I was reading an article in the Insurance Journal over the weekend and the article was about what happens when fun ‘n games at work take a bad turn.  The article was in reference to a lawsuit where an employee sued their employer because they were injured during a company picnic while participating in one of he activities. 

The employee and her partner had already won the hula-hoop contest and balloon toss.  The last event for them to win was the 3-legged sack race to clinch first place and the $50 prize.  Unfortunately the employee fell during the sack race and injured her shoulder. 

The employee thought that her injury should have been covered by workers compensation insurance, but coverage was denied because they deemed the activity voluntary.  The employer sponsored the picnic, approved the activities and had an award for 1st place, but did not force anyone to participate. 

This case hinged on whether the court felt that the activities were voluntary or if people were being forced to participate. 

There is a great opportunity for team-building when employees participate on employer sponsored teams and in company activities.  It’s an opportunity to get to know your colleagues outside of work and possibly showcase some talent that you might have outside of the workplace.  As an employer the important thing to remember is to keep the activities voluntary.  If someone is injured while participating on one of your employer sponsored teams or in one of your employer sponsored events, your workers compensation insurance is going to determine whether the activity was voluntary or not to determine if a payment should be made. 

Larson’s Worker’s Compensation Law is often used as a general guide to determine if recreational and social activities are within the course of employment and should be covered under workers’ compensation.  The “Larson Test” considers the following when an injury occurs:

• Did the injury occur on the premises during a lunch or recreational period (I’ve seen a number of warehouses that have basketball hoops for the employees to use on their breaks)
• Did the employer expressly or impliedly require participation (join the volleyball team or you’re fired!)
• Is the activity considered a requirement of your employment?  (i.e. all employees are required to volunteer for habitat for humanity)
• Does the employer derive substantial direct benefit from the activity beyond the intangible value of improvement in employee health and morale. 

As an employer it is great to sponsor sports teams and have company picnics with games to foster team building, but the important thing to remember is to keep participation voluntary.

I was driving to the gym yesterday morning and I was listening to the Brenna and Brenna Law Forum on WHAM 1180.  This is a great show that I enjoy listening to when I’m able to catch it because they field calls from listeners and dispense some really good legal advice.

I was listening yesterday and a listener called in and said that their daughters’ apartment had a fire and she lost all of her belongings and didn’t have renters insurance.  The caller wanted to know if there was anyway that she could sue the landlord to pay for her lost belongings.  Apparently the fire marshal deemed the fire accidental due an electrical wire failure. 

Knowing that the woman didn’t have renters insurance the attorneys indicated that she may be at a loss to get her belongings paid for, but indicated that she could have an engineer inspection to determine the cause of loss or go back to the fire marshal to find out more about the cause of the fire.  The attorney’s believed that if she was able to determine that the fire was caused by the landlord’s negligence or caused by an electrical contractor that performed faulty work she might have the chance of suing the landlord and/or the electrician to have their insurance pay for her damaged belongings. 

Now this is obviously good advice because I’m assuming that the woman was probably out $15,000 or more and that is a big chunk of money.  The only problem is that she could be incurring costs that won’t necessarily guarantee that her belongings will be replaced.  An engineer’s inspection would probably run $200-$500 and who knows how much attorney’s fees would cost, maybe $1,000-$2,000.  She could potentially be out another $2,500 and still not have her belongings replaced. 

She could have saved herself the headache of getting an engineer’s inspection, hiring an attorney and going to court if she just purchased renters insurance in the first place.  Even if she would have purchased the bare minimum policy covering her contents for only $12,000 it would probably have cost her less than $100/year.  It’s crazy to think that she could pay $2,500 to try to have her belongings replaced after the fact, which isn’t guaranteed or just purchased a renters insurance policy for less than $10/month and been guaranteed that her belongings would have been replaced. 

Now obviously hindsight is 20/20, no one ever thinks that they will have a fire in their apartment, so they don’t think that need to insure for it.  That is what insurance is there for, you pay it hoping that you’ll never need it, but if you ever do need it, it’s nice to know that the insurance is there for you. 

I cringe every time a talk to a renter and they say that they don’t have renters’ insurance and don’t want to purchase it.  Especially if they are already paying for auto insurance, they can usually get a multi-policy that can substantially reduce the cost of renters’ insurance.  It can reduce the cost to $60/year or less.  I had one client that it only cost them an additional $3/year to have renter’s insurance after taking into consideration the discount they received on their auto insurance.

