Contractors’ Guide to Navigating Cybersecurity Maturity Model Certification

Author, Anne Wright, Surety Relationship Executive, Rancho Mesa Insurance Services, Inc.

In true government fashion, the Cybersecurity Maturity Model Certification requirement, more commonly referred to as CMMC, is a mouthful!  While most companies are familiar with or are working on compliance with this requirement by now, we felt it was appropriate to share the history of this certification with our audience.

I have enlisted the help of a long-time friend and trusted resource of mine, Mandy Irvine, founder and CEO of Hoop 5 Networks - IT and Cybersecurity Solutions. As experts in this field, she and Russell Emig, Hoop 5’s Certified Chief Information Security Officer have provided much of the following information.

Why Did CMMC Became A Requirement?

The CMMC framework was born out of the need to protect sensitive information within the U.S. Department of Defense’s (DoD) supply chain. Historically, the DoD relied on a set of cybersecurity requirements embedded within the Defense Federal Acquisition Regulation Supplement (DFARS). However, rising cyber threats and increasingly sophisticated attacks against defense contractors highlighted the inadequacy of those measures.

Evolving Threat Landscape. Over time, cyber-attacks grew more frequent and severe, targeting companies that managed Controlled Unclassified Information (CUI). The traditional self-attestation model for cybersecurity controls proved insufficient.

Unified Standard. CMMC was introduced as a unified framework to ensure that every organization within the defense industrial base meets a baseline of cybersecurity practices. This move helps safeguard not only government data but also the integrity of the broader supply chain.

Who Needs to Comply?

CMMC compliance is not reserved solely for technology companies; it extends to all entities within the defense industrial base.

Defense Contractors and Subcontractors. Any company that bids on or holds DoD contracts and handles CUI must comply with the relevant CMMC level.

Broader Business Ecosystem. This includes manufacturers, IT service providers, and even logistics firms that support the DoD. Essentially, if your organization is part of the defense supply chain, CMMC compliance is on the horizon.

The framework is structured into multiple tiers, ensuring that each organization implements security practices appropriate to the sensitivity of the data it handles.

What to Expect Regarding Compliance

Preparing for CMMC certification involves a structured process that may require substantial changes to an organization’s cybersecurity posture.

Assessment and Gap Analysis. Organizations typically begin with a thorough assessment of their current cybersecurity measures to identify gaps relative to CMMC standards.

Implementation of Controls. Depending on the required CMMC level, companies may need to implement a range of controls from basic cyber hygiene (like access control and incident response) to advanced measures for more sensitive data.

Third-Party Certification. For higher maturity levels, a formal assessment by an accredited third-party organization is necessary. This external validation ensures that the implemented controls are effective and align with DoD requirements.

Operational Impact. Beyond technology, compliance may affect business processes, training programs, and even contractual relationships. Preparing for CMMC is an investment in the future stability and credibility of your business within the defense sector.

Consequences of Non-Compliance

Failing to meet CMMC standards can have far-reaching consequences for companies involved in the defense supply chain.

Loss of Contracts. The most immediate risk is exclusion from bidding on or maintaining DoD contracts. For many companies, this loss of business could be devastating.

Increased Cybersecurity Risk. Without adherence to robust cybersecurity practices, organizations are more vulnerable to breaches. A successful attack could lead to the compromise of sensitive data, resulting in financial losses, legal ramifications, and severe reputational damage.

Regulatory and Financial Penalties. Non-compliance may trigger increased scrutiny from federal regulators. Over time, this could result in additional sanctions or penalties, further straining business operations.

CMMC represents a significant shift in how the defense industrial base approaches cybersecurity. Its history is rooted in the necessity to counter a landscape of evolving threats, and its requirements extend to a wide array of businesses involved with the DoD. Preparing for compliance is a comprehensive process that, while challenging, is essential for securing contracts and protecting critical data. Conversely, the risks of non-compliance underscore the importance of investing in robust cybersecurity measures.

Understanding the intricacies of CMMC will be crucial for organizations looking to secure their place in the future of defense contracting.

For questions about the CMMC, contact the team at Hoop 5. They are ready to be of assistance and support if needed.

A Hardening Insurance Market for Non-Profits-Steps to Prepare for the 2025 Renewal Process

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

Non-profit and human services leaders started experiencing a hardening property and casualty insurance market in 2024 illustrated by reduced limits of liability, higher deductibles, and increased premiums. And, the market shift still may not have been enough to right the ship.

According to Insurancebusinessmag.com, reinsurers are seeking double digit increases in 2025 due to rising claim costs. Behind these rising claims costs are social inflation, emerging risks (i.e., opioid and synthetic chemicals), reserve increases, litigation funding and no promising tort reform. Reinsurers also argue that 2024 rate hikes were insufficient. As a result, these companies are reducing exposure to the US casualty market.

When reinsurers sneeze, the insurance market and its insurers catch a cold. In 2025, expect more signs of the hardening market. However, there are steps non-profit leaders can do to prepare for the renewal process in 2025.

Anticipate Premium Increases

Consider the organization’s growth in all rating factors, whether it be revenue, employee count, vehicles, or beds. Premium will increase accordingly before rate increases.

Complete Full Insurance Applications

An experienced insurance agent will ask clients to update applications in hard copy, using electronic documents, or via an online portal. If this is not happening, ask why. If it is happening, then complete the full version rather than truncated renewal applications. Creating competition in the marketplace means providing underwriters a full scope and understanding of operations. Very few underwriters will quote using another carrier’s renewal updates.

Review Contract Insurance Requirements

Many carriers are reducing limits of liability for abuse/molestation and professional liability. Others will no longer quote umbrella or excess liability. Stacking quotes from various carriers to achieve once readily attainable limits is possible, but this strategy comes with a significant premium cost. So, before stacking policies, review contracts with counties, regional centers, and funders to understand the required insurance coverage.

Engage with Partners Now

Communicate to organization partners the cost to maintain required insurance limits. Take a hard look at current programs to determine if outcomes (i.e., revenue and impact) warrant the increased insurance costs. Some programs may need to sunset.

A continuing hardening insurance market in 2025 will force non-profit and human services leaders to approach the renewal process with care and new focus. The recommended steps listed above will help organization leaders develop a renewal strategy while helping underwriters’ analysis prior to releasing quotes.

For more information about the hardening market, contact me at sbrown@ranchomesa.com or (619) 937-0175.

Step Up Your Safety: Essential Ladder Topics for National Ladder Safety Month

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

March is national ladder safety month. While worker safety should be a priority all year long, this month is a reminder of the dangers associated with ladders in the workplace. The Occupational Safety and Health Administration (OSHA) reports falls are a leading cause of death in the construction industry. A fall prevention plan and thorough ladder safety training can help protect workers from injury and prevent fatalities.

Following a few basic ladder safety rules can also ensure a safer work environment.

1. Choose the right ladder for the job

Make sure you are using the appropriate ladder for the task at hand. The ladder will need to be able to support the weight of anyone using it, plus the added weight of tools and materials. The ladder must also be tall enough so that a person can work from it without climbing onto the top three feet.

2. Thoroughly inspect the ladder before use

Before using the ladder, ensure there is no damage or missing parts. All bolts, screws, and hinges should be secure and there should be no broken or damaged rungs. The rungs or steps of a ladder should be clean of any oil, grease, or paint to prevent slips while climbing. If there is any damage to the ladder, it should not be used for work.

3. Set up the ladder in a safe area

It’s important to place your ladder on a level surface and away from any electrical wiring. If working in an area where people might be walking by, create a barrier around the base of the ladder to redirect traffic. If the ladder is placed in front of or near a door, block off the door. Be sure to keep ladders at least 10 feet away from power lines.

4. Exercise caution when using a ladder

Be sure to maintain three-point contact when using a ladder; you should never have more than one hand or foot off the ladder at any time. When using the ladder, do not lean over the side railings or move or extend the ladder while a person is on it. Use a tool belt to carry equipment so that your hands are free at all times when ascending and descending.

Regular training for employees and frequent ladder inspections can help reduce the risk of any falls or injuries and ensure workers are prepared for ladder use on a jobsite. Rancho Mesa clients can utilize SafetyOne’s Ladder Safety online training, and the mobile app’s built-in ladder observation to document inspections, any issues that are found and corrective actions.

 Toolbox talks for ladder safety, proper usage, types of ladders, and more are available through the SafetyOne™ platform and can be used to train workers on safe ladder use.

For more information, register today for Rancho Mesa’s ladder safety workshop at our Mission Valley office in San Diego, CA on March 21st, 2025

4 Steps to Ensure I-9 Compliance and Prepare for an Audit

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

The Trump administration has placed a strong emphasis on immigration policy. Significant changes to employment-based immigration and work authorization are anticipated to take effect within the next four years. For employers, this means I-9 compliance should be a top priority in order to avoid costly fines.

All employers in the United States are required to complete and maintain Form I-9 for each employee as proof of work authorization status. Businesses can be audited for I-9 compliance at any time. If your business is selected for an audit, you will have three days to provide documentation to U.S. Immigration and Customs Enforcement (ICE) inspectors.

Implement these four steps to ensure your business is in compliance before an audit takes place:

1. Complete I-9 forms for all employees

Documentation is required from both employees and employers. Employees should provide employers with proper documentation and proof of work authorization. Section 1 of Form I-9 will need to be completed by the employee. Employers will need to verify the validity of those documents and enter necessary information into the employer’s own records, in Section 2 and Supplement B of Form I-9.

Rancho Mesa clients can access additional guidance for completing the Form I-9 in the RM365 HRAdvantage™ portal to ensure record-keeping compliance.

2. Conduct an internal audit

Conducting an internal audit can help catch any errors before a formal audit occurs. Depending on the size of your business, you may want to audit all employee I-9 records, or for really large companies, just audit a portion of your records. Check for any errors or omissions in I-9 forms, ensure all forms are compliant with current Form I-9 requirements, and dispose of any expired I-9 forms. Regular internal audits can help ensure your business is prepared in the event of an official audit.

