Risk Management: Non-Owned Auto

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It is common for nonprofit organizations to have their employees or volunteers drive their personal autos for business-related purposes. This however provides the organization with additional liability exposures. In the event your employee or volunteer is in a car accident while using their personal auto on your behalf, your organization can be held liable. Although California law requires employees to carry personal auto insurance, the injured party can pursue a claim against your organization.

Below are some risk management tips if your employees or volunteers use their personal vehicles on your organization’s behalf:

  • Written driver policy signed by the individual driver
  • Obtain a copy of employee’s current driver’s license.
  • Require proof of personal auto coverage and get updated copies at policy renewal.
  • Run annual motor vehicle record check or use the California DMV pull program
  • Purchase a non-owned auto policy for your organization.

If your employees or volunteers drive their personal vehicles on your organization’s behalf, you should consider purchasing a non-owned auto policy. Non-owned auto coverage can be added to your business package policy, business auto policy, or purchased as a standalone policy. Non-owned auto coverage applies when the damages exceeds the limits of the employees’ personal auto insurance or where their personal auto carrier denies the claim. A non-owned auto policy will provide liability coverage for your organization.

Let us know if you have any questions regarding non-owned auto liability or would us to provide a quote. We are here to help.

This is intended for informational purposes only and not to be construed as legal advice.

Be Prepared for the Unexpected!!

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In creating an effective crisis management plan, your organization should explore various potential crises your organization can face, such as fire, weather-related perils, workplace violence, and cyber-attacks. After assessing the risks, create a crisis management plan to address those risks identified. This process should be assessed regularly to strengthen any weaknesses in the current plan or identify new risks.

Crisis Management Plans should include the following:

  • Procedures for the immediate response to a crisis, business operations plan, and a contingency plan for every potential crisis identified.
  • Updated inventory of your organization’s personal property and equipment to ease the insurance claims process
  • Identify Employees’ Roles
  • Identify Individuals who are designated to take charge during an emergency

Your crisis management plan should be able to answer, “What do we do [potential situation]?” Your crisis management plan should be reviewed by your attorney and regularly updated. The most effective strategy is to be prepared.

Many insurance carriers can provide additional information to assist with your crisis management plan. Let us know if you have any questions, we are here to help.

THIS IS INTENDED TO BE USED FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS LEGAL ADVICE

Are You Ready for the New Year?

Be Prepared or it Can Cost You! 

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As the New Year begins, it is important for every organization to review their risk management procedures by addressing any weaknesses to prevent potential accidents that lead to costly claims. One risk management tool to assist in mitigating the costs of claims arising out of your organization’s operations is to have adequate insurance coverage in place. Without proper insurance coverage, one lawsuit or a catastrophic loss can close down your operations.

While there are numerous insurance coverages available in the marketplace, the following are basic coverages that every organization should consider:

  • Commercial Property Insurance covers your building, personal property, and equipment in the event of a fire, theft, storm, and other perils outlined in the policy. Consider adding Business Interruption and Equipment breakdown coverages to the property policy. Make sure that you insure your buildings and personal property/equipment to reflect the replacement cost value [cost to restore or replace damaged property without deduction for depreciation]. The failure of adequately insuring your property (at least 80%) can result in a co- insurance penalty. Co-Insurance penalty reduces the amount of recovery that you may expect to recover if you under report the value of your Consider purchasing flood and earthquake insurance, since most property policies exclude damage or losses resulting from earthquake and flood.
  • General Liability Insurance provides coverage for liability claims from a third party (such as a client, vendor, visitor, etc.) for Bodily Injury and Property damage due to negligence. Most General Liability policies include liability coverage for Products/Completed Operations and Personal Injury (i.e. slander or libel).
  • Volunteer-Accident Insurance covers individuals who donates their work to your organization without pay. Coverage is triggered when those individuals are injured while performing duties related to the conduct of your business.
  • Workers’ Compensation covers the medical treatments, disability, and death benefits of employees who are injured or killed during the course of employment. In California, employers must carry worker’s compensation if they hire employees. It is imperative that every organization ensures their work environment is safe as claims history is one of the factors that determines
    Directors & Officers Liability and Employment Practice Liability Coverage: Coverage for Directors and Officers liability can be stand alone or coupled with other coverages such as Employment Practice Liability. It is important to read the policies terms, conditions, and exclusions of your policy and review the coverage with your attorney. It is also important to check if your policy’s defense limits is inside or outside the liability
    1. Directors & Officers Liability- the Board of Directors is ultimately responsible for the nonprofit organization. It is therefore important that they are informed of their legal liability, risk management program, and the organization’s insurance coverages. Directors and officers liability protects the individuals who serve on an organization’s board of directors against claims brought by employees, vendors, or other parties for alleged “wrongful acts” in the management of the organization. There is no standard coverage policy form. Therefore, it is important to read the terms, conditions, and exclusions of the policy. For example, the definition of “insured” differs among insurance
    2. Employment Practices Liability – Employment Practice Liability protects the organization against claims made by employees alleging discrimination, wrongful termination, harassment, and employment related issues. Most carriers do not insure Wage and Hour claims in California but some may offer a defense sublimit for wage and hour
  • Umbrella policy’s purpose is to protect your organization against a catastrophic liability loss. The Umbrella policy is a form of liability coverage protecting the policyholder for claims in excess of the limits of the primary General Liability, Automobile, or Workers’ Compensation. Umbrella policies may also include a few other liability coverages, such as: Professional Liability, Employee Benefits Liability and Abuse & Molestation.
  • Crime (Fidelity Bond) Insurance provides a source for recovery of funds embezzled by employees or volunteers. If your CPA or Bookkeeper is an independent contractor, make sure they provide you with proof of their insurance (General Liability, Professional Liability, Bond, and Workers compensation policies). If they do not carry their own insurance, discuss this exposure with your attorney, as most crime policies will not insure the acts of independent
  • Professional Liability Insurance coverage that indemnifies the insured for third-party liability claims due to negligence in the performance of professional services. Professionals include Doctors, Lawyers, Therapists, Social Workers, Engineers, etc. The Professional Liability coverage can be purchased as a separate policy or included under a General Liability policy form. However, most standalone professional liability policies are written on a claim made policy form. Therefore, be aware of the retroactive date listed on the policy.
  • Abuse and Molestation Coverage can be critical for social service organizations, especially those who work with children and vulnerable adults. There are no “standard” coverage form and before purchasing coverage make sure to read the terms, conditions, and exclusions carefully. Make sure to screen and supervise prospective employees and volunteers and review with your attorney to make sure your organization carries the adequate limits to protect your
  • Cyber Insurance is a special form of commercial insurance created to protect businesses against cyber (internet) risks, such as hackers and other breaches of computer system security. Also, check other insurance policies (such as General Liability and Directors & Officers) to determine if those policies carry cyber coverage, before purchasing a cyber policy. Claims resulting from cyber losses are on the rise and it is imperative to ensure that your organization has the proper controls in place to protect your data from a Most cyber policies are written on a claims-made basis, it is important to be aware of the retroactive date listed on the policy.
  • Automobile Liability covers organizations who use vehicles as part of their Company vehicles should be insured under a comprehensive commercial liability with limits high enough to protect the organization. If employees use personal vehicles for business, organizations should add hired and non-owned auto liability coverage to protect the business in the event the employee is in an accident.
Start the New Year off right by reviewing your risk management procedures. It is important that you review your current insurance coverages with your broker and attorney. Also, make sure your organization is in compliance by having your broker and attorney review your contracts.

Baker Romero offers an annual review of coverages as well as risk management and loss control services. Let us know if you have any questions regarding any of the coverages listed above or would like us to provide a quote. We are here to help and we wish you a happy and prosperous New Year.

**This article is intended only for informational purposes and not to be construed as legal advice.

Tips to Help Prevent Employee Theft

A recent report shows that the majority of employee thefts occur in small businesses burglar-157142_960_720with less than 150 employees. In most instances, trusted employees perpetuate employee theft.

The following are a few of the more common embezzlement myths, which fool administrators into complacency:

  • “Everyone who works here is a trusted employee.”
  • “Nonprofits rarely have to deal with embezzlement issues.”
  • “We are protected because the Audit will catch any embezzlement problems.”

Below are practical tips to help minimize employee theft within your organization:

  1. Establish best practices in the accounting department that include dual signature requirement or dual review of disbursements. There should be a separation in key business processes. Do not allow one person, including high-level employees, to have control over any function from start to finish.
  2. Provide training sessions for all employees to spot fraudulent activity and illustrate the damaging impact of fraud.
  3. Surprise audits are effective because fraudsters will not have time to destroy or misplace records.
  4. Thoroughly screen prospective employees (and volunteers) with a background check.
  5. If you contract with a bookkeeping service or an independent contractor, they should provide you with proof of their insurance including General Liability and Professional Liability.
  6. If fraud is suspected, immediately retain legal counsel to conduct an internal investigation. You should consider hiring a law firm with an expertise in embezzlement.
  7. Obtain the appropriate Crime Policy to protect your organization, as most liability and property policies will not cover employee theft. Make sure to carry high enough limits to protect your organizations’ crime exposure.

