3D Jewelry Printing

3D Jewelry Printing Revolution can cause general liability insurance changes

Jewelry making has always been a time honored tradition requiring skilled artisans to create exquisite jewelry pieces. These pieces are sold in jewelry shops, boutiques, antique shops and galleries offering these tiny works of art. Many jewelers have their own shops and sell their own custom designs. Alternately, originals and reproductions are sold in retail stores throughout the country on consignment; after purchasing directly from the artisan, or by obtaining copyright permission from the master artisan who designed and created the piece to mass produce it.

3D jewelry printing

In modern day many crafters also create jewelry on a smaller scale and sell it directly at art festivals, crafter’s markets, flea markets, mail orders and other means of distribution. In short jewelry sales in all its various forms is BIG BUSINESS. Jewelry sales in 2014 exceeded $68 billion dollars according to the 2014 US Jewelry Market Report.

3D jewelry printing will revolutionize the jewelry making business.

3D printing will have a compound effect upon the industry as new methods will require different types of insurance to protect the artisans who make and sell jewelry. 3 D jewelry printing is actually one (1) form of seven (7) categories of additive manufacturing. This process allows artisans to create an original piece of jewelry using additive manufacturing and replicate the jewelry in mass. Jewelry makers will no longer be required to design each original piece using traditional lapidary and hand tools to chisel and polish gem stones and settings. Instead they can use 3D jewelry printing.

Additive manufacturing (ADM) methods used to make jewelry differ. There are several viable options. American Pearl has built the “Jewelry Replicator” which can duplicate any piece of jewelry or create jewelry pieces from a photo or a drawing. As a result antique jewelry can be recreated when a piece is lost or broken beyond repair. 3D photo files can be created using software designed for jewelers such as “Rhinogold” to control the printer and design the actual jewelry. Jewelry made with rare metals and jewel can be created using a combination of techniques based on the jeweler’s preference.

3D Printers, other related equipment and the components for making the jewelry in house using ADM must be put in place; which means an initial investment in the equipment, supplies and chemicals used in the process. These items may be a great deal more expensive than traditional hand tools used in the past, but can be offset by the reduction in amount of time it takes to make the piece or pieces. Or, jewelers have the option of sending a 3D software file to an outside printing service to print the jewelry piece rather than purchasing the printing equipment.

Ultimately, after the jewelry making process is chosen and the machinery and equipment are in place to replicate the jewelry, it may radically reduce the cost of producing the jewelry. The ability to reproduce from a drawing or photo may diminish the need for galleries and show rooms and cause the retail value of some types of jewelry to fall as the supply of the product will increase.

On the other hand, it should lessen the costs of producing, copying and distributing the jewelry which will mean a bigger profit for the maker and seller.

Insurance coverage for Retail Jewelry Stores will need to be expanded.

Types of insurance which are available for Jewelers are:

Jewelers Standard policy
Jewelers Block Policy
Business Owners package designed for jewelers
Commercial Insurance Package designed for jewelers.

All of the above can be customized to fit the needs of any particular jewelry business.

Retail jewelry stores generally need the same types of insurance as any other business including general liability, worker’s compensation and standard business property coverage.

Jeweler’s also need property coverage for their building, fixtures, tools, equipment, molds, designs and original art work used to design jewelry. Other recommended insurance riders or supplements include, marine inland, Bailee’s insurance, and employer’s liability.

A jeweler’s property insurance must cover raw inventory, including stones, rare jewels, gold, copper, silver and other types of metal and elements used in jewelry making and design as well. Most of these coverage needs will not need to change due to additive manufacturing.

Insurance needs will change for:

general liability for new processes
new types of equipment,
products and environmental liability,
and, workers compensation.

Retail sales of jewelry are insured for general liability pursuant to the Class Codes depending on which of the 4 general classification codes are used to obtain a quote. For example. if using NAICS, retail jewelers fall under the Industry Group 44813 and the basic NAICS class code for a jewelry store is NAICS 448310. However, if the store is considered a department store that sells a wide array of products, including jewelry it could be classified differently, but it is unlikely that a department store will engage in replicating 3D jewelry.

General liability policies for retail jewelry sales should fall under this class code (or similar code) for jewelry making, But the additional class code for additive manufacturing will be come applicable for 3D jewelry printing services. So the general liability policy would need to be amended to add this code.

It is critical to your coverage that any needed class codes be added as you are adding new tasks which may not be covered at all under jewelry sales.

As 3D printers were not historically used as equipment, jewelers will have to add coverage for a commercial 3D printer including coverage for repair or replacement and may need to increase or add loss of income if the machine is down for a stretch of time. Jewelers may also need insurance for loss of production when electrical outages occur. Increases to the amount of coverage for fire may be needed due to the technical requirements of the printer and the temperature reached during the process.

