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Commercial Lines Insurance Marketplace Adds to Uncertainty for ContractorsConstruction industry forecasts are difficult in a “normal year” (remember those?), let alone a year following a global pandemic. Given everything, 2020 was a relatively good year in the construction industry despite increases in the costs of materials. The insurance industry, however, was hit by significant losses from the pandemic, a historically active hurricane season, huge wildfires in 2020, and a deep freeze in Texas to start 2021.

The liability market has also been hit hard.  There has been no slowdown in the number of construction defect claims, especially for residential construction. Awards for bodily injury claims, especially as a result of an auto accident, continue to escalate. As a result of the pandemic, carriers have also seen increased claims for both workers compensation and employment practices. Even Cyber Liability underwriters have taken a hard hit with more people working from home and exposing their companies in ways not previously contemplated.

As a result, carriers are now more reluctant to commit capital to the long-tailed construction industry. With less available capacity, the construction market is seeing some significant rate increases and encountering more challenges in securing project-specific coverage for larger residential construction projects.  Insurance companies have become more selective in construction and have cut back capacity, while pushing rate. Particularly hard hit are residential contractors that work on the envelope of a building – roofers, windows and doors, exterior painting, drywall, and stucco.

On Controlled Insurance Programs (CIP’s), lead excess layers are being reduced and carriers are less willing to take the conventional $25,000,000 capacity layer participations of year’s past, leading to smaller portions taken by the carriers at higher rates.  As the market resets, carriers are also more hesitant to offer long-term pricing and coverage commitments via Rolling-WRAP solutions so common over the past decade.  Even smaller practice policies for general contractors and artisans are increasing an average of 15% or more on General Liability and increases on Umbrella and Excess policies have averaged 25 to 50% or more. Contractors with large auto fleets are getting hit the hardest, even with good loss experience. For fleets above 100, many carriers are requesting insureds to purchase $2MM primary auto limits in order to offer a lead $5MM Umbrella. Since auto rates are also continuing a steep incline, many contractors are seeing overall increases of 25% or more.  This dynamic may be best exemplified here in the state of Florida, where the litigious climate and loss ratios have driven carriers out and rates sky high, particularly on the lead excess for residential projects.

Achieving the best, most cost-effective coverage will remain challenging. Putting project policies together may be more difficult in this market and will require greater flexibility. Deal structures are likely to be more complex than in recent years when broader terms and higher aggregate limits were readily available. Rates are likely to be higher, terms tighter, and capacity less plentiful. It is critical to start with a realistic idea of the insurance market as you evaluate projects in this challenging climate. Rates have been moving higher and coverage enhancements may not be as readily available.

The key to building a cost-effective program is working with the right insurance agent. A deep knowledge of the construction industry and experience in designing complex insurance is critical to provide a solid foundation for controlled insurance programs.  When reviewing your practice policies, it is equally important to work with an agent who has expertise in Risk Transfer, Fleet Safety, and Quality Control programs in order to  ensure that your company is presented to underwriters in the best possible light to obtain competitive terms and pricing.

Tim Spear, is a Client Advisor and Partner at Gulfshore Insurance specializing in the construction, oil/petroleum, and landscape industries. Through his consultative and diagnostic approach, he helps clients develop customized programs to meet their risk management needs. Comments and questions are welcome at tspear@gulfshoreinsurance.com

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in business insurance including liability insurance, property insurance, workers compensation insurance, vehicle insurance, business income interruption insurance, cyber insurance, commercial umbrella insurance, and more. Our insurance and risk management advisors are industry specialists for condominium associations, golf and country clubs, oil and petroleum marketers, construction, landscaping, churches and non-profits, and work comp. Navigating insurance requires an experienced and trusted insurance agent who understands your business risks and exposures. Gulfshore Insurance services Naples, North Naples, Marco Island, Bonita Springs, Fort Myers, Sarasota, Lido Beach, Longboat Key, Bradenton Beach, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.

Personal Lines A Key to Wealth Preservation Umbrella Liability ProtectionIn today’s litigious environment, successful clients are growing increasingly concerned about becoming the target of a costly lawsuit, yet many remain ill-prepared for such an occurrence. Typically, insurance policies (e.g. homeowners, automobile, and watercraft) include initial limits of “primary” liability that respond to legal judgments. However, these are commonly limited to $300,000 or $500,000, making them inadequate in today’s litigious society where multi-million-dollar judgments are all too common. An Excess Liability or “Umbrella” policy kicks in when a lawsuit judgment exceeds the limit on homeowners and auto policies. We recommend clients consider the maximum net worth they are willing to risk should such a lawsuit occur. We can place up to $100,000,000 in personal umbrella, and our recommendation is to maintain Excess/Umbrella Liability protection at a minimum limit of $5,000,000.

Below are just a few examples of why coverage limits matter.

