Understanding Why Your Building’s Leaky Roof Claim Might Be Denied

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

Leaky roofs can be a major headache for commercial property owners, often leading to significant damage and costly repairs. Understanding how insurance policies respond to these situations is crucial in navigating the claims process.

When is a Leaky Roof Covered?

Insurance policies typically cover leaky roofs under certain conditions. The key factor is whether the leak resulted from an unexpected and accidental event, such as a storm causing direct damage to the roof. For instance, if a storm creates a hole or crack in your roof, allowing water to penetrate and cause damage, your insurance policy will likely cover the repairs.

When is a Leaky Roof Not Covered?

On the other hand, if the leak is due to a lack of maintenance or general wear and tear over time, the insurance carrier will typically deny the claim. Routine maintenance and upkeep are the property owner's responsibility, and insurance policies are not designed to cover damages resulting from negligence or normal wear and tear. Also, the age of the roof can determine if the claim will not be covered.

According to the Raizner Slania lawfirm, “In most cases, roof damage on a roof that is 20 years old or older, which accounts for the lifespan of most shingle roofs, will not be covered. A roof on a commercial property can also be deemed too old if one of the lower layers is 20 years old and a new layer was simply added to it rather than the whole roof being replaced.”

Ensuring That Your Claim is Covered

To ensure that your insurance claim for a leaky roof is covered, it is important to document the cause of the damage. If a storm has caused the damage, take photos of the roof and any other affected areas. These photos can serve as evidence when you file your claim. Additionally, maintaining your roof regularly and addressing minor issues before they worsen can help you avoid the claim being denied. Keep records of any maintenance work and inspections conducted on your roof as these documents will be helpful if you need to prove that the damage was not due to lack of upkeep/maintenance.

Remember, if a storm directly causes the damage that leads to a leak, your insurance policy will likely cover the repairs. However, if the leak is due to poor maintenance or normal wear and tear, your insurance policy will most likely deny the claim. By staying up to date with roof maintenance and documenting any storm related damage, you can feel confident your claim will be covered.

To discuss your organization’s potential exposure to property claims, contact me at (619) 486-6569 or jmarrs@ranchomesa.com.

Governor Signs PAGA Reform

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

On July 1st, California Governor Gavin Newsom signed legislation to reform the Private Attorney’s General Act (PAGA). The legislation was enacted to help ensure workers retain a strong tool to resolve labor claims and receive fair compensation, while reducing shakedown lawsuits that hurt employers and employees.

The legislation signed was Assembly Bill 2288 (AB 2288) and Senate Bill 92 (SB 92). Newsom was quoted as saying, “This reform was decades in the making and it’s a big win for both workers and businesses. It streamlines the current system, improves worker protections, and makes it easier for businesses to operate.”

The key elements of the PAGA reform include:

Reform of Penalty Structure

• Increases the amount of allocated penalty money that goes to employees from 25% to 35%.

• It caps the penalty for employers who quickly take steps to fix policies and practices, and make workers whole, after receiving a PAGA notice. It also reduces the penalty for employers that act responsibly to take steps proactively to comply with the labor code before receiving a PAGA notice.

• Creates a new penalty ($200 per pay period) if an employer acted maliciously, fraudulently, or oppressively.

• Reduces the maximum penalty where the alleged violation was brief or where it is a wage statement violation that did not cause confusion or economic harm to the employee (i.e. misspelling of company name or forgetting to add “Inc.” on the pay statement).

• Penalties for employers who pay weekly are adjusted to meet other employers who pay on a biweekly or monthly basis. Previously, such employers were penalized at twice the amount because the penalties were accrued on a per pay period basis.

Reducing and Streamlining Litigation

• Expands which labor code sections can be cured to reduce the need for litigation and make employees whole quickly.

• It protects small employers by providing a more robust right to cure process through the state labor department (Labor and Workforce Development Agency) to ultimately reduce claim costs.

• For larger employers, it provides an opportunity for early resolution.

• Codifies that a court may limit both the scope of claims presented at trial to ensure cases can be managed effectively.

Improving Measures for Injunctive Relief and Standing

• It incentivizes or provides injunctive relief to employers to implement changes in the workplace to remedy labor law violations.

• It requires employees to personally experience any alleged violation prior to filing a claim.

Strengthening State Enforcement

• The administration will pursue a trailer bill to give the California Department of Industrial Relations (DIR) the ability to expedite hiring and filling vacancies to ensure effective and timely enforcement of employee labor claims.

PAGA claims have wreaked havoc on employers for decades. In fact, since 2013, there have been nearly $10 billion in court case awards. Unfortunately, due to significant attorney fees, only a small portion of these awards go to the workers. PAGA claims have impacted every type of business in California, including non-profits, family-run businesses, and even local governments. This PAGA reform should help change the long-term success of workers and businesses moving forward. 

While coverage for PAGA violations is limited at best from Employment Practices Liability policies, employers should review their wage and hour policy with their risk advisor and employment law attorney to mitigate the impact of potential fines.

To discuss your company’s potential exposure to PAGA claims , contact me at (619) 937-0174 or jhoolihan@ranchomesa.com. 