While there is little certainty about the future of products liability litigation regarding 3D jewelry printing in general, liability may arise. http://www.industryweek.com/emerging-technologies/3D-printing-and-its-uncertain-products-liability-landscape. Thus, it is prudent to explore what options are available through your agent to protect you from a products liability claim in case a client suffers injury directly from a product you created or from exposure to a component used in the 3D process.

Workers compensation insurance codes may need to be added to your policy as workers may be exposed to new risks during the 3D process. Byproducts of plastic and metal powders used in the additive process may also be an environmental pollutant and a workers compensation risk which may raise premium cost and increase your risk for pollution liability. Pollution is generally an exclusion under a general liability policy so you do need to examine you policy to determine if excluded, and determine options to obtain pollution coverage. The best way to address rising premium costs is to implement a safety plan for the business designed to combat these concerns and protect your worker’s health. The plan should also address disposal of byproducts and chemicals. See: http://www.lawnandlandscape.com/article/ll-071317-insurance-safety/

It may be necessary to protect 3D jewelry printing software files by adding or increasing cyber liability insurance. Patents, trademarks and copyright insurance should be added or enhanced especially if you are replicating jewelry produced by another artisan, or in case someone steals your designs electronically.

Thoughtful examination of your insurance policies will set you on the path to a successful and profitable 3D jewelry printing venture.

Image credit: Pixabay.com, used under Creative Commons CCO, permission from artist or attribution not needed for any purpose.

Concrete Contractors and Silica:

The field of Concrete Construction is extremely complex. This type of construction is subject to the ASTM International Concrete and Construction Standards (The American Section of the International Association for Testing Materials) as well as the American Concrete Institute Standards for Design and Construction.

Each build differs with the type of cement, sand and aggregates used to mix the concrete. The contractor must consider the moisture content, the strength of the mixture, the chemical reaction abrasion test result, and numerous other factors which go into planning a build. One of those factors is the use of silica in the process of making concrete and removal of silica. This mineral is about to make the job even more complex and may affect the bottom line due to increased need and costs for insurance coverage which shields you from liability for it’s use.

All concrete contractors need commercial insurance including commercial general liability and worker’s compensation which are required by law in most states. It is important to remember that general liability does not cover all insurance needs. You will also need Commercial Property, Commercial Auto, Inland Marine for tools and equipment and/ or Goods in Transit and Installation.

Additional recommendations not specific to the installation of concrete, would be Employee Dishonesty, Employee Benefits Liability, Employee Related Practices, Loss of Business Income with Extra Expense, Stop Gap Liability, Umbrella Insurance and Professional Liability for design and installation. You also need Heavy Equipment Insurance if your commercial auto does not cover large vehicles such as a cement mixer truck, dump trucks and other heavy equipment you use.

Specific Industry related recommended insurances would include Contractors E&O, (This is not the same as Professional Liability insurance) E&O covers you when you make a mistake and are negligent during the building process. Along with E&O you need a custom combination of the three types of insurance below to protect your business from environmental threats.

Products Liability
Environmental Impairment Liability
Pollution Control

The need for these insurance types has come about with the rise in litigation surrounding the construction industry as a whole and regulations imposed for each specific industry in the field of construction So you may need all of these separately or combined in a BOP depending on what your carrier offers.

Due to health concerns for workers and the public, OSHA recently adopted new rules in regard to airborne (respirable) silica. Silica is one of the varying components contained within the sand, rock and the cement used in the concrete mixture by contractors. This rule will significantly impact Concrete Contractors. Crystalline silica (SIo2) is the type used to make concrete as opposed to amorphous silica. All of the 5 types of crystalline silica are listed as known occupational carcinogens by the CDC. Crystalline silica is hazardous when it is used in construction processes such as blasting, cutting, chipping, drilling and grinding which make the silica “respirable”. It works much like asbestos which is not hazardous unless disturbed, and then the substance becomes friable. When silica is disturbed by construction processes it becomes “respirable” and workers breathe silica in and it becomes hazardous and can cause Silicosis and many severe lung related diseases which can be fatal in addition to cancer.

The Insurance and Risk Management Institute (IRMI) has predicted that the litigation surrounding silica will rise and result in increased environmental litigation much like the issues surrounding toxic mold did and points out that as Silica is a known carcinogen while mold is not. Aside from IRMI’s prediction silica seems to be more akin to asbestos than mold in some ways. According to the Department of Labor Construction Workers as a whole have an anticipated death rate of 1.82 as opposed to metal mining where the rate is the highest a 69.51%. But that figure could be categorically higher for concrete workers ( the study was not broken down to examine different types of construction workers) as their exposure to respirable silica is frequent, due to contact with the components used to make concrete and resulting concrete dust, while it is being mixed, installed, poured, leveled, troweled edged, brushed finished and cut to specifications. Workers are also exposed to the dust during the removal of old concrete from a construction or demolition site or during remodeling.