3. Correct any I-9 errors

If you do find any errors through an internal audit, be sure to correct them right away. To correct Form I-9 in accordance with U.S. Citizenship and Immigration Services (USCIS) guidelines simply:

• Draw a line through the incorrect information

• Enter the correct information

• Initial and date the correction

Errors made in Section 1 must be corrected by the employee, and errors made in Section 2 or Subsection B will need to be corrected by the employer.

4. Store I-9 forms and related documents in a secure location

I-9 forms contain sensitive information and should be kept in a safe and secure location. USCIS requires I-9 forms for each employee must be kept by an employer “for three years after the date of hire, or one year after the date employment ends, whichever is later.”

If an audit conducted by ICE does find your business to be in violation of I-9 requirements an employer could face fines worth tens of thousands of dollars. Repeat violations could also lead to criminal charges.

For questions about keeping your business in compliance with Form I-9 requirements, use the RM365 HRAdvantage™ portal to contact an HR expert.

Creating a Standard Operating Procedure for Work-Related Incidents

Author, Drew Garcia, Vice President, Landscape Group, Rancho Mesa Insurance Services, Inc.

In order to improve a process, there needs to be a baseline. When it comes to tracking, reporting, and following through on a work-related incident, injury or illness, creating a standard operating procedure (SOP) sets the foundation.

Flow charts can help all stakeholders better visualize the process and show potential next steps based on yes/no questions. This type of operating procedure also shows the duties and obligations for the individual employee, supervisor, human resources personnel and safety manager that is involved.

This process will ensure your employee receives the timely care they need based on the particular circumstances and provide your staff the confidence that they are accurately handling the situation.

Other areas to consider within this work flow can be:

• OSHA reporting requirements

• OSHA recordkeeping

• Initial incident report

• Supervisor’s report

• Witness statements

• State-specific requirements

• Follow up reports to address the root cause and prevent similar incidents from occurring in the future.

Standardizing your injury reporting protocol is the first step to getting the appropriate care, minimizing the incident’s claim impact, and providing you training opportunities to reduce the risk of a similar claim reoccurring. As your business continues to evolve and grow, it is critical that you establish a protocol as your foundation and continue to fine tune it as new departments are created or areas for improvement are observed.

Controlling Auto Insurance Costs for Plumbers and HVAC Contractors

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

Like most businesses, vehicles are an essential part of a plumbing or HVAC contractor’s operations. Whether the focus of their business is service and repair, tenant improvements, installation, or new construction, company leaders depend on trucks, vans, and cars to get their people, equipment, and materials safely to the jobsite.

Unfortunately, the cost to insure those vehicles has increased dramatically over recent years and there appears to be no imminent sign that trend will change.

According to AM Best, the U.S. commercial auto insurance segment sustained a $5 billion net loss in 2023. While it is still too early to know how the auto segment performed in 2024, early indications from the first half of the year showed further deterioration, marking the 12th straight year of net underwriting losses for auto insurers.

There are multiple reasons for the increase in auto losses. Distracted driving is contributing to an increase in the frequency of automobile accidents, while social inflation and third party litigation funding are amplifying the severity of associated losses. As all of these causes will continue to negatively affect the auto insurance marketplace broadly, avoiding auto accidents becomes increasingly more important for individual companies in controlling auto insurance costs.

While there are many factors that can lead to an auto accident, businesses can benefit from focusing on those within their control. Implementing or enhancing a fleet safety program with clear, actionable policies will better equip drivers to avoid accidents. Consider how your fleet safety program handles the following:

• Driver selection, qualification, and performance management. Establish clear written guidelines on who is eligible to drive and how their driving performance is evaluated. This may include policies such as requiring an applicant to provide their motor vehicle record as part of the interview or hiring process, participation in the Employer DMV Pull Notice program, incentives for safe driving, and responses to unsafe driving practices, near misses, tickets, or at fault accidents.

• Safety rules, vehicle use, and operating procedures. Define how and when drivers are allowed to operate vehicles. This should include policies that address use of cell phones and hands-free devices, impaired driving, personal use of company vehicles, company use of personal vehicles, passengers, seatbelt use, and speeding, among others.

• Driver training. Provide ongoing training for employees to understand their responsibilities as drivers and the risks that are present on the road. This could include in-person or video trainings that discuss topics like defensive driving, distracted driving, safe following distance, and driving in inclement weather. Having potential drivers successfully complete an in-person driving test in a controlled environment before getting on the road, as well as annual driving tests can also help reduce the likelihood of an accident.

  Learning management systems like Rancho Mesa’s proprietary SafetyOne™ platform can offer effective and convenient online trainings to ensure your drivers are knowledgeable and well equipped to drive for your company.

• Vehicle maintenance and inspection. Schedule and document routine maintenance tasks like oil changes, tire rotations, and brake inspections to help keep vehicles running smoothly. Implementing a daily vehicle inspection for items like active turn signals, working headlights and brake lights, and tire pressure reinforces the importance of safety to your drivers, while also proactively minimizing the risk of a dangerous maintenance issue that could lead to an accident.

Providing an easy way for your drivers to document and report their daily vehicle inspections and maintenance issues can increase the likelihood of compliance. Try one of our QR code-enabled Driver Vehicle Inspection Report (DVIR) to see just how simple it can be to document and report mechanical or safety issues with your fleet.

In addition to a robust fleet safety program, there are other tools and strategies that can be leveraged to provide savings in a challenging insurance marketplace, without sacrificing coverage.

To discuss these tools and strategies or for a complimentary review of your current fleet safety program and insurance program, contact me at (619) 486-6554 or mgorham@ranchomesa.com.

SB 428: Expanding California’s Workplace Violence Restraining Order Law to Protect Against Harassment

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

A new California law expands the state’s protections around workplace violence restraining orders.

Beginning January 1, 2025, employers were given the right to seek a temporary restraining order on behalf of an employee who has suffered harassment in the workplace. California State Senate Bill 428 (SB 428) was authored by Senator Catherine Blakespear and signed into law by Governor Gavin Newsom.

Existing state law allows employers to seek a temporary restraining order against a person who has perpetrated acts of violence in the workplace or has made credible threats of workplace violence. SB 428 expands those protections to allow employers to seek a temporary restraining order against a person who has harassed their employee(s), before harassment escalates to violence or threats of violence.

Individuals can also seek a restraining order against harassment for themselves.

The text of the bill defines harassment as, “a series of acts over a period of time, however short, evidencing a continuity of purpose, including following or stalking an employee to or from the place of work; entering the workplace; following an employee during hours of employment; making telephone calls to an employee; or sending correspondence to an employee by any means, including, but not limited to, the use of the public or private mails, interoffice mail, facsimile, or computer email.”

If an employer does request a temporary restraining order, and that order is granted by a judge, SB 428 states that the order will remain in effect for up to 21 days.

If the perpetrator of the harassment—otherwise known as the “respondent”—is also an employee of the same company that is requesting the temporary restraining order, a hearing will be held, “concerning the employers’ decision to retain, terminate, or otherwise discipline the respondent.”

If the respondent is determined to have been engaged in unlawful harassment, a restraining order may be issued with a duration of up to three years and the employer can request a renewal, “any time within the three months before the expiration of the order.”

However, the law does not allow employers to seek temporary restraining orders for any behavior or speech that is “constitutionally protected, or otherwise protected by Section 527.3 or any other provision of law.”

Rancho Mesa has a number of resources that can help protect your company and employees from workplace violence. Harassment prevention training, workplace violence training, and workplace violence policies can be found on the RM365 HRAdvantage™ portal.

Beyond a Single Bond: How We Help Contractors Stay Ahead of Their Surety Needs

Author, Matt Gaynor, Director of Surety, Rancho Mesa Insurance Services, Inc.

We recently issued a very large bond for one of our contractor clients which prompted a discussion during the underwriting process about potentially moving their account to a surety carrier with a larger capacity. However, after enjoying a seven-year relationship with the current bond company and receiving an early indication that they could support the larger bond request, this provided us with an initial understanding that we might be okay staying with the current carrier.

Most bond companies will provide their agency partners, like Rancho Mesa, with a range of support for their typical bond programs. For example, they may indicate they are looking to support established contractors with single bonds up to $40,000,000 range and work programs up to the $80,000,000 range with the caveat that they can go higher for specific accounts.

So, once we had the initial indication, the next step was to talk to our contractor client about the potential size of their future projects that might require bonding over the next few months. Based on that discussion, we realized it was actually time to find a bond company with much larger capacity to fit our client’s future needs. So, the discussion turned from support for this particular large bond to ensuring we had support for larger capacity both today and in the future.

We successfully placed the contractor with a larger carrier by focusing on really understanding the client’s business over the long term instead of just considering a particular bond at a particular time. The additional communication was key. 

If you would like more information about ways to ensure you are placed with the best bond company to fit your needs, please contact me at (619) 937-0165 or mgaynor@ranchomesa.com.

Updates to California Sick Pay and PTO in 2025

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Beginning on January 1, 2025, changes to California paid sick leave and paid family leave took effect in California.

Use of Paid Sick Leave Expanded

The use of paid sick leave has been expanded to cover additional reasons for absence including:

• Jury duty

• Appearance in court under a court order as a witness in a judicial proceeding

• Any reason covered under the victim leave law, if the employee or their family member is a victim of any qualifying act of violence (QAOV)

Additionally, agricultural workers whose job description requires them to work outside may use paid sick leave to avoid unsafe smoke, heat, or flooding conditions.

To ensure your business is in compliance with these new requirements, update your paid sick leave policy to include these new uses.

Use of Paid Family Leave Requirements Changed

The requirements for an employee to use paid family leave have also been updated. Employers can no longer require employees to use up to two weeks of accrued, unused vacation time before they are able to receive Paid Family Leave (PFL) from the state.

Employers should update family leave policies to remove any requirement that employees must use accrued vacation time before receiving PFL benefits on or after January 1.

Changes to paid sick leave and Paid Family Leave policies can be made through Rancho Mesa’s RM365 HRAdvantage™ portal by utilizing the Company Policies/Handbooks feature.

