P.O. Box 1750, Cockysville, MD, 21030
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Combined Umbrellas

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What happens to your assets when the liability limits are exceeded? If you have a liability left, your own assets cover the difference. These assets include your ownership in a closely held corporation.

Your co-owners probably don't want your accident victim who just sued you as a partner.

Proper risk management identifies all exposures to loss. One often overlooked issue is loss of ownership control due to personal liability.

Co-owners often consider divorce scenarios or the death of a shareholder. Life insurance resolves the death issue. First right to purchase will generally resolve divorce cases. Once assets are placed into bankruptcy, however, buyout options will become more difficult to execute.

If the liability issue takes years to resolve, that ownership share may be in limbo for the duration.

Avoid this risk by requiring all shareholders to carry some high minimum limits of personal liability. It's the responsible approach to ownership. 

One way to accomplish this is the combined personal and business umbrella policy. Endorse the umbrella to include shareholders.

This endorsement will require high underlying limits of liability on homeowners-policies and personal automobile.

This endorsement is not offered by every umbrella carrier or in every state. But ask your insurance agent about the option.

The important outcome ties personal liability management to the right to own a piece of a closely held corporate entity or partnership. Fate should not choose the next shareholder. 

Use an independent service to review all partners personal risk management situation. Assure adequate limits are in place including truly disastrous scenarios. Add layers of umbrella as needed or endorse the company policy.

Having trouble thinking of possible liability losses for your partner?
1. The daughter, son, foreign exchange student grabs the family car and goes on a drunken joyride.
2. The spouse slanders a local business rival.
3. Your personal computer is hacked and some employee personal information is backed up on the memory stick attached.

Most of the scenarios you cannot think of are the better reasons to manage the owners personal risks. 


Motor Vehicle Reports (MVRs)

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Think about MVRs like investigative journalism, the five Ws, who, what, when, where, why.

Who should order the MVRs for employees or potential drivers? On whom should you pull the records?

The fleet manager or operations manager needs a standard operating procedure to request permission from the driver or potential hire. Yes, obtain written permission. Every driver and every new hire should be screened by their driving record. The driving record is like their credit rating. It may not be a perfect mirror of their habits, but it is a good general indicator.

The standard procedure needs to include a maximum number of violations and accidents. Perhaps one moving violation within a year, two in four years and no at-fault accidents make a good hard rule. Major violations should be defined and held to zero tolerance. Be vigilant and consistent. You cannot discriminate in this area without inviting employee practice litigation.

The MVRs should be reviewed every six months for current employees, and before employment begins for potential new hires. Again, consistency. Why six months? Driving habits change with personal issues. Your driver may not be concentrating, perhaps they're on the phone or texting for pressing personal reasons. You want to ban all phone or texting while driving, and intervene with a slipping driver early.

Review the record in privacy with the employee. Pats on the back or some small reward for the good records, intervention for the ones with some issues.

Driving on public roads may be the biggest exposure to risk many companies face. Certainly the greatest chance of a catastrophic claim is vehicle use for most. Trust this risk to drivers with quality habits, sound judgment, and consistent results. 

Driver recruitment and retention is the cornerstone to a great risk management program for your fleet. Support these drivers with a maintenance program and up-dated fleet. Make life easier for your drivers and retaining them will follow. 

Inland Flooding and Severe Weather

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Inland flooding represents twenty percent of all flood claims.

Much of this statistic is due to development. More area is impervious pavement, so storm water flows as sheet runoff to the next site or the nearest creek. The creeks and rivers collect water much faster than natural flow and the banks overflow more often as a result. Floods occur naturally inland too in just relatively low areas.

Look at the area surrounding your location. Is there any more room for potential development up-gradient from your site? Check for a mile or so. If so, it's a good idea to look into flood insurance.

Because flooding is less likely, premiums will not be excessive. But, flooding must be written well ahead of predicted flood events. 

Flood insurance is written as a building value or a contents value. You can mitigate some flood damage by storing vulnerable goods off the floor.

Hurricanes have forced inland and more northerly in the last few years. Landfall can be anywhere on the east or Gulf coast. The volume of rain carried by hurricanes devastates unprepared communities. Low lying areas receive the majority of the storm water, and it comes fast.

Richmond, Virginia suffered a massive storm impact when one flood came down the James River, which the flood walls repelled. But, a second large storm drenched the land side of the same walls. So flood walls held the storm in. Of course, this two-storm system is rare and impossible to plan prevention.

The lesson learned is to apply the risk management techniques of risk transfer. Figure the largest loss a flood can cause. Remember, you may not be able to get to your property to move goods before the storm.

Investigate flood insurance. It does take time to implement a program, and it must be in place prior to storm warnings. Do not procrastinate. 


Document Your Safety Program- Insurance companies love it

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Document, in this case, is a verb, it's action; not a noun, like a few pages clipped together in a drawer.

Insurance companies receive snapshots of your business. The application, the loss control survey, the claim report, all the moments captured in time; and then the insurance company sets a price to reflect the motion picture that is your business.

Arguably, your credit report tells your story over time. Underwriters consider this an important document for that reason. The past behavior over time predicts the future.
You need to build a safety program(credit report). This report requires documentation.

A written safety plan requires thoughtful reflection on your company values; it answers the question: where does worker safety and liability avoidance rank among your priorities? The written document shows a commitment to safety, the standard operating procedures for a safe work environment.

Safety meeting minutes demonstrate that you hold meetings, that workers attend, the subject matter covered, and rules or procedures implemented.

Injury investigations show your commitment to understanding how an injury occurred and how to avoid the same injury in the future.

The documented plan shows safety program evolution over time. Management has a standard of safety, and manages towards that goal.

Some of the reports which demonstrate your safety culture:
1. All required government paperwork completed, up to date, and organized.
2. Employee safety meetings with updated standard operating procedures.
3. Written and posted evacuation plans, documented fire drills.
4. Contracts to inspect and update fire safety equipment.
5. Vehicle maintenance schedules and logs.
6. Equipment maintenance schedules and logs.
7. Driver documentation with annual physicals and driving records.
8. Quality control and assurance documents for products or completed operations.

These reports put motion to those insurance company snapshots. They show process. Insurance companies reward this behavior with lower premiums. Document your safety culture.