Commercial Insurance Resources

Preparing yourself before Evaluating the Insurance Marketplace

Before you choose and meet with an independent agent or broker to discuss insurance, compile the following information:

• Current business insurance policies
• Updated payroll and sales records
• Current profit and loss statement
• Loss information from the current and three prior years
• Your OSHA log, if available
• Current schedule of vehicles and Motor Vehicle Reports (MVR)
• Safety programs/procedures and safety meeting records
• Your company's promotional literature

• Once your papers are in order, assess how much risk you should retain - the deductible. The risk the insurance company assumes is the limit of liability over and above the deductible. Insurance allows you to transfer the risk of financial uncertainty to an insurance company for a known premium. So, first calculate how much of that financial uncertainty you're willing to take on and how much risk you want the insurance company to assume.

Generally, the premium you pay depends on the deductible, or risk, you're willing to assume if a loss occurs. By choosing a higher deductible, you retain more risk, but pay a lower premium. On the other hand, if you choose a lower deductible, your premium will be higher. When premiums are high or coverage is difficult to obtain, you may want to choose a higher deductible and directly pay for smaller losses. The premium savings you'll realize may allow you to purchase other essential coverages. This strategy makes the most of your insurance dollar, providing you with the maximum protection against losses that can result in bankruptcy, debt financing or the postponement of future business plans.

If you take this approach, make sure you build the average annual costs of smaller losses into your budget. Once you've determined how much risk you will retain and how much risk you want the insurance company to assume, you're ready to choose an insurance agent.

Managing Your Business Insurance Plan

The following list includes only a few helpful steps. Consult with insurance agent and a loss control representative to learn more about containing insurance costs.

General Considerations

• Increase your deductibles.
• Establish a safety program.
• Implement and maintain professional loss control recommendations.
• Notify your insurer as soon as you learn of a loss.

• Property Protection

• Keep your workplace clean and orderly.
• Carefully store all combustible products and equipment.
• Make sure all fire extinguishers are accessible and in good condition.
• Establish emergency procedures and conduct employee drills.
• Install a sprinkler system at your workplace and inspect it regularly

• Auto Protection

• Review the Motor Vehicle Reports (MVRs) of your drivers annually.
• Establish fleet safety and fleet maintenance programs.

• Employee Workers' Compensation

• Maintain accurate records of payroll divisions.
• Maintain an accurate OSHA log.
• Carefully review and track the progress of all workers' compensation claims.
• Implement an occupational injury management program to help bring injured employees back to work quickly.
  
   

How Can I Insure My Home-Based Business?

Let's face it. Launching and running a business takes capital, motivation and yes, even physical stamina to handle the stress and demands of a new or growing venture. And it's risky. In fact, one out of every five businesses fails within the first five years of opening.

Handling inventory, scheduling time, purchasing supplies, handling payroll -- there are a myriad of procedures every home or small business entrepreneur needs to know, but one of the most critical and often neglected is buying proper insurance coverage.

Taking Your Business Inventory

What would happen if a fire or other disaster destroyed your property, making it impossible for you to get back to business right away? Would you remember what property had been destroyed? One way is by taking a complete inventory of all your personal business property, determining its value, and deciding what's worth insuring. Having an up-to-date business inventory will help you get your insurance claim settled faster, verify losses for your business' income tax return and help you purchase the correct amount of insurance.

Start by making a list of personal business property, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals you have.

What's the Right Coverage for You?

Then there's the question of what types of coverages you'll need. Aside from personal business property, there is liability insurance, business income, insurance for the building, boiler and machinery, human failure, employee protection and management protection, among others. The type of coverage you need depends on a number of factors including what kind of business you operate.

How to Keep Costs Down

Start your search for a policy with trade associations or business groups. In many cases, these organizations are able to provide reduced insurance rates based on the volume of business they can offer the insurance company. They've also negotiated coverage specific to your type of business, which can save you significant time in determining what you should cover. Also make sure that you are working with an agent that understands your type of business.

Source: Insurance Information Institute

Do I Need Business Interruption Insurance?