Protecting Commercial Property Investments through Vacancy Permit Endorsements

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

Commercial real estate owners may face significant exposure nationally due to vacancy clauses and policy exclusions. The vacancy permit endorsement can potentially fill a major coverage gap within commercial property policies for landlords.

COVID-19 forever changed the commercial real estate industry by shutting down operations in several asset classes, including retail, office, and industrial. The shutdown created a huge spike in vacancy rates that has certainly come back to nearly normal levels but still presents issues for many landlords. For example, office buildings have seen a continued increase in the national vacancy rate from 12% in 2017 to 16.5% in Q4 of 2023 (www.statista.com).

For property managers and building owners, the risk of an insurance claim within a vacant space has increased, making a focus on coverage paramount. Most insurance policies have specific exclusions that can limit coverage for bodily injury or property damage based on the duration of a building's vacancy or the percentage of the building that is vacant. For example, some exclusions restrict coverage entirely if the building has been vacant for more than 60 days. Another common exclusion requires that at least 31% of the building be rented, leased, or owner-occupied for coverage to respond.

Vacancy Permit Endorsement

For insureds, requesting a vacancy permit endorsement is a smart move that helps eliminate any guesswork regarding coverage gaps. Most carriers will tailor this endorsement to specify the vacancy period, the coverages in place, and the conditions that need to be met by the insured. These conditions typically include maintenance disclosures, inspection reports, and security measures.

There is usually a relatively small premium adjustment for a vacancy permit endorsement, which is well worth the investment compared to the potential cost of an uninsured claim.

The risk associated with vacant properties is more pronounced than ever. Owners and managers must be proactive in securing appropriate coverage to mitigate these risks. The vacancy permit endorsement is a crucial tool in this effort, providing tailored coverage that addresses the specific challenges posed by vacant spaces. By understanding and utilizing this endorsement, property owners can ensure comprehensive protection, safeguarding their investments against unforeseen claims and maintaining peace of mind in an ever-evolving market.

California’s Indoor Heat Illness Prevention Standard Approved: What You Need to Know

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Recently, the Cal/OSHA Standards Board approved new requirements for California businesses, heat illness prevention for indoor work spaces. The new Section 3396 addition to the California Labor Code will go into effect as early as August 1, 2024.

 The law states that requirements apply to “all indoor work areas where the temperature equals or exceeds 82 degrees Fahrenheit when employees are present.”

 For work environments such as warehouses, restaurants, and manufacturing plants, temperatures can rise dangerously high, putting employees at risk for heat illness. Let’s take a look into the new requirements for employers. 

1. Provide access to cool-down areas, and encourage employees to take cool-down rests.

2. Provide access to potable water that is fresh, suitably cool, free of charge, and located as close as possible to indoor cool-down area.

3. Monitor employee symptoms and provide appropriate first aid and emergency response if they exhibit or report signs of heat illness.

4. Closely observe new employees for the first 14 days of employment as they acclimatize.

5. Provide employees and supervisors with training on topics such as heat risk factors, symptoms of heat illness, water consumption, and emergency procedures.

6. Establish, implement and maintain a written Heat Illness Prevention plan for the work environment.

Some additional requirements also apply when the temperature or heat index reaches or exceeds 87 degrees while employers are present, or the temperature reaches or exceeds 82 degrees and employees wear clothing that restricts heat removal or they work in a high radiant heat area.

 In these cases, employers need to maintain records of their indoor temperature or heat index. They also must initiate engineering, administrative, and personal control measures to reduce the indoor working environment and maintain it below 87 degrees.

 As temperatures continue to soar in many parts of California, employers with employees working indoors in high heat conditions should evaluate their current heat policies to ensure they comply with these impending labor law changes.

 For further information about indoor heat illness prevention compliance, clients should refer to the Cal/OSHA website, which offers resources employers can utilize, including a Sample Written Heat Illness Prevention Plan for Indoor and Outdoor Places of Employment (Model Program). 

Transitioning from a Credit-Based to a Standard Surety Program

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

When sureties began offering credit-based programs, there were only a few surety companies who would offer this type of program and the limits were low, most often around $250,000 for a single project and aggregate. However, over the past few years, there has been an increase in the number of surety companies that are willing to offer these types of programs. The limits offered have also increased with some companies writing $1,000,000 for a single project and aggregate bond based solely on an owner's personal credit score. These programs are great for contractors that are getting started with bonded work, or don’t bond frequently and are not looking to provide the information necessary to set up a standard program. However, for contractors looking to grow and need additional surety capacity in order to achieve that goal, they should be aware of the steps that will need to be taken in order to transition from the credit-based program to a standard bond program. The first, and most important step will be the company financials.

Standard bond programs are written primarily based on the financial strength of the company. Sureties will be looking to obtain the last two fiscal year-end financial statements, balance sheet and income statement, and the most recent interim balance sheet and income statement that are available. They will evaluate the current cash position, working capital, and equity in the company to determine a single and aggregate bond limit.

In addition to the company financials, the surety will want to evaluate the personal financial statements for all the owners. Personal financial statements are an important item that surety companies will evaluate. Similar to the corporate financials, assets and liabilities will be evaluated along with the personal credit of the owners. Surety companies want to ensure that the company owners are current with their personal obligations before providing surety credit to their company. 

