Tuesday, April 23, 2013

Want to get fired? Don’t buy EPLI

It’s really easy for your employees to sue you for discrimination, harassment, wrongful termination or anything they want to make up. They do not even need a lawyer. All they have to do is file a complaint with the state EDD department and the state will serve you a demand for damages and info. Then you have to hire a lawyer to defend yourself. Even if you win with the state EDD pro employee bureaucrats the employee can still hire an attorney and sue you.

If the EDD finds against you they will prosecute you for free. We had an employee do this and the EDD ran up $5000 in legal bills on our end just so they could justify their jobs before finding the case without merit 9 months later. Good thing we had paid $3000 a year for coverage.

A Company

Here is an example of what could happen to any company. A man was fired by his employers 5 years ago. According to him, a few days after he told his supervisor about an unethical business practice he found his company was indulging in, he was fired on grounds of his age (he was 71) and the need to cut the wage bill. He sued to company for wrongful termination and age discrimination. He recently won the case and the
total award, on different grounds, was $3.5 million. In the meantime the company he worked for was bought up by another business and that business is now stuck with the cost.

The question here is not whether the man had a legitimate claim or not. The new owners of the company are stuck with a huge payout, not to mention the cost of the legal fees they have borne. If it has EPLI, it is protected. If not, that kind of payout is going to have a serious effect on the bottom line.

A Manager

And what happens to the manager who conducted the due diligence before the take over? Maybe the facts of the case convinced him that the employee could not win and that the chance of having to pay out a large sum of money was so small it was a risk worth taking. Maybe he acted in the best interest of his employer. But now that the case has been lost, what happens to him? Is he busy working on his resume?

However, if there was EPLI, then any risk was covered and the manager, his company
and the bottom line are all protected.

With Employment Practices Liability Insurance, a business is typically covered against:

  • Wrongful termination of employment
  • Workplace discrimination
  • Workplace harassment
  • Emotional distress
  • Some defamation claims
  • Some privacy based claims

We had one client that declined the EPLI coverage. The next year they lost a $750,000 sexual harassment case against a manager. The manager was fired AND the CONTOLLER also was fired. If you are in charge of buying your companies insurance protect your job and buy EPLI. We live in CALIFORNIA after all.

It could happen to any business. Why risk it happening to you when EPLI can provide an effective line of defense?

Protect Your Valuables from Criminals

Your policy limits or doesn't cover the things thieves target – like jewelry, watches, silverware, guns, cash, securities and gold. Unless you get appraisals and schedule these items separately you will have little or no coverage.

Sadly the crime rate is rising all across the country. A client was burglarized last week, thieves took $50,000 of jewelry and watches and $10,000 in cash. With no scheduled items coverage her policy only paid $2000 for jewelry and $300 for the cash. She had planned to schedule the jewelry but was too busy and never got around to it. Don’t let this be you.

The first thing to do is to keep items of sentimental value and those which you never or very rarely use in a safe deposit box. The same applies to valuable collectors’ items like gold and silver coins, loose gemstones. And since you have a safe deposit box, it’s also the best place to keep share certificates and other valuable documents.

Having secured the things you do not need or use every day, the next step is to protect those that you need to have in your home. The first thing to do is to invest in a good security system. Many people feel that they do not have enough in the way of valuables to justify the cost of a home security system. Spend a little time totaling up the value of all the valuables you have in your home that can easily be stolen. The figure may surprise you and cause you to rethink about the necessity of increasing your home’s security. And remember, the average burglar does not break in with specific objects in mind to steal. He will take whatever he can. Why should he not take the $100 candle stand if it’s right in front of him? Losing a few small things can be a pain, but losing a lot of them at the same time could be a real tragedy.

The next thing to do is to look at your insurance. You may be covered against theft, but is enough? Insurance policies limit the coverage of items that are targeted by thieves. Items like jewelry, watches, cash, securities, gold ware, silverware, guns etc. are usually limited to a value of $300 to $3,000. Remember, your great grandmother’s wedding ring may have cost just a $100 a century ago. How much is it worth now?

It makes sense to inventory your valuables, especially the big ticket items and schedule them on a separate policy. A typical blanket policy for jewelry, watches, gold, silver etc. along with appraised big items will only cost you 1.5% of their value. That is $150 for every $10,000 coverage. That’s not a large amount to pay for the peace of mind that comes from knowing that if the worst should happen, at least you are financially
protected. According to one leading insurance broker 75% of his clients do not bother to get appraisals done in order to buy extra coverage. With the increase in crime, this is taking an unacceptable risk.

There is one more thing and this is something you need to not do. Do not think that you need only the minimum insurance because getting robbed happens only to the other guy. For everyone else, you are the other guy.

