Runners and schemers, fraud, oh my!

FACT: Insurance fraud is a crime that happens every day in every state. It costs policyholders a lot of money—nearly $80 billion a year. While the crackdown on fraud continues and more people are being prosecuted for their participation in fraudulent activities, the effects on policyholders’ purse strings continues to grow.

If insurance companies are addressing fraud and the government has been trying to enact meaningful legislation to deal with this issue, why is fraud on the rise? Perhaps it has something to do with the public’s view on the subject.

According to a public-opinion poll conducted in April 2004 by Accenture, more people think insurance fraud occurs because people believe they can get away with it. Compared to the findings of a similar survey conducted the previous year—the number of people who believe this statement jumped from 49 percent (in 2003) to 56 percent (in 2004).

Additionally, the poll found almost a third of respondents believe people commit insurance fraud because they feel they pay too much for insurance, and almost a quarter do it to make up for their deductibles. What they don’t realize is that their premiums continue to rise because insurance companies compensate for loss due to fraud. Insurers increase policy premiums they charge businesses and business owners, in turn, pass the cost on to their employees.

The two largest categories of insurance fraud against businesses are workers’ compensation fraud and liability fraud. Workers’ comp fraud occurs when an employee lies about an injury on the job or prolongs his or her disability. Liability fraud is when a claimant alleges exaggerated or nonexistent damages resulting from an action by the business. Businesses lose millions in income every year because fraud increases their costs for employee health coverage and business insurance. And, employees lose jobs, careers and health coverage when insurance companies go bankrupt after being looted by fraud thieves.

So what’s the solution? It’s up to you to help fight insurance fraud. If you suspect that you, or someone you know, is being taken advantage of by a fraudulent insurance scam, or if you know someone who is committing insurance fraud, contact the New Jersey Office of Insurance Fraud at (877) 55-FRAUD, or, visit its Web site at www.njinsurancefraud.org.
 

Preventing accidents protects employees
and reduces workers’ compensation premiums

Studies show most workplace accidents are caused by employees rather than by faulty equipment or dangerous conditions. Although it’s important to realize you can’t do away with accidents altogether, there are steps you can take to reduce them. By planning for and preventing work-related accidents, your company can decrease its workers’ compensation premiums.

What is the best way to decrease work-related accidents? Unfortunately, there are no sure answers. However, it is best to treat high-risk accident zones as proactively as possible. Three ways to help decrease the occurrence of accidents are establishing safety rules and regulations, employee training and investigating all accidents—even if they don’t result in bodily injury.

By establishing and enforcing safety rules and regulations, you help to influence your employees’ attitude about safety. There should be a set of general rules for all employees to follow and a set of rules designed specifically for each department or area of operation.

Once you’ve established these guidelines, it is important to make sure they are followed. The easiest way to do this is through employee training. This training will help them become aware of any potential hazards and to teach them what to do should an accident occur.

Investigate all accidents. Determine the details of the accident while the events still are fresh in everyone’s mind. Responding quickly also lets your employees know you are concerned about their welfare.

Even with the best preparation, there never is a guarantee that an accident won’t happen. It’s important to make sure your company has the best workers’ compensation program to protect your employees and your company in the event of a mishap. If you have any questions, give our agency a call.

Certificates of insurance —
what purpose do they serve?

If a tenant in your building, or a contractor you hire, conducts operations that could cause damages to you or make you liable to others, you should be sure they have insurance. Certificates of insurance can help verify the existence of an insurance policy. However, just like anything else, a certificate can be misused or misunderstood.

You should not rely solely upon someone else’s insurance to protect your business. The coverage evidenced by a certificate is limited by its terms. It would be difficult to know exactly what coverage another party has without actually seeing the policy. Only limited information is provided on the certificate. You don’t know if additional parties share the policy limits, what policy forms are being used or what exclusions have been added.

Sometimes, the information displayed on a certificate is inaccurate. A common error occurs when the certificate holder is designated as an additional insured. Too many times it is discovered after a loss that the additional insured never actually was requested to be endorsed onto the policy, usually, because the insurance agent never processed the request.

If there is no feature in the policy to provide advance notice of cancellation to the certificate holder, then don’t expect the certificate to make such a promise. A certificate must not promise anything that is not in the policy, or in the endorsements amending the policy. This means you know the policy truly exists only at the time when the certificate is issued. Because the policy may cancel the very next day after the certificate is issued, you really have no certainty that coverage will remain in force in the future.

Some certificate holders have attempted to insert on the certificate certainty of coverage and favorable terms that are inconsistent with the policy evidenced by the certificate. Besides the certificate holder’s false sense of security, the issuer of the certificate is likely to be violating regulatory requirements. Attempting to change policy terms on a certificate turns the certificate into an endorsement, which has not been filed with, nor approved by regulators, thereby, placing the issuer in violation of the law.

Although certificates have significant value in helping to allocate risk among business partners, they are not guarantees of coverage for the certificate holder. If you want certainty of coverage, buy your own policy. By the way, we just happen to sell them.

Ask yourself “Do I need flood insurance for my company?” If you answered no, read this

When you think of flooding, you probably envision rivers bursting free of their banks or hurricane spurred waves crashing well beyond the usual shoreline. But that’s just a failure of imagination. Floods can happen any where, any time—not just near the coast, lakes and rivers.

Springtime is prime time for flooding. Torrential rain, snowmelt and mudslides all can cause flood losses. And, unless you have flood insurance, you probably are not covered for these potential catastrophes. Generally, coverage provided by a standard business policy does not include damage caused by flooding or mudslides. This type of damage could be extremely destructive to your property and without the proper insurance coverage, you could be devastated financially.

You can help yourself prepare for flooding by heeding storm warnings and following any evacuation procedures such as boarding up windows and shutting off utilities.

Of course, no preventative measures offer complete protection. The best defense always will be the right insurance coverage. And, while many people think businessowners insurance will pay for flood repairs, it does not. Now that you’ve changed your answer to yes, call us today; we’ll help you secure complete protection for your property, at a price that won’t break the bank.