March 30, 2011

Non-Profit D&O Liability Insurance

Filed under: commercial insurance — Tags: — cleavelandinsurance @ 3:15 pm

Non-Profit D&O Liability Insurance

What you don’t know…can hurt you and your organization

A non-profit board may be subject to the same management exposures that are found in a private for-profit organization.  Unfortunately, non-profits do not purchase insurance coverage at the same rate as their for-profit counterparts.  Directors and Officers Liability Insurance was created to protect individual directors and officers, employees and an organization from the allegations of a covered wrongful act.  These policies protect the assets of the organization as well as the personal assets of the directors and officers on those non-profit boards by paying defense costs, damages, settlement and judgments of any covered claims.  The assets of spouses, domestic partners, heirs and estates may also be exposed and these policies protect these parties as well.  A claim brought against a non-profit firm and / or its board can be financially devastating.  Effective risk transfer to a Director and Officers Liability Policy (Management Liability Policy) may help alleviate that potential financial impact.

Directors and officers of a not-for-profit organization have historically been sued by employees, volunteers, customers, creditors as well as contributors (donors) to their organization.  The most common type of management liability claim against a non-profit organization typically comes from an employee or volunteer as an employment practices complaint, however, below is a more complete listing of typical allegations.

TYPICAL ALLEGATIONS INCLUDING THE FOLLOWING                    

   
  • Wrongful termination

 
  • Violation of the article/by-laws
  • Harassment
 
  • Breach of contract
  • Discrimination
 
  • Breach of fiduciary duty
  • Civil rights violations
 
  • Financial mismanagement/bankruptcy
  • Conflict of interest
 
  • Personal financial gain
  • Violation of a statute
 
  • Negligence
  • Fraudulent conduct
  • Mistakes/judgment errors
   

 

WHAT ARE THE FIDUCIARY DUTIES OF DIRECTORS AND OFFICERS TO THE ORGANIZATION?

Duty of Care:  Directors and officers are expected to perform their duties in good faith and at a level of professionalism they reasonably believe to be in the interest of the corporation and with the care that a reasonably prudent person in a similar situation would use under similar circumstances.

Duty of Loyalty:  The duty of loyalty prohibits directors and officers from using their positions to further or enhance their private interests and requires them to refrain from engaging in personal activities which might injure the corporation.  It requires an unselfish and undivided loyalty to the corporation and demands that there be no conflict between one’s self interest and that owed to the entity.

Duty of Obedience:  Directors and officers are required to perform their duties in accordance with applicable statutes and the terms of the by-laws of their non-profit organization.  Directors and officers are not excused from their duties if they are unfamiliar with the laws governing their conduct.

The exposures that affect a non-profit board include financial constraints, corporate governance, indemnification concerns, immunity misconceptions and others.

CHARACTERISTICS AND FINANCIAL CONSTRAINTS

Non-profit organizations were created to provide a service or support an issue (and gain tax advantages).  The issues that a non-profit organization supports are commonly formed for educational, religious, charitable or even scientific purposes.  The typical non-profit organization operates with fewer employees to keep expenses down and they normally have relatively small budgets.  They are less likely to have formalized employment practices procedures which may lead to increased claims exposure.  Additionally, non-profit organizations may be more prone to possible errors and oversight based upon their small budgets which may ultimately lead to a negative impact on their financial statements.  A full-time CPA is traditionally not on staff due to these budget constraints which also adds to the possibility of mistakes, miscalculations and inaccuracies.  Generally, the assets held within a non-profit organization are restricted, and may not be available for use, especially, if the operational cash flow comes from government grants or directed funds.  Non-profit organizations also rely heavily on the services of volunteers which may open the door to more errors and unforeseen lawsuits.

Corporate governance is also a factor to consider.  Sarbanes-Oxley and other similar legislation have provisions that apply to non-profit organizations, such as, whistleblower protection and document preservation.  A developing exposure which traditionally hasn’t had many controls, is the protection of personally identifiable information if its employees, customers, etc.  Forty-five states now have some type of law governing the actions required in the event of a breach of personally identifiable information.  Additionally, the Red Flag Rules (financial sector compliance) and HITECH (health care information compliance) are two examples of new compliance acts that have surfaced in 2009.  USI recommends that non-profit organizations develop and implement a formal process to acknowledge and appropriately handle these types of government issues.  The potential cost of these exposures may be offset with a comprehensive Management Liability Policy.