As pointed out by IRMI, the growing numbers of silica litigation could cause an exclusion to be carved out by insurance carriers for silica just as one was created in regard to asbestos. So look for an exclusion specifically for silica in your general liability policy to become a reality in the near future throughout the construction industry but particularly in regard to concrete contractors and workers. Additionally insurance carriers could deny coverage based on the total pollution exclusion if a court finds that silica is a pollutant. It is very likely that silica would be considered a toxin.

Despite these issues, it does not mean that liability coverage will not be available if silica is used during the construction project. It means:

Concrete contractor will need to carefully review their existing policies and question your agent whether coverage for silica exposure is specifically excluded or there is a pollutant exclusion. If so,
Concrete contractors will have to purchase an endorsement, rider or supplement that covers silica either as an environmental hazard or a pollutant and adds coverage in addition to any exclusion in their existing CGL policy; or purchase a new BOP designed to cover environmental pollution and pollutant liability
Insurance carriers will want safety plans that comply with specific OSHA regulations and the new silica rule to prevent silica exposure through the use of safety equipment and limiting time of exposure to be part of your everyday operations.
Expect higher workers compensation premiums as awareness arises and workers are diagnosed with silicosis or other related diseases.
Compliance with OSHA regulations to prevent or minimize exposure will be critical and will hopefully reduce the amount of your premiums.
Products liability will be necessary because the concrete mix you are making is actually a product you made or “manufactured” and you would have liability for it; if it is harmful to the public. You also have liability during the demolition and removal process for old concrete that you encounter as it will become respirable at that point: and you will have liability for any other toxins uncovered during the removal. If you purchase the concrete from an outside source, you may also still have some liability for using and installing it and recommending it to the client just as asbestos manufactures and installers were liable.

CNA Insurance offers a Subcontractors Errors and Omissions Policy with Pollution Liability which is endorsed by the America Society of Concrete Contractors. Their Pollution Liability Coverage includes asbestos, mold and respirable dust or Silica. Travelers also offer Contractor’s Edge policies. Many other carriers have policies that you can purchase additional supplements and endorsements for which can provide for coverage of these hazards for silica and/or other toxins which have exclusion in your CGL policy.

Retiring from Medical Practice Soon?

Risky business if you don’t have “tail insurance.”

Doctors are aging out of the medical field along with the rest of the baby boomer generation. In 2014, one out of every four doctors was over 60. HTTP://www.centerforhealthjournalism.org/2014/03/10 While it sounds wonderful to be able to retire and not have to worry about all the complexities of operating a medical practice, there are insurance risks you must address before exiting the workplace.

Chances are high that you might not have considered retirement at the time you entered into practice and selected your insurance coverage options some thirty plus years ago.

Most doctors are keenly aware of the necessity for professional liability insurance a/k/a medical malpractice insurance while in active practice but they may not be as knowledgeable about their options upon retirement or becoming disabled and leaving the practice of medicine altogether. One might think General liability insurance will suffice after retirement, which is not correct. General liability insurance does not cover any part of medical malpractice.

So, what is the most important type of insurance you need to address upon retirement?

The primary insurance needed for retiring Doctors is Tail Insurance.

General Liability Class Codes Professional Liability Tail Insurance

In the past, tail coverage was an extended reporting period endorsement, offered by a physician’s current malpractice insurance carrier. Simply put, this insurance is basically a continuation of your medical malpractice insurance upon leaving employment, reaching retirement, or becoming disabled. Retirement situations are the focus herein so we are narrowing the endorsement terminology to a non-practicing extended reporting period endorsement. Some insurance carriers historically provided free tail coverage upon retirement if the Doctor had 5 previous years of existing coverage with their company; or you could purchase a policy through your existing carrier only. The same factors generally applied if you become disabled.

Tail insurance differs from medical malpractice which only provides coverage for the period of time the policy was in effect and is a Claims Made policy. Tail coverage is for prior acts which occurred during the time http://www.irmi.com/claimsmade the original malpractice policy was in effect, but a claim is not filed until after the cancellation of the original policy. So it covers acts of negligence which occurred while in practice, but the claim is made after the physician retires. This assumes that the Doctor had an active malpractice policy in place before retirement that covered claims within the original policy dates.

The insurance industry has evolved dramatically in this area and now offers alternatives to obtaining tail coverage either directly from your former professional liability insurance carrier or a different carrier of your choosing through the use of a Stand Alone Tail Policy.

So what do you need to do to ensure you’re protected in your golden years?

First, you want to examine any agreement or contract that you entered into as part of your practice, or with any hospital where you were on staff, which addresses what type of insurance, if any you are required to carry upon retirement or leaving the hospital staff, the aggregate limits requirement in the contract and the cost of the premiums. You also should see a clause in the agreement which identifies whether you are required to pay the cost directly or the group is required to continue the payment, if applicable.