Business interruption insurance can be as vital to your survival as a business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and windstorms. But too many small businessowners fail to think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable. Business interruption coverage is not sold separately. It is added to a property insurance policy or included in a package policy.

A business that has to close down completely while the premises are being repaired may lose out to competitors. A quick resumption of business after a disaster is essential.

• Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the profits you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
• Make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people anticipate to get the business back on track. There is generally a 48-hour waiting period before business interruption coverage kicks in.
• The price of the policy is related to the risk of a fire or other disaster damaging your premises. All other things being equal, the price would probably be higher for a restaurant than a real estate agency, for example, because of the greater risk of fire. Also, a real estate agency can more easily operate out of another location.

Source: Insurance Information Institute

Disaster-Proof Your Business

Businesses that recover quickly are those that plan in advance. This involves not only purchasing the right insurance, but also developing and maintaining an adequate recovery plan. 

Minimize the risk of damage in advance of an emergency by:

• Training employees in fire safety, particularly those responsible for storage areas, housekeeping, maintenance and operations where open flames or flammable substances are used.
• Modernizing the electrical system since faulty wiring causes a large percentage of nonresidential fires.
• Situating your business in a fire-resistant building - a structure made of non-combustible materials with firewalls that create barriers to the spread of fires - and in a building with a fire alarm system connected to the local fire department. It is also a good idea to have a sprinkler system to douse fires.
• Limiting storm-related damage by making sure the building conforms to damage-resistant building codes.

• Develop a disaster recovery plan by:

• Keeping up-to-date duplicate records of both computerized and written records. Under federal law, if companies fail to maintain and safeguard accurate business records, the company may still be held liable.
• Identifying the critical business activities and the resources needed to support them in order to maintain customer service while your business is closed for repairs.
• Planning for the worst possible scenario. Do research before a disaster strikes by finding alternative facilities, equipment and supplies, and locating qualified contractors to repair your facility.
• Setting up an emergency response plan and training employees how to execute it.
• Considering the resources you may need to activate during an emergency such as back-up sources of power and communications systems. Also, stockpiling the supplies you may need such as first-aid kits and flashlights.
• Compiling a list of important phone numbers (including cell phone numbers) and addresses, including local and state emergency management agencies, major clients, contractors, suppliers, realtors, financial institutions, insurance agents and claims representatives. The list should also include employees and company officials. Keep copies off the premises in case the disaster is widespread.
• Deciding on a communications strategy to prevent loss of your customers. Clients must know how to contact your company at its new location. Among the possibilities to explore, depending on the circumstances, are posting notices outside the original premises; contacting clients by phone, e-mail or regular mail; placing a notice or advertisement in local newspapers; and asking friends and acquaintances in the local business community to help disseminate the information.
• Reviewing your plan on a regular basis and communicate changes to key employees.

• Source: Insurance Information Institute

Employment Practice Liability (EPL)

Your staff could be 5 or 500, in today's environment, every business is at risk. Employment practice liability concerns will touch virtually every single business in the U.S. The increase in employment-related lawsuits appearing in the media is just the tip of the iceberg - there are thousands more that you'll never hear about. What do these suits cost? The average suit will cost the average company hundreds of thousands of dollars, internal employee unrest and public relations damage that can take years to undo.

The fact is that the tide of employee-related laws keeps rising and employees are more savvy than ever about pursuing legal action. We can help protect your exposures with EPL coverage that is uniquely adapted to a volatile marketplace.

Q: Who Needs Employment Practices Liability Coverage?

Corporate entities or organizations with at least one employee.

Q: What Can EPL Insurance Cover?

• Failure to promote
• Unwarranted discipline
• Invasion of privacy
• Wrongful dismissal faulty evaluation
• Emotional distress
• Misrepresentation
• Defamation
• Harassment
• Discrimination
• Ill-directed discipline
• Breach of employment contract

• Q: What Federal Laws Affect Employment Liability?