For more information on other important changes to California employment law, register for Rancho Mesa’s 2025 Employment Law Update webinar.

Cal/OSHA’s COVID-19 Prevention Non-Emergency Standards End, Employers Still Required to Document COVID-19 Cases

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

February 3, 2025 marked the end of the California Division of Occupational Safety and Health (Cal/OSHA) COVID-19 Prevention Non-Emergency Standards.

However, while California employers are no longer required to follow any regulatory requirements, COVID-19 reporting and recordkeeping requirements (Title 8 Subsection 3205(j)) remain effect until February 3, 2026. The requirements specify that the employer must:

Keep a record of all employee COVID-19 cases.

These records should include the employee’s name, contact information, occupation, location where the employee worked, the date of the last day at the workplace, and the date of the positive COVID-19 test and/or COVID-19 diagnosis

These records must be kept for two years “beyond the period in which the record is necessary to meet the requirements of this section.”

Provide information on COVID-19 cases to all health and safety governing bodies when requested.

These records must be provided to the local health department that holds jurisdiction over the location of the workplace, the California Department of Public Health (CDPH), Cal/OSHA, and the National Institute for Occupational Safety and Health (NIOSH) immediately upon request and when required by law.

Although employers are no longer required to enforce a specific set of COVID-19 regulatory requirements, California employers must still adhere to state health and safety guidelines. These guidelines include:

• Maintaining a “safe and healthful” place of employment for all employees as required by Labor Code section 6400.

• Establishing, implementing, and maintaining an effective Injury and Illness Prevention Program (IIPP) as required by Title 8, California Code of Regulations, section 3203.

• Identifying, evaluating, and correcting any and all unsafe or unhealthy conditions, practices, or procedures associated with COVID-19 if COVID-19 is identified as a workplace hazard.

A COVID Resources Toolkit is available through Rancho Mesa’s RM365 HRAdvantage™ portal.

More information can be found on Cal/OSHA’s COVID-19 Guidance and Resources webpage.

Group Captives May Be Contractors’ Solution to Rising Insurance Premiums

Author, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.

Over the last few years, contractors have started to see rate increases on multiple lines of coverage within their insurance program. And, the difficulty insurance companies are having in the property market, especially here in California with the wildfire risk, has been pretty well publicized. We have seen both homeowners and commercial landlords forced away from the standard property market and into surplus lines, or, worst case scenario, the California Fair Plan. We are also seeing commercial auto policies come under pressure due to increases in litigation, costs to repair vehicles and social inflation. 

Believe it or not, workers’ compensation has been the lone outlier from these increases, until now.  In the last 6 months, we have started to see a shift in the market. Carriers’ combined ratios have been steadily creeping up and underwriters are cutting back on the amount of schedule credits they can apply.

As a result of the premium increases felt across the board, one alternative risk financing strategy contractors may want to consider is a member-owned group captive.

A member-owned group captive is an insurance company owned and operated by the captive members, strictly for the benefit of those members. This structure enables middle market companies the ability to increase their underwriting credibility through the collective purchasing power of the group. These groups can be related (what we call homogeneous like a trade group or association), or unrelated (which would be a heterogeneous group which could be companies similar in size).

There are real advantages of a group captive, like:

• Lower insurance costs over time

• Financial incentives for strong loss control

• Increased control over claims management

• Investment income

Who should consider a group captive?

• Companies that have shown long term financial strength

• Owners who are committed to safety and have strong safety programs in place

• Loss histories or experience modification rates that are significantly better than average in their respective trade

• Annual premiums of $150K or more for workers’ compensation and commercial auto

As we see the workers’ compensation market continue to harden, best-in-class contractors who are looking to control their costs and protect their bottom line may want to consider this alternative risk financing strategy. 

If you would like to learn more about captives, contact me at sclatyon@ranchomesa.com or (619) 937-0167.

Non-Owned Auto Can Be A Janitorial Company’s Hidden Nightmare

Author, Jeremy Hoolihan, Partner, Rancho Mesa Insurance Services, Inc.

It is common for employees of janitorial companies to drive their own vehicles, whether that is driving to various jobsites, transporting cleaning supplies, or simply running errands. For the janitorial company, this creates what is referred to as a non-owned auto exposure.

Often overlooked, non-owned auto liability arises when a business is held responsible for accidents caused by employees driving their personal vehicles while performing duties in the course of employment.

As inflation and nuclear verdicts drive up costs of individual auto liability claims, employers must be concerned not only with company-owned vehicles, but their employees’ vehicles being used on company time. If an employee causes an accident while driving their personal vehicle while on the clock, the injured parties may file claims against both the employee’s personal auto insurance and their employer.

To protect your company from non-owned auto liability, it is recommended that companies have an updated fleet safety program that includes the following:

• Employees using their personal vehicles on company time should be required to provide a copy of their MVR. It is critical that the employee’s MVR meets the same parameters as those driving company-owned vehicles.

• Employees who drive company and/or personal vehicles should be required to participate in the DMV Pull Program. This way, if an employee received a major moving violation (e.g., reckless driving, DUI, etc.), the company will be alerted.

• Require all company drivers who drive non-owned vehicles to purchase personal liability coverage. That way, damages of a claim are less likely to exceed the personal auto liability limit and fall on to the employer’s commercial auto liability policy. It is also recommended that employers require their drivers to purchase minimum limits of $300,000.

• Make sure the employee completes routine maintenance as per the car’s manufacturer on their personal vehicle, such as oil changes, tire checks, windshield wiper replacements, etc. This is just as critical as a maintenance program for company-owned vehicles.

• Provide regular fleet safety training to all employees driving company and personal vehicles during business hours.

• Finally, business owners may want to encourage employees to use safety features such as apps that prevent the driver from using their phone while the vehicle is in motion.

Janitorial businesses, in general, have a large non-owned auto exposure that can often be overlooked and leave a business vulnerable to high dollar auto claims, which can result in policy non-renewal and/or increased premiums.

Now is the time to review your current program’s policies and procedures with your insurance broker and make any adjustments necessary.

If you need any assistance reviewing your current program or have any questions, please feel free to contact me at (619) 937-0174 or jhoolihan@ranchomesa.com.  

Risk Management and Contract Strategies to Protect Your Landscape Business

In this second episode of a special two-part series, Landscape Group Vice President Drew Garcia, is joined by Josh Ferguson, attorney with Freeman Mathis & Gary, to discuss contract strategies and risk mitigation for slip and fall incidents.

Drew Garcia: Welcome back everybody. I'm Drew Garcia, Vice President and Landscape Group Leader here at Rancho Mesa. Today we have a great opportunity to connect with Josh Ferguson from Freeman, Mathis and Gary. Josh and I had a chance to get to know each other over the last couple of years through different trade associations. Josh has a big focus on the landscape and snow contracting community. Josh, welcome to the show.

Josh Ferguson: Yeah, thanks for having I appreciate it.

DG: All right, Josh. So we're going to jump into some things that are kind of current and news and noteworthy right now for primarily landscape operators. So primary, you know, customer is going to be community associations, commercial properties that could be hotels, could be shopping centers, municipalities doing city work. I know each customer might have different needs in terms of how those contracts might need to be set up. But some things that we're seeing on the slip and fall, trip and fall side, want to talk a little bit about if you're seeing that same kind of activity and what are some things that the contractors could be doing to help, not only just prevent them from happening, but if something comes in, what's that supporting documentation that might help your insurance carrier or you when you're going through an incident like that?

And then also talking about this commercial auto market, you know, a lot of the insurance carriers, this has been an issue for a really long time and they're trying to raise rates fast enough to be able to cover the losses that are in the past and they're looking out into the future and it's causing some significant increases and in some cases some non-renewals or some change in appetite and that can really hit landscape hard because these businesses are built with a lot of vehicles in mind and they got service areas that they've got to get to. So I want to talk a little bit about the commercial auto side and some things that maybe the landscape business should be considering. There's certainly technology out there that might be able to support them in some of those efforts, but let's jump first into the slip, trip, and fall type of scenarios that can happen on properties and maybe talk a little bit about trying to defer or shed some of that liability through the contract and you know calling out scope and everything like that that might help build a better case for the landscape company in the event something like that occurs.

JF: Sure, and what you said to start with I think is right on we are also seeing an uptick in volume of claims relative to trip or slip and falls involving landscape contractors getting brought or dragged into those lawsuits. And part of the reason we think they're getting dragged in based on the claims we're seeing and the conversations I'm having is from really broad contract language that is things like monitor and inspecting provisions or maybe unclear terms as to what the landscape or hardscape services are actually to be. The broader or more ambiguous those terms are, the more a property owner or property manager when they get sued can have their attorney go through the rolodex of vendors they have on site, look through every vendor that has a really broad contract and bring in those contractors. So, in the same trip and fall on gravel, they may end up bringing one hardscape company, one landscape company, whoever dug up the piping or drainage on the property to get everybody involved, to make sure that they have the best chance of being protected. So, how we would combat that is again, make sure that the scope of services are really well defined to what you're actually going to do at the site, when you're going to do it, the timeframe you're going to do it, and then have some liability limiting language saying once you're done it, you have no duty to monitor inspector after and they deem that it's satisfactory work, again, to help protect you there.

DG: And if you're the landscape contractor and you already have maybe contracts in play and it's not a practice for you to revisit, you're listening to this now saying, “Shoot, I've already renewed a lot of my business or I'm working for people that I haven't looked at the contract in a couple of years, we just kind to continue to renew it.” What would be the cadence again on looking at those contracts and making sure they're up to speed and how would you go about getting that done so you feel confident that you're in a position where you're there to support the issue if the issue is a result of your work and you're not picking up more than you are anticipating?

JF: Sure. I think there's a two-part answer to that question. I think first and foremost, even if you've signed an agreement and you're in the middle of that period of time in which the agreement's valid, but you think something just isn't accurate or correct or it was when you signed it but they're not letting you do that, there is no reason you can't go to your client and say “This is actually not within our scope or you're no longer allowing us to do this, we should sign an addendum to this agreement confirming the actual obligations of the party.”

