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Found 7 results

  1. Happy Tuesday To All, In today's installment of the "Tidbit" we are going to try something I gave a shot a while back but it was not as well received as I had hoped it would be, but first ... In the spirit of always growing my superpowers (and due somewhat to regulations and complilance), InsuranceMan 2.0!!! has been a bit preoccupied with CE. Ah yes, as any of you that came from or are still dwelling in the professional world (outside of distilling), there are requirements for Continuing Education (CE) in order to keep your licensure up to date and make all of the regulators happy, happy, happy. Well, 'tis the season, and I am neck deep in it, but that does not mean I am not here to serve and protect you! I should have it all wrapped up in the next day or so, but I have been a bit busy with it all. That then brings us to the meat of the TMIT for today. As stated, I tried to do a little Question and Answer (Q&A) post a while back and I have either done such an amazing job at educating all of you that no one has any insurance questions, or people just did not want to ask questions. I hope it was the former but methinkst thou ADI-ers mayst not want to appearest naive. Whatever the case, I would like to open up this post to questions. Any questions that you may have. There are no silly questions, people, so let's have at it. Do you have questions about your General Liability, perhaps your property coverage, maybe how your stock should be calculated?!?!?!?! Do you want to know how to make a killer Pad Thai or ask what I am doing this weekend? Nothing is off limits, so let's get this party started?!!??! Who will be first???? What will they ask?!?!?! So many questions ... but all from me so far. Now it is your turn. Be the first to post a question and let's have some fun with this. Until someone does ... Stay Vigilant!!!!! Best, Aaron Linden a.k.a InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com
  2. The very best of Tuesday mornings to you!!!!!!! Yes, Tuesday is upon us once again! I know we all look forward to what that means! It is time for today’s installment of the TMIT. Today I am going to shed some light on something that I have mentioned many times in the past but never really took the deep dive on. That “something” is co-insurance. Ah, co-insurance. This “something” is something that most insurance agents cannot even wrap their minds around. Don’t believe me, just ask them. I have actually had conversations with underwriters who have said that they really don’t quite understand it. Well, ok. I guess their job is underwriting and not claims adjusting, BUT STILL!!!!!!!!!! As you sit down with your insurance policy to give it a loving perusal (really, who does this?!?!?!!) you will inevitably come across your property section of the policy. In that section you will see the amounts of coverage you have in regard to your building (if you own it, or maybe your tenant improvements and betterments), your equipment (at least I hope you have coverage for that), your contents or business personal property (BPP), and maybe even your stock on hand (if your agent knows what they are doing that is) to name a few. If your policy is of a more standard ilk, you will see the description of what is being covered, the limit of value of that coverage, your deductible, and more likely than not, your co-insurance limit. OOooooooo …… Yep, there it is!!!!!! It is the insurance equivalent of spotting a unicorn in an open field. It is mythical, it is magical, and really, when you see it, you may rub your eyes and wonder silently, “What the heck am I looking at?!?!?!?!?!” Co-insurance comes in a myriad of different flavors depending on the carrier providing your coverage, but typically you will see an 80%, 90%, or in some cases 100%. I will say that one of the only times you see a 100% co-insurance clause should be if it is an “agreed value” or something of the like. Fear not dear reader, I will explain this so that you understand it, no matter what percentage you have listed. Then, armed with this all-knowing insurance geek knowledge, you can sit around your next dinner party or tasting and astound people with your incredibly in-depth repertoire of insurance knowledge, which to be honest, probably won’t get you anywhere. REGARDLESS, let’s get to it. For this example we will use your building value (fear not, if you do not own your building you can simply apply this to whatever aspect of property coverage you like, it all functions the same way). Let us hypothesis that you have your building listed with a nice round value of $1,000,000 (places pinky to corner of mouth with one eyebrow lifted)!!!!!!! Excellent. Maybe your agent went to the painstaking lengths to run a Marshall & Swift cost estimator or some equivalent based on contractor costs and types of materials used in your location to accurately decipher what your actual building costs would be if you needed to rebuild from the ground up. Wait, what?!?!?!! Who did what now?!?!?! Well, this is an interesting point of fact. Where did your insurance amount come from? Did you give it to the agent and they just said ok and used it? Is it what the property would sell for if you wanted to sell it???? Either way, dollars to donuts, it is wrong. First of all, your agent should always be providing you with a replacement cost estimation of what it would run if you had to rebuild the entire building, end of story. If they have not done that, run, screaming!!!! Not that you don’t know your building and what intrinsic value it may have to you, but in this case, the cost of construction is ever changing and the only accurate way to know what that cost would be is to do an “Insured To Value” (ITV) or “Total Insured Value” (TIV) cost estimation based on the most recent and up to date figures available in your area. As to “what would it sell for”, again, WRONG! The sale value takes into account things such as location, overall land and land size, etc. The sale price is not what it would take to rebuild the building. In fact, sometimes the sale price could be much more, and in some cases it could be much less that what the building alone would cost to replace. Interesting, isn’t it?!?!?!?!?! In fact, I am going to use a real-life example for you so you can see how dangerous this can be. I have a client in a middle of the country city, a city that was hit hard with having too much warehouse real estate and not enough buyers for the market. He was able to score an incredible deal on his building. He procured a 10,000 square foot warehouse for around $150,000!!!!!! That comes out to $15 a square foot (not including the land), which is UNHEARD OF! He calls me all excited and wants to get insurance coverage for his distillery in this location. I said great, and congratulations. He tells me that he wants to insure everything like it was before, but now he owns his own building (proud moment for him to be sure) so he wants to include that on the policy for $150,000. WHOA!!!!! Pump the breaks … What? He tells me of the amazing deal he got, and he only wants to insure the building for what he has into it. Can anyone say, “co-insurance clause”?!?!?!!? OK, here we go. A co-insurance clause is put into insurance policies (almost always reflected as a percentage) and used by insurance companies to ensure that policyholders insure their property (again, any kind of property) to an appropriate value. Why do they do this? Well, it is a way for the carriers to make sure that they are receiving a fair and accurate premium for their risk involved in insuring the property. Ah yes, it all boils down to money! A prime example is the one that I just gave (as by design). This insured wanted to insure his building for $150,000 when the true replacement cost of the building would be much higher. The premium to insure a $150,000 building may be around $1,125 (if it is a $0.75 rate) as opposed to a premium of nearly $7,500 in order to insure a $1,000,000 building value. Now you can see why the carrier is interested in making sure that things line up correctly. This is one of the reasons why they have the co-insurance clause. Co-insurance