Insurance Mic

Maximum Benefit Allowance For NY Workers Compensation Has Been Raised

This actually occured in July, which I published elsewhere. It occurred to me that perhaps folks who read this Blog could use the information. Rather than re-write the article I thought for effeciancies sake I thought I would just provide the link to those who want this valuable information.

CLICK HERE TO READ FURTHER

Owners Interest Liability Policies - Pick Your Poison

I have been slugging away this vocation for 20 years, which paved the way for parenthood but I digress. The point is for 20 years General Contractors, Developers, Owners, Non Profits AND Insurance Brokers have been screwing this up since day one. Present company included to be genuine here. I'm no Elliot Spitzer hypocrite, I don't have his money! LOL. The issue I speak about is cheaping out and adding entities to the construction liability policy that : 1) Don't belong there as there is NO common ownership , and 2) It's a "free" or "Cheap" way to get coverage. I actually wrote a very similar article on this topic a while back entitled The Difference Between Being a Named Insured Versus an Additional Insured. For those of you who got religion and stop doing that because it's understood the risk you retain is too high a price to pay for "free" insurance; kudos. In that article I espoused adding these entities as "additional insured's" rather than "Named Insured's" that way you won't fall trap to the " Cross Suits Exclusion". Well, I may suggest adding a second god to the equation so for those of you who had gotten religion. Purchase a separate "Owner's Interest Liability Policy" altogether , rather than being sated by the simple "Additional Insured " status.

I will try to be succinct as I am noticing your eyes glazing as your about to click to photos of Lady Gaga , insurance be damned!

The issue ALWAYS is what's the risk; and what's the cost benefit analysis look like if we try and transfer the risk. That's always the question , so let's start there shall we, I know your excited!!

If you succeed in getting an entity not owned by the construction firm folks added to their construction policy ( i.e. Non Profits always try a get listed as a "Named Insured" on the general contractor's policy because some dolt attorney years ago thought that was a great idea) kudos. Yes there is lots of coverage for a lot of situations, and the cost in premium dollars is $0 . I know your thinking why did he call that attorney a dolt as this seems like a no brainer. Your right, you need to have NO brain to retain all the other risk that is not contemplated by this technique. Let Lucy splain. On most liability insurance contracts a smart but nefarious little endorsement called the "Cross Suits Exclusion" lays in wait. The purpose from an insurance carriers standpoint is so they don't get in the middle of a Hatfield / McCoy feud between two of the entities on the insurance policy AND the insurance carrier is asked to pick up for both defense and indemnification for both parties. From the liability insurance carriers point of view if you folks want to slug it out, go for it, we aren't getting involved. That's the purpose of the cross suits exclusion.

The cross suits exclusion problematic for the General Contractor because if the project owner every litigates against the General Contractor for almost any reason there is no coverage for defense or indemnification because the owner is listed as a "Named Insured" on the G.C.'s policy. Thus the G.C.'s own balance sheet is at risk, and the owner is at risk of the G.C. not having enough of the unsecured assets to cover the loss. See how much free can cost!

Let's move on to Additional Insured status because I know you have Gaga on your mind. This possibility for loss is more remote than the one above , but I just had a scenario where this actually had happen. On the sidewalk adjacent to a construction site was a large tree, a tree well and raised sidewalk slabs. I know hard to imagine in NYC, but this was the scene. A pedestrian , probably with big red clown shoes and a clown nose took a header on the obvious raised sidewalk. The owner of the Property had all of the construction contracts in place, additional insured status on the General Contractors Liability insurance policy , AND they had the property insured under their real estate policy.

Result, coverage denied on all insurance policies, thus the pool of capital at risk resulting in a net income loss is on both the G.C. and the Owners. Reason it was denied on the Owner's Real Estate policy was because the property was under major construction and was vacant at time of the loss. Both no no's and exclusions in a real estate policy. The G.C.'s policy denied coverage to owner because the owner was trying to back in under "additional Insured' status. The reason I said back in was because in this instance it is the position of the carrier that the sidewalk issue , caused by the tree, is the owner's responsibility and not the G.C.'s. The general contractors policy would only respond if it was deemed negligent in the loss. Thus without perceived negligence by the general contractor; the general contractor liability policy will not respond. Simply put the coverage trigger is the negligence of the general contractor , which once triggered may result in coverage for the General Contractor AND all of their additional insureds. In this case coverage was not triggered when Bozo fell and a sidewalk raised by an adjacent tree root because it's the position of the insurance carrier the general contractor was not negilgent, thus no liability, thus no liability insurance coverage. Get it jimmy Neutron!