As an attorney, again, I want a 10 out of 10, and a 10 out of 10 would be those terms define what you're not supposed to be responsible for and everyone signs it. But even if it's just something where they acknowledge it by email, if then a claim arises relative to that issue, we've got something. We want—and by the global “we”, I mean you as a contractor, me as an attorney and your insurance company—we as a group want anything we can do to help protect you. And some things are better than others, but something is better than nothing. So first and foremost, I want to say that if you're listening to this and then know you signed a contract that's unfair, inaccurate, it doesn't mean you can't have those conversations. We can't guarantee the results, but I think it's worth that conversation.

And then if you did sign it and then you feel like there's nothing you can do about it, I would strongly suggest you revisit contract language on a yearly basis. Whether that's your base contract, you have folks sign or when you re-up with clients that you should look at on a routine basis. As an attorney who's done it for 20 years—and I review hundreds of contracts, especially in the late summer, early fall for snow and ice and then for maybe late winter, very early spring for landscapers—things come up that we had never talked about before. Things change in the industry or you as a contractor may change the type of services you perform. You may be a residential person and you're moving over to HOA or commercial, whatever it is. And then as a result, the language in your base agreement may need to be different. So I would strongly recommend doing it on a yearly basis.

DG: I'm nodding my head the whole time. I know this is just audio, but I'm just thinking of the past conversations with so many businesses and those are the things that come up. You know, everybody's an entrepreneur at heart when you own a business and that could create change No matter if that's with your customer base or a new service that you're offering and making sure that you're just covering your checks and balances in terms of how you're setting this up is important because at the end of the day you just want to make sure that you're supporting the business in the event there's an issue that, you know, comes against you and providing people like you the right information you need to defend.

And I would say the other key issue right now within the landscaping industry, primarily on the maintenance side; so when we've got fleet-driven businesses, commercial auto is at an all-time high in terms of so much scrutiny by the insurance carriers. And for a good reason, they've put out plenty of supporting information to show that they cannot collect enough premium to cover what seems to be the amount of claim cost that comes in. And in my experience with this, when I'm going through a renewal or if I'm talking to a landscape contractor about their business, and then ultimately get to that underwriting conversation. There's a lot of hesitancy right now with this class of business because of the amount of vehicles that they have. And they're really taking a deep dive into driver training, the ability to use things like GPS and dash cams, just as a way for driver behavior and training to that information. So it'll kind of open up that next category where I think originally maybe GPS was being used for routing purposes and then idling and fuel cost, but if you're seeing somebody kind of consistently speed or harsh breaking, harsh turning and you're not coaching to that information, am I right where you could be opening yourself up to some more opportunity where you had the information available and maybe you should have made some corrective action?

JF: Yeah, so there's multiple layers to what we're seeing and they all end kind of with the same end result, unfortunately. So there's certainly social inflation across the board for all personal injury claims The numbers are up across the board whether it's an auto claim, a slip-and-fall claim, a construction defect; whatever it is the numbers are just higher for settlement and for verdict, we track verdict analysis pretty consistently, and the numbers are up whether it's in South Dakota, California or Pennsylvania. So there's that aspect and that as a result then drives up the cost that the carriers are paying on those settlements and verdicts.

And then I think you're right, the plaintiffs' attorneys have figured out a way in this orbit of the landscape world to, if it's an auto claim, focus on the fact that if there's an inadequate training on these things, they can try to put the jury in the same person, in the same stance as the person that was injured, and try to get the jury to then punish these companies. And that's certainly the kind of claims that insurance carriers are worried about, which then cause earlier settlements and impact premiums or their even willingness to write the auto side.

The landscape industry, I think, certainly does a great job on across the board training for their employees because they're worried about workers comp and their employees’ safety. And they're thinking about slip and falls and tripping falls, but at the end of the day, as you mentioned already, all of these folks are in fairly heavy pieces of equipment and sometimes we kind of gets caught by the wayside that these are the things that could really cause the catastrophic losses and that bears out then in huge numbers and so the carriers are worried about it. So they want to see some internal training they want to see what kind of background information you're doing and training for these drivers because they want to make sure that even if they're going to have to pay out for a loss for your driver negligent running into somebody they at least want to be able to show that it was a one-off, it was truly negligence, and it was an accident, and that there wasn't any kind of history that should show that this was bound to happen.

DG: It makes a ton of sense, you know, when you back it in that way. And I think as most business owners, nobody's set out to go about business without any strategy or without any training. And I think that with the amount of technology that's now available, it's easier for them to gather information whether it's leading or lagging information to kind of appropriately assign and create trainings to make sure that they're putting their drivers in the best position to be successful and not to be in these accidents. And at the end of the day maybe having more evidence to provide to you and the insurance carrier to ultimately defend if there is an issue. Talk to us a little bit about—I'm going to flip right back to the contract side on slip and fall documentation—when it comes to doing that type of work or doing when you're primarily engaged in landscape maintenance for these commercial properties. What are some things that the landscape company can do to show that the proof of work or the scope of work was complete? And do you have any examples that you've seen in the past where people are using this so that it does help just with the proof of work being completed?

JF: Yeas, so, on the landscape side, sometimes we don't always get the records exactly when things were serviced, especially if it's a contract that says, you know, say twice a month mowing or weed whacking or fertilizer placement or whatever, gravel, whatever it is. There aren't always great documents to show when it was actually done. And then as a result of it, we have to go back through timesheets, sometimes years later when a claim arises. So, you know, we're really looking for increased documentation and I think technology does make it a lot easier, it takes away some of the friction for this to really show when where and how exactly the work was performed so that we can show that it was done as we see.

Again, one of the claims that does tend to come up a lot is when somebody trips and falls in a hole and the landscaper gets dragged in because they say it was covered up because it wasn't properly then mowed and our contract says twice a month and then we're having to dig through time sheets but if we actually know exactly who was out there when they were out there; if you have any records with communications with your client, if you're not going to be out there for a certain time because say it hadn't rained in a while or it's extra dry weather that August or September, help things explain itself a little better. Again, it puts you in a better position. Otherwise, we're at the mercy of again, relying on credibility and the insurance companies, especially in these days of social inflation with bigger settlement and verdicts, they don't want to rely on that. They'd rather settle out on the case and protect themselves from those high exposures.

DG: I appreciate it, Josh. I want to thank you again for coming in and helping us out and talking a little bit about snow, talking a little bit about landscaping. I think this is the beginning to just getting more information out to the industry. The goal here is just to educate people and raise the level of professionalism, raise the level of oversight and expertise when it comes to executing on the work that's being done in this industry. So I appreciate you taking that stance and kind of leading the way with the history of your involvement with both snow and with landscape. If somebody wanted to reach out to you or connect with you, it would be a good way for someone to do that?

JF: Yeah. You can find me on our firm's website, Freeman, Mathis and Gary; Joshua Ferguson, and I'd be happy to reach out and respond and I very much appreciate the time today.

DG: Josh, thanks again. Appreciate it.

JF: Thanks.

Steps to Prevent Social Engineering Fraud

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

Social engineering fraud is when cybercriminals impersonate a trusted individual to manipulate others into performing actions such as making wire transfers, sharing confidential information, or granting access to their systems. It is often confused with hacking, but the two are fundamentally different. Hacking involves identifying vulnerabilities in software to breach a system, where as social engineering fraud relies on impersonation and manipulation to trick individuals into helping the cybercriminal.

There are multiple types of social engineering fraud schemes, but the most common one is called phishing. CrowdStrike, a global cybersecurity firm, defines phishing as “a cyberattack that leverages email, phone, SMS, social media or other form of personal communication to entice users to click a malicious link, download infected files or reveal personal information, such as passwords or account numbers.” This form of social engineering fraud has increased in popularity since the start of the pandemic as a result of an increase in the population working remote.

Research highlights that 98% of all cyberattacks come from some type of social engineering fraud. In the U.S., more that 80% of businesses have experienced phishing attacks, and nearly all successful network breaches (95%) involve phishing tactics. These statistics show that social engineering fraud is growing and can be challenging to detect because it is designed to grab the user’s attention through human emotions to manipulate their victims. Given these statistics, it is crucial that organizations adopt trainings and proactive measures to prevent these types of cyberattacks.

Even with an increase in these types of crimes, there are strategies organizations can put into place to mitigate risks.  

Trainings

Employees need to know exactly what social engineering fraud looks like and how to identify phishing emails, fraudulent phone calls, and other common tactics. Organizations should implement in-house phishing attempts to their own employees to practice guarding against these attacks. It is important that employees are mindful when receiving a potential fraudulent email and they should be checking the source by confirming with person it came from that it is a legitimate request. This is especially important if the email is requesting personal information like passwords or asking to wire money. Educating your employees will help build awareness and help guard against these kinds of cyberattacks.

Secure Devices

Organizations will need to make sure their anti-malware and antivirus software is always up to date to block malware from phishing emails before it reaches the receiver. Another way to secure your devices is to always use different passwords for your various accounts. If you have multiple passwords and a cybercriminal does get ahold of one of your passwords, they are not able to login into other accounts. Also, implementing a two-factor authentication process will also help guard against these attacks. If a cybercriminal does obtain a password, there is now a second step that is required by requesting a text message with a confirmation code or asking a security question.

Minimize Your Digital Footprint

Cyber criminals use social media to their advantage to gather personal information. Kaspersky, an international cybersecurity company, shares an example of how a common security question many banks ask is ‘what is the name of your first pet.’ However, the security firm points out that if someone innocently shares this information on Facebook or other social media sites, you could be vulnerable to a cybercrime. “In addition, some social engineering attacks will try to gain credibility by referring to recent events you may have shared on social networks,” explains Kaspersky. To protect yourself, make sure all of your social media accounts are set to private so only friends and family are able to see what you post. Also, make sure your social media accounts do not include addresses and phone numbers. These easy precautions will guard against social engineering fraud. 

