New federal overtime guidelines under FLSA

By Yelana Sepeck and Jeff Viel of Cincinnati Insurance Company

A new federal rule for overtime pay that becomes effective December 1, 2016, may increase an employer’s need for EPLI – employment practices liability insurance.
In May 2016, the U.S. Department of Labor published a final rule updating its overtime regulations. For decades, the DOL’s federal wage and hour law, known as the Fair Labor Standards Act (FLSA), required employers to pay nonexempt employees overtime at 1.5 times an employee’s regular rate of pay for hours worked in excess of 40 per week. The DOL last updated the exemptions to the FLSA’s overtime standards in 2004.

The 2016 update expands eligibility for overtime pay by limiting exemptions. And states can expand overtime protections even further. If your business employs nonexempt workers, it is essential that you familiarize yourself with any updates to state-specific rules.
EPLI coverage protects your business or organization and your employees when confronted with allegations that an employee’s rights were violated. EPLI provides protection for covered claims, relieving insureds from paying significant defense costs and potential settlements or judgments. Additionally, having the proper protection in place helps you attract and retain the most qualified people.

The new overtime rule effective December 1 more than doubles the salary threshold for exempt employees, increasing the number of employees eligible for overtime pay.
In most instances, employers must reclassify salaried employees who earn less than $913 per week as nonexempt employees. This means that formerly salaried employees earning less than $47,476 annually will become eligible for overtime pay.
Going forward, the DOL will update the salary and compensation levels automatically every three years. According to DOL projections, it is estimated that on January 1, 2020, the threshold will rise to $51,000.

The updated rule allows employers to consider some nondiscretionary bonuses, commissions and various types of incentive payments to satisfy up to 10 percent of the salary threshold.
If you have not begun implementing a strategy to comply with the updated overtime rule, now is the time to begin. A successful implementation strategy includes:

            -A detailed transition plan

            -Handouts explaining the new rules and transition timelines

            -Talking points for managers responsible for discussing changes with employees

            -Training on proper time-reporting procedures for reclassified employees

            -Addressing changes in payment frequency or timing for reclassified employees

Like many employment issues, the new overtime guidelines can be complex. Contact your local independent agent to discuss EPLI coverage for your business.

Coverages described here are in the most general terms and are subject to actual policy conditions and exclusions. For actual coverage wording, conditions and exclusions, refer to the policy or contact your independent agent.

Make sure your insurance keeps up with your business

Cincinnati Insurance Company Blog by Wayne Pinney
A business owner doesn’t have to understand every detail of a machine or a process to benefit from it. How many drivers understand what is going on under the hood? How many machine operators are able to repair the machine? Insurance coverage can be the same way.

Just as you rely on a qualified technician to properly evaluate, maintain or repair a complex piece of equipment, you rely on your independent agent to evaluate your insurance needs and guide you in obtaining the necessary coverages, including business interruption and extra expense coverage.
For example, consider essential equipment you use every day to operate your business. The equipment does not have to be involved in actual manufacturing or assembly of a product to be vital to your operation; it could be equipment used to provide services, facilitate communication or manipulate critical data.

To be successful, you must invest considerable time, effort and expense to evaluate costs of operating and maintaining the equipment. Unless you make that investment before you buy, you could be in for unpleasant surprises. And you’re not home free once the equipment is installed and contributing to your business’s success. You need to know how the machinery – or its failure – could affect your bottom line.

Similarly, you don’t want to guess about the production value of equipment when you establish insurance limits and deductibles needed to recover from a covered equipment failure.
Business interruption and extra expense insurance coverage is calculated based on the language in your insurance contract and in accordance with accounting principles. It also takes into consideration many aspects of your operating profits and expenses that may not be obvious from a cursory review of production numbers.

Business interruption coverage is just as important to your business as the machine itself – maybe more important. It’s not uncommon for the business interruption portion of a covered machinery and equipment loss to dwarf the loss associated with physical repair of the equipment.