Another important item that a surety underwriter will want to review before providing a standard surety program, is a current work in progress schedule. Being able to provide a current and accurate work in progress (WIP) schedule will be a requirement from a surety underwriter. The WIP monitors project progress and performance over time, and plays a critical role in determining the maximum amount of bonded work that a contractor can take on at one time.     

While these are just a few things that surety underwriters will be wanting to evaluate in order to set up a standard bond program. There are other items that contractors can consider, like hiring a CPA for their year-end financial statements and getting a bank line of credit. 

For contractors that are looking to graduate from a credit-based program, increase their current surety capacity, and want to explore further strategies that can strengthen their bonding program, contact me at (619) 937-0165 or via email at aroberts@ranchomesa.com.

Updates to California Healthcare Minimum Wage Policies for 2024

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

This year has seen several changes to minimum wage in the State of California. On January 1, 2024, the California general minimum wage increased to $16 per hour, regardless of tips. However, as of July, several individual industries across the State, including healthcare, saw minimum wage increases. 

While the federal minimum wage rate still stands at $7.25 as per the Fair Labor Standards Act (FLSA), individual states and certain cities may have their own minimums like California. So, be sure to check the updates in the RM365 HRAdvantage™ portal for your specific industry and jurisdiction to ensure your company’s payroll is compliant.

California Healthcare Minimum Wage Rate Changes

Jurisdiction	Industry	Coverage	Minimum Wage as of July 1, 2024
Statewide	General		$16.00
Statewide	Healthcare	Hospitals	$18.00 (delayed, effective date TBD)
Statewide	Healthcare	Clinics and all other healthcare facilities	$21.00 (delayed, effective date TBD)
Statewide	Healthcare	Large employers and integrated healthcare systems	$23.00 (delayed, effective date TBD)

Clients can login to the RM365 HRAdvantage™ portal to review the full minimum and tipped wages for all states under the 2024 State and Local Minimum and Tipped Wage Rates.

Understanding the Importance of Your Workers’ Compensation Unit Stat Filing Date

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

Imagine you are a landscaping company owner and your workers’ compensation policy just renewed January 1st. You are probably thinking, now what? Well, the next date that should be on your radar is June 30th, your unit stat date. Each unit stat date varies and with the actual filing taking place approximately 180 days from when the workers’ compensation policy was placed. The unit stat date is when all workers’ compensation claim activity is frozen, along with audited payroll information, and sent to the rating bureau so the experience modification (XMOD) can be calculated.  

As a reminder, your XMOD is determined by comparing your loss experience and historical payroll to others with similar class codes. The XMOD is derived from three years of audited payroll and losses suffered over those years.

If a particular claim is closed after your unit stat date, that claim will impact your next XMOD at the total incurred value before the unit stat date. Therefore, if you have a claim that can either be closed or reserves reduced, it is critical that this is done ahead of the unit stat date. Staying up to date with your claims adjuster and insurance professional ahead of the filing can quite literally save you points on your XMOD, which in turn can help to reduce your worker’s compensation annual premium.

Using one of the metrics on our proprietary KPI Dashboard, our clients are able to track the number of days until their unit stat date. Combining this KPI tool with our dedicated workers’ compensation claim advocate services at prescheduled claims reviews throughout the policy year helps to close the claims or mitigate claim costs in advance of the filing. This strategy can dramatically lower overall insurance costs.

If you have any questions about the unit stat or would like me to put together a custom KPI dashboard for your team, you can contact me at ggarcia@ranchomesa.com.

Leveraging Your Experience Modification Rating to Your Advantage

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

Your Experience Modification Rating (e.g., EMR, X-Mod, or Mod) can have a significant impact on controlling costs within your insurance program. While most business owners recognize that a lower EMR typically leads to lower insurance costs, few owners understand the mechanics for determining an EMR and how they can be used to proactively manage resources to their company’s benefit.

An EMR is determined by evaluating a company’s recent history of payrolls and job related injuries, relative to its own industry, to benchmark them to their peer group.

If a company’s incurred losses (both paid and reserved) exceed the average within its industry, it will result in a debit mod (i.e., EMRs above 100) which leads to higher premiums. If the incurred losses are less than the industry average, the company will earn a credit mod (i.e., EMRs under 100) resulting in lower premiums.

As your EMR changes from year to year, it will directly increase or decrease your company’s workers’ compensation premiums, thus impacting overhead costs. Higher EMRs will increase overhead costs and can lead to increased bid costs, reduced profit margins, and in some cases restrict you in the pre-qualification process.

In the construction world, passing higher costs on to your customers in a competitive bidding process can prevent you from securing contracts. Choosing instead to absorb those additional costs, however, can jeopardize your company’s growth, financial stability, or possibly stop you from having the funds necessary to complete the job.

But managing your EMR is more than simply having the good fortune to avoid expensive claims. It is important to recognize that not all claims impact your EMR the same. Severity and frequency of claims both play an important role in your EMR, as does your primary threshold.