I insure a number of contractors and businesses that claim that they don’t have any employees.  They say that anyone that performs work for them is an independent contractor and they report what they pay them at the end of the year on the federal form 1099 for independent contractors. 

Now I know why businesses prefer to pay people as independent contractors because it can be costly to hire someone as an employee.  When you have employees you are subject to pay employment taxes (13.85% above the workers wages earned owed to the government), workers compensation insurance, and NYS statutory short-term disability insurance.  Some businesses hear all of these additional expenses associated with hiring an employee and are quick to classify anyone that performs work for them as an independent contractor. 

Independent contractors are responsible to pay their own self-employment taxes on their annual tax return and carry their own business and disability insurance. 

Most businesses would be in for a rude awakening if they are audited by the IRS.  The IRS may decide to classify that independent contractor as an employee.  If the IRS changes your business’ classification of an independent contractor to an employee you can face stiff penalties and owe back taxes. 

Even if you have a contract that states that the worker is an independent contractor, this is not sufficient to determine the worker’s status.  The IRS is not required to follow a contract stating that the worker is an independent contractor.  How the parties work together determines whether the worker is an employee or an independent contractor. 

There are three characteristics used by the IRS to determine the relationship between businesses and workers:

1. Behavioral control – covers the facts that show whether the business has a right to control how the work is done through instructions, training, or other means.
2. Financial control – covers the facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.
3. Type of relationship – relates to how the workers and the business owner perceive their relationship

Behavioral control refers to facts that show whether there is a right to direct or control how the worker does the work.  An employee is generally subject to the business’s instructions about when, where, and how to work.  All of the following are examples of types of instructions about how to do work:

• When and where to do the work
• What tools or equipment to use
• What workers to hire or assist with the work
• Where to purchase supplies and services
• What work must be performed by a specified individual 
• What order or sequence to follow when performing the work

Financial control refers to facts that show whether or not the business has the right to control the economic aspects of the worker’s job.  The financial control factors fall into the categories of:

• Significant investment – an independent contractor often has a significant investment in the equipment he uses in working for someone else.
• Unreimbursed expenses – independent contractors are more likely to have unreimbursed expenses than are employees.
• Opportunity for Profit or loss – having the possibility of incurring a loss indicates that the worker is an independent contractor.
• Services available to the market – an independent contractor is generally free to seek out business opportunities.
• Method of payment – an employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time.  An independent contractor is usually paid by a flat fee for the job.

Type of relationship refers to facts that show how the worker and business perceive their relationship to each other.  The factors for the type of relationship between two parties generally fall in the categories of:

• Written contracts
• Employee benefits
• Permanency of relationship – if you hire a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that the intent was to create an employer-employee relationship.
• Services provided as key activity of the business – for example, if a law firm hires an attorney, it is likely that it will present the attorney’s work as its own and would have the right to control or direct that work.  This would indicate an employer-employee relationship. 

If after reading this summary of employee vs. independent contractor that I summarized from the IRS.gov website, you still aren’t sure how to classify your worker, you can ask for the governments help.  You can file form SS-8 – “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding”.  This way you can be sure that you won’t be surprised by an IRS audit that changes your classification of independent contractor to employee.

I’m sure there are a number of parents that worry about what a new school year brings for their children.  New course work, new challenges and new dangers.  I can’t come by all of your houses after school and help tutor your children, but I can help you make them safer.  This month I’ve included a list of back to school reminders and safety tips that you should review and share them with your children, which I pulled from the American Academy of Pediatrics website.   

Traveling to and from school

School bus:

• If your child’s school bus has lap/shoulder seat belts, make sure your child uses one at all times when in the bus. If your child’s school bus does not have lap/shoulder belts, encourage the school to buy or lease buses with lap/shoulder belts.
• Wait for the bus to stop before approaching it from the curb.
• Do not move around on the bus.
• Check to see that no other traffic is coming before crossing.
• Make sure to always remain in clear view of the bus driver.

Biking:

• Always wear a bicycle helmet, no matter how short or long the ride.
• Ride on the right, in the same direction as auto traffic.
• Use appropriate hand signals.
• Respect traffic lights and stop signs.
• Wear bright color clothing to increase visibility.