works like this: It is the amount of insurance you DID have at the time of the loss divided by the amount of insurance your SHOULD have had (and just where does that value come from you are wondering????? You guessed it, mainly from an ITV/TIV that the claims adjustor runs, usually from Marshall & Swift. Oh, all the pieces are fitting together like I had this planned out or something!!!! The voice of experience is loud and clear coming from me!). Take that percentage, multiply it by the loss amount, subtract your deductible and that is what you get reimbursed from the carrier. Lost yet? Most people are, even those who have been in insurance for years. It is easy to understand when we go back to our example. We will get there in a minute, I promise. If this insured’s building has a true replacement cost of $1,000,000 and he has an 80% co-insurance clause, this means that to be in compliance with this provision he MUST insure his building to at least $800,000 (0.80 x $1,000,000 = 800,000) If he insures his building to that amount, he can avoid any kind of co-insurance penalty and he would receive the full amount of insurance (minus the deductible) in the case of a loss. Keep in mind that he will only be able to recoup the amount of value shown on the policy coverage form ($800,000 in this case), which would leave him having to out-of-pocket $200,000 in order to build this same $1,000,000 building, but that is better than what happens if you do incur a co-insurance penalty. OK, now that you understand that aspect, I will illustrate what happens if you are out of compliance. In our example it would look like this: $150,000 (DID have) / $800,000 (SHOULD have had since the value is $1,000,000 @ 80% = $800,000) = 0.1875 or 18.75% Yep, if an insurance agent didn’t know any better (which I of course do!!!!!!!) this client would have only had his building insured to 18.75% of its actual replacement value. VERY BAD!!!!! Here is the equation: Amount of insurance the insured DID have (if they had not known better): $150,000 --------------------------------------------------------------------------------------------------------------------------------------- = 18.75% Amount of insurance the insured SHOULD have had: $800,000 Obviously the insured is WAY out of compliance here. What happens next may make you cringe or toss your cookies, so hold on tight or prepare to look away! You have been warned. If the building were partially damaged, let’s say to the tune of $50,000 here is how this would play out: $150,000 (DID) --------------------------- = 18.75% multiplied by the loss amount of $50,000 – Deductible $800,000 (SHOULD) So you would have a co-insurance equation that looks like this: 18.75% x $50,000 = $9,375 - $1,000 deductible = $8,375 insurance claim payment. GASP!!!! As you can see, due to the insured being out of compliance and the co-insurance penalty being implemented, this insured is only going to received $8,375 on a $50,000 claim. This leaves this poor bugger having to out-of-pocket $41,625 in order to repair the building to bring it back up to where it was prior to the loss. Horrifying, right?!?!?!?!?! I don’t want to leave you with that vision today though, so I am going to show you what happens if everything is a hunky-dory! Same situation, but we have the building insured at $800,000. $800,000 (DID) -------------------------- = 1 or 100% x $50,000 loss - $1,000 deductible = $49,000 $800,000 (SHOULD) AND THE CROWD GOES WILD!!!!!!!!!! Here is the real deal folks and what you really need to know about co-insurance. Just don’t even play the game. My advice is to never try to get into a situation where you are trying to hit right on the value you need to meet your co-insurance limit. The price of concrete fluctuates, drywall, plywood, etc. Even if you think you are right on the money, it could all be different tomorrow and it could cost you big time! Think of this, what is it going to cost you to insure your building to its full value instead of 80% of its value? Well, in the case I gave above, it may cost you $1,500 more a year to insure your building (maybe!!!!) at $1,000,000 as opposed to playing the co-insurance game of Roulette and having it at $800,000 only to find out that is not enough. Do not scrimp on your coverage here, please, I implore you. Unless you are a “let it all ride on red” kinda gambler, this is something you need to stay away from. There are ways to shave some of the costs off your building replacement cost, there are. I have tricks and tips as to how to get some of the value down, but I am not going to share that here. Too many non-superhero agents read my posts to try and garner some of my super insurance knowledge, but there are ways to reduce the overall ITV/TIV. If you are interested in that further or need a comprehensive review of all things insurance-y, get a hold of me, InsuranceMan 2.0!!! and I would be glad to lend you a helping superhero hand. Until next time dear reader … Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insruanceman2.0@yahoo.com
  3. It is Tuesday here on the ADI forums, and we all know what that means … In today’s installment of the Tuesday Morning Insurance Tidbit we are going back to the basics. I have had many conversations with folks who were not entirely certain what the different coverages of an insurance policy are, how they are broken up, or really what they mean. So, in today’s installment of the TMIT we are going to dissect a basic insurance policy and provide a 30,000 foot perspective. First and foremost, again, this is a very rudimentary explanation of an insurance policy. Many of you will have needs far beyond this, but for several of you it may be your first time thinking about these issues. Wherever you fall on the spectrum, I hope this is helpful. Where shall we begin? Well, let us start with what is potentially the most important piece of information on the insurance policy, YOUR NAME! You would not believe how many times I see this messed up, and you really would not believe the impact this can have on your coverage. Your name is going to be your name, the name of the distillery, entity of the distillery, etc. Simple, right? Well, for some, not really. Let’s say “Joe Smith” owns “Main Street Distillery” to keep things simple. What should the NAMED INSURED section of the policy read then? Well, who are we protecting with the policy? Joe Smith owns the distillery and as the owner/partner/member/officer he is provided coverage by the policy if done under the entity name. That would then mean that we should use Main Street Distillery then, right? Well, maybe and maybe not. Is Joe Smith a sole proprietor? If so then we have to name Joe Smith as the named insured doing business as (DBA) Main Street Distillery. Confused yet? Right! It all depends on the structure of the individual or entity that owns the business. If Joe is a sole proprietor, then in order for Mr. Smith to be provided coverage he has to specifically be named on the policy as the named insured dba the business name. If Joe set things up as a C-Corp, S-Corp, LLC, etc., then he would be afforded protection automatically by the policy under the entity. So, if it is Main Street Distillery, LLC then Joe would be included for coverage under the operations of the business. It should be simple, but it can be confusing, and it can impact your coverage in a monumental way. Case in point, let us say that Joe is a sole proprietor who is doing business as Main Street Distillery but the policy only names Main Street Distillery. In this scenario there is a loss and not only is Main Street Distillery sued, but Joe is sued individually for his negligence. Well, if Joe is not name as an insured on the policy then “Joe ain’t got no ….” coverage!!!!!!! That’s right, the only thing contemplated for coverage is what appears on the policy declarations sheet. WATCH OUT FOLKS! If the scenario is changed and the entity is an LLC, let’s say, then if the entity is sued and Joe is named individually, he would be afforded coverage via the policy since he is the owner/managing member of the LLC. See how this can be confusing and have a huge impact on who is and who is not covered? OK, so