Author Archives: InfiniTeam

How to Reduce Workers Compensation Fraud

1. Educate your employees about workers compensation fraud and its consequences.  Re-enforce that workers are the real victims of fraud.  If your premiums are high, you can’t afford raises, bonuses and other incentives.

2. After an accident, refer the employee to your designated physician. Avoid “doctor shopping” by using a preferred provider who understands workers compensation injuries.

3. Interview the injured employee for details of the accident.

4. Interview witnesses and obtain written statements.  Pay attention to what other employees are saying to each other about the accident.

5. Investigate the scene for facts that corroborate or contradict the employee’s account of the accident.

6. Enforce drug testing. It is important to have a policy in place that requires screening after an accident.

7. Watch for the red flags of possible fraud. Stay in close contact with your injured employee. Contact makes an employee feel valuable and promotes an early return to work.

8. Implement modified duty when possible. Bringing an employee back to work can reduce costs and increase communication.

9. Fill out the Employer’s First Report of Injury Form in detail, even if it requires an extra page.

10.  Report any concerns to your adjuster as soon as possible. With early intervention, you can document information that may be lost, forgotten, or concealed later.

Red Flags of Workers Compensation Fraud

Employee Red Flags

– Is seldom available at home

– Delays return to work after maximum medical improvement

– Refuses light duty opportunities

– Is vague or contradictory about how the injury occurred

– Was in jeopardy of termination or probation prior to injury

– “Shops” for a provider and/or is noncompliant with treatment

– Conceals pre-existing medical information relevant to the claim

– Delays reporting the injury

– There is evidence that the employee has other concealed employment and/or is participating in activity that is contradictory to reported physical limitations

– There is no witness to the injury nor resulting symptoms

Employer Red Flags

– Fabricates location or type of operation

– Under reports payroll

– Medical Provider Red Flags

– Bills for services not actually rendered

– Bills for products not actually provided

– Over bills

– Fabricates procedures

– Unbundles services

Identifying Workers Compensation Fraud

Here are the top 10 warnings signs a workers compensation claim is potentially fraudulent:

Monday Morning Reports

The alleged injury occurs first thing on Monday morning, or the injury occurs late on Friday afternoon but is not reported until Monday.

Employment Change

The reported accident occurred immediately before or after a strike, job termination, layoff, end of a big project, or at the conclusion of seasonal work.

Suspicious Providers

An employee’s medical providers or legal consultants have a history of handling suspicious claims, or the same doctors and lawyers are used by groups of claimants.

No Witnesses

There are no witnesses to the accident and employee’s own description does not logically support the cause of the injury.

Conflicting Descriptions

The employee’s description of the accident conflicts with the medical history or First Report of Injury.

History of Claims

The claimant has a history of a number of suspicious or litigated claims.

Treatment is Refused

The claimant refuses a diagnostic procedure to confirm the nature or extent of an injury.

Late Reporting

The employee delays reporting the claim without a reasonable explanation.

Claimant is hard to reach

The allegedly disabled claimant is hard to reach at home.

Changes

The claimant has a history of frequently changing physicians, changing addresses and numerous past employment changes.

Experience shows that when two or more of these factors are present in a workers’ compensation claim, there is a chance the claim may be fraudulent.  Remember though, that these are simply indicators. Many perfectly legitimate claims are filed on Mondays-and some accidents have no witnesses.

 

Evaluating Your Cyber Coverage

Cyber liability insurance should provide coverage for key cyber risks.  However, as coverage can vary significantly from carrier to carrier, it’s extremely important that your company understands the coverage provided within your policy.

Note that just because a policy is sold as a cyber insurance policy, the insurance company will not automatically agree to cover or defend against potential liabilities for cyber risks.  Cyber policies are often sold with carious coverage modules, provisions and insuring agreements, allowing for companies to pick the specific coverages they want to purchase.  Because of the variety of options offered in the marketplace and the potential to select specific risk protections, a careful review of the policy form before a claim raises is critical.

A key component to reviewing a cyber liability policy is determining if there is proper coverage for first-part risks and third-part risks.

First-party Risks

First-party risks include the following types of claims:

  • Physical damage to, loss of or loss of use of data and software only – whether caused by third party, contractor, employee/former employee, or state actor.
  • Corrupted, lost, stolen or ransomed data resulting from data theft, data breach or virus.
  • Loss of use of data as a result of software failure, network interruption or denial-of-service attack.
  • An inability to conduct business because of loss of software, data or network access.

