Monthly Archives: March 2012

Insuring Artisan Contractors

Artisan contractors include many occupations that involve skilled work with their own tools in a variety of settings, generally at a customer’s premises. They include many contracting specialties such as plumbing, electrical work, minor excavation, landscaping, heating, air conditioning, painting, roofing, dry-walling, carpentry, remediation services, and asphalt/paving.  They also include a broad spectrum of skilled service providers, such as interior decorators, piano tuners and exterminators.  As smaller operations, artisan contractors typically work on large construction projects at the direction of general contractors, operate in small residential projects or work on installation, renovation or remodeling projects.

This group has special insurance needs; coverage for equipment and tools that are often moved around and for the value of work done for a customer until it is finished.  They also need a full complement of insurance services, such as general liability, inland marine (to protect their tools/equipment), workers compensation, commercial auto, excess liability and commercial property.

There is no standard insurance definition for an artisan contractor; the class is defined according to an individual insurance company’s underwriting rules. Companies consider elements such as number of employees, the contractor’s role in projects (general vs. sub-contractor) and net income in deciding how to frame policy offering.

Artisan exposures can be difficult to underwrite.  Small size means less premium dollars, even though loss exposures can be the same as larger construction operations. It is even more difficult for new artisan contractors because if they are inexperienced it may result in a higher frequency of losses.  Even with these issues, there are many companies offering Artisan Contractor policies often with different provisions.  

Artisan contractors in Washington need the advice and assistance of an experienced Washington business insurance agency to help them identify their protection needs, especially in the areas of handling exposures to the contractor’s tools and equipment. Complete information must also be developed concerning losses that may occur on their customer’s premises and damage a contractor may cause to property that belong to third parties, but which is in the contractor’s possession or control.

Washington Home Insurance is Fundamental

It is true that the older we get, the more risk averse we may become, and one thing that we may always want to make sure of is that we have sufficient insurance cover. When you suddenly wonder whether you are up to date with your insurance, it is likely that the first thing you think of is your Washington home insurance.

Home is a place of sanctuary and somewhere to renew the energies necessary to maintain a busy and productive life. Think how different it would be if you did not have this place to come back to at the end of the day. It is not surprising then that home insurance is one of the things that come to mind whenever disaster threatens.

Make sure that your policy is appropriate for your needs. Does it address the risks that are relevant to the area where you live? Do you regularly review the value that your home is covered for? Have you considered replacement costs in today’s market? Do you need additional policies for perils that aren’t covered by your policy, or endorsements for valuable items that exceed the policy item or category limits?

It may pay to seek the advice of an agent to help you ensure that you do have appropriate and sufficient coverage for your home and possessions. We know how to balance your needs against the available products so speak to us when you’re ready to purchase a Washington home insurance policy.

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Functionally Valuing Older Property

When you are considering insuring your property or business, you may have several options to consider for the type of coverage you need.  Replacement cost coverage helps minimize losses but is likely to be pricier than “market value” coverage where depreciation based on the passage of time affects the settlement. In some cases, the replacement costs for unique circumstances can make replacement cost insurance cost prohibitive.  Examples might include ornate building facades or specialized items of antique machinery. For these businesses and or types of property there may be another option to replacement cost coverage to consider.

Buildings that have unique or obsolete construction materials – think plaster and lathe construction – or a business that uses equipment that may remain functional long past obsolescence can consider functional replacement coverage. Functional replacement coverage can be considered when a functionally equivalent building can replace the original at a lower cost than would be required by an identical replacement or when a piece of equipment can be replaced at a lower cost by newer technology.  This can result in a reduction of the amount of insurance coverage required and thus lower premiums.

Coverage written to deal with unique buildings or equipment recognizes that the insured may have to be more concerned with repairing damaged, older equipment or finding an equivalent substitute. A policy with a functional valuation provision is likely to offer the additional option of paying an amount equal to the damaged or destroyed property’s market value that it held just before their loss. Other features are requirements that any repairs be done quickly and that any replacement property be at the same site and for the same use of the property that was lost or destroyed. A coverage modification is also likely to add terms with special definitions, such as “replacement” or “functional equivalent,” or “market value.”

When the coverage is written, care must be taken to learn what functional replacement may be considered and a valuation settled in advance.  It is also important to know if there are constraints on functional equivalents.  For example, a building in a historic district may not be able to replace a damaged tile roof with a shingle roof.  

 A policy that has been written to value certain property on a functional settlement basis should result in smoother claims handling.  Just the consideration of this type of coverage can help the business or home owner identify possible options and sources for replacing his vulnerable, older property.

