Reduce Your Risk of Claims by Making the Right Choices

Business owners are forced to make tough decisions, including substantial cutbacks, due to the challenging economic conditions. Unfortunately, staff shortages and prospective layoffs often lead to an increased risk of claims ranging from worker misclassification to wrongful termination. Here’s how to reduce the risk of claims.

Document. It is essential to have a written policy in place and then follow it. The next step is to thoroughly document each and every step when downsizing or redistributing duties. Make sure all managers are familiar with the process and implement it equally for each employee. Proper notification, submission of employer-provided equipment, final paycheck and other considerations should all be standardized in advance of terminations.

Review. Make sure your written policy is up to date and conforms to all state and federal requirements. Change is inevitable so it’s important to use the services of a professional to make sure the latest information and knowledge is up to date. An annual review should be conducted to make sure you comply with all recommendations and are not inadvertently exposed to additional risk in the event of an audit. Stringent new guidelines and incentives regarding worker classification should be carefully understood prior to cutting jobs in order to avoid potential claims.

Calculate the cost of cutting back prior to making a final decision. New mandates related to worker misclassification place severe penalties on employers that cut jobs then hire back employees under the ‘independent contractor’ status.

Re-schedule. Reducing the number of workers often results in an increased workload for the remaining employees. Pay special attention to creating job duties that comply with existing employment contracts, or take time to recreate the job position as well as provide proper training well in advance. Requiring employees to perform duties for which they are not compensated or properly trained is a sure-fire way to increase the risk of litigation, lawsuits or injury. It’s also a good idea to carefully consider the wisdom of re-hiring a recently downsized employee. To stay on the safe side, consider using a third-party employment service provider or outsourcing company instead.

What Your Insurance Policy Might Not Cover

Most people who purchase a homeowner insurance policy simply assume it covers almost everything.
But few things are further from the truth.

Learn how to protect your property and financial future by understanding the top three things your homeowner policy might not cover.

Big-Ticket Items. Read the fine print in your homeowner insurance policy. Chances are there will be strict limits on the coverage amount for big-ticket items like jewelry, electronics and collectibles. Ask your insurance agent about riders or addenda to your existing homeowner policy that will provide additional insurance coverage for expensive items.

Flood Damage. Homeowners are often surprised to learn that their policy specifically excludes flood damage. Even worse, many make the mistake of thinking they don’t need flood insurance because they live on “dry land” or areas not prone to flooding. Unfortunately, flood insurance can also provide valuable protection against more than just rising waters. For example, it might provide protection against other water-related losses, including those from a hurricane or even burst pipes during an earthquake. In fact, water-related damages are one of the leading causes of insurance claims. So if you’re a homeowner, don’t forget to ask your agent how to purchase flood insurance for your property.

Business Property. Whether you work from home full time or simply skip the office every so often, don’t assume your business property is covered. Computers and other equipment used at home are not typically covered by your standard homeowner policy. Employees should verify that their business provides full insurance for company-owned property used at home or in transit. Small-business owners should clearly differentiate business property from personal property while maintaining sufficient coverage for both. Ask your agent about business property riders or addenda that provide additional coverage for dual-use items or business property used off-site or at home.

Is Your Auto Insurance Right? Find Out with This Quiz

During tough economic times it can be tempting to cut back on car insurance. But there’s a fine line between saving money and putting your financial future at risk. Take this quick quiz to determine if you’re over-insured or simply engaging in risky behavior.

Is the cost of comprehensive insurance coverage greater than the value of the car?

In general, if the value of the car is equal to or greater than three years’ worth of premiums, it is a good idea to keep comprehensive coverage. Otherwise, you might benefit from reducing or eliminating comprehensive coverage for your old clunker. Just be sure that you have the ability to replace or repair the vehicle should a total loss occur.

Do you have a second car or additional vehicle available?

If so, you may be able to reduce comprehensive coverage on older automobiles as well as eliminate extras, like rental coverage, on the policy. Determine if the savings is worth the inconvenience before dropping coverage.

Do you have enough money in savings to pay for small repairs out of pocket?

If so, you may benefit from an increased deductible that lowers the cost of auto insurance. On the other hand, if you don’t have much money in savings or you are worried about cash flow, keeping a lower deductible is a quick way to supplement your emergency cash savings.

Tips to Determine if You Need Term Life Insurance

Term life insurance is a great tool when properly used, but like most financial instruments, one size does not fit all.

It is important to understand when and how to use term life insurance in order to obtain the best results.
Use these tips to determine if term life insurance makes financial sense for your situation.

Term Life Defined

Term life insurance is a policy that covers a specific period of time, typically from one to 30 years. In the event of your death, the face value of the policy would be paid to your estate or designated beneficiary. At the end of the allotted time, the policy provides zero coverage and no residual benefit.

The Good and Bad of Term Life

In most instances, term life insurance is substantially less costly than whole life insurance or other alternatives. However, the longer the duration of coverage, the less significant the savings due to the residual value of whole life.

Who Benefits?

Term life insurance is an exceptionally valuable tool for young adults or those just starting a family.
Because earned income is often moderate during the early years of marriage, college or young adulthood, the lower up-front cost of term life provides the protection you need without the high price.
In the event of the death of a spouse, term life insurance could provide the means to ensure valuable financial assistance required to replace an income.

It could also be used to pay off a mortgage or put children through college.

Term life insurance is also valuable for those seeking an additional layer of coverage to supplement a whole life policy during a transitional stage in life planning.

For example, many older adults purchase an additional term life policy while paying college tuition for adult children or other specific situations.

Why Long-Term Care Insurance Is a Wise Buy

Long-term care insurance is one of the most misunderstood and frequently forgotten forms of insurance coverage available, but research shows it’s also one of the most needed and likely to be used. Here’s some information to help you better understand your needs.

Alarming statistics. Nearly 80% of people will experience six months or more of disability that interferes with their ability to perform basic activities of daily living like grooming, eating or being mobile, according to the U.S. Census. Serious illness or injury resulting in high medical bills is one of the leading causes of bankruptcy and may result in years of financial hardship. With fewer safety nets and exploding government deficits, it’s more important than ever for individuals and families to have secure coverage.

Long-term care insurance provides coverage for the elderly as well as  the disabled – making it an important part of your estate plan needs at any age. The extra cost of a serious illness or injury, lost wages, and the time and effort required by family members can quickly create the perfect financial storm. Having long-term care insurance can ensure that you and your loved ones receive the care needed at any stage of life.

Buy sooner, not later.
Long-term care insurance is most affordable when you need it least. Young, healthy individuals are often surprised by how affordable it can be. Unfortunately, most people wait until they are older or already experiencing a health crisis before obtaining quotes.