Then you want to look at your existing individual malpractice insurance or group malpractice policy to see if it has a provision for the free endorsement after retirement, and when it would become effective which is generally after 5 years of coverage.

Once you know if you have to provide the cost of the tail insurance and what the policy limits need to be you can go forward and decide whether continuing with your present carrier is your best option.

If you are a sole practitioner then the decision making is a little easier. You will still need to determine your contractual obligations with any hospital you are on staff with. If you don’t have tail insurance you need to obtain it before retiring. If your original malpractice expires you will have a gap in coverage. Contact your current malpractice carrier and see if they provide a free endorsement and determine what the applicable date is that the free endorsement would become effective. If you are not eligible for a free endorsement with your present carrier, determine whether coverage is available through your carrier and what your options are as to cost and amount of coverage.

If the price is exorbitant, which it may be, you can comparison shop different insurance companies for a stand-alone tail policy. This type of policy can cover different lengths of time for the extension period ranging from 1 year to indefinite. Since medical malpractice claims may be filed many years later it is a prudent idea to consult an attorney to determine the statute of limitations in the area where you practiced. An Indefinite extension would be the optimal time length as you would be covered if a claim is ever filed, but that option may not be affordable. Some insurance carriers are offering financing on this type of insurance.

An independent insurance agency or broker is able to shop numerous carriers and find the perfect fit at the right price for you. So don’t end up holding a tiger by the tail. Take action to protect your assets.

Cyber Security, Data Breach and/or General Commercial Liability;

Can business owners safely terminate their cyber security/ data breach insurance relying on General Liability coverage as a safe harbor?

Cyber Security

On July 27, 2016 the U.S. Federal Court of Appeals for the Fourth Circuit held in Traveler’s Indemnity Company of America vs. Portal Health Care Solutions that a Commercial General Liability (CGL) does cover a data breach and the insurance company has a duty to defend the insured business on the class action claim filed against it.

This decision might lead businesses to believe that they do not need Cyber Security or Data Breach Insurance. While it may appear to be a cost saving measure now, it could result in a far greater liability in the event of a data breach claim against you.

The Portal case was filed in 2013. The decision therein hinges on the coverage under Part B of the CGL policy for Personal and Advertising Injury. Changes were made to CGL policies with exclusions and endorsements which became effective May 1, 2014 based on ISO’s suggested forms. While adherence to ISO forms is not mandatory, it is widely recognized and usually adopted. To date the ISO exclusion and endorsements on data breach are available for use in 53 states depending on the carrier’s preference. So the Portal case may not be applicable to policy claims made after that date that do not contain Part B Coverage. This point will certainly be argued in the future should similar cases be filed after the effective date without containing Part B coverage language.
The Portal Health Solutions case is a departure from the previous holdings in other state court cases holding CGL insurance does not cover data breaches creating a conflict between the states. This may result in the case being certified by the Supreme Court of the United States. However, there is an absence of conflicting rulings between two Federal Courts of Appeals which is generally a trigger for the Supreme Court to accept a case.
Each party has a right to file a Petition for Certiorari to ask the Supreme Court to review the case. In this case, only Travelers would have a reason to request review. The Supreme Court may want to hear the case because the Defendant Portable Health Solutions data consists of medical records which would fall under HIPPA privacy rules and the protection of these documents is legally mandated, so the Government would have an interest in protecting American citizen’s privacy and the members of the class action suit who were injured by the data breach.
It also raises important questions in regard to cyber security in the form of cyber hacking of data, which is a growing national threat. Cyber security is considered to be the 5th highest underwriting risk for insurance carriers according to the Swiss Re; Sonar report,May 2016.. Thus the Supreme Court has a duty and an interest in protecting the safety of America’s citizens.
Almost all businesses have some risk of data breach or a cyber security risk which impacts commerce and trade throughout the US.

Due to all the above factors, it is difficult to determine whether Traveler’s Indemnity will Petition for Certiorari, and whether the Supreme Court will accept the case. The better course of action for Travelers financially may be; to just cover the insured damages under the policy and then go on to fight another day in a case that does not have Part B coverage and the endorsements are on the newer ISO forms. However, Traveler’s may still have numerous policies outstanding with Part B coverage for personal injury and advertisement that compels them to address the question now.
Because of the ever growing risk associated with cyber security crimes, including extortion, kidnapping, and terrorism most major carriers have designed new types of insurance products to cover data breach and cyber s crimes presuming that general liability did not cover this instance based on previous court rulings. If this ruling is upheld without going to the Supreme Court it may still have far reaching impact for both the business community and the insurance industry, as it leaves the basic question unanswered regarding coverage after the inception of the new ISO endorsements.

If the public perception is that you do not need data breach / cyber security insurance this could lead to a sizable loss for the insurance industry in litigation and loss of premiums which could lead to employee layoffs in insurance companies and business closings.

