Beyond General Liability: Construction Industry

Insurance Dilemma’s facing the Construction Industry and Special Trades How to use the class codes to fortify your coverage.

Most industries are assigned one or more general liability class codes for insurance underwriting purposes. There are 4 commonly used authoritative classification guides that include: 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. The construction industry is one such industry.

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 construction they actually are building such as manufacturing plant, industrial building, 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 the field of construction is beyond the scope of this article. But the same process of listing each class code applies no matter which class code your building project falls under.

Businesses in the construction industry has a specific need for both general and professional liability insurance. 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 this group generally require licensure of the employees 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 need to be licensed as well, as determined by the state and local area they work in. These trades included electricians, painters, plumbers and HVAC installers to name a few. However, the classification codes also have categories of skilled or special subcontractors who do not necessarily have to be licensed individually in their state including but not limited to flooring, installation, trim installers and handymen. However, if they are functioning as a general contractor they generally need to be licensed.

Virtually all construction contractors, whether residential or commercial need a solid comprehensive general liability insurance policy which insures them from both claims by the public, or owner(s) 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 as a standalone policy or designed in a Business Owners or Commercial Package policy. Commercial general liability is not the stopping point in your search for the best coverage for your construction company.

General liability can be combined with other types of standard commercial policies to ensure that your company is adequately covered in any situation. Commercial auto and business property coverage for your equipment and tools should be added. If you have large movable equipment and specialized trucks and heavy machinery you need to make sure that you have coverage for those under your commercial auto or another specific endorsement.

Workers compensation is normally required in all states if you have employees unless you have the financial ability to self-insure.

General liability policies standing alone do not cover professional liability. Why you might ask?

The general classification codes for construction industries historically did 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 complex 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 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 on your insurance policies. If your company meets the definition contained in the NCAIS classification code for architects # 541310 which 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” the agent will see the term “design” and should go on to ask you whether you render any professional advice in the design aspect of your job and ask pertinent questions.

For existing policies you should closely examine your need for professional liability insurance and contact your independent agent or broker to discuss your options for selecting the appropriate professional liability policy as either a separate policy or add onto your general liability with an endorsement, rider or separate stand-alone policy.

In the past, professional liability was only needed by the architect or the design professional responsible for the project. In present day, general contractors’ who engage in the design aspect of a building project or manage the project need this protection and should explore what is there best option. Now that need has been widened to subcontractors.

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.g. 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 continue be a hot topic in the construction insurance industry. IRMI 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 you discuss the tasks that each employee performs with your agent and fill out your application thoroughly so you can get all the insurance that you need

Another common exclusion in most all general liability policies for a business in the construction industry is defective construction or faulty workmanship exclusion

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 is one of the few insurance carriers that now offers workmanship insurance as an add on to commercial general liability giving you coverage which is normally excluded under the primary general liability policy.

One more very important point is to review any and all exclusions contained in your primary general liability policy and discuss with your insurance agent and determine if there are any alternatives or options where you can obtain coverage for the matters that are excluded under the general liability policy, if necessary.

In addition to you may want to consider optional products such as an umbrella policy, contingent business interruption, environmental pollution and employment practices liability. These are all very helpful for a construction company. So be prepared, use the class codes to your advantage and make sure your construction industry business has all the coverage that you need.

Retails Sales:

Supply chains and logistics failures. How contingent business income interruption insurance coverage can help cover your loss.

The busiest sales season of the year is fast approaching for retail sales. If store based retailers don’t have sought after products to sell, buyers are unhappy and leave; or they just order online and have it delivered. Unfortunately, they are not buying merchandise from you if you don’t have what they want. So here you are depending on your supply chains and their ability to manage logistics successfully which includes timely delivery of merchandise to you. But what if those companies fail to deliver? Well, you can wait for another type of delivery.

Contingent business income interruption insurance

But chance are slim that the goods will arrive in time and you will most likely loose sales.

However, as a realistic alternative, you could purchase a type of little known insurance. You would think it might be called supply chain failure insurance but it isn’t. It is called contingent business interruption insurance, or CBI which is “an extension to other insurance that reimburses lost profits and extra expenses resulting from an interruption of business at the premises of a customer or supplier.” See https://www.irm.com/articles/expert-commentary/contingent-business-interuption-gettingallthefacts

Usually commercial general liability and business property insurance are the basic types of insurance a business needs along with workers compensation if the business has employees and inland marine coverage if they have specialized equipment. There are also various types of additional insurance coverage, usually added by endorsements, which may be appropriate for your business depending on your specific situation. Two of the available endorsements are business income interruption and contingent business interruption.

Business income interruption insurance is a type of insurance which is not covered by CGL or business property. So an ISO endorsement is needed to cover the loss specifically. This type of insurance covers a direct loss of income at your business location and it can be part of a Business Owners Policy or Commercial Package, if designed in that manner. There are conditions which must be meant for this coverage to kick in, which depend on the loss being directly to the insured’s property and actually sustained. Therefore, a loss which does not impact the insured’s owned property is not covered.

But contingent business income interruption insurance can cover your losses due to a supply chain failure.

This is a separate and distinct endorsement which only applies when the insured is not the owner of the property which suffers the actual physical loss. It specifically applies if the business supply chain is disrupted and income is lost by the insured due to the supplier’s failure to deliver for various reasons such as cargo theft, equipment failure, plant shutdown, cyber-attack or weather-related disasters. A direct business income interruption endorsement will not cover you in this instance. These two types are mutually exclusive and only one can actually apply in any given situation.

In older policies and some current policies, insureds had to purchase both primary direct business interruption insurance and a second specific endorsement for contingent business income interruption insurance using the proper ISO form. The insured business had to have the underlying endorsement for direct business loss of income and the amounts specified in the original direct loss endorsement determined what amount your indirect loss limits were. https://marsh.com/insights/research/business-insurance.html.

But in present times, some carriers, including the Hartford, automatically provide standard loss of business income (BI) in their BOP with a host of additional endorsements available, specifically including Business Income for Dependent Properties (or CBI) in available options, as well as many others. See: https://www.thehartford.com/business-income-insurance.