If you have a home with unique features or construction that may be expensive to replicate or repair, consider seeking advice from your concern Washington home insurance agent regarding functional replacement coverage.  If your business depends on old or unique equipment, it could be worth a discussion about your coverage options with a knowledgeable insurance professional.

A Bad Day for the Blues

March 28 really was a bad day for the blues, it was the day in 1958 William Christopher (W. C.) Handy died.  Handy was, self described, “The Father of the Blues”, the title of his 1941 memoir.   In a lifetime of music he wrote or copyrighted over 150 songs.  He had a wide range of interests, a talented ear and he had been trained in musical notation.  He set many old traditional songs – blues and spirituals – down in musical notation making them available to musicians who had never heard the music.  During the first half of the twentieth century Handy helped bring the blues as a musical form to the attention of the public.

W. C. Handy was born in Florence Alabama on Nov. 16, 1873.  His father was a Methodist minister and he grew up in a strict religious household. Music may not have been the first thing on his father’s mind as Handy relates that as a child he had saved enough money to buy a guitar of his own, but his father ordered him to trade it for a dictionary. 

However strict his family, there was a balance and while he took lessons on the cornet at a local barbershop, he also graduated from school near the top of his class.  Handy’s early working life oscillated between musical ventures and teaching – with a little factory work thrown in. He joined a minstrel show at 15 that didn’t pan out and worked as a teacher in Birmingham.  By 1893 he had formed the Lauzetta String Quartet, and traveled with the band to perform at the World’s Fair in Chicago. He returned to Alabama to teach at Huntsville Normal School (now Alabama A&M), but by 1896, he was on the road again playing cornet with Mahara’s Minstrels.  He toured the west and even as far as Cuba before returning to Huntsville Normal to serve as band director.  Within a few years Handy had moved on again, this time to Clarksdale Mississippi to direct the Colored Knights of Pythias, a band that played before both black and white audiences.  Clarksdale Mississippi is known as the Birthplace and World Capital of the Blues and Handy surely had opportunities for contact with the music.  He seems to have incorporated his experience into his own music, relating that this period gave rise to his famous “Yellow Dog Blues,” while an earlier stay in St. Louis gave rise to the 1914 “St. Louis Blues.”

Handy published his first song in 1909 – a political song called “Mr. Crump” whose refrain evidently summed  up “Boss Crump’s” attitude toward governance:  “Mr. Crump don’t like it, ain’t gonna have it here.” The song itself may be forgettable, but it was rolled out three years later with new lyrics as “The Memphis Blues.” He set up a very successful publishing company with Harry Pace (Pace & Handy Music Co.) who later went on to found Black Swan Records and in 1914, published one of the most-recorded songs of all time, “The St. Louis Blues.”

W. C. Handy went on to write, copyright or publish many blues and gospel songs.  He married twice – his childhood sweetheart, with whom he had six children and fifteen years after her death, he married his secretary.  Mr. and Mrs. Handy were planning to go to St. Louis on April 7 for the opening of the Paramount film “St. Louis Blues,” a fictionalized biography of the composer, and featuring, of course, many of his blues songs.  He died in Sydenham Hospital in Harlem on March 28, 1958.

While it is a bad day for the blues, it is a good time for blues lovers.  Registration is now open for The 2012 Port Townsend Acoustic Blues Festival to be held July 29-August 5 – 2012.  The festival is presented by Centrum at Fort Worden and throughout Port Townsend.  It is one of the area’s major music festivals and draw blues fans from everywhere.  Homer Smith Insurance, your Washington Insurance Agency is a long time supporter of Centrum and especially of its excellent programs for children in the area.    

Electronically Stored Information

It is hard to conceive of a business today that does not deal with electronically stored information (ESI) – documents of one kind or another kept in an electronic format. They may consist of bills, receipts, contracts, correspondence, orders, internal memos, e-mails, payroll records and tax records.  On most days ESI are the lifeblood of your business; occasionally you may be required to reproduce and share information.  It may be a customer request, the IRS or a request from someone who is suing you and it is in this last case ESI can become a problem. 

No matter what the basis for lawsuit, the contending parties each have rights of discovery; that is, each party has a right to see any information held by the other party that is relevant to the dispute. In a product liability case, for example, the information subject to discovery may cover an extended period of time – months or even years. Digital data is complex.  The rules of discovery that served physical records are evolving rapidly and attorneys are increasingly looking carefully at best practices to serve their clients.  

For one thing, it is difficult to destroy electronic data.  The security of data requires that it be backed up – often in various different places.  Exchange of information within a company or between a company and partners or customers can create instances of data that reside in other companies where it may be subject to different retention or access practices.  In addition, where a search of paper records can be an arduous process, data mining techniques make searching electronic records easy.  