Get Cyber Liability Insurance

While you can implement all the best strategies to protect your organization from social engineering fraud, it is still a best practice to talk to your risk advisor about a cyber-liability policy. They can explain the coverage and help you mitigate the risks.     

Social engineering fraud is a growing threat for individuals and organizations of all sizes. By implementing these strategies, organizations can help mitigate this risk. Focus on educating your employees by building awareness of what social engineering fraud is and looks like, securing your devices through anti-virus software and implementing two factor authorizations. Lastly, minimize your digital footprint by making sure your social media accounts are set to private and not sharing personal information. By implementing and practicing these steps, organizations and individuals will be better equipped to defend themselves from social engineering fraud.

For questions about your risk management program, contact me at (619)486-6569 or jmarrs@ranchomesa.com.

Navigating Snow and Ice Contracts: Best Practices for Landscape Contractors

In this first episode of a special two-part series, Landscape Group Vice President Drew Garcia, is joined by Josh Ferguson, attorney with Freeman Mathis & Gary, to discuss risk management for snow and ice operations and what landscape contractors should know.

Drew Garcia: Welcome back everybody. I'm Drew Garcia, Vice President and Landscape Group Leader here at Rancho Mesa. Today we have a great opportunity to connect with Josh Ferguson from Freeman, Mathis and Gary. Josh and I had a chance to get to know each other over the last couple of years through different trade associations. Josh has a big focus on the landscape and snow contracting community. Josh, welcome to the show. If you could share a little bit of your background with the listening group.

Josh Ferguson: Yeah, thanks for having me. I appreciate it. So as you said, I'm Josh Ferguson. I'm an attorney with the law firm of Freeman Mathis and Gary. I'm based in our Philadelphia office, admitted to practice in several states up and down the Mid-Atlantic. And I've been a litigator for 20 years now. I've litigated hundreds of slip and fall and trip and fall claims, developed the specialty over the last dozen years or so in the landscapes, snow and ice management, power sweeping industries, and have relationships with some of the trade associations in those industries like Snow and Ice Management Association, Accredited Snow Contractors Association, Planet and some of the state and regional landscape and snow contractor associations.

DG: Josh, your background's perfect timing for us because I can't tell you how many conversations with our clients lead to contracts and the contracts that they're signing with their customers, whether they're signing the customer's contract or are they putting their contract in front of the customer to sign; opportunities to review that and make sure things are up to speed before they start to get the work done. So I'm really excited for you to be able to comment a little bit on, you know, one, in the snow and ice management world, obviously the contract is super important. What are some things that these landscape contractors should be focused on pre-work, and before the contract gets signed, what are some things that they need to focus on to make sure that things are in order in the event something happens later on down the line?

JF: In the snow and ice management world especially, they're risk managers first and foremost. It starts and ends with documentation. So that's from the very beginning when they're starting to develop an RFP to if they get a contract and they need to do a preseason site inspection through in-event performance, post-event performance and invoicing all that needs to be documented. Because if it's not documented when these claims arise whether it's your client on the site telling you, you damaged something or two years later somebody said they slipped and fell you're going to need to prove through a document ideally what you did six months or two years before otherwise again it comes down to credibility and you don't want those claims to turn into intersectional car accidents where everybody claims they have the green light.

DG: That lines up so well with insurance right now because, you know, before we started recording this I was talking about just the carrier underwriting capacity for this type of work. It's really dwindling. There's a lot of questions that surround the pre–underwriting process or pre -quoting process for any landscape company that's in any portion of their work doing snow and ice operations. And you know, one of the key pieces that I think is starting to push the industry in the right direction is the ability to document and there's a lot of technology and software that's making that a little bit easier. Have you seen some improvements in the contractors’ ability to document based on the technology that's available to them today?

JF: Yeah, look, at the end of the day, from an attorney perspective, we're asking for the sun, the stars, and the moon from these contractors. And in the middle of an event, things are more challenging. It's why we probably didn't get as much documentation back in the '70s and '80s and '90s, but technology has really changed the ability for them to do things without a ton of extra work, whether it's right on their phone with an app or it's the actual pieces of equipment, recording it, GPS, or application of de-icing material, whatever it is. And we are seeing that more and more in claims when a suit arises and we're asking for documentation that's coming. And it really does make a big difference in our ability to prove that what you say you did, you actually did.

DG: And I mean, so important in today's world to be able to have that proof. And when there's the ability to do it, it's on the contractor to develop those processes so that it becomes routine so that they don't miss that one opportunity and that opportunity becomes the one that comes back to get them in the end. How about when that work’s being subbed out, so not self -performed, maybe by the landscape business, but they're using service partners to form that segment of the business. Is it same concept there? Are you holding your subcontractor to those same standards? Should they be doing anything different with that work?

JF: Yeah, I mean, absolutely the subcontractor should be doing meeting industry standards and what's in the contract. One area I see contractors that are really good and do good work fall down a little bit when they subcontract out work is that they may have one base subcontractor agreement that they hand out to all of their subs. But each and every one of their client contracts might be different. And you want to make sure the terms that you're obligated to are then passed down to your subcontractor so there's not a gap. So we're talking about the actual scope of services, we may even be talking about the insurance policy limits. These claims have gotten larger and larger in size. What used to be a slip and fall that costs $200,000 now costs half a million dollars in some locations. And sometimes that impacts policy. So you want to make sure you are really comparing and contrasting and making sure that your subcontractors are meeting all the burdens that you would have had to meet should you have kept the work.

DG: Absolutely. And do you see, is that something that a contractor should be looking at routinely? So how often should they review their subcontract agreement to make sure, “am I up to speed with today's terms?” Or is that like once a year you should be looking at that? What's a good cadence on just reviewing that and making sure that you're up to speed?

JF: Yeah. I mean, I think both on your client contract and then your subcontractor agreement, I would look at those yearly. As someone who reviews, especially this time of year over the last few months, dozens of contracts sometimes a day from my various direct hire clients that I serve as outside general counsel for, it's a living and breathing document, right? So even this many years into litigating and serving as general counsel, things come up each year where then we're adjusting a base agreement for. And in addition to that, things change over time. So I think it's something, and business models change. You may do less retail shops and more HOA work. And that may change the type of language you want in your agreements. So I think those are things you should revisit on a yearly basis.

DG: And so that the people listening on the other end have an idea is how to get that done is that having somebody like you in their corner where, you know, annually they're sending these over to you for review? So having some sort of partnership with a firm so that they have this ability to manage those contracts throughout the year or when they're annually recreating their subcontract agreement. Is that how you get that done?

JF: Yeah, I think that makes the most sense, you know, if you have a counsel or somebody you're comfortable with that makes a ton of sense. Again, something we do we do a fair amount and we revisit those annually and then, again, we know there's peak season for those contract review negotiations especially if you're getting a client agreement pushed down on you and you have some concerns with the language, that's something we look at routinely. But whether it's us or someone else the thing that I hope folks come away with the most is that you should always try to review that that contract that's put in front of you and mark it up so it's at least fair. The worst thing that's going to happen is it's all rejected, but you still have the benefit of reviewing it, understanding it, and so at least you know your risk management there.

DG: Good point. I think I like that term, just being fair, because I think a lot of the audience listening that is in this space and performing some snow and ice service or some winter services, they understand that at the end of the day, they want to be there to provide coverage if there's an issue that they inadvertently did. If it was an issue that came up as a result of the service that they rendered, then absolutely, you want to be there for that. I think it's where it might be a little bit of a gray area in terms of who's really at fault with this, that's where I think a lot of the businesses today. Are you seeing more where the contractor's able to put their contract in front of the customer or is it shifted now where the customer's more imposing their contract to the contractor? Has there been any change in that recently?

JF: I think it's pretty consistent that the big box stores, the retail establishments, the large property managers are still trying to put their agreement in front of folks in the snow and ice management industry. We are seeing, I think, an overall uptick in the willingness to engage in a back-and-forth process on the language. Again, depending on the size and folks involved on the other side. You may get one thing out of 10 changed, you never know. But again, most of the time it's worth those efforts.

I am seeing more contractors that have at least drafted up their own contract. And so sometimes then we try to add our contract—meaning the snow and ice management contractor—in as an addendum or an exhibit to then the say property managers contract to help balance out some of the risk and liability-limiting language.

DG: Got it, very good. Anything else that you wanted to share in your experience with snow and ice? I know this could go a number of different ways and we're trying to keep the time down to a 12 –minute segment, but anything else that you wanted to share on the snow and ice side for the listeners?

JF: Yeah again, the importance of having a contract that's clear on your obligations and documentation to prove what you did in January 15, 2021 at 2:30 A.M. If you've got a contract that says the time you were supposed to come out, exactly what you're supposed to put down—and you have the documentation to prove it, it allows your insurance company and their attorney, if a claim arises, to put it in the best position to defend those claims instead of paying out. And that will protect you and the industry as a whole over the long run.

DG: That's a great point. Well said. Well said. Well we appreciate it, Josh. Thanks for the comments on snow and ice, and hopefully we can do this again soon.

JF: Thanks for having me.

Exploring the Self-Insured Group Alternative

Author, Kevin Howard, Partner, Rancho Mesa Insurance Services, Inc.

The fabric of the California’s workers’ compensation landscape is ever changing. Most California-based subcontractors utilize what are called guaranteed cost options for their workers’ compensation needs. This is a safe option that allows for business owners to budget for their overhead costs, however, they have minimal control based on the ebbs and flows of the market. Additionally, with medical inflation and litigated claims on the rise, CA is now experiencing a hardening market as rate increases threaten 2025 and beyond.  This has caused many contractors to seek more control over their workers’ compensation program, especially those who have displayed best-in-class safety habits and lower loss ratios to prove it. While guaranteed cost options are widely known, Self-Insured Groups (SIG) are quickly gaining traction as a compelling alternative. By pooling resources, subcontractors can access benefits that are better suited to their specific operational needs.

Predictable Expenses with Added Benefits

A key strength of SIGs is the financial predictability they provide. Unlike traditional insurance with fixed premiums, SIGs have the flexibility to reward participants who maintain excellent safety practices with reduced contributions and the possibility of surplus return premiums that are traditionally nontaxable. This structure not only encourages proactive risk management but also helps members potentially reduce workers’ compensation costs through the hard market.

