Contractors Insurance Certificates and Endorsments

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What is ‘Additional Insured’ Endorsement?

Additional insured refers to a person or organization identified as an insured under an insurance declaration, in addition to whomever the insurance policy is named to. After the endorsement is signed, that entity will enjoy same benefit similar to the named insured including the filing of claims, and will be protected under the insurance policy.

What is Certificate of Insurance?

Certificate of Insurance (COI) is a document issued by an insurer to the policy holder to certify that an insurance policy has been acquired. The certificate shows specified information regarding the insurance, such as the type of insurance coverage, the effective date of the policy and the amount of the applicable liability. However, the certificate is not a substitute to the actual policy document and it is a non-negotiable document that cannot be assigned to a third party.

What are Loss Runs?

Loss runs are reports compiled and generated by the insurance company that records a detailed history of the claims information of each policy holder. Even if a policy holder has no filed claims, a loss run report should still be generated to reflect no losses. Every insured has the right to receive a copy of loss runs report from their insurance company and this is available without any additional charges.

What is Waiver of Subrogation?

Waiver of Subrogation is a type of endorsement on an insurance policy wherein the insurer waived its right to pursue any claim and take legal actions against the responsible party for the loss suffered by an insured. For instance, the landlord of an apartment signed an agreement with his tenant stating that they would not be held liable for any damages occurred to the rental unit. If any damages occur, the landlord will file claims to his insurer for the damages incurred in his property. However, the Waiver of Subrogation will prohibit the insurance company from coming after the tenant for the damages incurred in the property.

What is Primary and Non-Contributory Wording Endorsement?

Primary and non-contributory wording endorsement is commonly used in general liability insurance policy to stipulate the order on how the insurance company will respond on multiple policies. The term primary on your insurance policy means that the insurer will pay you first in the event of a claim, and the non-contributory means that the insurer will not only pay you first but will also pay the full amount of your claim.

Owner Controlled Insurance Program (OCIP)

OCIP is an insurance coverage provided by a property owner to contractors and subcontractors during a renovation or construction project. This type of insurance coverage is generally designed for big projects whose total constructions costs exceed $5 million. It covers all the liability and possible losses that may arise during the period of the project. As the project owner is acquiring all the necessary insurance coverage for the project, contractors and subcontractors do not include the cost of individual insurance in their bids for the project.

In OCIP, all the necessary insurance coverage for the whole project, including the construction, workers’ compensation, hazard, materials, terrorist and other building-related insurance coverage are acquired by the project owner as part of a single insurance policy from a single insurance company.

OCIP also provides standardized insurance coverage with high liability limits for all the contractors and subcontractors, and this can reduce the construction costs by approximately one percent to two percent compared to traditional insurance policies acquired by each contractors and subcontractors.

Most OCIPs are multi-year coverage with fixed duration, with the most typical duration is between two and five years. This insurance coverage normally applies to all the contractors and subcontractors working on the project site, which includes the main constructions site, lay down yards, storage areas and on-site fabrication.

Advantages of OCIPs for Owners

  1. Cost. The acquisition of OCIPs can result to two to three percent bid reduction. This can be achieved through premium credits for a volume purchase of insurance coverage by project owner.
  1. Scope of Coverage. Project owner has a guaranteed wide insurance coverage for their OCIPs as compared to traditional non-OCIP policies, which an owner sets minimum insurance requirements.
  1. Improved Risk Management. With OCIP’s single insurance policy, risk control management and claim handling are greatly improved, and dispute among contractors and subcontractors are easily resolved with the limits of the insurance policy.
  1. Policy Limits. In OCIPs, project owner can provide more than $800 million in insurance coverage to contractors and subcontractors, in contrast to traditional non-OCIP policy where it can only carry less than $1 million in CGL coverage.

Advantages of OCIPs for Contractors

  1. Safety and Loss Control. The implementation of a wide risk control management program can enhance existing safety programs of the participating contractors, reducing injuries and other construction hazards to employees.
  1. Claims Management. The large management program of project owner through the OCIP can result to coordinated and easy claims handling procedures.
  1. Dispute between Contractors. By covering all of the project’s contractors, disputes and subrogation issues between insurers and contractors are eliminated. In traditional non-OCIP programs, contractors/subcontractors and project owner are represented by different insurers and lawyers, and this potential source of conflict is eliminated in the OCIP program.
  1. Higher Limits. Smaller contractors and subcontractors are allowed to participate in the projects that need higher liability limits.
  1. Small or Minority Contractors. Project owners provide insurance coverage to smaller or minor contractors who do not have the capability to secure necessary insurance coverage for bigger projects.

