Business Insurance

Key Person Insurance: How it Works and Why it’s Important

Posted on by McGriff Williams in Business Insurance, Life Insurance |

Most of us understand the importance of life insurance when you consider your family’s well-being and financial security. But what about the businesses left behind when an owner or principal passes, no longer able to maintain that company’s success? Or having the financial burden of finding a replacement for that person?

Key person life insurance is when a business purchases life insurance on an individual that is an asset to the company’s operation and success. Often times, this is an owner or principal in which not just anyone can replace at any given time. A key personis someone that contributes creativity, operational management, knowledge, inspiration, relationships, etc that is crucial to the viability of the company.
A business can be the beneficiary and also pay the premium of the policy. Sometimes this is also referred to as business life insurance because it’s protecting the business in the event this very important and necessary person is deceased.

There are a couple of very real circumstances in which this type of coverage is considered:

– If a financial institution or creditor needs collateral for a loan that the business is applying for and requires the option of putting a lien on a key person policy. This is also called collateral assignment.

– If there are two or more partners that co-own the business together, this type of coverage would assist the partners in buying out the other’s shares if they die. This is also considered part of the buy-sell agreement as the life insurance would help fund buying out the deceased partners’ family members.

There isn’t a perfect formula to calculate how much key person insurance a company needs. One good way to estimate it is to have an idea of the immediate financial burdens the company could face if that person stops doing what they’re doing. An example would be someone in a Business Development role that could bring any growth to a screeching halt. Or someone with a reputation or connection that is the sole reason a big client does business with them. Another consideration, more for sole proprietors, is what amount of debt the company has that would need to be paid off if its doors were to close unexpectedly.

It’s highly likely that this key type of person has invested a large amount of time, effort, energy and heart into the company they either own or work for. There’s no better way to be sure their legacy lives on than having that business protected and stable when their time comes to leave it behind.

 

Back to School – What Does it Mean for Employee Leave?

Posted on by McGriff Williams in Business Insurance, McGriff-Williams News |

Across the country, students are getting back in the groove of classes, whether in-person or virtually. It’s been five months since there’s been a real routine with school, making this yet another transition period for parents and business owners.

The Department of Labor released a compilation of Frequently Asked Questions regarding employee leave under the FFCRA that may be helpful to you as your workplace and workflows are affected by this. Here are some examples or you can view the full list here.

– If I am home with my child because his or her school or place of care is closed, or child care provider is unavailable, do I get paid sick leave, expanded family and medical leave, or both how do they interact?
You may be eligible for both types of leave, but only for a total of twelve weeks of paid leave. You may take both paid sick leave and expanded family and medical leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons. The Emergency Paid Sick Leave Act provides for an initial two weeks of paid leave. This period thus covers the first ten workdays of expanded family and medical leave, which are otherwise unpaid under the Emergency and Family Medical Leave Expansion Act unless you elect to use existing vacation, personal, or medical or sick leave under your employer’s policy. After the first ten workdays have elapsed, you will receive 2/3 of your regular rate of pay for the hours you would have been scheduled to work in the subsequent ten weeks under the Emergency and Family Medical Leave Expansion Act. *Please note that you can only receive the additional ten weeks of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act for leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.

– My child’s school or place of care has moved to online instruction or to another model in which children are expected or required to complete assignments at home. Is it closed?
Yes. If the physical location where your child received instruction or care is now closed, the school or place of care is closed for purposes of paid sick leave and expanded family and medical leave. This is true even if some or all instruction is being provided online or whether, through another format such as distance learning, your child is still expected or required to complete assignments.

 

Vehicle Telematics: the tattletales of driving habits

Posted on by McGriff Williams in Auto Insurance, Business Insurance, Insurance |

The words Fleet Management may make some business owners’ skin crawl but it’s one of those things they just can’t ignore. For most companies, this is a key aspect of their overall operations and something that needs constant attention.

Some commercial insurance companies are providing Fleet Monitoring premium discounts for the use of telematics, with the hopes that it will reduce the amount of claims and incidents within their commercial auto fleet.

Telematics refers to technology such as front facing cameras, sensors, GPS, and vehicle engine diagnostics. These devices can effectively monitor driving behaviors such as location, hard braking, rapid acceleration, speeding and hard cornering. Identifying these habits is an important element of commercial auto insurance, especially given the increasing rates lately.

The results of these telematics can help determine the risk, along with appropriate pricing and proactive loss control. Some of the technology can even alert the driver itself in real-time of any unacceptable driving behaviors to prevent an accident or injury. Vehicle engine diagnostics also helps tremendously with monitoring things like the health of the vehicle, for example: oil life, fuel efficiency, tire pressure, engine or fluid needs, etc. This is yet another part of fleet management that can be very time consuming and stressful on a business owner/manager.

