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workers’ compensation in the hybrid workforce

workers’ compensation in the hybrid workforce: your complete guide

Over the past two years, more employees have become comfortable with working remotely. The bottom line? Remote work is here to stay—or at least on a hybrid model—and this could create ease for employers.

In fact, Nationwide reports that “83%  of employees who can work remotely said they would like to continue doing so at least once every week after the pandemic subsides, while 32% want to work from home full time.”

Remote and hybrid work, however, brings up questions about workers’ compensation. Questions we frequently receive from clients/employers include: 

  • Do I need workers’ compensation for remote workers?
  • What limitations occur with out-of-state employees who are remote? 
  • Can my premium become less expensive with remote workers?
  • If an injury occurs, what proof can be used in a remote setting?

do I need workers’ compensation for remote employees? 

The short answer is yes.

Employers must provide workers’ compensation for ALL of their employees. This means coverage for employees whether they are in office, remote, hybrid, or in the field.

All employees must have coverage in case of an injury. If an employee is uninsured for some reason and faces an injury, civil or criminal penalties could be directed toward the employer who failed to provide coverage.

Common remote injuries or exposures include:

  • Slips, trips, or falls
  • Ergonomic concerns (i.e. back pain from sitting at a computer desk)

how does workers’ compensation work for 1099 independent contractors?

As previously mentioned, your workers’ compensation policies must cover all of your employees. This includes your 1099 independent contractors.

The caveat, however, is that 1099 independent contractors should have their own workers’ comp that they can use if they are injured on the job. This is part of what classifies them as true independent contractors.

While your workers’ compensation will cover an independent contractor in case of injury, as an employer, you may not want to cover that injury. Let’s paint a picture: Say you hire someone to fix the loose entryway door of your company’s building. Then, the door falls on the 1099 worker and injures them. Their workers’ compensation insurance should cover the cost of the injury—not yours.

what can you do to protect yourself as an employer?

When hiring an independent contractor, make sure you’re asking the right questions to avoid costly mistakes in the case injury occurs. Verifying a certificate of insurance (COI) ensures the workers you hire are covered in case of an accident during the job.

how do i know if my workers are 1099 independent contractors? 

Business owners must be aware of Assembly Bill 5 (AB-5) worker classification changes. This way, you can avoid paying workers’ comp for independent contractors who should have their own coverage—and therefore, avoid an employment development department (EDD) misclassification audit.

So, how do you know if someone is a true 1099 independent contractor? In order to be considered a 1099 independent contractor, the worker must meet all three criteria of the ABC test:

ABC test criteria

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

Read on to learn more about AB-5 as it relates to workers’ compensation. 

what does workers’ compensation actually cover? 

For remote workers, most policies and carriers will have the same workers’ compensation coverage compared to in-office workers.

In general, workers’ compensation covers:

  • Medical bills
  • Lost wages
  • Disability benefits

There are, however, differences in premiums and rates depending on a couple of factors, which include:

  • Industry of work
  • Employee payroll
  • Number of employees per class code within industry

An important factor to note, however, is the new ‘telecommuting’ class code that was created as a result of increasing remote work.

class code 8871

Class Code 8871, or “Clerical Telecommuter Employees” is currently in effect in California.

According to Vantreo, in order to fall into class code 8871, an employee must:

  • “Spend more than 50% of their time performing clerical duties from a clerical work area located within their home or any other office space away from any location of their employer
  • Spend the remainder of their time engaged in clerical duties at the employer’s place of business.”

what compensation limitations are there for out-of-state employees?

A fluid workspace brings more opportunities for workers now more than ever. Gone are the days when an employee must reside in the same state as the company they work for. For example, it’s possible for an employer to have employees living in California, Texas, and Georgia simultaneously.

However, if a company has the same policies for all employees, with some employees working in another state, they are at risk for liability exposure. It’s important to know how to avoid liability exposure.

how to avoid liability exposure

In order to avoid liability exposure when employing workers from different states, it’s important to understand what factors need to be considered if an injury occurs. This includes:

  • What state the company is located in
  • What state the injury occurred in
  • What state the employee resides in

Most of the time, in the case of an injury claim, the answer to all of the three questions above is the same state. While it depends on the state, some states do have extraterritorial provisions which would include injuries that occur outside of the state boundaries (again, it depends on the state).

