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Business Newsletter - September 2018


2205 Point Blvd., Suite 200 | Elgin, Illinois 60123
847-741-1000 | www.lundstrominsurance.com | Fax 847-428-8857

"Serving you, your business and your community since 1956"

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Vol. 26 No. 5


Termite Prevention for Business Owners

In the natural world, tiny wood-eating insects called termites digest cellulose and break down the wood of fallen and dead trees, facilitating the natural cycle of decomposition. In the business world, however, termites cause an estimated $5 billion in property damage annually, according to the National Pest Management Association (NPMA, 2017). This is why prevention is essential. Even if your building is primarily brick or stone, it may still contain wood. If any of the wood comes in contact with soil, termites can gain easy access to your business and feast on your books, paperwork, files, filtration systems, and even your insulation. 
Business owners have long had to deal with infestations by subterranean termites, but the their potential destruction has increased in recent years due to storms that bring greater moisture to some areas of the country, as well as more aggressive varieties of termites. 
It is important for business owners to understand that there is no insurance available to cover losses caused by such infestations. There are ways, however, to recognize the presence of termites in the early stages, before significant damage can be done. There are also measures available that may help to deter termites altogether. The more you know, the better equipped you will be in helping to protect your number one investment: your business. 

Under Construction

If your building is under construction, be sure builders immediately dispose of any cellulose materials on the jobsite that could serve as food sources for termites, such as stumps and roots, wood and cardboard debris, grade stakes, and boards used in concrete forms. 
Although contractors are not solely responsible for pest control, their potential liability for infestations that could have been prevented extends well into the future. This is because there are steps they can take to minimize construction defects to prevent unwanted moisture and pests from entering the structure. While the banning of chlorine-based agents that were once used to combat termites has made protecting buildings more challenging, there are still preventive strategies and protective treatments that may be highly effective in reducing the chances of a serious infestation. 

Protection and Prevention

Termites rely on moisture for survival, so keeping water from accumulating near the foundation can reduce the chances of a termite infestation. To control runoff, the soil surrounding the building should be graded away from the foundation, and rainwater should be properly diverted away from the building with gutters, downspout extenders, splash blocks, and drain tiles. In crawlspaces, floor joists should be at least 12 inches above the soil. Any soil beneath floor structures should be covered or treated. 
Whenever possible, wooden sections of the building should be at least six inches above the soil. To prevent termites from using a porch, deck, or steps as an entry point, any wooden elements in these structures should be kept above ground on concrete footings, and latticework or trellises around the building should be made of non-cellulose materials. 
Regular maintenance of taps and pipes, along with good ventilation in crawl spaces, basements, and attics can help protect your business from termites. When landscaping the grounds, make sure that plants and mulch are several feet away from the building's foundation. Remember to store garbage in sealed containers and dispose of it regularly. 
Termites are especially prevalent in warm and temperate climates, or in close proximity to wooded areas. Often, large numbers of winged termites, swarming from wood or soil, are the first obvious sign of a nearby termite colony. Another sign is the appearance of mud tubes, which look like thin tunnels of dried mud that run from the foundation, up the sides of the building. Because termites live in soil and are soft-bodied insects, they need the protection of the mud tube as they move around consuming wood. If you disrupt one of the mud tubes, you may see whitish, opaque ants, which are in fact, the worker termites. 
An investment in termite protection is an investment in your business. Whether you opt for regular professional inspections, a termite bond, or a prevention plan, ask questions, and make sure you understand what you are purchasing. For more information, feel free to give us a call.

Protect Your Business from Work-Related Lawsuits

Every day you hear or read about employers being sued by employees or former employees for a wide range of complaints such as sexual harassment, wrongful termination, and discrimination. Faced with this growing threat, how can business owners take steps to protect their business from the expenses and possible devastating settlement or judgment costs that may result from a work-related lawsuit? 