Using these key data points, we are able to create a proprietary KPI dashboard for clients providing valuable insights to the mechanics of their EMR. Business owners are able to see their:

• Primary Threshold and Maximum EMR Impact

• Claim Dollars Equal to 1 Point of EMR

• Maximum Controllable Points within the EMR

• Individual Frequency Trends and Benchmarking to Industry

• Individual Severity Trends and Benchmarking to Industry

• Lowest Possible EMR

• Projected EMR

Our KPI dashboard has become a must have tool for business owners, providing a better understanding of how to manage their EMR, allowing them to more reliably forecast overhead costs, and proactively address safety concerns. Coupled with Rancho Mesa’s in-house workers’ compensation claims advocate, business owners can more efficiently deploy resources and return-to-work programs to mitigate claim costs.

To request your own KPI dashboard and start putting it to use within your business, contact me at (619) 486-6554 or mgorham@ranchomesa.com.

Resources and Tools for Completing Your Workplace Violence Prevention Plan

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

As July 1st quickly approaches, California businesses are working hard to prepare their Workplace Violence Prevention plans before the deadline. In our aim to serve the needs of our clients, Rancho Mesa has outlined resources we offer to supplement your specific company’s training and plan.

The SafetyOne™ platform and the RM365 HRAdvantage™ portal has the online training topics and recordkeeping tools available for workplace violence prevention.

HR Portal Course

• Preventing Workplace Violence Training for Employees

SafetyOne Courses

• Active Shooter: Surviving an Attack

• Workplace Security

• Workplace Violence

• Workplace Violence in Construction Environments

• Workplace Violence in Food Processing and Handling Environments

• Workplace Violence in Healthcare Facilities

• Workplace Violence in Office Environments

Clients can utilize SafetyOne’s incident report forms or create their own custom forms to collect workplace violence incident data on the job. The information collected in these forms are stored in the SafetyOne administrator website. Forms such as Accident Investigation, Incident Investigation, Incident Witness Statement, and Witness Statement can support clients’ Workplace Violence Prevention plan.

Online training can be used as a tool towards creating a complete Workplace Violence Prevention Plan. However, employers must also train their employees on the specific hazards of their company’s location, and address these in their written Workplace Violence Prevention Plan.

For questions regarding accessing Rancho Mesa resources, clients can contact their client technology coordinator.

Subcontractors: The Prime Contract and Its Impact On Your Rights and Responsibilities

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

Reviewing contracts is not everyone’s favorite thing to do. But, I would like to share some quick thoughts on why asking for and reviewing the prime contract (before you sign your subcontract, ideally) can be important for subcontractors. This can help strengthen your position if certain conflicts arise.

I have had the pleasure of knowing Pam Scholefield of Scholefield Construction Law, here in San Diego, for many years. Pam and I are both active and involved in NECA, as well as the Women’s Construction Coalition. Pam has an impressive background not just in her law practice and involvement in the industry, but in her education and prior job experience. Pam was an engineer for General Dynamics when female engineers were quite rare. She gained a valuable skillset that led her into the legal realm, and her passion for construction law and subcontractors, particularly.

I recently attended a class that Pam presented for one of these associations. The topic was contract terms. Diving into the weeds a bit, there were some key points that I’ve found to be relevant for all subcontractors. Each subcontractor can, of course, assess their own risk. I just want to address a few things that might make a difference and help you avoid certain disputes.

A few things to consider:

1. Does the prime contract always prevail if there are differing provisions in the subcontract?

2. It may prove in your best interest to incorporate your proposal into the subcontract.

3. Are things like warranty, payment terms, and liquidated damages negotiable in the subcontract?

4. When should you request a copy of the prime contract, at bid time or before you sign the subcontract?

Do not sign the subcontract until you are clear about your key issues. Those issues may be different for different jobs, but knowing about key provisions and terms up front may well prevent you from some nasty attempts at negotiations later in the job. Better contracts can translate into more profitable, and certainly more successful, projects.

Understanding Insurance Options for Tree Care Vehicles with Permanently Mounted Equipment

Author, Rory Anderson, Account Executive, Rancho Mesa Insurance Services, Inc.

The vehicles that tree care companies are using today have become more specialized and mechanized than ever. These specialized vehicles contribute to the overall productivity, profitability, and safety of the tree care industry.

Many vehicles in a tree care company’s fleet have permanently mounted equipment. The crane is a great example. Both the knuckleboom and straight boom crane are permanently mounted onto the cab and chassis. Obviously, the value of the vehicle significantly increases the moment the crane is mounted.

When placing insurance coverage for this unit, it is important to understand the options. The liability coverage for specialty vehicles will always be insured on the commercial auto policy. However, when insuring the physical damage to your unit, you may have a couple different options.

The commercial auto policy will value the physical damage on actual cash value, which is a depreciated value. Actual cash value equals the replacement cost minus depreciation. In the event of a physical damage claim, the commercial auto insurance carrier will factor in depreciation when determining the amount to pay out for the claim. If you have an older crane, this may be an acceptable way to provide coverage. Just be certain that your insurance broker and carrier have the total value, including the crane, for the vehicle.

