Is Your Business Fraud-Proof?

Falling victim to fraud can prove costly. Lost revenue and fines can reduce your bottom line and hinder future business. Small businesses are particularly susceptible to these effects. They are even more likely to experience business fraud than are larger organizations. Common small-business fraud includes cash larceny, skimming, payroll larceny, and check tampering.

The good news: you can stop fraudulent activity before it results in financial or reputational harm to your business. Use the following strategies to protect your company from fraud:

Trust…with accountability – Many small businesses involve personal relationships. Employees may be close friends whom the business owner trusts implicitly. While trust is good, trust accompanied by accountability is better. Put policies and controls in place that demonstrate trust but don’t allow room for temptation.

Spotlight on the bottom line – Keep a close eye on your accounts. Complete regular account reconciliations, examine documentation, and perform reviews of financial information. Watch your bottom line to detect skimming or other suspicious financial activity right away.

Consistent fraud controls – Too often, small businesses skip fraud-control measures due to the investment they require. Whether time or money, the effort is not considered worth the return. The truth is, companies with fraud safeguards in place report fewer losses and detect fraud more quickly than do those that fail to enact these policies. The most effective anti-fraud controls include business fraud training, employee support programs, employee codes of conduct, internal and external audits, countersignature controls, management review of financial statements, fraud hotlines, and formal fraud risk assessments.

Red flag alert – While hindsight is 20/20, most businesses can look back and realize several red flags were looming before fraudulent activities came to light. In most cases, clear warning signs are present. Business owners simply have to watch for them. Keep in mind that most business fraud turns out to be an inside job. In most of these cases, the employee is a first-time offender. This means you can’t rely solely on background checks and established reputation to prevent fraud. Watch for the following employee red flags that can lead to fraudulent activity:

Personal financial difficulties, living beyond their means, family issues, recent divorce, control issues, and an attitude of “wheeling and dealing.”

Of course, these situations don’t always lead to fraud. They simply create scenarios that make fraud more tempting. Struggling employees are more likely to rationalize their fraudulent behavior. They consider their theft a “loan” they will repay when they get back on their feet, or they tell themselves they are underpaid and deserve the “bonus.” If their actions go unnoticed, they become bolder, and their fraud becomes more frequent or greater in scope. This is why it is important to notice red flags early on and keep fraud controls consistently in place.

Insurance coverage – Even the best strategies cannot guarantee a business will never suffer from fraud. That’s why insurance coverage is important. To further protect your company from potential damages, speak with your agent about commercial crime insurance.

Audits: Why They Aren’t Always a Bad Thing

Many entrepreneurs shudder at the “A” word. They fear audits more than root canals. The truth is, this process is not always negative. It doesn’t mean the business owner has done anything wrong, and it doesn’t mean the party completing the audit is “picking on” the entrepreneur. In fact, an insurance audit is often performed for the benefit of the insured, and it may even save the company money.

It’s common for a new business to be audited by its insurance provider during the first policy period. The policy is based on annual gross sales, and these are mere estimates as the company gets under way. The initial premium is determined by estimating the annual sales for the first year.

To get an accurate picture of the company’s earnings and determine appropriate coverage going forward, an audit is necessary. Business owners can expect to be audited either during the first policy term or at the end of the period. The insurer will then adjust the premium based on true sales. This process ensures the business is not overpaying for coverage.

To prepare for an audit, maintain accurate records. This will make the audit go more smoothly. Be ready to provide a payroll summary, a cash summary, monthly sales tax reports, federal or state employment quarterly reports, subcontractor totals, 1099 forms for subcontractors, and any other documentation that will help the auditor gain a clear picture of your revenue.

If you have questions or concerns about this process, contact your agent for additional details about business policy audits.

Six Things Covered by Homeowner’s Insurance

You’re confident your home is covered for burglaries, tornadoes, and fires.
If any of these disasters occur, you know to contact your agent right away. You might be surprised to discover that the following situations also warrant a call to your insurance provider. These unusual costs might be covered under your homeowner’s policy.

When Fido gets feisty: Did you know dog bites account for about a third of homeowner’s insurance claims? Most policies offer liability and medical coverage for any damages your dog causes to an injured party.

When vandals attack: Are you the caretaker of a family headstone? If your loved one’s memorial is vandalized, your homeowner’s policy may provide for repairs. Even though the headstone isn’t on your property, it’s still your property.

When dorm living goes south: Is your child moving into a dorm this fall? If his or her property is stolen from the dorm room, you can file a claim. Your homeowner’s policy may consider your child’s belongings “off-premises personal property,” so that they will be covered by your insurance.

When groceries go bad: Have you ever experienced an extended power outage? If a lack of power causes your food to spoil, you may be able to recoup the cost of the extra grocery bill. Contact your agent to see if this falls under your homeowner’s policy.

When firemen call: Did you call the fire department to save your home? You might receive a bill for their services. If so, your homeowner’s policy may cover this fee. Coverage may depend on the reason for the call.

When the cows come home: Do you live near a ranch? Most people don’t, but it’s comforting to know that any damage caused to your property by a stampeding herd of cows is covered under your homeowner’s policy. Just in case.