Insurance Can Help

Employment practices liability insurance (EPLI) is a specialized insurance product that offers protection to employers who may find themselves the target of such lawsuits. Because of the demand for this type of insurance, many national insurance companies offer this coverage. Although each company's EPLI policy has its own features, most policies share the following characteristics: 
What is covered?—EPLI covers costs (legal defense, judgments and settlements) up to the policy maximums related to a number of work-related lawsuits. Under some policies, different dollar coverage levels are available from the insurer. In general, the policy will cover actions such as wrongful discipline, discrimination, wrongful termination and sexual harassment. However, the list of covered actions varies depending on the policy and the insurer. Employers should review and compare policies carefully to make sure that they are getting the most comprehensive coverage possible. 
What is excluded?—Bodily injury, property damage, workers compensation, and any actions that are covered by other insurance policies are not covered by EPLI. While some policies will not exclude punitive damages (but many do), most jurisdictions will not allow a policy to provide coverage for punitive damages, as it is deemed to be against public policy to incent behavior worthy of such punishment. 

Who is insured?—The policy will specify this, but in most cases it will cover the business entity, current and former employees, officers, and directors. 
How is the coverage underwritten?—As with any type of insurance, employers who have effective loss prevention and loss control procedures in place and who have a good track record are likely to pay lower premiums for their insurance coverage. Employers can help insure their business and will receive favorable underwriting on their EPLI policy by making sure that basic human resource policies are in place such as: 
  • a designated human resources contact for employees 
  • employment applications 
  • employee handbook 
  • sexual harassment policy 
  • regular employee performance review practices 
  • clear discipline and termination procedures 
  • bulletin board for required employee postings 
Some insurers offer assistance in developing basic human resources policies. 
As with any purchase, employers should shop around and compare a number of EPLI policies before making a final decision. It is important to choose an established insurance carrier with a good background and solid ratings. Employers should also make sure the policy has the features that make sense for their business. 
In today's litigious culture, employers of all sizes should take action to reduce the chances that they might become the subject of a work-related lawsuit. Nothing can eliminate the risk entirely. For the best protection, employers should purchase a good employment practices liability insurance policy.

For Your Information

USDA Rural Development 

USDA Rural Development seeks to support rural communities by improving economic opportunities, community infrastructure, environmental health, and the sustainability of agricultural 
 production. They offer training, technical support, and tools for rural residents to start small businesses and to access jobs in agricultural markets, the green economy, and other existing markets, as well as acquire training in vocational and entrepreneurship skills. For more information, visit www.rurdev.usda.gov


Children's Online Privacy 

All commercial websites or online services that knowingly collect personal information from children under age 13 must comply with the Children's Online Privacy Protection Act. Personal information includes contact information, such as name and email address, and other information, such as hobbies and interests. The Federal Trade Commission (FTC) provides information about compliance with child privacy laws through its Onguard Online website. For more information, visit www.onguardonline.gov

Partners for Growth 

The Smart Growth Network (SGN) is a partnership of government, business, and civic organizations that aim to explore alternative development patterns with the goals of boosting the economy, protecting the environment, and enhancing community vitality. This type of smart growth often is town-centered, is oriented to transit and pedestrians, and has a greater mix of housing, commercial, and retail uses. For more information about their programs and resources, visit www.smartgrowth.org.

Risk Management for Frequent Business Travelers

Imagine the impact on your business if you and some of your key employees were injured in an accident while traveling. The results could be devastating for your company's future. Although business travel has always involved risk, the globalization of business has expanded travel risk beyond the obvious concerns of airplane travel to include medical emergencies, assault, theft, and terrorism. 
This trend has prompted many companies to take a new look at controlling travel-related loss and at insurance. In addition to providing the usual insurance coverage, many businesses are redesigning their travel risk-management programs. They may now include self-protection training for frequent travelers, emergency assistance programs for employees at distant locations, and special insurance for unique risk situations, such as kidnap and ransom insurance.

Divided, We're Safe?

Many companies try to manage travel risk by limiting the number of employees who are allowed to travel together at one time. Unfortunately, it can be difficult to make this approach work. Even if employees take different flights to a common destination, they may end up meeting at the airport and sharing the same car and hotel. Sometimes it can be impractical to expect employees to travel separately. 

