Business Insurance Needs

Table of Contents

 

Chapter 1: The Basics

6

     Group Insurance Principles

6

          Eligible Groups

6

          Single Employer Groups

6

          Multiple Employer Trusts (METS)

7

          Unions, Associations, and Other Groups

7

          Creditor-Debtor Groups

7

     Underwriting Advantages

8

     Keeping Current With Business Needs

9

     The Informed Consumer

10

     Providing a Quote

11

     The Contract Participants

13

          The Insurer

13

          The Insured, Insurance Contract, Underwriting and Rating

14

          Finance, A Public Interest

15

     Insurance Helps Social Values

16

          Affected with the Public Interest

18

     The Insurance Contract

18

          Defining the Contract

19

     An Agent’s Responsibility

20

          The Application for Coverage

20

          The Binder

22

     Contract Elements

24

          Contract Agreement (Offer & Acceptance)

24

          Competent Parties

26

          Insurer Incompetency

27

          Public Interest, Consideration

28

     Contract Characteristics

28

          Adhesion

29

          Unilateral Contracts

30

          Good-Faith Contracts

31

          Warranties

32

          Representations

34

          Concealment

35

     Principle of Indemnity

37

     Insurable Interest and Subrogation

38

     Subject, Owner & Beneficiary

39

 

 

Chapter 2: Managing Risk

41

     Chance of Loss

41

     What is the Degree of Risk?

42

     Basic Definitions

43

          Peril

44

          Hazard

44

          Loss

44

     The Insurance Company’s Role

45

     The Risk Manager

47

          The Group Buyer

49

          The Seller or Advisor

49

          Group Insurance Administrators

50

     The Risk Management Process

51

          Business Management

51

          Worksheet Example

53

          Identifying Potential Loss Exposures

53

          Risk Transfer

54

          Retaining Risk

55

          Risk Avoidance

56

          Risk Reduction

57

          A Recap

57

          The “I am Insurance Poor” Defense

58

          Reducing Hazard

59

          Reducing the Loss

59

     What Is Indemnity?

60

     Insurers Face Their Own Risks

60

 

 

Chapter 3: Types of Insurers

65

     Private and Government Insurance

65

     Private Insurers

65

          Life Insurance

66

          Property and Liability Insurance

66

     Government Insurance

67

          Voluntary Government Insurance

67

          Compulsory Government Insurance

67

     Mutual Companies

68

          Assessment Mutuals

68

          Non-Assessment Mutuals

71

          Conversions

71

     Reciprocal or Inter-Insurer Associations

72

     Stock and Mutual Underwriting

73

          Factory Mutuals

74

     Superior Agents and Brokers

75

 

 

Chapter 4: Coverage Options

78

     Coverage Checklist

78

     Working From a Standardized Format

79

     Property Insurance

80

          Deductible Versus Self-Insured Retention

80

          Replacement Cost Versus Actual Cash Value

81

          Functional Replacement Cost

81

          Coinsurance Versus Agreed Amount

82

          Property Coverage Forms

83

          Earthquake, Flood Insurance

84

          Building Ordinance and Law Coverage

84

          Glass, Construction or Builder’s Risk

85

          Pollution, Reporting Form Coverage

86

          Property in Transit

87

          Business Income, Extra Expense, & Rent Loss

87

          Blanket Coverage, Business Owner’s Policy (BOP)

88

          Locations of Coverage

89

     Liability Insurance Coverage

89

          General Liability Forms

89

          Aggregate Limits

92

     No Policy Covers Everything

93

     Claim Payments

93

          Deductibles

94

          Costs of Defense

94

          Payment Approaches

95

     Umbrella and Excess Liability Policies

95

     Errors and Omissions Coverage

96

               Ostensible Authority

97

     Serving as a Director or Officer

101

     Underground Storage Tanks

102

     Auto Coverage

102

          Coverage Symbols

102

          Uninsured & Underinsured Motorist Coverage

103

          Coverage for Rented Vehicles

103

          Garage Liability

104

          Garage Keeper’s Liability

105

     Actual Cash Value or Stated Amount

105

          Accessories

106

     Miscellaneous Insurance Coverage

106

          Crime Coverage

106

          Boiler and Machinery Coverage

107

          Inland Marine Insurance

107

          Ocean Marine, Electronic Equipment Coverage

109

     Utilizing a Checklist

110

 

 

Chapter 5: Evaluating A Business

119

          General Information

119

          Historical Information

120

          Insurance Policy History

121

          Current Operations

122

          Property Information

123

          Checklist of Enclosures, Vehicle Schedule

125

 

 