Bear in mind the insurance carrier payment for a data breach policy endorsement in the Target data breach case reached $44 million dollars. Generally, CGL policies do not have this high of an aggregate limit.

If the insurance carrier has to provide this insurance under a CGL policy without endorsement there will be significant losses under those policies. Costs for General Liability insurance will rise and be passed on to the insured.

Insureds may not have adequate insurance under their CGL as the policies are not designed to offer specialized coverage suited to each company’s needs and the aggregate limits may be too low, thereby financially harming the insured, and the injured party.

The insured may still have options to purchase specific policy endorsements or supplements if the products continue to be offered. Most likely they will be as the public awareness of the threat and the demand for the products is growing.

Consequently, until there is a complete resolution of this issue, the prudent business person should, at a minimum; retain their present cyber security/ data breach insurance. High risk industries should also purchase appropriate insurance products based on a thorough risk assessment or continue their existing coverage. It would be unwise to rely solely on your commercial general liability policy for data breach and cyber security risk.

Pest Control Companies: Beware of the mosquito

What liability risks are out there and what you can do to manage them

Pest control is a vast multi-faceted and highly regulated global business offering various types of services to control pests of all types to numerous industries and the public Pest control business liability classification codes are:

Pest Control

Pest control involves eradication or abatement of all types of pests, insects and rodents but none more evasive and resilient than the mosquito. In the United States Pest control companies often provide residential pest control options for mosquitoes and other insects both to individual homeowner’s, apartment complexes and other types of residential buildings as well as temporary lodging such as resorts and hotels Municipalities, townships, counties, water districts, states, countries and community based programs also undertake the eradication of mosquitoes, especially when there is a disease outbreak. Commercial pest control companies often subcontract with these entities to perform the actual pesticide application, monitor the mosquito population, train applicators and monitor certifications and licensure of employees/applicators.

The reason so much attention is given to eliminating this one insect; is the danger to human life, along with wildlife, associated with Vector borne diseases transmitted by mosquitoes after extrinsic incubation, e.g. Malaria, Yellow fever, West Nile Virus, Chikungunya and Dengue fever. The National Resources Defense Council indicates that these diseases are increasing as the insect population grows, due to the warming of the climate, along with the shifting rain and weather patterns. As a result, Additionally, another growing threat from the mosquito is on the horizon.

As the 2016 Olympics get under way the public, the business sector, medical professionals, human health organizations, environmental and government agencies and the pest control industry are warily eyeing the event as the Journal of America Medical Association states the potential for a pandemic is explosive due to the presence of the Zika virus, which is an emerging illness borne by mosquitoes, in the Olympics host county of Brazil.

Some states in the United State have already experienced cases of Zika. Most notably there have been cases reported in 15 counties in Florida and as consequence new laws have been enacted which impose even greater regulation for pest control company applicators. Other states as well may follow suit as the disease spreads.

In this case, the infected female Aedes genus mosquito is the carrier Zika Vector Control for the Urban Pest Management Industry). This particular mosquito type is an invasive species which is already established in America and by its nature continues to expand its range. It carries Zika virus, dengue fever and a possible link to microcephaly in infants. Additionally, is has been recently confirmed that an infected human male can sexually transmit the Zika virus to a female similar to AIDS while the virus is active. Zika is also possibly linked to severe brain damage and Gullian Barre’Syndrome.

A debate now rages among the scientific community as to whether or not microcephaly is associated with the Zika virus; or its actual root cause is a larvacide (growth inhibitor) called “pyriproxyfen” used for mosquito control by targeting the larval stage while in the water source. In Brazil, it was allegedly injected into by the Brazilian Health Ministry into the drinking water tanks to combat the mosquito population. See: “Chemical Larvacide, not Zika, true cause of Brazil’s Microcephaly Outbreak.” This larvacide is approved in the US by the EPA and worldwide by WHO

Either way the pest control industry will be squarely in the middle of the debate on how to effectively reduce the mosquito population using Integrated Pest Management with Biological Based Technology and still prevent harm to humans in response to the concerns raised about this disease in the National Pest Management Association Industry wide alert issued in January, 2016. Irregardless of which cause is the culprit it will have far reaching implications for insurance coverage for the the pest control industry.

Liability claims may rise in the form of general liability, professional liability and products liability as the number of victim’s increases and public alarm rises. Additionally, many local government mosquito abatement programs are being dropped by insurance carriers at a time when they are sorely General liability covers bodily injury due to your negligence (which is a failure to exercise reasonable care). Bodily injury means injury, sickness, disease or death. It is quite conceivable that a client that acquired Zika or other vector borne diseases could bring a negligence suit against a Pest control company, who failed to provide effective mosquito control for their residence, barring another possible source of contamination, dies or is injured, or their unborn child is borne with birth defects, caused by the disease or from the products used to abate this pest.

