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Legalized marijuana, whether medical or recreational, is finding its roots nationwide. In those states that have legalized medical and/or recreational marijuana, employers must understand the relevant legal developments and how they affect the workplace. Currently, 33 states and Washington, D.C., have legalized medical marijuana use, and 10 states have approved both its medical and recreational use. So, what does this mean for employers?

All marijuana use is still illegal under federal law. Marijuana is listed as a Schedule I drug under the Controlled Substances Act, which means that it is deemed to have no medical value and a high potential for abuse. As such, this allows you to continue to consistently enforce your zero-tolerance drug policies, including as it applies to medical marijuana. Accordingly, you should be able to continue to send any employee to random or reasonable suspicion drug testing consistent with your policies and practices, and then enforce your disciplinary policies as it would not matter what kind of illegal drug – including medical marijuana – shows up in the individual’s system.

If you employ individuals in safety-sensitive positions or other jobs that require drug-testing under federal or state guidelines, you will almost certainly want to follow this recommendation. In some cases, you may be required to do so under federal law, such as Department of Transportation (DOT) regulations. In other cases, you will want to do so in order to avoid the risk of having one of your employees cause an accident involving members of the public, coworkers, or simply themselves, which could lead to devastating consequences and employer liability. Any employee who has to drive as part of the job, even if not subject to DOT regulations, should be legally prohibited from being under the influence of marijuana.

Since the passing of the most recent amendment in Florida, employers have worried about what it could mean for drug use in the workplace. Until courts rule otherwise, companies must not tolerate testing positive for marijuana under the drug-free workplace.

Given what we know, there are still many lingering questions, such as:

  • Should I still drug test?
  • Can I refuse to hire an employee who uses medical marijuana?
  • Do I have to accommodate an employee who uses medical marijuana?
  • What effects of medical marijuana can be anticipated on a job site?
  • How do I know if the medical marijuana use is valid?

The National Council on Compensation Insurance (NCCI) recently filed with the state Office of Insurance Regulation a proposal that would lead to an average 5.4% rate decrease for employers, effective January 1, 2020.

The exact amount of the rate decrease will be determined after the Florida Office of Insurance Regulation (OIR) holds a public hearing in October to discuss NCCI’s rate request and the Insurance Commissioner issues a formal decision. If the proposed rate decrease is approved, it will take effect January 1, 2020 and will apply to workers’ compensation policies as they are issued or renewed on or after that date.

Please note: The -5.4% decrease is an average rate decrease across all industry types. The rate change for your specific workers’ compensation policy may be different. The average proposed rate decrease by industry group is:

  • Manufacturing     -6.3%
  • Contracting       -7.4%
  • Office & Clerical   -4.94%

 

Gulfshore Insurance will provide additional information following the final rate decision. If you have any questions or concerns regarding this information, please contact us. We are here to assist you and happy to answer any questions you have.

Homeowners often mistakenly think their property insurance will cover loss during remodeling — or may assume that their contractor’s general liability policy may provide all of the needed coverage. Some property policies even have exclusions for coverage to the existing structure if renovations are taking place at the time of the loss.

Work site injuries. Damage. Vandalism. Fire. Theft. The list goes on. Many families look forward to remodeling their home, but too often the renovation process can become riskier than expected. Some of the largest losses that insurers experience occur to homes under renovation. The following is a quick list of some of the factors that arise during renovation projects that increase the risk of loss.

  • Increased foot traffic from the workers leads to a greater risk of injury on the property.
  • Luxury homes may have valuable objects inside that may be stolen.
  • Workers use tools to renovate the house that can cause damage. Some of the tools used involve flammable material, such as blowtorches, paint thinner, floor sanders, etc.
  • Unoccupied luxury homes under renovation are a target for vandalism, unauthorized use, and theft of building materials.
  • Contractors make mistakes too. If they cause damage to the home, their policy should cover the associated costs. However, there are uncontrollable factors that need to be considered, such as a canceled policy due to a missed bill.

 

Properly insuring a home while it is under renovation is a critical component of the planning process, and it is not one that should be overlooked.

There are two common ways to insure a residence under construction or major renovation: Homeowners Insurance and Builder’s Risk Policies. Each is based on specific criteria, and we strongly encourage owners and financial planners to consult with an insurance advisor who can determine the policy options to best manage potential risks.

Homeowners Insurance

Insuring projects under a Homeowners policy is often the preferred approach to managing the risks because it affords both property and liability coverage to the owner. It is critical for owners to maintain sufficient liability protection during the entire span of any renovation project. In most cases, contractors can be added as an “Additional Interest” to the policy, protecting their financial interests throughout the project while excluding them from liability coverage. However, a contractor should always maintain commercial liability and workers’ compensation insurance.

