Monday, December 14, 2009

Insurance Agents Get a Bad Rap

How do you view Insurance Agents? I bet it's something like this...

"Do you have life insurance? 'Cause if you do, you could always use a little more! Am I right or am I right. Right. Right."

It's an uphill battle.

Thursday, December 10, 2009

Replace Damaged Property with Greener Options

Many insurance companies are introducing special Green Upgrade endorsements to their Property policies. Green is the new black. We are all looking for ways to reduce our energy consumption and take it easier on Mother Nature.

Has anyone seen the movie WALL-E? My daughter loves that movie, so it's on heavy rotation in our house. In WALL-E's version of the future, the human race has to abandon planet Earth because we overloaded the environment with our garbage. Buildings are dwarfed by skyscrapers of garbage that has been crushed & cubed by our friendly, little robot.

None of us wants to live in this WALL-E World. However, we don't exactly have the cash needed to install that green roof.

These insurance policies offer an interesting compromise. In the event of a claim, the policies will pay the additional costs to replace damaged property with environmentally-friendly equipment.

One of our carriers, Central Insurance Company, offers a Green endorsement to their Homeowner's Equipment Breakdown coverage. It will pay up to an additional $3,000 to replace damaged equipment with a greener alternative. Here are some examples:

A homeowner’s hot water heater suffers an overheating event resulting in damage to the storage tank that is beyond repair. The homeowner replaces this heater with a tank-less hot water heater to provide instantaneous hot water on demand. The green equipment breakdown coverage can be applied to this additional initial cost, creating reduced operational cost for the homeowner. Property damage paid: $1,775 (less $500 deductible) for a tank-less water heater.

A homeowner’s washer and dryer are damaged by a power surge. The repair company determined that the electrical damage was too extensive to repair the covered property. The insured was provided an estimate to replace the washer and dryer with a similar size and quality for $950, as well as an estimate to replace them with Energy Star® rated appliances for $1,480. Property damage paid: $1,480 (less $500 deductible) as equipment was upgraded to an Energy Star® rated washer and dryer.

A homeowner’s refrigerator freezer was damaged by electrical arcing. The repair company determined that the electrical damage was too extensive to repair the covered property. The insured was provided an estimate to replace the refrigerator with a similar style, size and quality for $1,100, as well as an estimate to replace them with Energy Star® rated appliances for $1,600. Property Damage paid: $1,600 (less $500 deductible) for newer Energy Star® refrigerator, plus $430 spoilage.

Central's offering is an example of new changes for Personal Homeowner policies. Green options for Commercial Buildings are sprouting as well. Stay tuned for future posts on this topic.

Does your policy offer any Green options? I'd like to know more about what else is out there.

Tuesday, November 24, 2009

Can One Printer Save the World?

If so, I'd like to nominate my client Allen Wayne, Ltd in Chantilly, VA. In September, they received the Environmental Excellence Award from Fairfax County for eco-friendly printing processes. This is not an easy award to get.

Allen Wayne, Ltd. uses paper from socially, economically and ecologically accredited forests, Eco-Smart soy-based inks and chemical-free printing plates. They didn't need to do it. They chose to do it. Bravo, guys.

Monday, November 23, 2009

Is Your Company Protected If Your Network is Breached?

Employee records, social security numbers, customer credit cards, trade secrets. If this information is taken, it will damage credit histories & reputations. Information is valuable, and companies are finding themselves financially liable if their protected information is stolen.

This exposure is not covered by your existing General Liability or Errors & Omissions policies.

One of our partners, C N A Insurance, offers NetProtect, an insurance policy tailored to address a company’s exposure to information liability loss. Click to learn the 5 Reasons all companies should consider this important protection.

Friday, November 6, 2009

Congratulations to TAPE!

As an Insurance Agent, I usually get called when there's bad news. This time, however, a client shared some good news, and I'm thrilled to pass it along.

My client, Technical and Project Engineering, LLC (TAPE), was named #2 on the Washington Technology Fast 50 list for 2009. Each year, Washington Technology magazine ranks the 50 fastest growing small businesses in the government market. TAPE grew 233% in the past year to take the second spot. This is no small feat in a DC market swarming with companies chasing government contract work. TAPE's ability to grow in this competitive field is a testament to their expertise and dedication.

TAPE is a Service-Disabled Veteran-Owned/Woman-Owned contractor based in Kingstowne, VA (right outside of Washington DC). Their core competencies are:

Program Management
Force Development
Acquisition Support
IT Services

Congraulations to Bill, Louisa and everyone at TAPE!

Wednesday, October 21, 2009

And A Happy Drug-Free Work Week to You, Too!

Did you know that this week, October 19-25th, is Drug-free Work Week? Four years ago, the Department of Labor instituted this special week to highlight the benefits of maintaining a drug-free workplace.

According to the Department of Labor, "between 10 and 20 percent of the nation's workers who die on the job test positive for alcohol or other drugs. . .Industries with the highest rates of drug use include many of the same industries at high-risk of occupational injuries, such as construction, mining, manufacturing and wholesale."

Employers who take steps to prevent drug use will benefit from healthier employees, fewer Workers' Comp losses, and lower insurance rates.

For example, Virginia allows a 5% Drug Free Workplace credit on Work Comp premiums for companies who maintain qualified drug testing programs. These programs should include random testing, substance abuse education, and resource files for employees seeking additional help.

The Hartford Insurance Group's HartfordHelp website has great information and resources for employers looking to institute or beef up their own Drug-free policies. For more information, please click here.

Does your company have a drug testing program? Have you ever been faced with a situation where an employee tested positive? How did you handle it?

Friday, October 9, 2009

We Gave You Benefits, and You're Suing Us?

Employers who provide employee benefits are sometimes sued by their employees for mistakes made in administering those benefits. Companies who provide employee benefits should consider adding Employee Benefits Liability to their policies.

