Insurance Insights: The Cleary Insurance Blog
The Cleary Insurance blog covers insurance, risk management, and financial planning for New England businesses and individuals. Our team of licensed advisors and specialists publishes regular articles on commercial and personal coverage, employee benefits, life and financial planning, and insurance compliance. Browse recent articles below, or use the category filters to find topics relevant to your business or personal situation.
Making Sense of Certificates of Insurance
Understanding The Purpose Of Certificates Of Insurance
When stores lease real estate spaces or construction firms win jobs, the party on the other end usually has a very specific set of requirements. One of the main requirements is that the tenant, contractor or borrower must show proof that he or she has adequate insurance. Copies of insurance documents may be sufficient. However, not all companies want copies of documents sitting around. Space is valuable, and most banks do not have enough room to keep such copies of originals for every customer. A very helpful substitute for document copies is a Certificate of Insurance (COI). This item is simple to create and store. Unfortunately, not all firms and insurance buyers fully understand them.
ACORD constructed the forms that are most commonly used. Their instructions show that these certificates are intended for informational purposes. When some businesses receive these certificates, they think the items are contracts. However, the certificate is simply a snapshot of insurance provisions. It does indicate that a policy exists, but it is not the document that actually provides coverage. The only document that actually provides coverage when shown is the policy itself.
Standard certificates by ACORD state that insurers must provide advance notice to holders if policies are cancelled. Although policyholders rely on these words, they do not create a legal bond between the two parties. The only thing that can obligate the companies to give advance notice is the policy’s specific provisions. Many businesses want these certificates to have specific terms, phrases or words. However, agents have legal boundaries for such requests. The only way agents can add wording to a certificate is if the listed policies contain that wording. Changes are not always allowed.
Many states prohibit agents from handing out certificates implying provisions that are not included in the policies. For example, a certificate holder may want the item to state that coverage is primary and noncontributory. However, policies that do not reflect such information cannot have certificates indicate otherwise. Agents who add language implying otherwise could be in a great deal of trouble. Only the endorsements insurers issue can change policies. If an agent issues a certificate implying a change, this is a violation of the individual’s contract with the insurer and a violation of state insurance law.
Before you sign contracts including insurance provisions, we recommend verifying you comply with the coverage requirements. While we cannot provide any legal interpretations for the contract, we can certainly review the insurance provision and provide in-depth advice about the cost and availability of any missing elements. In some cases we may need to provide you with estimates for adding additional insurance coverages or increasing current limits. We can only issue certificates after coverage is in place. If certificates are used appropriately, they are valuable business tools. However, they can cause problems when they are used incorrectly.
Surety Bond Guarantee Program
The Small Business Administration (SBA) Surety Bond Guarantee Program
Presented by: Michael Regan
Did you know that the SBA, the federal organization that assists small businesses, will guarantee bid, performance or payment bonds issued on behalf of a small business by a surety company?
The guarantee program was implemented in an effort to help small construction businesses grow and share in the construction dollars expended by the federal government. However, the progam is not limited to federal work. They will issue guarantees on contracts at the state, municipal and private levels too.
Surety companies are conservative by nature. They want to bond construction companies that they know will be successful. However, there are many good contractors who may have some roadblocks to getting surety bonding. It may be because they are relatively new or lacking in financial capital. In these instances the SBA, after performing their own due diligence, can agree to issue a 90% guarantee to the surety of the bonds they issue.
The SBA also offers a cost neutral effort. The “fees” charged the contractors for the guarantees cover the cost of administering the program and funding the cost of any guarantees that are paid out.
The program has been very helpful to small, inner city contractors who may have limited, if any, access to standard surety.
Pay Equity Law
On August 1, 2016, Massachusetts Governor Charlie Baker signed legislation (S.B. 2119) aimed at eliminating gender-based pay discrimination.
Pursuant to the law, an employer may not discriminate in any way on the basis of gender in the payment of wages, including benefits or other compensation, or pay any person a salary or wage rate less than the rates paid to employees of a different gender for comparable work; provided, however, that variations in wages, including benefits or other compensation are not prohibited if based upon any of the following:
- A bona fide system that rewards seniority with the employer (however, time spent on leave due to a pregnancy-related condition and protected parental, family, and medical leave may not reduce seniority).
- A bona fide merit system.
- A bona fide system that measures earnings by quantity or quality of production or sales.The geographic location in which a job is performed.
• Education, training, or experience to the extent such factors are reasonably related to the particular job in question and consistent with business necessity.Travel, if the travel is a regular and necessary condition of the particular job.
Further, it is an unlawful practice for an employer to:
- Require, as a condition of employment, that an employee refrain from inquiring about, discussing, or disclosing information about either the employee’s own wages, including benefits or other compensation, or about any other employee’s wages.
• Screen job applicants based on their wage, including benefits or other compensation or salary histories, including by requiring that an applicant’s prior wages, including benefits or other compensation or salary history, satisfy minimum or maximum criteria; or request or require as a condition of being interviewed, or as a condition of continuing to be considered for an offer of employment, that an applicant disclose prior wages or salary history. - Seek the salary history of any prospective employee from any current or former employer. However, a prospective employee may provide written authorization to a prospective employer to confirm prior wages, including benefits or other compensation or salary history only after any offer of employment with compensation has been made to the prospective employee;
- Discharge or in any other manner retaliate against any employee because the employee: ◦Opposed any act or practice made unlawful by this law;
- Made or is about to make a complaint or has caused or is about to cause to be instituted any proceeding under this law;
- Testified or is about to testify, assist or participate in any manner in an investigation or proceeding under this law; or
- Disclosed the employee’s wages, benefits, or other compensation or has inquired about or discussed the wages of any other employee.
An employer may not contract with an employee to subvert the law. However, an employer may prohibit a human resources employee, or any other employee whose job responsibilities require access to other employees’ compensation information, from disclosing such information without prior written consent from the employee whose information is sought or requested, unless the compensation information is a public record.
Employers are required to post a notice in their workplaces notifying employees of their rights under the law.
The law goes into effect on July 1, 2018.