what if Joe operates the distillery as Main Street Distillery, LLC but owns the building under “Old Joe S Enterprises”? Well, how is the ownership structured here? Is it a subsidiary of Main Street Distillery, LLC dba Old Joe S Enterprises? If so, then I would hedge on the safe side and list it as such, but many miss this factor. Is it a separate LLC? If it is Old Joe S Enterprises, LLC then it could either be listed as an “Additional Named Insured”, a straight up “Named Insured”, it could be included to have coverage on the overall policy, or it could have its own policy. Ah, down the rabbit hole we go, HOLD ON!!!!!! Long-story-short, if you have never had the discussion with your insurance agent about what the ownership looks like, what the name of all of the entities are, and how they should be covered or separated out you could be in big trouble. Or … you could work with someone who has a tight grasp on all of this. Someone like me, InsuranceMan 2.0!!!, and you would know where you stand on this subject. Next we have the actual coverage, the meat and potatoes side of the policy. What you are actually being covered for and what that is based on. Again, a rabbit hole of impressive proportions in its own right. Simply put there are a few key coverage factors you will need to know about. They are as follows: General Liability Liquor Liability Property Coverage Commercial Auto Umbrella (maybe, depends on how big you are, lease contracts, distribution contracts, etc.) (and potentially) Workers Compensation. I say “potentially” Workers Compensation due to the fact that many distilleries that are starting out may not have that need as they may not have pay rolled employees, or if they do they may not be subject to work comp. It depends where you are located. See my post about Workers Comp here: For the General Liability it is broken out into roughly 6 different sections. Those sections are “Each Occurrence Limit”, “Personal and Advertising Injury Limit”, “General Aggregate Limit (Other Than Products – Completed Operations), Products/Completed Operations Aggregate Limit”, “Rented to You Limit”, and “Medical Expenses Limit (Any One Person)”. HOLY INSURANCE OVERLOAD, InsuranceMan 2.0!!!, “What does that all mean?!?!?!?!?”, you may be screaming at your screen. Well, in brief, your Each Occurrence Limit is the amount of coverage you would have for any one liability loss. Your Personal and Advertising Injury Limit would be the amount of coverage you have for any injury (physical) to a person or persons where as the Advertising portion would be if you were sued over saying something in your advertisements about someone else’s product tasting like caca and yours being superior. Then the Aggregate limit is the total amount of coverage that you would be afforded in any one policy period. So, if your per occurrence limit is $1,000,000 and your aggregate is $2,000,000 that means that the insurance company would pay out up to $1,000,000 for any claim, but never more than $2,000,000 in any given policy period. Clear as mud? No? OK, think of it this way. You have one claim wherein someone is injured and that claim is $900,000. Ooooo ….. yikes, that was dang near that Million limit, but you are ok, it was under. 6 months later you sustain a liability claim of $500,000. Boy Howdy, it is not your year! Well, due to the fact that you already used $900,000 of the million limit you may be concerned that only $100,000 will be covered. Not so! Because of the aggregate limit, the full $500,000 is covered in this claim. However, you now have had two instances that add up to $1,400,000 so you really only have $600,000 more in liability coverage to get you to the end of the year, and the way you are going, that may not be enough. The Products and Completed Operations Aggregate Limit works much the same way but this coverage only contemplated your products. So if someone were to be injured by your product, that would fall under this portion of the policy coverage. Somewhat easier, and there is more to say, but I will leave it there for the time being. Keep in mind that your General Liability premium and Products premiums are all based rated on your sales. Again, a rabbit hole that we don’t have time to go down but this is a huge pet peeve of mine. A L L sales need to be broken out and classified correctly, enough said. This is something that I find to be incorrect on about 80% of the policies I see that are not mine. I can fix this for you to make sure things are accurate, just give me a call to discuss this in detail. That bring us to the Rented to You Limit. This is for properties that you rent. WATCH OUT HERE!!!!!!! Most policies will give you $100,000 on the surface, and many of you are in lease situation where the building value you are in far exceeds $100,000. Many of the policies that I provide include an endorsement (you’re welcome) that replaces this $100,000 limit with a $1,000,000 limit. Ah, that’s better. But watch out for this, if there is no increased limit on this line item you could be in trouble. You can buy this limit up, but it will cost you some additional $$$$$$$. Last in the Liability section is Medical Expenses Limit (Any One Person) of $5,000. “Does that mean if someone gets hurt at my place, I only have $5,000 to cover their injury?” Great question my astute reader, but the answer is no. Medical Expense is kind of a sub-limit of the overall General Liability. This is for “nuisance” claims. If someone comes to your facility and slips on some spilled water (hypothetical) and twists their ankle and has to have it looked at and wrapped at the hospital, and the expense is $2,500 then the carrier would pay them that amount in exchange for them waiving their rights to seek further damages. If though, that same person who happens to be a concert pianist, slipped and fell braking their hand and now is claiming that they are going to be out of work for months on end, then it becomes a General Liability claim and would fall under that $1,000,000 limit. Now we are on to the Liquor Liability coverage. I know, I know … I hear it all the time, “But I only serve four (4) quarter ounce tastes, there is no way I can be sued for over serving under my Liquor Liability!” Well, read this: As for the Property coverage, this is where you are going to cover your assets. Your equipment, your building (if you own it), your contents, stock on hand, and miscellaneous items such as computers/boxes/labels/bottles/caps/corks/closures/etc. You are going to want to make sure that this figure is accurate for a few reasons. One, if something were to happen you want to make sure that you are reimbursed the correct amount so that you can replace your “stuff” and keep going. Second is that if this figure is not accurate you could face a co-insurance issue. Third is that you need to make sure that your product is covered correctly and adequately, especially if you are aging anything. The is so much more to this aspect but this is only a quick look at the overall coverage. If you want to know more about limits, co-insurance, deductibles, various coverage forms and what types of losses are covered, get in touch with me. How about Commercial Auto? If you own a vehicle in the name of the business, then you are going to want to place a commercial auto policy on that vehicle or vehicles. One, it protects you for a higher limit than you can obtain on a personal policy; Two, most personal policies exclude business use; Three, it protects the entity from lawsuits. You may be thinking that commercial auto does not apply to you because you don’t own any vehicles in the name of the business. I get that, but do you ever drive a personal vehicle, or ask others to do so for work related needs? If so, you have a commercial auto need. It is called Hired and Non-Owned (HNOA) Auto coverage. If you want more details go here: This brings us to the Umbrella coverage. What is this? Well, it truly is like an umbrella because it provides an extra layer of protection above the rest of the policies. Usually the limit is $1,000,000 and that is on top of your General Liability, Liquor Liability, Products, Auto, etc. So that $1,000,000 limit that you had, with an umbrella, is