INDEMNIFICATION CONCERNS

Most non-profit organizations are willing to indemnify their employees and board members, however, high legal expenses may ultimately exceed the organizations financial capacity.  Directors and officers of non-profit organizations that depend specifically on indemnification provisions may still be exposed to this potential financial shortfall.  Many times the indemnification provisions haven’t been updated or even reviewed for acceptable language.  It is possible that the bylaws may not be available to a particular non-profit chapter for a variety of reasons or the bylaws themselves may have become a forgotten topic after years of board turnover.  Relying solely on indemnification and / or charitable immunity (discussed next) has become a common practice for non-profits due to exceptionally tight annual budgets.  Fortunately, the cost of a D&O policy is much less than you might expect which may help ease the burden and costs associated with unforeseen litigation.

Although indemnity may be stated in the articles/bylaws of the organization or identified in an employment contract, by and large, non-profit organizations may not have the funds to pay the expenses associated with protecting their directors and officers.  It is important to review and update the articles / bylaws of your organization on a regular basis.  Understanding the issues and updating the areas that need to be addressed in your organization will help you attract more experienced and talented board members.

CHARITABLE IMMUNITY MISCONCEPTION

There are state and federal laws that limit the liability of non-profit volunteers, more commonly referred to as the Charitable Immunity Doctrine.  Many courts have abolished charitable immunity altogether while others are more likely to require those involved to take financial responsibility.  The organization itself is rarely included within the immunity language and there may be applicability concerns for compensated directors, officers, and employees.  Beyond state laws, there is a federal immunity law (i.e. Federal Volunteer Protection Act), which provides protection to individual volunteers but not the organization.  Ultimately, if a lawsuit is filed, those named will be required to defend themselves with proper counsel.  It is important to research and understand your state statues and protections as relates to immunity.

OTHER COMMENTS

As mentioned above, the majority of claims stem from employment related acts and the protections available under charitable immunity laws might not extend to these types of allegations. Depending on case specific allegations and policy language, defense cost and settlement options for an employment practices claim will most likely be covered under an Employment Practices Liability Policy.  The average cost to defend and settle an employment practices claim may easily exceed $100,000.  Can your balance sheet absorb this type of expense?  If not, you may want to consider purchasing insurance to transfer this exposure.

Another misconception is that personal umbrella coverage may cover liability arising out of ones work at a non-profit.  To some degree, this is true, however, in order for coverage to apply under a personal umbrella policy there usually must be property damage or bodily injury, but is not the answer to non-profit board liability.

SUMMARY

Adequate financial protection is critical for the directors and officers of a non-profit management team as they can be held to the same high level standards of a for-profit company.  Risk transfer is available under a combined comprehensive Management Liability Policy and this coverage can provide effective protection in today’s business climate.

SUMMARY POINTS

  • Non-profit organizations are subject to many of the same management liability exposures as for-profit organizations.

 

  • Most non-profit claims involve employment related issues (full-time, part-time, third party vendors and/or volunteers) which are also covered by a Management Liability Policy.

 

  • Claims have been brought by a variety of sources, including customers, creditors, donors, regulatory bodies and other non-profit organizations.

 

  • Non-profits are faced with less resources including a small number of employees and limited budgets.

 

  • Indemnification may be available, although not always adequate.

 

  • Charitable immunity doctrines should not be relied upon exclusively as the solution to your individual exposure.

 

  • Personal umbrella (homeowner) coverage may only apply to claim alleging bodily injury or property damage claims.

 

  • Management Liability Insurance can offset most, if not all, of these exposures.

March 25, 2011

Seniors taking advantage of free wellness visits

Filed under: Uncategorized — cleavelandinsurance @ 4:49 pm

Seniors taking advantage of free wellness visits, HHS says

By Paul Wilson

 

A growing number of seniors are taking advantage of the benefits of health care reform, according to a new Department of Health and Human Services (HHS) report.

More than 150,000 seniors have received a free annual wellness visit during the past two months, the report said.

As part of the health care reform law, Medicare beneficiaries are no longer required to pay a deductible, co-insurance or co-payment for a variety of preventive services.

According to the HHS report, the benefit can save seniors as much as $160 per wellness visit and $105 for subsequent follow-up visits.

HHS Secretary Kathy Sebelius will testify today before the Senate Finance Committee concerning the law’s benefits, a week before the one-year anniversary of the law’s enactment.