As dependence on supply chains evolve, claims have become more frequent. Documentation to verify the loss of income has become crucial to a successful claim. Algebraic formulas have been developed to calculate loss and are adjusted to take into account seasonality for retail businesses. http://www.air-worldwide.com/Blog/Supply-Chain-101–Breaking-Down-Contingent-Business-Interruption/

Businesses should be proactive before selecting a supply chain provider and be prepared for any loss.

Ask your supplier these questions before entering into a business relationship:

Does your supplier have a contingency plan to deal with natural and man-made disasters which interfere with delivery of goods on time?
Does your supplier have marine inland which will protect goods in transit and if so ask for a Certificate of Insurance and to be named as an additional insured on their policy? ( This will forestall any policy interpretation that CBI coverage is not applicable because it did not occur at the supplier’s place of business. This issue may not arise as arguably a business conducting a supply chain owns the transportation vehicle and it is the supplier’s property. But it never hurts to be doubly insured.)
Ask for a Certificate of Insurance for the supply chains general commercial liability policy.
Does your supplier have logistics management error and omissions liability policy? If so, also obtain a Certificate of Insurance.
Does your supplier have cyber risk insurance which covers third party losses from business interruption if the supplier is shut down due to a cyber-attack? If so, ask for Certificate of Insurance and to be named as an additional insured.

In closing it is always a good practice to establish a good working relationship with your key suppliers and engage in any working supply chain group to solve problems both before and after they occur.

Image Credit: Pixabay CCO Creative Commons free for commercial use.

Automobile Repair Shops:

Ways to keep your Automobile Shop running like “Greased lightning”

Automobile repair shops are one of the most needed and highly utilized businesses in the car loving culture of America. Despite the vast popularity of cars, the repair industry has a somewhat tarnished image. So why do people who love cars or those who just really need a car for transportation have a negative viewpoint about automobile repair shops?

People often feel that they were mistreated and/or deceived,treated rudely, charged unfair prices; or faulty workmanship was performed. They then tend to label the whole industry as bad. Likewise, repair shops experience all varieties of customers and are subjected to rudeness theft, fraud, disloyal clients who purchase a cheaper product from a competitor while asking you for your advice, and other unpleasant situations. Unfortunately, this is reality in the car repair business.

Automobile Repair Shop

There are numerous types of automobile repair shops in the industry ranging from one owner with just a few employees to chains stores that feature oil changes and minor repairs to full service garages and huge dealerships. There is no one right formula for success for all. This article focuses on general auto repair shops which provide a wide range of repairs to the public. Of course customers are vital to the industry, and you are codependent on customers just as they are on you. What steps can you take to establish or improve the public perception regarding this symbiotic relationship?

People just really want to be treated fairly. And they want to have their “baby” looking and running like greased lightning. For non-musical car lovers “Greased Lightning” was the white 1948 Ford Deluxe convertible hot rod emblazoned with shooting silver and gold flames on the fenders which conveyed the image of being fast as lightning in the musical “Grease.” This car became an icon in the movie industry and to the public. It was known as a “chic magnet” by the members of the T-Birds gang led by Danny Zuko (John Travolta) in his famous portrayal of their leader. “Greased Lightning “was restored in the movie and roared to life after the proper care and attention of the T-Birds and their shop teacher. The rival gang leader drove Hell’s Chariot, a 1949 Mercury, which featured black paint and red shooting flames. This car was lost for a time after the movie, and later it was also lovingly restored in real life, by its original builder, after setting dormant for many years on the Paramount Lot.

You can take an example from “Grease” and use the process of restoration to establish or rebuild a favorable image for your automobile repair shop by combining good old fashioned excellent customer service combined with CYR (Cover your risks). A few suggestions for this are:

Antique automobile repair shop

Set the bar for a pleasant customer experience

When a potential client enters, greet and assist them or indicate you will be with them very shortly.
Direct them to the waiting area. If you provide coffee or water say so or post the price.
Have a play area for kids if possible, with quiet inexpensive activates such as coloring.

Combine aesthetics with customer safety

Keep the waiting area in a safe area of the building where no one is exposed to an injury.
Keep the public waiting area and restroom clean and visually appealing. Routinely inspect the area for hazards/risks such as puddles on floor and use fall prevention measures.
Keep the outside parking lot safe, fix holes in parking lot and sidewalks, provide outdoor lighting, routinely police the area for broken glass, contraband and contaminants, such as needles, which carry blood borne pathogens.

Learn to appreciate the customer’s input and put it to good use.

Ask the client what they feel is the problem, listen and acknowledge their opinion and solicit more information with questions.
Explain what else the problem might be and what your procedures are:
If you need to run diagnostics tell them upfront whether it’s free or there is a charge and why it needs to be done.
Be aware of client’s financial situation: If a client suddenly declines upon learning about the fee, offer them options. (Monetary embarrassment to the customer is a driving factor in their decision making) If they do not have the ability to pay immediately work with them to set a price and a time line for fixing issues one at a time if at all possible. If they cannot proceed immediately due to finances, thank them for their business let them know you will be willing to assist them when they are ready.
(Mechanics liens usually prevent the client from being able to simply not pay for your services). An explanatory brochure on mechanics lien should be available that you can have the customer read. If they want to proceed having the client sign a contract which says a mechanics lien can be used if they default is s a good risk management practice and puts the client on notice.
If you start work on a vehicle and have to revise your estimate let the client know ASAP and get their consent.
After service, advise the client of upcoming needed repairs and maintenance. A print out would be great.
Be patient with complaints, acknowledge and fix the problem if at all possible.
And try to keep calm and carry on!

My Insurance Question - Get the best answers to your Automobile Repair Shop Questions.

Show off your talent:

Display large pictures of cars you have lovingly restored or fixed with their happy owner’s as well as showcasing automotive industry awards and Certificates of Membership from industry associations which address customer excellence.
Display testimonials or thank you letters from clients
Use miniature cameras to record your employees work to prevent mistakes and complaints. Then furnish a complimentary picture for the client showing them with their car smiling.