Comprehensive Risk Management Support

SIGs can often go beyond the typical insurance offering by providing members with access to advanced risk management resources. Because SIGs utilize group communication for safety needs, members can lean on each other and pool data to utilize the hive-type safety support systems. These systems can include safety training programs, compliance audits, and in-depth data analysis. These tools help subcontractors pinpoint and address potential risks, leading to safer worksites and fewer insurance claims.

Collaborative and Transparent Decision-Making

A distinctive feature of SIGs is the active role that members play in the governance of the program. Subcontractors participate in selecting providers, setting policies, and shaping the group's strategies. This cooperative approach ensures that the program aligns with the interests of the members, fostering trust and transparency.

Strength in Numbers

Joining a SIG connects subcontractors to a broader network of industry peers. This collaborative environment encourages knowledge exchange, problem-solving, and collective negotiation, ultimately contributing to mutual growth and resilience. Many SIGs also hold quarterly and/or annual meetings, offering opportunities for additional sharing and recognition when warranted.

When is a good time to consider a SIG?

When annual estimated premiums reach between $150,000 and $1,000,000, and your firm can show competitive loss ratios over a 5 to 7-year window, SIGs can become a viable alternative.  More than anything, educating yourself and your management team on this loss sensitive option allows for a more proactive approach to your upcoming renewal.

If you would like to learn more about SIGs and have an interest in this type of program, reach out to me directly at khoward@ranchomesa.com or call me at (619) 438-6874.

Natural Disasters and Severe Weather: A Workplace Safety Guide

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Some of the most catastrophic fires in California history are currently burning in Los Angeles, and 2024 saw no shortage of other extreme weather, from flooding in the Northeast to record-breaking heat in the Southwest.

Severe weather and natural disasters are often unpredictable, but having a safety plan in place can help save time and lives.

Oftentimes, natural disasters strike quickly and with little warning. It might not be possible to communicate quickly and thoroughly with employees in the moment. Creating and communicating an emergency plan ahead of time, for use in these moments, can help keep employees safe.

Preparation

A good plan begins with adequate preparation before the risk occurs. Taking steps to protect your property from natural disasters can minimize damage in the long run.

A formalized emergency action plan (EAP) is an excellent resource to share with employees to ensure they are prepared for any emergency. An EAP should include procedures for reporting emergencies, escape procedures, names and contact information of all employees, and procedures to account for all employees after an evacuation. A template to create your own emergency action plan can be found on Rancho Mesa’s RM365 HRAdvantage™ portal.

In the specific case of a wildfire, there are a few steps business owners can take to ensure they are able to manage their fire risk. Compliance with all fire and safety codes in your area is a necessity. Regular landscaping around your building—including lawns, brush, and trees—can also mitigate potential wildfire risk, especially if you are located in a more remote area.

Training

Employees should always be kept up-to-date on current emergency evacuation plans and procedures. Staff should be provided maps of evacuation routes and safe-zones in the area to minimize confusion in the event of a workplace evacuation. Assign emergency-specific roles to key personnel and ensure they are trained to perform critical functions as needed.

Training all employees on emergency response procedures is also advised. There are a number of emergency planning, first aid, fire prevention and other safety toolbox talks and online courses available through Rancho Mesa’s SafetyOne™ platform which can be used to train staff on the proper ways to deal with fire hazards and other emergencies. Emergency and fire preparedness online trainings can also be found on Rancho Mesa’s RM365 HRAdvantage portal.

Communication

Good communication is vital for keeping your business and employees safe during a natural disaster. Sharing safety information ahead of time, either electronically or by posting to a central location, can help prevent confusion during an emergency. An intercom system or software that sends alerts to staff are also good resources for sharing important emergency information with employees.

Rancho Mesa’s SafetyOne platform allows company administrators to send push notifications not only to app users, but also via text and email to the entire organization or to specific groups that may be affected by an emergency.

Closures

There may be times when a natural disaster is severe enough to warrant an office closure. Be sure to check which laws and regulations are in place in your state regarding employee compensation and paid leave.

Develop a plan for maintaining essential business operations during and after a natural disaster. This may include developing remote work capabilities or a modified work schedule.

While natural disasters are unpredictable, a comprehensive emergency plan and regular employee trainings can help ensure your business stays resilient in the face of any disaster. Remember, emergency preparedness is an ongoing process that requires regular reviews and updates to remain effective.

Contact your Client Technology Coordinator with questions about any of Rancho Mesa’s safety resources.

Mitigating Inland Marine Losses

Author, Casey Craig, Account Executive, Rancho Mesa Insurance Services, Inc.

Inland marine insurance can sometimes be a forgotten line item in some construction companies’ insurance portfolio. This insurance covers your materials, equipment and tools once they are in the field or in transit. Sometimes insured’s feel they have coverage through their property insurance but once the equipment, materials or tools leave your premises, inland marine is the line of insurance that covers you.

Historically, inland marine coverage had fewer losses than other lines of coverage and this type of insurance had not seen a change in premium. However, this has changed in recent years with bolder criminals stealing larger equipment and materials from jobsites, breaking into work trucks to take higher valued tools and vandalism. What are some ways you can cut down on cost and help insulate yourself from losses?

By utilizing new technology to track where you are storing your materials and equipment overnight and investing in security measures, you can help prevent claims and reduce premiums. With theft on the rise, it is a good time to make sure you are storing your materials and equipment in the best way possible. Placing air tags or similar GPS tools on larger equipment is extremely helpful in recovering stolen items and tracking where they are being stored. If leaving equipment at jobsites, removing batteries is also helpful but if possible, try to not leave equipment at the jobsite. Train your employees to properly secure and store equipment if they are taking it home in their work truck. Most theft or vandalism are crimes that are a result of convenience or opportunistic. The harder it is to commit crime because of preventative measures, the less likely the crime will happen.

Ensure you have proper limits for your equipment and materials with your carrier. In reviewing and insuring your tools and equipment, it is important to understanding what is considered miscellaneous tools. Typically, this might be tools with a value less than $2,500, thus necessitating the need to “schedule” equipment above that value. Often times, we see insureds who have aggregate miscellaneous tools limits much higher than needed and then also including those tools or equipment on the scheduled equipment list.

When insuring the materials that will be used on a job, it is important to distinguish between a transit, jobsite and temporary location limits. These limits should be specific to your actual needs and not necessarily always the same values, that is another common mistake we see in auditing insurance portfolios. These vital discussions can help you save on premiums and ensure you are properly insulated from exposures.

While inland marine insurance isn’t typically one of your largest expenses in your insurance portfolio, it is something you need to monitor so costs do not creep up over time from frequency of losses. With rising costs in both auto and property insurance, it is becoming more important to make sure you are insulating your company from risk as much as possible to keep your controllable exposures down.

Discussing your inland marine coverage with your insurance broker regularly can help keep premiums and losses down. If you have questions relating to inland marine or any other of your insurance coverage, please reach out to me at ccraig@ranchomesa.com or (619)438-6900.

Utilizing Your CPA's Expertise with Nick Balaity

Author, Andy Roberts, Surety Account Executive, Rancho Mesa Insurance Services, Inc.

Andy Roberts, Rancho Mesa's Surety Account Executive, is joined by Nick Balaity, CPA with ⁠Aldrich CPA + Advisors⁠, to discuss the tax law outlook for 2025 and offer insight on contractors’ business decisions in the coming year.

Andy Roberts: Welcome to StudioOne™, I’m Andy Roberts, a surety account executive here at Rancho Mesa and joining me today is Nick Balaity, who is a CPA and partner at Aldrich CPA and Advisors.  Thank you very much for joining me in the studio today.

Nick Balaity: Yeah, thanks for having me, man. I've never done a podcast before so this is pretty exciting for me.

AR: Yeah, it's going to be fun. And we have a few really great topics that we're going to get diving into. But before we get started, Nick, why don't you give us a little background about yourself and what you do at Aldrich?

NB: Yeah, thanks. Yeah, so I've been working with contractors on the accounting side for probably 13 years or so at this point. The last eight of which I've been with Aldrich been a partner there for about four years. Getting to work with contractors is pretty awesome just because they're mostly salt to the earth people and blue collar guys and gals and so they're really easy people kind of to work with for the most part.

But Aldrich is a West Coast based firm. Primarily our big offices are in San Diego and Portland, Oregon. And then we organized by industry group. So I'm in our construction group. I head up our California group. And then we have other industries that, you know, manufacturing, real estate things like that. So yeah, I focus just on contractors. I'd say 85% of what I do is just working with contractors.

AR: Yeah, that's fantastic. I know we've worked together on a few and you guys always do just a wonderful job. So, you know, let’s dive into what we're going to talk about first, which I think is a really important topic, especially with, you know, administration changes or some uncertainty. So we're going to dive into some tax law updates and strategies and kind of discuss what might be coming next year. As I'm sure you're probably sitting down with your clients and doing some tax planning, to figure out what 2026 might look like, what changes might come.

NB: Yeah, it's a funny year to do it because, you know, we go into these meetings at year-end tax planning and we're kind of telling them, “Hey, this is the strategy for this year, but it might be different next year.” So, the 2018 Tax Cuts and Jobs Act that went into place when Trump was last in office, those provisions are set to expire at the end of 2025. And so the question is like, what will change if those expire?

 So the kind of the big things that'll change that people should be aware of is the overall the rates are going up. So, like your top federal rate is going to go from 37% to 39.6%. Not a huge jump, but definitely noticeable, especially if you're at the higher levels. And so the qualified business income deduction also expires. So if you have any pass through entities, so like S Corps, partnerships, LLCs, you were getting and still are getting a 20% deduction on your federal taxable income. So if you had an income of a million bucks, you'd be getting a $200,000 deduction to bring it down to $800,000. That got us to what are effective top rate of 29.6%. You know, 37% minus the 20%. So 29.6% kind of was the top tax rate, which was great. That's kind of some of the lowest rates we've ever seen in recent memory. That's all set to expire at the end of 2025 and going into 2026.