Now what Insurance Mic? Well, glad you asked and even happier your still with me! The proper way to trigger insurance coverage for a Bozo type loss is the placement of an Owner's Interest Liability policy , specifically for the benefit of the owner. It takes the above two examples completely out of play. The problem is two fold , cost and RFP. The cost is typically .05 % of the hard cost of the job, which is real money. The second problem is that the Owner's don't ask for and specify the purchase of such a product during the RFP process, thus all of the Developer's and General Contractor's in an effort to be super competitive on their bid chose either one of the two examples above and cheap out. Thus opening the door to a major net income loss. Thus the article title "Pick your Poison" If Owner's really understood the cost and the risk to their own balance sheet , I am convinced that most would opt to spend the .05% up front and guarantee that is all they will lose in the deal then again what do I know, I'm just the 800 pound gorilla in the room.

Do You Know When Your Builder's Risk Coverage Ceases?

Typically when I ask this question many owners or construction folks simply respond , "the expiration date on my Builder's Risk Policy is _____ " . Which is naturally the wrong answer or I wouldn't be writing this post. The correct answer is WHEN YOU GET YOUR CERTIFICATE OF OCCUPANCY, OR whenever the policy actually expires, whenever is sooner. Thus by example for those a little thick in the skull : It's June 1st your project is built, units are being marketed & sold, you just have some minor punch list stuff, AND the City has given you a Certificate to Occupy , you no longer have Builder's Risk (Property Coverage), even though the NY Builder's Risk policy you bought does not expire until October. Why you ask, because in the policy ( policy is one of those cute insurance terms which really mean CONTRACT) it simply states coverage ceases upon receipt of the Certificate of Occupancy. Yup,  I said, it's out there, whew that feels so much better!

Now that I have sufficiently crinkled your brow, while the blood leaves your fingers as you furiously dial the phone and call you insurance broker, let Ricky "splain".

Quick Primer on Insurance:

1. Insurance is simply a mechanism to fund a loss, that's it. Forget all the Mutual of Omaha Commercials you saw as a kid. It's a bank loan in reverse that only get's partially re-paid. If you had to repay the whole thing it would not be called insurance , it would be called a bond! Did I lose you?
2. The mechanism that triggers the funding of the loss is buried in the insurance contract. When you buy insurance you buy a unilateral contract. Yeah they are crazy long and cumbersome to read, but let's cut to the quick. Focus on a few things out of the box, "EXCLUSIONS" , DECLARATIONS PAGE , and COVERAGE TRIGGERS. 

•      I mention exclusion because Insurance Carriers typically go to great lengths and detail to tell you up front "if this happens your on your own; basically." 

 

• Declarations Page because this is the info that specifically relates to you, the rest is Boiler Plate. If the info is wrong here and a loss occurs count on two things happening. The quickest RED STAMP DENIAL you ever saw, and then huge legal bills trying to blame everyone else why the info on the Dec page is wrong in the first place thus the claim being denied.

 

•  Lastly, coverage triggers which are typically broad events or characteristics. An example of a coverage trigger I always use when someone calls in a claim : THE INSURANCE SNIFF TEST - was the event "sudden and accidental" in nature. If it's a leaky pipe, typically no, as the damage from that event happens gradually over a long period of time. Burst Pipe, not so much.

Got it ! Still frowning or is that a small knowing smile I detect. Come on, in just a few short sentences I made you feel better. Unless of course your the poor S.O.B. who googled "Builder's Risk Insurance New York" after his building was taken out from a gas explosion 100 days after the Certificate of Occupancy was issued. F.Y.I. I write these little educational sarcastic pieces so you are informed and can avoid such drama.

Here's a quick tip when you buy Builder's Risk going forward: ASK FOR A " Right to Occupy Endorsement" . Some insurance carriers will name the endorsement something different but essentially it's function is to extend coverage 90 days AFTER the Certificate of Occupancy was issued. It helps , perhaps not as much as we would like in this market where it may take a year to sell many units, properties or buildings, but it can be helpful and give you some breathing room. Another point of clarification is to see if the insurance carrier makes a distinction between "Certificate of Occupancy", and a "Temporary Certificate of Occupancy".

