Category: Commercial Insurance

Grandfathered Flood Insurance Premiums Can Be Locked-In Indefinitely, But Time is Running Out

The Federal Emergency Management Agency is in the midst of a multi-year initiative to update flood zone maps in more than 20,000 communities nationwide. Current maps need updating to more accurately reflect the risk of flooding. Flood hazards change over time and maps in some areas are based on decades old data. As a result, many will see their current flood insurance premium rates increase sharply. Others will be notified by mortgage lenders that under their new flood zone map, they are now required to purchase and maintain flood insurance.

The good news is that it’s possible to lock in the lower premium by using the current flood map even after the updated map goes into effect. However, to take advantage of the National Flood Insurance Program’s grandfathering options, you will most likely need to act BEFORE the updated flood zone map becomes effective.

Continuous Coverage Grandfathering. To qualify for this option, you must purchase and maintain flood insurance coverage before the new map goes into effect. If you do, your premium will be calculated using the pre-update flood zone or Base Flood Elevation (BFE) even after the updated map becomes effective. Your grandfathered rate is locked in for as long you maintain continuous flood insurance on the property. It can even be transferred to the new owner if your property is sold.

By taking advantage of the continuous coverage grandfathering option, you can save hundreds if not thousands of dollars per year for as long as you own the property. But remember, once an updated map becomes effective, the continuous coverage grandfathering option disappears forever. However, the NFIP offers another option for those who fail to secure flood insurance prior to the updated map’s effective date. Unfortunately, it’s not available to everyone and is significantly more complicated and burdensome than the continuous coverage grandfathering option.

Built-In-Compliance Grandfathering. To qualify for this option, you must provide documentation showing that the property was built in compliance with the flood map in effect at the time of construction and that the property has not been substantially improved. You are not eligible for built-in-compliance grandfathering if your property was constructed before your community’s first flood zone map went into effect.

FEMA’s flood zone remapping initiative is expected to continue for years. If the process hasn’t already started in your community, it may just be a matter of time. If your property is at risk of being remapped into a higher risk flood zone, there may not be much time left to lock in your grandfathered flood insurance rates. Otherwise, you may miss the chance enjoy substantial savings for years or decades to come.

Please contact us if you would like more information about the National Flood Insurance Program’s grandfathered premium options or are interested in obtaining flood insurance.

Experts Are Predicting a Surge in Employment-Related COVID-19 Lawsuits

Employers have endured a parade of challenges since the coronavirus disease 2019 (COVID-19) pandemic began. The parade, it seems, is far from over.  According to a recent white paper co-sponsored by Liberty Mutual Insurance Company, there is early evidence that employment-related COVID-19 claims are on the rise. The white paper identifies various types of COVID-19-related employment claims that employers can expect to see in the near future.

Denial of Paid Leave. The Families First Coronavirus Response Act’s new paid sick leave and expanded family and medical leave requirements are expected to be the source of many COVID-19 cases. Claims may be based on various aspects of the law, including the denial of leave, the calculation of leave, requests for substantiating documentation and retaliation.

Discrimination. COVID-19-related characteristics have become yet another way to separate us from them (COVID positive or negative, real or hoax, facemask or freedom). The polarization of COVID-19 provides fertile ground for claims of discrimination.

Breach of Employment Contracts. Extreme measures are being taken to survive COVID-19’s unprecedented impact on the global economy, including layoffs, furloughs, reduced hours and reduced pay. Employers can expect breach of contract claims if any such remedial measures violate the terms of any employment agreements.

WARN Act. The federal Worker Adjustment and Retraining Notification Act generally requires employers with 100 or more full-time employees (not counting those on the job for fewer than six months) to provide at least 60 calendar days advance written notice of worksite closings or mass layoffs affecting 50 or more employees. COVID-19’s sudden and devastating impact made this impossible in many cases. Lawsuits are nevertheless expected. They will likely focus on the Act’s “unforeseeable business circumstances” exception to the 60-day notice requirements.

Wage & Hour Violations. Employers may see wage and hour claims from employees working remotely during the pandemic. Claims are likely to include allegations that employers failed to properly monitor, track or pay remote employees for all hours worked and that employers failed to reimburse employees for work-related expenses incurred while working remotely.

These are but a few examples of COVID-19-related claims that employers can expect to see. To reduce the likelihood of claims, employers should proceed cautiously when presented with any COVID-19-related matter. This may include seeking counsel from a licensed professional. Please contact us for additional information about protecting your business during the COVID-19 pandemic.