 So really, the question has been, what is the Trump administration going to do when it comes in, especially now that the Republicans control both sides of the House and the Senate? And so I think what we've seen so far from the administration is they are looking to extend most of those provisions and make them permanent, is kind of what they want to do. Really, it becomes a question of budget reconciliation, what they can do, but we're anticipating that those will get extended.

 I think there's a section of our clients that are like, “Are taxes going down?” Maybe, I don't know if there's an appetite to actually cut it again. It feels like there's more of an appetite within Congress to just extend what we currently have. So, but the other provision is bonus depreciation, that's been coming down. It's been going down 20% percent every year and that's going to go to zero. They want to bring that back at 100% as well and make that permanent too. So yeah, so I mean, if all that happens, you know, we'll be kind of looking at kind of the same as we have, but if not, which we'll get an idea of, you should be reaching out to your CPA and starting to look at what strategies you can do as you go into 2026.

 AR: I mean, that's what makes it really important to have a resource like yourself if you're a contractor and an owner to talk about this kind of stuff when you're sitting down so you can plan for your business. What do you think the timeline looks like for when we might have a finalized answer on some of this stuff and what they're going to do? Just best guess.

 NB: Yeah, if they're going to do something, they'll have to do it within the first few months, I would think, for it to be effective. I mean, there have been retroactive tax law changes. Everything I've read is they're going to make it all effective, 01/01/25. So if they're going to do that, you would think they would do it in 2025. But man, Congress is typically a jumbled up mess. So it's very hard to know exactly when it's going to happen.

 AR: If they do a retroactive to 01/01/2025, do you have to go back and amend returns?

 NB: As long as those changes are in place before we file the 2025 return, which would be like, you know, February through April of 2026, yeah.

 AR: Yeah, it's good information right there. That's a lot of work on your guys as well.

 NB: Yeah, for sure. You know, a lot of just keeping our ear to the ground.

 AR: Yeah. So, with those, now that we've kind of talked about that, so let's kind of look at what some strategies contractors can do, you know, when they're doing their taxes for what they, you know, to decrease their income and stuff. So let's look at some pros and cons of maybe like cash basis versus percentage of completion on your end.

 NB: No, that's always like one of the first things we do when we meet with a client or a potential client, a prospect is figure out what their method of accounting is for tax and just try and evaluate if that's really the best fit for them. A lot of times it can be, "Hey, we're already on this method," and so to switch might not make sense. It might cost us a bit in the short run, but generally what we see a lot of is, you know, smaller contractors that are first starting out and growing will be on cash basis.

 Cash basis can be really advantageous as you're growing your business because as we know, construction is a very capital intensive business and so the more cash you can retain, the better. So typically as you're growing, your AR balance is also growing. You have more and more accounts receivable outstanding and cash allows you to defer that income on that AR until it's actually received. And so as you're growing, it keeps more cash in the business. As you flatten out, you know, if you reach that kind of cruising altitude, it'll, you know, you'll be deferring, you know, that AR, but then it'll be coming back into the next year and you're typically deferring a similar amount. So it kind of gets, it should in theory level out to kind of closer to where book would be, but you're still managing that all the time. So a lot of times we'll see clients switch over to percentage of completion method or they'll be forced to do that when they go over $30 million roughly-- it's an inflation adjusted number of gross receipts on a three-year average. The advantages of that is it's just way your plan around, you know, you're not, you're not sitting there on December 30th, and, and saying, “How much cash do I have in my account? What's my AR? What's my AP?” You're really able to manage that kind of just through your whip, you know, so you're able to kind of look at and see, okay, whatever my book income is, typically my taxable income is going to be pretty similar.

 AR: Yeah, well, it's, I mean, it's a good thing to talk about too, because we were always on our end looking at percentage of completion for what we want to see from your guys on that part, but that's different from on the tax side.

 NB: Yeah, and that's one of the advantages though, of being on cash is you can still be showing really nice profits, but you're not picking up that income yet until you actually do. So there can be a pretty big divide between taxable income and book income when you're on cash basis.

AR: So one last thing to touch on this one would maybe be, for contractors looking to buy equipment, should they buy it? Should they not? What are the advantages, disadvantages?

 NB: Yeah, I feel like it's the question we get very frequently at the end of the year, because I think, you know, there's been enough TikToks and Instagrams out there talking about, “Oh, I just bought this Escalade and now I get to write it off.” And while that is true…

 AR: You got that big cash balance in your bank account, what do you want to do to bring that down a little bit?

 NB: Right. And so, buying equipment is the question we get a lot. And kind of my two cents on this is, it never makes sense to spend a dollar to save 30 cents, you know, like if you need the piece of equipment, you should buy it.

 AR: Absolutely.

NB: If you're looking at buying it in Q1 or Q2 of the next year, maybe we say, “Hey, maybe it makes sense to accelerate that purchase and go ahead and do it now to go ahead and capture that deduction.”

 But really, there's impacts to it, right? So if you're paying cash, then you're reducing your working capital because you're exchanging a current asset for a long-term asset. If you're financing it, that'll have a little bit less of an impact on working capital because you'll have just a current portion of that debt that'll be on the books. And so it's really something to just kind of evaluate, you know, bring in your surety broker, bring in your banker, especially if it's a big piece of equipment and kind of let them know what you're thinking about doing, work with your CPA, what the impact would look like and just make sure that it's going to affect anything on your credit side or your bonding side.

 AR: Yeah, well, I mean, especially on our end where, you know, we love to see cash in the bank. You know, when we do a submission, we send in, like, we'll often send in like a vehicle list. But that's not going to give you a ton of surety credit. That's nice to show the underwriter, like, “Hey, this is where they have invested in their business,” but we also, you know, if it's going to tank that cash balance, that's going to have a direct effect on the credit you're going to get and lead to a lot more questions from underwriting as to what happened to that money because they would always rather see it sit in the account in case something happens.

 NB: Yeah, it's our CFO said this to me recently that I really like this saying; if you come to me early with a decision like this, you have a partner, you come to me after you have a judge.

 AR: Oh man, that’s great.

 NB: Yeah, I think that's really kind of the same thing here with you let your partners know what kind of types of moves you want to make and they can help guide you along the way and really help you with that. You come to them after, what's done is done, and now we're just kind of stuck with the result and we got to kind of manage around it that way.

 AR: Yeah, and we have to deal with whatever terms are going to come from that as opposed to putting a plan in place or at least putting the options out there and be like, “Well, if you do this, this is what happens or here's what happens on this side,” and let them make the decision from there, and, you know, whatever repercussions might come from it.

 All right, next thing, which I mean, I know I've been seeing a lot more and I'm sure you have as well are business transitions. I know there's a few different methods. Let's start with, you know, we were talking about what an internal buyout looks like. I mean, that's pretty self-explanatory that it's coming from like the inside, but do you see that pretty frequently or…?

 NB: Yeah. It's a timely topic. It's kind of been a big thing I feel like for the last five or 10 years as this large baby boomer generation is getting closer to retirement, you know, they're looking at, “How do I get the final value out of this business?” Or for some, it's not even about getting that final value, it's about, “How do I leave a legacy behind and a company that'll keep going on and have people there to run it?”

 AR: I feel like a lot of people are very proud of the name that they've built and they want to see it keep going.

 NB: Totally. And they should, especially some of the ones we've seen that are local that have grown to be $100 million contractors. You should be proud of that. So yeah, internal buyouts are probably the most common we're seeing right now where maybe you have a kid—a son or a daughter—that's coming into the business that has been working with you and wants to buy you out or maybe you just have some key employees that you would like to hand over the keys to the kingdom on. Really the biggest thing there is like the financing for those tend to be based on the company's profits. And so there may be some debt that comes into place related to that. And so how's that going to affect the company kind of bringing it back kind of the surety piece of it is like, you know, if we put on this big debt, what's going to happen? Also, if we, you know, if our main shareholder who probably at this point in their career has nice personal net worth is in, you know, is on the indemnity, is there someone else who's going to take that over? Are they going to stay on? How's that going to impact the bonding capability or even the bank, right? Yeah, you know, your lines of credit probably have some personal guarantees in there as well.

 AR: Well, I mean, that's like a big question we usually ask too, because typically the, you know, the son or the younger generation that might be buying the company are definitely not going to have as developed a personal financial statement as the current owner who's been doing this for 30 plus years. So like if they're willing to stay on and indemnify, that really helps our case a lot if they're going to be bringing on some debt, because just to know that there's someone else there backing the company, as these people come in.

 NB: And I mean, I would say, man, I feel like I deal with in five or six of these almost every year, where we're just trying to figure out how to make this work. So there's a thing you can get really creative. And so it's not something people should be afraid of. But they should reach out to their CPA, they’ve seen a lot of these go on and there's a lot of different ways we can skin this cat and come up with a solution that's going to work for everyone.

 AR: No, it's always I mean, it's super important to trust your advisors or your partners and make sure you're utilizing all the resources that you have around you when you're making a big important decision like this.

 NB: Yeah. And I think getting everyone as involved as possible and then also just looking at what are you trying to get out of it, right? So if we're trying to maximize cash, internal buyout might not be the best, maybe an external buyout would be better and we can kind of transition talking about that.

 AR: Yeah, let’s do it.

 NB: External buyouts, there's a bunch of different ways that can kind of look. You can sell to a competitor, or maybe someone more upstream that's trying to vertically integrate, those tend to be some of the faster moving deals that get done because they know your industry really well. They kind of already have an idea of the types of projects you do.

 You can also go private equity; which private equity has been coming into construction space more and more. It used to be they were really only interested in companies that had more of like a repeat service component or repair. You know, so, it would be like HVAC, or maybe like plumbing or in some cases electrical, but some of those don't even have service component to them. And so recently they've gotten more aggressive and there's definitely been more of a push into some more niche or specialty areas. And so they're not quite going after general contractors yet, but I can see a world where eventually they do.