HERE"S YOUR ACTION PLAN:

1) Build a Spreadsheet with your buildings , projects , or properties on it.
A. Make it 4 columns ( Column 1 Property Address , Column 2 C of O Date, Column 3, Builder's Risk Expiration Date, Column 4 Coverage Yes/No

2) What's it look like? If you have a problem (see text above) , questioning coverage, call the Jimmy Neutron who placed the insurance and get clarification. If you can hear the person blinking on the other end of the phone add find another Broker to the To Do List.

            3) Either extend out the Builder's Risk consistent with what your spreadsheet is telling you, ( hint only works if it's an expiration issue, not a C of O issue, get either a vacant building quote , or a quote to bind coverage consistent with the buildings ulitmate intended use. For example, if the building is going to be more than 50% occupied in the next several weeks, and it's an Apartment rental, purchase an insurance contract for Apartment Buildings. If you have trouble securing end use insurance for your property then you MUST purchase vacant building insurance to bridge the gap between Construction ( Builder's Risk) & End Use ( Rental Property Insurance).

If you are still having a problem, and are confused then call these guys they are awesome! Metropolitan Risk Advisory. Yeah that was an unabashed plug, sorry might I digress.

Hopefully you are feeling a little better. To solve any problem first it must be understood there is a problem,  Quantify it, then you can pick a course of action.

Now that we spoke about Property ( Builder's Risk ), what about liability................

Uh Oh, your'e frowning again, sorry!

Did You Overlook The NY Workers Compensation Premium Credit ??

Many construction firms, especially those that work in Union active areas, or high wage states have a discounting tool available to them as it relates to their New York Workers Compensation Premium. Sadly this credit is often overlooked. It's called the "Contractor's Premium Adjustment Credit". Construction firms paying Union scale wages will almost always qualify for the credit, which is available in 20 states listed below. The size of the credit varies however in most states the credit range is between 5 & 40 percent with discounts of approximately 20 percent  being the average. In many states a formula is used to determine the credit. The formula is based upon average weekly wages to determine the size of the credit. 

The contractors Premium Credit can be obtained by completing a simple application. Contact the Agency or Brokerage Firm who has placed your workers compensation policy. If they don't know what your talking about, stop looking for the credit and find another Risk Advisor or Insurance Broker, preferably a risk advisor. You can also contact us directly at Metropolitan Risk Advisory for the application based upon the state you are applying for the credit.

Since this credit is applied on a per state basis, you need not be domiciled in that State to be eligible for the credit. The criteria is that you must have had eligible payroll incurred in the State that offers the credit, and the payroll must exceed the State Average payroll for that classification. 

In this environment every bit helps. A good risk advisor will make this an audit procedure every year to check and make sure that you are getting all the credits you deserve, while you focus on your business. Set up the procedure so it becomes automatic. If you have to think about it, it's not getting done!

States Allowing the Credit:

1. New York
2. New Jersey
3. Connecticut
4. Massachusetts
5. Delaware
6. Maryland
7. Pennsylvania
8. Minnesota
9. Missouri
10. Montana
11. Oklahoma
12. Nebraska
13. Oregon
14. Virginia
15. Florida
16. Hawaii
17. Illinois
18. New Mexico
19. Wisconsin
20. Alaska
21. 
    

NY Post Exclusive on "Don Vito" Embarrassing (to NY Post)

In Dan Heath's book  "How To Change When Change Is Hard" he lists 24 of the most commonly used "emotion" words in the English language. Of the 24 , only 6 of them are positive! The take away, our emotional default dial is set to negative. Thus when you read the NY Post's quotes allegedly attributable to Assemblymen Vito Lopez, it's obvious Joe Goldstein's default is either negative, or he is getting his 5 year old info from someone with questionable motives.  

If you read the NY POST DON VITO QUOTES supposedly tran scripted from the tape , you scratch your head and mutter "this is all you have"? Having the privilege of sitting in dozens of meetings with Assemblymen Lopez the stalwart Democratic Brooklyn Assemblymen who Chairs the Housing Committee in Albany, what you marvel more than anything is his candor. He calls it like it is plain and simple. For those of us not emersed in the black art of Albany politics, Vito's blunt truth is refreshing. In Albany it's not what makes fiscal or common sense , it is what makes political sense that gets done. Assemblymen Lopez makes that clear in the beginning of each meeting. As I read the NY Post quotes  it's this prism from which I viewed these quotes. He was simply calling it as he saw it which is fodder for the apparently headlined challenged New York News Institution. 