Chapter 6: Workers’ Compensation

127

     Calculating Workers’ Compensation Premiums

129

     Applying Payroll Classifications Properly

129

     Experience Modification Factors

130

          Minimizing Experience Modification

130

          Loss Control Services

131

     Dividend Programs

133

          Dividend Types

133

          Comparing Dividend Proposals: Terminology

134

          Retention, Loss Conversion Factor (LCF) & Loss Development Factor (LDF)

134

          Incurred But Not Reported (IBNR)

135

          Dividend History Matters

136

          Commissions

137

     Good Accounting Is a Must

137

     Other Considerations

138

          Illegal Immigrants, Owners and Officers, Independent Contractors

138

          Volunteers, Out of Territory Employees

139

      Workers’ Compensation Coverage Checklist

140

 

 

Chapter 7: Group Health Insurance

142

     Terminology

142

     Defining Group Insurance

149

          The Group Contract

150

          Experience Rating

150

          Group Underwriting

151

          Group Classification, Individual vs Group

152

          Franchise Health Insurance, Blanket, Group Credit Insurance

153

          Self-Insuring

154

     Patient Protection & Affordable Care Act

158

          Guaranteed Issue, Young Adults, Individual Mandate, Health Insurance Exchange

159

          Medicare & Medicare Reforms, Small Business

160

          Employer Mandate

161

     Disability Insurance

166

          Short-Term Disability (STD)

170

          Long-Term Disability (LTD)

171

          Disability Terms, Benefit and Waiting Period

175

          Cost of Living Escalator

175

          Renewable & Non-Cancelable Contracts

175

          Benefit Coordination

177

          Marketing Disability Insurance

178

     Long-Term Nursing Care Insurance

178

     Life Insurance for Long-Term Care Costs

180

     Rising Costs for LTC Care

183

          How Costs Are Covered

184

     State Statutes on Long-Term Care Group Insurance

185

          Premiums, Long-Term Care Benefits

187

          Activities of Daily Living

188

          Asset Protection, Integrated Long-Term Care Policies

189

          Assisted Living Benefits, Marketing Group Plans

190

 

 

Chapter 8: Terrorism Risk Insurance Act (TRIA)

191

     Defining “Act of Terrorism”, TRIA

191

     President Bush Signs TRIA

193

     The Role of Terrorism Insurance

193

     Policy Restrictions

195

     Business Interruption Insurance

195

     Workers Compensation and Other Coverage

197

     Coverage under Terrorism Insurance

197

 

 

Chapter 9: Key Person Insurance

202

     Buy-And-Sell Agreements

202

          Sample Buy-Sell Agreement

204

     Final Checklist for Buy-And-Sell Agreements

213

     Death & Beneficiary Arrangements

214

          Loss of Interest

214

     Cross-Purchase Agreements

215

     Wait-and-See Arrangements

216

     Key Person Principle

216

          Insurable Interest for Life Insurance

216

          Health Insurance on Key Employees & Owners

218

     The Small Company’s Exposure, Loss of the Small Business Owner

220

          Loss of the Small Business Owner

220

     Planning Ahead for Death or Disability

224

 

 

Chapter 10: 401(k) Plans

226

     Employer Incentives to Offer 401(k)

226

     Various Plans Exist

227

     No One Plans to Fail

229

          Retirement Needs Worksheet

230

     Too Much To Cover in One Chapter

232

     401(k) Plan Elements

232

     How the 401(k) Plan Works, Eligibility

235

          Contributions, Plan Vesting

236

          Company 401(k) Fund Matching, 401(k) Loans

237

     Fund Withdrawals

239

          Section 72(t)

242

     Non-Discrimination Testing

242

     401(k) Plan Investing Options

243

     Fund Rollovers

245

     At Retirement

247

     In Conclusion

248

 

 

Chapter 11: Business Ethics

250

     Cooperation

250

          Promises

252

     After the Sale

255

     Educated Professionals

255

          Why Don’t Agents Interact?

258

     Setting Goals

259

     Recognizing Potential Business Risks

260

     A Culture of Shortsightedness

265

     It’s A Jungle Out There

266

     Following a Code of Ethics

268

     Promoting Ethical Conduct

270

     Choosing The Ethical Path

271

      Identifying With Others

273

               Test Your Own Ethical Standards

274

     What Does An Ethical Agent Look Like?

275

          Initiating the Appointment

276

          Replacing Another Agent’s Policies

278

          Rolling Clients From One Insurer to Another

278

          Information Provided, The Client’s Best Interest

279

          Servicing An Existing Policy

280

     Public’s Perception of Agents

282

     Developing a Sense of Professional Pride

282

     Education is Not Only Required – It Also Makes Sense

284

     Midwest Zone Agreement (Education)

285

     Whistleblower Protection Act

287

     From a Practical Standpoint

291

Final Page of book:

300

 

United Insurance Educators, Inc.

 

Email: mail@uiece.com

 

Web address: www.uiece.com