Another way to avoid liability exposure is to make sure the proper state is listed in the workers’ compensation policy. If the employer purchases coverage in separate states but lists each on record, there will be a lower risk of liability exposure.

how can businesses protect remote workers from occupational hazards?

Businesses can protect their remote workers from occupational injuries by implementing the following practices:

  1. Establish work hours to reduce false claims that occur outside of working hours
  2. Make sure workstations are set up ergonomically
  3. Conduct regular check-ins
  4. Create a clear remote work policy for employees to follow to avoid injury
  5. Take injury and illness reports seriously

 

how does a remote employee provide proof of injury?

This is where remote work and workers’ compensation can get tricky. In general, remote employees who file workers’ compensation claims can expect more questions and explanations needed to prove a work-related injury.

In addition to higher levels of investigation, if a false claim is suspected, an applicant’s attorney might need to get involved.

can my premium become less expensive with remote workers?

In short, no. It is not necessarily less expensive to insure a remote worker. There is a rating code for remote workers, even hybrid ones, used to determine your premium. However, the rate is almost the same as an in-office employee. 

If you’re looking to find a way to save on insurance premiums, read our article on how to stabilize or reduce your insurance costs.

It’s also important to note that the high amount of work from home employees has created a vulnerable spot for companies with cyber attacks. Read on to learn how to educate your team to avoid email scams.

workers compensation in the hybrid workforce is vital

what does cyber insurance actually cover?

what does cyber insurance actually cover?

Cyber cyber cyber… This is one of the hottest topics in the insurance industry today. You may already have cyber insurance, or you might be considering getting coverage — in either case, you’ll likely be asking,  “what does your cyber insurance actually cover?” 

who needs cyber insurance? 

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

what does cyber insurance protect you from?

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. 

In 2019, The FBI’s Internet Crime Complaint Center (IC3) reported that the losses for business email scams were $1.7 billion. Learn why an email might be your biggest email risk on our blog. 

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 using different software tools. 

Email scams such as Business Email Compromise/Email Account Compromise (BEC/EAC), are sophisticated scams that target both businesses and individuals who perform legitimate transfer-of-funds requests. In addition to those email-based vulnerabilities, there is an increase in other cybercrimes that threaten businesses (especially those that are remotely operated). According to Cybersecurity Ventures, a cyber attack will occur every 11 seconds in 2022, 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. 

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

what else does cyber insurance cover?

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
  • Paying extortion money
  • Repairing the damage to software and hardware
  • The cost of business interruption and missed income while operations are suspended
  • Other ancillary costs

Third-party coverage helps a company defend against lawsuits and legal claims. There are a number of 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. 

Going into 2022, there is likely going to be a change in coverage. Read our blog cyber security: looking forward to 2022 for more insights. 

cyber insurance for a remote workplace

A recent global industry study conducted by Tenable found that “eighty percent of security and business leaders said their organizations have more exposure risk today as a result of remote work.” 

They listed three main factors that have increased cyber attacks in the 2-year wave of remote office that are important to understand as a business owner moving forward with cyber coverage.

  1. “Enabling a workforce without boundaries.
  2. Expanding the software supply chain
  3. Migrating to the cloud.” 

These three factors are all present in remote workplaces, and give even more reason to understand what your cyber coverage actually covers. 

One question we’ve received from clients is: What happens if a remote employee breaks their work computer while at home? In general, cyber insurance will not cover a broken laptop — but commercial property insurance might. 

okay now my business is covered — now what?

