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Why checking your homeowners insurance should be a rite of spring

Double-checking your homeowners insurance probably isn’t on many spring to-do lists. But it should be.

That’s the advice from David Miller, Vice President and risk management expert at Plexus Private Client Solutions, a suburban Chicagoland personal insurance agency protecting the life’s work of successful families and individuals with tailored home, auto, and umbrella coverage solutions.

In his recent article, “Eight Things That Might Surprise You About Your Home Insurance Policy,” Miller highlights some hot-button issues for homeowners, including:

Your home may be underinsured. Via Consumer Reports, which cited data from analytics firm CoreLogic, three out of every five homes are 20% underinsured on average. In the case of a total rebuild, this could leave homeowners left to pick up the pieces — while also picking up the check.

Take a look at your deductible, because it may have changed. Miller, who has more than two decades of insurance experience, cautions homeowners to be aware of wind and hail deductibles. These have been on the rise, with an uptick in roof-related claims particularly an issue. An insurance company can only change your coverage at renewal; make sure to read the fine print. Your agent can help.

Do not assume you have sump pump failure coverage. Most insurance companies will exclude this damage as a cause of loss. However, you can usually buy back a limited amount of coverage. Writes Miller: “Even if you have an unfinished basement, the costs associated with a sump pump/sewer claim might surprise you.”

For more information on the home and personal insurance expertise offered by Plexus Private Client Solutions, contact David Miller at 847-307-6100, or visit plexusgroupe.com. The firm's located at 21805 W. Field Parkway, Suite 300, in Deer Park, Illinois.

About Plexus Private Client Solutions

The personal insurance practice of national insurance brokerage The Plexus Groupe LLC, Plexus Private Client Solutions delivers a superior client experience and comprehensive personal insurance for successful individuals and families, including auto, home, and umbrella coverage. Our experienced, dedicated team takes a consultative approach to your personal risk management needs. For more information on Plexus Private Client Solutions, contact the firm at 847.307.6100 or via the Web.

Claims history, employment practices among underwriting considerations for D&O insurance

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Directors and officers (D&O) liability insurance is an insurance coverage sought by public, private and non-profit organizations to help protect their executives from costly legal actions. Over the years, insurance companies have refined their underwriting practices for D&O insurance to reward organizations that implement proactive risk management measures. While organizations across the United States have developed a greater appreciation for the importance of D&O insurance, many misconceptions about the underwriting process for D&O insurance persist. This Coverage Insights article examines some of the information that underwriters generally review when they receive an application for D&O liability insurance.

The Basics

Applications for D&O insurance generally start by asking applicants for a basic profile of their organization. In particular, underwriters want to establish the organization’s size, location, and industry. While this information may seem basic, it impacts an underwriter’s willingness to accept an application for coverage, and sets the price, terms, and conditions of the policy.

Note that an organization’s industry may contribute to an insurance company’s perception of the D&O risk posed by an applicant. When forming an opinion of a potential new client, underwriters will often take into consideration any recent litigation trends, along with their own underwriting experience with organizations in that sector.

The Organization’s Financial Condition

Typically, underwriters will require organizations to submit a copy of their audited financial statements along with their application for D&O coverage. Underwriters require this information in order to develop an understanding of an organization’s financial circumstances, particularly its key income statement components and balance sheet components. With this information, insurance companies create a range of financial ratios to benchmark an applicant to other similar organizations within its industry.

One of the main questions the underwriters will be trying to answer is whether an organization has sufficient cash or credit available to fund its operations and service its debt obligations for the proposed policy period. Organizations with a strong financial standing operating in an industry with positive economic outlook are generally looked upon favorably by underwriters.

Claims History

Insurance companies, by their nature, want to extend coverage to organizations that will allow them to remain profitable. Insurance companies generally view an organization with a history of frequent claims or pending litigation as undesirable and may decline to offer coverage or charge more for coverage based on the likelihood of a future loss.

While each insurance company has its own internal D&O underwriting practices, underwriters typically look at the following:

-- Recent civil or criminal action, or administrative proceedings alleging violation of a federal, state, or foreign securities law.