Builders Risk Insurance

Most owners and contractors involved in residential new construction projects are familiar with builders risk coverage to insure against the risk of property loss. However, builders risk insurance can provide coverage beyond new construction projects. Builders risk also provides much-needed coverage for remodeling or additions to residential structures like custom homes. Owners or contractors working on a remodeling project may not be aware that builders risk coverage is a valuable purchase to protect the structure in the event of a loss. Builders risk is designed to protect property owners, real estate developers, and general contractors who have an insurable interest in a construction project. The policies extend well beyond that of the contractor’s general liability policy – and the homeowners policy. Builders risk insures materials, equipment and fixtures being permanently installed, whether the project is new construction or remodeling.

Please contact us for additional guidance if you are planning to renovate or begin construction on a property.

For many associations, insurance premiums are the largest overhead cost, so it’s very important to accurately forecast any changes for the coming year. Each year, we review market conditions and trends that may impact your insurance renewal premiums, providing you with an educated look at how they may increase or decrease your association’s budget. Below, we are breaking down what you can anticipate for the remainder of 2019, including current renewals, and as you begin the budget planning process for 2020.

Property/Hazard Insurance Rates:
For the past several years, beginning in 2014 and continuing through 2018, we have generally experienced decreasing property premiums and improved coverage terms. This type of environment is known as a “soft” market. By the end of 2018, the property market began to show signs of firming. That continued into the first quarter of 2019. This trend has continued through the second quarter and appears to be accelerating more significantly than initially expected.

Adverse loss development from recent catastrophic events and an increase in the cost of reinsurance have been catalysts for this acceleration. Two consecutive years with combined loss ratios exceeding 100% has heightened the focus of management and underwriters to reduce aggregate exposure and increase rates.

In addition to rate increases, we are witnessing tightened risk selection, reduced capacity, increased deductibles, and policy form revisions. Some carriers are approaching New Business and Renewals differently and might be more aggressive offering a New Business quote vs. a Renewal quote, for essentially the same risk. Insurance carriers are utilizing a level of underwriting discipline we have not seen in a while.

  • At this time, our recommendation would be to budget for an increase of 10% to 30% for rates, and 5% to 10% for appraisal increases.
  • For coastal communities with losses and/or older structures, you should anticipate an increase on the higher end of this range.


Ancillary Coverage: (General Liability, Crime, D&O, Excess Liability)
We continue to expect these lines of coverage to remain relatively “flat” with the exception of General Liability and Umbrella. Due to adverse loss experience (severity and frequency), compounded by water damage subrogation claims from Personal Lines carriers, some carriers are pricing themselves out of this market. Others are adding restrictive endorsements, such as a Weapons/Firearms Exclusion, which basically forces agents to move carriers.

  • We recommend that you budget for a 10% premium increase for General Liability and Umbrella.


Flood Insurance Rates (NFIP):
As of April 1, 2019, there were changes to the NFIP that will affect both new and renewal policies.

  • Base premiums will increase an average of 7.3% after surcharges and fees. (As always we caution not to use this 7.3% to estimate any specific policy increase as this is an average of the NFIP’s many varying rate increases and policy types.)

Understanding what an elevation certificate is and how to read one will help you better navigate the issues a home may have in regards to flood insurance, a critical component of the home buying process. An elevation certificate (EC) is a document prepared by a land surveyor (or other licensed professional) that details the elevation of a home in reference to the Base Flood Elevation, commonly referred to as the “BFE.” The BFE is the elevation that floodwaters are estimated to have a 1 percent chance of reaching or exceeding in any given year. Remember, no type of flood damage, no matter the source of the water, is covered by standard homeowners policies.

FEMA Fact Sheet: Elevation Certificates

FEMA Elevation Certificates Instruction Guide

How an EC Is Used
If the property is in a high-risk area—a zone indicated with the letters A or V on a Flood Insurance Rate Map (FIRM)—the EC includes important information that is needed for determining a risk-based premium rate for a flood insurance policy. For example, the EC shows the location of the building, lowest floor elevation, building characteristics, and flood zone. The EC consists of six pages. Pages one through four are informational regarding the property, the Flood Insurance Rate Map (FIRM), and data pertaining to the structure. Pages five and six are photos of the property and structure. Your insurance agent will use the EC to compare your building’s elevation to the BFE shown on the map being used for rating, and determine the cost to cover your flood risk.

Section A (Page 1)
This section provides pertinent data including: the address of the property, the property description (otherwise known as the legal description), the latitude/longitude of the property, and information regarding the type of structure that is on the property such as: basement, crawl space, on slab, etc., and information regarding buildings with attached garages.

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