Third-party Risks

Third-party risks include the following types of claims:

  • Investigation, mitigation and remediation costs relating to a data breach, which include costs incurred before a suit or claim.
  • Costs for complying with various laws and regulations after a data breach.
  • Putative class-action lawsuits alleging disclosure of personally identifiable information.
  • Business partners alleging breach of contract, negligence or other causes of action.
  • Professional negligence due to a cyber event.

One of the other important things to consider is how your policy will respond prior to a claim.  Having coverage for costs incurred immediately after the discovery of a data breach — including investigation and notification costs.

Lastly, businesses should consider protection for data loss or corruption; the inability to access data; and the inability to conduct business due to inaccessibility of the various cloud-computing platforms on with the entity relies or provides to clients.

Also, we recommend working closely with your insurance agent to ensure your cyber policy addresses the exposures your company faces.

Social Media and EPLI in Recruiting and Hiring

The following comes from an article written by Kathleen McCullough, Jill Bisco, Cassandra Cole entitled “Social Media and Employment Practices Liability in Recruiting and Hiring.”

Introduction

The National Association of Insurance Commissioners (NAIC) has defined social media as “a group of Internet-based applications that allow for the creation and exchange of user-generated content” (National Association of Insurance Commissioners, 2012). Over the past decade, social media has changed how individuals interact with each other and how businesses interact with vendors, employees, and customers. The various methods of communication have continued to expand throughout the years. Today, individuals and business can e-mail, instant message, and Tweet. They can communicate via Skype or FaceTime or utilize “blogs” to voice their opinions or share ideas. They can post pictures, videos, and other forms of content. They can “like” or “friend” other individuals and businesses to stay connected over time. Along with these new methods of communication comes the potential for employers to use this material in ways that could lead to employment practices liability (EPL) claims.

Social media is not a stagnant platform, but is ever changing with dominant sites changing and new sites becoming available. As of December 2012, the most popular social networking sites are, in order: Facebook, Twitter, LinkedIn, Wikipedia, MySpace, Digg, YouTube, StumbleUpon, Reddit, and Yelp (SEOMOZ, 2012). For those individuals with a computer or cell phone, it is more likely than not that a person is a member of one or more of these sites. As of June 2012, Facebook alone had just under one billion worldwide users and as of September 2012, LinkedIn had over 187 million users in over 200 countries. With these types of numbers, the impact of social media is clear.

Although the demographics associated with each of the social networking sites varies, the majority of users are between the ages of 18 and 64. For Facebook, this group accounts for 79 percent of its users. For Twitter and LinkedIn this group accounts for 87 and 93 percent, respectively (Bloch, 2010). With so many users in what many consider the “working years,” it should be no surprise that Human Resource (HR) directors are turning to these sites to assist in recruiting and hiring employees. According to a research report by the Society for Human Resource Management, in 2011, 76 percent of companies were using or planning to use social media sites for recruiting and more than half said that social networking sites were an efficient way to recruit candidates (Pickell, 2011).

With the increased use of social media in the recruiting and hiring of employees, there are new and serious concerns for potential EPL claims. This issue is of importance to employers as these claims can be extremely costly. Additionally, for companies that write EPL coverage, this issue brings up concerns regarding the underwriting of risks and highlights the importance of providing loss control measures.

Social Media and Hiring Practices

With the high cost of hiring and training new employees, employers attempt to gather as much information as possible on potential hires in order to ensure that they select the most qualified applicant. Using social media to access information about applicants is easier than ever and because of this, human resource departments may investigate the social networking sites of applicants in order to evaluate the persons being considered for employment.