Walking:

• Make sure your child’s walk to a school is a safe route with well-trained adult crossing guards at every intersection.
• Be realistic about your child’s pedestrian skills. Because small children are impulsive and less cautious around traffic, carefully consider whether or not your child is ready to walk to school without adult supervision.
• If your child is young or is walking to new school, walk with them the first week to make sure they know the route and can do it safely.
• Bright colored clothing will make your child more visible to drivers.
• In neighborhoods with higher levels of traffic, consider starting a “walking school bus,” in which an adult accompanies a group of neighborhood children walking to school.

Before and after school child care 

• During middle childhood, youngsters need supervision. A responsible adult should be available to get them ready and off to school in the morning and watch over them after school until you return home from work.
• Children approaching adolescence (11- and 12-year-olds) should not come home to an empty house in the afternoon unless they show unusual maturity for their age.
• If alternate adult supervision is not available, parents should make special efforts to supervise their children from a distance. Children should have a set time when they are expected to arrive at home and should check in with a neighbor or with a parent by telephone.  

Most of these safety tips are pretty basic and mostly a reminder, but be sure to review them with your children because it never hurts to review safety tips, but it can hurt not to. 

I’ve personally never had my home or apartment broken into, but I have had my car broken into.  Luckily, I keep hardly anything in my car, so the thief only made off with the change in my ash tray, I did have to pay to repair my door where he broke the lock.  Even though the financial damages were small the thief was able to take away something much more important for me, my security. 

After you have had a break-in you feel violated and vulnerable.  I couldn’t help but think to myself if the thief had found my address on my registration and was planning on breaking into my home at some point.  You are on high alert for a period of time after a burglary.  I’ve seen it a number of times with clients of mine that have had their house broken into.  When I’ve show up to a client’s house after an incident you can see vulnerability on the persons face.  There belongings are thrown everywhere, there are empty spaces where a TV, piece of furniture or picture used to be and the police are there going through everything trying to get fingerprints.

We all want to minimize the chance of having our house burglarized, so I’ve compiled some security tips to help us reduce the likelihood:

• When you take a vacation be sure to have your mail stopped or have a relative stop by and pick up your mail for you.
• If you are away for an extended period of time in the winter, have a relative/friend stop by your house to make some tire tracks in your driveway or have your driveway plowed.  This will give the appearance that someone is home
• If you are going away on vacation don’t announce it the various social media websites, like Facebook, Twitter and Myspace.  Wait until you get back to share the pictures of you on the beach sipping margaritas.
• If you have a security system on your home or are thinking of getting one make sure that the activation pad is in a place that can’t be easily seen from a door or window.  You don’t want a burglar to be able to see from the window if the system is activated or not.
• If you have children be sure to keep their toys put away and not left out in the yard.  If you have good toys in your yard, someone is most likely to think that you have good toys in your home, like expensive gaming systems and computers. 
• If you have a contractor come to your house to do some work, be sure to check all of your locks on your doors and windows afterwards.  Sometimes a contractor will unlock a door or window for easy entry later on. 

This is just a brief list of safety tips that was provided by Reader’s Digest.  I could have listed pages and pages of security tips to keep you and your property safe and secure.  The best rule of thumb is to use your best judgment to minimize the chance of being burglarized.

First off, my daughter Kaci Kathleen VanScoter was born 7/18 at 8:42am, since that time Christine and I have learned a lot about babies.  In our brief stay in the hospital the nurses got to know us pretty well.  We frantically called the nurse’s station to come to our room and examine Kaci because she seemed to have very deep hiccups.  The nurse assured us that babies get hiccups and she is fine. 

The hospital thought they had gotten rid of us, but just over 24 hours after we were discharged, we were making a trip to the emergency room.  Kaci had spit-up ferociously, what appeared to be her entire feeding.  We were concerned with the projectile nature of the spit-up, so our pediatrician recommended that we go the hospital.  The doctor asked us a series of questions, such as, is she feeding ok?, is she having bowl movements?, is she lethargic?, we replied, she’s feeding fine, she’s filling the diapers alright and she’s as alert as you could expect from a new born.  He checked her out and then asked us the most important question of all, are you first-time parents? Yes, we are, then his tone changed and he assured us that babies spit-up and she is fine. 