At one time, companies that had a document handling/retention/destruction system could both manage and explain information in its possession. No legal consequences were likely if paper information that seemed routine was destroyed on a predictable cycle.  Digital information can become inaccessible, but it is difficult to destroy.  Data is routinely backed-up and stored on tapes or other media or even in the “cloud.” Computers and users may make many copies of information, sometimes storing data in odd – but recoverable places. 

Failure to properly preserve and produce electronic documents can lead to court-imposed sanctions that can involve monetary sanctions and even jail terms for company executives. The Enron case in 2001 made plain how far reaching electronic discovery could be and the consequences for a company and individuals when the inner working of the business become embarrassingly public. 

Complying with orders to produce e-documents can be challenging. Even if it is stored electronically, the vast amount of data has made complying with discovery requests more difficult, time consuming and expensive in many cases.  Most companies do not have an inventory listing where all data is stored. 

Washington business insurance can help you, but it is best to be prepared to support your own defense.  Experts suggest it is important for a company to have a data map and a clear electronic information retention policy.  A data map outlines its information systems and processes and allows identification of important sources of electronically stored information.  A clear data retention policy, like a physical records policy, can help show consistency in data preservation and data deletion. Companies should also establish a protocol to follow when a lawsuit is filed, and a basic component of that protocol should be data preservation.  It should include specifications for the scope of data preservation, implementation of the process, how to ensure relevant files are not deleted and when the process should be triggered. 

Businesses will need to reconsider their procedures on handling and storing their information – a major task considering the volume of data created, but as conditions and requirements are shaped in courtrooms it is not optional.

Around here – Brinnon

Today, we offer another entry in our series on the towns and areas on the peninsula.  The Brinnon community is the southernmost area of Jefferson County.  It lies along the Hood Canal near the mouth of the Dosewallips River.  It is one mountain south of Quilcene on Route 101 and in the winter it can be harrowing to get to over the west flank of 2808 foot Mt. Walker, the easternmost peak in the Olympics.  Brinnon was an early settlement in Jefferson County as people moved in to what was clearly a rich environment.  Fishing and shellfishing were easy in the bays of the Hood Canal area and mountains rising up behind were a natural for logging. 

Brinnon had a population of 797 at the 2010 census – a loss of six from the 803 inhabitants in 2000.  It is among the oldest of Washington towns with a median age of 60.5 compared to Washington State as a whole at 37.3.  Locally, Brinnon was famous for the Shrimpfest, a two day celebration of the local spot shrimp, and belt sander races.  On a wider scale, Brinnon and the Hood Canal are well known as dive destinations.  

The first person to log the area seems to have been one Tom Pierce who was there in 1859.  Elwell (or Ewell) P. Brinnon settled there in 1860 with his wife Kate who was the sister of  Chief Chetzemoka of the S’Klallam tribe.  The town – still unincorporated – was named for Brinnon; Chetzemoka’s name lives on in a park in Port Townsend and on a Washington ferry. Elwell thoughtfully set aside one acre of land to be used as a graveyard.

The Brinnon area drew people interested in logging, working the land and, perhaps, living in a quiet place.  The area was first surveyed for the Bureau of Land Management in 1871 and by then much of the area had been logged.  The first land patent was issued to a William Marple in 1892.  Mr. Charles Comer received a land patent in 1893.  These two families are of historical interest.  Charles Comer was a civil war veteran from Pennsylvania listed in the veterans census of 1890 who joined the 82nd Pennsylvania infantry after Gettysburg (July 1863) and was likely injured at the Battle of Cold Harbor, where the 82nd had173 killed or wounded.  Also listed in the census was Mary F. Gilson formerly widow of Silas H. Marple and the mother of William Marple.  Silas Marple had entered the war as a private with the 11th Kansas infantry regiment but by the end of the war was a 1st lieutenant in the 65th regiment – a troop of Buffalo soldiers.  He died of malaria. 

The Marple family were originally owners of some of the land that is now Camp Parson’s, the third oldest Boy Scout Camp in the nation. Marple’s son, Silas Marple filed the original claims (1901 to 1903) that would later become the Tubal Cain Copper and Manganese Mining Company.  Silas was responsible for marketing the mining venture to investors.  It closed in 1906 without ever turning a profit; exploration for minerals continued on into the 1920’s. 

Brinnon from its beginnings till today has been more isolated than most towns along the Hood Canal.  The railroad that was headed toward Port Townsend in the early 1890’s might have helped that isolation, but its failure left Brinnon and its neighbor to the north, Quilcene, an uncomfortable distance from anywhere.  Route 101 is the only way in or out of Brinnon today.