March 24, 2011

Medical claims denial appeals often successful

Filed under: health insurance — cleavelandinsurance @ 4:40 pm

Medical claims denial appeals often successful:  GAO report

By Lauren McNitt

 

While health insurers denied one in five claims in 2010, as many as 50 percent of some appeals were reversed, according to a new Government Accountability Office report.

At the request of Congress, the GAO examined data collected from several states, and found that as many as 50 percent of appeals to insurers in Maryland in 2009 led to denial reversals.  In Ohio, 48 percent of appeals resulted in reversals in 2010.

However, the figures do not mean patients have a 50 percent chance of having a claims denial reversed if they appeal, cautioned GAO Health Care Director John Dicken.  The statistics are based on appealed claims, and only a small number of denials are appealed, he explained.

Denials are often based on mistakes, according to Nancy Davenport-Ennis, CEO of Patient Advocate Foundation.

“There are many times the claim is denied the first go-round to see if you come back and appeal,” Davenport-Ennis told the Associated Press.  The Patient Advocate Foundation helped more than 17,000 people deal with insurance claims denials in 2010.  The most frequent reason they see for claims denials is a benefit not covered by a health plan, said Davenport-Ennis.

March 23, 2011

Winter Weather – Ice Storms – Power Failures: Plan Ahead

Filed under: commercial insurance — cleavelandinsurance @ 6:54 pm

Winter Weather- Ice Storms- Power Failures:  Plan Ahead

 

In most of the United States, even as far south as Texas and Florida, there is the probability of winter weather, ice storms and even arctic freeze conditions.  Power failures can be a direct result of these events.

Minimizing The Effects Of Power Failures Due To Ice Storms And Winter Weather

 

Power Failures

 

If a power failure lasts more than 4 to 5 hours, depending on the outside temperatures and the insulation level in the building, the building may no longer be heated above freezing.  Power failures from ice storms especially can last several days.  When the temperature in the building drops below freezing and, ultimately, cracking.  The result will be water damage to the building once the temperatures rise and the pipes thaw.  The damage from water can be extensive.

Preparation

 

Monitor the national weather service during winter months in your area.  www.nws.noaa.gov

  • When subfreezing temperatures are predicted check all heating systems for proper operation.  Service as needed.
  • If an ice storm is predicted, anticipate a power failure at your facility.
  • Develop your plan ahead of time on how you will respond to a lengthy power failure and loss of heat.
  • To help put your plan together, please see the following Travelers documents for guidance.

-         Winter Weather Checklist

-         Cold Weather:  Planning Ahead

-         Emergency Planning- General Overview

  • Maintain safe roof access throughout the storm.  Prepare equipment to be used for keeping drains clear and removing excessive snow loads from the roof.
  • Line up ahead of time appropriate licensed sprinkler contractors, plumbing contractors and electricians to assist with the preparations outlined below.

 

Protection

 

If the heating system will be off for several hours to several days due to a power failure, and the temperature in the building will fall below 32o  F, the following protection features should be implemented:

  • Shut off and completely drain all fire sprinkler systems.  Be sure to notify Travelers using the Travelers impairment- Are You Prepared?”
  • If there are any fire sprinklers installed on drops (like in suspended ceiling areas) they should be drained if there are not many.  If there are sprinklers on drops over areas with highly damageable equipment, such as computer rooms or materials such as fine arts, these should be drained.  For other areas where it is impractical to drain all the sprinkler drops, be ready for water damage when the heat returns.  Have buckets, tarps, mops, etc., ready for the water to minimize the damage.
  • Notify the local fire department and alarm receiving company that you have shut off your fire sprinkler system (s).
  • If there is a diesel fire pump on site it may automatically start when the power fails.  If so, shut it off and put it on manual start at the controller to conserve the fuel.
  • If there is an electric fire pump and it is connected via an automatic transfer switch to an emergency generator the transfer switch should be disabled and the pump controller also disabled as the sprinklers are shut off.  Otherwise it will start and run throughout the power failure needlessly.
  • Shut down all hazardous operations like welding, cutting with a torch, painting, flammable or combustible liquids use, etc., while the sprinklers are off.
  • Provide a constant fire watch in all areas while the sprinklers are off.  This is best done by employees.  If the employees need to leave, hire a security service to provide the constant fire watch.  Be sure the employees and/or security officers are trained to turn the sprinklers and fire pump (if there is one) on if there is a fire.  Be sure they know to call the fire department as the alarm system may be out of battery backup.
  • Shut off and completely drain the domestic water and heating piping systems.
  • If portable heating systems are used make sure they are UL-listed or FM-approved and used in accordance with the manufacturer’s instructions.  Ensure they are placed on stable surfaces and far enough from any combustible materials that may be ignited.  Also, consider the health and safety implications of carbon monoxide build-up in enclosed areas.  Refer to the Traveler’s document “Carbon Monoxide”.  Fuel should be kept in UL-listed or FM-approved containers and stored in safe areas or outdoors.  Refueling should be done outdoors and away from potential ignition sources.  Better to not use them than to have them become an ignition source for a catastrophic fire.
  • Portable emergency generators also have many of the same life safety and property protection considerations that portable heaters do.  They should be used in strict accordance with manufacturer’s instructions, including use of licensed electricians to make the connections to building wiring.
  • Make sure all roof drains, gutters and scuppers are clear prior to the storm and clear snow from the roof (if this can be done safely) during the storm if you are concerned that the amount of snow and ice will be enough to collapse the building.  Pay particular attention to differences in roof heights where drifting snow may cause unanticipated snow loading.
  • As practical, store water damageable stock off the floor on pallets or in racks to minimize damage in the event of pipe breaks or water infiltration.

 

Recovery

 

After the event is over and the power is restored:

  • Inspect all fire sprinkler, domestic water and heating system piping before restoring them to service.  Make all repairs needed, if any, immediately.  Where water has frozen in piping, it is often many hours or even days after power, heat and water are restored before pipe breakage and resulting water damage becomes evident as ice plugs in the piping begin to thaw.  Around the clock surveillance of these areas may be warranted to ensure there is no hidden pipe damage and water leakage.
  • Do not use open flames, lamps or other high temperature devices to thaw frozen pipes.  Experts recommend using hair dryers.
  • Restore all fire sprinkler, domestic water and heating system piping to service.  Maintain the constant fire watch until this is completed.
  • Notify the fire department, Travelers and the alarm company that the systems are back in service.
  • Maintain the weather watch.  Be especially cautious of rainstorms after snow as roof pooling can occur with resultant possible collapse.  Take measures to ensure all roof drainage is in service.
  • Watch for post storm drifting on roofs and remove the extra weight, if this can be done safely.
  • Clear fire lanes, fire hydrants, fire sprinkler valves, process valves, gas shutoffs, etc of snow accumulations. 
  • Resume normal safe operations.

March 21, 2011

Protect Against Frozen Pipes

Filed under: commercial insurance — cleavelandinsurance @ 2:39 pm

Protect Against Frozen Pipes

 

Here’s what homeowners can do to help protect pipes from freezing:

 

  • Open the cabinets under kitchen and bathroom sinks to allow heat to circulate around water pipes.
  • Let faucets drip.  Moving water freezes more slowly than still water.
  • Insulate pipes in your home’s crawl space or attic.  Pre-cut foam insulation is inexpensive and easy to install.
  • Make sure outside water hoses are disconnected from spigots.  Drain hoses if possible.
  • Insulate your outdoor water meter box, and be sure the lid is on tight.
  • Protect outdoor electrical equipment to help prevent power outage.
  • Seal any leaks in the home’s foundation that allow cold air inside, using spray foam insulation or caulking approved for cold weather use.  (Do not cover vents that are installed to provide combustion air to fuel-fired hot water heaters or other equipment as that could lead to carbon monoxide poisoning.)
  • Maintain heat in your home at a comfortable level, even if you will be away from home.
  • If you elect to drain your pipes when leaving for an extended period, turn off your water at the shut-off valve while faucets are running to drain your pipes.  If you drain your pipes, contact your electric or gas company for instructions on protecting your water heater.  Please be aware that if you have a fire protection system in your home, it will be deactivated when the water if shut off.

 

If you suspect your pipes have frozen:

 

  • Turn off your water at the shut-off valve.
  • Contact a plumber for assistance
  • Do not use lamps or electrical appliances to thaw frozen pipes.  Leaking water from thawing pipes could result in an electrical shock.
  • If your plumber uses a portable torch to thaw or repair piping, make sure that combustibles are removed from the area, and that a charged portable fire extinguisher is available.  Observe the area for a minimum of 30 minutes after hotwork is completed to ensure that no embers or overheated material from the hotwork is smoldering.