Your local independent agent, who is familiar with your business and the provisions of your insurance contracts, can be a source for essential information and guidance. Consider inviting him or her into any conversation you may have about protecting your business from loss. You will be glad you did.

Are you properly insuring your other structures?

Cincinnati Insurance Company Blog by William Maples

There’s more to your homeowner policy than just coverage for the house you live in. It also provides coverage for other structures on your property.

These may include all structures and buildings not sharing a foundation with your house. Most insurance policies provide 10 percent coverage for other structures. For example, if you insure your home for $200,000 an additional limit of $20,000 applies to all other structures. Remember that if you have a total loss, you don’t receive $20,000 for each structure, but $20,000 total for damage to all other structures. A large detached garage by itself can exceed this amount in many cases.
So how do you know you have appropriate coverage?

If you have detached structures on your land, it is best to consult with your local independent insurance agent to discuss options. A pool house, large barn, garage with living space, fence, freestanding deck and stable may fall into different categories, and your agent can help make sure you have the correct coverage to protect you in the event of a total loss.

While the chances of losing all your other structures at one time are small, you want to secure enough coverage to protect your investments. You may need more than the 10 percent standard coverage for appurtenant structures.

Also consider that many different types of structures could qualify for coverage on your policy, and it’s important to select the correct category based on usage. Your agent can advise you on the information you will need to provide to obtain the coverage that’s right for your situation.
A good example is a barn. Barns can be built in many different ways from a variety of materials. By providing accurate information on usage and construction, you can be assured that your property is protected.

If your other structure is being rented, is used for a business or was not reported, you are most likely not adequately insured. Your agent has the expertise to guide you.
Finally, don’t forget to assess how much insurance protection you need for personal property housed in your other structures. For example, a home woodshop in your barn could have valuable equipment you’ll want to protect. Ask your agent for advice.

The best way to look at it is to think of insuring your other freestanding structures the same way you would your home. You want 100 percent coverage for each structure in the event of a loss. Replacement of these structures is typically less expensive than a home, but those costs can add up and represent a significant loss.

Coverages described here are in the most general terms and are subject to actual policy conditions and exclusions. For actual coverage wording, conditions and exclusions, refer to the policy or contact your independent agent.

No business is too small for cyber criminals

Cincinnati Insurance Company Blog Post (3/31/16) - Kate Miller

Data breaches make the news when big retail chains get hit with a cyber attack. You may even be notified of the breach by the retailer if they have reason to believe your data was compromised. Or, you may read about data breaches when you receive a new credit card or are offered identity theft protection.
What you might not hear about are the cases where a business owner goes bankrupt after a data breach. A 2012 study by the National Cyber Security Alliance found that 60 percent of small to midsize businesses that suffered a breach went out of business within six months.

FIRST LINE OF DEFENSE

Your first line of defense as a business owner is to educate yourself on how to prevent or mitigate a breach. Follow news reports, and take advantage of online materials available to help you prepare for and respond to cyber attacks.

SECOND LINE OF DEFENSE

Your local independent insurance agent could be your second line of defense, providing information about Internet exposures and insurance products. Any business that handles private information is at risk of breach and subject to cyber exposures. Private information includes personal identifiers (Social Security numbers, birth dates, driver’s license numbers, etc.), financial information (bank or investment accounts, credit cards, etc.), medical or medical claim history, employee personal data or student records.
Companies that use third parties to process their transactions or record keeping, such as payroll, employee benefits or billing, also have the potential for a cyber loss. Consider the possibility of that third party experiencing a data breach where you might be ultimately responsible for the breached records.

WHY BUY CYBER INSURANCE?

Cyber insurance can reimburse for expenses incurred such as:

-Breach notification law compliance – 47 states have data breach notification laws that include an obligation to notify those whose information has been breached and certain federal laws, such as HIPAA, may also require similar notifications.

-Breach response costs – for example, notifying and providing services to affected individuals

-Opportunity costs and out-of-pocket expenses involved in resolving identity theft problems for business owners and customers

-Damage to the business computer systems and data due to unauthorized access, hacking, malware or denial of service attacks.