Disadvantages of OCIPs for Owners

  1. Administrative Burden. OCIPs increased administrative burden to the part of the project owner, and if not managed competently, it could lead to additional cost to the owner.
  1. Market Risk. Premium cost for the OCIP can increase if the insurance market hardens, which could potentially hurt the project owner.
  1. Bid Preparation. Additional costs and preparations are needed in imposing an OCIP programs, which is a time consuming and brings additional work to the project owner.

Disadvantages of OCIPs for Contractors

  1. Limited Insurance Coverage. OCIP is designed to provide insurance coverage for work performed on the project. However, this coverage is normally subject to various exclusions which could lessen the coverage to the contractor compared to what they could get in traditional insurance policies.
  1. Complicated Bidding. A complicated bidding process is required to demonstrate that the insurance coverage has been removed from the contractor’s bid price.
  1. Documentation Requirements. Projects with OCIP have more paper works and report intensive, imposing additional administrative burdens to contractors and subcontractors.

Transportation Insurance Explained

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Transportation Insurance

Theft, fire, and damages are some of the common devastating perils faced by distributors, wholesalers, retailers and other business owners that convey goods from one place to another. Thankfully, a customized transportation insurance policy can cover any of those damages, and help keep your business afloat. Transportation insurance covers goods and property in transit. The coverage includes transport by land, water, and air.

How Does Transportation Insurance Work?

Transportation insurance pays compensation for your damaged, delayed, or stolen goods in transit. You may choose to get the basic or go for more comprehensive coverage, depending on the kind of protection you want for your business. The cost of insurance and coverage amount will be based on some factors, such as the value and nature of goods you are transporting, and the distance, whether domestic or international.

Types of Transportation Insurance

Each means of transportation and goods has its own peculiarities, and as such, will require a customized policy that will best suit the business. Transportation insurance products include:

  • Taxi Insurance, Limousine Insurance, and Bus Tour Insurance: Needed to cover your vehicle and your passengers. It should also include a business interruption coverage, which pays for income loss when your vehicle breaks down, and require a service or repair.
  • General Cargo Insurance: This can cover both the goods in transit and the container. It comes in three basic clauses, namely, A, B, C. Clause A is the most robust category that offers the widest coverage, followed by clause B, while C offers the lowest coverage. The wider the coverage limit, the higher the premium rate.
  • Goods in transit insurance: This product provides coverage for goods against fire, accidental damage, or theft when in transit. The coverage includes when the goods are being loaded or offloaded. It has two types, which are

–          All risks, which covers goods from the loading stage till the final destination, and

–          Restricted cover, which only provides coverage if the conveying vehicle is involved in an accident.

  • Marine Cargo Insurance: Covers goods transported by water or air. It comes in different types, which include voyage policy, open cover.

–          Voyage Policy covers goods from a specific point to another and ends when the goods get the covered destination.

–          Open Cover is particularly essential for businesses that transport goods frequently. It offers blanket coverage, which covers all shipments made for one year, and as such help saves cost getting a new policy for each journey.

  • Rail Insurance: This provides coverage for those who …in rail business, such as passenger and freight operators, locomotive owners, storage facilities, etc.
  • Airfreight insurance for goods transported by air. The premium rate is calculated based on the value and nature of goods and route to the destination.

Why Your Business Needs Transportation Insurance

Casualties and theft are commonplace in the transportation business, and can sometimes bankrupt a company if there’s no reliable coverage. Transportation insurance is a risk transfer plan that can help you weather the storm of adverse financial effects capable of ruining your business.

ISO Releases National Building Code Assessment Report

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(Jersey City, N.J. – Insurance News 360) – On March 19, ISO released the National Building Code Assessment Report,  which examines code enforcement efforts by more than 25,000 building departments across the U.S. It offers key insights into how building codes can help prevent losses from disasters.

“We have seen heightened incidents of natural disasters during the past few years that have put the nation’s building codes to the test,” said Robert Andrews, vice president and chief field operations officer, ISO Community Hazard Mitigation. “Hurricanes, flood, and wildfire have caused billions of dollars in losses across multiple states. Our new report provides valuable insights about building codes throughout the country and how well they are enforced, which is vital information for communities, municipalities, and insurers.”

The report was developed by the ISO Building Code Effectiveness Grading Schedule team. The report also features analyses of natural hazards and catastrophes in each state and diverse perspectives on catastrophe mitigation from the federal government, nonprofit organizations, and academia.

Source: Verisk.