now $2,000,000. WHAT!?!??!!? SWEET!!!!!!! Yes, sweet indeed! However, it is truly only $1,000,000 as most umbrellas only provide an aggregate limit of $1,000,000 meaning that the limit really is just $1,000,000. Some reasons that you may consider an umbrella policy is that they are cheap, and they afford you a lot more protection. Maybe your operation is such that you are seeing many people in your facility, you do a lot of events, or your distribution area is so large that if there were tainted product and you could not recall it quick enough there would be the potential for a lot of claims. Who knows, but we can discuss that further if need be. Another reason would be that it is a requirement. Maybe the landlord requires you to carry $2,000,000 for any one occurrence. If that is the case, really, one of the only ways to achieve that is via an umbrella. Sometimes “big box stores” or distributors will require this in order for you to sell your products through them. Whatever the case may be, it is something to think about and have knowledge of. Last but not least is Workers Compensation. If you didn’t click the link above that references this, scroll back up after reading this and click on it to get a feel for what we are talking about. In that article it discusses what Workers Compensation is, who needs it, and why. I don’t want to regurgitate all of that here, so, if you think you have a need for this coverage, do yourself a favor and give it a look. OK, dearest loyal reader, there you have it. A brief (-ish) synopsis of an overall insurance policy, what to look for, what you need at a basic level of understanding, and some interspersed humor (hopefully, so that it is not as painful or dry). With that, I will leave you until next time. If you have questions, would like to learn more, or just want someone to bounce things off of (I am a superhero after all so things just bounce right off of me), give me a call, shoot me an email, or flip on the InsuranceMan 2.0!!! beacon and I will swoop to your assistance. Until next time dear reader … Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com
  4. Happiest of Tuesday Mornings to You, My Dear ADI-ers!!!!!!!!! Well, today’s TMIT is going to be fairly short and to the point (fairly). I am not putting up this post to Insurance-shame anyone, I am just addressing a particular issue that has been somewhat prevalent as of late. Let’s start with a scenario, shall we? You make booze. No, you actually are handcrafting a unique and individual spirit unlike those produced by anyone else. You have taken painstaking amounts of time to hone your mash bill, tweak your recipes and keep insanely detailed notes as to the overall distillation process. You put your heart and soul into what you do to make it uniquely yours, different and better than anything else available. YOU ARE A TRUE CRAFTSMAN! So, what if someone comes in to your distillery, tours around, sits down for a tasting flight and winds up saying something to the effect, “Yeah, the Vodka is OK, but not as great as Ti-o‘s though! Your bourbon doesn’t taste anything like Pen----n or J- -k.” (Yes, I know that neither of those are bourbons, that is the point here folks!) Your eyes may widen, you jaw may hang agape, and you may gaze deeply into the persons soul and think, “What the … ?!?!???!” Same can be said about what I do. I too am a craftsman. I too have taken painstaking lengths to hone my skills, to tweak my insurance recipes and keep insanely detailed notes to the overall insurance process to provide something completely different and better than anything else available, to make something that is uniquely yours! Crafting an insurance policy that no one else has, that takes into account all of the details of your unique and individual operation. So, when I hear things like, “Well, insurance is insurance, I don’t really know that you can offer me anything better than what I have.” I tend to have the same look that you might. “What the … ?!!!?” Has your current agent discussed your stock values and provided you with a spreadsheet that will calculate the correct values of your products regardless of the stage of maturation that they are in? Has your current agent taken an active interest in how your equipment is being valued and where it should be placed to get you the best insurance premium for your buck? I would say that for the most part the answer would be no. How many distilleries does your current insurance agent work with? Have they worked with 400+ distilleries across all 50 states and done import/export ocean-marine cargo policies for products being shipped overseas? If the answer is no, I think you can tell where I am going with this. God forbid, but if you or a loved one were ill and needed specialized care I dare to imagine that you would not run down to the GP doctor in town and say, “Well, I need brain surgery so let’s get this skullcap off!” NO, OF COURSE NOT! I have said it before and I will continue to say, you would seek out the best doctor in the specialized field and you would have them treat you. If you did choose to utilize the GP to treat you, well … you will probably get the results that you could expect, not so good. Same thing applies here. If you want to utilize a general practitioner of insurance, someone who writes shoe stores, a contractor or two, and a lot of homes and autos, you are going to get the results that could be expected. They are not going to understand the valuation of maturation (they may not even know what “maturation” is), they are not going to understand the difference between your tasting room and a bar, they are not going to take the time to dissect your overall business operation and make certain that each and ever aspect of off-site tastings, special events, gift shop sales, wholesale and retail sales are accounted for and how that may impact your overall premium. You very well may end up with a policy that is cobbled together with a carrier that may not be a good fit or the best use of your money, and in the case of a claim, well, if it was not done correctly you may be in a world of hurt. I always say that even if you don’t have the right insurance, you may have insurance anyway because you may have to get into a long and miserable battle of having to put in a claim against the agents E&O policy. In the meantime, and over the years that could take to settle, you may not operational and all your efforts may have been for naught. Is that a risk you are willing to take with your business, your passion, your life? If the answer is no, then I suggest at least letting an expert take a look at your policy. Let an expert dissect the coverage and ask the deep questions to see if you really have the coverage that you need for what you are doing. Each distillery is as unique as fingerprints, no two are the same. There is no catchall policy for every distillery. If you are uncertain as to what you are covered for, if the coverage has never been explained to you, or if you just bought a policy ‘cause you needed to have it, then it is time to bring in an expert. Unless you are the “put it all on the line” gambling type, I highly recommend that you get a hold of someone who has taken the time to go grain to glass at several different distilleries. To find someone that has spent nearly 20 years in the insurance industry who specializes in distillery insurance for nearly a decade. Someone that has been endorsed as the recommended insurance agent by ADI! Here, I am going to make that search easy for you, it is me, InsuanceMan 2.0!!! Heck, even if you just have questions about your current policy situation, I am more than happy to take a look at it, offer my insight and expertise, and if you choose to stay where you are at, OK. Dollars to doughnuts though, we will end up working together and have a great relationship. You may have tried the rest, now work with the best (I know, that sounds cocky and I really don’t want it to come off that way, but I have spent a very long time working diligently to understand all aspects of what you are doing as well as deep-dive into the insurance industry as a whole, so it is not cocky, I just really am passionate about what I do because I LOVE IT!) OK, end of rant for today. Was it a rant?!?!? Maybe. Was it informative? I think so. Does it clearly spell out that what you do is unique and truly different from everyone else? Yes, just like what I do for my clients is unique and truly different, something you likely won’t find anywhere else. Here is the best piece of advice that I can offer anyone that is either just starting out, has been distilling for a few years, or is a massive scale international producer, call 307-752-5961 and have a conversation. A no-obligation conversation. I guarantee, you will not be sorry. Until next time my friends …. Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com
