Certificates of Insurance

It is good risk management for customers to check and make sure their vendors have insurance. Because of this small business owners are often asked to prove to their customers they do indeed have insurance. When customers ask for proof of insurance what they are often asking for is a form called a certificate of insurance. A certificate of insurance gives the basic information of a business insurance policy. It tells things such as the insurance company's name, dates the policy covers, name of the insurance agency who handles the policy and highlights the different types of liability coverages the policy has and the limits or amount of insurance in each of those coverages.

Any type of business can be asked to provide a certificate of insurance. Three areas where you see certificates of insurance most commonly asked for are construction and maintenance contractors, businesses that lease space and consultants. The reason that construction and maintenance contractors are often asked to show certificates of insurance are because their customers want to be sure if they cause injury around their premises or damage around their premises that they are covered. Also, many contractors are acting as subcontractors to other construction and maintenance companies. If their subs cause damage or injury they want to be sure they have insurance because if they do not they will then be the responsible ones.

People that lease space are asked for certificates because the owner of the building wants to make sure that if they cause damage to the building they have insurance to put the building back as it was prior to incident that caused damage. They also want to make sure if the person leasing space is responsible for someones injuries while they are visiting the building that they have insurance in place to cover those injuries.

Consultants are asked to provide certificates of insurance in order to meet contract requirements. Often, consultants sign a contract with their customers and in the contract there is always an insurance section that outlines the required coverages they must have. The best way for that customer to make sure the consultant is meeting the requirements is to ask for a certificate of insurance.

So the next time you are asked by a customer to show proof of insurance you will understand that you are being asked for a certificate of insurance. Contact your agent and let them know you need a certificate of insurance. Make sure to provide them with the name and address of the company or individual that is asking you for the certificate.

Rough Notes Homeowner Video

The Rough Notes production department has put together a wonderful video that goes over the basics of a homeowner insurance policy and how it protects your house.  This is a great video for any homeowner to view, especially someone buying a house for the first time.

To Shovel or Not to Shovel? Here's the law in Ohio

This is an article posted on "Ohio Insurance Institutes" website:

As far as Ohio law goes, homeowners don’t have a legal obligation to shovel sidewalks due to a natural accumulation of snow and ice, but this doesn’t mean you shouldn’t at least try to maintain them.


In December 1993 the Ohio Supreme Court upheld this law when a guest attempted to sue a homeowner in Franklin County for a slip and fall outside of the homeowner’s house.

In the case Brinkman v. Ross, the court ruled that you are walking at your own risk when Mother Nature calls. The case stemmed from a visit by the Brinkman’s to the home of the Ross’ in February 1989. Ms. Brinkman slipped outside the Ross home breaking her ankle. She sued her hosts in Franklin County Court of Common Pleas. The court threw out the complaint, indicating that it had long been established that Ohio homeowners are not obligated to remove natural accumulations of snow and ice.

The decision was reversed in the court of appeals, saying that if a homeowner knows of a hazardous condition and invites guests to visit, there is an obligation to at least warn them. The case then went to the Ohio Supreme Court where the judgment was overturned.

It’s up to your guests and other pedestrians to assume that due to the nature of Ohio winters, there’s always a risk of a slip or fall due to the natural accumulation of ice and snow.


Local snow removal ordinances

Local municipalities may invoke snow removal ordinances. If your city or township has an ordinance that requires residents to keep walkways free of snow and ice, then you have a responsibility to maintain your sidewalks. Some Ohio cities with snow removal ordinances levy fines for not removing snow in a timely manner while others issue warnings.

However, a local ordinance does not automatically implicate a homeowner if someone slips and falls on their uncleared property.

Examples of local snow removal ordinances/requirements
Below are links to information and/or ordinances for a handful of Ohio communities. The Ohio Insurance Institute suggests checking with your local municipality on any snow removal policies or requirements. Many provide this information online.

• Centerville

• Dublin

• Forest Park

• Fairfield

Waiver of Subrogation, What is it?

If after an insurance claim is paid out by your insurance company, it is deemed that another party was actually the negligent one, then your insurance company (via the insurance policy contract) has the right to go after the negligent party. This right is usually found in the "Conditions" section of your insurance policy. This conditional right can, however, be waived. This means that your insurance company would then not be allowed to go after the negligent party. The term for this waiving of rights is called Wavier of Subrogation.

