiums are increasing

why auto insurance premiums are increasing

The past year has brought many new challenges to the insurance industry. The consistent rise of auto insurance premiums is impossible to ignore— but why are they rising? Here’s why auto insurance premiums are increasing.

distractions behind the wheel

The rise of technology brings a plethora of pros and cons to the insurance field. As reported by The Centers for Disease Control and Prevention (CDC), there are eight deaths a day due to a distracted driver.

They list the three main types of distraction as:

  • “Visual: taking your eyes off the road
  • Manual: taking your hands off the wheel
  • Cognitive: taking your mind off driving.”

The statistics have shown that distracted driving has increased with the influx of devices to be distracted by (think about the 17-inch screen that is now installed in Teslas).

The rise in distractions creates a greater financial risk for insurance companies, hence the rise in auto insurance premiums. Some insurance companies even have a “Distracted Driver Policy” because it has become so common.

The National Safety Council provides a PDF with a sample of a Distracted Driver Policy for reference.

drivers with little experience

The hiring market is unpredictable right now. According to The American Trucking Association, “without substantial action, by 2030 and at current trends, the driver shortage could grow to 160,000.”

What does this mean? Well, nearly “one million new drivers will need to be trained and hired in the next decade to keep pace with increasing consumer demand and an aging workforce.”

With the lack of drivers, there is a sense of desperation to find anyone to help transport supplies. In turn, this has resulted in a higher risk of accidents because of less experienced drivers handling large machinery and vehicles, and you guessed it, increased auto insurance premiums as a result.

repair costs

Insurance aside, most vehicles have become more expensive to maintain because inflation has affected many sectors in the auto industry. 

This is partially due to the rise in smart cars that are equipped with special technology and advanced parts that are expensive to replace and repair. The combination of technology advancements and the stress on chain distributors the past year has created the perfect storm. As a result, more control is given to car shops and manufacturers to raise prices on parts and labor. This includes a higher premium and insurance needed for more expensive auto installations and parts. 

injury costs

The rise in accidents has caused a rise in auto insurance premiums. CNN reports that last year around 38,680 persons died in car accidents – the highest number since 2007.

There are different types of car accidents, and not all of them are chargeable. Forbes lists a “chargeable accident” as a collision that causes damage to property (like another car or a fence) or causes injury or death.

Most reports and claims of a car accident that causes injury increase an insurance premium.

involved attorneys

The rise of claims has created a higher demand for attorneys involved in the vehicle accident sector. With the increase in specific claims, more people have representation.

Has your insurance broker asked for a copy of your contract recently? Don’t worry, they’re not being nosy! Your broker is just going the extra mile to understand the terms and scope of an agreement.

Learn more about why your broker needs a copy of your contract in order to issue a certificate on the benchmark commercial insurance blog.

how to educate your team to avoid email scams

how to educate your team to avoid email scams

In 2019, The FBI’s Internet Crime Complaint Center (IC3) reported that the losses for business email scams sat at $1.7 billion.

With cybersecurity risk at an all-time high, there’s no room for a financial blow because of a malicious link clicked through an email.

One of the first steps to avoid email phishing is educating your team on what red flags to look out for. Here are some tips to include when training your employees about phishing.

what is phishing?

Email phishing is a cyberattack where the hacker targets email to gain sensitive information. This is often performed by the hacker masking themselves as a trusted source or business.

Typically the hacker starts the scam by researching on the internet. There is not much that can be done to avoid someone researching you, but there are ways to avoid getting directly scammed (and avoid huge financial losses as a company as a result).

signs of a bec scam

The FBI lists the main ways a Business Email Compromise (BEC) occurs in a company. These identifiers should all be well-known for employees so that it’s an automatic recognition of a scam. The list includes: 

  • Spoof websites and email addresses
  • Spear phishing emails (when an email is posed from a trusted sender)
  • Use of malicious software that can gather information
  • False invoice
  • Data theft
  • Account compromise
  • Attorney impersonation
  • And more

red flags in an email

There are many red flags to educate your team on. Some of the common features of phishing emails include:

  • “Too Good to be True” offers are exactly what it sounds like. One example is the common scheme of “you’ve won a FREE iPhone!” 
  • “Sense of Urgency” is when a deal or offer is going to expire soon. This is often seen in the subject line of an email claiming to be URGENT. 
  • “Hyperlinks” are often used in phishing schemes. The hyperlinks can often look like a real website but have one letter off.
  • “Attachments” are also something to look out for. A great recommendation is to not click on any attachments or unexpected emails.
  • “Unusual Sender” might seem obvious, but it’s important to update your team to avoid clicking on emails that aren’t internally sent or from clients.

additional training requirements

Aside from informing your team about the common email phishing emails listed above, setting clear policies and expectations is crucial. 