You can also split the physical damage coverage between commercial auto and inland marine. Often times, you can get replacement cost valuation on the inland marine policy, which is a more robust valuation. Replacement cost is the cost of a new one today, without factoring in depreciation. You can cover the physical damage of the vehicle (cab and chassis) on the commercial auto policy, but then you can cover the crane itself on the inland marine policy and get the replacement cost valuation. This strategy might make more sense if you are insuring a new, and expensive, crane. In the event of a total loss, the difference between actual cash value and replacement cost can be staggering.

Properly insuring your assets is a fundamental aspect of your risk management program. It is crucial for protecting your company’s financial stability. It is also important to work with your insurance broker to understand how your current insurance company will handle this.

If you have any questions, please reach out to me at (619) 486-6437 or randerson@ranchomesa.com.

WCIRB 2024 Construction Dual Wage Threshold Increases Approved

California Insurance Commissioner Ricardo Lara has approved an increase in hourly wage thresholds for all 16 construction dual-wage classifications.

The increases range from $1 to $4 depending on the classification and will go into effect for policyholders on their workers’ compensation policy renewal date on or after September 1, 2024. The chart below outlines the proposed increases for each classification.

Dual Wage Classifications	Existing Threshold	Proposed Increase	Proposed Threshold
5027/5028 Masonry	$32	$3	$35
5190/5140 Electrical Wiring	$34	$2	$36
5183/5187 Plumbing	$31	$1	$32
5185/5186 Automatic Sprinkler	$32	$1	$33
5201/5205 Concrete Work	$32	$1	$33
5403/5432 Carpentry	$39	$2	$41
5446/5447 Wallboard Installation	$38	$3	$41
5467/5470 Glaziers	$36	$3	$39
5474/5482 Painting Waterproofing	$31	$1	$32
5484/5485 Plastering or Stucco	$36	$2	$38
5538/5542 Sheet Metal Work	$29	$4	$33
5552/5553 Roofing	$29	$2	$31
5632/5633 Steel Framing	$39	$2	$41
6218/6220 Grading/Land Leveling	$38	$2	$40
6307/6308 Sewer Construction	$38	$2	$40
6315/6316 Water/Gas Mains	$38	$2	$40

In light of the ongoing labor shortage within the construction industry, employers have been making a concerted effort to retain their workforce. This includes providing more comprehensive benefits packages, including higher wages, and merit-based bonuses when appropriate. As a result, these new wage classification increases may prompt employers to consider extending further salary increases to their employees, with the aim of reducing workers' compensation premiums.

To better understand these changes and plan for the impact this will have on your company, please call us at 619-937-0164 and ask to speak to a member of our construction group.

Four Weeks of Safety: Important Resources for National Safety Month

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

As we hit the halfway mark on the 2024 year, we’ve explored plenty of important topics related to health and safety each month. The month of June is National Safety Month by the National Safety Council (NSC), in partnership with the Center for Disease Control and Prevention (CDC).

This month brings attention to safety issues as a whole and highlights important topics each week. So whether our clients are construction leaders or human services professionals, June is an opportunity to evaluate the safety practices of yourself and your workers.

Week 1: Safety Engagement

One of the foundational aspects of cultivating a safe workplace is through intentional participation in safety practices.

“Both employers and employees must be engaged in safety. Working together, employers and employees can develop policies and procedures to identify, monitor, mitigate, and eliminate work-related hazards,” NSC states.

One way Rancho Mesa encourages clients to engage in safety is by offering tools to help best equip them for the task. The SafetyOne™ platform offers weekly toolbox talks that employers can administer to workers on the job. SafetyOne also offers a library of online training courses to encourage safety engagement. The videos and quizzes are taken individually via a web browser. 

The more relevant the employer’s lessons are to the current safety hazards and job tasks, the more valuable the training will be to employees.

Week 2: Roadway Safety

The Bureau of Labor Statistics states that the leading cause of work-related deaths in the nation are motor vehicle crashes and either the first or second leading cause of death in each major industry. That’s why the NSC has dedicated this week to driving safety.

Rancho Mesa offers a library of driver trainings, both in the form of toolbox talks and online trainings:

Toolbox Talks

• Defensive Driving

• Driving in Wet Conditions

• Like Oil and Water, Drinking And Driving Do Not Mix

• Do Cellular Phones Cause More Vehicle Accidents?

• Motor Vehicles – A Form of Locking Out

• Motor Vehicles – Seat Belts

• No Vehicle Accidents on This Site

• Safety While Refueling Vehicles and Equipment

• Vehicle and Equipment Parking Safety for Landscape Contractors

Online Training

• Driver Safety: The Basics

• Driving Safety

• Driving Defensively

• Distracted Driving

• Commercial Drivers License (CDL) Defensive Driver Training

Rancho Mesa also recently hosted its Fleet Safety Workshop, presented by Travelers Insurance. The recording is now available.

Week 3: Risk Reduction

The best ways to keep employees safe and prevent workplace incidents is by identifying the environmental hazards and addressing them immediately.

According to NSC’s Injury Facts, there were a total of 4,695 preventable workplace deaths and 4.53 million medically consulted injuries in 2022.