When it’s Time for Teenagers to Take the Wheel

He has matured past the tricycle phase, grown beyond the bicycle stage, and is ready to try his hand at something with an engine. Your teen says he’s ready to drive. Are you ready?

Whether or not you’re emotionally up for the task, you can at least prepare yourself financially. Take the following steps before your teen takes the wheel.

Assign for savings: Which car will your teen drive? If possible, ask your insurer to assign your teen to the car with the lowest value. Keep in mind that this must be the car that the teen drives. By linking your teen to the least-valuable car, you can save on insurance premiums.

Boost your coverage: If you currently have minimum liability insurance, consider increasing your coverage. You may be fortunate to have a responsible teen, but statistics are still stacked against him. Research shows that teens are more likely to be involved in car accidents than adults, and their chance of being held accountable for a crash is twice that of adults. You’ll be grateful for greater coverage if your teen has an accident that results in costly repairs or lawsuit payments.

Balance the cost: As you raise your liability, you may pay higher premiums. To balance this, consider raising your deductible. Higher deductibles typically result in lower premiums. You can apply this savings to your increase in overall coverage.

Make the call: As with any life changes that may affect your insurance, contact your agent to discuss what solutions are best for your new teen driver.

Get Peace of Mind with a Short- or Long-Term Disability Policy

Disability can strike at any time. It can be the result of a chronic disease like hypertension or the result of an accident. In 2016, over half of those in the U.S. with a disability were of working age. Would you be prepared if you suddenly joined their ranks?

Perhaps you rely on your disability coverage where you work, but if you lose your job or are unable to continue working, that coverage may cancel.

You may think that Social Security Disability Income (SSDI) is a speedy solution to your disability problems, but the initial wait once you have filed a disability application is between 30 and 90 days. According to experts, absent a very serious medical condition, Social Security reviewers deny the majority of claims for SSDI the first time an applicant applies. The next step is reconsideration, which can take up to six months. Denial rates by Social Security at the reconsideration level are about 87%, so you cannot depend on a speedy process or a positive outcome.

A disability policy can be your best option as part of your insurance planning process. Based on your current age and health, you can pay a monthly premium for a short- or long-term disability policy that guarantees a set amount of your average pre-illness salary. The amount depends on your choice of coverage and the insurer; however, many typically pay 60% of your pre-illness earnings.

Contact your local health insurance agent to explore your individual costs and benefits of a disability policy.

Travel Insurance: Medical Evacuation and Repatriation

Americans love to travel. Despite all the positive outcomes – seeing new sites, meeting new people, trying new cuisines – problems can arise. Travel insurance can mean the difference between a safe trip and one fraught with frustrations.

Most travel insurance covers canceled flights, lost luggage, lost passports, and other inconveniences. A serious illness or accident, however, can be much more problematic than replacing lost toiletries. If you become sick or injured while abroad, there is no place like home.

Your travel policy may include medical evacuation and repatriation coverage, which provides the following benefits that can prove helpful, whether you travel domestically or abroad.

Your coverage can transport you to a local medical facility if one is available that is able to treat your particular illness. If you receive the best care near your home, your coverage can manage the logistics of your flight home, including special equipment needed during your transport.

If you remain abroad for treatment, some travel plans cover the additional cost of keeping a loved one at your side as your advocate. Some policies will also cover the cost to return your loved one home.

If the worst happens to you or your family member, repatriation coverage is extremely beneficial. This helps arrange and pay for the transport of remains. While most policies do not pay for the burial, the cost of repatriating remains can run in the thousands. This coverage can greatly reduce the financial and emotional strain on family members during a difficult time.

Americans trust their travel agents to help plan the best trip within their budget. However, it is better to rely on your travel agent to provide the best travel advice, not insurance guidance. Insurance agents who specialize in travel can help you plan that trip of a lifetime so you can travel with peace of mind.

Your Kids Are Grown – Do You Still Need Life Insurance?

We often purchase life insurance when we are young (and it is less expensive), then forget about it. Life goes on.

We get married, buy houses, have children, send them to college, and have grandchildren. At this point, do you still need your life insurance?

It depends on your needs. Chances are, you purchased life insurance to support a spouse, child, or other dependent in the event of your demise.

You might have intended it to allow your spouse to stay home with your children or pay for a child’s college education if you weren’t around to cover the bills. When you retire, however, you may not need to cover the same bills.

You and your spouse have a nest egg, and your children are supporting themselves.

In this case, you may want to consider decreasing or canceling your life insurance, as the money you will spend on premiums can be reallocated to long-term care insurance.

Long-term care insurance protects you from the cost of home-health care or a nursing home, which can quickly diminish your financial resources.

The national average cost of long-term care in the United States, as of 2016, is $225 a day or $6,844 per month for a semi-private room in a nursing home, $253 a day or $7,698 per month for a private room in a nursing home, and $119 a day or $3,628 per month for care in an assisted living facility.

Chances are, you will need such care. As the population ages, the prevalence of age-related diseases increases. Even if you plan to stay healthy (as we all do), there is a good reason to take on the expense of long-term care insurance now: being younger and in good health means long-term care insurance costs less.

So, while you might not need long-term care insurance in your 40s and 50s, you may not want to wait too long to buy it.