According to the Federal Motor Carrier Safety Administration, the amount of fatal crashes involving large trucks and/or buses has increased by 42% since 2009. Ironically, technology such as cell phones could have contributed to that and here we are, talking about technology of other forms to help prevent it. But isn’t that our reality now All things technology? But shouldn’t we be open to anything that can get that number back down? While telematics are optional for now, it could be very soon that they are actually required and that may not be a bad thing.

 

What do I do if an employee is exposed to or tests positive for COVID-19?

Posted on by McGriff Williams in Business Insurance, McGriff-Williams News |

As many businesses return to work after the stay-at-home order from the COVID-19 pandemic and even as essential businesses continue to work amidst the quarantine business owners may question how they should handle symptoms or positive cases in the workplace. The following protocol has been recommended by Employment and Business Law attorney Terin Cremer of Barbas Cremer, PLLC:

If an employee is confirmed to have COVID-19, employers should inform fellow employees of their possible exposure to COVID-19 in the workplace BUT maintain confidentiality as required by the Americans with Disabilities Act (ADA). Those who have symptoms should self-isolate and follow CDC recommended steps:

– Employees should not return to work until the criteria to discontinue home isolation are met and cleared by healthcare provider

– Pre-screen employees (e.g., measuring the employee’s temperature and assessing symptoms of COVID-19 prior to starting work) and perform regular medical monitoring (e.g., the employee should self-monitor for symptoms or follow up with the employer’s occupational health program) of exposed workers.

– Consult with an occupational health provider and state and/or local health officials to ensure that medical monitoring is conducted appropriately.

Maintaining open, honest communication will assist with keeping everyone as healthy as possible and the workplace as safe as can be, which also limits a business owner’s liability exposure. Stay tuned for updates and additional tips on how to handle these types of situations and be safe!

 

Important updates on FFCRA and employee leave

Posted on by McGriff Williams in Business Insurance, Human Resources |

With the Coronavirus being something new to most people as of this year, it is to be expected that the way we react to and handle it to be unfamiliar territory. Even just this week, the FFCRA (Families First Coronavirus Response Act) guidelines were challenged after some DOL (Department of Labor) changes. This stemmed from a court hearing in New York but could trickle out to the rest of the US as well. Here is some important information from our valued HR partner, Think HR:

FFCRA Leave Significant Rule Changes

A federal court in New York recently struck down four federal DOL rules related to the leaves provided by the FFFCRA. As a result, certain aspects of the FFCRA are now more favorable to employees. Unfortunately, it’s not clear if the ruling applies nationwide or only in the Southern District of New York, where that court is located. Until there is further activity in the case which may clarify whether the rules remain intact throughout the rest of the country we recommend that employers err on the side of caution when administering FFCRA leaves and assume these particular rules no longer apply.

What is clear is that these four rules definitely do not apply to the counties of Bronx, Dutchess, New York, Orange, Putnam, Rockland, Sullivan, and Westchester (i.e., the Southern District of New York).

Here are the rules that the court invalidated:

1. The requirement that work be available for an employee to use leave
– DOL Rule: The DOL said that for an employee to use Emergency Paid Sick Leave (EPSL) or Emergency Family and Medical Leave (EFMLA, aka EFMLEA), the employer had to have work available for them during the time they needed leave. For instance, if an employee was furloughed while sick with COVID-19, they would not be eligible for EPSL.

– The Court’s Ruling: Availability of work is irrelevant. If an employee is still employed, whether on the schedule or not, they should be allowed to use FFCRA leave for qualifying reasons.

2. The requirement that employers agree to intermittent leave
– DOL Rule: Employees must get approval from their employer to use intermittent leave to care for their children when their school or place of care is unavailable because of COVID-19.

– The Court’s Ruling: If an employee needs intermittent leave (partial weeks or partial days off) to care for their child whose school or place of care is unavailable because of COVID-19, the employer must allow it.

3. The requirement that employees provide documentation before taking leave
– DOL Rule: Employers could require that employees provide certain documentation before being allowed to take FFCRA leave or before designating the leave as EPSL or EFMLA.

– The Court’s Ruling: Employers can still require documentation (which is necessary to get their tax credit), but they can’t prevent an employee from starting leave until the documentation is received. The law clearly states that an employee must provide notice as is practicable when taking EFMLA leave and after the first workday of leave when taking EPSL.

4. The definition of health care provider, for the purpose of exemption from leave
– DOL Rule: The DOL had defined health care providers broadly, to include anyone who works for a healthcare entity and many who contract with one. (The rule was so broad that a custodian working at a drugstore or an English professor at a university with a medical school could be exempt.)

– The Court’s Ruling: The definition is too broad. However, the court did not provide a new definition. We recommend that employers apply the exemption only to those employees capable of directly providing healthcare services.

As a partner of Think HR, we will pay close attention for activity in this particular case and will let employers know if and when things change or become clearer.