When Can Employees with COVID-19 Return to Work?

The likelihood of an employee testing positive for coronavirus disease 2019 (COVID-19) increases with every new case. By now, employers know that employees suspected or confirmed to have COVID-19 must be kept away from the workplace. But, when should they be allowed back?

The Centers for Disease Control and Prevention (CDC) provides two strategies for determining when an employee can stop home isolation and return to work: a symptom-based strategy and a test-based strategy. The CDC stresses that the decision on which strategy to use should be made in consultation with healthcare providers and local public health authorities knowledgeable about locally available testing resources

Symptom-Based Strategy. If it is determined that employees will not be tested to determine if they are still contagious, an employee can leave home and return to work only if:

  • the employee has had no fever for at least 72 hours (without the use of fever-reducing medicine);
  • the employee’s respiratory symptoms, like cough or shortness of breath, have improved; AND
  • at least 10 days have passed since their symptoms first appeared.

Test-Based Strategy. If it is determined that employees will be tested to determine if they are still contagious, an employee can leave home and return to work only if:

  • the employee no longer has a fever (without the use of fever-reducing medicine);
  • respiratory symptoms, like cough or shortness of breath, have improved; AND
  • the employee tested negative for COVID-19 in two consecutive tests taken at least 24 hours apart.

Employers should utilize these strategies in conjunction with other preventative measures designed to limit the spread of COVID-19 in the workplace, such as actively encouraging sick employees to stay home, social distancing, hand hygiene, respiratory hygiene, cough etiquette and the use of facial coverings.

Even though guidance issued by the CDC and other public health agencies typically comes in the form of recommendations rather than requirements, employers are strongly encouraged to follow applicable recommendations when it is reasonable to do so. Remember, under OSHA’s General Duty Clause, employers are required to furnish workplaces that are free from recognized hazards that cause or are likely to cause death or serious physical harm.

Please contact us for additional information about protecting your business during the COVID-19 pandemic.

Bostock v. Clayton County: Supreme Court Rules Title VII Protects LGBT Workers; Employers Must Now Adapt

The Supreme Court’s landmark decision in Bostock v. Clayton County is significant yet simple. “An employer who fires an individual merely for being gay or transgender defies the law.” Discrimination on the basis of an individual’s sexual orientation or gender identity (transgender status) is now considered an unlawful employment practice under Title VII of the Civil Rights Act. As of June 15, 2020, millions of LGBT workers may raise Title VII’s broad shield to resist unlawful workplace harassment and discrimination. They may also unsheathe its broad sword.

Bostock has immediate consequences for all employers subject to Title VII, including those in states that already prohibit LGBT harassment and discrimination. Bostock must be integrated into the workplace culture and reflected in workplace practices, policies and procedures. Employers must take action to ensure (or confirm) compliance with the Court’s decision.

Identify all employment-related documentation that involves “sex” or gender-based characterizations. Employee handbooks and existing harassment and discrimination policies are a good place to start, but employers must go beyond the obvious. Sex and gender-based characterizations can be found in other documents too, like dress code policies, job applications and benefits enrollment forms.

Update relevant documentation to include sexual orientation and gender identity (transgender status) among the list of protected categories. Some documents may require little more than adding sexual orientation and gender identity (transgender status) wherever the word “sex” appears. Others may require more extensive revisions.

Update equal employment opportunity (EEO) statements to include sexual orientation and gender identity (transgender status) among the list of protected categories. EEO statements are often posted on websites and included in job postings and marketing materials. They can also appear in non-employment related contexts as well, such as bids for contracts and project proposals.

Communicate policy changes to employees. Don’t assume employees know about the Supreme Court’s ruling or the resulting change in the law. Updated policies should be distributed to and acknowledged by all employees.

Train managers and supervisors. Don’t assume managers and supervisors grasp the dynamics of LGBT harassment and discrimination. Those in positions of authority must be trained to understand, recognize and address these new forms of unlawful conduct.

Train employees. Rules cannot be followed unless they are known. Rank and file employees need updated harassment and discrimination training to help them understand expectations and conduct themselves accordingly.

Claims of unlawful conduct often increase when laws change. Bostock’s limits will likely be tested for years to come. In addition to taking necessary remedial measures, employers should carry Employment Practices Liability Insurance to protect against the uncertainty that typically follows landmark decisions like Bostock. Please contact us if you would like to learn more about employment practices liability insurance.