If you have enrolled for cyber coverage, good for you! You’re taking one more step to help create a safe workplace for your employees. Even if your business is protected against cyberattacks, there are some steps you can take to further protect your business. 

read the fine print

It’s important to fully understand what your business is covered for when it comes to cyber risk. At benchmark, we take the time to look into the meaning of a ‘network’ for your company’s policy. The policy might change or be limited to “software, hardware, devices, and other infrastructure owned, operated, or leased by the company.” Knowing what your network entails, how far-reaching it is, and what security protocols you have in place can affect the type, limitations, and cost of your cyber coverage. 

set home-office expectations

In addition to understanding your policy’s details, understanding what your employees’ home offices are like is important to help prevent cyber attacks. A couple of ways to ensure that your remote employees have a safe environment to work is: 

  • Bring in an IT professional to evaluate the laptops and monitors being used or to help install a VPN.
  • Set boundaries with employees about workspace (for example, only use your work laptop, not the family computer that multiple people are using).
  • Provide cyber security training about red flags to avoid.

There are preventive steps you can take to improve your security protocols and reduce the cost of your cyber liability coverage.  To find out more about how we can add cyber to your existing business-coverage, please reach out. 

starting 2022 off right - what to expect for your commercial insurance.

starting 2022 off right – what to expect for your commercial insurance.

The world of insurance has changed quite a bit over the last year. The new reality of insurance established in 2021 will shape the future for 2022. In this video, Rob Cohen, President of benchmark commercial insurance, speaks about what to expect for your commercial insurance in 2022.  

As we look to the next year for updates in the insurance industry, we’re still seeing a few lines of coverage that are being highly underwritten: cyber liability, and directors and officers liability. Over the next year, you can expect 15 to 40% rate increases on those lines. We’re also seeing a few insurance types, like auto insurance, getting flat rates. Let’s dive in a little deeper.

cyber liability

Cyber security is a hot topic for good reason — cyber crimes are at an all-time high and continuing to grow with an increased focus on digital communication. 

Cyber insurance covers the expense incurred due to a data breach, virus, or other cyber-attacks and fraud. It can also cover legal claims that come from a security breach. As companies utilize cloud software, personal computers and laptops, and other technology-based means to store their sensitive data, their risk for a security breach grows exponentially.

The Identity Theft Resource Center claims that in 2018 businesses experienced 571 breaches in security, which exposed 415 million employee and customer records. 

When you do experience a breach as a company, federal law requires you to perform an extensive list of action steps to train and help mitigate future risk. With cyber insurance coverage, however, your carrier will take that responsibility on.

As mentioned above, because of the increased need for cyber insurance, we’re seeing more underwriting, in addition to, increased rates.

directors and officers liability

Directors and Officers (D&O) are defined as, “Insurance coverage intended to protect individuals from personal losses if they are sued as a result of serving as a director or an officer of a business or other type of organization. It can also cover the legal fees and other costs the organization may incur as a result of such a suit.” 

With insurance costs increasing, clients are asking what to expect with D&O coverage. Underwriting is still stressed across all lines of coverage, especially in California. The reason behind the increase in underwriting frequency is a higher sensitivity to the current economic environment, in addition to taking into account additional claims activity. 

Alongside D&O insurance, employment practices liability insurance (EPLI) has also been challenged over the last year. Into the next year, you will likely see higher deductibles and higher premiums associated with EPLI coverage, specifically in California. 

auto premiums

Commercial auto for clean accounts is receiving flat rates, but there may still be a few predicted increases in your auto premium to be aware of. 

In fact, we’ve written an entire article about it! Learn a few reasons why auto insurance premiums are increasing in this blog post. 

auto technology

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 increase in technology in vehicles (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.

driver shortages

They call it ‘The Great Resignation’ for a reason. 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? The demand for drivers has increased over the last few years as a result of the cultural shift toward delivery and convenience. 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 a shortage of drivers, there is a sense of desperation to find any somewhat-qualified person to help transport supplies. In turn, this has resulted in a higher risk of accidents due to a lack of experienced drivers handling large machinery and vehicles. Which, you guessed it, increases auto insurance premiums.

workers’ compensation 

Workers’ compensation coverage seems to be remaining pretty flat. However, if you have a high X-Mod or you have a consistent loss experience over the last two or three years, you will likely see an increase in rates.  

There are a few things to consider when looking at the future of your workers’ compensation coverage.

covid-19

First and foremost, the effect of COVID-19 on your business. The regulations regarding COVID-19 and other standard health requirements vary from state to state, so it is important to understand what your state requires as far as coverage and claims.