• Civil Rights Act of 1964 - Title VII Prohibits discrimination by employers based on color, race, religion, sex or national origin. The law applies to all employers with 15 or more employees.
• The Family and Medical Leave Act - Requires that all employers with 50 or more employees provide up to 12 weeks of paid leave per year for an employee due to: birth of a child, placement of a child with an employee for foster care or adoption, or the need to care for oneself, a child, spouse or parent with a serious health condition.
• The Age Discrimination in Employment Act (ADEA) - The ADEA prohibits employment discrimination against persons aged 40 and older based solely on their age. ADEA applies to employers with 20 or more employees.
• Civil Rights Act of 1991 - This act amends Title VII of the Civil Rights Act of 1964 to include additional recoveries for a claimant and also allows a claimant the right to demand a jury trial.
• Americans with Disabilities Act (ADA) - The ADA prohibits discrimination on the basis of disabilities and also requires an employer to make reasonable accommodations in the workplace for disabled employees. This law may only apply to employers with a certain number of employees.

What Is Workers' Compensation - And Workers' Compensation Insurance?

In general, the current workers' compensation system represents a compromise between employers and employees regarding employment-related injuries or illnesses. Basically, employees relinquish their right to sue employers if they suffer some job-related injury or illness. In return, employers agree to provide state-mandated benefits if such injuries or illnesses occur.

To ensure employers will have the money to pay these mandated benefits, most states require that employers demonstrate that they have the financial ability to pay any claims that may arise. Typically, this financial ability is demonstrated through the purchase of workers' compensation insurance.

Most workers' compensation insurance policies actually provide two types of coverage:

• Workers' compensation Coverage. Pure workers' compensation coverage provides benefits for injured workers as required by state law -- regardless of who is at fault for the injury or illness. In other words, whatever benefits your state requires that employers provide for injured workers, your workers' compensation policy provides.
• Employer's Liability Coverage. This additional coverage provides employers with liability protection in case they are ever sued for damages arising from employment-related accidents or diseases. However, to collect benefits provided by Employer's Liability Coverage, both the employee as well as anyone else not covered by workers' compensation laws (i.e., spouses and dependents), would have to prove that the employer was actually legally responsible for the employee's injury or disease.

• Who This Policy Will Cover?

In general, workers' compensation insurance is designed to provide benefits for your employees. However, the individuals that are defined as employees are determined by state law. And in workers' compensation cases, courts have typically been very liberal in their definition of employees, so as to provide injured workers with broad protection under the state's workers' compensation laws.

The Employer's Liability insurance included in your workers' compensation policy can also provide damages to injured workers separate from their workers' compensation benefits. Family members and other third party claimants may also receive benefits under this coverage -- if they prove the employer's legal liability.

What Expenses This Policy May Pay?

Typically, your workers' compensation policy will pay for:

• Medical benefits for a covered injury or disease -- including medical, hospital, surgical and other related health care costs as well as physical therapy and prosthetic devices
• Disability income benefits - including compensation for lost wages
• Rehabilitation benefits - including services to help an injured worker return to productive work, such as vocational rehabilitation
• Death benefits - including a flat amount for burial expenses as well as partial replacement of the worker's weekly wage.

• What Protection This Policy Offers?

Work-Related Injuries

If one of your employees is accidentally injured while on the job, your workers' compensation policy will pay for a wide range of services to aid the injured worker's recovery and return to productive work. These services can include the cost of medical care, compensation for lost wages, and rehabilitation therapy.

If your employee is accidentally killed while on the job, your policy will also provide death benefits -- including burial expenses and partial replacement of the worker's weekly wage.

Occupational Illnesses

If some condition in your working environment actually causes one of your employees to become ill or contract a work-related disease, your workers' compensation policy will provide a wide range of benefits to help treat this illness and speed the employee's recovery. These benefits will typically cover the cost of medical care, compensation for lost wages, and other required therapy.

If your employee dies from this disease, your policy will also provide death benefits -- including burial expenses and partial replacement of the worker's weekly wage.

Coverage for Employees Not Subject to Workers' Compensation Laws

Most workers' compensation policies only provide benefits for those employees your state specifically identifies as subject to workers' compensation laws. But some policies go beyond this requirement. It automatically extends bodily injury coverage to employees who aren't expressly covered by your state's workers' compensation laws -- such as volunteers. (Not available in Wisconsin and New Jersey.)