Workers Compensation Insurance

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Worker’s compensation insurance is mandatory coverage for business owners in most states in the United States. Apart from being a requirement of the law, it is an essential risk management plan that can help you achieve business sustainability, as it covers your business against claims for:

–          Lost wages

–          Medical treatment

–          Death benefit claims

–          Disability

–          Accidents at work

How Does Workers Compensation Insurance Work?

Regardless of how you make your business environment safe for your employee, you can’t completely rule out events of work-related injuries, illnesses, or even death. Cases like these are what Workers Comp helps to mitigate by providing coverage to any affected worker in the following ways:

Disability

Workers compensation insurance replaces a specified portion of an employee’s loss of income while recovering from a work-related injury or illness. Disability definitions under this policy are four types, namely:

–          Temporary partial disability: A short-term disability that partly makes a worker unfit to work

–          Temporary total disability: A short-term disability that completely prevents a worker from working during a short period.

–          Permanent partial disability: A permanent injury or impairment that partially limits an employee’s performance and earning power

–          Permanent total disability: A permanent impairment that completely prevents the affected workers from ever doing the same job……….

Worker compensation for disability is sold with a specified waiting period – meaning a disability must last beyond the period before an employee could be eligible for claims. The benefit payment is typically based on the specified percentage of the current income, usually 66% in many states.

Medical Expenses

Workers compensation pays for an employee’s cost of treating a work-related injury or illness. The policy covers bills for hospital visits, surgery, and necessary aids for recovery, such as crutches, wheelchair, or braces. Depending on the state, the covered expenses may also include therapies, chiropractic or biofeedback.

Rehabilitation

In some states, workers compensation covers the cost of rehabilitative therapies needed to help an employee recover from a work-related injury. The coverage could also include psychological rehabilitation for those who suffer mental injury.

Death

The policy pays death benefits to relatives of an employee if the worker dies on the job or from an illness or injury sustained at work. The death benefit is to provide the dependent children or spouse of the deceased worker with a financial safety net to help cushion the effects of their loss. It may also cover burial cost.

Employer’s Liability Insurance

Employer’s Liability Insurance

Employer’s liability is a significant component of worker’s compensation designed to protect you against damages claims from your employees. Workers comp is generally responsible for a work-related injury or illness claims. However, if employees feel the injury or illness was caused by an employer’s negligence, they may file a lawsuit for additional damages specifically against the employer. Lawsuit cost such as court costs, lawyer’s fee, and settlements are what employer’s liability arm of workers compensation will help you cover.

What Determines Workers Compensation Insurance Cost?

Number of Employees: Almost all states require a business to buy workers compensation insurance immediately after hiring the first worker for your business. The number of employees will be considered by your insurer for the policy’s price.

Payroll Size: Your payroll unavoidably increases as you hire more hands. This will mean a periodic review and increase of your worker compensation insurance needs and budget.

Your Industry: Some businesses are considered as high-risk industries due to the rate and severity of work-related injuries and illnesses they are known for. If your company operates in such, expect to pay a higher premium for your policy.

The 55+ Housing Market still strong in second quarter

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(Washington, DC – Insurance News 360) – According to release by National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) the single-family housing market edged down from 72 to 71 in the second quarter keeping the builder’s confidence solid.

Single-family and multifamily condominiums are the two segments measured by HMI 55+ housing market. The survey measures builder’ sentiment inquiring if recent sales, potential traffic of buyers and expected sales of 6 months are good, average or poor  for traffic.

“Although the single-family HMI fell slightly, builder sentiment remains strong for this segment of the market,” said Karen Schroeder, chair of NAHB’s 55+ Housing Industry Council and vice president of Mayberry Homes in East Lansing, Mich. “The reading of 71 is just one point off from the all-time high of 72 from the previous quarter. We expect the 55+ housing market to continue on a positive path moving forward.”

For 55+ single-family HMI’s three index components, current sales remained unchanged at 76, one point raise in anticipated sales for the next six months at 78 and potential buyers traffic dropped five points to 56.

There’s an increase of two points to 59   in HMI of the multifamily condo. There’s raise in two out of three index components as compared to last quarter. Current sales increased three points to 61 and forecasted sales for the next 6 months rose to three points at 65. However, traffic of prospective buyers dropped two points and fell at 50.

There is an increase from the first quarter  in all four components of the 55+ multifamily rental market: Current production and future anticipated production both rose six points at 64, while current demand increased  12 points to 73 and future expected demand increased 10 points to 73

“Demand for 55+ housing remains solid, as demonstrated in the surge for 55+ rental demand,” said NAHB Chief Economist Robert Dietz. “Builder sentiment for the for-sale 55+ housing market also remains in positive territory, supported by low inventory of existing homes. However, it is being constrained by development costs and their impact on affordability.”

