Business Insurance Needs

Table of Contents

Chapter 1: The Basics	1
Group Insurance Principles	1
Eligible Groups	1
Single Employer Groups	1
Multiple Employer Trusts (METS)	2
Unions, Associations, and Other Groups	2
Creditor-Debtor Groups	2
Underwriting Advantages	3
Keeping Current With Business Needs	4
The Informed Consumer	5
Providing a Quote	6
The Contract Participants	8
The Insurer	8
The Insured	8
Insurance Contract	9
Underwriting and Rating	9
Finance	10
A Public Interest	10
Insurance Helps Social Values	11
Affected with the Public Interest	13
The Insurance Contract	13
Defining the Contract	13
An Agent’s Responsibility	14
The Application for Coverage	15
The Binder	17
Contract Elements	18
Contract Agreement (Offer & Acceptance)	19
Competent Parties	21
Insurer Incompetency	22
Public Interest	22
Consideration	22
Contract Characteristics	23
Adhesion	23
Unilateral Contracts	24
Good-Faith Contracts	25
Warranties	27
Representations	28
Concealment	29
Principle of Indemnity	31
Insurable Interest and Subrogation	32
Subject, Owner & Beneficiary	33
Chapter 2: Managing Risk	35
Chance of Loss	35
What is the Degree of Risk?	36
Basic Definitions	37
Peril	37
Hazard	38
Loss	38
The Insurance Company’s Role	39
The Risk Manager	41
The Group Buyer	43
The Seller or Advisor	43
Group Insurance Administrators	44
The Risk Management Process	45
Business Management	45
Worksheet Example	47
Identifying Potential Loss Exposures	47
Risk Transfer	48
Retaining Risk	49
Risk Avoidance	50
Risk Reduction	51
A Recap	51
The “I am Insurance Poor” Defense	52
Reducing Hazard	53
Reducing the Loss	53
What Is Indemnity?	54
Insurers Face Their Own Risks	54
Chapter 3: Types of Insurers	59
Private and Government Insurance	59
Private Insurers	59
Life Insurance	60
Property and Liability Insurance	60
Government Insurance	61
Voluntary Government Insurance	61
Compulsory Government Insurance	61
Mutual Companies	62
Assessment Mutuals	62
Non-Assessment Mutuals	65
Conversions	65
Reciprocal or Inter-Insurer Associations	66
Stock and Mutual Underwriting	67
Factory Mutuals	68
Superior Agents and Brokers	69
Chapter 4: Coverage Options	72
Coverage Checklist	72
Working From a Standardized Format	73
Property Insurance	74
Deductible Versus Self-Insured Retention	74
Replacement Cost Versus Actual Cash Value	75
Functional Replacement Cost	75
Coinsurance Versus Agreed Amount	76
Property Coverage Forms	77
Earthquake	78
Flood Insurance	78
Building Ordinance and Law Coverage	78
Glass	79
Construction or Builder’s Risk	79
Pollution Coverage	79
Reporting Form Coverage	80
Property in Transit	80
Business Income, Extra Expense, & Rent Loss	81
Blanket Coverage	82
Business Owner’s Policy (BOP)	82
Locations of Coverage	83
Liability Insurance Coverage	83
General Liability Forms	83
Aggregate Limits	86
No Policy Covers Everything	87
Claim Payments	87
Deductibles	88
Costs of Defense	88
Payment Approaches	89
Umbrella and Excess Liability Policies	89
Errors and Omissions Coverage	89
Ostensible Authority	91
Serving as a Director or Officer	95
Underground Storage Tanks	95
Auto Coverage	96
Coverage Symbols	96
Uninsured & Underinsured Motorist Coverage	97
Coverage for Rented Vehicles	97
Garage Liability	98
Garage Keeper’s Liability	98
Actual Cash Value or Stated Amount	99
Accessories	99
Miscellaneous Insurance Coverage	100
Crime Coverage	100
Boiler and Machinery Coverage	101
Inland Marine Insurance	101
Ocean Marine	103
Electronic Equipment Coverage	103
Utilizing a Checklist	103
Part 1 – Building Coverage	104
Part 2 – Building Coverage	105
Part 3 – Miscellaneous Property Coverage	106
Part 4 – Business Income, Extra Expense, and Loss of Rents Coverage	107
Part 5 – Commercial General Liability Coverage	108
Part 6 – Umbrella/Excess Liability Coverage	109
Part 7 – Automobile Coverage	110
Part 8 – Miscellaneous Insurance Coverage	113
Chapter 5: Evaluating A Business	114
Part 1 - General Information	115
Part 2 - Historical Information	115
Part 3 - Insurance Policy History	116
Part 4 - Current Operations	117
Part 5 - Property Information	118
Part 6 - Checklist of Enclosures	120
Part 7 - Vehicle Schedule	120
Chapter 6: Workers’ Compensation	122
Calculating Workers’ Compensation Premiums	124
Applying Payroll Classifications Properly	124
Experience Modification Factors	125