  5. Happy Tuesday Morning, ADI-Land!!!!!!!!!!!!!!! I know, I know, you are probably currently undergoing some-sort-of anxiety as well as other physical symptoms of withdrawal associated with not having you weekly dose of the Tuesday Morning Insurance Tidbit for the last couple of weeks. Well dear reader, sit back, take in a deep breath, sip your coffee or what-have-you, and relax. I am back and you can rest easy knowing that the TMIT is back in all of its outstanding glory for your reading pleasure ….. You’re Welcome!!!!!! Yes, it has been a few weeks since the last installment of the TMIT and for that I apologize. As it turns out, InsuranceMan 2.0!!! was otherwise occupied administering superhero justice in a different capacity. Suffice to say, although it was not insurance justice, it was justice nonetheless and it was doled out in healthy, hefty amounts to the evildoers. With that said, let us get on to todays “Tidbit”. As you all are aware (unless you have either been under a rock or doing an insane amount of runs and bottling to get ready for the 4th of July sales) there have been a lot of sizeable disasters in the distilling world as of late. As you know, the Barton bourbon warehouse #30 that initially collapsed back on June 22nd ruined nearly 18,000 barrels of Bourbon. Despite attempts to shore up the warehouse and save what bourbon was left, those attempts proved to be unsuccessful as the rest of the warehouse came tumbling down on the 4th of July destroying the remaining barrels. Ugh, the horror!!!! Then on July 2nd we had the Jim Beam fire in Woodford County, Kentucky that destroyed 45,000 barrels. Again, THE HORROR!!!!!!!!!! This is just insane, people! Now, to make matters worse, an alcohol plume 23 miles long has spread down the Kentucky River from the runoff killing innumerable amounts of fish. Although Beam Suntory has brought in a team of environmental cleanup contractors and consultants the damage is far reaching and unfortunately far from over. As if all of this was not enough, back on March 5th of this year Sazerac had a 120,000-gallon mash spill in which not only was there a massive cleanup involved, but people were also injured. To this I truly say, OH THE HORROR!!!!!!!! Loss of property, damaged stock, and massive cleanup efforts are one thing, but injury to human life is undoubtably something that gives us all pause and is certainly “worst case scenario”. Things can be replaced, people cannot. My heart goes out! So, why am I bringing you all this doom and gloom in todays “Tidbit” you may be wondering? “I’m just a micro-distillery and I don’t have anything close to 45,000 barrels or 120,000 gallons of mash! What does this have to do with me?!?!?!”, you may wonder. Well, honestly, it has everything to do with you and here is why. Yes, although it is true that many of these larger disasters took place at the “big boy” distilleries and many of those are either self-insured or coverage is placed with a large reinsurance company, it still has an impact on all of us. Although the losses in these aforementioned cases may not have a direct impact on many of the insurance carriers that I work with, the overarching scenarios certainly do. Underwriters are a fastidious bunch and they pay a lot of attention to the news, especially when it has to do with an industry that they are providing insurance coverage for. Although the claims of these horrible losses may never hit my carriers P&L sheets, that does not mean that they are not paying close attention to the types of losses, the severity of the losses, and the frequency at which they are occurring. That is an interesting point. “Frequency” and “Severity” are two terms that are often batted around in the insurance world. Some may argue that it is better to have one event of “severity” over the course of many years than it is to have less damage but more “frequency”. Why is that? Well, in the world of insurance, it is not “if” you will sustain a loss, but “when” according to many actuaries (and you know how I feel about them if you have read my other posts). Generally, actuaries will say that everyone will have a loss at some point in time. And if you have never had a loss, then you are due to have one sooner than later. I don’t like that saying, but it is somewhat true. “Severity” is sometimes better in that if you have one large loss over the course of a decade it could be said that everyone is due to have a loss and that may not be as impactful to your premium as having multiple smaller losses every year or so. The reasoning behind this is, that if you are having losses more often, than there is potentially something inherently wrong with your process, safety protocols, or overall operation. Underwriters and actuaries do not like “frequency” in the slightest. These types of losses often have a greater impact on your overall premiums and can even lead to loss of coverage completely. Circling back around, these news stories and losses have an impact on the industry as a whole since they demonstrate that there is a potential for losses within the distillery business. Fire is of course one of the utmost concerns that carriers have when insuring alcohol. Alcohol is flammable and fire can spread quickly. In the case of the Jim Beam fire, they are hypothesizing that the initial fire was started by a lightning strike. Obviously, if lightning were the cause than this was not an operational or safety issue on the part of Beam Suntory, but it still resulted in an incredible loss. A loss that now is not just a loss of product, building, and value but now it is also an environmental loss, or a loss due to “pollution”. The point to all of this being that no matter your size of operation, things can and do happen. Things that more often than not are out of your control. Tanks leak, structures give way, fires break out, and people can be injured. If it can happen on a large scale at facilities who have been honing their skills for hundreds of years than it can certainly happen (albeit on a smaller scale) at any size operation no matter the precautions taken. Afterall, that is why they are called “accidents” and not “on-purpose-es”. Take for instance the matter of the Jim Beam fire. According to sources, the building was equipped with a fully functioning sprinkler system, yet the results were a complete loss. (ASIDE HERE … I have made this argument time and time again to underwriters, fire marshals, etc., that sprinkler systems do not stop these types of fires, if anything they only possibly mitigate the damage slightly, but I digress!) Could they have had lightning rods in place? Maybe. Would they have helped? Possibly. At the end of the day though, although this loss may have been due to an “act of God” (again, I don’t like that term. I would like to think that God, no matter your manner of religion, would never destroy so much delicious alcohol) and not due to their policies or procedures. A true “accident”. Accidents though are what drive insurance premiums and cause underwriters and companies to tighten up their already stringent underwriting guidelines. That is the impact on all of us. That is the issue at hand. This is why these losses are devastating not only to those who have sustained these atrocities, but to all of us in the industry as a whole. As I have written about previously (see: ), carriers have been undergoing an underwriting guideline tightening over the last 6 months or so and these stories certainly are not helpful. So, take heed and be warned, the difficult underwriting requirements that we have all been facing could potentially become more challenging in the months to come. So far, we have not seen an increased impact from these issues, but they are relatively new on the scene, but be prepared in the months to come. In the meantime, if you are struggling with your insurance coverage, need coverage to get up and going, or want to have a more in depth conversation about pollution coverage as it relates to the alcohol industry (especially if you are close to a natural body of water or waterway), just call on me, InsuranceMan 2.0!!! and I will zing to your rescue. Until next time dear reader …. Stay Vigilant!!!!!!! Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com