Some states, like New York, will include covid-related claims and provide benefits in workers’ compensation coverage if there is reason to believe the individual was exposed at the workplace. 

remote work environment

The lines have blurred between work and home. Employers have lost some sense of control over their employee’s working conditions. In order for a workers’ compensation claim to hold up, the employee must be able to prove that their injury or illness resulted while performing a task for their company. A greater obligation has been placed on the employer to take extensive measures to make sure the employee’s home-office setup is safe.

rising premiums

We’ll likely see a rise in claims over the next year. Not because there is greater risk in working conditions, simply due to the fact that unemployment was high last year therefore the claims and worker’s compensation benefits decreased. 

Because of the rise in claims and cost of benefits, we’ll likely see a rise in premiums.

a final word

Unfortunately, not a lot of great news in the insurance realm. However, this puts greater pressure on your insurance broker to make sure that they’re turning over every rock to find the best rates and coverage for your unique business. 

Speaking of rates, a lot of our clients wonder whether or not working with a larger brokerage firm influences their rates. Check out Peter Katkov, of benchmark commercial insurance services, speak about the difference between larger and smaller insurance brokerages. 

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

benchmark team holiday traditions

benchmark team holiday traditions

It’s the most wonderful time of the year! While the office is busy preparing for commercial insurance changes in 2022, the holiday season is still being celebrated at benchmark commercial insurance. 

We wanted to highlight the team’s favorite holiday traditions and current inspirations for the new year. Keep reading to get the inside scoop on what the holidays look like for our team.

Ethan Sutton, Marketing Representative

“I’m Looking forward to traveling again, both interstate and intrastate.” 

Cindy Adler

“Whatever it is you’re scared of doing, do it.  Make your mistakes, next year and forever. You never know until you try.” 

Steve Quinones, Commercial Account Manager

“I’m looking forward to developing new skills and increasing knowledge, professionally and personally.”

Rob Cohen, CEO 

“Looking forward to health, prosperity, and fun!”

Peter Katkov, Commercial Lines Broker

“The challenges of 2020 and 2021 have proven to me that as a team we can rise to overcome obstacles and not just survive but thrive.  Bring on 2022!”

Candace Cohen

“Be fearless in 2022! If you want to be the best, you have to do things that other people aren’t willing to do.”

Deanne Session, Personal Lines Broker 

“2021 was a year full of HUGE changes for me Professionally and Personally so I am looking forward to settling into all the changes and making new connections with clients and friends. 2022 is going to be even greater than 2021!”

Do any of these goals and inspirations ring true for you? We would love to hear more of your insight! Feel free to reach out today. 

As you look to 2022, what are you focused on? As an insurance agency, we, of course, are thinking about our client’s potential risk factors. One area of concern for most business owners is cybersecurity risks. Check out a few tips on how to work to mitigate your cybersecurity risk in the new year in this article.

earthquake insurance: shaken not stirred

earthquake insurance: shaken not stirred

Do You Need Earthquake Insurance?

Your home and your business are some of the largest investments you will ever make.

California is known as a hotspot for earthquakes. With multiple fault lines running through the state, it’s no wonder that earthquake insurance costs can be so pricey. In both personal and business insurance planning, it’s important to ask, “Do I need earthquake insurance?” 

Unfortunately, most business and homeowner insurance packages do not include earthquake coverage, and investing in earthquake coverage can be costly. 

Southern California, specifically, is typically at high risk for experiencing earthquakes. Earthquakes with a magnitude of 6 or greater may cause serious damage to areas that are densely populated. 

How can you begin to prepare for an earthquake before it occurs? Do you have a disaster plan ready to go? Want to improve your earthquake preparedness? Read on for more.

how much does earthquake insurance cost? 

Most homeowner and business insurance policies don’t cover earthquake damage, you will need to invest in an added layer of protection. Earthquake coverage is offered as a separate coverage option, in which you pay based on your location’s risk. If you’re in Southern California on the San Andreas fault line, your earthquake insurance costs will be much higher than if you’re in a lower risk area, far from any kind of fault line. 