Liability Suits Related to an Employee Injury

To recover benefits under your state's workers compensation law, your employees don't have to prove you were somehow responsible for their employment-related accident or disease. But if they can prove you were liable for their accident or illness, they may be able to successfully sue to recover damages beyond the workers' compensation benefits.

If so, you'll be comforted to know that the Employer's Liability portion of your workers' compensation policy can pay for the damages awarded to your injured employee, as well as, the legal expenses involved in such a suit. This coverage may also provide certain benefits if you are ever sued by a third party affected by a workplace injury, such as a family member of the injured worker.

Expenses You Incur as Part of a Workers' Compensation Claim

If you are ever involved in a workers' compensation claim, proceeding, or suit, most workers' compensation policies will pay for any reasonable expenses you incur at our request to participate in these proceedings or help prepare your defense. In fact, we'll even pay for any earnings you lose because of these activities -- a benefit most standard workers' compensation policies do not offer.

Legal Expenses in Workers' Compensation Cases

If you are protected by workers' compensation policy, you generally won't have to worry about bearing any legal expenses related to a workers' compensation or employer's liability claim. Your policy will:

• Pay the cost of defending you in any hearings, suits, etc. that result from any occurrences covered by workers' compensation; and
• Pay damages if you are successfully sued because of a job-related injury or disease.

• Compensation for Family Members

If an injured worker's family members can prove that you were legally liable for a work-related injury or illness, they may be able to collect damages from you. In such cases, the employer's liability coverage provided by your policy may pay for:

• compensation for family members for their "loss of consortium" or access to the injured worker; and
• damages for injuries to spouses or relatives that result from the injury to the spouse or relative.

• Coverages for Employees While Traveling on Business

Most workers' compensation policies only provide coverage for the states in which you do business, as specified in your actual policy. Therefore, check your policy if it extends its workers' compensation coverage to employees traveling outside the standard policy territory (excluding U.S., Canada, Cuba, Iran, Iraq, Cambodia, North Korea, Libya, and Lebanon).

Accidents Over Navigable Waterways

If any of your employees ever have an accident while carrying out their job responsibilities over a navigable waterway, they may be subject to the workers' compensation benefits provided by the United States Longshore and Harbor workers' compensation Act. Typically, benefits mandated by this act are more extensive than those provided under a state's workers' compensation law.

Employer's Liability in Monopolistic States (NV, OH, WA, WV, WY)

In six states, the state governments mandate that employers purchase workers' compensation insurance from the state fund. Referred to as "monopolistic states", these states don't even allow insurance companies to sell workers' compensation to employers headquartered within their borders.

Even if your business isn't domiciled in one of these states, you could still be affected by their laws. If one of your employees is injured in any of these states and decides to file a workers' compensation claim, that state's laws would apply. In such a situation, you'll be reassured to know that most workers' compensation policies automatically provide "employer's liability" coverage. This coverage would pay for related expenses and damages in case you are ever sued for the employment-related injury or illness. Other insurers may offer this extended coverage in these states -- but only if you specifically request that they add it to your policy.

Third Party Suits Against the Employer

If your employees are injured in an accident, they may try to sue a "third party" (a company other than yours) -- if they believe that party is somehow responsible for their injury. In turn, that third party may sue you -- if it believes your company is legally liable for the accident.

For example, an employee injured while using a piece of equipment may sue the equipment manufacturer for some alleged negligence or faulty design. However, the manufacturer can then turn around and sue your company -- if they believe the accident was instead caused by your improper maintenance of the equipment.

In this situation, the employer's liability coverage of your policy would pay any damages awarded by the court to compensate for the bodily injury.

Failure to Notify Insurer of Potential Hazards

When you apply for a workers' compensation policy, you have an obligation to disclose to the insurer all known hazards.

Investigation into Workers' Compensation Fraud

Unfortunately, fraudulent claims add to every employer's workers' compensation costs. And since most insurance companies are serious about helping you control costs, they are serious about fighting fraud. Many  carriers provide tips on how to spot and handle a potentially fraudulent claim.