  6. Good Tuesday Morning, Fellow ADI-ites, Ah … it seems as though Spring has finally Sprung here in Sheridanopolis, and fingers crossed, there will be no more of that flaky white stuff falling from the sky for many months to come!!! It is just a glorious time of year and the sunny skies are quite welcomed after such a long, cold winter. I hope that wherever you are, you are experiencing wonderful weather, and that you get a chance to get out and enjoy it. In today's installment of the “Tidbit”, I want to address a question that I have received quite a lot lately. The question of, “When is late too late?” What I mean by that is actually multifaceted, due to the fact that I have been asked the following questions: “When is it too late to obtain insurance?”; “When is it too late to get out of the insurance I already have?”; “When is it too late to make changes to my policy? Let me take these one-by-one in the order that they are presented. When is it too late to obtain insurance? The answer is “Never”. It is never too late to obtain insurance. Heck, I have even worked with folks that have been in operation for years that have never had insurance. Then, due to distribution requirements, or a change in business, etc., they need to obtain coverage. Truly, it is never too late to cover your ass ---- ets! I will say this, if you have been operational for a several years, a year, or even a few months, and you have not had prior coverage, it can complicate things a bit. Underwriters often times will ask, “Where has their coverage been prior to us?” When I tell them that there has not been coverage they often ask why. Then, through explanation usually we can get over that hurdle but there are a few things that need to happen in order to do so. Some carriers may want a “No Known Loss Letter” (or NKLL in cool insurance-ese language), or, some may choose to not offer coverage due to the fact that someone has been in operation without coverage and will ask that we come back to them after having a year of coverage under our belts. This can be an issue since it may throw that person into an E&S market for a year (or two), where they are going to end up paying a higher rate in order to prove coverage to a standard carrier later. If you have questions as to the difference between an “Admitted” or standard carrier and a “Non-Admitted” or E&S carrier, check out this posting that I put up a while back that explains it in all of its glory: Back to the question though, it is never too late to obtain coverage. Whether we have to go E&S, or if we can get it through a standard market, technically, you always need insurance coverage, really from day 1! Think about it. You have assets to protect, you have several potential liability issues that can arise, products liability issues, and you certainly have a liquor liability aspect that needs to be contemplated. Yes, I know folks that have run for 7 years without coverage and they have been just fine. It can happen. I also know some folks who have been up and running for a few months and have sustained a loss. In one case it was a pretty sizable loss to their equipment. It was the kind of loss that would have wiped them out had it not been for the insurance coverage that they had in place. Some may say that it is too late in the case of not having coverage and then sustaining a loss. I can understand that thought process, that it is too late if you have a loss and no coverage to pay for it. I personally would argue though, that it actually may be an opportune time to procure coverage so that you can make sure if a similar situation arises, you will be covered. Silver lining and all! That brings us to the next question, “When is it too late to get out of the insurance I already have?” Great question, dear reader! The short answer again is “Never”. It is never to late to get out of a policy that is either incorrect, does not provide adequate or accurate coverage, or one that is costing WAY too much premium. However …… it all depends on if it is a “standard” or “non-standard” policy. UGH! Here we go again with all this nonsense. Here is the quick “skinny” as to the difference and why it matters. Standard carriers will allow you to cancel a policy at any point and refund you any unused portion of your premium. What this means is that if you paid the policy in full but decide to cancel your policy 5 months into the coverage period, they will refund you the 7 months of unused premium that you paid in. Cool, right?!??! That is nice of them. E&S carriers operate a bit differently though. Most, if not all E&S carriers, have some built in costs and clauses that ensure they retain some of your premium for their efforts of writing your coverage. E&S carriers have things such as “Minimum Earned Premiums”, or MEP’s (again, cool Insurance-ese language for you to impress your friends with! Yet another reason to ready these riveting articles provided by InsuranceMan 2.0!!!) MEP’s state that you owe 25% of the total premium to the carrier regardless of when you cancel your policy. How about an example? OK! Let’s say that you purchase a policy from someone that does not really understand distillery insurance (this happens ALL THE TIME!). You get the policy and as you look through it you find that there are several things missing, or you have been classified incorrectly. In a rage, you slam the policy dramatically to the table, grab your phone, and feverishly dial up InsuranceMan2.0!!! to get my expert take on your policy. Through conversation we find that this policy that you have paid a ton of money for is not worth the paper it is written on. FRUSTRATING!!!!!! To further add to your ire, we discover that you have a 25% MEP which means that the carrier is going to keep 25% of the total premium of the overall policy even if you cancel. UGH! To further cause your blood to boil, we also discover that you have been charged taxes and fees (very common for E&S carriers) that also are non-refundable! Grab the antacid!!!!! So, what does this mean? It means that if your policy was $12,000 a year (ease of math sake, again. I just don’t like math all that much), the carrier is going to keep $3,000 of your premium dollars even if you cancel in the first few days, or months. As well, any taxes and fees (this amount could be $1,000 when totaled) are not refundable since they are due at inception of the policy. The long-and-short of this means that you are obligated to pay about $4,000 in premium no matter what. If you break that down into “months”, this basically means that you are obligated to stay with this carrier for about 3 1/3 months. Does this mean it is too late to get out of the policy you don’t want that does not provide the correct coverage? Not necessarily. I have worked with clients where we have been able to provide the correct coverage for them, all while saving them enough money to make it a wash, or close enough to it for the first year, that it was advantageous for them to make a switch early on. As well, as the coverage period continues, the amount of premium you might negate dwindles. Thereby, if we wait a month or so to get the policy rewritten, the blow becomes lessened due to the fact that you would have owed that premium anyway. Depending on your unique situation, it may be advantageous to make a change earlier than later. Or, you may have to wait until all of those initial premium dollars are used up, with the taxes and fees, and then make your move. It is still never too late