There are many other things you can do to feature your company in a positive light and focus attention on the quality of your work.

At the same time you want to take every step possible to protect your business from any bad apples while also protecting your valued clients and employees with comprehensive insurance coverage.

General Auto repair shops are in the business liability category of Automotive Services and Sales.
The SIC Business Code would most likely be the General Automotive Repair Shops-7538.
The NAICS Liability Classification would be 811111-General Automotive Repair.
The ISO General Liability is 10073 Auto Sales, Repair and Service and the Worker’s Compensation Class code is 8380 Auto Repair.

Various types of insurance will be necessary. All automobile repair businesses will need worker’s compensation which is mandatory if they have employees and do not have the ability to self-insure.

Employers Insurance Company has created this great video about the Workers’ Compensation Insurance needs of Automobile Repair Shops.

You will need General Liability (slips and fall) and business property. You may want a BOP with the following: Business income and extra expense, Hired and non-owned auto, Commercial Crime, and Umbrella. Be aware that some business property policies do not cover signs which are not attached to the building, so you would need a rider.

Automobile repair shops also need to determine whether they need Garage Liability, or a Garage keeper’s policy. These two types are not identical. They address different needs. Generally speaking Garage Liability is more useful for a dealership that does auto repairs than a stand-alone auto repair shop. Many times a dealer will need both garage liability and garage keepers if they do auto repairs.

Garage keeper’s is best for a non dealer auto repair shop which may combine legal liability, direct primary and direct excess for customer’s automobiles. Commercial General Liability has an exclusion for client’s cars which are in the care, custody and control of an auto repair shop including test drives. Garage keepers covers what would be missed under the exclusionary language of the GLC policy and function much like Bailee’s insurance.

If your repairs fleets of autos for government, large corporations or schools; most of them will require Garage keeper’s with direct primary coverage and a Certificate of Insurance. Some may require that they be listed as an additional insured.

Cyber insurance is also highly recommended in light of the Payment Card Industry Standards and threat of data breach. You could be liable for the invasion of privacy, notification costs and damages should a customer’s data or identity be stolen.

Other types of insurance worth considering: Employment Related Practices, Moneys and securities, Accounts Receivable, Computers, Goods in transit, Valuable Papers and Records, Employee Benefit, Environmental Impairment and or sewer back up.

With all of the clients concerns and safety addressed and insured you can focus on your main priority. Making cars run like greased lightning!

Home Health Care Liability Needs.

Meeting our seniors & disabled population’s health care needs through thoughtfully designed, safety conscious insurance coverage for the business owner, while protecting both the patient, and their caregivers/employees in the Home Health Care setting.

Home Health Care

With the baby boomers rapidly aging, their growing health issues have sparked an enormous need to expand businesses caring for the elderly. Additionally, disabled people have the same needs but may not be elderly. Two types of businesses that care for the elderly and disabled are home health care agencies and assisted living facilities.

These two industries are considered the least restrictive options for health care, allowing seniors and disabled persons more flexibility and control over their own living arrangements. Patients and their families may see home health care as the most attractive option so they can both retain their autonomy and remain in their home near their family.

Providers in these fields bear a great responsibility to care for people in an ethical and caring manner. Intense scrutiny is placed on each industry to provide quality care. Both the home health care and assisted living industries are highly regulated in every endeavor they undertake: by law enforcement, governmental licensing agencies, government insurance carriers, private health insurance carriers, workers compensation insurers, the medical profession and even the insurance carries which service these industries needs directly. Safety for all, especially patients and employees, is an extremely important concept in insuring both of these industries and directly impacts a provider’s rate for your insurance premiums.

So as a business owner analyzes what insurance coverage you want for your agency, safety needs to be a factor in your decision making in order to protect all concerned.

In order to address this vast topic this article will be divided into three sections:

Home Health Care Agency Insurance
Assisted Living Facility Insurance
Workers’ Compensation and employee safety protocols for both types of industries.

Section 1. Home Health Care Agency Insurance

Home Health care providers, whether for profit or non-profit, fall into the SIC Business Insurance code 8082 Home Health Care Services. These entities should have all of the generic insurance types below:

general commercial liability
worker’s compensation,
business auto (hired and non-owned),
business personal property insurance, mobile medical equipment, durable medical goods
commercial real property insurance, or commercial renters insurance
commercial crime and employee dishonesty, bonds, damage to client’s property
Inland marine or property in transit.
Equipment breakdown, Loss of income
Professional liability
Data Breach and Cyber Security

Some of these coverage’s are standard policies and are available through most commercial insurance carriers as part of a business owner’s package with supplements and or endorsements. The State Department of Health where you are operating may have a minimum amount of liability you must carry if you do business in that state. Additionally, if you accept Medicare or Medicaid your general and professional liability must meet their certification requirements.

However, due to the gestalt concept of providing care in the privacy of the clients home, there is less direct supervision and real time scrutiny of the staff as the actual care takes place by the agency. The agency has a duty to to ensure adequate care accompanied by an obligation to protect the client from abuse or neglect by the employee providing the care; yet alternately imposing a greater responsibility for the employee to be a guardian for the client and report unsafe conditions or abuse by another in the home, and take appropriate actions, even if unwanted by the client.

In order to protect the agency, the business owner must be acutely aware of this double edged sword and carefully choose coverage which ideally incorporates the best safety practices used in this industry. Some types of insurance listed above deserve more in depth discussion due to the nature of the services provided to the client. Some of the options discussed are not available through every carrier and your agent may need to find carriers who specialize in providing coverage for this field.

