Keeping your working vessel and business covered for liability claims does not stop at the water’s edge. While you may be focused on the liability you have while working on the water, don’t forget about the liability that you may be exposed to on dry land.
Chances are the crew on your working commercial vessel are covered under Protection and Indemnity for an injury or illness occurring while they are in service to the ship. This coverage extends to crew while they are away from the boat but on ship business. But what if a crewmember gets into an accident while driving to the marine supply store and, worse, another person is injured?
In a motor vehicle accident, the vehicle’s coverage is primary. This means that if you send your employee to the store in their own vehicle to pick up some supplies for your boat and they get into an accident, their personal automobile coverage will be the primary insurance should someone get injured. Required automobile liability limits vary from state to state and if the accident is severe your employee’s personal auto policy may not carry sufficient limits to pay for the damages. In case like this, you can expect your business will be dragged into this.
This is where non-owned auto coverage comes in. This is a coverage which extends third party liability limits for accidents involving your employees when your business is sued. There are number of ways to have this rolled into your overall insurance package. A non-owned auto policy can be covered by any excess liability policy that you may have or coverage can be attached to your business’ commercial auto policy. Alternatively, non-owned auto coverage often can be included in your general liability policy. Last resort would be a stand-alone policy. The premium for non-owned auto is based on the number of employees and generally is reasonably priced.
Allen Insurance and Financial is pleased to announce that Jaime Hannan, a personal insurance account assistant has achieved the designation of Accredited Customer Service Representative in Personal Lines from The Institutes, an insurance education organization.
Jaime has been with the company for six years. She is based in our Rockland office.
ACSR courses help insurance professionals advance their skills, build knowledge and stay ahead of evolving trends so they can better serve their customers. Allen Insurance and Financial encourages all of the company’s employee-owners to include continuing education as part of their professional development goals.
In December 2022 Congress passed a law regarding the COVID-19 public health emergency that will cause the State of Maine to conduct a review of every member on MaineCare to determine their ongoing eligibility for coverage. The process will start in April 2023 and a full review must be completed by May of 2024. By the end of the process it is expected that 65,000 to 90,000 individuals will lose MaineCare.
If you are someone impacted by the loss of MaineCare, you will have a 90-day special enrollment period (SEP) before or after your MaineCare ends to purchase a health plan in the private market. If you need assistance with this process, we have specialists in our office who can assist you with this process. Call 236-4311 and ask for a member of our benefits team to help you with individual health insurance.
Here are some additional notes for those who want to read more:
What is the Medicaid Continuous Coverage requirement?
Public health emergency declared in Jan 2020 because of COVID19
Received increase from the feds to help offset the cost of Medicaid- to receive those resources states had to agree to provide continuous coverage and not terminate Medicaid coverage
This means even if someone should lose MaineCare because of a change in income, they continued to be enrolled in Medicaid
In December 2022 Congress passed a law that separates the continuous coverage provided from the COVID-19 public health emergency and in April 2023 every state has to begin review Medicaid eligibility
Implications for MaineCare members?
In April 2023 states need to start review of every MaineCare member’s eligibility
States have 12 months to initiate the process
May 2024 is the last month for the state’s Office for Family Independence to complete all renewals/terminations
About 1 in 3 Mainers are covered by MaineCare
By the end of the redetermination process an estimated 65,000 to 90,000 members will lose MaineCare
Renewals start April 2023 and for example if a member is typically reviewed in July of 2021, they would be reviewed in July 2023
Current members will lose MaineCare if they do not fill out renewal paperwork or respond to requests for income verification or if they are determined to no longer be eligible because of their income
Preventing coverage loss?
Renewal letter will go out one month prior to scheduled renewal
OFI will mail members a pre-populated renewal form in an envelope with a blue box
OFI will also text and email members with a reminder
Sam Grinnell of Lincolnville has joined Allen Insurance and Financial as an account manager in the company’s business insurance division.
Grinnell is a graduate of Colby-Sawyer College and before starting his insurance career as an employee-owner at Allen, he has worked as a carpenter, home inspector and aquatics director at the Penobscot Bay YMCA in Rockport.
