Summer 2011
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Bret Dixon Insurance News
Our newsletters are intended to keep you up to date on pertinent industry news and offer more in-depth insight into various types of coverage and endorsements.  We publish our newsletters at least once each quarter.  We hope you enjoy it.
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We will be closed Monday, July 4th for Independence Day and Monday, September 4th for Labor Day.

Illinois On The Brink of Workers Compensation Reform

The Illinois House passed HB 1698, the Workers Compensation Reform bill, on June 1st.  Having already cleared the Senate, the bill now goes to the Governor who is expected to sign it.


The bill is aimed to make Workers Compensation more affordable for Illinois businesses.  Illinois is currently among the most expensive Work Comp states in the nation, and benefits are extremely favorable to employees.


Here is a synopsis of some of the key provisions of the bill.  Among them:


  •  Employers can utilize a preferred provider organization to provide medical services at more favorable rates.  Employees do not have to use a doctor within the preferred provider program, however.
  • Lifetime wage differential payments are eliminated.  Employees will now receive wage differential payments during their work career to the age of 67 or five years, whichever is later.
  • Reduces carpal tunnel syndrome payments from an average 40 weeks award to a maximum of 28 weeks.
  • A number of new fraud provisions are added, including the establishment of criminal penalties based on severity of crime starting with misdemeanor up to a Class 1 felony.
  • Changes the rules for workers injured while under the influence of illegal drugs or alcohol.  No compensation shall be payable if the employee's intoxication is the proximate cause of their accidental injury.

It remains to be seen how this will affect the underwriting of workers compensation policies.  Under another provision of the new bill, the Illinois Department of Insurance is required to submit an annual report to the Governor and key legislators on the state of the Work Comp market.  To generate this report, it's expected that significant additional data may be required from workers compensation insurers.  But it's not clear what additional information may be needed to underwrite a policy.



Workers Compensation Reform Passes from IIA Illinois on Vimeo.

Illinois Mine Subsidence Changes coming July 1st

Illinois has had a long history of mining across a good portion of the state.  Occasionally, these old mines will sag or collapse, capable of causing significant damage to structures above.

Because of this, Mine Subsidence coverage has been something for you to consider carrying on your property insurance policy.  Typically, the amount of Mine Subsidence coverage you carry would be equal to the property limit you carry on your residential or commercial structure.

However, since 2008, the maximum limit available under the Illinois Mine Subsidence Fund is capped at $750,000 on residential property and $350,000 on commercial structures.  If your commercial building is worth $500,000, your options to cover that $150,000 difference between the amount of coverage you need and the amount of coverage you can buy were difficult to buy and fairly pricey if you could find coverage.

Effective 7/1/2011, the maximum amount of coverage available on commercial buildings will be raised to $750,000 under the Illinois Mine Subsidence Insurance Fund (IMSIF).  However, because the increase was legislated into effect, policies with a gap between the property limit and the mine subsidence coverage limit will not increase until the next renewal.