Source: National Association of Home Builders.

Pending Home Sales Dip 1.0 Percent in February

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(Washington, WA – Insurance News 360) – On March 28, the National Association of Realtors announced that pending home sales dropped by one percent during the month of February.

The forward-looking Pending Home Sales Index dropped from 102.9 in January to 101.9 in February, marking the 14th straight month of annual decreases, as year-over-year contract signings dropped 4.9 percent.

“In January, pending contracts were up close to 5 percent, so this month’s 1 percent drop is not a significant concern,” said Lawrence Yun, NAR Chief Economist. “As a whole, these numbers indicate that a cyclical low in sales is in the past but activity is not matching the frenzied pace of last spring.”

Although there has been growth in the West region, current sales are well below where they were in 2018. He attributes this to a lack of inventory and prices that have risen too quickly.

Denver-Aurora-Lakewood, Colo., Seattle-Tacoma-Bellevue, Wash., San Diego-Carlsbad, Calif., Portland-Vancouver-Hillsboro, Ore.-Wash., and Nashville-Davidson-Murfreesboro-Franklin, Tenn., saw the largest increase in active listings in February compared to a year ago.

“If there is a change at all [in interest rates], I would say the Fed will lower interest rates in 2019 or 2020. That would stimulate the economy and the housing market,” he said. “But the expectation is no change at all in the current monetary policy, which will help mortgage rates stay at attractive levels.”

Yun expects existing home sales to decline to 5.3 million, while the national median existing home price is expected to increase by 2.7 percent.

In the Northeast the Pending Home Sales Index declined 0.8 percent to 92.1, and is now 2.6 percent lower than it was in 2018. In the Midwest the PHSI dropped 7.2 percent and is 6.1 percent lower than February 2018.

Unlike the regions already mentioned pending homes sales in the South and in the West experienced increases. In the southern region, the index crept up 1.7 percent to 121.8, although this is still 2.9 percent lower than February 2018. In the west, the index increased by .5 percent, but is 9.6 percent below February 2018.

Source: National Association of Realtors®

Lloyds reports 2018 aggregated market results

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(London – Insurance News 360) – On March 27, Lloyd’s released the 2018 annual report, which announced an aggregated market loss of 1.0bn for 2018, which is half of what the aggregated market loss was in 2017.

Other key figures to note are:

  • An increase of £1.9bn in gross written premiums in 2018 (£35.5bn in 2018, compared to £33.6bn in 2017)
  • A reduction of net incurred claims in 2018: £16.4bn compared to £18.3bn in 2017
  • A reduction of net investment return in 2018: £0.5bn compared to 1.8bn in 2017

Several natural disasters in 2018, including Hurricane Florence and Hurricane Michael, Typhoon Jebi in Japan and California’s wildfires led to major claims that cost the Lloyd’s market £2.9bn. This is significantly higher than the long term average of £1.9bn. This contributed to a combined ratio of 104.5% in 2018.

In spite of substantial claims, Lloyd’s is in a stronger financial position. The company added 9% to its total assets, bringing that figure to £118.0bn. Lloyd’s net resources increased to £28.2bn. Lloyd’s central assets also saw growth to £3.2bn.

A rigorous business planning process for 2019 removed almost £3.0bn of poorly performing business from the market and remediation plans were implemented across all review classes of business. Four new syndicates started trading in 2018 demonstrating Lloyd’s enduring appeal and the market’s continuous focus on innovation.

Lloyd’s is also ready for Brexit through its new Brussels subsidiary, which is fully operational and writing risks. This provides certainty for our customers in the European Economic Area (EEA) that they can continue to access Lloyd’s insurance products, services and expertise. The market also made good progress on modernization in 2018, evidenced by a substantial increase in adoption of technology solutions, including electronic placement.

“The market’s aggregated 2018 results report a combined ratio of 104.5%, and a £1.0bn loss. This performance is not of the standard that we would expect of a market that has both the heritage and quality of Lloyd’s. We have implemented stronger performance management measures which will remain an enduring feature of how we go about our business. We expect these actions to deliver progressive performance improvement across the market beginning in 2019 and in the years to come,” said John Neal, Lloyd’s Chief Executive Officer.  “We are determined to show decisive leadership across three fronts: to address the performance gap; to secure Lloyd’s future success; and, following our announcement yesterday, to tackle all forms of inappropriate behavior with robust actions to create a more inclusive working environment.”

Source: LLOYD’S

Lloyds of London commits to creation of safe, inclusive work environment.

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(London – Insurance News 360) – On March 26, executives at Lloyds announced a robust plan of action to handle reports of sexual harassment in the market and create an inclusive working environment where employees feel safe.