Publicly available information found on the internet is not considered private information and therefore, an employer’s review of this information is not considered an invasion of privacy (Brown and Vaughn, 2011). As such, employers may use social media sites to obtain information which helps identify an individual’s qualifications to perform a job. However, sites may also contain information that reveals negative traits or characteristics. For example, potential employees could disclose that they were not truthful on their resumes or applications, or provide other disqualifying, embarrassing information (Berkowitz, P., 2009). Additionally, pictures posted on-line could provide recruiters or potential employers with information about employees that they do not want to or do not need to know in the hiring process (Segal, 2012). On-line searches can produce information related to protected group status, even if that was not the original intent. This information includes age, race, color, religion, sex, national origin, and disability status (Brown and Vaughn, 2011). In addition, employers need to be cautious as some social media posts may be protected by law. For instance, some complaints about discrimination or working conditions that a person may post on-line may be protected by Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act or other laws (Segal, 2012). It is important to remember that it is not easy to draw a line between what may be protected and what may not. Therefore, it may be better not to attempt to do so (Segal, 2012). Furthermore, potential employees may assume that any adverse action taken (i.e. no personal interview) was a direct result of protected information found on social media (Segal, 2012). Once an employer reviews a candidate’s on-line profile, the courts will assume that the employer is aware of the candidates protected characteristics (Berkowitz, M., 2013).

Although there are clearly concerns with utilizing social media to obtain information on potential hires, it does not mean that these sites must be avoided completely for recruitment and hiring purposes. For instance, Twitter may be a useful way of advertising an open position. If the message regarding the position is re-Tweeted, it is possible that more qualified individuals become aware of the position. The downside to using Twitter for recruiting is that the posting may go viral in a negative way which would require some form of intervention by the employer (Smith, 2010).

Due to the potential liabilities associated with the use of social media in the hiring process, all searches should be completed by an HR professional, not individual department managers or other hiring personnel. Additionally, searches should only be done on position finalists and only after the equal employment opportunity profile of the individual is known (Segal, 2012). In fact, it may be best to leave any social media reviews until potential candidates are met face-to-face in an interview setting and all searches should be completed at the same point in the process for all candidates (Berkowitz, 2013).

It is important for all employers using social media reviews in recruiting and hiring to document their process. Any guidelines or procedures created should be maintained in print or electronic format and updated on a regular basis. If something is found during a social media review that makes the employer question the professionalism, integrity, or candor of an applicant, the employer should retain a snapshot of the questionable material for the file (Berkowitz, 2013). Of course, if an employer is unsure if their process is appropriate or if they are unsure if the material they found is grounds for adverse action, they should consult with an attorney that is well-versed in legal issues involving social media (Berkowitz, 2013).

According to the Equal Employment Opportunity Commission (EEOC), between 2009 and 2010 there has been a seven percent increase in the number of filed complaints associated with hiring practices. As a result, the EEOC has increased its staff and budget in order to deal with the increased workload (Lacey, 2011). It is possible that some of the increase in claims may result from the use of social media in recruiting and hiring practices, such as those mentioned earlier.

Employment Practices Liability and Underwriting

The International Risk Management Institute (IRMI) defines employment practices liability as “a form of liability insurance covering wrongful acts arising from the employment process. The most frequent types of claims alleged under such policies include: wrongful termination, discrimination, and sexual harassment.” Employment Practices Liability Insurance (EPLI) may be written as a stand-alone policy, which is most often claims-made (IRMI.com, 2012). For private firms and non-profits, Directors and Officers Liability (D&O) and EPL are often incorporated into the same policy (Lacey, 2011; IRMI.com, 2012).

The definition of a wrongful act for EPL can vary from coverage form to coverage form (Lacey, 2011, 2012). Some forms provide coverage only for current or past employees while leaving coverage mute for prospective employees. Purchasers of EPL coverage should be sure to review the definition of wrongful act and employee to ensure that the actions surrounding prospective employees are covered. It is in this area that employers will receive protection for recruiting and hiring practices.

The Insurance Services Office (ISO) produces both standardized stand-alone EPL coverage and an endorsement to provide coverage on their Business Owners Program, both written on a claims-made basis. Both the stand-alone coverage, EP 00 01 11 09, and the ISO Business Owners endorsement, BP 05 89 01 10, provide coverage for prospective employees and specifically indicate that hiring practices are covered. As many insurance companies manuscript their own EPL coverage forms or endorsements, it’s possible that prospective employee coverage may not be provided in all coverage forms. Reviewing coverage forms is critical to the risk manager within the company to make sure the coverage desired is actually in place.

When underwriting EPL coverage for potential clients, insurers may be interested in determining the types of social media reviewed by the HR departments. Although the ISO Application for Employment-Related Practices Liability Insurance asks if the employer utilizes credit reports, genetic testing, criminal record checks, physical examinations, drug/alcohol testing, psychological testing, education/credential checks, reference checks or employment history checks in their pre-hire screening, they are mute on the issue of social media reviews. The ISO application, however, does ask if there is an Internet/Electronic Communications Policy, whether it is written or electronic, and whether it is part of the employee handbook or a separate document.5 It does not, however, ask how often this policy is updated to reflect changing technology or how often the policy is reviewed with personnel.