-- Involvement in insolvency or bankruptcy proceedings.

-- Instances of employment or labor-related litigation or proceedings.

-- Disputes over employee benefit or pension plan.

Mergers and Acquisitions

If an organization has been involved in merger or acquisition (M&A) activity, underwriters will typically investigate the reasons for these transactions to gain an understanding of its associated risk. This information interests insurance companies because financing activities and M&A activity are events that often lead to D&O claims.

Depending on the nature of an organization’s M&A activity, an underwriter may recommend certain conditions or restrictions in the D&O coverage provided to the organization or choose to decline coverage altogether.

Employment Practices

Current and former employees are a common source of D&O insurance claims, especially for private and non-profit organizations. In order to get a better sense of how likely an organization’s directors and officers are to become involved in a  dispute with employees, insurance companies will typically ask a series of questions related to employment practices. Common questions include, but not limited to, the following:

-- Does your organization have a formal human resources department?

-- Does your organization have an employee handbook?

-- Has your organization recently completed any layoffs, facility closures, or early retirement programs?

-- What is your organization’s annual turnover rate?

-- Does your organization have policies forbidding discriminatory conduct in the workplace?

-- Does your organization have formal hiring and interviewing guidelines?

International Exposures

Organizations that have operations in foreign countries tend to face a higher degree of D&O risk due to the complex compliance requirements that exist in each jurisdiction.

Accordingly, underwriters will typically ask an organization applying for D&O coverage what percentage of its business is in the United States and other countries.

Diversity of Business Activities

Generally, D&O risk is lower for organizations that concentrate their efforts in one core business activity. For this reason, underwriters may look more critically at organizations that involve themselves too many unrelated areas where the directors don’t have expertise in that type of operation. As a rule of thumb, the longer an organization has been involved in a business activity, the D&O risk associated with performing that activity decreases.

Additional Considerations for Public Companies

For publicly traded companies, insurance companies often require additional analysis from their underwriters during the application process. In addition to the areas previously mentioned, D&O underwriters may examine a publicly traded company’s accounting practices, corporate structure, stock price volatility, executive compensation, disclosure practices, and corporate governance.

Contact Us

Whether your organization is a non-profit, privately held, or public company, it is likely that it can benefit from a D&O policy. While the application and underwriting process for D&O insurance may seem daunting, The Plexus Groupe's knowledgeable insurance professionals are here to ensure your organization finds the insurance coverage it needs.

For more information on Plexus's management lines insurance expertise, including directors and officers coverage, contact a Property & Casualty executive at 847-307-6100 or visit ThePlexusGroupe.com

Disclaimer and publishing credit: This Coverage Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2017 Zywave, Inc. All rights reserved.

DOL Rule Requires New Disability Claims Procedures in Place by April 1, 2018

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The Department of Labor recently announced that the delay of its Final Rule regarding disability claims procedures is, in fact, final. This means all employee welfare plans providing benefits based on a determination of disability, including health plans, stand-alone disability benefits, 401(k), pension, and other retirement plans, must have these new procedures, including new contract provisions, in place by Sunday, April 1, 2018.

Which plans are affected?

Any plan governed by ERISA with provisions for disability determinations must implement new claims procedures, whether that be long-term disability benefits, most short-term disability plans, group health plans, stand-alone disability benefits, 401(k), pension, and other retirement plans. These new procedures must be in place by April 1, 2018 and apply to all disability-related claims received on or after April 1.

The new procedures will not apply to non-ERISA arrangements, such as instances where an employer continues paying salary during a time an employee's disabled.

What do affected plan sponsors need to do?

Fully Insured Plans

For employers that maintain insured disability plans, you will want to discuss with the insurance carrier how to apply and document the new procedures.

Self-Insured Plans

Employers with self-funded disability plans or retirement plans with benefits based on disability determinations will need to update plan documents and summary plan descriptions to reflect the new requirements. These employers will also need to update their claims procedures to include the new claims denials and appeals requirements outlined briefly below.