I’ve also learned to watch where you keep hands when you’re preparing to bath her and she’s not wearing a diaper.  My hand got soaked and it wasn’t from the bath water.  Also when you’re changing her, be sure to get that new diaper on her as fast as possible or there could be a mess on the changing table.

Christine and I have learned a great deal in the just the first two weeks the hard way, so I thought I would do a little research so we won’t have to learn everything the hard.  So below are some safety tips for babies and children provided by Safe Kids Worldwide:

•  Keep soft things out of the place where an infant sleeps
•  Babies should be put to sleep on their backs
•  Put all plastic wrappings or bags where children can’t reach them
•  Infants should ride in rear-facing car seats until they weigh at least 20 lbs (9 kg) and are at least 1 year old. Do not put a rear-facing car seat in the front seat of a vehicle with an active passenger air bag
• Children over 1 year old and weighing between 20 lbs (9kg) and 40 lbs (18 kg) should ride in forward-facing car seats
• Children ages 4 to 8 weighing between 40 lbs (18 kg) and 80 lbs (36 kg) should ride in booster seats restrained with lap and shoulder belts. A regular safety belt won’t fully protect a child this size in a crash
• Don’t leave a baby alone on a changing table, bed, couch or other furniture. Keep one hand on the baby while changing diapers
• Always strap a baby into a high chair, swing, changing table or strollers
• Teach children a plan for escaping your home in a fire and practice it
• Before bathing children in heated water, always run your open hand through the water to check its temperature
• Keep hot foods and liquids away from table and counter edges. Never carry children and hot foods or liquids at the same time
• Always watch children near water. Don’t leave, even for a moment

Hopefully you can benefit from our learning experiences and these safety tips. 

I received a call recently from a prospect looking for auto insurance that was a male, 20 years old, had 4 tickets in the last 2 years and 1 accident, and he lived in the city of Rochester and wondered why he was paying so much for his auto insurance.  He obviously didn’t understand that insurance premium rates are based upon your driving record.  Insurance companies reward you for having good driving habits and penalize you if you don’t. 

If you look at this prospect he is getting whacked for a number of reasons, first being his age.  At 20 years old he is still a new driver.  Once he turns around 24 he will start to see his rates decrease.  Second he is single, insurance companies give better rates to married couples because actuarial data has proven that married drivers are more responsible. 

Also being such a young age and having his driving record isn’t boding well for him.  Even if you take a defensive driving course to have points removed from your DMV report, your insurance company will still surcharge you for them.  Insurance companies assign their own points to your violations.  Having 4 tickets within 2 years not only results in him paying more, but it also excludes him from even applying to some preferred companies.

He is also getting charged a higher rate because he lives within the city of Rochester, not that the city of Rochester is a bad place to live, but insurance costs may be higher in the city compared to some of the surrounding towns and counties.  Insurance companies rate based on where you live, they have statistical data the proves that some areas where people live have more frequent or higher dollar claims. 

Now all of these factors make sense on why he would be paying a higher rate, but what most people don’t realize is that he may also be paying a higher rate because of his credit score.  Most insurance companies will run a insurance score which is based off of your credit score.  With this new rating factor companies are able to have many more tiers of rates than they did previously. 

Some companies will have over 100 different tiers to rate someone based on their insurance score, then once you take into consideration the rest of the factors like where you live, driving record, age, marital status and the car you drive, there are an infinite number of rating combinations.  I always think it is funny when people will ask me how much it will cost to insure their vehicle and think that I can tell them off of the top of my head.  There are so many factors that go into the rates that you can’t estimate accurately the premium without putting all of the information into the insurance companies rating software.  Everybody has their own individual rate for their car insurance.  Also, the prices can vary greatly from one company to the next as well.

Did you know that the NYS DMV requires you to pay an assessment in addition to any fines, fees, penalties, or surcharges that you may have to pay and it’s for a 3 year period? 