The NAIC states “the deductible for earthquake insurance is usually 10%–20% of the coverage limit. For example, if your home is insured for $200,000, a 10% deductible would be $20,000.”

what isn’t covered with earthquake insurance

As we mentioned above, most homeowners insurance fails to cover earthquake damage. Earthquake insurance is recommended if you live in an area that has a high risk of experiencing an earthquake.  This coverage includes structures close to the house (i.e. a garage or shed).

As you look to invest in earthquake insurance, it’s important to understand where you may still need additional coverage.


Most items not covered under earthquake insurance, are surrounding what could occur after an earthquake occurs. For example:

  • Fires
  • Flooding
  • Vehicle damage

Damage to land is also not typically covered under your earthquake insurance. For example, if the earthquake caused a sinkhole to appear, that cost would not be covered by your earthquake insurance.

how your premium is determined

At the end of the day, your insurers determine your premium. There are a few factors that will impact your premium: 

  • Your home’s location
  • The age of your home
  • The construction of your home
  • The cost to rebuild your home
  • The deductible

How to stay protected

There are a few steps you can take to begin limiting the risk associated with earthquake damage to your business and your home, which can in turn lower your insurance premium.

earthquake survival kit

Start with an earthquake survival kit. Your office or home could be without electricity, internet, phone, water, gas, and sewage services when an earthquake hits. The American Red Cross gives a few items that should be included in your earthquake survival kit:

  • Water: A two week supply of a gallon per person
  • Food: Things that are non-perishable and easy to make
  • Flashlight
  • Battery-powered radio
  • Batteries
  • First Aid Kit
  • Any medications or medical items
  • Multi-purpose tools
  • Sanitation and personal hygiene items
  • Personal documents: Medication lists, medical information, address, lease or deed to your home, passports, birth certificates, insurance
  • Cell phones and chargers
  • Emergency contact information
  • Cash
  • Emergency Blanket
  • Map of the surrounding area

Inform staff and family

Host regular staff meetings to discuss how your team can stay safe during an earthquake. Be sure everyone knows to drop, cover, and hold during an earthquake and proceeding aftershocks. 

It’s important that they know that underneath furniture and against walls are likely the best places to be. Be sure to inform everyone to steer clear of windows and bookcases or large pieces of furniture. 

All frames, mirrors, and large cabinets should be anchored to their foundation. Gas appliances and water heaters should be secured with wall studs.

retrofitting your property

One of the best ways to tackle your earthquake risk is to retrofit your property. As mentioned above, it’s important to have large furniture anchored down, and secured in case an earthquake does occur. Here are a few ways to get started retrofitting your property to decrease your risk of injury during a natural disaster.

  • Bolting down bookcases, dressers, and televisions. Securing these heavy items, as well as other heavy items throughout your home can reduce property damage, and reduce the risk of injury during an earthquake.
  • Secure and brace the water heater to the dwelling frame.
  • Install automatic gas shut-off valves.

If you want to go even deeper into retrofitting your home, here are a few things you can do: 

  • Anchoring your house to the foundation through seismic bolting. 
  • Install bracing to cover cripple walls (in the space between the foundation and the floor where the crawl space is) with plywood. 

next steps

We at benchmark commercial insurance company can assist you in finding the right coverage for your specific business and personal needs. With insurance costs rising, it’s important to understand ways in which you can start to stabilize or reduce your insurance costs, read one of our recent blogs, here.

preparing for potential bottlenecks in your business and supply chain

preparing for potential bottlenecks in your business and supply chain

Are there red flags in your supply chain that may lead to bottlenecks? If there are, a bottleneck may impede product delivery in the new year, and that is not ideal. 

So, what can prevent potential bottlenecks before they damage your company’s ability to deliver? And what is a bottleneck? It can be complicated, so let’s dive into the details.

what is a bottleneck? 

A bottleneck can occur on all levels of manufacturing when resources are pushed past their maximum capacity. A bottleneck limits a company’s full potential, and is, of course, to be avoided.