If you're among those impacted by this and are wondering if your coverage can be endorsed to reflect the higher limit available, the answer is yes and no.  We have checked with our property insurers and they've all told us the same thing - the IMSIF, who handles the reinsurance of mine subsidence coverage for all insurers in the state, won't process mid-term endorsements.  However, if you want to, coverage can be cancelled and rewritten after July 1st to get the higher limits available on Mine Subsidence.  This typically won't cost you much, if any, additional money, but you would have to come up with another downpayment.
Spotlight On: Utility Services Coverage    
It's been a brutal year for storms already with nationwide damage estimates in the range of $13 to $15 billions, about four times the amount in a typical year.  Storm season is always a good time to review a key coverage for businesses called "Utility Services - Time Element."
Business Income coverage in the property portion of a policy is triggered by direct physical damage to the insured premises.  The direct damage has to be severe enough to prevent the business from normal operations.  Once triggered, Business Income will usually have a deductible stated in hours (ranging from 12-72, depending on the carrier).  The deductible is retroactive, so if you incur severe enough damage and the policy had a 48 hour deductible, then coverage will start with the 49th hour.  Business Income coverage covers the loss of net business income plus ongoing expenses while your business is shut down.
A problem arises though, when a business is shut down due to an off-site power failure, such as damage to a sub-station or downed power lines off of your premises.  In cases like these, there is no "direct" physical damage to your business.  This is when Utility Services coverage becomes key.
Utility Services (sometimes called Off Premises Power Failure in some policies) is coverage for a loss due to lack of incoming electricity (or other utility, such as communications, gas or water), caused by damage from a covered cause to property away from the insured premises such as power stations, sub-stations, lines and transformers.  It's not provided in a standard policy form, but is often available by endorsement. Utility Services Interruption coverage endorsements vary widely as to what utilities are included, whether both direct damage and time element loss are covered, and whether overhead transmission lines are included.
Claim settlements are based on your sales, less the cost of the goods you sell, ordinary payroll and continuing expenses.  You may be able to recover .30 to .45 cents on the dollar.  While that may not sound like much, it's better than nothing, and with this economy, every little bit is crucial.
As usual, you should read your policy to verify what coverage you do and don't have.  This could be a very helpful coverage for your business that you may not have any idea if you have.
Avoiding Heat Exhaustion and Heat Stroke  
Unless you're part lizard, this is a pretty miserable time of year to be working outdoors in many parts of the Midwest.  Mid-nineties heat and high humidity seem to choke the oxygen out of your lungs and leave you drenched as soon as you walk outside.
When working outdoors in hot weather, workers who do not take precautions can suffer from heat exhaustion or heat stroke.  Heat exhaustion is caused by prolonged exposure to high temperatures and inadequate fluid replacement.  Heat stroke is the most severe of heat-related problems.  It is potentially life threatening because the body's normal mechanisms for dealing with heat stress, such as sweating and temperature control, are lost.  The following are the symptoms of these ailments and the steps needed to help the victim.
Heat Exhaustion
The first signs of heat exhaustion are dizziness, weakness, headache, blurred vision, nausea and staggering.  The face becomes pale, there is profuse sweating, weak pulse and respiration is low.  The victim can fall unconscious.
When someone shows symptoms of heat exhaustion, immediately transfer that person out of the sun and into a shady or air-conditioned location.  Have the person lie down and keep calm.  If the victim is conscious, have him or her drink cool water or a sports drink (which will replace lost salts) and have the victim drink frequent, small sips.  Do not give any beverages containing alcohol or caffeine.  Monitor the victim closely.  Heat exhaustion can quickly become heat stroke.  If symptoms persist, call a doctor.
How to Avoid:
Keep fit and take frequent breaks.  Stop to rest when you start feeling weak.  Increase dietary salt and fluids when working in extremely hot weather.  Avoid beverages containing alcohol or caffeine, as these can dehydrate you further.  Use hats and wear light-colored clothing.
Heat Stroke
The victim develops a severe headache, the face is red, the skin is hot and dry, there is no sweating, and the pulse is strong and very rapid.  The person has a high fever (105-106 degrees Fahrenheit) and may become unconscious.  Following the fever, there may be confusion, convulsions, coma or even death.
Call 911 immediately, getting the victim professional medical treatment as soon as possible.  Place the individual in a room with air conditioning or move him or her to shade.  Loosen the clothing and cool the victim with the best means available.  Follow emergency services directions.
More Information:
You can get a little more info by viewing OSHA's Protecting Workers from the Effects of Heat bulletin. 
If Home Prices are Down, Why Isn't Your Insurance? 
We get this question quite a bit - the housing market is in the toilet and your home value is probably less than it was a few years ago.  In some instances, it may even be a fraction of what it was.  But why is your homeowners premium still the same, or even up slightly?
The biggest reason lies in the difference between Market Value and Replacement Cost.  Market Value is what you could sell your home for.  Replacement Cost is the dollar figure it would take to rebuild your home, just as it is, brand-new from the ground up.  These two numbers are often far, far apart.  The reason your homeowners premiums aren't down like home values, is because the supplies and labor to reconstruct them aren't going down.  If anything, they continue to inch upward in price.
The price of homeowners insurance is based on the cost to repair or rebuild your home.  Even though the recession has been hard on the housing market and construction industry, the cost of the materials hasn't seen a decrease.
We use a company called Marshall & Swift/Boeckh to compute replacement cost valuations for residential and commercial buildings.  They are recognized as leaders in the real estate market for providing building cost data.  Their raters are updated quarterly with new information about the cost of building materials and labor in different sectors of the United States (view a sample).  We enter the characteristics about a particular structure - location, size, construction type and quality, number of floors, basement information, roof type, number of kitchens, bathrooms and other interior characteristics (sample form) and it spits out a Replacement Cost estimate.  This estimated figure is what your home should be insured for.   
Wedding Insurance: Is It Worth It?  

One of our companies, Travelers Insurance, offers a nice little insurance package for weddings.  With many smaller ceremonies, you may not have much invested.  But, having been to a few weddings that cost more than a small house, some folks go all out for their big day.  Wedding insurance might not be such a bad consideration. 


On the page that's linked to above, Travelers has a quick, 10-question summary to help you determine if you may want to take a closer look at insuring your wedding.  Some of the mishaps you can protect yourself from include:


  • Postponement due to family illness, untimely deaths, and travel delays
  • flowers and wedding photography that failed to arrive when promised
  • bakers, caterers, bridal boutiques and wedding venues that went out of business
  • no-show photographers and DJs
  • Lost or damaged wedding rings, dresses and attire
  • damaged wedding cake, spoiled food, and other glitches in catering and entertainment


If this is something you'd like to look into further, you can start quoting your wedding insurance package on our website, right here

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Bret Dixon Insurance
In This Email
IL Work Comp Reform
Mine Subsidence Change 7/1
Understanding Utility Services Coverage
Avoid Heat Exhaustion & Stroke
Home Prices & Insurance
What is Wedding Insurance?
Auto Rate Decrease 
We offer a full-line of personal lines coverages for your home, auto, boats, motorcycles, RVs, and more.  Give us a shot at your next renewal to see how we compete. 
Click here for more information.
One of our companies, Travelers, announced over the weekend that a large group of territories were getting a 10% rate decrease on their Auto rates.  Check with us to see how we stack up to your current coverage.

Carrier Corner 
We represent over 15 insurance carriers and have access to many more via brokers, but you may only know one or two that we deal with.  Each issue, we'll highlight one of our valued partners in this space. 

Conifer Insurance
Conifer is a B++ ("Good") rated company based in Michigan, and the newest addition to our stable of insurance companies.  Among states we do business in, they are currently available in Illinois and Indiana.  They have a fairly narrow appetite for commercial risks, focusing on the hospitality industry, which is why we viewed them as a good partner for our Agency.  As we further acclimate ourselves to their coverage packages and exact appetite, some of you in the hopitaliy industry may start seeing their name a bit more.