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 Coverage, 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	159
Health Insurance Exchange, Medicare & Medicare Reforms, Small Business	160
Employer Mandate	161
Changes to the Affordable Care Act	162
Short-Term Insurance, Association Health Plans	163
Pre-tax Dollars, Limiting Consolidation	164
Other Changes, Timeline	165
Disability Insurance	166
Short-Term Disability (STD)	170
Long-Term Disability (LTD)	171
Disability Terms, Benefit and Waiting Period	175
Cost of Living Escalator	176
Renewable & Non-Cancelable Contracts	176
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
IRS 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

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