March 17, 2011

Quake Losses

Filed under: Uncategorized, auto insurance, commercial insurance, health insurance — cleavelandinsurance @ 5:13 pm

Quake Losses Tab:  $35 Billion

 

By Erik Holm and Ulrike Dauer

 

Costs Would Further Sap Insurers Amid Other Disasters, Falling Policy Prices

          The earthquake that devastated Japan caused as much as $35 billion in insured property losses, a figure that would make Friday’s quake the costliest ever for the insurance industry, even before the effects of the tsunami are included, according to a disaster-modeling company.

            While the exact cost of the catastrophe won’t be known for months, Boston-based AIR Worldwide estimated Sunday the quake caused insured property losses of $15 billion to $35 billion.  If claims come in at the middle of that range, the cost of the disaster would surpass all other natural catastrophes except 2005’s Hurricane Katrina. 

            Some of the damage to residential buildings and the liability costs stemming from radiation leaked by Japan’s crippled nuclear reactors will be borne by the Japanese government, which sells insurance to power companies for major natural disasters.  Neither cost is included in the AIR estimate.  Even so, the losses from the Japanese earthquake will further sap the capital of an industry hit by the quake in New Zealand and severe flooding in Australia this year and by years of falling prices for policies.  Equity analysts that track the industry said most catastrophe reinsurers will have a first-quarter loss and some are likely to lose money for the full year.

            “This will certainly have a major effect on the reinsurers, especially when you add in some of these other disasters, and we’re not even out of March yet,” said Duncan Ellis, the U.S. Property Practice Leader for insurance broker Marsh Inc. “It seems like it has to

________________________________________________________________________

The estimate will raise expectations of an increase in insurance and reinsurance costs.

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cause rates to flatten, at least.  Whether it causes prices to go up, for those global companies, it’s probably too soon to say.”

            Loss estimates from AIR and its rivals are closely watched by the insurance industry and by Wall Street to gauge potential losses for individual insurers.  No major companies have disclosed estimates of their own losses yet, but the size of AIR’s estimate will raise expectations of an increase in the cost of insurance and reinsurance.  Such a spike would be felt by businesses and homeowners in catastrophe-prone areas around the world.

            Munich Re AG and Swiss Reinsurance Co., the world’s largest reinsurers by gross premium income, reiterated Sunday that it was too early to provide estimates of their potential losses, as did smaller reinsurer Hannover Re AG.  Allianz SE, Europe’s largest primary insurer by premium income said the same.  So did American International Group Inc. and Lloyd’s of London, the U.K.’s 322 year-old insurance and reinsurance market. 

            However high the insured losses run, total economic losses are likely to be significantly more.  Japanese homeowners and businesses have been reluctant to buy insurance to cover potential losses because the cost of the protection has been perceived as too high.  AIR estimated about 10% to 12% of commercial property exposures are insured against earthquakes outside of Tokyo.

            AIR’s number doesn’t yet include estimates for the loss caused by the tsunami.  But on Saturday, AIR said it had examined prefectures most directly affected by the tsunami, and concluded that $24 billion of insured property had sat within three kilometers of the shore in those areas.  Of that amount, $5 billion was within one kilometer of the coast.

            AIR said it plans to independently estimate the loss caused by the tsunami as more detailed information becomes available, including satellite photos from NASA of the extent of floods, and provide a combined loss estimate that avoids double-counting in the affected areas.

            There have been few reports of major structural damage in the Tokyo and Chiba prefectures, except for several serious fires.  However, the risk-modeling agency cautioned that the high concentration of insured properties in the area and that the quake was felt there means that “even relatively small individual claims will likely add up to significant numbers.”

            Tokyo Electric Power Co., which owns the troubled Fukushima nuclear plant, is required to buy $1.5 billion in liability protection to cover the costs of a radioactive leak, said Dan McGarvey, a nuclear engineer who chairs the U.S. power and utility practice at insurance broker Marsh Inc.  Japanese law says Tepco is responsible for any leaks, while the reactor’s manufacturer, General Electric Co. and the contractors that built it, aren’t liable.

            But that insurance, which is purchased from a group of domestic companies, doesn’t cover natural disasters.  Instead, the utilities buy policies to cover quakes, tsunamis and volcanoes directly from the government.

-William Launder

Contributed to this article.