Remember, data comes in all forms, paper and electronic, and business owners need to protect data to manage risk.

To File or Not to File a Claim?

When should I file a claim and when should I not?  It is a common question we get in our agency and every time it is asks we always say, "it depends on each situation".  Let's first tackle this question with how claims can affect your insurance. 

It varies by insurance company but most companies look at a 6 year window for home insurance claims and a 3 to 5 year window for auto insurance claims.   What this means is that if you file a home claim it can have an affect on your premium for up to 6 years and if you file a claim on your auto insurance it can affect your premium for 3 to 5 years.  If you have more than one claim in this window of time it can really have an impact on your premium and may even cause some insurance companies to look at canceling your coverage.  With this in mind, it is best to consult with your insurance agent to see what prior claims you have on your record before deciding whether or not to file a claim.  If you already have a  claim inside one of those windows of time then it may be worth contemplating whether to file a claim or not.

Let me break for one second to mention that liability claims are a must file.  These would be auto accidents that involve a third party bodily injury or a homeowner claim that involves injury to another person.  These need to be handled by the insurance company and their legal firms.  Also, if you have a large claim such as a totaled vehicle or large size house damage, these too are claims you would want to file without hesitation.  The claims that we are talking about that may or may not be worth filing are things such as backing your car into a light post, backing into an unoccupied car or driving off the road and causing damage to the front bumper when you hit a ditch.  On the homeowner side, it would be small claims such as ice dams that cause a $1000 or $2000 worth of damage or a roof claim that the repair is only a $1000 or so.  These are the types of claims it is worth contemplating prior to filing.  When you factor in deductibles and the affect on your premium for a few years, those smaller claims may be best to pay out of pocket.

Protect Your Building from the Cold

Arctic temperatures can have a dramatic effect on your building — and your livelihood. Regular maintenance and a winter weather plan can help you avoid any negative impact.

WHAT CAN HAPPEN

Winter storms frequently cause electrical power failure, which in turn can disable your heating system. If this happens, water-filled piping (such as sprinklers, domestic water pipes and heating, ventilation and air conditioning systems) may freeze and rupture. It is important to assess the potential for this hazard.

• Inspect all safety shutoff valves and cutoff switches on combustion equipment such as rooftop units, boilers and ovens, including water main shutoffs and main electrical service disconnects.
• Have qualified contractors or staff properly inspect heating, air-handling units and space heaters on at least an annual basis. Assure that space heaters are monitored for fire safety.
• Review the location and storage of flammable liquids such as propane, gasoline and diesel fuel. Should your sprinkler system freeze and require that it be disabled, it is recommended to reduce this storage to a minimum to minimize the amount of fuel in a fire.

Without proper winter weather preparation, your business could experience property damage — roof collapse, pipe rupture and more.

HOW TO REDUCE YOUR RISK

There are some strategies you can implement to protect your facility and minimize the impact of severe weather on your business:

• Maintain building temperatures above 55 degrees. Plan for maintenance personnel to properly monitor buildings during cold snaps, making more frequent visits to buildings or areas of buildings not normally occupied.
• Inspect all areas along the inside and outside perimeters of the building to ensure they are sealed and there are no drafty areas.
• Maintain roofs in good condition, including repairing leaks, securing flashing and clearing debris from the roof, roof drains and overflow scuppers.
• Check that downspouts are secured to buildings and clear of leaves and debris. If they iced over during a previous winter, consider properly installing heat trace to prevent major icicles and dams.
• Make sure all building openings are weather-tight so they do not admit cold air.
• Consider how you’ll address removing snow accumulation on your roof. If you or a contractor use a snow blower, make sure the height of the snow blower shave plate is adjusted higher as to not damage the underlying roofing material.

Gusting winds, heavy snow and bitter temperatures can create catastrophic property losses and havoc in your life, but a little preparation can prevent losses, saving you time and money.