In order to mitigate EPL-related losses, most insurers offer some type of loss control services. Often, these services are provided through third-party vendors or law firms. These services can include up-to-date information on labor laws and assistance in developing written employment procedures, including insight on how and when it is appropriate to utilize social media in recruiting and hiring. Many times a call line is offered to help mitigate a situation from becoming a claim (Lacey, 2011). Employers should use these services to supplement any internal counsel they receive. With the ever changing aspect of social media, proper legal advice could save an employer from unnecessary litigation.

Conclusion

Social media is no longer cutting edge, it is mainstream and one thing is certain, it will continue to evolve and its use will continue to grow. With the expansion of social media and its use by human resource departments in the recruiting and hiring of employees, the potential for EPL claims will continue to be of concern. Certainly, employers must be aware of the potential liability associated with utilizing social media and look for ways to prevent or reduce the potential for litigation. In addition, insurers need to focus on underwriting processes and loss control measures to better understand and reduce the overall risk potential.

In order to prepare for these potential claims, employers need to establish clear, written or electronic guidelines or procedures—for employees, HR personnel, managers and executives – regarding the proper use of online services (Berkowitz, P., 2009). These procedures should detail the validity of using social media in recruiting and hiring, including what action will be taken if negative material is identified. Along with these procedures, employers should provide ongoing education regarding new trends in social media to personnel responsible for recruiting and hiring. Acknowledging the potential for issues regarding the use of social media in hiring, the EEOC held focused training institutes in late 2011 that specifically focused on the use of social media, credit checks and criminal background investigations to make employment decisions (EEOC, 2013).

In the future, EPL insurance carriers may update applications to include questions about social media searches associated with recruiting and hiring. Also, they may intensify their underwriting and begin to require full explanations to application responses and request conference calls with management to better understand the use of social media in the recruiting and hiring process (Lacey, 2011).

Footnotes

1 See Facebook statistics, http://www.facebook.com/press/info.php?statistics (as of 08/24/2012).  As of this date, 81% of the monthly active users were located outside of the U.S. and Canada.

2 See LinkedIn statistics, http://press.linkedin.com/about (as of 01/05/2013).

3 Age is covered by the Age Discrimination in Employment Act (ADEA) of 1967; national origin is covered under Title VII of the Civil Rights Act of 1964; and disability status is covered by the Americans with Disabilities Act (ADA) of 1990.

4 Specific claim data by year is available on the EEOC Federal Reports, Table B-8.  The 2009 report is accessible at: http://www.eeoc.gov/federal/reports/fsp2009/table_b_8.cfm and the 2010 report is accessible at: http://www.eeoc.gov/federal/reports/fsp2010/table_b_8.cfm

5 Insurance Services Office (ISO) Application, EP AP 00 09 07, titled Application for Employment-Related Practices Liability (EPL) Insurance was reviewed.

References

Berkowitz, Melanie, “Social Media Recruiting: Understand the Legal Guidelines,” Monster.com. Last retrieved Jan. 6, 2013, from http://hiring.monster.com/hr/hr-best-practices/recruiting-hiring-advice/acquiring-job-candidates/social-media-recruiting-guidelines.aspx

Berkowitz, Philip, “Adjusting to New Norms As Social Networking Pervades the Workplace,” New York Law Journal, 2009.

Bloch, E. (2010, April 9) “Social Media Demographics: Who’s Using Which Sites?” Flowtown.com. (Table C-1). Last retrieved Jan. 9, 2012, from www.flowtown.com/blog/social-media-demographics-whos-using-which-sites?

Brown, Victoria R. and E. Daly Vaughn, “The Writing on the (Facebook) Wall: The use of Social Networking Sites in Hiring Decisions,” Journal of Business Psychology, 2011, 26: 219-225.

Equal Employment Opportunity Commission (EEOC). Training Institutes press release July 28, 2011.  Last retrieved Jan. 5, 2013.

International Risk Management Institute (IRMI.com). Definitions. Available at:

http://www.irmi.com/online/insurance-glossary/terms/e/employment-practices-liability-insurance-epli.aspx Accessed on January 8, 2012.