Reducing Workers' Compensation Costs

Whether you employ only one part-time worker or thousands of employees in multiple locations, workers' compensation insurance can be a significant cost of doing business. Comprehensive education and ongoing training in the workplace will help you reduce worker's compensation costs.

Workers' compensation insurance premiums are calculated based upon a combination of factors including size of a company's payroll and claims history compared with other businesses in your industry. This means companies can do a great deal to impact their premium costs, reduce worker claims by creating a work environment oriented toward worker safety and training.

There is a great deal of information available to employers about how to improve on the job safety and training, primarily through your worker's composition carrier. Many insurance companies provide trained industrial hygiene specialists who will consult with you for little or no cost to evaluate your current safety and training programs.

Improving Your Current Worker Safety Programs

Loss prevention begins with an audit of your company's current safety programs. Study how employees are performing their jobs, how job processes can be improved to reduce and eliminate injuries. Review your industrial accident record. Is there any correlation between frequency of accidents and job process? You may want to consider the following steps to improve your company's programs.

1. Documentation

Worker safety programs should begin with documented written programs including job descriptions, proper use of equipment and safety procedures in the event of an industrial accident.

2. Training

All new employees should be thoroughly trained on their job duties and safe handling requirements. Existing employees should receive regular and updated training on proper use of equipment and job procedures.

3. Regular Updates and Supplemental Materials

Many workers' compensation carriers as well as industry associations and state regulators offer published information, videos and newsletters which can be distributed to employees to increase job safety awareness, enhance training and reduce on the job injuries.

4. Worker Safety Committees

Develop a committee or group comprised of internal staff from a variety of functional areas to evaluate and suggest improvements in your company's accident prevention programs. The charter of this organization should focus on process, education, and ongoing training.

5. Early Return to Work Programs

Encouraging early return to work by previously injured employees can help reduce the costs of workers' compensation claims in a number of ways. Historically, workers' compensation claims can be reduced if employees can be retrained for a new position because they possess valuable experience or historical information about the company. They can learn their new role more quickly make an immediate contribution. Job retraining is a proactive approach that improves employee morale significantly. Safety and education can result in substantial reductions in industrial accidents and worker's compensation claims. The first step is creating greater awareness about job hazards and safety processes among your personnel.

Control Your Workers' Compensation Premium

We believe these measures are so important that we will help our policyholders implement and maintain these programs, all at no additional charge.

Develop a Written Safety Program

If accidents don't happen, they can't affect your premium. Our loss prevention specialists can help you develop and implement a practical, effective safety program tailored to your special needs.

Implement a Drug Testing Policy

An integral part of any safety program is a drug testing policy, because drug-impaired employees cost companies an additional 25 percent of their salaries each year.

Determine Second Injury Fund Eligibility

The SIF is a state-administered program that may partially cover claims costs when an employee with a permanent, preexisting condition is injured on the job. To qualify, employers must have documented knowledge of the condition before the injury occurs. Post-employment questionnaires and health screenings that comply with the Americans with Disabilities Act (ADA) are the best way to obtain this information.

Develop a Return-to-Work Program

The faster you get employees back to work, the lower your claims costs will be. Before an accident occurs, establish a return-to-work program that includes written job descriptions, modified work assignments and set transitional duty periods.

Report Claims Within One Hour

Statistics show that late reporting can increase claims costs up to 50 percent. That's why you should report claims and injuries within one hour.

Report Suspected Fraud

Report fraud if you suspect a claim is fraudulent or if any of the following early warning signs are present: the injured employee is never home, you hear rumors the accident didn't occur on the job, the employee's story changes, the employee switches doctors after being released to work, there are no witnesses or the accident is reported late, on a Monday or before a layoff.

Conduct Accident Investigations

Train supervisors to investigate accidents and complete reports. Ask the employee and any witnesses to explain in detail how, where, when and why the injury occurred. Use this information to correct any hazards and also to spot possible third-party liability.

Workers' Compensation Tips for Employers

Workers' compensation insurance protects employers from claims resulting from injuries to employees. It protects your business from lawsuits and provides employees with compensation for on-the-job injuries.