Foreseeing potential injuries before they happen mitigates risk. A pivotal part of this process for companies is through observing their work environment. The SafetyOne app offers the Observation tool clients can use to perform safety observations or inspections via a phone or tablet. An issue identified in an observation can be assigned to other employees or emailed to third parties. Once completed, they are automatically documented in the platform.

Additionally, employers create and maintain a written Injury and Illness Prevention  Program (IIPP) and a copy must be made available in the workplace. This week is a good opportunity to revisit your company’s IIPP and make sure it is up to date and covers all job hazards. The Cal/OSHA website offers a model IIPP for both high hazard and non-high hazard industries.

Week 4: Slips, Trips and Falls

As the final topic of the month, slips, trips, and falls are a prevalent hazard across most industries. Whether missing a step down a slippery ladder, losing balance on an aerial lift, or slipping on wet flooring, falls can happen anywhere in the workplace. The best way to prevent these common incidents is to eliminate the hazard initially and make sure employees are trained in the correct safety procedures.

Rancho Mesa offers toolbox talks and online training that covers slip, trip, and fall prevention:

Toolbox Talks

• Slips, Trips and Falls

• Fall Prevention and Guardrails

• Slip and Fall Prevention for Landscape Contractors

• Watch Your Step! Don't Slip & Fall

• Fall Protection

• Avoiding Falls

• Let's Prevent Slips, Trips and Falls

Online Training

• Slips, Trips, and Falls

• Slips, Trips and Falls in Construction Environments

• Slips, Trips, and Falls in Food Processing and Food Handling Environments

• Slips, Trips, and Falls in Healthcare Environments

• Slips, Trips, and Falls in Office Environments

• Fall Protection in Industrial and Construction Environments

As we continue to make our way through National Safety Month, it's a good idea for clients to evaluate any holes in their safety practices. The opportunities employers take to keep workers trained will impact their hazard prevention, and ultimately their incident rate, the rest of the year.

Rancho Mesa is committed to offering the necessary tools to help.

For questions about accessing resources in SafetyOne, clients can reach out to their client technology coordinator.

Beyond Insurance: Employer Strategies to Prevent Wage and Hour Claims

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

It was June, 86 years ago, when Congress and President Franklin D. Roosevelt (FDR) signed into law the Fair Labor Standards Act of 1938 (FLSA). In the words of FDR, the FLSA ensured “a fair day’s pay for a fair day’s work.”

While the FLSA immediately raised wages for hundreds of thousands of workers and improved working conditions, it has also given rise to a specific type of costly allegation, wage and hour claims.

Wage and hour claims arise when non-salaried or non-exempt employees make a formal complaint stating they were unfairly compensated for work performed.

In 2021, about 19,000 California workers filed unpaid wage claims for a total of more than $330 million, according to Cal Matters.

Wage and Hour Liability Allegations include:

• Underpayment of overtime

• Miscalculation of wages

• Refusal to allow employee breaks

• Expecting off-the-clock work

• Not paying employees regularly

• Refusal to pay exempt employees for absences

• Not paying for time required to put on or remove protective gear or clothing

• Adhering to federal minimum pay guidelines when state guidelines warrant higher pay

Prevention is always the best line of defense against wage and hour claims. Beyond purchasing insurance, which will typically provide $100,000 to $200,000 of defense costs, employers can mitigate risk by:

• Assessing the risk within the company, starting with the State and Local Government Self-Assessment Tool available from the U.S. Department of Labor’s Wage and Hour Division.

• Review employee classification as to “exempt” and “non-exempt” status to ensure compliance with guidelines under the FLSA and applicable state laws.

• Consult with an attorney or consultant regarding job descriptions and how overtime is calculated.

• Review and confirm proper classification for independent contractors.

• Keep payroll records for all employees and establish a mechanism for tracking non-exempt employees’ hours.

• Review practices and procedures to ensure compliance with meal and rest periods as applicable to state law.

• Allow an outside HR firm to conduct an external audit of the employer’s wage and hour practices.

• Enacting policies that prohibit off-the-clock work

Navigating employment law and the FLSA will help employers earn good favor among workers and help to avoid costly wage and hour lawsuits. Understanding common wage and hour allegations is a critical step in this process, but may not be enough.

If you have questions about how insurance policies may supplement your existing risk management plan, contact me at sbrown@ranchomesa.com or (619) 937-0175.

Building an Effective Renewal Submission in a Hard Market

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

Insurance renewals can be challenging for nonprofits, especially in the hard market of 2024, characterized by higher premiums, stricter underwriting, and reduced coverage from insurance carriers. Leaning on your insurance broker as the quarterback, a well-prepared submission can significantly impact the outcome of your insurance renewal, potentially leading to better terms and lower premiums. Nonprofits can work effectively with their insurance broker to build a comprehensive submission using the following strategies.

Pre-Renewal Meeting

Begin the pre-renewal process well in advance by meeting with your insurance broker at least 90 days before your renewal date to update expiring applications and discuss any changes in operations, such as new programs, major grants, changes in leadership, turnover percentage, and employee count, etc. Rancho Mesa meets with clients 120 days prior to the renewal date. This provides plenty of time to gather the necessary documentation, address potential issues, discuss a renewal strategy, and explore alternative options if needed.