to get a jump on it though, so we are poised to make the switch when it becomes financially advantageous to do so. Last but certainly not at all least is, “When is it too late to make to make changes to my policy?” Three guesses as to what the answer is! You really don’t have to be “Jeopardy James” to get this one correct! Come on, what is your answer?!?!?!?!? “What is, ‘NEVER’?” “Ding, Ding, Ding!!!! Right again!!!! Tell ‘em what they’ve won!!!!!!!!!!!!” “You have won an exclusive trip to ‘Insuranceopolis’ where you get to meet InsuranceMan2.0!!! and get a fully comprehensive analysis of your insurance needs!!!!!!!!!! This incredible prize package is worth … well, it is priceless actually!!!!!!” Truly, it is never too late to make any changes that you deem fit to make to your policy. Insurance policies are dynamic, living documents, really. You can add coverage or remove coverage for your policy at any given time. Your needs change throughout the course of a policy period, and you should be able to make adjustments at any time that you like. If you add coverage to your policy however, it may result in additional premium that you will owe (sometimes in full, sometimes over the course of the rest of the policy payments for the year.). If you take coverage away or reduce it, it will result in a premium refund that will either be paid out to you in full (if you paid in full or are close to the end of your policy period), or be applied to any future premium that is due. In closing, it is never too late to get insurance, it is never too late to get out of your insurance if it does not fit you correctly, and it is never too late to make changes that you need to your insurance. As well, plot twist, it is never too early to start working on your insurance needs either. Whether you are coming up on a policy renewal, just getting ready to start a distillery, move into a facility, or are ready to drop your first ounce of distillate, you need insurance. The sooner you start thinking about it, the better. Life is easier when you can check insurance off your list, and I, InsuranceMan 2.0!!! am just the person to get it done! Until Next Time My Friends, Stay Vigilant, Aaron Linden a.k.a. InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com
  7. Good Morning A D I !!!!!! Ah, here we are again, Tuesday! Where does the time go?!?!!? It seems like we just had last week’s installment of the “Tidbit”, but here we are again. I truly do hope that you enjoyed your long weekend and took the time yesterday to remember all of those who have severed our great nation. Freedom most certainly is not free, and so many have given so much, and we all need to remember that daily, not just on Memorial Day. To those that have served, no matter the capacity, THANK YOU! You allow us to do what we do and enjoy being able to do it in the greatest country on earth! With that, let us get on to today’s installment of the Tuesday Insurance Tidbit. Today I have something very special on tap for you … a delicious serving of Workers Compensation! Mmmm … Doesn’t that sound tasty? From the aroma, to the way the light glistens off of it, to the full-bodied texture of the policy … who doesn’t enjoy a good taste of Workers Compensation now and again?!?!?!?! Workers Compensation, Work Comp, or WC, as it is known, is often viewed as a “necessary evil”. Why is it a necessary evil, you may wonder? The reason for this is because for many distillers, brewers, vintners, etc., it is a “must have”, and for many it can be one of the most expensive policies that you are required to purchase by state law. So, what exactly is WC? I am glad you asked! At a very high-level view, Work Comp is a type of insurance that assists in providing a type of wage replacement, as well as medical benefits to your employees if they are injured in the course of their job/duties while working for you or your business. You provide (and in most cases are required to provide, as we will see) the employee with workers compensation benefits in exchange for the employee’s relinquishment of their rights to sue you or your business for injuries sustained while on the job for any tort negligence. Although various states have different requirements, WC policies generally provide for compensation for lost wages due to injuries, as well as reimbursements for medical bills due to work related injuries, and in some cases, pay benefits to dependents of a worker if they are killed in the course of their job duties. WC is typically “compulsory” in most states. For those of you recovering from a long weekend, that means it is required by law. There are exceptions to this, however, but Work Comp is always a good idea, and it is one more protection for your most valuable assets, your employees. Workers Compensation rates are created based off of several different areas specifically with your individual business in mind, and are based on your specific business. This is known as your “experience rating”. The experience rating compares your business to other business’ in the same industry grouping through an averaging of these rates. Each individual business is compared to the industry grouping as a whole, which is known as an “experience modifier”, “Ex. Mod.”, or in super-cool insurance-speak, “X-Mod”. (Not to be confused with “X-Men” which is a Marvel trademarked bunch of other superheroes that are not associated with me, your all-knowing and loving InsuranceMan 2.0!!!) If your business has a better loss ratio than the grouping as a whole, then your X-Mod. would reflect that on your rating sheet. However, if your losses are greater than the average, then your X-Mod. would be higher than the average and that will also be reflected and drive your premiums to be higher than others in the same grouping. The reasoning behind this is due to the fact that it provides an incentive to control work related injuries and keep them to a minimum. The less injuries/claims, the lower your premiums. Also, it encourages employers to return workers back to their duties as quickly as is permissible. Obviously, this is calculated by our favorite folks, the actuaries (read my past posts to get a feel for these people) to make sure that enough premium is being charged in order to offset any potential losses. OK, now you may be thinking, “So what does all that really mean to me?” Again, so inquisitive, dear reader. Well let me tell you what it means. The premium calculations are determined by multiplying your rate times each $100 worth of payroll. “In simple math, please!” Right! Sorry. This means that if you have $250,000 in payroll, you would divide $250,000 by 100, equaling 2,500. Pretty easy, right?!?!? Well, not so fast. That is only known as the “manual premium” in WC terms. Cool, huh? Who knew you would learn so much? InsuranceMan 2.0!!! knew it, that is why I write these for you! The manual premium is only an indication at this point and has not yet taken into account your X-Mod. discussed above. So now what happens?!?! Well, X-Mods. are typically based on a 3-year loss cycle, also known as an “experience period”, but they are generally calculated each policy year. X-Mods. have an average rating of “1”, meaning that a rating of 1 is right in the middle of the pack. Not good, not bad, but average, just as you would assume. If you have been in business for 8 years with no losses, your X-Mod. could be below a 1. If you have been in business for 3 years with several small losses, or one big loss (An aside here, it is better to have one large loss then several small losses. It is a “frequency vs. severity” issue. I may discuss this at a later date), you may have an X-Mod. much greater than 1. See, again, it is all based on your individual and specific business and your history. A simplistic example of this would be that you have been in business for 3 years and you have typical losses and your X-Mod. is a 1. Given the above payroll of $250,000 then, you would divide $250,000 by 100 giving you $2,500. You would then multiply the X-Mod. of 1 against the 2,500 and end up with 2,500 x 1 = $2,500 in premium. (Do keep in mind here that carriers will often charge some other associated premiums or fees to offset the state