Lacey, Bradley, “Dodge Risking D&O/EPL Claims,” American Agent and Broker, 2011, May.

National Association of Insurance Commissioners, “Use of Social Media in Insurance, Social Media (D) Working Group of the Market Regulation and Consumer Affairs (D) Committee, adopted December 20, 2011.

Pickell, Rob, “Social Media Screening: Navigating the Minefield,” Society for Human Resource Management, 2011.

Segal, Jonathan, “Widening Web of Social Media,” Society for Human Resource Management, June 2012.

SEOMOZ, “Social Media Marketing Guide.” Last retrieved December 16, 2012, from www.seomoz.org/article/social-media-marketing-tactics.

Smith, Allen, “Twitter Recruiting Raises Legal Concerns,” Society for Human Resource Management, February 2010.

Social Media & Employment Practices Liability Insurance

The following comes from an article entitles “Social Media & EPLI: Minimal Impact—So Far” by Chad Hemenway from PropertyCasualty360.com. 

Based on its post-IPO performance, the value of Facebook might have been significantly overstated by its overly optimistic investment bankers.

And based on the assessments of a broker and two major carriers that write the coverage, the predicted massive impact of social media on Employment Practices Liability Insurance (EPLI) claims may also have been overstated.

While some observers expected the industry to be dealing by now with a barrage of claims stemming from social-media misdeeds, the market has not seen much, if any, social media-related EPLI activity.

Phil Norton, head of the Professional Liability practice at broker Arthur J. Gallagher, says EPLI claims generated by the use of social media “might be a blip, but nothing hugely significant.”

Melissa Mattioli, vice president of Employment Practices Liability for Liberty International Underwriters, attended seminars on the subject to prepare for a possible onslaught of claims. But so far, the insurer “has not yet seen any exposure,” Mattioli says. “It hasn’t taken off yet” as many anticipated, she adds.

Chartis, another major underwriter of EPLI coverage, also has not seen this type of claim emerge at any great frequency, according to Joni Mason, senior vice president and Employment Practices Liability product manager.

But Mason says there is no doubt that social-media EPLI claims will surface more frequently in the future.

Social media can create “a blurring of lines between work relationships and social activity,” she says. “It’s uncharted territory for employers, and there is little guidance” about whether a person’s activities on social media can be deemed work-related or simply social, outside-of-work actions.

GOING INTO LABOR

As companies craft their social-media policies—with input from their risk managers, brokers and carriers—it’s important to make sure the rules expressed stay on the right side of the National Labor Relations Board (NLRB)—the federal agency responsible for safeguarding employees’ rights to organize into unions.

The NLRB “is taking a strong, activist position” on policies that might infringe on employees’ right to take collective action.

On May 30 the NLRB issued its latest in a string of reports by its acting general counsel, Lafe Solomon, focusing on social-media-usage sections in employers’ handbooks.

The latest report parses the policies of several unnamed companies in an effort to provide guidance on what types of social-media regulations can potentially violate the rights of employees—and lead to EPLI claims in event of a termination.

In one of the cases highlighted in the report, the NLRB quotes the social-media policy of a motor-vehicle manufacturer: “If you engage in a discussion related to [Employer], in addition to disclosing that you work for [Employer] and that your views are personal, you must also be sure that your posts are completely accurate and not misleading and that they do not reveal nonpublic company information on any public site.”

The NLRB was having none of it. “We found various provisions in the above section to be unlawful,” Solomon writes. “Initially, employees are instructed to be sure that their posts are ‘completely accurate and not misleading and that they do not reveal nonpublic information on any public site.’ The term ‘completely accurate and not misleading’ is overbroad because it would reasonably be interpreted to apply to discussions about, or criticism of, the Employer’s labor policies and its treatment of employees that would be protected so long as they are not maliciously false.”

The NLRB’s influence as a federal agency, says Longmore, does influence the opinions of judges, and since the organization is taking social-media policies so seriously, so should employers—and insurers.

“No one has made an issue of this like the NLRB,” she says. “You need to listen when they speak.” The organization’s reports, she adds, give companies, employees and legislators alike “a prompt to listen and an authorization to act in a concerted manner.”