EBL covers damages caused by an error or omission committed in the "administration" of your "employee benefits program." Below are definitions from an EBL policy that define the covered acts a little more clearly:

"Administration" means:

1. Counseling, "employees," including their dependents and beneficiaries, with respect to the "employee benefits program";

2. Handling records in connection with the "employee benefits program"; or

3. Effecting or terminating an "employee's" participation in a plan included in the "employee benefits program";

"Employee benefits program" means the following plans:

1. Group life insurance, group accident or health insurance, flexible spending plans, profit sharing plans, pension plans and stock distribution plans; provided that no one other than an "employee" may subscribe to such insurance or plans;

2. Unemployment insurance, social security benefits, workers' compensation and disability benefits.

For example, failure to properly enroll someone on the health plan may leave an employee without coverage for a medical procedure.

The premium for this coverage runs about $200 - $400 per year, depending on the number of employees. Larger companies may pay more. Ask your agent about it. If you don't have an agent, give me a shout!

Tuesday, October 6, 2009

We Want Your Information

It's 8 pm, who's watching your information? Does your insurance policy cover your company's potential liability if your network were breached?

In a prior post, I wrote about the E&O exposure that Tech companies face when their clients fall victim to a network security breach. (Access Unauthorized? Claim DENIED!) This post focuses on your potential liability from hacks on your own networks.

Earlier this year, I came across the following article:

Apptis Cited for Lax Computer Security on Army Medical Job

July 24 (Bloomberg) -- Apptis Inc., a military information technology provider, repaid $1.3 million of a $5.4 million Pentagon contract after investigators said the company provided inadequate computer security and a subcontractor’s system was hacked from an Internet address in China...

The Government relied on this company to maintain secure networks. That security failed, and Apptis found themselves liable. Did their policy cover the loss?

This is just my guess, but the claim was probably denied for 2 reasons:

1. You cannot be liable to yourself.

Errors & Omissions Insurance is a 3rd party coverage. Therefore, the policy will only respond to damages claimed by companies not assoicated with the insured (or the 1st party). In the above example, the Pentagon claimed that Apptis failed to provide adequate security as required in their contract and required them to refund a portion of the contract price. Apptis lost the money, so I don't believe their E&O policy would respond. It is possible that the E&O coverage may respond due to the alleged breach of contract. However, if the root cause of the damage is excluded by the policy, then the carrier may have denied coverage.

2. Network Security exclusion.

We will not pay damages or claim expenses for any claim arising out of or in any way related to: Failure to prevent identity theft or disclosure of personally identifiable information.

This is a common exclusion in E&O policies. Check your policy to see if it contains similar wording.

Cyber security has been a hot issue for several years. However, the Federal Government is redoubling its efforts to enforce secure networks and tighter controls on information. As the Apptis article shows, Uncle Sam will not hesitate to recoup his money, if he feels that your security was not up to snuff. The Apptis article states:

President Barack Obama is seeking to improve security in government computer systems. He said in May he will appoint a White House adviser to oversee the security of all government and business computer networks in response to widespread breaches and theft of information.

The Pentagon by September will publish proposed revisions to its acquisition rules that will require improved protection of Pentagon information in its contracts, said spokeswoman Cheryl Irwin. A draft proposal will be released for public comment, she said in an e-mail.

If you do business with the Federal Government, you will need to comply with their security standards. If those security standards fail, then your company may be held liable.

Has your company ever been a victim of information theft or an unauthorized intrusion? Please let me know how it affected your business.

Friday, September 11, 2009

I will be a Featured Presenter at MAREMA Monthly Meeting - September 16, 2009

MAREMA Monthly Meeting - September 16, 2009

Join us at the Westpark Hotel in Tysons Corner for the monthly MAREMA Meeting. This month we will be having two guest speakers - Jimmy Norton of Brock-Norton Insurance Agency and Brian Ginter of REVAC, Inc. Jimmy Norton is going to speak to us about "The Pitfalls that could Lead to an E&O Claim" and Brian will speak on "Current Trends and Influences on Appraisers".

Did you know that if your company specializes in residential real estate, you may not have E&O coverage for commercial real estate business. Come and hear Jimmy Norton discuss issues that affect our commercial real estate business.

Bio - Jimmy Norton

Jimmy Norton, CPCU, is an Independent Insurance Agent who specializes in Property & Liability coverages for the Real Estate industry. At this month's MAREMA meeting, Jimmy will discuss how Realtors can protect themselves against Errors & Omissions claims. His presentation will highlight potential pitfalls that could result in a claim, and he will outline the important features of Professional Liability (or E&O) policies. Jimmy has written commercial Property & Casualty insurance since his first day on the job, 12 years ago. Brock-Norton Insurance Agency serves clients in Virginia, Maryland and the District of Columbia, as well as several other states

With the changes in the law affecting appraisals, Brian Ginter will discuss the trends and how it affects our business. This is an opportunity to get up to date with the law.

Bio - Brian Ginter

Brian Ginter currently consults and analyzes properties in the W.DC / MD / VA / NY markets (primary) and in PA / NC / SC (secondary); other States when requested. He specializes in real estate properties (residential & commercial), mostly with issues (foreclosure/non-performing/rehab./changing markets). Brian is often asked by investment individuals & groups to review portfolio holding & acquisitions and organizing investment "money pools". Typically property values in the $0 to $15m range (individual parcels values).

Primary Experience (27+ yrs): Real Estate & Specialized Business Valuations. Secondary: Commercial Finance Origination and Brokerage Sales. Extensive Skills/Knowledge: New Construction / Rehabilitation / Development / Litigation / Property Management / Brokerage-Sales / Senior Project Coordinator & Developer: Ability to work, identify, & report unique valuation factors & trends in any market. Currently

Maintain: General Appraisal Certs. (VA/MD/DC/PA/NY) / RE Brokers License

(NY) - Completing applications for Brokers Licenses in VA, MD, PA, & DC.

Focus: Valuation and consultation on Real Estate for investment and/or "value ad" purposes. Extensive Ability to Lecture & Teach. / Knowledge of Argus & Advanced Excel Spreadsheet Design. Currently Finishing CCIM Designations

Recently Brian has taken on 10 investment students for a year long education program. In the last eight weeks over 95 /"actual deals"/ have been investigated, two properties have been settled, two are is under contract, and three have pending contracts waiting ratification. In addition, over the past year he has performed assignments for the District of Columbia (Economic Development) on their acquisitions of residential development/conversion projects and have conducted valuations on non-performing /foreclosure residential, commercial, and multi-family properties.