The Supreme Court of California widened the legal playing field when it held that pesticide application may not be excluded summarily under the pollution exclusions clause of an insurance policy without a thorough analysis of the facts and can be ordinary negligence performed in the general course of doing business in John R. MacKinnon vs. Truck Insurance Exchange (2003). As a result varying coverage has evolved for pest control companies.

These coverage may have different names but can be added as a supplement or rider to most general liability and business owner’s packages or can be obtained as special risk insurance specific to the industry including but not limited to mosquito abatement, fumigation, exterminator, pollution care custody and control, Crisis management endorsement and last but not least chemical liability. With the advent of new diseases and chemical compounds to address them Pest control companies must become or remain pro active to combat the negative impact caused by just one list insect.

The key factor is to review your company’s general liability policy or business owner’s package and be sure the wording covers pesticide application and mosquito control in the ordinary course of business and to make sure that specifically named diseases and/or vector borne illnesses are not excluded; or if excluded, purchase a rider, a supplement or special risk insurance policy. Also consider raising the aggregate amount on your general liability. You also need to make sure that if you are utilizing Biology Based Technology and larvae based pesticides (even if approved by the EPA) used on or near a water sources are covered, and obtain specific coverage and products liability for those products where there is either a known or potential risk for those pesticides and chemical degradation residue even if the product is approved for use under the Federal Insecticide Fungicide and Rodenticide Act and the EPA.

Products liability is necessary if you are selling a product or dispersing it into commerce. Professional liability is necessary if you are recommending products for use as part of your business or selling them to clients separately. It would be fiscally prudent to have liability for any known or emerging vector borne disease spelled out, if obtainable; but you primarily want to make sure they are not excluded under your policy.

If it is proven, that the chemical pyriproxyfen used in larvae applications is the cause of microcephaly, rather than the Zika virus, then there is sure to be tort cases similar to those brought regarding the Thalidomide tragedy. (Disturbingly, Monsanto is either the parent company or a partner with Sumitomo which makes this chemical. Monsanto is the maker of Agent Orange, 24-D and Roundup). If you are recommending the use of larvae applications, and use or sell this particular chemical or any type of application that causes an environmental risk due to the degradation of chemicals in your pest control business it is vital that you have environmental coverage as well.

As the world population rises and various new diseases emerge and new chemical compounds and pesticides are developed to eliminate the pests and thus combat the diseases the risk increase proportionally for a pest control company. Excellent comprehensive insurance packages are your best protection.

Business Liability: Artisan Contractors

SIC Business Insurance Codes:

7342 Disinfecting and Pest Control services
2879 Pesticides and Chemicals-Not classified Elsewhere

NAICS Liability Classifications:

561710 Exterminating and Pest Control Services
325320 Pesticide and Agricultural Manufacturing

Business ISO General Liability:

Code 43860 Fumigators
Code 43470 Pest Control Services

Beauty Salon Owners

What Beauty Salon Owners need to know about insurance before entering into a Chair or Booth Rental

Get the answers to your beauty salon insurance questions at generalliabilityclasscodes.com

In the Beauty Salon industry the practice of renting a chair or boot to a stylist has been around a very long time since the early 1900’s. This tradition fell out of vogue and the number of renters declined. See Booth Renters 101: A Guide for Owners Renters. Beyond the Chair.com Judiffier Pearson, 1916. In fact chair rentals are no longer legal in some states such as Pennsylvania. However, it is increasing in popularity again and is expected to be one of the fastest growing trends in this industry.

From a salon owners perspective it might seem quite attractive. It can offer many benefits such as:

Cuts down on the building overhead.
It is a standard flat rate not dependent on the stylist’s income.
The salon owner does not pay a wages, workers compensation insurance, employee or ER taxes for the renter:
The salon owner does not pay for the supplies or products used by the stylist
It may reduce the salon owner’s actual time standing on their feet while providing services for the clientele, which may be of significant value as the national work force as whole, including salon owners is aging.

So what’s the catch? First this relationship radically differs from an employee employer relationship and is actually a landlord tenant relationship giving the tenant rights of recovery an employee does not have. Second, there are numerous legal and tax issues which must be addressed in a contract in order to meet the Internal Revenue regulations: See Booth Rental-Legal and IRS Compliance, businesecon.org/2013. If you do not meet the requirements of an independent contractor IRS may determine you misclassified the employee and are now liable for taxes and/or Workers Comp. If you are going to rely on booth rentals you really need to have an attorney specifically design a standard contract that complies with your state laws that you can tweak to use for all booth rentals. Your contract needs to be salon specific and cover every material factor including: guess what insurance!