Highlight Risk Management Efforts

Insurance carriers are going to favor organizations that proactively manage risk. Demonstrating your commitment to risk management can position your nonprofit as a lower-risk organization, potentially leading to more favorable insurance terms. Risk Management Strategies:

• Safety Training
  Regularly train staff and volunteers on safety procedures and document these sessions. Rancho Mesa clients have access to our proprietary SafetyOne™ Desktop & Mobile App, which allows you to manage your workplace safety program from anywhere, access important documents, and share job-specific and employee safety data as needed. The SafetyOne platform also includes tailored trainings to ensure proactive risk management.

• Large Claim Summary
  For organizations that have experienced any number of large claims, it is best practice to provide a detailed summary of each claim. This should include exactly what happened and the procedures your organization has put into place to mitigate similar claims from happening in the future. Charity First recommends this approach because it demonstrates to insurance carriers that your organization is proactive about risk management.

Description of Operations

Providing a detailed description of your operations is crucial. This includes explaining how your nonprofit executes its mission, the specific activities and programs you run, and how these activities align with your organizational goals. A comprehensive description helps insurance carriers understand the nature and scope of your work, assess the associated risks accurately, and provide appropriate coverage.

Broker Expertise

Your insurance broker is a valuable resource and should have a deep knowledge of your organization’s insurance market and the specific needs of nonprofits. The broker should be ensuring that the submission is as strong as possible. The broker should be leading you throughout this entire process, informing you exactly what is needed and educating you on what is happening in the marketplace. The broker's role is not only to provide nonprofits with adequate coverage but also to ensure clients feel well-informed about what to expect for their renewal.

Importance for 2024 Renewals in a Hard Market

The insurance market in 2024 is particularly challenging for nonprofits due to an uptick in frequency and severity of claims across all lines of insurance. A hard market typically translates into insurance carriers engaging in more conservative underwriting, more restrictive coverage, elevated retentions/deductibles, and higher premiums. This makes it even more critical for nonprofits to present a strong, well-documented submission.

Building a strong submission for your insurance renewal in 2024 requires a proactive and collaborative approach. By starting early, maintaining open communication with your broker, compiling comprehensive documentation, highlighting risk management efforts, leveraging your broker’s expertise, and exploring alternative options, your nonprofit can secure the best possible terms for its insurance coverage. This strategic approach not only helps in managing costs but also ensures that your organization is properly insured.

To discuss your organization’s insurance renewal, contact me at (619)486-6569 or jmarrs@ranchomesa.com.

Surety Bonding: Understanding the Client-Broker-Carrier Relationship

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

People from outside the surety bond industry will sometimes ask if we work for 1) the carrier (bond company) or 2) the contractor client. This is an easy one. While we are approved to issue bonds by the 20+ carriers we are appointed with, make no mistake that we work 100% for our clients. 

The thought for this article came about when a potential new client mentioned to me that he felt his broker was not working very hard on his behalf to increase his aggregate bond program. During a phone call where the client was providing the broker with a narrative of information to pass along to the bond company, the broker mentioned that he didn’t want to, “push too hard” because he had a number of accounts with the bond company and did not want to negatively affect that relationship.

Whether a broker has 1 or 10 accounts placed with a particular carrier, you should ethically treat each account individually, working as hard as possible to create the best program for your client. Our industry promotes very high standards regarding the servicing of our accounts, and the State of California requires agents to complete three hours of ethics training every two years. I am certain this is covered during the training.

Looking at this from the carrier viewpoint, if the bond company supported an account mainly because a broker placed numerous accounts with that company (yet the underwriting of the account did not meet the bond company requirements) that would open the door for them to accept undue risk of future losses. At some point, one of these accommodation-type accounts will fail and cause a loss that the bond carrier could have avoided. 

If you would like to discuss the client-broker-carrier relationship, please contact me at (619) 937-0165 or mgaynor@ranchomesa.com.

Return to Work Programs: Best Practices for Handling Workers’ Comp Claims

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

How do you handle the situation when a great employee is injured but not quite ready to return to full duty? We do all that we can to prevent injuries and make sure once they do happen our employees are taken care of quickly and properly. The one true variable we have in our control, after a claim has been filed, is how to accommodate employees that are injured but not able to return to normal duties until deemed fully recovered.

Your experience modification rate (X-MOD) is a very important component in your premiums and potentially securing bids in states like California. Every company has a primary threshold that is unique to the company. This is a dollar amount per claim that, once the medical, permanent disability, and temporary disability surpasses this threshold, has no further impact to your X-MOD. Carriers have medical review teams set in place to ensure that the medical portion of each claim is as low as possible, permanent disability is dictated by the treating doctor, so the only portion of each claim we have control over is how the temporary disability will be handled. Sometimes, even that is out of our control if an injured employee is not able to work in any capacity.

Ideally, your workers’ compensation doctor will quickly give you work restrictions and you will be able to determine if you have any available work within those restrictions. The bigger question is what to do with these employees if they are not fit for regular duty? Is it best to let the carrier handle the temporary disability portion of the claim, have the employee come back and work in your office doing odd jobs, or utilize companies like ReEmployAbility or carrier programs where they can work at any number of nonprofit organizations? Temporary disability mismanagement can add up very quickly and lead to a small claim turning into a claim that heavily impacts your X-MOD.