For instance, Professional Liability is absolutely necessary and critical in this field because you are delivering health care. Strategically, there are some different options. You may prefer a carrier who provides coverage for every member of your organization including employees, volunteers, medical directors, students, independent contractors and the Board of Directors. This option may be cost prohibitive and the agency might consider having professional liability for its medical staff and requiring each doctor or nurse to carry their own excess professional liability policy in addition to the agencies; with the agency being an additional insured on the staff’s individual policies. This is akin to a hospital requiring physicians to carry medical malpractice or professional liability in order to be on staff. It may also be referred to as Primary and Contingent Medical Professional liability. You might also want to look at obtaining a large umbrella or excess professional liability policy for directors, administrators and officer’s liability as they may not be in the medical profession.

The doctrine of respondent superior is the legal theory that holds the employer liable for the negligent acts of employees while acting in the scope of employment. As part of your agency’s duty to care for the client, you are responsible for the patient’s life in some cases where they are extremely ill or near the end of life. If the employee fails to show up or walks out and the patient is left unattended you are liable. If the employee arrives intoxicated whether from alcohol or drugs or other substances and makes a mistake you are liable. If an employee is careless and lets a patient burn themselves while smoking you are liable. I am sure you can see the pattern here and realize this field has an extremely high exposure for liability.

However, all the insurance types shown above still may not be adequate to protect the agency from liability for its employee’s intentional acts. Under general commercial liability, neglect of a patient by an employee while acting under the scope of employment as shown in the examples above should be covered by your general liability policy but usually intentional harm to the client is not.

One might think commercial crime might provide this protection. Commercial crime insurance does cover dishonesty in terms of both money and inventories belonging to the company and a rider or supplement can be purchased to protect the client’s property. You also need to ensure that the situations covered include employee’s acts, error or omissions in administration of the employee benefit plan, or fraud on the part of a medical director or administrator, and legal expenses to defend a case again a director or administrator.

Unfortunately, neither general commercial crime insurance does not cover assault, battery, elder abuse, sexual abuse or exploitation, of the client, or any other intentional tort by an employee. These are often exclusions under the policy. The health care industry has a heightened duty to protect its clients as they are considered vulnerable people. Statistics are alarming regarding the frequency of occurrence of intentional abuse.

Therefore, you also need to exercise due caution during the hiring process by always identifying whether the employee has previous violent or criminal history or mental health concerns which might place a client in danger. In that instance you can be directly negligent for injuries inflicted on the basis of negligent hiring or negligent retention if you retain an employee after becoming aware of previous bad acts. Additionally, even if you have an assault and battery insurance supplement your knowledge of this employee’s past behavior or if you should have known this information, may allow your carrier to decline coverage depending on the wording of your policy.

Insurance coverage for assault and battery (a/k/a abuse and molestation) by agency employees is not widely available but it is very necessary. This insurance type must be purchased as a supplement or endorsement in addition to general liability but given the high risk exposure for this type of claim it is one you should obtain if at all possible. More insurance carriers are offering this coverage as awareness of the problem grows. If your carrier does not offer this option, solutions such as part of a business package, supplements and stand-alone polices are available through carriers such as but not limited to: Solutions Group, Hanover Home Care, Cincinnati, Philadelphia and Markel who specialize in insuring this industry.

Conversely, you may have a patient who harms an employee. The patient may be abusive or impaired by their condition. Patients may have Alzheimer’s disease, senility, other mental health disorder or be delusional and think they are being attacked in some way. You’re first instinct may be to abruptly terminate services for this patient. This is a very risky method of dealing with the problem.

This reaction may leave you liable for “patientabandonment” which is another tort that you can be liable for. You must take steps to ensure the patient health care is undertaken by another provider or give a sufficient notice with reasonable time for the patient to obtain care by another health provider. This is usually covered under professional liability insurance but scrutinizes your policy to ensure that it is not excluded, and purchase a supplement if needed.

Today more clients also want options that suit their individual tastes and desires not just what is available through the usual channels. Innovative housing options are available as an adjunct to home health care. One such option is the “med cottage” which is basically a kit which allows the patient to turn their garage or other building located on the property where they are residing into a state of the art hospital room for the family member who needs care. Another option is taking an ordinary out building and outfitting it specifically for the patient through a licensed contractor specializing in medical construction.

Should your agency work in one of these buildings, or an ordinary house, medical equipment will most likely be used by your staff. You want to make absolutely sure that you have insurance which covers both specialized medical equipment and durable medical goods and equipment. It is likely that you or the client will have to rent or lease some of the medical equipment. Sometimes Inland Marine Insurance covers this need but you need to be sure it is spelled out whether damage by your employees to rental equipment is covered. Additionally, you need Medicare certification and surety bonds if you provide or supply the durable medical goods to the client, as part of your services.

Harm to a client could also result from a defective machine but would normally be covered by products liability coverage on the part of the manufacturer. However, improper cleaning and sanitation on the part of your worker resulting in harm to the client could be negligence on the agencies part.

One last type of insurance is critical to the Home Health Care Agency and that is data breach & cyber security. This is particularly true because you are dealing with medical records subject to HIPPA. You want to make sure you are covered for the actual expense related to the breach as well as any fine or penalties levied by any government entity for a HIPPA violation associated with the breach.

Comprehensive insurance is your best suit of armor in the home health agency field. Protect yourself, your staff and your patients accordingly.

suit-of-armour-for-finding-the-best-home-health-care

Microblading in 2017:

Microblading, isn’t it like Tattoo’s or Permanent Makeup? Is it too risky for your beauty salon?

Microblading is all the rage at present and anticipated to continue growing exponentially in 2017. Numerous types of businesses are performing this beatification process and thousands of women are scurrying to places where they can have the technique performed. If you are thinking of adding microblading to the current menu available at your beauty salon or spa, you need to be aware of the benefits and the risks to ensure your business is protected.