Covering the Bases

As an alternative to employees having to travel alone, a comprehensive travel risk-management program can include any of the following: 

Medical coverage and income replacement. Traveling employees are considered to be at work and are therefore entitled to workers' compensation benefits if an accident should occur. In fact, workers' compensation may provide the primary coverage for medical expenses and income replacement; however, to obtain full coverage, a workers' compensation policy must be properly amended. Travel insurance that covers emergency medical assistance may provide emergency care for illness or injury, as well as for necessary evacuation from a dangerous location.
Protection training. This can take the form of seminars that cover a broad range of topics, such as airport conduct, auto travel (including carjacking), and hotel safety, as well as the safe use of credit cards and ATMs. Travel risks may be identified, and specific safety tips may be offered on handling these situations. As traveling employees become aware of the risks they may face, they can learn how to reduce their chances of being victimized.
Kidnap and ransom insurance. For employees who frequently travel to countries experiencing political upheaval or social instability, kidnap and ransom insurance is becoming a standard part of comprehensive travel accident policies.
Teleconferencing, videoconferencing, and Internet communications have become popular ways for businesses to communicate across distances; however, a handshake carries a lot of weight in the business world, and face-to-face meetings still have great value. By understanding the risks involved in today's business travel and taking the appropriate measures to manage those risks, you can help protect yourself, your employees, and your investment in your business.

Did You Know?

Employee Negligence 

According to Shred-it's State of the Industry Report, one-third of working adults in the U.S. admit to potentially risky behavior at work. When assessing the causes of data breaches, the report found that employee negligence or accidental loss is a main cause. In fact 47% of C-suite Executives and 42% of Small Business Owners (SBO) reported human error or accidental loss by an employee was the cause of a data breach. In addition, 78% of C-suites and 28% of SBOs plan to train their staff on information-security procedures over the next year. 

Taking Too Long 

According to the "Time to Hire" Robert Half survey, 57% say the most frustrating part of a job search is the long wait after an interview to hear if they got the job. Moreover, 23% lose interest in the firm if they don't hear back within a week and another 46% lose interest within two weeks. Paul McDonald, senior executive director of Robert Half notes, "Candidates with several options often choose the organization that shows the most interest and has an organized recruiting process." 

Lack of Critical Insights 

In a recent survey to uncover the importance of data insights from within eCommerce marketplaces, the big takeaway was that marketers lack customer behavioral data. In fact, 84% lack insights into buying behaviors on eCommerce marketplaces. And, 50% are hesitant to invest in marketplaces because of lack of insights. Finally, only one third think the existing understanding of path-to-purchase is excellent.

In the Aftermath: Ordinance or Law Endorsement

Imagine if a sudden fire swept through the building where your business is located, destroying over half of the property and its contents. After such a catastrophe, you learn that local ordinances require you to demolish the remainder of the building. The building inspector also informs you that the building cannot be reconstructed exactly as it was before the fire because that would violate current building and zoning codes. At this point, you may need to cover significant expenses to get your building back and your business up and running. Do you know if your insurance would help cover the cost if such a disastrous event should ever occur?
Generally, basic commercial property policies exclude coverage for building updates, repairs, or demolitions mandated by public law or ordinance. This can be a costly gap in your coverage, even if you are required to add a sprinkler system or make other minor changes to meet current building codes. The cost of meeting accessibility requirements as stipulated by the Americans with Disabilities Act (ADA) is also generally excluded under basic commercial property contracts.
To fill this gap, you may want to consider adding an ordinance or law endorsement to your policy. In the event that your building is damaged by an insured peril, an ordinance or law endorsement can provide coverage for the following:
  • the cost of construction necessary to comply with current building codes
  • the cost of demolishing the undamaged portion of the building
  • the cost of rebuilding the undamaged portion that was demolished.
Your building may have met all existing laws and ordinances when it was constructed, but codes change over time. As a building owner, an ordinance or law endorsement could prove to be a valuable addition to your insurance coverage. Even if you rent your building, you should confirm that your landlord has this coverage. Furthermore, if you have made significant improvements to your space that you are responsible for insuring, you should be certain to maintain this extended protection. 
Be sure to contact one of our qualified insurance professionals for further information on ordinance or law endorsements.
Copyright © 2018 Liberty Publishing, Inc. All rights reserved.
 The content of this newsletter is taken from sources that are believed to be reliable. 
 However, this newsletter is not intended as a substitute for legal, financial, or professional counsel. 



2205 Point Blvd. Suite 200 | Elgin, IL 60123
p 847.741.1000 | f 847.428.8857