Come and join us this month for some networking, hearing what's new in the industry and some socializing over lunch. Please RSVP at so we can get an accurate head count for the meeting room and lunch.

Don't forget to sign up for the MAREMA Annual Meeting that is only one month away. You can get more information and a Registration Form at

Thank you for your support and bring a colleague to the meeting!

New to commercial real estate, ask about the new MAREMA Intern Program.

Thanks and see you at the meeting!!!


MAREMA meets the 3rd Wednesday of every month at the Westpark Hotel in Tysons Corner, Virginia except in October. Bring a colleague!Yahoo! Groups Links

<*> To visit your group on the web, go to:

Friday, August 21, 2009

Trust, but Insure, pt 2: Firewalls won't stop an employee with access

As I preached in a prior post (Trust, but Insure), employees have weaknesses. In today's economy, an otherwise angelic employee may be easily influenced by a bribe in exchange for network access.

Below is a great blog entry from Dave Stelzl, The Profit Program, who writes about the potential catastrophes of information theft. Companies should consider Network Security Liability to protect themselves from liability claims that will arise from the release of confidential information.

Insider Threat makes the perimeter useless
Posted: 20 Aug 2009 07:50 AM PDT

Well Fargo in the news for bank fraud? This article came from a recent workshop attendee at Heit in Colorado, a company that specializes in bank security. It’s actually a common thing for insiders to take advantage of systems they know, for personal gain. Organized crime syndicates sometimes employ someone inside a bank with the title money mule – someone who helps them gain access to system inside the bank. In the linked article below, there is no mention of organized crime. Instead, the article reports an insider charged with gaining access to bank accounts and using the money and credentials to create credit cards, debit cards, and pay down their personal debt. It looks like they have at least 35 years imprisonment coming; maybe more.

The sales tip – insider threat is real. Firewalls, VPNs, and a bulletproof perimeter (which is never the case) won’t protect companies from this threat. Let’s face it, there is no perimeter in today’s borderless network world.

Thursday, August 13, 2009

Landscapers: We'll Insure Everything but the Plants

I insure several local landscaping companies, and I always talk to them about Installation Floaters. These policies cover materials that are transported to and installed at the jobsite.

On larger jobs, some of these materials are stored at the site for a day or two, waiting for their chance to be permanently installed. During that time, the materials may be stolen, vandalized or just blown away by one of our hazy day windstorms. When this happens, the landscaper is responsible for replacing this material. Installation Floaters will cover this material cost.

BUT, I recently discovered an Installation Floater with the following caveat:

The following types of property are not covered:
Trees, shrubs, and plants - "We" do not cover trees, shrubs, plants or lawns.
If you store a significant amount of plant material at a jobsite, your Installation Floater may not cover it. Check your policy exclusions to make sure your plant material will be replaced if it's ever "gone with the wind."

Thursday, August 6, 2009

Employers: Protect Yourselves Against Information Theft

Has your business been the victim of an inside job?

This is a great article from HartfordHelp, a site designed for Hartford policyholders and partners. The site is a treasure-trove of information for employers to arm themselves against claims of wrongful termination, harassment, discrimination, employee theft, etc. Knowledge is power!

When Computer Network Employees Go Bad

A terminated employee of a not-for-profit organization pleaded guilty to unauthorized access to her former employer's computer network. She now faces a two-year prison term and will have to pay $94,222 in restitution to the employer. "Houston Computer Administrator Sentenced to Two Years in Prison for Hacking Former Employer's Computer Network," (July 15, 2009).

The evening following her termination and the next day, the former director of information technology illegally accessed the not-for-profit's computer network via a remote connection in her home. She then deleted important database records; including accounting invoice files, database and accounting software applications, and various back-up files. In an attempt to conceal her sabotage, she also disabled the computer logging functions on several employer servers and erased the computer logs that recorded her remote access.

Commentary and Checklist
A surprising aspect to this story is that many employees that destroy data have no clue that they are committing a crime. To some, it is just a cruel prank to get back at their employers. Employers should make their employees aware that data destruction is a crime. In this example alone, the network employee that went bad has nearly $100,000 to pay in restitution and is looking at two years in a federal prison.

The ironic aspect of this story is that the person who was in charge of data protection used her knowledge to damage her employer. Too many employers, especially smaller employers, do not take data protection seriously enough and therefore are more vulnerable to attack.

Protecting your data from theft, destruction or corruption by an employee is akin to protecting your finances from embezzlement. Employers must set up safeguards, including having more than one person in charge of data security.

In this case, the person in charge of data security had given herself the ability to access the employer’s system remotely. Had another person had access to oversee the data’s protection at the time of termination, he or she could have dismantled the remote entry at the same time that he denied her other access points.

Moreover, organizations should make it an employee offense to develop remote entry access without authorization. The organization should approve all access points.

To that point, employers should establish and enforce a policy on computer usage and data management. This Site offers a model policy on Computer, Internet and Network Usage. To see if you have access to this policy, log on and go to Knowledge Vault and then Model Policies. [for access, go to HartfordHelp and register to obtain a login id and password]

Consider these steps to get your message across that your data is not to be stolen or sabotaged:
  • Establish a clear and concise policy that employer data is valuable.
  • Define what is appropriate use and transfer of employer data, and provide examples of what is improper use of employer data.
  • Explain that data thieves will go to extraordinary measures to capture sensitive data.
  • List possible outcomes to an employee that steals or sabotages data including, but not limited to, termination and possible criminal prosecution.
  • As part of employee orientation, make certain that employees acknowledge your data protection policy.
  • Develop a procedure that locks down your data when an employee is terminated.
  • Consider banning personal memory transfer devices such a USB memory stick.
  • Consider limiting the sensitive information that employees can store on laptops.
  • Consider regulating the information that employees can have access to from home and other remote entry places of origin.

This informational piece is part of "The Loss Prevention Journal" published on July 29, 2009.