Type of Loss: Liability
Description: Worker handling renovations at insured’s home fell 12 feet from a ladder, suffering serious head and brain injuries.
Verdict/Settlement: $11,000,000 *Plaintiff alleged dangerous work conditions as contributing factor to fall.

Type of Loss: Liability
Description: A neighbor was leaving a neighbor’s yard and tripped and fell over tree roots protruding through the ground. The fall caused a fractured hip, necessitating surgery and the use of a walker for the rest of his life.
Verdict/Settlement: $2,100,000

Type of Loss: Liability
Description: Child injured in swimming pool accident; resulted in permanent paraplegia.
Verdict/Settlement: $13,000,000

Type of Loss: Auto
Description: While test driving a new car, driver lost control and crashed, killing the salesman who was the passenger in the vehicle.
Verdict/Settlement: $13,700,000 *Wrongful death lawsuit by salesman’s family.

Type of Loss: Watercraft
Description: Insured’s boat collided with another boat, killing a passenger in the other boat. The passenger was a co-owner of a successful business and high-income earner.
Verdict/Settlement: $6,500,000 *Insured’s $5,500,000 limit was inadequate and held personally responsible for $1,000,000.

There are two key components that should be included in a comprehensive Excess/Umbrella policy:

  1. Uninsured/Underinsured Motorist – This important protection is provided under most primary Automobile policies. It ensures that a household member will be covered for injuries he/she receives from a negligent driver. In the event of a qualifying accident, the insurance company will pay the difference between what the uninsured/underinsured driver can pay and what the injured driver would be entitled to as if the uninsured motorist had proper insurance in effect (coverage also applies in “hit-and-run” accidents). We encourage every client to purchase additional limits of protection, which are available as an endorsement to the Excess/Umbrella policy. This additional protection covers the bodily injury damages they cause you or a family member.
  2. Ensuring a Proper Defense – Most clients are unaware of how their defense would be managed by their insurance company in the event of a lawsuit brought against them or a family member. Three specific items to request include:
    • Outside the Limits – All covered defense costs are “outside” the limit of Excess/Umbrella coverage, thus preserving the full Excess/Umbrella coverage limit for judgments against you.
    • Expanded Defense – A sub-limit of coverage will apply to the reasonable expenses for your preferred law firm to review and consult on the defense offered by the policy.
    • Reputational Damage – Some policies will also provide a sub-limit to cover the fees of a public relations firm to protect your reputation within your community.

 

Remember, coverage needs evolve over time. It is critical to inform a trusted insurance advisor of any related exposures that you or your clients may have.

Andrea Pelletier, CPRIA, CPIA is Client Advisor and Partner at Gulfshore Insurance specializing in Private Risk Services. Andrea works with successful individuals and their families on creating and customizing package insurance solutions in the areas of luxury homes, car collections, jewelry, fine arts, watercraft, and personal excess liability. Comments and questions are welcome at apelletier@gulfshoreinsurance.com

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in home and homeowners insurance, car and auto insurance, boat and yacht insurance, property insurance, umbrella insurance, valuables insurance for fine art, jewelry, wine, and more. Navigating insurance requires an experienced and trusted insurance agent who understands your high net worth risks and exposures. Gulfshore Insurance services Naples, North Naples, Port Royal, Park Shore, Pelican Bay, The Moorings, Naples Beach, Marco Island, Bonita Springs, Sanibel Island, Captiva, Fort Myers, Sarasota, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.

JCO CIC Award V2Client Advisor and Partner, John Caballero, CRM, CIC, was recently honored for his ongoing pledge to education, commitment to excellence, and dedication to the insurance profession. The Society of Certified Insurance Counselors (CIC) presented Caballero with a formally­ inscribed certificate for his continued participation in the CIC Program.

Earning his CIC designation and maintaining all update requirements for twenty years places Caballero in the top one percent of all insurance professionals in the country. “The high standards of leadership maintained by Caballero not only benefits Gulfshore Insurance but the insurance profession as a whole,” said William J. Hold, CRM, CISR, CEO and President of the Society of CIC.

The Society of CIC is an organization nationally recognized as a leading continuing education program of insurance professionals. A not-for-profit organization, the Society of CIC is the cornerstone program for The National Alliance for Insurance Education & Research, headquartered in Austin, Texas.

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in business insurance including liability insurance, property insurance, workers compensation insurance, vehicle insurance, business income interruption insurance, cyber insurance, commercial umbrella insurance, and more. Our insurance and risk management advisors are industry specialists for condominium associations, golf and country clubs, oil and petroleum marketers, construction, landscaping, churches and non-profits, and work comp. Navigating insurance requires an experienced and trusted insurance agent who understands your business risks and exposures. Gulfshore Insurance services Naples, North Naples, Marco Island, Bonita Springs, Fort Myers, Sarasota, Lido Beach, Longboat Key, Bradenton Beach, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.

Commercial Lines 8 Elements of a Fleet Safety ProgramFleet vehicle accidents are among the most costly injury claims for businesses. The average cost of a loss related to vehicle accidents is approximately $70,000. This is almost twice the cost of the average workplace injury ($36,592).