March 16, 2011

Protecting Your Property from Ice and Snow Damage

Filed under: auto insurance, commercial insurance — cleavelandinsurance @ 1:09 pm

 

Protecting Your Property from Ice and Snow Damage As a result of recent storms, some areas of the country are experiencing heavy snow and ice accumulations. It’s important to take the right steps to protect your home from the risks associated with heavy snow and ice. In order to assist you, Travelers’ Claim and Risk Control professionals have prepared answers to some frequently asked questions about winter weather damages and what you can do to prevent them.

 

Q. What types of damage should I be concerned about?

A. Interior water damage from ice dams

is very common after heavy snow followed by frequent periods of melting. Ice dams occur because the eaves (the overhangs at the edge of your roof) tend to be colder than the rest of the roof. When water melts off the main part of the roof and reaches the eaves, it may re-freeze there and create a dam that prevents water from draining off the roof. The water can then back up underneath the roof shingles and make its way inside your home. Structural damage

can also occur when the weight of snow and ice exceeds the load-bearing capacity of your roof. This is most often the case with flat roofs, older buildings, or structures whose integrity may already be compromised. Q. How do I know if there is too much snow and ice on my roof?

A.

The answer depends on a number of factors, including the roof type, construction technique, and age and condition of the structure. As a rule of thumb, if there is more than a foot of heavy, wet snow and ice on your roof, you should try to have it removed. Q. How should I remove the snow and ice that has accumulated from my roof?

A.

If you have a

If you have a flat roof that is easily reached from an interior stairway, you may want to shovel the roof. Remember to put safety first any time you are on a roof, especially one that is covered in snow and ice. If you have any doubt, leave it to the professionals. sloped roof, it may be possible to remove the snow and ice using a roof rake, a long-handled tool designed specifically for this purpose. Stand on the ground and pull as much of the snow off the eaves as you can safely reach. It is not necessary to remove all the snow; removing the first three to four feet of snow closest to the gutters will help alleviate these issues. Q. What if I can’t reach the roof at all?

A.

We do not recommend using a ladder in snowy and icy conditions. This can be extremely dangerous and is best left to professionals.

Many homebuilders, landscaping and roofing contractors, and property maintenance companies will remove snow and ice from roofs. Before hiring a contractor, Travelers encourages you to check references. Always be sure your contractor is insured and bonded. Q. Will Travelers pay to have snow and ice removed from my roof?

A.

Q. I already have an ice dam on my roof. What should I do about it?

A.

Another method is to

If you can reach the roof safely, try to knock the ice dam off with a roof rake, or cut a channel through the ice to allow standing water to drain. If you cannot reach the roof safely, consider hiring a contractor to remove it. Each claim is unique, and coverage and claim decisions always require an expert analysis by a licensed Claim professional. However, property owners are generally responsible for preventive maintenance. Keep in mind that the cost of snow removal is likely to be considerably smaller than the cost of roof damage or interior property damage caused by water leaks. fill a nylon stocking with calcium chloride ice melt and place it vertically across the ice dam so that it melts a channel through the dam. If you try this method, make sure you can safely position the ice melt on your roof, and make sure to use calcium chloride, not rock salt. Rock salt will damage your roof. Also be aware that shrubbery and plantings near the gutter or downspout may be damaged. Q. I have an ice dam. How can I tell if it has caused damage inside my home?

A.

Look for water stains or moisture in the attic or around the tops of exterior walls on the top floor. Just because an ice dam is present does not necessarily mean water has penetrated the roof membrane. However, it is always best to remove ice dams before they have the opportunity to cause damage. Q. I have giant icicles hanging off my gutters. What should I do?

A.

Look carefully at where the ice is. If the icicles are confined to the gutters and there is no water trapped behind them, this does not indicate the presence of an ice dam. However, large icicles can pose a danger to people when they fall off. Try to safely knock the icicles off from the ground, making sure not to stand directly beneath them. If you cannot reach them safely from the ground, consider hiring a contractor to help. Q. What else can I do to protect my home?

A.

An easy way to help snow and ice drain off your roof is to make sure the area around your downspouts is clear. This will make it possible for your gutters to drain when snow does melt. It will also help prevent flooding when the snow and ice melts. Q. How do I keep this from happening again next year?

A.

Ultimately, the best prevention for ice dams is to eliminate the conditions that make it possible for them to form in the first place. Making sure your attic is well insulated will help prevent the melting-and-freezing cycle that causes ice dams to form.