Sunday, August 2, 2009

MAREMA Monthly Meeting - August 19, 2009

MAREMA Monthly Meeting - August 19, 2009

***** *August is Members Bring a Guest Free Month* *****

Bring a colleague to the August meeting and your non-member guest will
get in free.

This month, we have an opportunity to learn how our clients can benefit from Commercial Auctions. Our Guest Speaker this month is Jeff Stein, Vice President, Tranzon Fox. Jeff, a former MAREMA member will speak on “Opportunities in Commercial Auctions”. If you have a listing that is currently on the market, the auction route may be a good alternative. Tranzon Fox has accelerated marketing expertise and experience that can help commercial property owners expose their property to the market in an intensive marketing effort that will bring more activity and interest to the property than conventional sales methods. Jeff brings experience and expertise in the following types of commercial properties: Office Buildings, Retail and Restaurant Properties, Hospitality and Lodging, Warehouse and Industrial, Convenience Stores and Service Stations, Commercial Development Land, and special uses such as Medical, Bank Branches, Retirement, Skating Rinks, etc. Don't miss out on learning more about how auctions can help you and your clients sell properties.

*Bio - Jeff Stein*:

Jeff concentrates primarily on Real Estate auctions and has represented a wide variety of real estate clients from banks and corporations to private owners. He has been an active real estate broker since 1985 and has sold over $200 million in property throughout the Mid-Atlantic
region. Jeff is a graduate of the University of Virginia with a degree in Economics. He is a licensed real estate broker in Virginia, Maryland, the District of Columbia, North Carolina, South Carolina and West Virginia. Jeff is the Sales Manager of the Washington-Baltimore Region and is Principal Broker for Tranzon’s Virginia, Maryland, D.C. and West Virginia operations.

Jeff Stein
Vice President, Tranzon Fox
3819 Plaza Drive
Fairfax, VA 22030
Tel.: (703) 539-8111
Fax: (703) 539-8633
Cell: (703) 626-7407

Bring your Package Presentations, Quick Pitches (Haves and Wants), and Cash for the Cash Board and let us hear what you have and/or your Client needs. Forms are available on the MAREMA Web site at

New to commercial real estate or want to break into the commercial real estate field. Ask about the new MAREMA Intern Program. Networking starts at 9:00 a.m. with the meeting starting at 9:30 a.m. Lunch is served immediately following our guest speaker. Join us this month at the Westpark Hotel in Tysons Corner on August 19, 2009.

Please RSVP at as seats are limited. Also, don't forget to RSVP for attending the MAREMA Annual Meeting this year. Join us this year at the Hilton Springfield. Get all the details at

Looking forward to seeing you there and bring a colleague!!!

Thank you for your support to the MAREMA membership.

Thursday, July 30, 2009

Access Unauthorized? Claim DENIED!

Have you ever spent any time with your Errors & Omissions policy? I mean, really looked at it? You may be surprised at what you find.

Grab a magnifying glass and dig deeper. . .deeper. . .deeper into the cadaver
of your policy. Once you get past the glossy cover, you'll find that the bright, pretty logos disappear; as do the promises of unmatched service. The text shrinks and splits into 2 columns that seem to run on without end - like the yellow brick road coiling into the horizon.

Once you find the EXCLUSIONS section, you may see something like this:

The insurance does not apply to any "claim" arising from:

Security or System attack, unauthorized access to, unauthorized use of, tampering with or introduction of malicious code into: firmware, data, software, system or networks, or any resulting denial of service or repudiation of access.

As an IT company, your clients rely on you to protect them from viruses, worms, cyber attacks, & theft of information. Your customer pays top dollar. They rely on your expertise to keep their network running and stay in business.

If a customer's network falls victim to an attack, either by a virus or unauthorized access from an outside party, they will call to ask why you didn't protect them. If they determine that your company made a crucial mistake in configuring their system, then they may hold you liable for their:

  • Cost to repair their system
  • Loss of revenue during their downtime
  • Lost customers due to adverse publicity related to the attack

Once you receive the call from that irate customer, your next call will be to your Insurance Agent. If your policy contains the above exclusion, then you will not be covered.

Double check your Errors & Omissions policy to see if it contains an Unauthorized Access exclusion. It probably does. If so, ask your Underwriter if you can buy this coverage back by endorsement. If your company can't do it, then I recommend finding another insurance carrier.

Errors & Omissions policies have lots of other landmines that will surprise the IT business owner. I'll describe some of these in future posts. In the meantime, if you have any questions or want to discuss specifics, please do not hesitate to contact me @

If you've ever been caught in this coverage gap, let me know about it.

Monday, July 27, 2009

Madoff's Legacy: The Importance of Fiduciary Liability Insurance

I received the following information from Professional Risk Solutions, my main resource for specialized Professional Liability coverages. PRS's President, Kathleen Zortman, tells how Directors & Officers (D&O) or Errors & Omissions (E&O) policies may not protect you against liability claims from pensions, retirement plans, 401(k) plans, etc.

Individuals and companies who sponsor these types of plans have a Fiduciary Liability under the Employee Retirement Income Security Act (ERISA). If they mishandle or mismanage those funds, then they may be held liable by regulatory agencies and/or the funds' participants.

Fiduciary Liability insurance is a very affordable way to protect yourself against these risks.

Your client who run pensions, 401(k), benefits: A Madoff Lesson

Top line:
If you have clients who sponsor pensions, retirement plans, profit-sharing, 401(k) plans, group life and medical expense plans, it's critical to protect them with Fiduciary Liability coverage.

They could be personally at risk for lawsuits stemming from their managing or administering the assets of others. As a fiduciary, you can not wholly transfer your liability to another party, such as an investment manager or third party administrator. And D&O/E&O will not help.

Fiduciary Liability coverage is generally designed to protect individuals or firms that are responsible for managing the assets of others. This encompasses those who administer retirement plans, pension funds, 401(k), other employee benefits and trusts. The need for Fiduciary coverage is likely to increase as pensioners lose more and more value in the depressed financial markets -- and look for someone to blame.