Often you will see the Waiver of Subrogation in commercial leases. Landlords will require that tenants have this verbiage in their insurance policy so that if a claim occurs at the leased location that the tenant's insurance company cannot come back after them for damages. The landlord, however, would be less inclined to have this wording on their policy since it would mean they and their insurance company would not be allowed to go after their tenant after a claim. A building owner and their insurance company usually have more to lose (the building and its rental income) than the tenant does so they would be very interested in being able to go back after a negligent party.

There are two example of where a landlord may want the Waiver of Subrogation wording on their own insurance policy. The first is if they are renting to a family member or friend who they know doesn't either have enough assets or money to be able to cover them in case of a claim, they may not want their insurance company to be able to go after them to collect for damages. The second is if the landlord and tenant are owned by the same person or organization. In some cases, usually for legal or tax reasons, a person may have one company that owns the building and another company that owns the business that is the tenant. In those cases you would probably want both the landlord and tenant policy to have a Waiver of Subrogation clause in their policies so that you don't have your two insurance companies fighting over payout.

Another place where you will see Wavier of Subrogation is in situations where companies or organizations will subcontract work to other companies or organizations. Often, if a business is going to hire another business to do work on their behalf they will request that the subcontractor have Wavier of Subrogation on their policy. Similar to the Landlord/Tenant relationship, if the contractor requires the subcontractor to have Waiver of Subrogation on their policy it means the subcontractor, if a claim arises, is not able to go back after the contractor for money.

When entering into a lease or a business contract it is important to know if you are going to be required to have Waiver of Subrogation and if you have it or not in your insurance policy. It is best to have both your legal team and your insurance professionals review contracts to make sure you are adequately protected.

Michigan Health Care Claims Tax Fight -- Additional Rounds Ahead

It’s been a tough fight thus far in opposition to the Michigan Health Insurance Claims Assessment Act, which imposes a one percent (1%) assessment on all health care payers, including self-insured employers and certain business partners, for medical services rendered to Michigan residents in the state of Michigan.

As this blog has previously reported, business groups in Michigan signed off on the legislation last year noting it was part of a larger budget deal that was not as bad as possible alternatives.   ERISA preemption concerns were outweighed by the belief that self-insured employers could absorb the new tax without much disruption. 

Then in August of this year, a federal district court in Michigan dismissed an ERISA preemption lawsuit, which contended that the administrative obligations imposed by the Act are unlawful.    

Game over?  Well, not exactly.

An appeal of the District’s court ruling has just by filed with the Sixth Circuit Court Appeals and incorporates some very strong arguments to justify a reversal.  And this time, the self-insurance industry will have an unlikely ally in this legal fight – organized labor. 

What has not been widely recognized is that the tax applies to self-insured Taft-Hartley plans and the ERISA preemption argument is even stronger as it relates to these plans.   So it is a positive development that at least two Taft-Hartley plans are expected file amicus briefs next week. 

But while more pressure is being applied in Federal Court, things are heating back up in the Michigan State Legislature to make the tax significantly more onerous.

The Act was structured based on the assumption that it would raise $400 in annual revenue from all payers.   Of course, government budgeting is often suspect and Michigan bureaucrats have lived up to this reputation.  Through the first half of 2012, the state collected only $109 million from the health claims tax, which means the annualized estimate is short nearly $200 million.

So it should not come as any surprise that the Michigan Legislature is now considering a proposal during a lame duck session to significantly hike the tax.  SB 1359, introduced earlier this month, would allow for an unlimited and variable rate on the claims tax so that it would float up and down to ensure that the tax generates $400 million annually.  The bill would also eliminate the proportional credit/refund provision should the tax collect more than the $400 million target amount.

Interestingly, state business groups who provided tacit approval to the tax last year have now launched an aggressive lobbying effort to defeat the proposed 2.0 version.   We’ll see if labor groups join the cause. 

While it’s certainly encouraging that there is strong push back against SB 1359, the opposition remains focused on the economic argument.    Yes, this is clearly important but arguably not as important as the ERISA preemption issue.

We’ll concede that the most self-insured employers in Michigan have figured out how to comply with this new tax obligation, but multi-state employers will also tell you that if other states implement a similar tax scheme this would greatly complicate compliance efforts.  In turn, this could make the self-insurance option much less attractive – a particularly troubling development in the post-ACA world where self-insurance offers a critical safe harbor.