Also, when replacing a roof, make sure to install a water membrane underneath the shingles. This acts as an extra barrier that helps prevent water from seeping inside the building.

Using a roof rake to clear the first three to four feet of snow from your roof immediately after each winter storm is an effective approach to preventing ice dams from forming. Q. What should I do if there is damage to my home?

A. Call Travelers at 1-800-CLAIM33

if you suspect damage to your home. The sooner you call, the sooner we can start helping. Our experts are available 24/7 to answer questions and quickly assign your claim to a skilled Travelers Claim Professional in your area. For more information:

Follow Travelers on Facebook and Twitter

. The Travelers Indemnity Company and its property casualty affiliates

One Tower Square

Hartford, CT 06183

travelers.com

This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Availability of coverage referenced in this document can depend on underwriting qualifications and state regulations.

© 2011 The Travelers Indemnity Company. All rights reserved. CE-10223 New 1-11

Contact your independent agent or

View Winter Weather Resources on Travelers.com

　

March 15, 2011

The “Primary and Noncontributory” Myth

Filed under: commercial insurance — cleavelandinsurance @ 2:51 pm

The “Primary and Noncontributory” Myth

Agents are often asked to place language on a certificate of insurance that says certain entities have been added to the policy as additional insureds on a “primary and noncontributory” way.  These terms are almost never defined in the contract or at the request of the third party, and they are only rarely defined in proprietary insurer Al endorsements. 

The bottom line is that, unless an Al endorsement prescribes that coverage is provided on a “primary and noncontributory” basis, it would almost always be inappropriate to include this language on a certificate.  One reason is that, assuming ISO CGL policies, it is the additional insured’s CGL policy that controls primacy, not the Al endorsement on the insured’s CGL policy.

In addition, what if the agent is dealing with a government agency or large corporation that self-insures or has a non-ISO CGL policy?  If such a policy exists, Al coverage is not “primary and noncontributory” unless the Other Insurance clause of that policy has been reviewed.

For these and other reasons, avoid this language on a certificate of insurance.  To read the full article, including links to related information, visit the Forms & Substance section at IAmagazine.com.

March 11, 2011

Attention!! Your Spouse Is In Our Prison in Nigeria- Send Money for Her Release!!!!!

Filed under: Uncategorized — cleavelandinsurance @ 7:19 pm

Attention!! Your Spouse Is In Our Prison in Nigeria- Send Money for Her Release!!!!!

By Joel H. Monsma, CPCU, ARM

 

            Millions of people receive a disconcerting e-mail with this as a subject line.  This e-mail is a scam disguised as an important message from Microsoft, MSN, AOL, or Hotmail addresses.  So, what’s this e-mail really about?  Money transfers!  The scammers want to scare you into responding immediately- especially if either you are away from home or your spouse is out of town.

            How did this happen?  A hacker hijacks your e-mail or social-media identity on sites such as Facebook and/or Twitter, and then contacts your e-mail list and/or friends, usually through a private message, status update or chat message.  The tip-off is that the message is pretty generic.  Scammers don’t want to be exposed, so answers to questions are designed as to not “tip their hand.”  That’s why you or anyone else who asks a specific question that requires definitive answers will find that you won’t receive any useful information.

 

Information That You Should Never Give Out Online

Never, ever give out your Social Security number, bank or credit card account numbers, PIN numbers or any other information that would permit the recipient to access any of your accounts.  Credit card companies, banks, and/or other financial institutions will never send you an e-mail requesting this information.  They don’t have to- they already have the information.  If the “excuse” is that they want to verify the information- that’s bogus too.

How to Protect Your E-Functions Such as Online Banking, E-Accounts

One of the most important things you can do to protect your online security is to be careful about accessing these sensitive functions using a wireless device.  Although it may be convenient to do your online banking at the local Starbucks, the level of potential exposure to a privacy breach is very high.  Wireless connections can be easily monitored, which gives hackers a virtual open door to access your private information.

Safeguarding your passwords and PIN numbers is also an important step in preventing access to online accounts.  Many people use the same username/ password for all of their accounts, which is a very dangerous practice.

Watch Out for the Shortened URLs!