Said Grinnell: “I like that I can use my experience to provide a critical service to our customers. Having worked for myself, I understand what goes into it and navigating risk is a big part of that. I enjoy working with a group of talented and thoughtful and caring team members, it makes every day more fun and encourages me to be the best I can.”
Grinnell will be based at Allen’s office on Elm Street in Camden.
With 2022 rapidly receding to stern but with the new year still as fresh as a cadet on their first cruise, I thought this would be as good a column as any to step back from coverage and safety details and instead give a high-level view of how the marine insurance landscape appears to be shaping up for 2023.
The phrase to familiarize yourself with above all others this year is “hard market.” Insurance is subject to a range of forces − claims activity, social inflation in jury awards, stock market performance, inflation and the overall state of the economy, the availability and affordability of reinsurance, the end of an era of cheap capital, geopolitical concerns and climate instability, among others. These factors combine to harden the market by driving insurers into a defensive posture to protect their balance sheets. In a hard market, premiums increase, underwriting becomes much more selective, the capacity to offer policies decreases and insurance carriers become less aggressive competitors. There’s no point in soliciting your competition’s customers if you don’t have the capacity or appetite to write the risk.
Economy-wide, inflation and labor issues are big drivers of disruption, as is the drying up of the cheap capital well (which funded large tranches of reinsurance) and the challenging performance of the financial markets – most insurers invest portions of the premium they collect to offset claims losses and to generate additional revenue. In the marine universe, the supply and cost issues around energy and distillates, the war in Ukraine, climate driven uncertainty, record-smashing hull, cargo and property claims and huge settlements and nuclear jury awards on P&I claims all have insurers battening the hatches.
We are also seeing other longer-term trends in the economy having increasing impacts on insurance. The oft-discussed troika of “Environmental, Social & Corporate Governance” concerns (ESG) are coming to the fore and will likely feature more heavily in approaches to underwriting. We are already seeing this where some insurers and reinsurers are declining to take on new hydrocarbon business: State legislatures in oil and gas states are less than impressed. AI, machine learning and increased automation will also continue to decouple the person from the process when it comes to underwriting and quoting coverage. This will mean potential expense savings for insurers, but will they pass these on to customers? And what impact will robo-underwriting have on the quality of the product that has been driven by the expertise of actual people since the early days at Lloyds’ Coffee House?
What can individual operators and companies do to offset this? Well as the old saw has it, quality will out. A good risk will still be attractive to insurers, even in a time of retrenchment. Making sure you are paying attention to the details like vessel or yard housekeeping, working on culture, making your safety management systems a living process, investing in maintenance and training, being responsive to loss control recommendations and working with your insurance agent to both present your business in its best light and to understand how insurance functions as a tool will put you in the best position to weather the storm. Hard markets are no fun for anyone, but a proactive and prepared business can avoid most of the issues they cause.
Recently we shared information about the increase in the age for the Required Beginning Date (RBD) for taxpayers to begin taking annual Required Minimum Distributions (RMD’s) from retirement assets like Individual Retirement Accounts (IRA’s). This was a key part of SECURE 2.0 and there are several more provisions that impact taxpayers that are working or retired. To recap, the RBD age for those born in the years including 1951 through 1959, is 73 and for those born in 1960 or later, the age is 75. This is potentially a greater period of time for these assets to grow tax-free until withdrawals must begin and income tax paid on those withdrawals.
For those who fail to take their RMD, there has historically been a penalty of 50% of the amount required to be taken but not distributed. This was a significant incentive for people to be sure to take the full amount of their RMD. SECURE 2.0 reduced the penalty to 25% and for those able to correct the underpayment “in a timely manner” the penalty is 10%.
The law also expanded the opportunity to put funds into retirement accounts on a pre-tax basis. For taxpayers aged 50 or older, the IRA “catch up” contribution of $1,000 (on top of the contribution limit of $6,500) will be adjusted annually for inflation starting in 2024.