As shown in the illustration below, the base of the bottle is overwhelmed and the neck of the bottle is too small for the demand of the supply chain. 

preparing for potential bottlenecks in your business and supply chain

Image courtesy of Chris Hohmann

As a manufacturer, there are five types of bottlenecks to be aware of: 

  • Poorly Designed Processes
  • Employee Absences
  • Overworked Machinery
  • No Automation
  • Poor Forecasting

These types of bottlenecks can be broken down into the categories of: People, Machines, and Processes.

people bottlenecks

employee absences

As mentioned above, human error is a part of the industry. One of the main factors of bottlenecks occurring is a high amount of employee absences. The processes that are set in place to avoid equipment failure are only as strong as the number of employees that are at work. With employee absences, there is a higher chance that small errors will occur.

If people are filling in roles out of desperation, then they are not well versed in the processes in place. One way to try and avoid this is to train employees on all of the roles involved in manufacturing, in case an employee is put into a position they’re not fully comfortable performing.  

machine bottlenecks

overworked machinery 

Just like people, if a machine is overworked, it will not be performing at its top level of productivity. If the machinery is overworked to meet the demand, there is a high risk of a bottleneck occurring.

Although the easier choice is to push machines to their maximum capacity (or further) in order to meet a deadline, this decision is asking for trouble.

process bottlenecks

lack of automation

We live in a world of technology.

In the manufacturing industry, technology should be used to help prevent bottlenecks. Automation is sometimes included in machinery or can be externally used. Regardless, there are benefits to using automation and technology in manufacturing.

Manufacturers have used automation not only to keep track of numbers but also to identify the physical location of machinery. Another benefit of automation is that with technology comes usable data. Data collection can be a huge tool in predicting future bottlenecks and learning from past mistakes.

Automation creates a smoother process of combining people and machinery.

poor forecasting

Although it’s true that some machine failures or bottlenecks are impossible to predict, poor forecasting can be a catalyst to missing major red flags that can disrupt your supply chain.

An example of poor forecasting is not maintaining structure in properly storing supplies and materials.

To use forecasting to your advantage, it’s helpful to predict when there might be increased demand. Then, make sure the right amount of inventory is available and that the machines can handle this level of demand to avoid a bottleneck.

poorly designed machine processes

If one part of the machine doesn’t work, the entire machine will most likely fail. If there are detailed processes laid out with preventative measures, however, there is a decreased chance of machine failure.

The efficiency of said processes can also be affected by human contact within the manufacturing line. Human error is common, so keeping employees up-to-date with understanding new machinery and processes is crucial in avoiding bottlenecks.

This includes:

  • Implementing preventative action to keep machinery up-to-date with industry standards
  • Not letting parts function beyond their lifespan

Along with preventive measures, there is value in training employees the proper response to a machine failure that resolves the situation quickly. This can prevent bottlenecks.

red flags in your supply chain

Is there a way to see where bottlenecks might occur? Well, aside from the processes mentioned above, acknowledging that there are red flags in manufacturing is crucial.

Some red flags in your supply chain may include: 

  • Unpredictable lead time
  • Internal reporting and delivery issues 
  • Slow product phase movement 
  • Not enough workers at one stage or another of production/ processing/ delivery 
  • Disorganized delivery scheduling 
  • Lack of product lifecycle tracking 

Identifying and addressing these red flags early on can help prevent bottlenecks. When it comes to equipment failure, however, sometimes a delay is inevitable. Read on for more on how to prepare.

how to prepare for equipment failure

There is not much that can be done if major equipment failure takes place. 

One key way to try and avoid equipment failure, however, is to create a diversified pool of vendors that you collaborate with. This means hiring locally, offshoring, and “near-shoring”. Doing so streamlines processes, provides backups and is one way to improve and balance your supply chain. 

what do I do after a bottleneck occurs?

So, you’ve experienced a bottleneck. What now? 

Bottlenecks have both short and long-term effects on a business.

After a bottleneck occurs, it’s important to evaluate what happened, why it happened, and how to avoid a similar situation in the future. The bottleneck you experience will help your company learn and grow when you look at it from the perspective of a learning opportunity.