What the Post deems as "arm twisting"  and  "bullying" is just another example of Vito explaining the political realities of Albany to a group of folks. In this case it's  elderly women, not "grannies" as the Post so disparagingly call this group of voters. " I've been around a long time. And the only thing that's worth credibility-the only thing I have that's worth something-is politics. That's how I get the money"  according to the recorded tapes of Assemblymen Lopez as released by the Post. 

What's wrong with that Mr Goldstein? That IS how he get's THE money TO FUND PROJECTS FOR THE ELDERLY AND DISENFRANCHISED. The Post makes it sound like the money is going into his pockets lining his ESPADA labeled designer jeans! If the money is going into his pockets then Mr Goldstein you have much more work to do to prove that point, and not simply make baseless allegations which is the anathema of responsible journalism.  

How about another vitriolic Vito Lopez rambling" The Whole City is dirty... Every campaign I've ran, I've always run a very clean and postive campaign. But, you know, after a while, you get smacked one way, you get smacked the other way, you don't want to keep getting smacked... I don't want to keep turning the other cheek because then they start kicking me."  OOOHHH ! Joe Goldstein, you really got the goods on Vito now! Dust off that mantle and get it ready for that Pulitzer Prize that is sure to be forthcoming for this ground breaking piece of investigative journalism. 

Puuuhhlease! I have two questions for you Mr Goldstein. If this was such an important revelation why did it sit for 5 years? According to the article , the meeting and tapes were recorded back in 2005. I am no Google Mathematician but that was 5 years ago Holmes! Further, why are they releasing this now 7 weeks before the November elections? The only thing Vito appears to be guilty of in these tapes is his legendary candor,and perhaps lapse of judgment in being too candid. 

For those of you who don't know me, I am no fan of the vast majority of NY Politicians. I am an equal opportunity basher, Democratic or Republican. Assemblymen Vito Lopez happens  to be one of the select few that I respect and admire. 

Hopefully cosmic justice will prevail. When it comes to NY Politics I am always amazed but never surprised. To be continued........

 

 

 

 

 

 

 

85% of Businesses In U.S. Eligible for Health Insurance Credit

According to Small Business Majority & Families USA 84% of small businesses are eligible for the Health Care Credit on their business tax forms by filing IRS Draft Form 8941 . 

Starting in 2010, those small businesses covering their employees are eligible for a credit of up to 35% of the cost of the health plan or the average group premium for small businesses in the employer’s state, whichever is lower. The maximum 35% rate is available to employers with 10 or fewer full-time workers and average yearly wages of less than $25,000. The credit shall decrease quickly for businesses with more employees and higher annual pay, and is not available at all for firms that have 25 or more employees or average annual wages of $50,000 or more.

If you are a Tax-exempt group you  will use two forms: They will compute the amount of the credit on the 8941 and claim the break on Form 990-T, which is used to report and pay tax on unrelated business income. The IRS is currently revising the 990-T to reflect this. The maximum credit rate for exempt organizations shall be capped at 25%.

The tax credit should be available up until 2014. We strongly encourage you to speak to your accountant to see if your small business may be eligible for a credit towards your companies health insurance premium. 

There are so many ways to cut insurance and other risk related costs; for more information PLEASE CLICK HERE

 

 

NY Workers Compensation Rates Set to Rise 7.7%

One of my pet peeves is the C.P.I. index which perennially shows inflation hovering somewhere around 2%. Perhaps that's true if you live in Alaska and your last name is Palin. Here in New York, which saw an average increase in our Budget / Taxes last year at around 17 %. Gas prices up 5%, Health Insurance costs up over double digits, property taxes up close to 4 %, I would love to know how our esteemed economists arrive at their C.P.I. number , where the average business and working family live a much different reality.

NY Workers Compensation Insurance , another huge cost component to many businesses here in New York is set to raise by an "average" of 7.7% across the state according to a published report by New York Workers Compensation Board . The new rates are set to take effect October 1st. The impact on individual payroll classifications has not yet been published , but will be available August 1st on the Board's Web Site. 

If you have substantial payroll , and high workers compensation costs, I would encourage you run a quick pro-forma to forecast how these new rates will effect your cash flow , and more importantly the labor component of your bids going forward. If you are only working with a 5 % profit margin as you respond to an RFP, these new worker's compensation rates can eat up most of if not all of you profits contingent on the class of business for your trade, and your jurisdiction. 