Hurricane Season 2020 Has Not Been Postponed Due to COVID-19

The 2020 Atlantic Hurricane Season officially begins June 1st, but this year is different. Coronavirus disease 2019 (COVID-19) has affected virtually every aspect of our daily lives. The Federal Emergency Management Agency cautions that social distancing and other CDC preventative measures to protect against COVID-19 may impact hurricane preparation plans, including evacuation routes and shelters. Now is the time to evaluate and finalize the plans and protective measures that will be needed if a storm is coming your way.

According to the National Oceanic and Atmospheric Administration, there is a 60% chance that the 2020 Atlantic Hurricane Season will have above-normal activity. The likelihood of a below-normal season is only 10%. An average hurricane season produces 12 named storms, including 6 hurricanes and 3 major hurricanes. For the 2020 hurricane season, NOAA is forecasting:

  • 13-19 Named Storms (winds of 39 mph or higher)
  • 6-10 Hurricanes (winds of 74 mph or higher)
  • 3-6 Major Hurricanes (winds of 111 mph or higher)

Forecasters at the Colorado State University Tropical Meteorology Project calculated a 69% probability that at least one major hurricane (Category 3, 4, 5) will make landfall somewhere on the continental coastline of the United States. They are also predicting:

  • 16 Named Storms (80 named storm days)
  • 8 Hurricanes (35 hurricane days)
  • 4 Major Hurricanes (9 major hurricane days)

A lot is made of these annual predictions, but it only takes one storm to make it an active hurricane season for you. Unfortunately, the 2020 Atlantic Hurricane Season was not suspended or delayed due to COVID-19. Waiting until the last minute is never a good idea, particularly in the middle of a global pandemic.

Start preparing now with Setnor Byer Insurance & Risk’s Hurricane Season 2020 Checklist. Our team of experienced and responsive professionals can help you find affordable options to protect your home and your business in the event of a hurricane. Please contact us if you would like more information about protecting your personal and business property during the 2020 Hurricane Season.

Documenting Paid COVID-19 Leave Under the Families First Coronavirus Response Act

Employers are required to document employee requests for paid sick leave or expanded family and medical leave under the Families First Coronavirus Response Act, regardless of whether the request is granted or denied. Department of Labor FFCRA regulations specify the kind of information that employees must provide and that employers must document prior to commencing COVID-19 leave. According to the DOL, documentation for paid COVID-19 leave must include:

  • the employee’s name;
  • the dates for which leave is requested;
  • the reason for leave; and
  • an oral or written statement from the employee that he or she is unable to work because of the stated reason for leave.

Depending on the reason for paid leave, employees may need to provide additional information that must be documented by employers. An employee requesting paid sick leave because he or she is subject to a federal, state or local COVID-19 quarantine or isolation order must provide the name of the government entity that issued the order. An employee who has been advised by a health care provider to self-quarantine due to COVID-19 concerns must provide the name of the health care provider.

An employee requesting paid sick leave to care for an individual who is subject to quarantine or isolation order or who has been advised by a health care provider to self-quarantine must provide the employer with either the name of the government entity that issued the order or the name of the health care provider that advised the individual to self-quarantine. The “individual” requiring care must be an immediate family member, a person who regularly resides in the employee’s home, or a similar person with whom the employee has a relationship that creates an expectation of care.

An employee requesting paid sick leave or expanded family and medical leave to care for a minor son or daughter whose school or place of care is closed due to COVID-19 must provide:

  • school, place of care or child care provider that is closed or unavailable; and
  • a representation that no other suitable person will be caring for the child during the period for which the employee is requesting leave.

Employees must also provide any additional information required by the Internal Revenue Service for the employer to claim the tax credit for providing paid leave under the FFCRA. An employer is not required to provide FFCRA leave to an employee who fails to provide information or materials needed to support the employer’s claim for a tax credit.

Employers should proceed cautiously when presented with requests for COVID-19 leave to ensure compliance with the FFCRA’s requirements. This may include seeking counsel from a licensed professional. Please contact us for additional information about protecting your business during the COVID-19 pandemic.

How COVID-19 might change the Insurance Market

COVID-19 will change our world in many ways, some good and some bad. The same holds true for the insurance marketplace. While in the midst of the crisis, it is hard to predict, but the following considerations should be noted.

Property policy and the corresponding business interruption coverage terms will be more restrictive, with insurers making certain to exclude (or make clear) that certain triggers to loss will not be covered. These excluded triggers will be viruses, contagious diseases, pandemics, epidemics, bacteria, pollution and as many more terms as needed to make it terribly clear that the policies will not cover biological damages. While many policies have these exclusions now, there are efforts on the part of a few states and attorneys to void the terms of the current contract. While any action to void contract language on a wholesale basis will be met with challenges, the states that have taken this position might find that insurers retreat from those states and offer limited property protections.