Split Experience Mod Changes

The National Council of Compensation Insurers(NCCI) proposed significant changes to the calculation of the experience modification factor(e-mod) that have recently taken effect in most states.

Experience mods historically have been a metric for Workers Compensation claim loss
frequency; now with the recent changes, mods will now add some additional weight to claim severity as well.  These changes were made to reflect the increased wage, benefit levels, and medical costs due to inflation.

WHAT IS CHANGING?

Currently the NCCI counts the first $5,000 of every claim as primary losses. Any dollar amount over $5,000 on a claim is then called excess and is discounted heavily. These excess dollars do not have as big an impact on the emod as primary losses.

NCCI is moving that split point between primary and excess losses over a three-year period. Instead of $5,000, the primary threshold will change as follows:

  • 2013 $10,000 split point
  • 2014 $13,500 split point
  • 2015 $15,000 split point

Thereafter, the split point will be determined based on an index calculated by NCCI.

WHY IS NCCI CHANGING THE CALCULATION?

  • The split point was developed over 20 years ago and has not been changed since.
  • The average cost of a claim has risen from $2,500 to $8,800 in 20 years.
  • Employers with few or no claims have been subsidizing the costs of employers who have many claims.

HOW WILL THE CHANGES AFFECT MY EMOD?

  • Employers with good emods will see their emods go down even more and could save money on their premiums.
  • Employers with high emods will see their emod increase and their premiums could potentially increase.
  • Employers whose emods are closer to 1.0 will see minor changes to their emod (an average emod is a 1.0).
  • The more payroll an employer has, the more the emod could potentially change so smaller companies will see smaller changes.

SO IS THERE ANY GOOD NEWS?

The good news for employers is that the strategies for controlling your emod have not changed. These strategies include:

  • Getting top management involved in creating a company safety culture.
  • Work closely with your agent to create a good safety program.
  • Implement a claims management program.
  • Discuss your classifications and payrolls with a premium auditor to make sure everything is reported correctly.

When (and When Not) To File an Insurance Claim

At its most basic, shields us from financial distress whenever something goes wrong with (or on) our property. It provides coverage for a whole host of accidents and calamities, including damage from fires, windstorms, lightning and hail.

But just because something goes wrong doesn’t always mean you should file a claim.

The claim process can be complex and time-consuming, and it can also be expensive if you don’t know what should — and shouldn’t — be claimed.

Here are six tips for considering when (and when not) to file a home insurance claim.

Should you file a home insurance claim?

1. Does the damage exceed the deductible?

If the answer to this question is “no,” then you should not file a claim.

For instance, if your deductible is $1,000 and your home has only sustained $500 worth of damage, that damage isn’t going to be covered through the claim process. Any damage less than the deductible would be the responsibility of the homeowner.

Even if damage does exceed the deductible, it’s important to consider by how much. For example, if you have a $1,000 deductible and you put in a $1,200 claim, you’ll only get $200 and you also have a claim on your record, which could impact your premium.  It probably makes more sense to just pay for those repairs out of pocket. Always think about the risk and reward of filing a claim before you decide.

2. Make sure you have coverage for the type of claim you’re thinking about filing.

If you don’t have flood insurance, for instance, filing a claim for water that ended up in your basement after a hard rain is a bad idea.  If you file a claim for something that isn’t covered, it’s still going to show as a claim on your history for the next three years, even though your insurance company denied the claim because you didn’t have that coverage.  Your agent should be able to help you determine what is covered and what isn’t, so make sure you call that agent before making a decision.

3. Make a calm, rational business decision. 

When things happen to our homes and our belongings, it’s an emotional experience, but the decision on what to do next should be a business decision.

If it’s not overwhelmingly tragic, at least wait until the next morning before deciding to file a claim.  Get some advice from friends and family, have a long conversation with your agent, and get an estimate from a contractor or two. Then do the math and make your decision if a claim makes sense.

4. You should probably file any claim involving personal liability.

Personal liability coverage is the part of a standard homeowner’s policy that protects you against lawsuits if another person is injured on your property (for instance, your dog bites a visiting friend).  Personal liability claims are almost always worth filing.

You never know when any liability claim can explode into a financial and legal disaster, and the insurance company requires prompt notification if something happens on your property.

This doesn’t mean you need to file a claim if a visitor gets a paper cut or scrapes a knee. But if the injury is serious, you’ll want to make sure your insurance policy will cover a whole host of costs, including medical expenses, lost income or even permanent disability.