Crime policies (or Fidelity Bonds) can be purchased as a separate policy or included under the commercial business package. Crime policies require that you cooperate with the insurance company in the event of a loss. Proof of a crime usually requires a full investigation. A Crime Policy provides coverage for loss or damage of money, securities, or other property resulting directly from theft by an employee. Most policies exclude electronic data, unless covered by endorsement. Another option to consider is adding the Volunteer Endorsement in the event you hire volunteers to help in your accounting/bookkeeping department of if they handle funds.

According to the 2017 Hiscox Embezzlement Study, bookkeepers are the most common positions who commit theft followed by managers.  The most common embezzlement schemes include:

  1. Funds theft – employee takes cash or bank deposits, or employee transfers money into their own account.
  2. Check Fraud – Employee alters or forges check.
  3. Credit Card Fraud – Employee fraudulently uses employer credit card/
  4. Payroll Fraud – Employee uses payroll system to divert funds to themselves or family members.
  5. Vendor Fraud – Employee creates fictitious invoices.

A few warning signs of embezzlers include:

  1. Disgruntled employee.
  2. Diligent and ambitious employee who appears to be extremely involved in company matters.
  3. Employee with extravagant lifestyle.

Employers should not be complacent about instituting preventive measures. The reality is people steal from their employers work in an organization with an attitude of blind trust. Having strong internal controls and effective hiring practices will go a long way toward mitigating employee theft risks.

Call us if we can be of assistance or if you would like a quote for crime coverage.

**This is intended to be used for informational purposes only and should not be construed as legal advice. Consult with your attorney and CPA for advice on appropriate controls and policies. 

Back to Basics: Workers Compensation Premium Calculation

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Did you ever wonder how workers’ compensation is calculated and why premiums fluctuate even though your payroll is consistent?

Most administrators know that workers’ compensation premium is based primarily on estimated annual payroll.  However, many times, we receive concerns from our clients who were billed an additional premium at audit. Many times this additional premium is due to improper payroll reporting during the workers’ compensation renewal. It is important to be as accurate as possible when submitting your workers’ compensation renewal information or the carrier will bill your organization with an additional premium at audit.

The following is a quick review of payroll calculation. Payroll includes, but is not limited to the following:

  • Hourly and Salaried payroll
  • Bonus
  • Holiday Pay
  • Sick Pay
  • Vacation Pay
  • Commissions
  • Piece Work
  • Market Value of Gifts
  • Profit Sharing
  • Meals and Housing For Employees
  • Allowances for Hand Tools
  • Expense Allowances not based on receipts
  • Deferred Compensation Plans

Not included in the workers compensation payroll:  Tips, Overtime Excess, Severance Pay, Expense Reimbursement based on Receipts and third-party sick pay

Another area that is critical to managing your premium has to do with Independent Contractors. To avoid this premium charge, 1099’s should provide your organization with proof of their workers compensation insurance (at the very minimum). If the 1099 does not carry workers compensation insurance, the insurance carrier may considered them as employees for premium audit purposes and will charge a corresponding premium. Determination is made on a case-by-case basis.

Having accurate payroll information and documentation will go a long way toward streamlining payroll reporting and premium. If you have any questions, call us. We are here to help.

Risk Management Basics: Preventing Slips, Trips, and falls

Written By: Rebecca Gomez

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One of the most common incidents that nonprofits face are slips, trips, and falls. These claims can be costly for many nonprofits and implementing an effective slip and fall incident prevention method will help prevent future claims and keep insurance premiums low. Your organization should establish a risk management policy that focuses on both prevention and procedures in the event an injury occurs. Some good practices include documenting the incident, collecting witness statements and any video surveillance (if possible). These practices can make a huge difference in defending your organization from fraudulent claims as well.