The background:
A development in the ongoing Madoff mess points out the huge difference between D&O/E&O and Fiduciary Liability

A firm called Austin Capital Management is being sued by the members of a Philadelphia-based hospital pension fund for losing some of the fund’s assets in an ill-fated Madoff feeder fund.

Unlike other suits filed in the Madoff situation, this is an ERISA action, which is specifically excluded from D&O/E&O policies. In this case, a Fiduciary Liability policy could possibly help with defense costs, and any judgment. Without Fiduciary coverage, the principals could be personally liable for any settlement or judgment, as well as the defense costs.

Learn more about Fiduciary Liability coverage on the PRS website. Or if you have questions about when and where the coverage might apply for your clients, or how to structure a plan, just ask us.

Kathleen O. Zortman

Wednesday, July 22, 2009

Trust, but Insure

From Hartford Help: Hard Times Lead to Big Employee Crimes.

Protect yourself against employee theft. Your insurance program should include some type of Employee Dishonesty coverage. Many companies overlook this important coverage, or they decline it with a comment like, "My employees would never do that to me." With tough times getting tougher, some employees may find themselves in difficult positions and choose to do the unthinkable. The linked article above highlights some glaring examples.

The Insurance Auditor Cometh. The End is Nigh.

Your policy year just ended, and you're all renewed for the new year. I hope it wasn't too painless. However, your journey is not yet complete. You are about to be visited by a harbinger of goodwill and efficiency. . .the Insurance Auditor!

Auditors are the eyes and ears of your insurance carrier. Their reports have caused premiums to double and coverages to cancel. Be afraid. Be very afraid.

At the start of the policy, your Agent submits information about your company to the Underwriter. To get an accurate quote, we tell them everything about your company: products, operations, locations, radius, # of employees, limits, estimated payroll, gross sales, etc. Your policy premium is based on these estimates.

The carrier then dispatches their personnel to verify that your Agent was telling the truth. The Auditor physically inspects your work site or office and interviews you about your operations. They review your books to verify the actual premium basis of the particular policy. For Workers' Compensation policies, your friendly Auditor is reviewing payrolls. For General Liability, he or she could be looking at payrolls or gross sales. Other types of policies are auditable, but Work Comp and GL are the most common. The intent of the audit is to ensure that your insurance company is getting accurate premium for their exposure to loss.

For example, if I report that a contractor has $50,000 in Carpentry payroll, then the insurance company assumes that they are insuring 1-2 employees against injury. If they actually have $500,000 in payroll, then the insurance company's exposure to loss is much higher. More swinging hammers means more potential smashed thumbs. The insurance carrier is entitled to the proper premium dollars to fund those potential losses.

The audit is a requirement of all auditable policies. Resistance is futile. If your actual payroll or sales figure is higher than the original policy estimate, then the insurance company will bill you for the additional premium. If your actual figure is lower, then you can expect a refund from the company.

Your Auditor will ask to review any or all of the following items:

  1. Quarterly payroll tax reports (IRS-941s and/or State Unemployment Statements)
  2. Individual payroll records for each individual employed by the company during the policy period

  3. Overtime reports

  4. Names of Subcontractors and amounts paid to each during policy period

  5. Certificates of Insurance for the Subcontractors on your list (see Service & Sub Contractor Insurance Guide, 4/30/09 post)

  6. General Ledger

  7. 1099s & W2 forms

  8. Cash Disbursements Journal

  9. List of Company owners, partners, officers - including amounts paid & duties

  10. Employee list and job description

  11. Description of company operations
To be fair, not all Auditors are antagonistic bookworms. They are paid by the insurance company to make sure the policyholders are staying honest. If insurance companies did not collect the proper premium dollars to pay losses, then they'd all go out of business. The sky would fall, and chaos would reign. Your Auditor can be your friend or your worst nightmare. Many of them will work with you. They will recommend ways that you can protect yourself against radical premium increases. They may let a few things pass.

How will you survive? Don't panic. We'll get through this together. Start compiling this information, and I'll tell you how to present it. Stay tuned...

In the meantime, tell me about your audit experiences. Did you prepare? Did the Auditor sit in your office for hours? Was the Auditor a good cop or bad cop?

Tuesday, July 21, 2009

To Get A Rebate, Your "Clunker" Must Have Had Insurance

Below is an article from one of my carriers, Allied Insurance, that discusses the insurance requirement of President Obama's new Car Allowance Rebate System (CARS), or "Cash For Clunkers." In order to qualify for the rebate, consumers must show that their "clunker" has been continuously insured for at least 12 months.

CARS -- Car Allowance Rebate System (Cash for Clunkers)
President Obama in June 2009 signed into law the Car Allowance Rebate System (CARS) also known as "Cash for Clunkers. This program, administered by the National Highway Traffic Safety Administration (NHTSA), is designed to increase fuel efficiency and stimulate auto sales. It also has the potential of generating net new auto premiums for insurers. Program Highlights:
· This program will help consumers purchase a new vehicle when trading in a less fuel efficient vehicle.
· Consumers can get between $3,500 and $4,500 per vehicle, depending on fuel efficiency of the new vehicle vs. the old vehicle.
· The NHTSA is scheduled to release regulations regarding required forms for compliance with CARS on or around July 24.

What we know so far:
· Consumers will be required to provide proof that their trade-in vehicle has been continuously insured for the most recent 12 months.
· The federal government has yet to define many details of this program, including what will be accepted as proof of continuous coverage.
· There have already been news stories released about this program, so you may receive questions from your clients before all details are finalized.
· Consumers can visit to determine eligibility and review information about the program.
· Since CARS is a Federal program and not a Nationwide program, consumers should rely on the CARS website for their information.

Our job will be to provide any policyholder or prior policyholder with the evidence of insurance. Once the NHTSA regulations for compliance are finalized, we will provide additional information regarding the program and what forms you may be asked to provide.
For more information or answers to your questions, please visit the website or contact your Sales Manager. Once the final details of the program are known, additional information will be posted.

Wednesday, July 15, 2009

What is a CPCU?

From the Insurance Daily Quote Calendar:

A Chartered Property Casualty Underwriter is a professional designation granted by the American Institute of Chartered Property Casualty Underwriters. CPCU designation requires an individual to pass exams in five core courses and three courses in either a personal or commercial insurance concentration. CPCU designees are also bound by a Code of Ethics.