Microblading: If you're thinking about adding microblading to your salon or tattoo parlor, get the answers to your liability risks at https://www.generalliabilityclasscodes.com/

Microblading is the process of making minute incisions in the skin surrounding a person’s eyebrows and injecting tattoo ink or pigment, which is preferred by some artists, to make the client’s eyebrows appear full and lush. In Microblading you are not cutting hair or applying an external chemical process to hair which can grow back rapidly; you are cutting into the skin and tissue in close proximity to the eye and the brain with a needle very similar to a scalpel. You are injecting tattoo ink or pigment into the cuts in the skin and tissue which can result in a variety of infections and complications. These include fistulas, inflammation, inflammatory diseases of the eye, eyebrow, facial tissue, glands and muscles with spreading to the brain, scarring, and hyper-pigmentation. http:/www.ivylasersalon.com/microblading-dangers-and-disasters/Additionally, there is danger of transmittal of blood borne pathogens and communicable diseases. All of these can be caused by:

Contamination of the instruments used in the procedure,
the actual ink or pigment injected into the skin,
And/or the local water used to dilute the inks used in the process.

Microblading is not the only common name for this procedure. It is also referred to as eyebrow embroidery, micro stroking or feather touch and technically includes the process of micro-pigmentation. According to the Skin Science Institute, it is usually administered by an esthetician, tattoo or make up artist.

Regulation of artists performing Microblading is sporadic and confusing. There are no well-defined processes developed for compliance with all the applicable laws and rules. While Cosmetologists have a very structured training and regulation process for licensing, microblading is not regulated in the same manner. Each state sets standards for training in tattooing and permanent makeup and determines whether they need to be licensed or certified; how many hours of training are required and whether an apprenticeship is needed.

Microblading artists are usually a permanent make-up or tattoo artist as the FDA regulates tattoos, including eyebrow tattooing, and considers it to be permanent cosmetic makeup. Tattoos & Permanent makeup: Fact Sheet, http://www.fda.gov Whether you choose to use pigment, which some artists prefer, or tattoo ink; the product used for Microblading, has to be approved under the Federal Food, Drug and Cosmetics Act. Laws regulating the actual tattooing process vary significantly depending on the state you are working in. Usually the State Department of Professional Regulations regulates both Cosmetologists and Tattooing separately but some states do not even mention Makeup Artists, Permanent Make-up Artists or Estheticians.

Liability coverage for Microblading can be added to most insurance packages.

The Microblading process exposes you to liability well beyond the normal routine matter for a beauty shop or spa and is actually more akin to a medical procedure.

It is fraught with risks for the clientele, leaving you quite vulnerable to liability. On the other hand, it is a very popular procedure, especially with older women, who comprise a large portion of the clients who use salons for this procedure. Additionally, you want to remain competitive in this field so what can you do to insure and protect your business?

The key factor is to you use all of the available insurance protection options wisely. It is incumbent upon you to inform your agent or carrier that you are going to start offering these services. If you do not inform the insurance company they have no way of knowing until you make a claim.

If you fail to inform your insurer it is easily arguable by the carrier that microblading is not covered under the general liability class codes or workers compensation class codes for a beauty salon under either a standard general liability policy or BOP for a beauty salon.

It is also arguable by an insurance carrier that Microblading is being performed by artists that are not covered under a standard general liability policy or BOP for cosmetology as they are not licensed cosmetologists. This would hold true even if the policy has no specific exclusion for microblading.

So the answer here is you need coverage for the specific act of Microblading. You can accomplish this by having a new BOP tailored to meet both a beauty shop including a permanent makeup artist and a tattoo parlor performing Microblading. This art can also be covered with an endorsement, supplements or a stand-alone policy specifically addressing the activity to be covered and the employees performing the activity. You want the policy to clearly define what Microblading is in all of its many forms or names and specify that is covered in all instances. You may want to fully describe the action of cutting the skin and injecting inks and pigments into the skin. You want to make sure that your artists are certified or licensed appropriately in the state where the act will be performed.

When adding microblading to your beauty salon, make sure to purchase the right liability coverage by doing your research at General Liability Class Codes.com

Also compare your beauty shop policy to a tattoo artist or a permanent makeup artist policy and determine what acts are covered by a tattoo artist policy but are missing from your policy and then you want to add those features by endorsements to your existing policy.

Of course you will still absolutely need general liability, property insurance, workers’ compensation and any others which are standard for salons. Additionally, you need professional malpractice a/k/a as errors and omissions for permanent makeup artists and/or tattoo artists in addition to E&O for the beauty shop. You also need products liability, for the inks, pigments and blades.

Typically tattoo artist policies include completed operations which might not be a part of your cosmetology policy. You will want to have this covered because tattooing can fade, leaving scars well after the tattoo is completed. Tattoo parlor insurance usually includes protection against communicable disease and blood borne pathogens, as well as apprenticeship or guest artist insurance. You cant have a tattoo business without this coverage.

If you plan on the artist creating tattoos other than on the eyebrows, sexual abuse coverage may unfortunately be a wise type of coverage to carry as clients sometimes want tattoos in delicate places which are usually performed in a secluded portion of the salon. Sadly some clients bring a claim for abuse or inappropriate touching which can be a battery, whether or not it is justified. This is not necessarily covered by standard crime coverage. Don’t hesitate to ask your agent to check whether this is covered on your policy if you have crime insurance.

So as they say, people make a statement about themselves when they obtain a tattoo. Your shop can make a statement too by the manner in which they create wearable art which enhances a client’s facial appearance and have the pleasure and satisfaction of knowing their art is insured to the fullest extent possible.

What are the diverse needs of a Retail Business?

Retail Businesses, Cyber Liability & Cyber Security Insurance

Retail

Accepting credit card payments at your retail location makes you part of the Payment Card Industry (PCI stands for Payment Card Industry). The PCI Security Standards Council, which is a voluntary council, has issued Data Security Standards dealing with cyber security for credit card data (PCI DSS) which are voluntary regulations for the Payment Card Industry. In particular, the council issued PCI DDS Requirements 5 and updated V3.2 in May of 2016 which impacts retail stores substantially.

The most important aspect of these regulations in regard to retail sales is that non-compliance with the voluntary regulatory standards to prevent a data breach can result in making your organization ineligible to be a point of sale for credit cards.