URL shorteners, such as Bit.ly or TinyURL.com, are popular ways to share long links on social-media sites.  But a shortened URL can hide a link’s true destination, sometimes directing users to a malicious website or damaging content.  That’s where your Internet security system can be worth its weight in gold.  Install a URL expander for your browser, which allows you to preview the actual URL of a shortened link before you click.  If you do click on a link that takes you to a suspicious site, avoid installing any programs or providing personal information, and make sure your antivirus software is enabled and up to date.  A good internet security system will probably alert you to the danger if you click on a suspicious link.  Pay attention to what the alert says!

What to Do Immediately upon Suspicion of a Privacy Breach

If you suspect that an online bank or credit card account has been compromised, contact the bank and/or the credit card company immediately.  The sooner you report the possible breach, the better you will position yourself to limit your liability with the financial institution.  Generally, the credit card holder is only responsible for $50 if the card has had unauthorized use.  Some credit card companies even waive this fee for longtime customers.

The important message to remember is that your bank and/or credit card issuer cannot act on your behalf unless you alert them.  Sometimes a possible breach will be detected by the bank and/or the credit card issuer even before you realize it. You may be contracted by the bank and/or credit card company, but they will not be asking you for your account number!  They may, however, be asking you to provide them with the answer to a predesigned security question just to make sure that they are really talking with the account holder.

Conclusion

Anyone who has an e-mail address, website, smart phone, Facebook page, Twitter account, LinkedIn profile or online bank account (or any other type of online access to a financial account) is at risk for a privacy breach.  Sounds like everyone is at risk!

March 8, 2011

Directors of not-for-profit organizations have specific duties

Filed under: commercial insurance — Tags: — cleavelandinsurance @ 3:54 pm

Directors of not-for-profit organizations have specific duties

By Karla C. Steele

 

It is estimated that more than 1,300 not-for-profit organizations exist in the Quad-Cities alone.  A common misperception is that a member of a not-for-profit organization’s board of directors (a “director”) is insulated from any personal liability due to the fact that the organization is incorporated.  The truth, however, is that a director could be personally liable if she violates her fiduciary duties.  Directors have three primary fiduciary responsibilities- the duties of care, loyalty, and obedience.

First, a director owes the corporation a “duty of care,” which requires the director to participate in the activities of governance, provide operational and policy oversight, and exercise a reasonable level of care when making decisions.  A director must discharge duties (1) in good faith; (2) with the care that an ordinarily prudent person in a like position would exercise; and (3) in a manner the director believes to be in the best interests of the corporation.

Examples of activities furthering this duty include the following:

ü  Participating in board and committee meetings;

ü  Becoming familiar with the business and strategic plans and with the organization’s purpose as stated to the IRS;

ü  Reviewing the budget, fundraising results, and audited financial statements;

ü  Raising questions to clarify facts and forming independent judgments about decisions to be made.

Directors generally are not liable for their decisions- even if later such decisions were informed and made in good faith without any conflict of interest.  A director may rely on information provided by the organization’s staff, legal counsel and other advisers, unless she has reason to believe the information is incorrect.

Second, a director owes the corporation a “duty of loyalty,” which focuses on conflicts of interest, disclosure of conflicts, and confidentiality, and requires the director to place the interests of the organization above her own and above the interests of another organization with which she may be affiliated.  Issues arise in many contexts, because many individuals serve on more than one board and are also employed by a separate corporation.

Examples of breach of this duty include the following:

ü  Voting on a matter in a way that benefits the director or another organization affiliated with her or her family member, or in which she or a family member has an interest, at the expense of the organization;

ü  Using information obtained as a director for personal benefit or for the benefit of third parties.

ü  Failing to disclose to the board all conflicts of interest and to abstain from voting.

Third, a director owes the corporation the “duty of obedience,” which requires the director to ensure the organization carries out its mission as defined in its governing documents and that the organization complies with applicable laws.

Examples of breach of this duty are the following:

ü  Failing to modify activities to comply with changes in laws.

ü  Changing the organization’s purpose or activities to those outside the scope authorized by the organization’s documents or to those in violation of the law.

Directors who breach this duty could cause the organization to lose its tax-exempt status if it operates in a way that is contrary to the purpose stated to the IRS or if it fails to serve the public good.

In conclusion, directors owe fiduciary duties to the corporation- mainly the duties of care, loyalty, and obedience.  This article is intended to provide a general discussion of the main fiduciary duties but not intended to constitute individual advice on a specific issue.  For specific advice, please contact an attorney.

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