The policies that can be set in place should eliminate your company’s risk for a security breach of information. For example, the policy on sharing passwords and credit card information should be bulletproof to hackers. 

If your company is already performing larger cybersecurity training due to the rise of scams, then adding additional security training on BEC scams will be easier to include.

An additional note: Social media is generally a part of most businesses. If an employee is providing too much information about the office, the hackers can pick up on schedules and patterns of the company.

If an employee is posting frequently about the company having a retreat or week off, this is making the hacker’s jobs way easier. 

Do you know how much it costs to insure your business? Learn some of the main factors that will affect the cost to insure your business on our blog. 

AB 5 & Workers' Compensation Explained

ab 5 & workers’ compensation explained

We partnered with John Milikowsky, the founder and managing attorney of Milikowsky Tax Law to discuss Assembly Bill 5 and how it correlates with Workers’ Compensation. John is a seasoned tax lawyer who understands the ins and outs of government agency audits. Through his experience working with hundreds of EDD, CSLB, and IRS audit cases, John and his team of experts understand how to protect business owners in the face of an audit. Get to know the Milikowsky Tax Law office here.  

what does assembly bill 5 mean for companies?

Assembly Bill 5 (AB-5) is a federal law that passed in January 2020 that introduced further regulations for independent contractor classification.  Previously, there was only the 13-Factor Borello Test. Under AB-5, the ABC test is used to set the standard for worker classification. All workers are considered W-2 employees unless they meet all three of the following criteria according to the California Labor Workforce Development Agency:  

  1. “The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
  2. The worker performs work that is outside the usual course of the hiring entity’s business; and
  3. The worker is customarily engaged in an independently established trade occupation or business of the same nature that is involved in the work performed.” 

Let’s unpack the three criteria. First, when it comes to your 1099 independent contractors, employers cannot hold control over workers. Examples of areas businesses can control workers, intentionally or unintentionally include: 

  • Uniforms 
  • Your company’s business card with your independent contractor’s name on it
  • Requiring the independent contractor work specific hours 
  • Accepting money from a customer and then paying your contractor 

Generally, if you employ an independent contractor, they function as an independent business. The worker has the freedom to work when they choose, and how they choose within the parameters of their contractual agreement. Independent contractors should receive money directly from the third party that is receiving their services. 

The second element is that your company’s services and the services of independent contractors should be different. If an independent contractor is providing your core services, the second element cannot be met. 

For example, let’s say you own a plumbing company that hires both W-2 and independent contractor plumbers. They both provide the same services and do not meet the second criteria of the ABC test. However, a residential plumbing company hired for a commercial job may decide to hire a specialized commercial plumber. Since the residential plumbing company typically does not do commercial work, they might qualify under the second element of the ABC test to distinguish between what the contractor does and what your company does. 

The third element is that the contractor has to have an independent trade or business. The EDD generally requires a business license, and potentially an EIN number. Having a corporation or an LLC is a great added bonus. The independent contractor should have entrepreneurial risk in their company to show that they have an independent business. 

what does that mean for workers’ compensation? 

Workers’ compensation carriers are indifferent to the distinction between an independent contractor and a W-2 employee. As far as they’re concerned, if you’re on a job and your work product is under the control of the insured, then that employee is a covered employee. 

This process typically comes to light during the annual audit at the end of the workers’ compensation policy. The insurance company will ask, “do you hire independent contractors?” If the answer is yes, and that independent contractor cannot prove that they have their own workers’ comp coverage, then the carrier will pay heavy fines and penalties for that exposure because ultimately, there’s coverage there.

what happens when a workers’ compensation carrier finds an independent contractor? 

In the construction industry, when a workers’ compensation carrier identifies an independent contractor, the Contractor and State Licensing Board (CSLB), EDD, Labor Commissioner, and OSHA, will descend upon a job site and start asking questions of everyone on site. If the government agency finds people who are independent contractors without a license, that potentially becomes a criminal issue, and also a rise for an EDD audit. 

if a carrier finds a misclassification on the stateside for payroll, how does that affect the audit on the workers’ comp side?

