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If you’ve ever considered owning a small business, or are considering owning one, you’ve probably heard all the usual advice.  Make sure you have enough capital.  Only let family run the cash register.  Don’t take in a partner without an ironclad contract.   Location, location, location, etc.

What you may not have heard is this one: Be careful you don’t get nailed with hazardous waste remediation and lose your shirt.

How could that happen?  You’re not opening a nuclear reactor, just an ice cream shop. And how can an ice cream shop have hazardous waste to deal with?

Aha!  What if the site you select for your ice cream shop ends up being in a district where the water is found to contain too many parts per million of some noxious substance or another and you have to close down or move?  Or worse, be permitted to stay, but be required by local government to hang a sign at the order window telling customers they drink your sodas at their own risk?  It has happened to a shop in the town of Finksburg, Maryland. Fortunately, the local population isn’t too concerned about that stuff in the water, and the owner didn’t have to close up shop, risking his investment and his livelihood.  But he without a doubt lost business.

That was a mild case of the ‘environmental flu.’  Others can be much worse.

Fortunately, there is Pollution Liability Insurance for that sort of thing, and having it might even help you get financing for your new venture. Originally meant for big business, ones that might easily buy a 40-acre site that was a pharmaceutical waste dump in the 1950s and is now in need of expensive remediation, secured creditor environmental insurance now comes in sizes to fit most businesses, large and small.

These policies protect both the business owner and the business owner’s lender in the event that contamination of the business site is found and must be cleaned up.  The pollution insurance takes care of the cost of remediation, or the loan if the owner must default because of the cost of remediation.  And it also covers liability claims, including bodily injury.  Note:  These policies cover only claims based in environmental laws in effect at the time the policy was written, not claims based on later regulation and legislation.

In effect, secured creditor environmental insurance acts much like title insurance.

Title insurance includes an investigation of the real estate to make certain all previous deed transfers, survey and so on were correct.  If the investigation failed to find something that later becomes a problem, the title insurance takes care of it.

Secured creditor environmental insurance policies also require an investigation into the prior uses of the land.  If a problem is later discovered, but the investigation was conducted with due diligence, then the insurance pays for the cleanup. In all cases, the policies won’t pay off if information that results in claims has been withheld.

Unlike title insurance, secured creditor environmental insurance companies also want to know what the intended future use of the site will be.

You want to open an ice cream store?  You’d probably have no problem.  The Finksburg Maryland case is actually unusual.  But ice cream shops do have a lot of chemical refrigerants on their sites, and a breach of the refrigeration system would cause the pollution liability insurance to kick in.

Dry cleaner?  Sure, although your deductible will be fairly high, in the $1,750 range. Note, too, that managers of strip malls, where most dry cleaners are located, are beginning to require dry cleaning shop owners to have some sort of pollution liability insurance.  Cleaning up a spill at a dry cleaning store costs about $50,000 on average; the deductible will be somewhere around $10,000.

Nuclear reactor?  Get real.

Workers’ compensation insurance claims are a major cost of doing business.

And the length of time a claim remains open has a large effect. Workers comp insurance claims that stay open for long periods of time are more likely to involve attorneys, high medical bills, and significant payments for lost wages. According to the Insurance Information Institute, between 2002 and 2007 the medical cost per lost-time claim (workers compensation insurance claims where the injured employee is unable to work) rose 50 percent faster than the annual rate of medical inflation for the economy as a whole. The institute estimates that attorney fees increase claim costs by 12 to 15 percent with no net gain in benefits to the worker. Most states index the maximum payment for lost wages to the state’s average weekly wage, a figure that generally rises each year.

Limiting the duration of workers’ compensation claims insurance is an important strategy in the effort to hold down costs.

To do this, employers have several options at their disposal:

• Prompt notice of claims to the insurance company hastens the onset of medical treatment, speeds up the injured worker’s recovery and return to work, and reduces the likelihood that he will hire an attorney. Therefore, requiring workers to immediately report all injuries, however minor, and promptly reporting them to the insurance company can have a huge impact on the duration of a claim.
• A prompt and thorough investigation of the incident is just as important. Interviews with the injured worker and witnesses, photographs, and other information gathered as soon as possible will help the insurance company to properly adjust the claim.
• If the employee will be out of work for an extended length of time, the employer should keep in regular contact. An injured worker who gets the sense that his employer does not care will become a receptive audience for plaintiff attorneys. Employers may want to call the worker periodically to check on his condition, offer assistance with completing the paperwork, and generally to check on his emotional state.
• The employer should have a good understanding of the state law pertaining to the waiting period for benefits covering lost wages. This is especially true if the employer operates in several states, as their laws may vary widely. Understanding how the law applies to the worker’s situation will help the employer set expectations properly. This reduces the chance of misunderstandings that can lead to problems down the road.
• Building relationships with the physicians treating the employee will keep the employer better informed as to his condition, treatments, medications, and expected duration of disability. This should eliminate surprises and help the employer get the employee back to work sooner.
• Return to work programs can shorten claim duration and reduce costs significantly. These programs permit an injured employee to return to work in some capacity before he has recovered to the point where he can resume his previous duties. They reduce payments for lost wages, meet the worker’s need to feel productive again, and remove incentives for the worker to hire an attorney.
• Employers should review loss reports with their insurance agents and claim adjusters and ask questions about losses that do not appear to be progressing toward closure. They should also look for patterns in the loss reports to identify correctible factors that raise the cost of lost-time injuries.