CPCU, or Chartered Property & Casualty Underwriter, is an advanced degree in insurance. After several years and several exams, I finally achieved mine. The Insurance industry has many different designations, but CPCU is the grand-daddy of them all.

I'm glad to have it, and this study has exponentially increased my knowledge of the commercial insurance industry. If you are a new agent, I highly recommend that you take the plunge. If you are a policyholder, make sure you are using an agent who has one. We CPCUs can't wait to shower you with knowledge.

For more reading on the CPCU designation, please visit the American Institute for CPCU,

Monday, July 6, 2009

Preventing Dryer Fires

Following is great information on how to reduce your risk of dryer fires. I received this article from one of my clients, Moss Building & Design, in Chantilly, VA. Moss is a specialist in custom residential remodeling.

How a clean dryer can do more than clean your clothes…it can save your life!

The U.S. Consumer Product Safety Commission estimates that in one year alone, clothes dryers are on average associated with 15,600 fires, which result in 20 deaths and 370 injuries. Fires can occur when lint builds up in the dryer or in the exhaust duct. Lint can block the flow of air, cause excessive heat build-up and result in a fire in some dryers. These easy steps will show you how to protect your family and your home.

  • Clean the lint screen/filter before or after drying each load of clothes. If clothing is still damp at the end of a typical drying cycle, this may be a sign that the lint screen or the exhaust duct is blocked.
  • Clean the dryer vent and exhaust duct periodically. Check the outside dryer vent while it is operating to make sure exhaust air is escaping. If it is not, the vent or the exhaust duct may be blocked. To remove a blockage, it may be necessary to disconnect the exhaust duct from the dryer.
  • Clean behind the dryer where lint can build up. Have a qualified service person clean the interior of the dryer chassis periodically to minimize the amount of lint accumulation. Keep the area around the dryer clean and free of clutter.
  • Replace plastic or foil, accordion-type ducting material with rigid or corrugated semi-rigid metal duct. Most manufacturers specify the use of a rigid or corrugated semi-rigid metal duct, which provides maximum airflow. The flexible plastic or foil type duct can more easily trap lint and is more susceptible to kinks or crushing, which can greatly reduce the airflow.
  • Take special care when drying clothes that have been soiled with volatile chemicals such as gasoline, cooking oils, cleaning agents, or finishing oils and stains. If possible, wash the clothing more than once to minimize the amount of volatile chemicals on the clothes and, preferably, hang the clothes to dry. If using a dryer, use the lowest heat setting and a drying cycle that has a cool-down period at the end of the cycle. To prevent clothes from igniting after drying, do not leave the dried clothes in the dryer or piled in a laundry basket.

Source: Consumer Product Safety Commission


Justin Schopp

Moss Building & Design

Come to the July MAREMA meeting - 7/15/09

MAREMA Monthly Meeting July 15, 2009

I hope everyone had a good Fourth of July Holiday!

It’s that time to put the MAREMA Monthly Meeting on your calendar. This month’s meeting is a special one. Our Guest Speaker is Richard (Rick) Brown, Principal, B&B Realty Investments, LLC. Rick is an expert in TIC (Tenant in Common) transactions. His topic this month is "Tenant in Common Investments, the Good, the Bad and the Ugly", or "How to prosper and take advantage of this growing part of the industry".

If you aren’t familiar with TIC’s, this is a great opportunity to get up to speed. Learn the benefits of these investments. Remember, your real estate principles class. A Tenant in Common is a type of ownership of real property by two or more persons in which each owns an undivided interest in the whole. Upon the person’s death the property will pass on to their heirs. A TIC may be a good investment alternative for your Clients.

Join us this month and learn the "ins and outs" of investing in Tenant in Common properties. Take advantage of Rick’s expertise in this investing alternative.


Richard W. Brown, CCIM, 59, has been in the real estate business in the Mid Atlantic region for more than 30 years. As an agent, a manager or an owner he has been involved in over $650,000,000 of commercial investment real estate transactions.

He served as a salesman and then the manager of the Shannon & Luchs Co.

Commercial Division and as Regional Director for the Marcus & Millichap Company in Washington D.C., supervising a staff of over 25 investment real estate professionals.

From 2001 to 2004, Rick was the in-house real estate broker for the Reznick, Fedder & Silverman accounting firm in Bethesda, Maryland. Rick advised clients on the sale, development and tax structuring for a multiple number of projects, including 1031 tax deferred exchanges.

In the past 3 years, Rick has specialized in the acquisition, structuring and Co-Sponsorship of Tenant In Common (TIC) transactions.

His closed volume has exceeded $180,000,000. He has handled the acquisition, financial modeling, due diligence, TIC structuring and equity development for 7 properties: 6245 Leesburg Pike, Falls Church, VA, ($23,750,000), One Town Center, Bowie, MD, ($27,500,000), Yellow Breeches, Harrisburg, PA, ($13,500,000), Village Medical Park, Orangeburg, SC, ($14,000,000), Olde Lancaster Town Center, Charlotte, NC ($23,750,000), Pinnacle Point Center, Columbia, SC ($10,400,000) and Alexandria Corporate Park, Alexandria, VA ($57,800,000). Rick is a Co-Sponsor and signatory on loans exceeding $104,000,000 on these properties.

Rick has also advised The DeSanto Realty Group on their entry into the TIC industry. DRG has recently completed their 7th TIC transaction totaling over $150,000,000.

Rick is also an industry leader and has spoken on TIC issues at the National TIC Association Annual Conference, the National CCIM Annual Conference and the NAR National Convention. He served as a local and national director for the National Association of Realtors (NAR) for 12 years and was National Chairman of the NAR Realtors Political Action Committee in 1990. He currently serves on the NAR Federal Taxation Committee.

He was the founder and 5 year Dean of the Washington D.C. Graduate Realtors Institute and has served on the faculty of the Maryland Realtors Institute for more than 25 years. In 1979, he was named as the "Realtor Associate of the Year" by both the Montgomery County Association of Realtors and the Maryland Association of Realtors and in 1990, Rick was named the "Realtor of the Year" by the Washington D.C.