A basic “walk through” of your premises to find potential problems should be implemented daily. Below are a few tips to include in an effective slip, trip, and fall prevention risk management program:

  • Conduct a daily facility safety survey to look for common problems such as wet or greasy floors, loose mats, torn carpeting, bad lighting, clutter, cables or wires and uneven surfaces.
  • Immediately attend to any problems by putting up warning signs and/or closing an area off and taking steps to eliminate the hazard.
  • Maintain all floors and walkways on a consistent basis, using the recommended cleaning products and methods. Fix all uneven surfaces if possible by recoating or leveling the floor. You should mark or illuminate areas that cannot easily be leveled.
  • Train your employees and volunteers in slip and fall safety, and establish guidelines on how they should report problems and respond to customer injuries or hazardous situations
  • Make sure you have secure handrails for all stairs and balconies.
  • Take care of your outdoor areas, including sidewalks and parking lots. Potholes, snow and ice all create potential problems.
  • Additional or dry replacement entrance mats should be available on site during wet weather.
  • Document all of your efforts by keeping records of your daily safety inspections and any maintenance work to improve walking and working surfaces.

Best practice is to have a written policy in place and to train managers, employees, and volunteers on all safety procedures. Safety is everyone’s business!

Your organization should also have a written incident report form to document any such events. It is every employer’s responsibility to provide a safe environment. Be sure you are doing all that you can to recognize and reduce the risk. Slips, trips, and falls have the potential to be a major cause of injury for your employees, volunteers, vendors, and visitors. Be Prepared.

Let us know if you have any questions or would like more information. We are here to help.

Back to Basics: Cyber Risk Management and Your Employees

By Rebecca Gomez

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Addressing cyber security risk management procedures to all staff is critical to every organization. A recent report indicated two-thirds of all cyberattacks against organizations (large and small) result from employee negligence or malicious activities. The same report also indicated that external breaches only caused about 18 percent of cyberattacks. Human error, according to many studies, is the leading cause of cyber-attacks. Therefore, administrators and employees need regular training on how to identify and prevent cyber-attacks.

Minimizing cyber threats requires a cyber security plan that includes effective policies and procedures that account for legal compliance and data protection. These policies should include (not an exhaustive list):

  1. A bring your own device (BYOD) policy: governing whether or not an employee can use their own device to conduct business and the circumstances that deem whether or not personal cell phone use for business is appropriate.
  2. A password policy requiring the use strong and unique passwords that change at least every 6 months.
  3. Personnel policies that enhance security
  4. A network tracking policy requiring regular monitoring of network traffic for evidence of suspicious access.

Organizations should also have an incident response plan in place which outlines how a company will respond to suspected events. Implementing an incident response plan will help your organization to quickly investigate and remediate cyber-attacks. It will also outline the leaders of the response team and their responsibilities implementing the response plan.  The board of directors should be informed of the organizations cyber security program and exposure, as they are ultimately responsible.  Brown & Streza offers a unique proactive approach to a Data Security Breach plan that can help your organization prepare in the event of a breach.

Cyber Risk Insurance should be considered as part of your risk management plan (and not your only plan). A Cyber Risk Insurance policy can offer nonprofit organizations with affordable protection. There is no “standard” cyber policy form and administrators should review their cyber policies to understand what coverage their policy provides. Most standalone Cyber policies offer forensic investigation coverage, system restoration costs, defense and indemnity costs associated with litigation resulting from the loss of personal information, or other sensitive data and defense costs and penalties associated with regulatory investigations. Most General Liability policies now exclude coverage for cyber-related claims.

Please let us know if you have any questions regarding cyber risk management or would like us to provide you with a quote. (see attached application)

Cyber Risk Management and Cyber Liability Insurance

By: Rebecca Gomez

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Last weekend, a ransomware virus known as “WannaCry,” affected 150 countries and more than 300,000 people. Ransomware is a cyber attack where hackers encrypt files from their victim’s server and holds them for ransom. In the case of “WannaCry,” the hackers demanded $300 to restore their data.

An important lesson to take from this incident is that no one is 100% safe from cyber crime. If the appropriate measures to protect your data are not diligently taken, your organization is vulnerable and recovering from a cyber attack can be costly. The Hiscox Cyber Readiness report stated that last year alone, cyber crime has cost the global economy $450 billion.

Below are some risk management tips your organization may want to consider regarding cyber risk:

  • Conduct regular back ups of systems
  •  Have strong passwords that are unique which provide a barrier against intrusions
  • When using unfamiliar websites, make sure the URL begins with https. The “s” indicates that the site is secure.
  • Continually install the updates your browser and operating system (including anti-virus and anti-spyware) requires.
  • Be aware of the e-mail you receive: if the deal sounds too good to be true, be very skeptical. If you receive a message from your co-worker, employer, or someone you know and it sounds out of character, or includes nothing but a link in the body of the email, it may be suspicious. Check with the sender and make sure it is legitimate. This could be a phishing fraud.
  • Do not use an unprotected Wi-Fi network for your business, always require a password and do not conduct business where there is public Wi-Fi.
  • Password Protect smart phones and computers
  • Train employees on cyber risk management

The “WannaCry” ransomware incident serves as a good reminder to keep current with system updates and to contact your IT person to check your organization’s software for vulnerabilities. Good data security is key to protecting your organization.