Working with the Lloyds Market Association, and the London and International Insurance Brokers Association, the Lloyd’s Board and Council developed the wide ranging plan, which includes the following:

  • Provision of an independently managed, confidential and market-wide access point for reporting inappropriate behaviors.
  • Confirmation that, where investigations conclude that individuals have a case to answer, they will be subject to sanctions from their own companies and also from Lloyd’s. They may be banned from entering Lloyd’s for a fixed period and potentially for life.
  • Undertaking an independent and market-wide culture survey to identify the scale and scope of the issue, and to inform further action.
  • A comprehensive review of policies and practices across the Lloyd’s market, with a view to identifying and sharing best practice.
  • Provision of training focused on prevention, as well as reporting and supporting those who have been subjected to inappropriate behavior.

This is in addition to the company’s commitment to hearing accounts of women who spoke to Bloomberg, in a safe and confidential space; and making changes to Lloyd’s Nominations Committee to improve diversity. Fiona Luck and Vicky Carter will join the committee immediately, succeeding Sir David Manning and Charles Franks.

“It has been distressing to hear about the experiences of women in the Lloyd’s market. No one should be subjected to this sort of behavior, and if it does happen, everyone has the right to be heard and for those responsible to be held to account,” said John Neal, CEO of Lloyd’s. “I am pleased that the market has given its full support for a strong set of actions, and I am determined that Lloyd’s offers a safe and inclusive working environment for everyone.”

Source: LLOYD’S

Two whistleblowers receive $50 million from SEC

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(Washington D.C. – Insurance News 360) – On March 26, the Securities Exchange Commission announced $50 million in awards to two whistleblowers. One individual received the third largest award to date – $37 million. The second received a $13 million reward.

“Whistleblowers like those being awarded today may be the source of ‘smoking gun’ evidence and indispensable assistance that strengthens the agency’s ability to protect investors and the capital markets,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  “These awards show how critically important whistleblowers can be to the agency’s investigation and ability to bring a case to successful and efficient resolution.”

Since 2012, when the first whistleblower award was given, the SEC has awarded more than $375 million to 61 different individuals. Payments for these awards come from an investor protection fund financed through the monetary sanctions paid to the SEC by those who violate securities laws. None of the award money has come from investors who were harmed by violators.

The SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity as required by the Dodd-Frank Act.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.

Source: U.S. Securities and Exchange Commission.

HHS releases voluntary cybersecurity practices for health industry

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(Washington, DC – Insurance News 360) – On Dec. 28, the Department of Health and Human Services (HHS) released the “Health Industry Cybersecurity Practices (HICP): Managing Threats and Protecting Patients” publication. The four volume publication, aims to provide voluntary cybersecurity practices to healthcare organizations of all types and sizes, ranging from local clinics to large hospital systems.

This was report came from a mandate to develop practical cybersecurity guidelines to reduce risks for the industry, as part of the Cybersecurity Act of 2015 Section 405(d). The publication is an end of a two-year effort bringing together over 150 cybersecurity and healthcare experts from industry and the government under the Healthcare and Public Health (HPH) Sector Critical Infrastructure Security and Resilience Public-Private Partnership. It was the result of a true public-private partnership to better secure the nation’s health systems.

“Cybersecurity is everyone’s responsibility.  It is the responsibility of every organization working in healthcare and public health.  In all of our efforts, we must recognize and leverage the value of partnerships among government and industry stakeholders to tackle the shared problems collaboratively,” said Janet Vogel, HHS Acting Chief Information Security Officer.

Technologies that are vital to the healthcare industry and help provide life-saving treatments and improve patient care are also susceptible to attacks. They can be exploited for personal data or to shut down entire hospital systems.

“The healthcare industry is truly a varied digital ecosystem. We heard loud and clear through this process that providers need actionable and practical advice, tailored to their needs, to manage modern cyber threats. That is exactly what this resource delivers; recommendations stratified by the size of the organization, written for both the clinician as well as the IT subject matter expert.” said Erik Decker, industry co-lead and Chief Information Security and Privacy Officer for the University of Chicago Medicine.

The HICP publication aims to provide cybersecurity practices for this sector to improve the security and safety of patients. It recommends 10 Cybersecurity Practices to help mitigate these threats. It also lays out a call to action for all industry stakeholders, from C-suite executives and healthcare practitioners to IT security professionals, that protective and preventive measures must be taken now.

For more information on this effort and to download a copy of the publication, please visit the 405(d) website at www.phe.gov.

Source: U.S. Department of Health and Human Services (HHS).