In regard to insurance, our contract should spell out:

all types of insurance that you are requiring the chair renter/ lessor to carry
the face amount you are requiring
that both the salon and you personally be named as additional insureds and that you be entitled to copies of all policies and copies of any policy changes be provided to you by the insurance company at the salon’s location. This is because your salon is liable if the renter fails to carry insurance and it is likely you will be joined in any lawsuit.
The contract should require that the tenant’s coverage be primary and noncontributing. with the insurance maintained by the landlord. This means the tenants insurance coverage is depleted before the renter or the insurer can seek recovery from the salon owner’s coverage.
The lease should also require the renter’s insurer to be licensed in the state in which the property is located and that they have sufficient total assets to cover its policy risks and satisfy certain Financial Strength ratings by A.M. Best Company.
The alternative to this is, a few insurers will allow Salon Owners to have a rider for Independent Contractors; if they meet all the regulations and qualify as Independent Contractors. The key for this arrangement to work is the cost for the add on or rider is set out clearly in the contract as a dollar amount between the Chair Renter and the Salon Owner which must be reimbursed to the Salon owner. (Although is not a common insurance practice there is nothing wrong with mentoring a new renter/Independent contract and trying to help them get established by offering information on types of insurance available, or even asking your agent to design a Business Owners Package which protects both parties. (See. “Changing the Booth Rental Salon Structure Entirely: Don’t be Just a Landlord.” The Ugly Beauty Business Dec. 2013.Tina Alberino.

If you choose to go the traditional route, what type of insurance is going to provide you and your business with the most protection from the renter’s actions? Of course, you want the renter to carry both General Liability and Professional Liability which most trade organizations in the industry recommend for the renter. As a salon owner you want to ensure that your needs are covered so you may want the renter to carry more diverse coverage. One obvious choice is Damage to Premises Rented to you. You may want to require the renter to furnish Personal and Advertising Injury as well as Tenant’s Legal Liability. If the renter is advertising you could be injured if reference is made to your name, salon or your address in the ad. Or you could co- advertise or feature their service in your advertisement but may lead to issues if the renter is not professional and above board.

Optional insurances highlighted above above can be purchased through a business owner’s package or as separate add on to generally liability. These packages are available to the salon owner and are also applicable to a renter who, in essence is a small business owner as well. The packages can include all of the above; plus, Back up of Sewer and Drain, Business Property, Commercial Auto, Inland Marine, Products liability, Products -Completed operations, Damages to Premises Rented, Personal and Advertising Injury and Loss of Business Income and Extra Expenses, Equipment Breakdown, Mechanical Breakdown, Identity Recovery Umbrella Liability, Cyberflex Coverage, Stretch Coverage which can cover just about any item owned or used in providing Services, including while being transported or being used offsite for a wedding or event of some type, Bailee’s insurance and bodily injury by disease.

So perhaps a risk management review with your agent or broker is a necessary step to protect you before renting a chair. This is particularly true if you are adding a new type of service you have not had in the past as more salons are embracing the spa model and offering expanded services to meet the clients need. You want to be sure that your general classification code for liability includes this category of services or it is added to your policy. Each new service may have a classification code of their own for example nail salons, nail technicians and Esthetician professionals. Each may have a different class code under the code used by the insurer applicable to the state you’re salon is I, and may have different licensing requirements. As part of your insurance risk review you agent or broker can advise you on emerging risks you may not be aware of relating to the industry. A perfect example is what is happening in NY with nail technicians and manicurists.

Due to the practices of a few unscrupulous nail shop owners, nail technicians were paid unfair wages and forced to participate in illegal activities. New York took swift legal action against the owners and enacted new laws. The media attention generated by the investigation cast the nail salon profession in a negative light. It also sparked growing health concerns impacting nail technicians, manicurists; and pedicurists and their unborn children including cancer, miscarriages and birth defects after a second research study came out on the health of nail technicians.

The medical issue is sure to spark litigation by the public, renters and employees alike and drive up concerns over the risk involved in running a nail salon or having employees and or renters who engage in nail services. Expect it to generate new stricter OSHA regulations for the protection of the public, nail technicians, whether a renter or an employee, and other employees exposed to the chemicals, fumes and residual dust from products. Anticipate more restrictive regulations for protective equipment as well as ventilation systems and/or HVAC systems along with changes in the building code used for beauty and nail salons in your region. you may want to get an inspection to ensure code compliance.

Products liability cases against the manufacturer of the products used by nail technicians can be expected. General liability claims may rise against the salon owner where a claim is for exposure to products resulting in cancer, miscarriage, birth defects and bodily injury by disease, by persons who were the salons clients not the chair renters Additionally, the renter does not qualify as an employee and so would not be able to bring a worker’s comp claim but that does not mean a renter cannot bring a general liability claim against you for an injury caused by one of your employees or another renter.

If you, the salon owner has a renter (or employee) who renders nail services or uses chemicals not frequently used for styling hair you would be wise to inquire at your insurance risk review if your policy aggregates and medical expense coverage is adequate

Beyond General Liability Insurance: Construction

Beyond General Liability: Insurance dilemma’s facing the Construction Industry and Special Trades

How to use the proper construction class codes to fortify your coverage.