At that point, the workers’ compensation policy auditor will determine the value of compensation paid to that supposed independent contractor. They then will charge the employer the premium for the wages related to that relationship. This occurs whether or not the employer or policyholder knew that their policy was not limited to covering only W-2 employees. If any insured or uninsured independent contractors wanted to, they could make claims on the employing companies’ workers’ compensation policy.

This creates liability for the hiring company. Business owners who have any doubts about whether a worker is an independent contractor or not should be sure to do their research and make sure that they meet the three elements of the ABC test. As previously advised, limit your liability because anybody can file a claim against your business. The workers’ compensation carrier then would have to make that determination. Learn more about what you need to know about changes in tax codes here

Do You Need an Employee Manual Review? (Yes!)

do you need an employee manual review? (yes!)

What Is an Employee Manual Review?

An employee manual is not only a resource for employees but also for an employer as well. An employee manual is a book or online PDF containing employees’ and employers’ guidelines to reference for all job-related information.

Although an employee handbook is given and reviewed once a new hire is onboarded, the document should be reviewed at least annually. 

This is generally a large document, as it will cover topics including: 

  • Equal Opportunity Guidelines
  • Company Culture
  • Paid Time Off (PTO) and Holiday Time
  • Job Expectations
  • A Company Mission Statement
  • Company Policies
  • Work Performance Expectations
  • Who to Contact if an Issue Arises

Surprisingly, employee handbooks are not required by law. They are, however, very helpful and highly recommended.

Most HR representatives consider the employer’s handbook as an active document. This means that throughout the year when policies and employment laws change, notes can be added and reviewed.

It is important to note that creating and maintaining employee manuals within California is much more difficult than in other states as policies and guidelines are constantly being adjusted. It’s almost impossible to keep up, which is why adding notes and using the employee handbook as an active document is a helpful practice to follow.

Why Review?

Most HR representatives consider the employer’s handbook as an active document. This means that throughout the year when policies and general guidelines change, notes can be added and reviewed. Again, an employee handbook is most helpful when acting as an active document because the handbook will stay perfectly to date without annual revisions. 

As an employer, it can be helpful to see the employee handbook as a resource, not just another box to check off the list. It can be a helpful tool because there is a high level of information to keep track of. If an employee gets called to jury duty, for example, do they receive paid time off? Check the employee handbook.

What to Avoid

If you have an employee handbook from a past business, don’t copy and paste this document for another business. This doesn’t work for many reasons. Each company has a unique set of guidelines that apply to its employee handbook.

Ideally, an employee handbook should be written by an HR consultant or professional, or an employment attorney. Although there are tools that can help employers build a handbook, it’s more consistent to collaborate with a professional. 

As a new hire is onboarded, there are many documents that can get lost in emails. One suggestion as an employer is to review the handbook in-person—open it and highlight some of the main topics. Consider creating an infographic with the top 10 ideas and questions that employees might have as a reference.

Do you have questions about our program development and options available? Our team is ready to answer your questions and provide you with information about insurance and building a beneficial partnership with us. Call Benchmark today at 800-283-0622 or send us a message.

Thursday August 19 2021

inland marine

does my business need inland marine coverage?

From the name, it might seem that Inland Marine insurance is only required for businesses who ship goods over bodies of water but in fact, that is not the case.  Since the great fire of London in 1666, inland marine insurance has grown from its original purpose of covering all goods and property in transport across bodies of water to simply mean coverage of commercial properties in any form of transit.

In fact, inland marine insurance does not even cover boating transportation. Boating transport is covered under ocean marine insurance. Inland marine covers damage to business property while in transport, or while in your care, custody, or control during transport.

Inland marine policies became known as “floaters” since the property covered was originally floating on water. However, now the coverage is applied to all property in transport.

Some of the areas of coverage frequently included in an inland marine policy include fire, lightning, windstorm, flood, earthquake, landslide, theft, collision, derailment, overturn of the transporting vehicle, and bridge collapse.

Bailees and those companies which work off-site, or move products typically need commercial inland marine insurance coverage.  For example, if you are in the construction business you may want to round out your coverage with inland marine coverage to ensure that equipment in transit is covered.  Additionally, those business owners in the renewable energy or R&D space can use inland marine coverage to protect communication towers, solar, wind, and other renewable energy equipment.

Take the following case story for example as it highlights a business that was frequently transporting goods as bailees from one destination to another.