So, you now know how to prevent a bottleneck—but do you know how to prevent a cyber-attack? Read on to learn why email may be your biggest cyber risk.

a day in the life of a benchmark broker

a day in the life of a benchmark broker

 

What does your insurance broker actually do for you? 

The daily tasks that a Benchmark insurance broker performs fall into the categories of:

  • Coverage analysis
  • Risk control
  • Hr services
  • Insure-tech

Here’s a deeper look into what the role looks like when it comes to commercial and personal insurance.

Client Communication

Like the old American proverb says, “To keep a customer demands as much skill as to win one.” 

Client communication is essential as an insurance broker in continuing a trust-filled relationship. One of the first steps a Benchmark insurance broker takes on during the day is taking client calls and emails and answering any concerns in a timely manner. 

This included us following up with any open items we need to complete underwriting or claim files. 

There are smaller questions that are easier to respond to, but sometimes a client emergency comes up, then industry advice is needed ASAP.

Client Emergencies

Benchmark insurance experienced this recently with Lyon & Associates Creative Services, Inc, who reported on their experience in a recent email describing their unfortunate “Pandemic Burglary.” 

Lyon & Associates Creative Services, Inc was out of office for three weeks during the pandemic back in March 2020. Then they fell under the healthcare communicators category and returned back to the office. 

“Our editing computers are largely empty shells, running the software alone. As a result of this structure, an early morning thief snatched all of our editing workstations.

When we reached out to our insurance broker, Carlsbad-based Benchmark Commercial Insurance, they took care of getting a claim opened with our insurer, Travelers.

Due to Benchmark’s previous good counsel, we had excellent replacement value and business interruption coverage. When the Travelers claim adjuster got in touch the same day, they had a significant starter check on the way before the weekend. 

Replacement value means exactly what it says, and then some, by the way. They covered things like the dozen new USC-C (Thunderbolt 3) to Thunderbolt 2 adapters we needed to keep our considerable investment in unstolen hard drives connected to the new computers. Of course, the claim was so well-covered that we exceeded their allowable percentage loss limit and they declined to renew our policy. (Chubb had our workers comp policy and they scooped us up with no increase in rates).” 

In any field of business, unpredictable events occur, so this can often take up time during the insurance broker’s day.  

Negotiation 

One task that generally occurs daily is negotiating with underwriters for best terms on new and renewal business quotes. 

Team Communication

Babe Ruth said “The way a team plays as a whole determines its a success. You may have the greatest bunch of individual stars in the world, but if they don’t play together, the club won’t be worth a dime.”

Even though insurance is a tiny bit different from baseball, the same concept applies in the workforce. 

Communication within the Benchmark team is also crucial throughout the day. This can look like answering internal questions related to claims, billing, certificates, and underwriting. 

Coffee Breaks

Yes, a Benchmark insurance broker does require multiple coffee stops throughout the day— cappuccinos are preferred. 

Client Contracts

Another daily task is reviewing client contracts. The insurance world is constantly changing, so staying up-to-date is important for client communication. When reviewing client contracts, our broker will check to make sure that any insurance or indemnity-related contractual stipulations are consistent with the client’s coverage. 

This also included following up with claim adjusters on open claims on behalf of the broker’s clients and advocating on behalf of our clients to claim adjusters on difficult claims issues. 

Prospect Clients

Finding new clients that will be a match with Benchmark Commercial Insurance, and that we are a match for takes effort. Throughout the day a broker will field calls and emails from new business referrals and prospect call-ins. 

Policy Review

An insurance broker will perform policy reviews to make sure policies have been issued correctly. This includes policy reviews for prospects so they can understand how their current program integrates with the scope of their current operations, which exposes any gaps in coverage. 

A Benchmark insurance broker will also initiate, and continue to follow up on the underwriting status for all renewals 90-days in advance of the policy expiration date. 

Third-Party Communication

Keeping relationships with other companies is important to our brokers. This includes Zoom meetings with our marketing agency and promoting our excellent relationships with the underwriters who support us. 

Wondering why your insurance has skyrocketed this year? Find out the factors that might be directly impacting you on the Benchmark blog.