1. Make sure that all your employees are trained properly for the job they are doing.

2. Make sure that the workplace is as ergonomically safe as possible. Don't have an employee who is 4'11" working in or on a workspace designed for someone 5'6". This is one of the main areas where problems can occur.

3. Make sure all employees are wearing proper equipment for the job. This includes not only those employees doing heavy manual labor, but also those individuals who are sitting at a desk and typing all day. Cumulative trauma, especially Carpal Tunnel Syndrome, is the fastest growing area of worker's compensation injuries. When an injury does happen, don't just ignore it. Handle the same way you would handle the injury of a loved one or a family member. This automatically sets up a feeling of caring between you and the injured worker.

4. Keep up the communication between you and your injured employee. Remember, whether this employee is on site or not, he or she is costing you money. The more you keep up the levels of communication, the better the chance the employee will want to return to work sooner. This not only saves you money, as in actual cash outlay, it also saves you money in indirect costs (hiring someone to temporarily take over the job, changing around shifts to accommodate workers absences, etc.).

5. In keeping up communication, that also means to contact the doctor who is treating the worker. This can definitely keep down costs as you are more aware of what is going on with the worker and the doctor. Not all doctors are saints. Some are just in it for the money, so it's in your best interest to keep up the lines of communication. Also, it is important to have more than one "Company Doctor". You should have not only the Emergency center, urgent care, etc., you should also have other types of doctors. Not everyone responds to the same person for every injury. Have a list of three or four different types of doctors, chiropractors, medical doctors, acupuncturists, etc. This gives the employee a chance to choose what kind and who he may wish to see for his injury.

Workers' Compensation Tips for Employees

The areas that require your attention are not as technical or restrictive as that of your employer, but none the less they require to take specific actions.

First and foremost, don't lie about the injury. This not only can cause you a lot of hassles, it is ILLEGAL in most if not all states. If you really hurt yourself playing softball last night don't do something stupid like say you hurt yourself at work. You will get caught.

Another don't is: don't exaggerate your symptoms as an expectation of getting a big payoff. It does not happen in workers' compensation. All payouts for disability are strictly regulated by the state or by the workers' compensation board.

It is important that you try to prevent all injuries, not look for them. Prevention is the name of the game. By preventing injuries, it saves the company money, which in turn can be passed on in pay raises and other benefits.

Make sure that you are properly trained and qualified for the job you are taking on. Pay attention to your supervisor or whoever is training you for the job. They are looking out for your best interest. They want the job done correctly, the first time. Redoing the job means time and money for both you and the employer. Have respect for your employer. He is the one paying you.

If you are injured and put on temporary disability, keep in touch with your supervisor. Let them know what is going on; How you are doing? When you are expected back, etc. This lets the employer know that you are not just taking them for a ride. You know, sitting home watching Oprah, hoping that you don't have to go back to work and just waiting for "your ship to come in".

As we said at the beginning, workers' compensation is a two-way street. Both you and your employer are directly involved and you both need to communicate this to each other.

Return to Work Programs (RTW)

Once an injury has occurred, the goal of a Return to Work program should be to return the injured employee to work as quickly as possible. To accomplish that, the employee's job may have to be reevaluated considering the following two alternatives:

1. Modified Work: The employee returns to his original job, but some restrictions are placed on the job by the treating physician. Restrictions may include reducing the amount of work time, and/or restricting certain activities such as bending or lifting. Modified Work is also referred to as Light Duty.

2. Temporary Alternate Work: The employee returns to work, but because the original job cannot be modified to conform with the physician's restrictions, he or she performs another job that accommodates the injured employee's abilities.

Benefits of a RTW Program

A RTW program is beneficial to both management and employees. Such a program:

• Allows an injured employee to continue to be productive and to contribute to the company.
• Maintains communications between injured employees and management.
• Reinforces the company's interest and concern for an injured employee.
• Improves communications between company, the employee and the treating physician.
• Discourages malingering.
• Reduces the disability associated with an injury and its related costs.

• Another benefit of developing a RTW program is that it helps a company comply with the Americans with Disabilities Act (ADA). By following the steps listed below, specifically those in Job Descriptions, the essential components of each job will be identified and classified. This will help management identify jobs which potential employees with disabilities may be able to perform.