Making sure your employee feels valued and that they have a job to come back to is a great way to keep claims cost down and employee morale high. When employees sit at home waiting to recover, they may feel helpless and uncertain about their future, are exposed to countless commercials about injured workers and lawyers that claim they can make them rich. Keeping them at work, in some capacity, where progress can be seen and communication continues is beneficial for both the employee and the employer.

The intricacies of how to handle claims is something you hope to never need to be good at as an employer, which is why it is so important to have a broker and claims advocate on your side to help navigate the process with you.

This is a complex topic and if you would like to discuss further or talk about any other insurance needs, I can be reached at (619)438-6900 or you can email me at ccraig@ranchomesa.com.

Focus on Frequency with a Small Work Comp Deductible

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

Economies of scale create leverage for landscape businesses as they grow. The Bureau of Labor Statistics (BLS) 2022 table of incident rates notes that the landscape industry has an incident rate of 3.4 per 100 full time employees. Landscape is classified by BLS under Administrative and Support and Waste Management and Remediation Services; this sub class has an incident rate of 1.9. The average for all other industries is 3.0.

With frequency typically being high for the landscape industry, it’s important to continue to focus on ways to minimize injury, prevent severity and focus on return to work opportunities when an injury does arise.

While commercial auto, general liability, and umbrella have been stuck in a hard market, workers’ compensation has relatively been in a soft market. Combined ratios for private insurance carriers on workers’ compensation was published at 87% in 2021 and 84% in 2022, according to the National Council on Compensation Insurance (NCCI) State of the Line Report. This impact on carrier profitability has led to decreased pressure on rates for landscape employers across the country.

Like all things cyclical, it is expected that the workers’ compensation market will reverse and begin to harden.

As the market hardens, landscape employers operating in the middle market (i.e., businesses with an annual workers’ compensation premium between $300,000 and $1,500,00) should consider a small workers’ compensation deductible to tackle the high likelihood of frequency.

Small deductibles vary by carrier from $1,000 to $25,000. Collateral might be required and the ability to apply an aggregate to the policy will also vary by carrier.

A small deductible allows the landscape company an opportunity to take the predicable layer of injury cost while still transferring severity to the insurance carrier. 

As your company grows and/or market conditions change, consider a small workers’ compensation deductible to maximize your insurance program.

To discuss implementing this strategy for your business, contact me at (619) 937-0200 or  drewgarcia@ranchomesa.com.

National Electrical Safety Month: Preventing Hazards in the Construction Industry

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

We’ve just started the month of May, National Electrical Safety month. The Electrical Safety Foundation International (ESFI) dedicates this month annually to help reduce electrical-related fatalities, injuries, and property loss.

Many Rancho Mesa construction clients not only work with electricity, but specialize in some form of it. So, it's a great opportunity to reevaluate workplace safety and ensure any hazards to shock or fire are addressed.

One of ESFI’s missions is to spread awareness to specific industries that work with and around electricity. Accidents involving electricity can lead to electrocution and flash fire, and the construction industry stands the most risk. The Center for Construction Research and Training found that construction workers account for almost half of all workplace electrocution deaths in the nation.

As we continue through the month of May, it's a good idea to make sure your workers are handling electrical tools and hazards safely. Rancho Mesa offers training resources in the SafetyOne™ app with several online courses relating to electrical safety as well as various toolbox talks.

For more information about the resources Rancho Mesa offers, clients can reach out to their Client Technology Coordinator.

WCIRB Files for Workers’ Comp Rate Increase

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

Earlier this month, the Workers’ Compensation Insurance Rating Bureau (WCIRB) recommended a nominal .9% increase in the advisory pure premium rates. The reason given, increased loss development for medical costs and higher claims adjustment expenses. This recommendation is now sent to the California’s Insurance Commissioner Ricardo Lara for approval. If approved, the increase in rates then take effect September 1, 2024.

Recognizing that a .9% increase is not very significant and in 2023 the WCIRB requested a similar increase which ultimately was denied by Commissioner Lara, the message remains clear that  workers’ compensation rates have probably bottomed out.

This does not mean every business will see an increase. There will still be reductions in some class codes pure premium rates and pricing will be more tied to Experience Modification Rate (EMR) decreases and an individual company’s claims experience. For distressed accounts, companies whose EMR is increasing and have had poor claim experience, will likely see an increase in their rates.

In order to stay ahead of this, we recommend companies review their key performance indicators (KPIs) that measure and compare a company’s frequency and severity of claims to their peers within the same governing class code. These metrics allow a company to identify trends, design programs that will address specific training needs, and project claims costs that will ultimately impact their EMR.

In addition, we recommend working closely with your claim advocate to assist in monitoring open workers’ compensation claims, and identify any open claims under your company’s primary threshold that could be closed prior to your unit stat filing that can impact your EMR.

If you would like to learn more about the pure premium rate’s impact by class code or evaluate your specific KPIs, I can be reached at (619) 937-0167 or via email at sclayton@ranchomesa.com.