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Tips for Saving on General Contractors Insurance

If you are a construction business owner, odds are high that you spend too much money on your general contractors insurance. While it is true that construction carries a diverse range of risks such as worker injury and theft, there are several ways for business owners to save on their general contractors insurance. Read more

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Preventative Maintenance is the First Step in Heavy Equipment Safety

Elements of Preventative Maintenance Procedures

The moment you purchase a machine or piece of heavy equipment, it is vital to begin preventative maintenance. Keeping on top of your equipment is the best way to ensure that you don’t suffer tragic accidents that can be costly, not only in terms of insurance premiums and money but also in human lives. Remember: maintenance does not end until you dispose of the machine and it is no longer on site. Here are the elements of proper maintenance procedures.

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New York Independent Contractors and Workers Compensation Insurance

New York State has been cracking down severely on workers’ comp fraud. Such fraud creates a serious cost to those working in the contracting, mechanical and construction industries. It raises premiums, increases the cost of claims and creates more overhead for employers. It is vital for employers to know which workers on their site are independent contractors so that you can be sure all claims are valid.

Workers Compensation Disputes

Whenever a worker files a dispute regarding a workers’ comp claim, there are a number of factors that will come into play. It is vital that you know how to identify a true independent contractor when this happens. The courts will not accept excuses such as ignorance of the qualifications.

What is an Independent Contractor?

There are ten criteria for independent contractors in the construction industry. If you have people on your staff who meet all ten criteria, then you are not required to pay workers’ compensation premiums for them. If, however, they fail to meet even a single criterion, failure to pay out may result in audits and penalties.

These ten requirements are as follows:

  1. They must have a Federal EIN from the IRS, or must file self-employment income tax returns for the prior calendar year
  2. They must maintain a separate business establishment
  3. They must perform different work than your primary work, and must work for other employers
  4. They must operate under a clear contract and be responsible for all work performed under that contract. Their success or failure must also relate to the business’ profit or loss
  5. They must carry their own liability insurance policy under their business name
  6. They have ongoing business obligations and liabilities
  7. They have their own advertising, which can include commercials, business cards or listing in the phone book.
  8. They provide their own equipment and materials as specified in their contract
  9. They control their own time and their own means of completing the work
  10. They have their own contract, operating permit or authority.

 Protecting Yourself against Penalties

The best way to protect yourself against audits, penalties and unforeseen expenses is to act with care and stay on top of your responsibilities. Pay your premiums over the course of a year rather than all at once. Be sure that you clarify for any contractors that the above criteria are met in full. If they are not, replace the contractor with one who does meet the standards.

Anyone on your workforce who qualifies as an independent contractor or who may fall into a gray area should purchase their own workers’ comp policy. They should then provide proof of the policy and proof of payment. This will kill two birds with one stone: you will not have to pay premiums, and they will be able to stay on the job.

Have you encountered problems with independent contractors who didn’t meet the criteria? If so, we would like to hear your story. Leave a comment and let us know!

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SMART Act: Making Medicare Easier for Insurers and Consumers

SMART. RIMS. No, we’re not talking about the new line of children play sets from V-tech (though they do look pretty cool). And no, we’re not talking about rims to customize your Smart Car either (yes, people really do that). We’re talking about the Strengthening Medicare and Repaying Taxpayers Act, which President Obama signed back in January of 2013.

The SMART Act was designed to “improve and clarify the federal government’s otherwise unmanageable ability to seek reimbursement for healthcare expenses paid by Medicare and arising from a compensable tort.” It also makes the process more efficient and predictable for worker’s compensation carriers and primary payers. The SMART Act allows the Centers for Medicare and Medicaid Services (CMS) to know what’s supposed to come in and what’s supposed to be paid out.

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Homeowner’s Insurance: Replacement Cost vs. Market Value

Now that you’ve bought a new home, there are decisions you’ll need to make about the kind of homeowner’s insurance coverage you want to buy. Deciding on the value that you’re going to insure is the most important choice you’ll have to make. The options you have to weigh for this decision are replacement cost vs. market value. In order to make the most responsible choice to protect your family and your home, you need to know exactly what each of the options entail.

What is Replacement Cost Coverage?

Replacement cost is the amount that it would cost to repair or replace your whole home. In the event that there was damage so severe that your house needed to be demolished and completely rebuilt, replacement cost coverage would reimburse you for the total cost. This amount is based on the size and structure of the home, and whatever was lost or damaged (from the structure of the home itself, not its contents).

Determining the replacement cost of your home is most accurately done by hiring a building contractor to assess your home and provide you with a detailed estimate of his findings. It’s important to note that in replacement cost coverage, the value of the land that your home is on is not included in the amount of your insurance policy. The only values that are accounted for in your insurance policy are the cost of the property’s structure and the systems, fixtures, and finishes associated with its structure.

Benefits of Replacement Cost Coverage

If you were to lose your home, your quality of life and your financial standing would be least impacted if your home was insured with replacement cost coverage. This is because you will be reimbursed for the total cost of replacing or repairing your home, so you wouldn’t incur any significant out-of-pocket expenses. The reconstruction of your home wouldn’t need to be put off because you didn’t have the money for the repairs, so you’d be able to get back to your everyday life as soon as possible. Experts recommend that you take out replacement cost coverage for at least 100 percent of your home’s replacement value.

Risks of Replacement Cost Coverage

Due to the fluctuating nature of replacement value, it’s important to annually review your policy to ensure you’re still fully covered. Whenever you do any work on your home to upgrade or improve any of its structural components, you should give your insurer a call to let them know. Making these kinds of changes can increase the value of your home, thereby increasing its estimated replacement cost. It’s also important to regularly update yourself on the current market conditions for your area, because any increases in labor, material, or transportation costs will directly affect the replacement value of your home. Some policies offer inflation clauses that will automatically adjust the coverage amount and premiums you pay when construction costs change. That’s the safest way to ensure you’re always fully covered.

What is Market Value Coverage?

The market value of your home is the amount that it would sell for if you put it on the market today—including the current condition of its structure and the value of the land it’s on. Your home’s market value is different than its replacement cost in that it considers additional factors beside the material and labor costs of repairing or rebuilding your home. These factors include the school district the home falls within, crime statistics of the local area, and the number of similar homes that are available in the area. The market value also considers the value of the land itself.

Benefits of Market Value Coverage

Generally speaking, insuring the market value of a home is usually less than insuring its replacement cost. That’s one of the most appealing benefits to new homeowners. For this reason, insuring your home’s market value may be most practical for your needs. If you live in an older home, the cost of rebuilding its artisanal woodwork or masonry may be incredibly high compared to the amount you paid for the house. This is because today’s market doesn’t use the same materials as were previously used, so it’s more expensive to get those materials, and you need to contract a specialist to do the work because it’s outside the scope of modern general labor. For a home like this, a replacement cost policy would have much higher premiums than a market value policy.

Risks of Market Value Coverage

The biggest risk of market value coverage is simply that you may not have complete coverage on your home. Consider the scenario that you purchase your home for $200,000, but the actual cost to rebuild the home from the ground up is $250,000. If your home is damaged beyond repair, you’ll be out $50,000 if you take out a homeowner’s insurance policy for the home’s market value. This means that should a fire, flood, or other disaster destroys your home, your insurance would only provide $200,000 toward the repair of your home. If your family didn’t have that kind of money to shell out on the spot, you’d have to rebuild a home that was less expensive than the one you had before.