The Council itself does not have compliance enforcement ability over the retail industry. This power rests with the credit card companies who are the founding members of the Council e.g. Visa, Master Card and American Express. Thus, these regulations have far reaching impact on your ability to be a vendor who can accept credit card payments and as a result your compliance is necessary if you want to use credit cards. If you become ineligible of course it can reduce your profit.

Putting aside any theoretical discussion regarding compliance issues with voluntary security standards, they are meant to protect the public by preventing data breach, so stringent guidelines were put in place protecting the consumer purchasing the products you sell from invasion of privacy, theft, fraud and identity theft due to payment by credit card under Requirement 5.

For those who are not computer savvy, Requirement 5 in a very condensed nutshell states you must protect all data systems against malware and regularly update anti-virus software of all programs. The sub parts further break it down in regard to the actions you must take to implement Requirement 5 which essentially means

you must take all possible steps to prevent a data breach by identifying all threats and detecting all known types of malicious software and malware,
ensure that all protection software programs are current and updated, perform periodic scans
document the scans in logs and track everything you do to keep current, ensure that all antivirus and malware programs can’t be disabled or turned off.
If you have to shut down the anti-virus and /or malware programs for a limited time frame for an approved legitimate reason you have to have authorization from your management, and
document all details in yours logs and run all security protocols when the programs are back up and running and perform a security scan. See the PCI Basics & Quick Guide for more detail. http://PCIcomplianceguide.org

Accomplishing all these tasks is very difficult to achieve. Not even the Democratic Party has been able to complete insulate itself from cyber-attack. So it is fair to assume that you might have some difficulty accomplishing all of the required tasks without a really top notch IT person or department. There are Quality Security Assessors who specialize in conducting technical assessments of your compliance defense system. See Cb Defense PCI DSS Anti-Virus White Paper, Carbon Black Arm your Endpoints. http://www.coalfire.com

Numerous companies also sell antivirus and malware platforms that you can purchase and have the platform itself tested to ensure that it does comply with the PCI regulations.

While you may think all of this is unnecessary or over kill just think of the cyber-attacks against national retailers (e.g. Target, Home Depot and E-Bay).

If you are ever sued by customers for a data breach that occurs within your retail business, compliance with the PCI industry standards may actually support your defense as it is considered a best practice to comply with these security standards and it helps to establish that you used a high standard of care in dealing with data and client’s privacy. Because you have a high risk for data breach it is in your best interest for you to have data/ breach/cyber security Insurance. In saying that, you also want to consider other insurance needs in addition to cyber insurance.

Most carriers offer retail establishments either a business owner’s package with a combination of: standard features including:

commercial general liability
business property and inventory with or without enhancements or stretches (interestingly property coverage does not include an outdoor sign that is not attached to the building so you would need a rider in that instance)
property in transit floater, or inland marine
business income loss with endorsements for utility outages and direct damages
worker’s’ compensation
e-commerce sales
burglary, theft or crime; and employee dishonesty
spoilage and a food contamination rider if you sell fresh or frozen food items
mechanical or electrical breakdown
Commercial auto if indicated.
And, most agents and carrier often suggest umbrella insurance.

But at the same time carriers and agents do not emphasize the need for cyber security or data breach, nor are they usually offered as part of a BOP. This may be because this type of insurance is fairly new and the parameters for cyber insurance are not completely developed or formalized. While there is very limited cyber coverage in the business property insurance portion of the policy, it is insufficient for anyone who is required to meet the standards for payment card industry as this requirement makes it self-evident that there is a legal duty and a standard of care in the payment card industry and if you are negligent and fail to meet the standard it may increase your liability to your customers for a data breach.

Thus, any PCI retailer will want to ensure that the cyber security policy they choose has provisions for coverage of regulatory fines, notifications of customers, first and third party damages and defense coverage which triggers at the earliest moment possible.

Cable Installers Liability Needs

Cable Installers, are you an employee or a 1099 contractor? (Or “The elephant hiding in the closet”)

There is a vast movement afoot in the cable and satellite installation industry to have cable installers become a 1099 contractor rather than an employee of the cable company. See “Consider the Cable Guy”: The Grind Investigation Fund. Many major cable companies are requiring their employees to make this change involuntarily. Why you might wonder?

Well, this is a very effective cost cutting measure for the cable companies. They need people to install the systems, wiring and equipment that operate and control the media service they are selling. This job cannot be performed without a human at this point in time. However, if cable companies utilize a fleet of 1099 contractor’s as cable installers instead of employees:

It reduces the employer’s costs considerably as the employer no longer collects or pays FICA or federal and state income tax on the cable installers.
Cable companies does not pay employer taxes in to the government.
Cable companies often charge the 1099 contractor cable installers for such things as uniforms, tools, equipment and use of a truck. Conversely, as an employee, the installer would most likely have received those items at no cost from the employer. These measures both reduce the cost and bring in revenue from the contractor.
A Cable companies also save vast amounts of money on reduced insurance payments as the burden of carrying certain types of commercial insurance switches to the 1099 contractor. This reduces the number of employees and conversely reduces the premium cost for the employer as well.

So, if a cable installer begins working as a 1099 contractor they really are functioning as any small business owner would. The installer will need all the types of insurance that any company in the cable installation business should carry including general liability, errors and omissions, business property, inland marine, commercial auto (if you are furnishing the vehicle), commercial property and loss of business income and perhaps an umbrella policy or a technology policy. As a 1099 contractor, you can obtain these as part of a business owner’s package or as standalone policies.

You should speak with your agent to gain knowledge about the best options for cable installers within the Class Codes your business comes under listed below:

Business Liability Category: TV and Media Installation

SIC Business Insurance Codes:

4841- Cable and Other Pay TV Services

NAICS Liability Classifications:

517110- Wired Telecommunications Carriers
• 515210- Cable and Other Subscription Programming

Business ISO General Liability:

Code: 91315- Cable and Subscription TV Companies

Common Workers Compensation Class Codes:

7536- Cable Installation and Construction
8901- Cable and Telecommunications- Office Employee
7600- Cable TV or Satellite- Other Employees and Drivers
6325- Conduit Construction- For Cables or Wires
8742- Outside Sales Persons
Code: 91315- Cable and Subscription TV Companies
Code: 91315- Cable and Subscription TV Companies

Plus, as a 1099 you will need health insurance which covers your own health needs. This means obtaining health insurance which is most likely not part of a group plan in most cases. Individual health insurance is usually very expensive no matter who the insurance carrier may be. An alternative is to join a union or an association of workers in this field that offers health insurance to its members thus forming a group (E.g. Communication Workers of America).