Specialty markets are already launching virus insurance in the form of indemnity and parametrics protections. This type of insurance was offered years ago, but the price tag caused the failure of these insurers. They will certainly try to find a market. Premiums will be 1 to 5 percent of the limit sought. So, metropolitan areas would possibly pay $50,000 for a $1 million limit in coverage.

Workers compensation insurance, if certain COVID-19 cases are determined to be occupational in nature, could modify pricing for certain industries, such as healthcare and assisted living facilities.

Commercial general liability, directors and officers and employment practices may see pricing increases due to the possibility of increased litigation—employers now have additional laws to comply with and errors will certainly occur. Even in the absence of errors, certain segments of the workforce will seek to recover their economic losses by finding a soft target.

Health insurance should increase due to the COVID claims.

Certain classes of products liability will see additional scrutiny in the underwriting process, as many products that are being rushed to market may cause damages. While there is a new federal law that ‘holds harmless’ the organizations that are building these products, this law may not have the impact it needs, as these products will age in the system and insurers may be faced with future claims. Perhaps we will see insurance exclusions for such products.

America was heading into a hard market with most insurance lines were increasing in cost. With the new financial/investment troubles, combined with underwriting losses, and possible future decreases in demand for insurance, the market may become soft again, despite performance. In the longer term—two years plus—the market should significantly harden.

Businesses Planning Beyond COVID-19 Are Considering Epidemic-Specific Insurance Coverage

Coronavirus disease 2019 (COVID-19) has revealed that standard commercial insurance policies are not designed to protect against the financial impact of a global pandemic. Standard property policies, for example, do not cover business interruption claims in the absence of direct physical loss or damage to property. Policies that don’t already have broad virus exclusions soon will. To fill this coverage gap, insurers are offering new epidemic-specific insurance products that do not require physical property loss or damage to trigger coverage.

It is too late to purchase coverage for COVID-19 claims, but businesses struggling to survive this pandemic are looking for ways to protect against the next one. Epidemic-specific policies can be designed to meet the specific needs of various industries that are particularly vulnerable to pandemics, such as hospitality, tourism, manufacturing, retail, construction, healthcare and education. A number of coverage features are available, including:

  • business interruption coverage;
  • delay in start-up coverage;
  • modifiable claim triggers;
  • post-epidemic public relations;
  • epidemic expert consultation;
  • early prevention coverage;
  • temporary site closure coverage; and
  • event cancellation coverage.

Policies can be structured to pay claims on an indemnity or parametric basis. Unlike traditional indemnity policies that cover an insured’s actual losses, parametric policies pay a fixed sum upon the occurrence of an agreed-upon trigger, regardless of an insured’s actual losses. Epidemic-specific parametric policies use straightforward parameters or indexes, like infection or mortality rates in a defined area, to trigger coverage.

Given the unique nature of the risk and the customizable scope of coverage, the application and underwriting process for epidemic-specific policies is somewhat more involved than for standard policies. The process, however, is necessary to identify specific risks and modify coverages accordingly. Please contact us if you would like more information about epidemic-specific insurance coverage for your business.

Coronavirus Disease 2019 and Insurance Matters

The economic impact of coronavirus disease 2019 (COVID-19) is spreading like the virus itself. As the financial effects trickle down from global organizations to regional and local businesses, many are asking whether losses caused by COVID-19 are or will be covered by insurance. This isn’t an easy question because standard commercial insurance policies are not generally designed to protect against people getting sick. However, standard policies may provide limited coverage under the right circumstances.

Scenario 1: Employee contracts COVID-19

Workers’ Compensation Insurance generally covers occupational injuries and illnesses that arise out of work performed in the course and scope of employment. Employees contracting COVID-19 may be covered by workers’ compensation insurance if they were initially exposed to the virus in the workplace or while working. But, an employee’s employment, and the resulting exposure, must be the major contributing cause of contracting COVID-19.

Workers’ compensation coverage would likely turn on whether an employee could establish a causal link between their employment and their exposure to COVID-19. This may be harder for some employees than others. Those working in the healthcare industry, for example, may find it easier to establish the causal link than those whose employment does not clearly subject them to a greater risk of exposure than that to which the general public is exposed.