Association of Realtors.

Rick is a graduate of Towson University with a BS in Business Administration.

Richard W. Brown


B&B Realty Investments, LLC

4550 Montgomery Ave.

Suite 230N

Bethesda, Maryland 20814

office: 301- 469-3900

dir: 301-469-3902

mobile: 301-367-4489

fax- 301-469-3904 <>

Bring your Package Presentations, Quick Pitches and Cash Board items to the meeting and let’s make some deals this month. You can get the appropriate forms on the MAREMA web site at and

Don’t forget to put the MAREMA Annual Meeting on your calendar this year. The meeting is going to be held on October 2-3, 2009 at the Hylton Springfield this year. Get all the details and Registration Form at

If you are new to commercial real estate or need a little boost in your career, check out the MAREMA Intern and Mentoring programs. Information is available at

RSVP at to attend the monthly meeting. We need a head count for the luncheon as seats are limited.

Interested in joining MAREMA? Get all the information for joining at

Thank you for your membership and support!!!

Michael Setunsky





MAREMA meets the 3rd Wednesday of every month at the Westpark Hotel in Tysons Corner, Virginia except in October. Bring a colleague!Yahoo! Groups Links

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Tuesday, June 30, 2009

Contractors: Secure Your Trucks, You Hockey Pucks!

Sorry, I couldn't resist a tip of the cap to Don Rickles.

I received this report from Jody Hibbs of the Plumbing & Mechanical Professionals of Virginia, Many contractors report that the "hockey puck" locks are a great theft deterrent. The report below is more proof of that statement.

Contractors should note that most policies require some proof of forced entry in order to trigger theft coverage. If tools are stolen from an unlocked truck, then your insurance may deny the claim. Whether or not you use a "hockey puck," make sure your employees are locking those trucks when they park.

Here's the report from the PMPV:

It has been brought to our attention that one of our members had 10 vehicles broken into in his yard over the weekend. All of his vehicles are equipped with “hockey puck” locks, and the two vans that had those locks in use, were left undisturbed. All of the vehicles that WERE broken into, the locks had not been engaged on the trucks.

This is a reminder of how important it is that your employees properly secure their vehicles at all time, and if you do not have specialty locks on your vehicles, now would be the time to consider it.

Jody Hibbs is the Executive Director of the Plumbing & Mechanical Professionals of Virginia. She can be reached at 800-947-7450,, if you have any questions about PMPV. They are a great organization.

Monday, June 29, 2009

testing out a shotgun status update approach through

Monday, June 8, 2009

Networking Workshop with The Elevator Speech Therapist, June 25th @ 8:00 am

As a devoted reader, you are invited to join The Professional Networking Group (PNG) for a workshop with Ellen Kaminsky, The Elevator Speech Therapist. Her topics will include:

  • What defines a great elevator speech -- and why you can't prosper without one.
  • The three deadly sins most people commit when giving their introduction.
  • How to clearly identify your perfect client - and how to attract them.
  • How to create a powerful message focused directly on you rperfect client.
  • How to leverage others to help you effectively spread your message.

Details can be found here:

RSVP early to reserve your spot!

Friday, May 29, 2009

Outdoor Work Safety Tips

As an Insurance Agent, I often work with clients to improve their safety programs. We all know that insurance rates are determined by loss experience, and everything we do to maintain a safer workplace will help to keep those rates low. Safe work sites also mean healthy & happy employees.

Now that Summer is here, remind your employees to be wary of excessive exposure to sun, heat stress, & storm hazards.

This link is an excerpt from a safety manual for a landscaping company. Despite some horrific misspellings, the excerpt offers great information about the Environmental Hazards of outdoor work. Feel free to include in your toolbox talks & safety meetings:

The manual was developed by the Farm Safety Association, Inc. in Ontario, Canada. For full copies and further information, please contact them. 800-361-8855.

Friday, May 8, 2009

Sprinkler credits: Get 'em right the 1st time!

You've installed a new sprinkler system in your building. Good for you! You've taken a strong step toward protecting your investment from a dangerous & costly peril. In a January 2009 report, the National Fire Protection Association reported that "damage per fire is lower by 45 - 70% in sprinklered properties." (source).

So, now you just sit right back and wait for the insurance savings to roll in, right? Not so fast. You need to take a few more steps to make sure that the insurance industry will give you full credit for your investment.

Fire insurance rates are determined by a company called the Insurance Services Office (ISO). Once built, an ISO representative will visit a building to inspect its type of construction, occupancy, loss protection and community features. ISO will recommend that the building be assigned a specific fire rate, which is used by your insurance company to develop your final insurance premium.

Like Haley's comet, ISO inspectors visit very infrequently. Therefore, the fire rate for your office building may be based on an open-flame table side cooking restaurant from the 1980s. They make their rounds, but there are a LOT of buildings out there. Insurance companies can request updated inspections as well.

Proper sprinkler credits can discount a Property premium by 40%. The challenge lies in getting the credit. If ISO is not satisfied with your sprinkler system, then they may not approve a credit at all. Let's review their requirements to make sure we get it right.

Their sprinkler system evaluation consists of a review of these areas:
  • System Design based on the requirements of the occupancy
  • Available water supply
  • System installation & components
  • System testing
  • Areas of the building without sprinklers
  • Building conditions that effect the operation of the sprinklers

An ISO inspector will want to review these items during the building inspection:

  • Main Drain Test results (all systems)
  • A copy of the Underground and Overhead Piping Hydrostatic test Certificate (all systems)
  • Dry Pipe Trip Test (systems with Dry Pipe Valves)
  • Fire Pump Performance Test (systems equipped with a fire pump)
  • System Design Criteria in the form of either sprinkler plans, hydraulic calculations, or hydraulic data plaque information.

I will expand on these reports & criteria in future posts, but this is the laundry list. If any of these items is missing when the ISO inspector knocks on your door, then you won't get your sprinkler credit.

This information is drawn from ISO's Property Resources Online:

Feel free to contact me with comments or questions.