But the biggest concern related to insurance is Workers Compensation.

Since you no longer are an employee, just as you are no longer covered by the Cable Company’s group health plan, you are no longer entitled to worker’s compensation through your client the Cable Company. That means even if you get hurt on the job while installing for the cable company at a property you were sent to by the cable company you are not covered by Workers Compensation. (There is that elephant hiding in the closet with a not so great surprise!)

Whether your required to carry Worker’s Compensation insurance for yourself (as a single employee) is another question altogether and depends on many things. Some states require that a single employee company carry workers compensation while other states do not. In some states you are exempt if you have less than 4 employees. Some states exempt members of an LLC. Whether it is required by the state should not be the end of the inquiry because if you don’t cover yourself for Workers Compensation, no one else is, and you may be definitely letting the elephant loose to trample you if you are injured severely on the job. Additionally, your old employer (the cable company) who is your “client” who sends you out to cable company users homes to do installations can and often does require that you carry workers’ compensation and that you make the cable company an additional insured on your policy when you go out to install systems for their customers.

You may think you are covered by your own health insurance that you just bought, however; many times your health insurance carrier will deny coverage if you were injured on the “job” and if you don’t have workers compensation the injury is not covered at all unless a third party or the cable company was negligent.

This can be quite a tragedy if you are injured and have not obtained the insurance needed to protect you. The Bureau of Labor Statistics shows that 3 million workers were injured on the job in 2014. So if you find yourself in the position of a new 1099 contractor make obtaining commercial insurance one of your top priorities.

Insurance needs for Drones in the workplace.

Thinking of Using Drones to Perform Home Inspections? What insurance options do you have?

Most home inspectors are familiar with and carry General Liability, Commercial Property and E&O or Professional Liability Insurance to protect their business and understand the risks they run if not protected by these critically necessary types of insurance. The American Society of Home Inspectors (ASHI) recommends these coverages at a minimum. Until recently drones may not have been used as tools at all in the home inspection field. Drones are probably not covered on your commercial general liability policy or business owner’s package. Drones are currently being used for fun hobbies such as photography; throughout different industries such as in science, surveillance, and logistics and, specifically including property surveying and home inspections. So drones are gaining popularity with business owners. The FAA now requires drone insurance to meet Section 333 exemption for a drone that is used commercially.

However, drone insurance coverage nuances are just being created for the insurance industry. International Organization for Standardization (ISO) has developed different endorsement forms for adding endorsements to Commercial General Liability, Commercial Liability, Commercial Umbrella Excess, Commercial Inland Marine, Commercial Property and Capital Assets together with business interruption exposure due to loss of use of a drone. Information about all of the ISO forms for drone and white papers on drone are available. See ISO’s Emerging Issues Portal (http://www.iso.org)

Any carrier that offers drone insurance can use these ISO endorsements by adding them to your existing coverage. However, of every carrier underwrites policies for drones due to the cost of replacement, technical differences, and various types of machines availability and standards of safety for operating and FAA requirements being undefined until very recently; and what function (s) the drone will perform.

Disputes over the ethics and morality of the use of drones as weapons may also have historically driven the carrier’s decision not to provide coverage so as not to tarnish the public image of the insurance company. However, as more and more companies use these as tools in commerce; the public‘s perception may become more favorable. If a distinction is made in ordinary language between domestic drones and weaponized combat drones more frequently, it may aid the acceptance of drones as well.

Home Inspectors obviously want coverage for a domestic drone, while a defense contractor is more likely to request coverage for weaponized drones. Some carriers include Lloyd’s of London ( a specialty carrier) Stonewall Aviation, Global Aerospace, Assurex Global and AIG. Most carriers who serve the aviation industry are very knowledgeable about drones and do offer drone insurance.

But in regard to purchasing commercial drone insurance for a home inspector, you first need to know if you are actually insuring a drone, or is it really technically something else? The terms drone, UAV and UAS are used interchangeably in general business. It behooves you to clearly identify the technical name of the equipment or tool you want coverage for in seeking drone insurance.

Drones are defined as any kind of remotely guided vehicle whether on land, sea or air with the main qualifier being unmanned. Regulations are in progress that would further define what is or is not a drone
UAV’s are defined as unmanned aerial vehicle s that are remotely controlled or guided through pre-programmed software.
UAS’s are defined as unmanned aerial systems.

There are numerous debates about which definition is technically correct. The technical name used by the maker is the most logical term to use for insurance. To be assured of coverage you want to furnish the manufactures Id or serial number similar to a motor vehicle Id no. and to update the policy if new drones are acquired. But most importantly, since you are using the drone commercially, the drone must be registered with the FAA if it weighs more than .55 lbs. and it cannot exceed more than 55 lbs. in weight. If you are not registered with the FAA you can be fined and even imprisoned. Federal Drone Registration Part 107. You must also have a FAA Commercial Remote Pilots License which became effective on 8/29/2016. Your carrier will require copies of the registration and license.

The identity of this particular tool is what is essential so that the insurance covers the repair or replacement cost of that particular item and sufficiently identifies that specific piece of equipment if damage to persons or property occurs while in use.

Next you need to define exactly what the function of the machine is and tasks you are going to be performing with the drone and equally important what liability could result from the tasks you are performing. The most important factor to a carrier boils down to what risks are assumed and what damage can be caused by the use of this tool in your business. Damage could result from crashing the drone along with injury to a person and/ or property if hit by the drone or pieces of it, in the event of an explosion or malfunction.