Steps to a Successful RTW Program

Top Management Support and Commitment

In order for a RTW program to be successful, it is imperative that management make a firm commitment to "drive home" the need of the program and its benefits to all employees. Once the program has been developed, management should develop a strategy for communicating its enthusiasm for the program throughout the company.

Job Descriptions

A written description should be developed for all present jobs as well as potential alternate jobs. The description should include a listing of the job's essential functions, the location where it is performed, length of shift, etc. Job functions such as lifting, carrying, bending, walking, standing, and other repetitive motions should be classified according to severity and recurrence.

Policies and Procedures

Top management should develop policies and procedures by which RTW programs will operate. A variety of issues must be addressed, including: Who administers the program, and how is that administrator selected? When can the program be used, and by whom? What sort of forms (job demands, doctor's release to work, standard letters) should be developed? How long should Temporary Alternate Work last? How long should Modified Work last?

Communication and Training

Once the program is developed, top management must develop a strategy for communicating with employees about the importance of the program and their role in it. This communication may take the form of training for management and supervisors, and group discussions or seminars with employees. Top management may also want to meet with treating physicians or other medical personnel to get their input and involvement.

Follow Up and Evaluation

Top management should establish a timetable for periodic follow-up and evaluation of the program. This will ensure the program's continued use, identify any incorrect procedures, and reveal concerns that may not have been addressed in the original program.

Kidnap and Ransom Insurance

You're cruising the streets of Mexico City in the company car, feeling good about your trip across the border: A week to explore exotic night spots, soak up some sun, and do a little work. You pull up to a red light, idling for a minute. Startled by a knock on the window, you turn to find two men, two guns, and two options: let them in, or . . . let them in. If you're lucky, the next step is waking up in a cold sweat. If you're not, then you, your ATM card, and your wallet just succumbed to an "express." That's "express kidnapping" - the latest trend among Mexican criminals, and one of many reasons to look at kidnap and ransom insurance if your company sends employees abroad.

Kidnap and ransom policies ("K&R") provide coverage in the event of a kidnapping. The policies cover not only executives and employees, at home and overseas, but also, in many cases, employees' families and guests staying in their house or traveling with them are covered as well. Some policies even cover consultants who are abducted or held for ransom while on a job site for the company.

A typical K&R policy covers all kidnap-related costs, from ransom to travel expenses. Ransom money is also insured during transit, until it's delivered. Other potential covered costs include legal liability, fees for a professional negotiator, personal accident insurance, and travel expenses. Some policies will cover the expenses for a security consultant called in to investigate a threat, even if no ransom payment is necessary or no one is kidnapped.

"When you have a disaster such as a kidnapping or extortion, what you really need is instant help," says John Coonan, vice president and deputy of U.S. operations at Chubb Executive Risk. K&R policies partner the insurer with a security company specializing in international terrorism, which can finesse the delicate task of negotiating with kidnappers. Within a day, representatives of the firm will be on-site, working closely with the client to ensure that all aspects of a kidnapping have been attended to.

"The biggest selling point of the coverage is that a specialist is available to the insured," says Will Demers, manager of commercial risk at Travelers Property Casualty, which partners with the security firm Control Risks Group of McLean, Va. Hearing that a colleague or family member has been kidnapped spurs panic in most people; the security firm acts as a neutral advisor who can not only guide ransom negotiations, but also ensure that often-overlooked details, such as informing the press, are taken care of.

Some security specialists take over the negotiation; others prefer to devise strategies but have them carried out by a family member or company representative, fearing that the presence of a professional negotiator might anger the kidnappers.

A Quiet Purchase

Policy limits vary, depending on the company's size and the riskiness of its ventures abroad. Coonan estimates that a smaller company with two or three overseas locations can buy $10 million in coverage for between $2,000 and $5,000 per year in premiums. Large corporations with as many as 50 overseas locations often purchase upward of $20 million in K&R coverage, costing $25,000 or more per year.