Scenario 2: Business operations interrupted due to COVID-19

Closed manufacturing facilities, quarantined workers, travel restrictions and the temporary suspension of imports and exports are just a few ways that a pandemic can disrupt crucial supply chains. The resulting disruption or interruption of operations poses perhaps the greatest financial risk to many businesses. Business Interruption Insurance, which replaces lost business income when a covered property loss causes a business to reduce or suspend its operations, may sound like the perfect solution, but it really isn’t.

Business interruption coverage is triggered when a covered peril causes damage to covered property. The damage must be sufficient to render the property unusable in its current state. A standard policy, for example, would cover lost business income if operations are interrupted because the manufacturing facility is destroyed by fire. Coronavirus-related claims are unlikely to cause the property damage needed to trigger business interruption coverage. Even if facilities (offices, warehouses) or inventory (raw materials, fish, produce) are rendered unusable by COVID-19 contamination, business interruption coverage would be unlikely because standard policies typically contain exclusions for bacteria, viruses and other pollutants.

Supply Chain Insurance is an option for businesses wanting broader business interruption coverage. Policies can be written to name specific suppliers, manufacturers, etc. and to cover negotiated perils, including pandemics. Unfortunately, the breadth of coverage provided by supply chain insurance comes at a cost. Policy premiums are often cost prohibitive, particularly for smaller businesses.

Scenario 3: Cancellation of business-related travel

Pandemics naturally stifle travel abroad, particularly to high-risk areas. Travel Insurance is designed to limit financial losses caused by various travel-related risks. Trip cancellation coverage, for example, reimburses pre-paid, non-refundable travel expenses if a trip is cancelled for a reason that is covered under the policy, such as an injury, illness or death involving you, a family member or a travel companion. Some insurers offer “cancel for any reason” coverage that should respond to pandemic-related cancellations. However, it’s important to note that travel insurance does not cover “disinclination to travel” cancellations caused by fear or concern over what might happen while travelling abroad.

Scenario 4: Cancellation of business function or special event

Event Cancellation Insurance, as its name implies, is designed to cover circumstances beyond your control that necessitate the interruption, abandonment or cancellation of a business-related function or event. Unfortunately, it’s too late now to purchase coverage for cancellations prompted by COVID-19. Policies issued prior to the outbreak, however, may cover cancellations, at least for now. Insurers are expected to add exclusions for pandemics and communicable disease as policies renew.

Scenario 5: Liability for negligently exposing others to COVID-19

Standard commercial general liability policies would likely respond to third-party claims regarding negligent release of or exposure to COVID-19.

Despite the potential for limited insurance coverage, it’s worth noting that standard commercial insurance policies are not designed to cover the spread of contagious diseases like COVID-19 or the flu. And, depending on the severity and duration of the COVID-19 outbreak, insurance companies are likely to add exclusions that eliminate the possibility of any coverage for COVID-19 claims. As a result, most businesses will not be able to rely on their standard insurance policies to adequately protect against coronavirus-related losses.

Assignment of Insurance Benefits: New Law Creates Strict Standards for Property Insurance AOB Agreements

It’s been a few months since Florida’s new assignment of benefits (AOB) laws went into effect. AOBs generally authorize vendors (contractors, water remediation companies, etc.) to collect payment for their work directly from the owner’s property insurance company. AOBs are commonly included in contracts and can be easily abused by unscrupulous contractors. Since property losses often require immediate attention, home and business owners often had no choice but to sign the AOB and hope for the best. But that’s no longer the case.

As of July 1, 2019, an assignment agreement for services to protect, repair, restore or replace property or to prevent further damage after a property loss MUST:

  • be in writing and signed by the parties;
  • give the property owner at least 14 days to cancel the contract without penalty or fee;
  • be furnished to the insurance company within 3 business days after being signed or the date on which work begins, whichever is earlier;
  • include a written, itemized, per-unit cost estimate of the services to be performed;
  • include the statutorily required notice of rights in conspicuous uppercase and boldfaced type; and
  • require the vendor to indemnify and hold the property owner harmless from all liabilities, damages, losses and costs if the property insurance policy prohibits AOBs.

An assignment agreement may NOT contain:

  • a fee or penalty for cancelling or rescinding the contract;
  • a check or mortgage processing fee; or
  • an administrative fee.

If a contract fails to satisfy these requirements, the AOB is invalid and unenforceable. It’s still too soon to know the impact these reforms may have on home and business owners in need of urgent repair or loss mitigation services following a property loss. We’ll just have to wait and see. In the meantime, please contact us if you have any questions about obtaining adequate property insurance under Florida’s new AOB laws