Beginning in 2025, retirement plan participants (401(k) and 403(b) plans, for example) age 60-63 will have a catch-up limit of up to $10,000 or 50% of the regular catch-up limit (currently $7,500) whichever is greater. The 2023 contribution limit for these plans is $22,500.
Currently those participants aged 50 or older have a catch-up limit of $7,500 ($3,500 for SIMPLE IRA’s). In 2023 the SIMPLE Contribution limit is $15,500 and catch-up amount for those 50 and over is $3,500.
All of these provisions offer a greater opportunity for taxpayers to save more with pre-tax earnings toward their retirements. Many more provisions of the SECURE 2.0 Act involve new rules for qualified plans and their administration. If you are an employer with a plan, your plan administrators should be able to update you on the provisions that impact your plan and employees.
Taxpayers should consult with their own tax advisors to understand the impact of these provisions on their particular financial situation.
Laura Rowe, AAI, CIC of GHM Agency of Waterville was recently recognized for professional leadership and advanced knowledge by the Society of Certified Insurance Counselors.
Rowe was awarded a certificate of achievement recognizing five consecutive years of successfully maintaining the Certified Insurance Counselor (CIC) designation. The CIC designation requires an annual continuing education update ensuring that her education is always up-to-date and relevant.
“The dedication and commitment represented by the CIC program sets the standard within our industry,” said Mike Pierce, president of Allen Insurance and Financial, of which GHM is a division. “Laura’s emphasis on professional development positively sets a great example for her colleagues, both within our company and in our industry in Maine.”
ABOUT THE CIC PROGRAM: The CIC Program is nationally recognized as the premier continuing education program for insurance professionals, with programs offered in all 50 states and Puerto Rico. Headquartered in Austin, Texas, the Society of CIC is a not-for-profit organization and the founding program of The National Alliance for Insurance Education & Research.
Shipyards and marine related business comprise a wide variety of jobs which in turn require different forms of workers compensation coverage. What your employees are doing will determine what coverage extends to their injury. Take a moment to review these three areas of injury coverage.
Jones Act: Officially titled “The Merchant Seaman Act of 1920,” this covers your employees who are considered crew members on your vessels. Seamen employed on vessels traveling from U.S. port to U.S. port are entitled to coverage under the Jones Act, with the coverage provided under your vessel’s Protection and Indemnity policy. Crew are covered for injury and illness while ‘in service to the ship’ through the Maintenance and Cure portion of the coverage. Crew are also entitled to sue the ship or ship owner for unseaworthy or negligent conditions which they believe caused their injury. To be considered a crew member, the employee must spend roughly a third of their time at work in service to the ship.
USL&H: Employees who are working around docks, wharves or servicing a vessel will fall under the U.S. Longshore and Harborworkers Act. These are your stevedores, repair crew, crane operators or similar employees who service, load or go on and off vessels but are not considered crew members. The two determining factors for USL&H are Situs and Status, both of which need to be met in order to be eligible for this coverage. To meet the Situs test, the injury must have occurred while working on or near navigable waters. The Status test is met by the work being done. Exclusions include office workers, aquaculture and boat builders who build recreational vessels less than 65 feet in length. Even if you have a boat yard where you feel you would never have a USL&H risk, it is very inexpensive to have this coverage added to your state workers compensation policy on an ‘if any’ basis. This way you at least have some defense covered should a USL&H claim be filed against you.
State workers compensation: Your office staff and other employees are covered under your state workers compensation act. Keep in mind that if you have employees who work in other states besides the one where your business is located then you need to list these as well. State workers compensation acts are no-fault laws which means they cover a claim as long as the employee’s accident happened within the scope of their employment.
This is a very quick explanation of a very important insurance coverage. Take the time to review your operation and exposure with your agent to help you get the coverage you need.
Meesha Luce, CPIA, ACSR, a personal insurance account executive at Allen Insurance and Financial, is the 2023 chairwoman of the Maine Insurance Agents Association’s Young Agents Committee.
A member of the MIAA Young Agents Committee since 2013, Luce was named the MIAA Young Professional of the Year in 2017.