Afraid publicity will lead to fraudulent claims, or even actual kidnappings if the existence of a policy is known, companies with K&R coverage keep their purchase under wraps, so it's hard to guess how many carry the coverage and how often it's put to use. Coonan speculates that at least two-thirds of Fortune 1000 companies purchase K&R coverage.

"It's common coverage, and we pay out ransoms every year," says Coonan. Insurance companies decline to discuss many kidnapping details, citing client confidentiality. Coonan cites two instances where K&R coverage proved a worthwhile investment: A kidnapping in El Salvador where a medical-products company executive was abducted and his driver killed. After eight weeks the executive was released, only after his insurance company paid a $7 million ransom. In Guatemala, a local businessman was abducted and released after his K&R insurance paid $4 million in ransom. "Over the years, it's been a profitable product for us," says Coonan, "and it's not only the Fortune 100-type companies who are going overseas."

Who needs it? Do you really need this coverage?

After all, it sounds a bit extreme. Reading the materials accompanying a K&R policy can make you feel like taking your next business trip down the street rather than overseas. Says Demers of Travelers, "A lot of smaller companies don't realize the exposures they face. You don't find many companies without, say, fire insurance, but you do see a lot who never buy kidnap and ransom insurance." Coonan agrees, saying, "It's a real world threat."

Colombia leads the world in kidnappings. Colombian kidnappings are generally well-planned, professional jobs, often involving extensive research on the company, surveillance of the kidnapping target, and high ransom demands. In a widely publicized 1998 abduction, the FARC (Revolutionary Armed Forces of Colombia, a Marxist rebel group) kidnapped Canadian mining company employee Ed Leonard, then traded him for Norbert Reinhardt, a company executive who felt compelled to take Leonard's place. Reinhardt, who did not know Leonard, was eventually released in exchange for $170,000 in ransom. (No word on whether an insurance company was involved in the negotiations.)

Then there's the Mexican kidnapping threat. While Colombian kidnappings are highly organized crimes, Mexico is notorious for "express kidnappings," where assailants wait roadside until a likely victim - namely, one in a new, fancy car - drives up. The victims are forced out of the cars, sometimes violently, and taken to ATM machines. They are forced to withdraw money, then set free.

Coonan argues that in the increasingly global economy, it's small businesses who can benefit most from kidnap and ransom insurance. "Larger companies have huge risk-management teams and are generally much more savvy about using security consultants, knowing what their exposure is. They take as many protective measures as they can," Coonan says. For instance, using a security consultant and internal research, a large company can track the movements of the FARC, avoiding Colombia at times when the rebel group seems likely to strike.

"A fair number of smaller companies, say one that's just exploring the Colombian landscape, won't be as aware of what the risk is," Coonan explains.

All this can make you think a kidnapper lurks outside every hotel in every city outside the US But according to Victor Ferreira of Control Risks Group, 90 percent of abductions are preventable, and you'll be much safer following the advice of your security consultant in planning your trip.

Here are some hints on how to avoid trouble:

• Maintain a low profile and don't discuss your travel plans with strangers.
• Vary your routine - If someone is watching you to figure out when you're most vulnerable, leaving the hotel at different times and taking different routes around the city can throw them off.
• Never take a taxi service that isn't approved by your security company. If you're not sure, take a franchised cab instead of an independent one. Gypsy cabs in particular can whisk jet-lagged travelers from the airport straight to the house of a kidnapper.

• And if you do have a problem, Ferreira offers Control Risks Group's top tips for abductees:

• Don't resist your attackers.
• Try to befriend the kidnappers, not for escape purposes (don't try it!) but to make the atmosphere more bearable.
• Try to keep a routine of exercise, reading, writing, or whatever you can do to make the time pass.
• Above all, don't give up hope - remember that a large team of co-workers, family members, and security specialists is working for your release.

Kidnap & Ransom Policies

A typical K&R policy includes the following:

• Kidnap and ransom coverage: Pays ransom, and most policies insure ransom money while it's in transit ("delivery coverage"). Also includes payment of security company fees.
• Extortion coverage: Protection for threats against company property, contamination of products, and computer systems.
• Expense reimbursement: Includes travel expenses for security consultants, family members, and the kidnapped employee. Also covers the abductee's lost salary, and legal services.