Minimizing Experience Modification	125
Loss Control Services	126
Dividend Programs	128
Dividend Types	128
Comparing Dividend Proposals: Terminology	129
Retention	129
Loss Conversion Factor (LCF) & Loss Development Factor (LDF)	129
Incurred But Not Reported (IBNR)	130
Dividend History Matters	131
Commissions	132
Good Accounting Is a Must	132
Other Considerations	133
Illegal Immigrants	133
Owners and Officers	133
Independent Contractors	133
Volunteers	134
Out of Territory Employees	134
Workers’ Compensation Coverage Checklist	135
Chapter 7: Group Health Insurance	137
Terminology	137
Defining Group Insurance	144
The Group Contract	145
Experience Rating	145
Group Underwriting	146
Group Classification	147
Individual vs Group	147
Franchise Health Insurance	148
Blanket Insurance	148
Group Credit Insurance	148
Self-Insuring	149
Patient Protection & Affordable Care Act	153
Guaranteed Issue	154
Young Adults	154
Individual Mandate	154
Health Insurance Exchanges	155
Medicare & Medicare Reforms	155
Small Businesses	155
Congress	155
Employer Mandate	156
Changes to the Affordable Care Act	157
Short-Term Insurance	158
Association Health Plans	158
Pre-tax Dollars	159
Limiting Consolidation	159
Other Changes	160
Timeline	160
Disability Insurance	161
Short-Term Disability (STD)	165
Long-Term Disability (LTD)	166
Disability Terms	169
Benefit and Waiting Period	169
Cost of Living Escalator	170
Renewable & Non-Cancelable Contracts	170
Benefit Coordination	172
Marketing Disability Insurance	172
Long-Term Nursing Care Insurance	172
Life Insurance for Long-Term Care Costs	174
Rising Costs for LTC Care	177
How Costs Are Covered	178
State Statutes on Long-Term Care Group Insurance	179
Premiums	181
Long-Term Care Benefits	181
Activities of Daily Living	183
Asset Protection	183
Integrated Long-Term Care Policies	184
Assisted Living Benefits	184
Marketing Group Plans	185
Chapter 8: Terrorism Risk Insurance Act (TRIA)	186
Defining “Act of Terrorism”	186
TRIA	186
President Bush Signs TRIA	188
The Role of Terrorism Insurance	188
Policy Restrictions	190
Business Interruption Insurance	190
Workers Compensation and Other Coverage	191
Coverage under Terrorism Insurance	192
Chapter 9: Key Person Insurance	197
Buy-And-Sell Agreements	197
Sample Buy-Sell Agreement	199
Final Checklist for Buy-And-Sell Agreements	208
Death & Beneficiary Arrangements	209
Loss of Interest	209
Cross-Purchase Agreements	210
Wait-and-See Arrangements	211
Key Person Principle	211
Insurable Interest for Life Insurance	211
Health Insurance on Key Employees & Owners	213
The Small Company’s Exposure	215
Loss of the Small Business Owner	215
Planning Ahead for Death or Disability	219
Chapter 10: 401(k) Plans	220
Employer Incentives to Offer 401(k)	220
Various Plans Exist	221
No One Plans to Fail	223
Retirement Needs Worksheet	224
Too Much To Cover in One Chapter	225
401(k) Plan Elements	226
How the 401(k) Plan Works, Eligibility	228
Contributions	229
Plan Vesting	230
Company 401(k) Fund Matching	230
401(k) Loans	231
Fund Withdrawals	233
IRS Section 72(t)	235
Non-Discrimination Testing	236
401(k) Plan Investing Options	236
Fund Rollovers	238
At Retirement	241
In Conclusion	242
Chapter 11: Business Ethics	244
Cooperation	244
Promises	246
In Order to Avoid Problems	247
After the Sale	249
Educated Professionals	249
Why Don’t Agents Interact?	252
Setting Goals	252
Recognizing Potential Business Risks	253
A Culture of Shortsightedness	259
It’s A Jungle Out There	260
Following a Code of Ethics	262
Promoting Ethical Conduct	265
Choosing The Ethical Path	266
Identifying With Others	268
Test Your Own Ethical Standards	269
What Does An Ethical Agent Look Like?	271
Initiating the Appointment	272
Replacing Another Agent’s Policies	273
Rolling Clients From One Insurer to Another	274
Information Provided	274
The Client’s Best Interest	275
Servicing Existing Policies	275
Public’s Perception of Agents	277
Developing a Sense of Professional Pride	277
Education is Not Only Required – It Also Makes Sense	279
Midwest Zone Agreement (Education)	280
Whistleblower Protection Act	283
From a Practical Standpoint	286
Section 406 of the Sarbanes-Oxley Act	289
Making ethical decisions involve	293
Final Page of book:	295

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