 AR: I mean; we're definitely seeing it more too.

 NB: Yeah.

 AR: Like, I mean, it's happening more and more frequently.

 NB: Yeah. And so the biggest thing to know about with private equity is it's going to come with some-- it's probably going to be one of your highest offers you will get; you'll maximize value that way. But there probably will be a three or five-year period where the owner or key management are going to have kind of golden handcuffs, where they need to stay on. So it's not going to be a quick exit where you might be able to get that more with an internal buyout or potentially having a competitor come in and buy you out. Typically, private equity is going to want key management to stay on board for a little bit. So it's something to consider.

 So one of the things, you know, we talk about a lot with clients is trying to plan in advance for this. When you're starting to say, "Hey, I think I'm five years out from wanting to retire and be out," that's the time to start kind of planning, "Okay, how do we want to do this? Should we get a valuation of the company to kind of see what's it worth and figure out, you know, what's our retirement plan? Is that going to be enough? Do I need to stay working a little bit longer to make sure I have enough for my nest egg?” And so it's just kind of a, there's a whole bunch of different conversations need to happen. And then also, if we're going to look to external, how do we position the company to sale, right? So how do we make it look as attractive as possible to an outside buyer?

 I think kind of the last option that's become a lot more popular recently is ESOPs. So if you don't know what an ESOP is and it's an Employee Stock Option Plan. And basically it’s where a trust gets set up, and not to get too into the weeds, but a trust is owned by what’s essentially a 401k plan, and they own the stock of the business. And so it’s a way that you can get the ownership of your business to your employees, which is really actually a pretty cool legacy you can leave if you’re basically selling the company back to all your employees, not just key employees. But they are expensive, they cost quite a bit to run every year. There's evaluation that has to happen. There's an audit that has to happen. There's actuaries that get involved and things like that. But it can be a great way to cement that legacy and let it live on and really reward your employees who've been loyal to you over the years with ownership in the business. All this stuff just takes a lot of planning. Like my key thing that I say to every contractor is whenever you think you want to start looking at this, you know, we just need to make sure we have a runway to kind of build out that plan.

 AR: Yeah. How often do your clients come to you with the five-year runway versus like the one-year?

 NB: Pretty rarely, I would say. You know, I have a couple, clients that just really look ahead. I think it's one of those business, construction's hard when you're, especially when you're the sole owner or primary owner, you know, all that stress, you feel it. And so it can be really rewarding, but it can be really challenging just on yourself. So a lot of times we get contractors that come to us and are just like, "I'm done. I need to get out." And we can absolutely help through that situation. But in an ideal world, we would say, "Hey, let's start looking three to five years out so we can get you positioned and ready and we have your plan set up and all that."

 AR: Do most of the time when they come to you with this plan, do they have an idea already; do they want to do external versus internal? Because I know external, there's more options. Do they kind of have an idea of what they want to do?

 NB: Most of the time they do. They'll come to us and they'll say, “Hey, I do have a key employee or a son or daughter that wants to take over the business. And that's the way I really want to go because I feel strongly about that.” Sometimes they do come where they're like, “Hey, I think I

want to do an internal buy-out but I'm not sure that they're going to be able to afford it.” I just had that conversation with a client the other day and we went through process, we got a valuation done for them and they saw what it's worth. And the question was, "Hey, do I want to take a haircut and make it so that it can be bought internally or do I want to go external?" And in this case, they wanted to go external because they didn't want to leave that much money on the table, which is totally fair. You know, you built up that company, that's your value and you choose what to do with it. So, yeah, I would say most of the time they have an idea of what they want to do. My job I feel like as an advisor to them is to make sure they're aware of all the options that are out there to them and what those, how much money could be on the table.

 AR: Now, kind of circling back on like private equity because, I mean, we're seeing a bunch of that, just like you are. And I mean, it can have a pretty big effect on your financials and your balance sheet that really can actually hurt your bonding capacity, and I think a lot of people aren't totally aware of that going into it because they see this big number coming from PE, and they think it's fantastic if they just have to hang around for three to five years, but they don't understand what bringing on some of this debt or goodwill and these kinds of things to do to your balance sheet and your financials and what they can do to your surety program.

 NB: Yeah, it's one of those things that you really want to model out, right? So before that deal closes, before you sign that purchase agreement, you want to make sure that you've looked at, okay, this is the number, this is the debt, this is how the working capital is going to look post transaction. And then also like, you know, is the private equity firm going to be willing to take on the indemnity that maybe the primary shareholder was taking on?

 AR: Usually that's a no.

 NB: Yeah, exactly. It's almost always a no. So it's like, okay, are they going to infuse more capital in to make sure that the bonding is going to stay there? And so I think that's why you've seen a little bit less interest in public works contractors for PE because there is kind of that hook that they got to sign on for. And so you're seeing it a little bit more and more than ones that do private construction projects.

 AR: No, definitely. I feel like too, there's been some PE firms that I've just been reading about and stuff that they don't totally understand what they're getting into when they buy that company, when it comes to the bonding aspect, because maybe it's not major, but it's sizable and then you

present them with, “Oh well, we either need you to put a bunch of money in or someone on over there needs to sign,” and they don't want to do it.

 And you're like, “Well, then you're going to lose that aspect of the business.”

 NB: Totally, and it comes back to every time, like the best advice I can ever give a contractor is before you do any significant transaction or anything you need to be bringing in all of your outside advisors: the bank, the surety broker, the CPA, your attorney, making sure that everyone's on board and knows what's going on and we can work through all these things kind of before the transaction happens. Because it can kill a transaction too.

 AR: Yeah, it kind of goes back to what you were saying about how you need to utilize all your resources, whether it's banking, CPAs, your surety agent, your insurance agent too, what that kind of does with your policies to make sure there's, you know, you're not significantly impacting your business. You know, because I think you guys will handle like some benchmarking and some of that type of stuff.

 NB: Yeah, yeah, so we'll do benchmarking with clients. We get really good data just from our own client groups. I mean, we serve, gosh, I want to say like 400 contractors across our firm, you know, between all of our geographies. So we have a lot of internal data and then there's also external data points out there like CFMA, Construction Financial Management Association does an annual survey that's broken out by company size, geography, trade. It's really an incredible survey they put out. You can benchmark yourself against that. But then also it's just like the kind of intangible knowledge of working with a lot of contractors. What have I seen be successful? Same with your surety broker. What have they seen to other contractors that you could leverage off of, that experience that you guys have with other folks? So yeah, there's a lot of great opportunities for your CPA or bonding agent to come in and provide knowledge from kind of the outside, just from what we're seeing in other places.

 AR: Yeah, that's great. And I mean, I think the kind of last thing to kind of, you know, from my perspective to kind of input on here for, you know, any contractors listening is, you know, having a great CPA relationship is something that's invaluable to your business. So, you know, I know you and I have gotten to work a lot together over the last few years since I've kind of come into the industry. And It's always nice when we see a review from you guys that says Aldrich on the front. So yeah, no, I appreciate that.

 NB: And likewise, Andy. And Rancho Mesa has been a great partner with us too. And so to me, it's the more you can get your advisors talking together as a group and not isolated, the better, because we can come up with solutions as a group that kind of come to think about all the different angles, right? So like, I know a lot about the tax side. I know a lot about the financial side. I know a little bit about, you know, the bonding program, but that's where your expertise comes in and you can kind of give your expertise and your specialization there that you have and kind of advice on impacts, you know.

 AR: Well, and it's super nice because anytime someone's like, "Oh, well, let's talk about what's this going to do tax-wise," I'm like, "Oh, I'm not the guy for that, but I know someone that can help you there.”

 NB: Yeah, right, exactly, exactly. So, yeah, I mean, that's the biggest thing is, just keep everybody in the loop.

 AR: Yeah well I think that was a lot of really great information on this this episode so Nick, thanks very much for joining me.

NB: Yeah happy to happy to join you and thanks for including me.

US Bureau of Labor Statistics Updates Fatal Work Injuries Data

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

The U.S. Bureau of Labor Statistics has released their Census of Fatal Occupational Injuries Summary for 2023. This data highlights important safety trends across multiple industries and demographics, and can be helpful in determining what areas an employer should look to emphasize in their safety program.

According to the report, a total of 5,283 fatal work injuries were recorded in the United States in 2023; a 3.7% decrease from 2022. The report shared several key findings, which include:

• 1,942 occupational fatalities—or 36.8% of all deaths—were caused by transportation incidents.

• 740 fatalities were caused by violent acts, with the majority resulting from homicides.

• Opioids were found to be the source of 162 fatalities, and a contributor in an additional 144 drug-related fatalities.

Additionally, the report breaks down the annual fatalities by occupation and industry.

Since 2011, the construction industry has recorded the highest annual number of fatalities among all industry sectors and 2023 was no different. 1,075 construction deaths occurred in 2023. Slips, trips and falls were the most common types of fatalities, accounting for 39.2 percent (421) of all construction fatalities, followed by transportation incidents which accounted for 22.3 percent (240) of fatalities.

Source: U.S. Bureau of Labor Statistics

Human services organizations recorded significantly less workplace fatalities than the construction industry. However, the total number of fatalities within these types of human services organizations didn’t change from 2022 to 2023 with a total of 178 fatalities occurring in both years. Transportation incidents accounted for 37.6 percent (67) of fatalities within human services organizations, while violent acts were 16.3 percent (29) and falls, slips and trips were 13.5 percent (24) of fatalities.

Administrative and waste management and remediation services saw a total of 484 fatalities in 2023. Within that sector, the landscaping and grounds keeping occupation had the most fatalities (102), followed by tree trimmers and pruners (80). The report lists trees, logs, and limbs as the primary source of these deaths.

The risk of occupational fatalities can be mitigated through proper safety training and preparation. Rancho Mesa has a variety of training tools available for use across multiple industries which can be accessed through the SafetyOne™ platform, including driver training, slip, trip and fall safety, fall protection and workplace violence prevention training.

For more information about all the safety tools Rancho Mesa has to offer, contact your Client Technology Coordinator.