“Colaprico Collectibles” is a multinational auction house that handles the goods of high-end estates around the world.  In late 2017 while in transit from Russia to the US the truck carrying highly valued goods was damaged in a collision on its way to the auction house in NYC.  While the majority of the goods were undamaged, 3 large pieces were partially damaged.  Without the specific coverage provided by their inland marine coverage, they or their consignees could have lost large sums of money.  With inland marine coverage, their claim was handled and both parties were made whole.  The coverage itself was a drop in the bucket compared to the value of the goods that were damaged and they were appreciative that their coverage was well-planned and specific to their unique industry and needs.

Some of the additional areas of coverage in the inland marine insurance space include the following.  While this overview gives a glimpse into the types of industries and risks that are covered by inland marine, this coverage is less regulated and therefore, can cover a wider variety of risks than many other more highly regulated areas of insurance.

  • Shipping Motor truck cargo Rolling stock Warehouse and logistics
  • Agriculture and landscaping
 Computer 
Electronic
 Entertainment
 Flooring
 Medical
 Party and special event
 Sales and rental dealers
  • Collectibles Exhibitions Fine arts Musical instruments Patterns and dies Signs Vending machines

 

personal cyber

cyber security coverage in the age of ransomware

A cyber attack incident will occur every 11 seconds in 2021… Ensure you’re covered

Cyber attacks are on the rise in 2021.  According to Cybersecurity Ventures, a cyber attack will occur every 11 seconds in 2021, nearly twice the rate in 2019.  With that being said, it’s important to ensure your business is covered in case a cyber attack does occur, with cyber security liability coverage. 

Who needs cyber liability insurance?

While some general liability and professional liability policies include some basic cyber liability coverage, some additional coverage may be needed. Businesses that store personally identifiable information (PII) for both employees and customers should have additional coverage. 

Cyber breaches can occur in a multitude of ways. They can be executed through phishing emails, viruses, ransomware, or other malicious attempts to corrupt your data. The best way to begin protecting your data is to establish internal safeguards with cyber security. This includes strong passwords, monitoring electronic device access, and access to different software tools. 

What exactly does cyber liability insurance cover?

There are a few types of coverage within a cyber liability policy. First-party coverage and third-party coverage to help ensure you’re covered for whatever comes your way.

First-party coverage includes coverage for immediate expenses related to the cyber breach. These expenses typically include:

  • The cost of notifying employees and the public
  • Marketing and public relations response that protect the company’s reputation
  • Extortion money
  • Repairing the damage to software and hardware
  • The cost of business interruption and missed income while operations are suspended
  • Other ancillary costs

On the other hand, third-party coverage helps a company defend against lawsuits and legal claims. There are a few lawsuits that can occur. Privacy lawsuits are covered under this coverage in case you have breached the privacy of customers and employees.

Regulatory body fines are covered, as well as media liability claims (copyright infringement, libel, or slander). Lastly, breach of contract and negligence claims are covered with third-party coverage.

While it’s important to understand what is covered with cyber liability insurance, it’s also important to understand what’s not covered.

It’s important to understand what all of your insurance coverage does not cover. As when you look to ensure you are protected with cyber security, you can see where your vulnerabilities may lie. Some common exclusions from cyber liability insurance include:

  • Bodily injury and property damage claims: Any claims of bodily injury or property damage will not be included in your cyber liability insurance policy. However, a general liability policy will cover these claims.
  • Criminal activity: Cyber liability insurance policies do not cover fraud, robbery, employee theft, and other crimes. However commercial crime insurance will cover these claims.
  • Social engineering: A cyber liability insurance policy will not cover when employees are tricked into transferring company funds. This can be an additional add-on with some cyber liability plans.
  • Loss of property: When an employee loses a piece of property, like a phone or computer, cyber liability will not cover the cost. However, a commercial property insurance policy will. 

Like many businesses, you likely utilize computers, and other electronic devices to send, receive, and store electronic data. Data is one of your most valuable assets. It’s important to ensure that you protect that data and the cost of losing it when you can. Contact Roger today to see how you can protect your cyber assets today.

 

claims process

commercial claims – what you need to know

No one wants to go through a commercial insurance claim.

Whatever the situation, it is never fun to have to file an insurance claim.  Necessarily, something has gone wrong.  But knowing what to expect and having a team who works with you to support and advocate for you is all the difference.

Depending on the type of loss your business experiences, the duties and responsibilities required by you in a claim can be numerous. It is important to remember that your broker-agent can assist you throughout the claims process. In many cases your broker-agent will be your first point of contact when filing an insurance claim. Whether you contact your broker-agent or the insurance company directly when filing a claim, you are required under the insurance contract to report all claims in a timely manner. This allows the insurance company to process the claim and conduct its investigation as quickly as possible.