Employers owe it to their workers to provide a safe workplace and benefits to help them should they get hurt. With some extra care and attention, employers can meet those obligations and keep costs in check.

Does your business have a social media policy?

It probably should!

Social Media is ever expanding and giving users more ability than ever to collaborate and interact with each other in a virtual community. Even if you and your clients aren’t actively involved with social media sites like Facebook, Blogger, YouTube, LinkedIn, Twitter, Pinterest, Wikis, Digg, and so forth, it’s highly likely that at least some of your employees are using them.

There are actually many business benefits and opportunities to be had by using social media portals to link your company with your clients and suppliers, such as lowering your cost to do business, increasing revenues, making marketing more cost effective, the speed and ease of access to information, and such. That said, using social media isn’t risk-free.

One way you can manage the risks associated with social media is by creating a social media policy. A comprehensive policy with the specifics on training, supervisions, and employee responsibility is especially vital if you require, or even encourage, any employee to blog or utilize social media on behalf of your business. You should also consider carrying a media liability insurance policy or a similar social media-specific coverage.

Regardless of whether you require, ask, or encourage employees to utilize social media on your behalf or not, you should still have a policy pertaining to what your employees do with their own time on social media. The following are some key areas that should be covered:

• If you don’t have bargaining agreements or employment contracts that would limit your options for termination, then you can remind your staff that their employment is at-will, meaning you retain the option to end their employment at any time for any non-discriminatory reason.
• You should make it clear that your policy on internet usage, privacy, non-competition, nondisclosure, ethics, and so forth will run concurrently with your social media policy. For example, your internet usage policy probably states that you have access to monitor the sent and received messages on your business’s communication systems. You will want to make it clear that you have the same access when the communication systems are used for social media purposes.
• Inform employees of the risks associated with online publishing, particularly their risk of disclosing information that’s confidential. Give employees a specific contact, such as their supervisor, to check with if they have any doubts about the confidentially of a topic.
• Your policy should clearly warn against displaying your business trademark or logo, as these may give viewers the false impression that the speaker is representing your business. Employees should also be aware that they’re to disclose their employment and state that their views are entirely their own if they decide to publish anything related to your business.
• Employees should understand that they’re liable for the content they publish and can be sued for incidences like copyright infringement, libel, and plagiarism. Keeping in mind that state and federal laws allow some degree of privacy for social media communications that occur outside the workplace, have disciplinary actions outlined for the publishing of content that’s damaging or embarrassing to your business. Employees should be reminded that what they post about their employer, competitors, customers, and co-workers should be respectful and that they should delete inappropriate comments from any site under their control.
• Remind your employees to fact-check, make appropriate attributions, specify all information that’s opinion, and provide a safe means of contact prior to publishing all content. Some bloggers publish anonymously, but anonymous publishing can make malice easier to prove in privacy and defamation cases.
• Remind employees of the dangers of giving out personal information or clues that could allow online predators to obtain their personal information. Suggest that they review their privacy settings on all online social media sites. Identity thieves can often access sensitive personal information with nothing more than a birthday and name.

How Does Your Driving Record Affect Your Auto Insurance Premiums?

Did you know that your auto insurance company has the right to review your driving record at any time?  Typically, they’ll review your driving record when you apply for coverage and when they issue a renewal offer for your car insurance policy.  This is to evaluate your risk potential, or determine if you are insurable at all.

Generally, what the auto insurance company will analyze are the incidents that are reported on your driving record.  When found guilty of a traffic violation (moving violations, parking tickets, at-fault accidents, etc.), the violation then appears on your driving record.  The more violations you accumulate, the worse your record. The violations on your driving record may or may not affect your auto insurance rate since each car insurance company has their own way of evaluating violations.

Car Insurance Companies  typically evaluate your violations using their own system to determine the amount of your rate increase (if your rates increase at all).  Most auto insurance companies, however, use a Safe Driver Insurance Plan, which lists the different types of violations and assigns a points value to each one, based on the severity of the incident.  Under this plan, as you accumulate points, your car insurance rates are subject to increase or to a non-renewal of your policy.

Your driving record isn’t the only information your auto insurance companies can use to underwrite your car insurance policy.  In most states, including Maryland, Auto Insurers can also use credit scores to determine rates. If you have a good credit score, your rates are likely to be lower than someone with a bad credit score. Auto insurance underwriters perceive a direct relationship between your credit score and the chances of you filing a claim.

Your auto insurance company can also us a CLUE (Comprehensive Loss Underwriting Exchange) report to underwrite your auto insurance policy.  Almost all car insurance companies report all of their claims activities to CLUE.  So when you apply to a new auto insurance company, they pull this CLUE report to verify the number of past accidents that you have been involved in.