Home Inspectors use drones mainly to inspect roofs and chimneys because of the height, the necessary angles that need to be examined on steep roofs, and the danger of falling. The primary function of the drone for these inspections is actually aerial photography so you will need a good camera that can be remotely operated while attached or built into the drone and produce high resolution pictures. You may want a dual control model camera where a pilot mans the flying function and the inspector reviews the photos simultaneously for quality and to determine whether different shots or angles are needed. You also want to be sure the camera is covered either separately or as part of the drone insurance. In a UAS the aircraft or drone is the Platform, the Payload is the camera or sensor and the Ground Control Station is the remote pilot and the inspector, or just the inspector if he is also the pilot. You want to ensure you have coverage for all parts. Fortunately, the drone itself has a wide range of price s depending on the model you select starting at approximately $175.00and the camera may actually be the most expensive piece of equipment.

Damage to the property owner may also result if an unsafe defect on the property is not detected as part of the home inspection and later results in a loss. This type of injury is either covered by Error & Omissions or Professional Liability for the home inspector. Some insurance company such as Target Professional Programs offer Home Inspectors Insurance as a specialty insurance endorsed by ASHI that has a combined BOP package with Professional liability and Drone insurance endorsements.

Target’s General Liability insurance can limit coverage to specific types of inspections that you actually perform depending on whether they are residential, commercial, Section 8 or other types. This lowers your cost for premium. They also offer tailored optional insurance coverage, e.g. mold inspection but not termite inspection.

So if drone inspections are in your future business plans, you want to explore your insurance options thoroughly.

Insurance needs in the Food Truck Industry.

Amazing Innovations in the Food Truck Industry spark new Insurance needs

One of the most delightful culinary happenings in history is here to stay. Food trucks have made major inroads into the restaurant industry and are one of the fastest growing areas due to new innovations in this field. From sleek and savvy to cute and sassy the designs, structure, overall look and utilization of food trucks are being reborn, and taking root in America.

The widespread advances throughout the food truck industry sparked a remarkable change in the food world because of the unique melding of two types of business into one. That is a hybrid restaurant on wheels but not the stereotype ice cream truck or cold sandwiches and snacks served in a factory parking lot. The public wanted outrageously good food, with appetizing aromas and an enticing appearance served in a fun atmosphere.

Restaurant entrepreneurs responded to the public’s desires and now diverse menus with every food imaginable served from fantastic wickedly designed trucks provide adventures in dining to the public’s delight.

As more and more food trucks enter the business world and develop their own style or “brand” many other industries seek to cash in on this phenomenon by providing goods and services designed specifically for the food truck scene.

Among those wanting to collaborate with the food truck industry is the commercial insurance industry. Thus the food truck BOP insurance policy came into being because every business needs insurance which fits their specific needs. Especially a state of the art customized truck fit to feed a queen and king or better yet, you and me.

With that thought, what type of insurance does an amazingly clever entrepreneur need to keep his mobile eatery and victuals protected from peril?

While the insurance needs for a food truck are similar to the needs of a restaurant there are many differences and concerns which are not present in a brick and mortar restaurant so restaurant insurance is just one piece of the protection puzzle. Additionally you need excellent comprehensive vehicle coverage for your food truck; especially since you have lovingly crafted the ideal truck with the right atmosphere using your imagination to create a dining experience extraordinaire for your clientele.

Initially, the insurance industry did not share the vision and were really divided into two camps. Auto insurance carriers offered business add ons to policies and commercial restaurant insurers offered add ons for company vehicles, but very rarely did insurers have a specifically designed business owner’s policy for a food truck. To meet the growing desire for “specialty” policies, insurance carriers adapted and developed packages tailored for food trucks and more options became available. No matter which carrier you utilize a specialty tailored policy should include these basic elements:

A comprehensive commercial general liability insurance policy (required by law)
Commercial auto/truck policy.
Business property and equipment/inland marine
Business Loss of Income with extra Expense
Workers Compensation for your employees (Required by law)

The business liability category for Mobile Food Trucks is Eating and Drinking Places

This means your classification codes used to classify and rate coverage premiums would generally fall under:

SIC Business Insurance Codes

4812 – Eating Places

NAICS Liability Classifications

722320 Food Caterers
722310 Food Service Contractors
722330 Mobile Food Services

Business ISO General Liability:

Code 11039 – Caterers and Mobile Food Service

Additional insurance options are:

Food Spoilage/contamination
Cyber-security/data breach
Liquor Liability (If you serve beer, wine or alcohol)
Commercial Umbrella
Catering/Special Events
Employees Dishonesty

Special concerns may arise when choosing your businesses commercial automobile coverage and your businesses commercial property insurance.

Coverage for employees sent on errands for the food truck with their personal auto.
Special riders that cover the unique painting and finishes on your truck in the event of a wreck
Coverage if you have retractable awning or parts that expand the size of the vehicle. You may need extended coverage or a rider similar to a policy for an RV

Coverage for refrigeration units, both if the unit breaks or the truck itself is broken or damaged and coverage for any foods that spoil
Coverage for cooking equipment and apparatus giving special attention to whether there is any exclusion for types of cooking units or types of fuel used. A good example of this is exclusion for a propane fuel cooking system due to the spate of recent explosions.
Coverage for nearby buildings, and objects damaged by fire or explosion

(You will also want to develop a fire and safety plan with training components for employees to help with your insurance costs. You will also need a gas detector suitable to the type of cooking fuel you use.)

Coverage for lease or rental of additional commercial kitchen space
Coverage for use of your home kitchen to cook a portion of the food in ,needs to be specifically covered in your property insurance.
Coverage if you have a home office, computers or other equipment used for the business located in your residence, which should be specifically listed and included.

Another category of concern is raised by the frequent use of credit card readers which leaves your food truck vulnerable to data breach. This seems unlikely but really is not. Credit card information is eagerly stolen by criminals who want to make profit from its usage. Approximately 43% of all business in US have had data breaches.

Now that you built your dream on wheels keep on, keeping on protecting your dream by being a connoisseur of your insurance needs.