Look around.  Most states have budget challenges, especially as it relates to health care obligations.  If the Michigan tax withstands legal and legislative challenges then we should not be surprised if other states attempt the same approach.

So the stakes are high in Michigan as it is now ground zero in the ERISA preemption fight.

Thanksgiving Safety Tips from NFPA

Here is an article from the National Fire Protection Association (NFPA) on Thanksgiving Safety Tips.  From our family here at Fey Insurance Services to yours, have a wonderful and safe Thanksgiving! 

THANKSGIVING SAFETY TIPS
The kitchen is the heart of the home, especially at Thanksgiving. Kids love to be involved in holiday preparations. Safety in the kitchen is important, especially on Thanksgiving Day when there is a lot of activity and people at home.

Safety tips:


•Stay in the kitchen when you are cooking on the stovetop so you can keep an eye on the food.

•Stay in the home when cooking your turkey and check on it frequently.

•Keep children away from the stove. The stove will be hot and kids should stay 3 feet away.

•Make sure kids stay away from hot food and liquids. The steam or splash from vegetables, gravy or coffee could cause serious burns.

•Keep the floor clear so you don’t trip over kids, toys, pocketbooks or bags.

•Keep knives out of the reach of children.

•Be sure electric cords from an electric knife, coffee maker, plate warmer or mixer are not dangling off the counter within easy reach of a child.

•Keep matches and utility lighters out of the reach of children — up high in a locked cabinet.

•Never leave children alone in room with a lit a candle.

•Make sure your smoke alarms are working. Test them by pushing the test button

Captives & Dodd-Frank -- Hitting the Right Target

The recent announcement of an industry coalition to push for federal legislation clarifying that the Nonadmitted and Reinsurance Reform Act (NRRA), included as part of the Dodd-Frank law, does not apply to captive insurance companies certainly sounds like a positive initiative.  But despite good intentions, this blog is skeptical that it will acheive the desired result.

We have actually been tracking this issue for some time and is aware of discussions that have taken place with key congressional sources regarding the viability of a possible legislative fix (two conversations as recent as yesterday).  The consensus is that it could be done technically, but DC politics dictate that such an effort would be a heavy lift.

The political reality is that neither Democrats nor Republicans have the appetite to open up the Dodd-Frank Law for any changes at this point. 

Truth be told, congressional Republicans don’t want to do anything to help the law actually work, as this was a highly partisan piece of legislation, much like the Patient Protection and Affordable Care Act.  The only way Republicans would be motivated to even consider amending the legislation is if such action would substantively lessen the administrative burdens on the banking industry and provide certainty to the business community, especially small business.

 Democrats, for their part, will be resistant to “technical amendment” legislation even if they support it in principle for fear that it would become a legislative vehicle where additional amendments would be grafted on with the intent of watering down the law.

And neither party wants to come back under fire from the powerful financial services industry lobby, which would surely happen if Dodd-Frank is opened back up – even for so-called technical fixes.   

But just for the sake of argument, let’s assume that legislation is introduced and some co-sponsors are lined up.  Does that mean success is any more likely?  Probably not.  To understand this assessment, we need to talk about the relative political power of interest groups in DC. 

While many of the larger lobbying organizations active in DC have the ability to block and/or shape legislation, there are far fewer who have enough political juice to get their own special interest legislation passed through Congress, no matter how limited. To be blunt, the captive insurance industry simply does not fit into this latter, more exclusive group.   

Finally, the country’s biggest captive domiciles simply do not have powerful congressional delegations with regard to insurance-related issues, which could potentially offset the deficiencies and complications described above.  That is not to say these members of Congress would not be forceful advocates, they simply are not positioned to move legislation envisioned by proponents of this approach.

So does all this mean that there will never be clarity relative to whether the NRRA applies to captives?  Well, it may not to come from Congress for the reasons we just explained, but it may come from federal regulators as part of the Dodd-Frank rule-making process. 

In fact, this avenue is now being actively explored by self-insurance industry lobbyists.   This strategy can best be described as a “surgical strike,” as opposed to an expensive and pro-longed “land war,” which the congressional route would surely become. 

We’ll see if the political operatives now engaged with the regulators can hit the target.  But at least an arguably clearer path has been identified.