Without a formal fleet safety program, you may be putting the welfare of your employees and company at risk. A generic safety program is better than none. But it is far more effective to specifically design a program for your company and your fleet. A fleet safety program establishes the policies and procedures that are needed to help ensure a safe work environment for employees. It can also help protect against liability from vehicle accidents.

For any company with a fleet of vehicles of any size, a formal fleet safety plan can provide a number of
advantages, including improved safety, employee satisfaction, and the potential to improve fleet efficiency.

8 Essential Elements of a Fleet Safety Program

An effective fleet safety program must be comprehensive, up-to-date, and instituted as a part of your company’s safety culture. It should be thorough, reaching each employee who gets behind the wheel. And the commitment has to start at the top.

  1. Identifying all of your drivers. Businesses may not be aware of the full extent of their non-owned vehicle exposure. You should identify everyone who drives on behalf of the business, even those employees that use personal and/or rented vehicles.
  2. Management commitment. Leadership support of the program can help assure that the program is used.
  3. Screening and selecting drivers carefully. This can help create a reliable, safe team. Without safe drivers, no organization is likely to have a good long-term safety record. Establish clear hiring standards and a thorough screening process for anyone who drives on company business.
  4. Training drivers. This can help to ensure that all drivers understand vehicle safety policies and procedures. All drivers should have access to information on safe driving strategies and techniques, including instruction in defensive driving.
  5. Managing drivers on an ongoing basis. This is essential in helping to ensure that drivers are following fleet safety rules and driving safely.
  6. Managing accidents, when they occur. This can help mitigate accident costs. It also helps you to understand your exposures and can reduce the potential for future losses.
  7. Establishing written policies and procedures. This sets clear consistent expectations.
  8. Formalizing a plan for vehicle inspection, repair, and maintenance. This can help reduce costly, unexpected breakdowns, and can assist in avoiding accidents due to faulty equipment.

Dave Wissel is a Client Advisor and Partner at Gulfshore Insurance who specializes in construction, landscaping, and the oil and petroleum industries. Comments and questions are welcome at dwissel@gulfshoreinsurance.com

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in business insurance including liability insurance, property insurance, workers compensation insurance, vehicle insurance, business income interruption insurance, cyber insurance, commercial umbrella insurance, and more. Our insurance and risk management advisors are industry specialists for condominium associations, golf and country clubs, oil and petroleum marketers, construction, landscaping, churches and non-profits, and work comp. Navigating insurance requires an experienced and trusted insurance agent who understands your business risks and exposures. Gulfshore Insurance services Naples, North Naples, Marco Island, Bonita Springs, Fort Myers, Sarasota, Lido Beach, Longboat Key, Bradenton Beach, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.

IRS Extends Time to Make IRA, HSA Contributions and File Forms 1040On March 29, 2021, the Internal Revenue Service issued Notice 2021-21, which extends tax deadlines for filing Form 1040 series returns and other deadlines to May 17, 2021. The Notice, issued as a result of the ongoing COVID-19 pandemic, follows a prior IRS extension (also to May 17, 2021) of the federal income tax filing due date for individuals for the 2020 tax year.

The Form 1040 series includes Form 1040, Form 1040-SR, Form 1040-NR, Form 1040-PR, and Form 1040-SS. Businesses and other types of taxpayers that file federal income tax returns on forms outside of the Form 1040 series are not eligible for the extension. In addition, the Notice does not alter the April 15, 2021 deadline for estimated tax payments.

Contributions to IRAs and Other Accounts

The Notice automatically postpones, to May 17, 2021, the time for individuals to make 2020 contributions to their individual retirement arrangements (IRAs and Roth IRAs), health savings accounts (HSAs), Archer medical savings accounts (Archer MSAs), and Coverdell education savings accounts.

Notice 2021-21 also postpones, to June 30, 2021, the due date for Form 5498 series returns related to these accounts (Form 5498, Form 5498-ESA, Form 5498-SA). These forms must usually be filed with the IRS and furnished to participants and beneficiaries by the due date specified in general instructions for other information returns. The period beginning on the original due date of those forms and ending on June 30, 2021, will be disregarded in calculating any penalty for failure to file.

Click here to download the legal update

Ryan Laude is a Client Advisor at Gulfshore Insurance specializing in employee benefits. Ryan works with a wide range of businesses to create the best funding options that fit their needs. Comments and questions are welcome at rlaude@gulfshoreinsurance.com

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in employee benefits insurance including group medical, dental, vision, life insurance, short and long term disability, voluntary life, employee assistance programs, wellness programs, individual life insurance, and more. Our insurance and risk management advisors are experts can provide valuable services including benefits plan design and administration, human resources support, funding options, compliance assistance, benefit administration, and enrollment services. Gulfshore Insurance services Naples, North Naples, Marco Island, Bonita Springs, Fort Myers, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.