She said: “I’m looking forward to building on all the work done by the committee over the past few years. We’re all so passionate about what we do and I can’t wait to translate that energy into projects to help shape the future of our industry in Maine.”
Past chairwoman of the MIAA Young Agents Committee is Ashley Purington of Gosline Insurance Group’s Gardiner office.
Luce joined Allen Insurance and Financial in 2006. She is based in the company’s Rockland office. She holds the Certified Professional Insurance Agent (CPIA) designation from the American Insurance Marketing and Sales Society and the Accredited Customer Service Representative (ACSR) designation from the Independent Insurance Agents & Brokers of America.
ABOUT MAINE YAC: The MIAA Young Agents Committee focuses on activities and communication to build insurance industry leadership potential among those in the industry who are younger than age 40 or have been in the industry for fewer than five years. More information: https://www.maineagents.net/YoungAgents/Pages/AboutMEYAC/default.aspx
Real estate agents know that valuing and pricing a home is more art than science. In most parts of the country, this question is a lot easier to answer, as homogenous homes in cookie-cutter subdivisions create a commodity-like price environment while homes in Maine are much more often one-of-a-kind assets.
The classic market-based answer to the question of value is that something is worth what someone is willing to pay for it. To get there, real estate agents look at recent comparable sales but often agents go with their gut, using recent sales and market momentum as a guide.
The seller’s situation can also guide pricing. I would argue that the art of valuing the home is the most important role that the real estate agent plays in both the buy and sell side of the transaction.
Valuing a home from an insurance perspective is a different, but no less important job, and in many cases just as subjective. Insurance agents look to insure homes at the cost to replace new, assuming a total loss. Generally, you’d also add in the cost to demolish the damaged structure and dispose of the debris. If the market value of a home and the replacement value of the home are the same, that is purely coincidence.
Now, how do insurance agents get to the correct valuation?
Software All insurance agents have access to replacement cost estimating software. The agent fills in data about the home such as building shape, square footage, year built, basement type, number of bathroom and so on. The agent can select grades from drop down menus to assign the quality of the construction. These options range from basic contractor grade to custom luxury, with several grades in between. Agents can also fill in fields for flooring, built ins, extra features, with thousands of options and exponentially more combinations. The downside with this software is that it is only as good as the assumptions built into it by the developer and it probably works best with newer, modern built homes in regions with developer-based construction. Still, this is an important tool.
Conversations with local contractors and architects These are the professionals who have the real time information. They know exactly what their material, labor and subcontractor costs are, and that information is always going to be more regionally accurate. Most builders and architects can break down the cost to rebuild in a per square foot number and the agent can use that as a range to overlay with the valuation report generated by the replacement cost software.
Valuation specialists working with insurers Insurers are paying the claims, so they have a lot of data on hand about the cost to replace a home. Many insurers have specialists in-house or they work with third-party inspectors to inspect homes and perform their own replacement cost analysis. A diligent agent will have a conversation with the insurer before issuing coverage to make sure they are comfortable with the replacement cost number. Working with an insurer who inspects the home (almost always after the policy is issued) should provide peace of mind to the homeowners that a professional has seen their home, documented its unique features and come up with their own cost to replace.
With all these tools at the insurance agent’s disposal, coming up with an accurate replacement cost number is still part science and part art. A diligent agent will always err on the high side because a homeowner does not plan to have an insurance claim. When you’re building a new home, you can work within the contractor’s schedule and perhaps even get several bids and select the lowest option. This is usually not the case following an insurance loss. Also, historic homes cost far more to replace than the equivalent modern home due to unique materials, dimensional lumber, and custom finishes. The best tip for homeowners is to work with an independent agent who understands the importance of being properly insured and has the expertise to work collaboratively with the homeowner to get there.
Top tip: Look for insurance policies that offer guaranteed replacement cost coverage. A guaranteed policy is a promise to rebuild regardless of the limit of coverage: essentially unlimited. If that is not available opt for one that provides extended replacement cost, usually expressed as a percentage of the dwelling limit on the policy: for example, 125% or 150% extended replacement cost.