guarantee fund or for other reasons, but we are just trying to keep this simple, Mmm-kay?) Another, more advanced example would be you have been in business for many years, but due to some workplace incidences, your X-Mod is a 1.75. You would then take the above payroll of $250,000 and divide it by 100 giving you the same 2,500. Now though, you would multiply the 2,500 by 1.75 and end up with $4,375 in WC premium. Ah!!!!! Now you can see the incentive to keep your accidents/injuries lower. By keeping your accidents/injuries lower via training, safety procedures, etc., you could have saved yourself $1,875 annually in work comp premium! Again however, these are fairly simplistic examples and real Work Comp policies contemplate several aspects of payroll. For instance, if your $250,000 in payroll is comprised of $50,000 for bookkeeping, $150,000 of distillery operations, and $50,000 of bar/tasting room payroll, then each of those would be broken out into their own classification and rated independently based on each of their own X-Mods. MAN, THIS IS SO COOL!!!!!!!! Sorry, my “insurance-nerd” is showing! *****WARNING: COSTLY INSURANCE PITFALL ALERT AHEAD ***** The above-mentioned is one of the biggest areas in which inaccuracies can arise and result in a costly mistake. Potentially a several thousand-dollar mistake! Be careful here! Some classification codes through the National Council on Compensation Insurance, or NCCI, can be split out by the amount of payroll that a multi-functional employee severs, and some cannot! Let’s say that you have an employee that spends some of their time in the distillation operations, and some time working the tasting room. “Well, I will just split their payroll out by how much I am paying them for each function, right?!?!?!” Well, maybe right, maybe wrong. In the case where you have an employee (or several) that perform multiple functions (and we all know that this happens, jack of all trades around the distillery), their payroll may be able to be split between each function, maybe not. The NCCI may have exclusionary terms in their definitions that state if an employee is doing other associated tasks, then those are either needing to be contemplated in the highest hazard code, or they may have to be split out. Super confusing, right?!?!? An example is as follows: 2130 SPIRITUOUS LIQUOR DISTILLERY – Includes grain alcohol manufacturing. Warehousing, blending, rectifying or bottling to be separately rated as 2131 – Spirituous Liquor Bottling. CROSS REF. Alcohol Manufacturing – Grain – All Operations. As you can see, if your employee is engaged in distilling only, we would classify all of their payroll into the 2130 category. However, as you can see in RED, if they are warehousing, blending, rectifying or bottling, those would need to be separately classed under the 2131 classification. Well, what if they are working the tasting-room as well?!?!? Then we have to allot the correct amount of their payroll to that role as well! Again, sometimes you will get into a situation where their entire payroll has to be classed into the highest rated job hazard that the employee performs, sometimes it can be split out, but you better make sure you (or your agent) know which-is-which so you can avoid spending too much, or not enough! Cue the music as the dreaded “Audit” is about to take place!!!!! I know this is getting long, but I am here to inform, and that does not always just happen in a few paragraphs, so stick with me, we are almost done. Now, with all of that amazing information given above, you must also keep in mind that each state has its own set of governing requirements and regulations. Some states require EVERYONE be covered; some states don’t care. It may depend on if the employee is full-time or part-time. Other states only have WC policies that can be purchased directly from a state governmental entity. Most states fall somewhere in between. Here are some quick examples of varying regulations to illustrate the point: ALABAMA: Only employers with 5 or more employees (including an officers) are required to carry WC; ALASKA: Any business with 1 or more employee must carry WC; California: All employers must provide workers compensation, only Sole Proprietorship with no employees may opt out; Illinois: Workers Compensation is required on all employees, even if it is only (1) part-time employee; Indiana: All employees must be covered, but Sole Proprietors, Partners, and Managing Members may opt out of coverage; Kansas: WC is mandatory for any employee making over $20,000 annually; Massachusetts: All employees, including owners must be covered; Minnesota: I throw this one in because it shows how weird and specific this all can get! Check this out: 2018 Minnesota Statutes 176.041 EXCLUDED EMPLOYMENTS; APPLICATION, EXCEPTIONS, ELECTION OF COVERAGE. Subdivision 1.Employments excluded. This chapter does not apply to any of the following: (15) persons employed by a closely held corporation who are related by blood or marriage, within the third degree of kindred according to the rules of civil law, to an officer of the corporation, who is referred to in clause (7), if the corporation files a written election with the commissioner to exclude such individuals. A written election is not required for a person who is otherwise excluded from this chapter by this section; WHAT IS UP, MINNESOTA?!?!?!?! ”… within the third degree of kindred according to the rules of civil law …”?!?!?!!?!? Wow, they are super-duper specific here! It actually has a lot to do with farming/agriculture if you must know, but again, you can see how varied the states are. Texas: OPTIONAL! Ah, good ol’ Texas!!! They ain’t gonna’ have nobody tellin’ them what to do! In Texas, the only WC that is required is if you are in the construction business and you are having your employees on a governmental work site. Let us not forget North Dakota, Ohio, Washington, Wyoming, Puerto Rico, and the US Virgin Islands. Those states/territories are considered “Monopolistic” states whereby the only workers compensation insurance policies must be provided by the state plan. This brings up other issues such as “Stop-Gap” and a few other items, but I am not going to get into that here. If you are in one of these places and you have questions, you know that you can call me. Last but not least is the question of “volunteers”. UGH!!!!!!! “InsuranceMan 2.0!!! MY BRAIN HURTS … STOP!!!!!!!” I know, I know, dear reader. I often use my powers of droning on about insurance to vanquish my arch-nemesi, but I don’t want you to suffer, my dearest friends, so I will be quick. In regard to volunteers, first, check with your state department of labor if you have questions. Their contact information can be found here: http://www.dol.gov/whd/contacts/state_of.htm ). In many states, volunteers would be considered guests or permissive users, and nothing really has to be done. If they get hurt, it would more than likely fall under your overall general liability, but be careful! In other states, volunteers may need to be added to your WC policy via a “Volunteer Worker Endorsement” but this can cost you. Often times this is the best way to make sure your “bottling party” folks would be covered if they are injured, but there is often “assumed wage” language whereby you would be charged a premium as if these folks were making the “assumed wage” of what an employee doing this task would normally be making. Basically, in the end, given the role that each employee serves, to if their payroll can be split or not, to who is required to be covered, to where you can even purchase coverage from, to ensuring volunteers can come in and assist you, there are a lot of things to consider. Do you want to try and figure this out on your own or do you want someone with Insurance-Superpowers to come to your assistance?!?!? We all know the option you are thinking in your minds. That is why I, InsuranceMan 2.0!!!, am here to save the day!!!!!! I think you should be getting in contact with me, don’t you? Until next time, dear reader … Stay Vigilant! Aaron Linden a.k.a InsuranceMan 2.0!!! 307-752-5961 insuranceman2.0@yahoo.com
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