Thursday, April 30, 2009

Service & Sub Contractor Insurance Guide

Service & Sub Contractors present a significant loss exposure to your business. Potential losses may come from injuries to their employees or injuries or damage to others as a result of their work.

I recommend that you take these steps to protect yourself against this exposure:

1. Require all service contractors to provide a Certificate of Insurance showing that they carry at least General Liability & Workers' Compensation coverage. Effective dates should be current, and policy limits should be at least as high as the limits on your own policies.

2. Require them to name you as Additional Insured on their General Liability policy. If you are an Additional Insured on their policy, then their insurance carrier will be obligated to defend and pay claims on behalf of both of you.

3. Be an Additional Insured for both Current & Completed Operations on their General Liability policy. Many forms will add you as an additional insured for a contractor's current operations, but they will exclude coverage for completed operations. This could create a large gap in coverage for you (on the contractor's policy), if a suit is brought alleging damage caused after they left their jobsite. A "current operation" exists while the contractor is working on the site. A "completed operation" exists after the job is completed.

4. Require Waiver of Subrogation endorsement on the General Liability & Workers' Compensation policies. If a contractor's insurance company has to pay out money on your behalf, they may try to go against you to be reimbursed. This is called subrogation. A Waiver of Subrogation means that they cannot come after you for reimbursement.

5. Require Primary, Non-contributory wording on their General Liability policy. This wording means that the contractor's insurance policy will respond first in any claim that involves the two of you.

6. Require Workers' Compensation insurance regardless of your state's requirements. All states have their own Workers' Compensation statutes. Virginia, for example, requires Work Comp insurance for companies of 3 employees or more (full or part-time). If an employee is injured on the job, then they are entitled to medical & disability payments from their employer. In our situation, your contractor may not carry Work Comp insurance. If one of their employees is injured while working on your property, then that employee may bring suit against you for his/her injuries. If you require your contractors to carry Work Comp insurance, then that policy will cover those expenses.

This is a checklist of items that I share with my insurance clients. If you have any questions, or suggestions to improve this list, please send me a note.

Tuesday, April 28, 2009

The Growing Trend of Uninsured Drivers

As referenced in my first post below (4/8/09), the number of uninsured drivers on the road is growing. I received an article from The Hartford Insurance Group's HartfordHelp website that attests to this fact.

Uninsured Drivers Hit the Roads in Record Numbers
A recent auto insurance industry study reports a drastic rise in the number of drivers who are dropping their auto insurance and driving on the roads uninsured...

Keep an eye on your Uninsured/Underinsured Motorists Liability limits. Protect yourself against those who don't.

Saturday, April 25, 2009

Flood Insurance Facts

The following information is summarized & excerpted from the National Flood Insurance Program's website. For more information, please visit:

Flooding is the most common natural disaster. Flash floods, inland flooding and seasonal storms are always possible and can bring floods to every part of the region. Just one inch of water can cause thousands of dollars in damage. Most homeowners insurance does not cover floods. Only flood insurance financially protects your home and your personal property from floods.

Flood insurance compensates policyholders for all covered losses, and as opposed to a disaster loan, there is no payback requirement. The average flood insurance premium is approximately $500 a year. As long as your community participates in the NFIP, you can purchase flood insurance regardless of the extent of your flood risk. You are eligible for flood insurance if your house has been flooded before, and you can purchase it even if your mortgage doesn't require it.

In 2007, nearly 25 percent of all flood insurance claims came from low- to moderate-risk areas. You may be eligible for low cost Preferred Risk Policy if you live in a low- or moderate-risk area.

For just $119 a year, you can purchase a minimum of $20,000 building and $8,000 contents coverage. Business owners can purchase $50,000 building coverage and $50,000 contents coverage (per building) for just $550 per year.

Should a flood event occur in your community, it is important you know what to do in response to a flood watch or warning, as well as the important steps to take when you return home. Below, please find links to documents to assist you as you recover from flood damage:

After The Flood Fact Sheet
Tips on how to safely assess the extent of flood damage to your property, as well as instructions on how to prevent further loss.

Filing Your Flood Claim
A checklist for policyholders as they manage their claim.

NFIP Summary of Coverages
An explanation to help policyholders understand the extent of coverages provided by their Flood policy.

The above information was excerpted from the National Flood Insurance Program's website. For more information on Floods and Flood coverage, please visit

Wednesday, April 22, 2009


I am a licensed Property & Casualty Insurance Agent and Consultant, and my blog is about general insurance & risk management concepts. Every company is different; every policy is different; every state is different. I try to give the most updated facts, based on my research and 12 years of experience in the industry. However, before you act on your policy, be sure to verify with your company and your state's insurance regulations. If you have a specific question as it relates to your policy, please don't hesitate to contact me -

Wednesday, April 8, 2009

Uninsured & Underinsured Motorists Liability

When the economy is down, people will be tempted to skimp where they can. Some will choose to skimp on their Auto insurance. They may purchase the bare minimum ($25,000 liability limit in VA), or they may choose to go without insurance at all.

You may get hit by an uninsured driver; or you may get hit by a driver with liability limits that are inadequate to cover your damages. When a situation like this happens, look to the Uninsured/Underinsured Motorists Liability portion of your Auto policy.

What's that? Where's that? Look on your declarations page - under your Liability coverages. You will see this:

Bodily Injury Per Person/Bodily Injury Per Occurrence
Property Damage Per Occurrence

Medical Expenses (or PIP) (to be explained in a future post)

Un/Underinsured Motorists Bodily Injury Per Person / Bodily Injury Per Occurrence
Un/Underinsured Motorists Property Damage Per Occurrence

Your UM Liability limits should be the same as your Liability limits. After all, this is insurance that will pay for bodily injury and property damage to YOU and YOUR CAR - if you're hit by an un/underinsured driver. This coverage should also pay for a rental car while your car is being repaired.

I have seen some companies include a $200 deductible for UM coverage. Check your policy to see what your company requires.

If you are hit by an uninsured or an underinsured driver, don't let your insurance carrier pay the claim under your Collision coverage. Make sure that they pay the claim under your UM coverages. You pay the premium for it, make sure they use it.