Self-Insured Plans with TPAs

Additionally, if an employer's self-funded but has a third-party administrator (TPA), the employer should amend the TPA administrator agreement to ensure the TPA's handling claims in compliance with this new rule.

What are the new requirements?

Similar to the new claims requirements for group health plans under the Affordable Care Act, new requirements for disability claims include but not limited to:

— The individual who decides a disability claim must not have any conflict of interest or incentive to deny or approve the claim. This includes certain aspects of that individual’s compensation, promotion, termination, etc.

— Claim-denial notices must be both culturally and linguistically appropriate, including assistance with filing claims in non-English languages.

— Certain appeals procedures must be put into place, such as providing the claimant, free of charge, with any new or additional evidence considered or relied upon before the administrator may deny an appeal.

— Potential "penalty" of faster access to litigation and court decision for claimants for whom the plan administrator did not comply with the new claims denials and appeals procedures.

Let Plexus lend a hand

Employers with applicable ERISA benefits plans must have these new procedures, including new contract provisions, in place by April 1, 2018.

Have questions regarding today's Alert or other employee benefits matters? Then, contact a Plexus benefits client service team member in Deer Park, Ill. (847.307.6100), Chicago (312.606.4800), Dallas (972.770.5010), or Oklahoma City (405.840.3033). You can also visit us online here, PlexusGroupe.com. We're here to help, and we're happy to help.

Helpful insurance links, resources for storms

Currently a Category Five storm, Hurricane Irma could make landfall in Florida by Sunday, according to the National Hurricane Center. From there, the storm could move north and east to affect parts of Georgia and South Carolina. Irma's impact on renters, homeowners, and business owners could be significant. As a resource, we have put together a short fact sheet on insurance FAQs and contact information for U.S. areas most immediately affected by Irma.

A brief overview of common insurance coverages

Flood insurance: Flood coverage is required in some flood-prone areas, and possibly essential for homeowners, renters and business owners, as homeowners, renters and businessowners coverage typically excludes flood damage.

The National Flood Insurance Program oversees most U.S. flood policies. This is typical coverage under flood insurance.

Homeowners / renters insurance: These policies will cover structural, fire and other various damage inflicted by storms. A rental policy covers damage and loss to a leaseholder's apartment, including valuables.

Businessowners insurance policy (BOP): Businesses guarding against a wide range of risk, including property damage from storms, typically hold this coverage. The coverage often contains business interruption insurance, a must if operations are halted because of weather or another cause.

Auto insurance: Comprehensive auto coverage, will protect you in case of storm damage to a car. Note that flood coverage excludes car damage.

In all cases, it is good to known what each of your policies covers and excludes, and your insurance agent can be your greatest guide in this regard.

Beginning the post-storm claims process

To begin, policyholders are advised to inventory their belongings before a storm strikes (though, of course, that can be easier said than done when time is of the essence).

In the case of a loss, consider taking these steps:

⇒ Take care of this first if you need emergency assistance.

⇒ If -- and only if -- it is safe to do so, you may want to take action to begin reducing the impact of the loss. For instance, if there is water on your floor, and you have access to shut off your water, this would be a logical step, but only if it safe to proceed.

⇒ Contact your insurance agent. However, in the case of a major weather event, it is possible your agent might not be immediately available.

Resources -- national

FEMA offers numerous online resources on the flood insurance claims process, including infographics in more than a dozen languages and an in-depth fact sheet on claims.

Here is a list of toll-free numbers for property & casualty insurance carriers from the Property Casualty Insurers Association of America (PCIAA).

The PCIAA website has plenty of valuable information as well, including tips for before the storm.

Resources -- state

⇒ The Florida Office of Insurance Regulation offers information for state policyholders. Visit the organization's website, or contact the office via multiple phone numbers, including toll-free in-state at (877) 693-5236.

The Office of Insurance and Safety Fire Commissioner regulates Georgia's insurance industry. Telephone: 800-656-2298. The commission website offers search functions to find local insurance agents in Georgia, as well as other insurance information.

⇒ The South Carolina Department of Insurance has a host of information for policyholders, including a brochure on what to do before a storm. Telephone:  803-737-6160.