The town is along the major from the peninsula to Olympia and there is substantial motor traffic through there.  The people of Brinnon  are now, and likely have always been an independent bunch living in one of the most beautiful areas of the peninsula. As a Washington insurance agency the services the south county area, Homer Smith Insurance salutes our neighbors in Brinnon.    

Rating Insurance Companies

There are many ways to review insurance companies if you are planning on an insurance purchase. The state of Washington, for example, keeps tabs on complaints identified to the insurance commissioner’s office and offers comparative scores of companies in life, health and auto insurance. 

Nationwide, there is a rating industry that looks at insurance companies and rates them according to proprietary formulas.  Rating services like A. M. Best, Moody’s and Standard and Poor’s examine insurance companies to determine and rate their financial strength now and for the foreseeable future.  These ratings are useful for individual consumers, risk managers and human resource administrators.  They help to understand the details of an insurance organization’s ability to pay its policies and meet its contract obligations.

Insurance brokers and agents also use ratings because they are often called upon to disclose the strength of a company in offerings of insurance and it help them in due diligence before deciding to work with a particular company. 

Rating services are important to you as an individual consumer of insurance products.  Coverage, rates, and service may vary from company to company and you can choose a company based solely on price, but choosing the best company for you and your family is a critical financial decision. Past the price of the policy, you may want to have some assurance the insurance company will the financial strength to safeguard you and your family immediately and over a longer term.  If the company cannot pay future claims or benefits, the initial price become far less relevant. The financial strength ratings are an analysis of a whole range of risks that could affect an insurance company’s long-term viability. Insurance companies have failed or ceased to operate due to inadequate financial strength, competitive forces, or changing dynamics in the marketplace.

Several national rating institutions rate insurance companies and you can check the reliability of the insurer from which you plan to buy a policy. Each rating agency has its own formal methodology and guards their methods carefully.  A. M. Best, for example, looks carefully at a company’s balance sheet strength, operating performance and business profile and compares these to industry standards and the performance of other companies in the industry. Moody’s evaluation involves examining an insurance firm’s management philosophy as well as asset/liability structure and investment portfolio.  , Fitch Ratings examines claim coverage, debt ratings, leverage and quality of assets.  Many of these assessment areas overlap, but each agency may provide a different perspective. 

You can make sure the company you’re interested in gets top grades by checking at least one — and even better, two — rating agencies, to be sure.  You can also ask your Washington insurance agent directly for information on the rating agency and the rating score for any company you intend to work with.  

Life Insurance – put yourself in expert hands

Life Insurance is one of the oldest forms of insurance known.  Some authorities trace concepts of life insurance to 2,000 BC when mutual societies paid into a pool to establish a fund to support families after the death of a member. Ina the western world, we have a record of a policy issued in 1583 to William Gybbons of London. Mr. Gybbons purchased what we would call a “term” life policy for one year.  Unfortunately for Mr. Gybbons, his family did collect the policy benefit when he died one day short of its expiration. 

Life insurance has evolved since that time and what was once a simple contract offering a set benefit for a single term has proliferated into a bewildering array of policies and services designed for different niches.  There are over twenty different named types of life insurance from Burial Life Insurance to Whole Life Insurance and touching most of the letters between. 

Policies can be set up to handle estate planning, charitable contributions, the cost of college, mortgage protection and a host of other life-cycle events.  There are policies with similar names and different provisions and policies offered with names that imply one form of insurance while providing another.  “Paid-up Life Insurance”, for example offers a policy that sets a time when the policyholder stops paying the premium – a number of years or a set age, typically.  If a policy is offered that does not allow coverage to continue beyond the termination of payments, it is not a true paid-up life insurance plan no matter what it is called; it is simply a term life insurance plan.  True Paid-up Life policies are almost invariably more expensive than term policies, so an imitator may be pocketing a large difference in premiums.  

You can look on the internet and find plenty of life insurance options; you can even research companies to find their ratings through rating companies like A. M. Best or Moody’s.  The ratings will give you an idea of how stable they are financially – a real consideration when you are proposing a relationship that will last for your lifetime.  You don’t necessarily want to pick your policy solely on price.

For any insurance, but for life insurance in particular, you want to select a Washington life insurance agency that can help you identify your needs both in terms of the type of insurance and the amount of coverage you and your family need.  Homer Smith Insurance has been helping clients do just that on the Olympic peninsula since 1950.   