Since commercial claims tend to be more complex, it is important for the company to assess the claim quickly in order to mitigate any situation that may have the potential for increased loss. This is especially crucial in liability claims, as there can be high dollar amounts at stake. When claims are not controlled early in the claims process, litigation from third parties can arise. Litigation can be expensive and often ends in a judgment much higher than if an experienced claim representative had handled the claim from the beginning. This is why it is necessary to turn all claims over to your broker-agent or insurance company as soon as you are made aware of the claim. Trying to handle the claim yourself violates your duties under the insurance contract and can be costly to you in the long run.

Most business owners are aware that claims loss experience is reflected in the rating formula and directly affects premium costs. By following the duties outlined in your contract regarding claims, you are a partner with your insurance company in helping to keep claims costs to a minimum, which in turn helps keep your premium costs down.

The better your claims experience, the greater modification allowed to lower your premium. When you first receive your policy, contact your broker-agent to discuss all the duties and responsibilities required by you under the contract.

Deductible

The deductible on a commercial policy is the part of the loss that you pay up-front before your insurance company pays a claim. Based on the amount of the deductible as stated in your policy, the insurance company will pay up to the limits of the policy when a claim is covered after you have provided the deductible payment. The type of deductible utilized in a commercial policy is referred to as an “absolute dollar amount.” The higher the absolute dollar amount (deductible), the lower your premium.

Loss Control

One of the most effective ways to decrease the frequency and potential severity of claims is through loss prevention and control. Most commercial insurance companies have their own loss prevention departments; however, some insurers rely upon contracted loss prevention services. Usually, loss control services are built into higher risk, higher premium accounts as a part of the entire package of insurance. If you are a small business owner, you can still benefit from proven loss control methods. Based on your type of business exposure, your broker-agent can offer suggestions on how to best control the loss exposures common to your business. The broker-agent along with your account underwriter, claims representative, and loss control representative can create an entire program of loss prevention that includes specific modifications and procedures to follow that can help create a safer workplace. These programs can even include an employee safety program that incorporates awards and suggestions. Getting your employees involved in loss control makes good business sense. Creating a safe work environment benefits everyone. When proven loss control methods are implemented, the public and workers are better protected, and your premium costs go down as your loss experience

benchmark commercial insurance architecture

does your coverage match your business size?

The types and amount of insurance that you need for your small business are based on several factors. Primarily:  the number of employees, your total sales and annual revenue, your industry (some industries have a higher need for insurance), the State in which you live, and of course your tolerance for risk.

Home-based businesses

These days many businesses are home-based.  Traditionally, however, a home-based business was defined as one with no full time employees and revenues under .5 million dollars.

Just because the business is small, doesn’t mean it shouldn’t be insured.  According to the U.S. Small Business Administration (SBA), more than half of American businesses are home-based. Homeowners insurance alone will not necessarily cover your home-based business against business property loss or liability.

Small businesses

Do you know all of your employees by name? Does your business make less than 5 million dollars annually?  Some insurers consider businesses with 50 or fewer employees to be small businesses. The SBA defines a small business concern as one that is independently owned and operated, is organized for profit, and is not dominant in its field.

A common small business policy—called a BOP, for “Business Owners Policy”—is usually available only for businesses with fewer than 100 employees and revenues of up to about $5 million or less. While you can purchase customized insurance to cover your specific type of business, insurers offer standardized small business policies that enable you to affordably protect your company against the most common risks.

Medium-sized businesses

If your small business is growing and thriving, you may have graduated into a medium-sized company. Again, definitions of business sizes vary, but if your company has between 50 and 1,000 employees with annual revenues between $10 million and $1 billion, you can seek insurance as a medium-sized business. Insurers have special policies designed specifically for this segment that may combine property and liability coverage. If your medium-sized business owns especially expensive equipment or has locations in more than one state, you may also want to seek special customized policies.

Large businesses

Large businesses have at least 500 employees; revenue requirements are dependent on the type of business.

Large, complex businesses have multi-million dollar risks, and commercial insurance is customized to meet a company’s specific needs. Large companies even have employees dedicated to analyzing the potential causes of accidents or loss, recommending and implementing preventive measures, and devising plans to minimize costs and damage should a loss occur, including the purchase of insurance and managing claims. This practice is known as risk management. If you run a small business, you generally have to act as your own risk manager. Sometimes a small business will hire a risk management consultant. If you’re unsure, ask an insurance professional to help assess the risk for businesses of all sizes.