Most industries are assigned one or more general liability class codes for insurance underwriting purposes under the 4 most commonly used authoritative classification guides including: PAAS/ ISO , NAICS, SIC and NCCI. However, some industries have multiple class codes which are broken down by specific sub groups within a general type of industry.

For example, the construction industry contains separate categories for general contractors and for subcontractors who work in this complex field. The class codes are further refined by whether the contractor works on residential property or commercial developments and are categorized by the type of work they actually do such as Manufacturing & Industrial Bldg. Construction, Heavy Construction, Highway and Streets; with subcategories for Bridges & Tunnels to name just a few. Identifying and defining all of the class codes relating to construction beyond the scope of this article.

Under the construction industry classification codes many of the sub classifications are assigned to what is considered to be “skilled” or “special” trades. Some trades in his group generally require licensure by the state or local area they work in, in regard to their own field as an individual worker. Sub-Contractors in the specialty trades usually always require licensure as well, as determined by the state and local area they work n. These trades included electricians, painters, plumbers and HVAC installers. However, the classification codes also have categories of skilled or special subcontractors who do not necessarily have to be licensed individually including but not limited to flooring, installation, trim installers and handymen unless they are a contractor.

Virtually all construction contractors, whether residential or commercial need a good comprehensive primary general liability insurance policy which insures them from 3^rd party claims by the public, or owner of the property being built or remodeled; brought against the contractor for damages to person or property. The general liability policy can be tailored and tweaked to meet the needs of each policy holder based on their general liability classification. General liability policies standing alone do not cover professional liability. Why you might ask?

The general classification codes for construction industries normally do not classify construction companies as rendering professional opinions or advice as they would, say for example architects, who designs buildings. Architects would normally be advised by their insurance agent that they should have professional liability insurance because of their classification code. This is the crux of a rising issue on the horizon. Since construction industries are not usually assigned a class code which triggers the need for professional liability insurance; some construction contractors and subs may not be aware of the rising need for this type of insurance. It is important that every classification code applicable to the work your company actually performs be determined and included as a class code o your organization fits in. If your company meets the definition contained in the NCAIS classification code for architects # 541310 gives this description “both design and construction of buildings, highways or other structures; or in managing a construction project, or are classified as Section 23 Construction” you should closely examine your need for professional liability insurance and your options for selecting the appropriate professional liability policy. (Link to Project Professional Liability) as either a separate policy or add onto your general liability.

In the past professional liability was only needed by the architect or the design professional responsible for the project. In the present general contractors’ who engage in the design aspect of the building project or manage the project need this protection and should explore what is there best option. (Link too. Project Professional Liability Insurance Alternatives, IRMI) That needs has been widened to subcontractors. (Link State of the Industry Construction Insurance and Risk) The subcontractors who appear to be most vulnerable are concentrated in the special trades who design systems that are an integral part of the building, such as the HVAC system, the electrical system and the plumbing system. It can also include those instances where the system being installed inadvertently compromises another part of the project, .e, the HVAC Contractor gave an opinion or advice on how to modify construction to accommodate the HVAC system and it negatively impacts the foundation.

The emerging trend according to the Institute for Risk Management suggests that professional liability will be a hot topic this year in the construction insurance industry. They further indicate that Contractors are requiring subcontractors to have professional liability and certify that they have it continuously throughout the job.

It is not inconceivable that professional liability insurance for contractors and subcontractor may be needed in a residential setting as well. For instance assume an electrical contractor is employed to rewire a house and makes recommendations and offers opinions on all of the products to use, the type of wiring needed to meet the electrical code, where the junction box should be placed, how many outlets are recommended, what type of lighting is necessary and the list could go on and on when you consider all the myriad operating decisions made on an on-going basis during a build or remodel. These appear to be professional recommendations and the rendering of an opinion and litigation could be brought under this theory.

So, it is critical that the insured discuss the tasks that each employee performs with your agent and fill out your application thoroughly. (Construction Business Owner.com) so you can get the exact coverage needed at the most reasonable cost to you. General liability is not necessarily the stopping point in your search for the best and most coverage for your construction company. General liability which is required can be combined with other types of commercial policies to ensure that your company is adequately covered in any situation. In addition to profession liability. You always want to consider a Business Owners policy and/or an umbrella policy.

One more very important point is to review all exclusions contained in your primary general liability policy you are considering purchasing and discuss with your agents and then determine if there are any alternatives where you can obtain coverage for the matters so excluded.

A common exclusion in a construction company general liability policy is defective construction or faulty workmanship exclusion as insurers did not want to encourage bad workmanship based on public policy concerns. However the emphasis is shifting to protection of the public with adequate insurance coverage options being made available to the contractor. Citizen’s General (Link) is one insurance company that now offers workmanship insurance as an add on to commercial general liability policy giving you coverage which is normally excluded under the primary general liability policy.

So take heed and make sure your business has all type of coverage that you need.