Disaster Recovery

The Olympic Peninsula has a unique population geography.  Our 3600 square miles of land area is nearly two thirds public parkland and our 100,000 people live in a narrow band around the edges.  We live in an earthquake zone and almost all of us live and work within a few miles of shoreline. We are surrounded by forests and exposed to high winds that roar down the Strait of Juan de Fuca.  If you have a business on the Olympic Peninsula, you need a disaster recovery or business continuity plan. 

It is not unusual for a business to overlook creating a disaster plan. No business likes to spend time considering how to respond to an event that could seriously hinder or even shut down business operations.  However, the exercise of creating a plan can be an opportunity to consider all of business operations and identify key business components.  Testing the plan you create  can also yield insights into business processes. 

In developing a disaster plan, you first need to think negatively.  You begin by asking what the business does; where it does it and how it does it; then, look at what might happen to stop any of these things.  Natural events that could occur – fire, flood earthquake, tsunami or windstorm are obvious choices here; hurricanes and tornadoes, not so much.   Snow and ice are possible; even likely, short term disruptions.  Human events like vandalism or theft need to be considered as well. In general, business needs to review the full range of possible threats to normal operations.

In disaster planning, consideration should be given to the impact of the event on the business’ physical structures and property, services, communications, data, machinery or equipment, management, finances, employees, products, stock, finished goods and goods in process and  transportation.  Even items that seem out of the production process need to be considered – contractual obligations, competition, suppliers, impacts on distribution are important areas.

The goal in disaster planning has to be on working to maintain business operation and to work toward resuming normal operations as quickly as possible. Business insurance may be a major component of recovery, but other arrangements to maintain business function may be even more important. Core components of disaster plans typically include the following:

  • Identifying and arranging for use of another location to run the business
  • Backup and offsite storage of key business records and data
  • A computer and data recovery plan
  • Identifying other sources of materials if a key supplier’s business is interrupted
  • Having access to substitute production machinery
  • Buying and maintaining generators/alternate sources of light and power

When considering how to deal with events that could threaten your business, you also have the opportunity to ask why things are done, not simply how. For example, if you are concerned about flooding as a threat to your business, you might ask why financial and customer records are stored in the basement. 

Your Washington business insurance agent can help you with aspects of your disaster planning, particularly as it relates to identifying options to protect you from financial risks.  First, you need a plan, because a real disaster would be a failure to have one.

Inland Marine Insurance

Marine insurance was one of the earliest forms of insurance.  Born out of coffee houses, like Lloyds in London, pools of underwriters’ defined insurance itself as they helped support the shipping industry by protecting against the risk of losses at sea.   The interest in marine insurance centered on the risk of goods in transit.  There were plenty of areas for concern.  A shipper consigning goods to the care of another may not be able to protect them; the ship owner faced hazards of the sea.  Marine insurance considered all these risks and fond a way to underwrite them. 

On land, as concepts of insurance developed in the United States, they focused on property – fire insurance was imperative in our young cities and underwriting evolved around risks to fixed property.   Inland Marine Insurance is a product that has grown to fill some gaps in property insurance.  Perhaps through the extension of marine insurance to the needs of businesses that provided transportation on inland waterways or by land transport, this area of insurance has grown to cover risks to all kinds of “moveable” property. 

Inland marine insurance is now a broad form of Property & Casualty insurance applicable to many risks – some even unique and unusual exposures. Where property coverage is generally intended to cover specific premises and its contents against defined risks, Inland marine coverage is intended for property that may be moving from location to location, property that is at a new or different location, temporary locations, or work locations.  It also may consider “unique” causes of loss that traditional property policies do not cover.  The breadth of available coverage under Inland Marine Insurance is set out in the NATIONWIDE INLAND MARINE DEFINITION defined for most states by the National Association of Insurance Commissioners in 1976.  Broadly speaking Inland Marine policies can be written to cover items being transported, the ways in which transportation is facilitated – including bridges and tunnels – and a host of individual items that are “moveable”.  This last group is generally labeled “floaters.”   

So, who needs an Inland Marine Insurance policy?  If you operate a small construction business, it could be you.    While you are at home, your Inland Marine policy could be insuring the tools and materials at your job site.  If you manage a band, your musical instruments might be covered under an inland marine policy.   In fact, if you have any items of special value that might be particularly valuable – furs, antiques, jewelry, paintings or memorabilia – they can all be covered under and inland marine policy.  Even as individual items, “floater” policies can protect that special set of golf clubs or your expensive camera.  Where most Homeowner policies limit the amount of coverage available on expensive personal property an Inland Marine policy provides you a way to adequately insure these items.

Your Washington insurance agency, Homer Smith Insurance, can help you understand inland marine policies and how they might apply to your unique home or business situation.