Cyber Liability insurance should be part of your organization’s risk management program.  If you have a Cyber Liability policy, be sure to review it and understand the terms and conditions. Many cyber policies offer effective loss control services to help protect your organization. Let us know if you have any questions regarding Cyber Liability or would like us to provide you with a quote. We are here to help.

Back to Basics: The Importance of the IIPP

by: Rebecca Gomez

 

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In California, organizations with at least one employee are required to have a written Injury and Illness Prevention Program (IIPP) that is easily accessible for employees to read. An IIPP is a safety program that requires employers to develop and implement an effective program that improves safety in the workplace. In order for the IIPP to be effective, all employees, supervisors, and management need to be actively involved.  Cal/OSHA requires eight elements to be written in the IIPP and implemented in the workplace (with a few exceptions).

  1. Responsibility (The position/person who is in charge of implementing the IIPP)
  2. Compliance
  3. Communication
  4. Hazard Assessment
  5. Accident/Exposure Investigation
  6. Hazard Correction
  7. Training and Instruction
  8. Recordkeeping

Above are the minimum components required for an IIPP to be acceptable to Cal/OSHA standards. Everything in the IIPP must be implemented and documented to avoid a fine from the Cal/OSHA inspector. If your organization adds additional safety procedures to the IIPP, make sure those procedures are properly implemented with proper documentation.

There are a few exceptions to the IIPP requirements. One exception is as follows:

If your organization has 20 employees or less in a calendar year, whose industry is not on a high hazard list, and has an experience modification rating of 1.1% or less, your organization qualifies for the limited requirements of the IIPP:

  1. Identity of those whose authority and responsibility to implement the IIPP
  2. The schedule of periodic inspections to identify unsafe conditions and work practices
  3. Training provided to employees.

Cal/OSHA provides a sample IIPP program (see attached). Anything that is written in the IIPP must be implemented and have supporting documentation. Administrators need to make sure that employees know who the IIPP administrator (the authority) and who has the responsibility for implementing the procedures in the IIPP (This is usually one of the first questions a Cal/Osha inspector will ask an employee during an inspection). If your organization identifies a specific individual’s name, instead of a position title, make sure to update the IIPP if another individual replaces that position.  It is important to update your IIPP at least once a year.

The IIPP, while statutory, can support an organization’s safety culture. The IIPP enforces the importance of safety in the workplace. A safe work environment can help prevent workplace injury claims and lower your organization’s workers’ compensation premium. Please let us know if you have any questions or concerns regarding workers’ compensation or the IIPP. We are here to help.

Developing a Safety Culture

by Rebecca Gomez

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At Baker Romero, we encourage our clients to focus on the importance of developing a safety culture in the work environment. Administrators should find ways to motivate employees to practice safe work practices. An effective safety culture can help lower the amount of claims and minimize the cost of a claim as both affect the x-mod and the workers’ compensation premium.

This past year, the Occupational Safety and Health Administration (OSHA) enacted a new regulation that prohibits employers from implementing injury based incentive programs. OSHA considers this type of incentive program as retaliatory, which can discourage employees from reporting injuries.  Having rewards based on injury free days is an example of the prohibited safety incentive program. When employees refrain from reporting a claim after an injury, another issue to consider is the adverse impact it can have on a claims report. The cost of the claim significantly increase when employees do not report injuries.

However, OSHA did not prohibit the use of incentive programs altogether. Employers should develop a safety program that encourages safe work habits and implement an effective return to work process.  Recognizing employees for safe work habits such as completing training and using safe work procedures can create a proactive safety culture. Also, consider incorporating safety measures into performance appraisals. The performance appraisal demonstrates the importance of a company’s commitment to safety.

In the final analysis, developing a strong safety culture by encouraging safe work habits can be more effective. Administrators should create innovative ways to encourage and recognize safe work habits that encourage employees to be safe on a daily basis.

As a service to our clients, our agency provides safety videos tailored to their organization to help them promote safe work habits.  Please contact us for information regarding the safety videos or if you would a quote for workers’ compensation coverage. We are here to help