You must pay the driver responsibility assessment if any of the following incidents occur:

• you receive 6 or more points on your NYS driver record during a period of 18 months
• you are convicted of an alcohol-related traffic violation in NYS
• you are convicted of a drug-related traffic violation in NYS
• a DMV hearing determines that you refused a chemical test in NYS

The amount of the assessment depends on the type of violation and the total of your driver violation points.  If you are convicted of a traffic violation that is alcohol or drug related, or if you refuse a chemical test the annual assessment is $250 for 3 years.  If you receive 6 points on your driving record during a period of 18 months, the annual assessment is $100 for 3 years.  If you receive more than 6 points on your driver record during a period of 18 months the annual assessment is $25 for each point that is more than the original 6 points. 

This assessment is in addition to the fine for the actual traffic violation.  Not only are you getting hit with a traffic violation fine, but they’re whacking you with a 3-year assessment on top of it.  It can turn pretty costly to break the rules of the road in NYS!

Unfortunately, you are not able to reduce the amount of the assessment by taking a DMV-approved accident prevention course.  The accident prevention course will reduce your insurance premiums and reduce the total of your driver violation points, but will not eliminate the assessment. 

If you are looking to save some money on your insurance premiums, NYS has recently approved an on-line accident prevention course, visit

http://www.newyorksafetycouncil.com/?lgr=bc53ca64-8740-de11-9e2f-00c09f3f0f12

For more information on the driver responsibility assessment you can visit http://www.nydmv.state.ny.us/drp.htm

PIP is an important coverage on all auto insurance policies and it is particularly important to self-employed individuals.  PIP stands for Personal Injury Protection and this is what people commonly refer to as “no-fault”.  When you are injured in an auto accident and you have medical bills your PIP coverage pays for those bills.  People call it “no-fault” because it doesn’t matter who is at fault in the accident each persons policy covers their own medical bills. 

Now why is this coverage particularly important to self-employed individuals?  Because PIP will also provided coverage for loss of wages due to an auto accident.  If you are self-employed and have looked into disability insurance you know how expensive it is and difficult to obtain.  PIP won’t provide you as extensive coverage as a disability policy, but it will offer you at least some protection for loss of wages if you are in an auto accident.

The standard PIP coverage will provide coverage for 80% of your monthly wages up to $2,000/month.  $2,000 won’t get some people very far to cover their monthly expenses.  What most agents don’t point out is that you can purchase additional PIP coverage, which not only increases the amount of medical bills that will be covered, but can increase your monthly loss of wages to $4,000.  So how much does it cost to buy this increased coverage?  Around a whopping $15 per car per year! 

$4,000/month of wage replacement isn’t a lot for some people but it’s a heck of a lot better than $2,000/month.  If you are self-employed and not able to work because of a car accident, you know that your business will suffer and your income could drop significantly.  PIP can help bridge the gap between your earnings prior to the accident compared to after.

There can be some confusion as to who should insure a young driver’s car of divorced parents.  The young driver may primarily reside with his/her mother, but the father may have purchased the car for the young driver to use and it is titled in the father’s name. 

The mother will need to add the young driver to her policy because the child primarily resides with her, but the father will have to include the car on his policy with the child listed as a driver because it is titled in his name. 

If the car is titled in the child’s name then he/she can obtain their own separate auto insurance policy.  That is if neither of the parents wants to run the risk and increased premiums of having an inexperienced driver on their policy.  It will be much more cost effective for the child if they are added to the parents’ policy because they would get the benefit of the multi-car discount for having more than one vehicle on a policy and a multi-policy discount assuming the parents have their homeowners or renters insurance with the same company. 

It is important that the child be listed as a driver of the car on the father’s auto policy and listed as a driver on the mothers’ auto policy to make sure that they have the appropriate coverage in case they are in an accident.  It will also help the child when it is time for them to go out on their own and obtain their own auto insurance policy. 

I’ve had this happen a number of times when a young driver will come to me to get auto insurance because they are purchasing a new car in their name and they think that they’ve been listed as a driver on their parents’ policy, but unfortunately they were never added.  This dramatically increases the cost of insurance for the young driver because it looks like they’ve had no prior insurance.  The insurance company has no record to draw from to determine if this driver has been acting responsibly or not, so they charge them a higher rate.  If the young driver can show me their parents’ policy that lists them as a driver, I’m able to get them a substantially better rate. 

Once the youthful driver has their own insurance, the parents can remove the child from their auto insurance policy.  The parents’ insurance company will most likely want to see an actual policy showing the child has their own insurance before they remove them.