5. Consider the number of claims you’ve filed in the past

If you have an unusually high number of claims (usually more than one or two in a three-year period), you may be flagged as a high-risk homeowner, which could result in a higher premium or even having your coverage dropped completely.

Insurance companies use the number of claims you file as a shorthand way of evaluating how well you maintain your property and manage the risks of ownership.  This is particularly true if you have numerous claims involving the same damages, such as wind damage, flooding or tree damage. Several of the same types of claims can be a red flag.

6. Don’t submit claims for known maintenance issues. 

For instance, the fence in your backyard may be old, and you know a windstorm is eventually going to blow it down. It’s better to budget for replacing the fence on your own than it is to submit a claim after the damage occurs.

Homes are full of maintenance expenses, and insurance companies try to weed out clients that use their policies like maintenance contracts.  Also, well-maintained properties should get the best insurance pricing. So save your maintenance records and let your agent or broker know when you do work to your property. It may help you get discounts.

What to do After an Auto Accident

Be Prepared

  • Carry a set of cones, warning triangles, or emergency flares in your trunk to help alert traffic.
  • It also helps to have a pen and a card with any relevant medical information for you and your family.

Immediately After an Accident

  • Take a deep breath and stay calm.
  • Check for injuries; call an ambulance when in doubt.
  • If accident is minor, move cars to a safe place, out of traffic.
  • Turn on your vehicle’s hazard lights and use cones, warning triangles or flares for safety.
  • Call the police, even if the accident is minor.
  • Notify your insurance agent immediately.

 

Other Important Tips

  • Do not sign any document unless it’s for the police or your insurance agent.
  • Make immediate notes about the accident, including specific damages to all vehicles involved, witness information, etc.
  • If the name on an auto registration is different than the driver, jot down the relationship.
  • Be polite, but don’t tell anyone the accident was your fault, even if you think it was.
  • State only the facts, and limit your discussion of the accident to the police and your insurance agent.
  • If possible, don’t leave the accident scene before the police and other drivers do.

Flood vs. Water Damage

There are two insurance policies that deal with a homeowner’s damage due to water — a flood insurance policy and a homeowners insurance policy. Losses not covered by one of these policies may be covered by the other. Knowing the losses to which your home could be exposed will help you decide whether to buy one or both of these insurance coverage.

While insurance policies may differ in the coverage provided from homeowner to homeowner, there often are basic features common to all policies.

FLOOD INSURANCE

As the name implies, a standard flood insurance policy, which is written by the National Flood Insurance Program, provides coverage up to the policy limit for damage caused by flood. The dictionary defines “flood” as a rising and overflowing of a body of water onto normally dry land. For insurance purposes, the word “rising” in this definition is the key to distinguishing flood damage from water damage. Generally, damage caused by water that has been on the ground at some point before damaging your home is considered to be flood damage. A handful of examples of flood damage include:

  • A nearby river overflows its banks and washes into your home.
  • A heavy rain seeps into your basement because the soil can’t absorb the water quickly enough
  • A heavy rain or flash flood causes the hill behind your house to collapse into a mud slide that oozes into your home.

Flood damage to your home can be insured only with a flood insurance policy — no other insurance will cover flood damage.  To determine if your home is located in a flood plain, contact your county planning office. If you are living in a flood plain, flood insurance may be an excellent purchase.

HOMEOWNERS INSURANCE

A homeowners insurance policy doesn’t provide coverage for flood damage, but it does provide coverage for many types of water damage to your home. Just the opposite from flood damage, for insurance purposes, water damage is considered to occur when water damages your home before the water comes in contact with the ground. A few examples of water damage include:

  • A hailstorm smashes your window, permitting hail and rain free access into your home.
  • A heavy rain soaks through the roof, allowing water to drip through your attic or ceiling.
  • A broken water pipe spews water into your home.

Even if flood or water damage is not covered by your homeowners insurance policy, losses from theft, fire or explosion resulting from water damage is covered. For example, if a nearby creek overflows and floods your home, and looters steal some of your furnishings after you evacuate, the theft would be covered by your homeowners insurance because it is a direct result of the water damage. However, the flood damage would be covered only if you have flood insurance.

It’s important to note that flood insurance and homeowners insurance do not duplicate coverage for water damage. Instead, they complement each other.