Friday, April 12, 2013

The effect of State Farm's dropping insurance rates

State Farm is California’s biggest provider of homeowner’s insurance and any change in the premium rates that the company makes will have a ripple effect across the state. The company recently announced that it will be reducing insurance rates for over 1 million policy holder from April of this year. This will mean, on an average, a reduction of insurance premiums by approximately $100. State Farm insures about 1.6 million homeowners in California and the benefit of the rate reduction should be available to around 85% of them. The rate are expected to come down by 8.5% in San Francisco, 12.3% in Los Angeles County, 12.4% in San Diego County, 14.1% in Orange County and 21% in Sacramento County. The total annual savings to homeowners in the state is expected to be in the region of $160 Million.

Balancing pervious rate increases
State Farm had increased rates by 6.9% in January 2009 and again by the same amount in February 2010 and this reduction should allow homeowners to pay in 2013 what they were paying for insurance on 2008.
The reductions in insurance rates are based on a new system that does away with the old ZIP code based risk assessment. The new system works on micro-zones and breaks down risk factors such as fire risk and geological factors based on the latitude and longitude of the home. This allow for a much greater fine tuning to the risk assessment and consequently a revision in the insurance premium rates. State Farm says that this new system will allow the company to provide its customers with more competitive insurance quotes and better service.

The California system seems to works
It would appear that California’s system of regulating property and casualty insurance rates is working. The new fine-tuned policy being adopted by State Farm is a logical fallout of the state’s efforts to keep insurance rates low and the market competitive.

The move by State Farm should cause other insurers to take a look at their pricing structure to determine if they are overcharging for insurance and to find ways to reduce premiums. This will trickle down effect will benefits homeowners across the board. And if the other insurance companies do not follow suit, the California insurance commissioner has the authority to begin proceedings to study the question and determine why they have not cut their rates. But with insurance being such a market driven business, the chances of this happening are small. Insurance premium costs are a major factor in determining the choice of insurers and none of the other companies will want to risk losing out.

Using the savings
Many studies show that most homes in California are under insured. While it may be tempting to pocket the savings or spend the money on something else, examining the risk coverage and looking for weak areas where the coverage could and should be improved and using the money to cover the shortfall is always a good idea. The fine tuning that State Farms has done means that local risk factors can be more clearly identified and more balanced coverage will be possible. Additional savings by reducing the amount of coverage where it is not required can be used to increase risk coverage where the risks are higher. The approximately $100 savings that State Farm policy holders will benefit from can go a long way in achieving this.

Contacting an insurance professional to discuss policy modifications makes a lot of sense right now.

Wednesday, April 10, 2013

Basic car insurance requirements in California

In 2006 the laws in California were changed to ensure that all privately owned vehicles that are on the state’s roads have insurance liability coverage for any damage or injury caused by a collision, regardless of the party at fault. The mandatory requirements are that all vehicles operated or parked on roadways in the state of California must have proof of financial responsibility available at all times. This evidence must be provided when asked for by law enforcement, when the vehicle is involved in a traffic accident, irrespective of who is at fault and when renewing vehicle registration. Failure to provide the required proof may result in severe penalties.

Additional requirements

In addition to the mandatory requirements, there are some additional requirements that may also be asked for by the Department of Motor Vehicles (DMV). These include:
  • An ID card or other equivalent document issued by your insurance company
  • Cash depositors or those who are self-insured may be asked for a DMV authorization letter
  • California Proof of Insurance Certificate (SR-22) for owner’ policy or broad coverage
  • If a vehicle is covered by commercial or business policies and is being registered for the first time, as Notification of Alternative Forms of Financial responsibility (REG 5085) may be required
Minimum liability requirements in California of private passenger vehicles

The following are the minimum liability requirements required for operating a private vehicle in California:
  • Death and / or injury to one person - $15,000
  • Death and / or injury to more than one person - $30,000
  • Damage to property – $5,000
It is important to note that liability insurance specifically covers compensation to a person other than the policy holder for any injury of property damage. Comprehensive and collision insurance do not meet this requirement. Those who are financially unable to meet these liability insurance requirements may eligible for coverage under the California Low Cost Automobile Insurance Program.

Violations could resulting in suspension of vehicle registration

Your vehicle registration could be suspended if:
  • The DMV is is notified by the insurance company that a policy has been cancelled and a replacement policy is not issued within 45 days
  • At the time of initial registration or transfer of ownership the required insurance information is not submitted to the DMV within 30 days
  • The registration is obtained by providing false insurance information
If you receive notice from the DMV that your vehicle registration is going to be suspended or has been suspended, it is possible submit the required information and reinstatement fee and be able to operate the vehicle.

The requirements are simple

As can be seen, the basic insurance requirements in California are really quite simple and it should not be difficult for anyone to ensure that they are followed. However, this is where many people make mistakes. They either take the procedure for granted and make careless mistakes or do all that is required of them and then forget about it and neglect their renewals and so on. Adhering to the insurance requirements is simple – just keep a checklist of all that is required and place a renewal reminder in your planner or computer diary.
It is also worthwhile noting that the minimum liability requirements are just that – the minimum. Any serious accident could make you liable for much more and it is a good idea to discuss your driving habits, typical trips, vacation journeys and other car usage information with an insurance agent who will be able to help you find the kind of coverage that is best for you.