The good news is the Consumer Price Index  is only 1.1% for All Items as of 12 months end June 2010. I read a great quote a while back that I thought nailed it. "The purpose of an economist is to lend credibility to the practice of Astrology" . The financial meltdown of the last few years confirms this is my mind.

For more information on Workers Compensation Insurance we invite you to click here 

 

Database for State Incentives for Renewables & Efficiency

In the spirit of partnering with our clients in helping them succeed in their respective businesses we offer this resource.

This is a great website for Developers and General Contractors looking for alternative traunches of funding. I know everyone is beating the banks back with their magic money wands however in the off chance you my need to pull in some alternative sources of funding this is a great resource. With some smart “value engineering” substituting staid building materials with some new green materials with a high efficiency rating or “R" factor could land you enough funds to close your gap and get the project off the board and into the ground.

The site is a gift from the North Carolina Solar Center / North Carolina State University College / College of Engineering.

DSIRE - Database of State Incentives for Renewables & Efficiency

Good luck and God Speed.

Insurance Mic

Significant Davis Bacon / Prevailing Wage Opportunities for “Best Practice” Construction Firms

Mention prevailing wages to an open shop Contractor, Development firm or General Contractor and watch them shut down like a Toyota Executive. They begin to talk about how much more jobs like this cost to produce than do jobs that are not prevailing wage; agreed, not the point. The point is to fish where the fish are, and succeed landing them with frequency.

With funding scarce on so many projects, pulling in funds from the American Recovery and Re-Investment Act of 2009, Davis Bacon of 1931 or other such federally funded, or state funded programs stipulating a prevailing wage can become a strategic imperative. Accept that prevailing wage must be paid on these projects, but do it in a creative way to leverage your bid. This kind of creativity can be the difference between a 1st place payday and everyone else.

There is a smart strategic play that I do not see many open shop construction firms utilizing when they bid on these types of funded projects. Please be cognizant Union Shop’s are already using this technique, as they are set up for it. If an open shop wants to compete with a Union Shop on Davis Bacon or other like funded projects they need to employ the same weapons and thus cost structures to be competitive. Before I get into the details please indulge a brief primer on prevailing wage for those firms not entirely engaged in these types of funded projects.

With respect to Davis-Bacon and related Acts contractors must pay laborers and mechanics employed directly on the job site at the least locally prevailing wages (including fringe benefits). This would be listed in the Davis Bacon wage determination section of the contract for work performed. Remember the Davis Bacon “Prevailing Wage” is the combination of the basic fringe local hourly rate AND any fringe benefits listed in the Davis Bacon wage determination. To check prevailing wages in your area go to the Davis Bacon Wage Determinations Web Site.

The construction firm has an obligation to pay the “prevailing wage” listed in the contract for each laborer or mechanic on the job site either in a total cash wage, or a combination of cash wage AND a predetermined employer provided fringe benefit. Prevailing wage must be paid for all hours worked on the job site.

Here’s where the wheat separates from the chaff, or what I like to call the leveraged differentiator. Most non-union construction firms pay the fringe benefit portion in additional cash wages. The best practices construction firm knows and understands that there is another way to comply with the law, resulting in a wage costs savings in excess of 20%. Imagine cutting your bid by 20% on the labor component while your competition is overpaying to comply with Davis Bacon like prevailing wag e acts. As you read this which firm are you?

The Strategy Works Like This :

Instead of paying the full prevailing wage for say a carpenter (Carpenters & Soft Floor Layers) at the full rate of $ 78.98 (Residential – Manhattan), a best practices firm would split the rate as stipulated in the Davis Bacon General Decision County Index, or contract by what is stipulated. In this example the split is $43.02 for real wages, and $35.96 for fringe benefits.

By paying the fringe rate of $35.96 in benefits instead of cash the Best Practices Construction firm saves on the following:


Social Security and Medicare Taxes     
Federal Unemployment Taxes
State Unemployment Taxes
Workers Compensation Premiums
General Liability premiums (if based on payroll).

How much could you save if you didn’t have to pay all of the above expense burdens on the full rate of $78.98, but instead paid the above expense only on the split labor rate of $ 43.02 of the real wage rate? The answer is big dollars, enough to be the difference between getting the bid or not! I had one client say to me, prevailing wage is prevailing wage, or $78.98 is $78.98. True but how about all of those indirect costs above the $78.98 that needs to be absorbed and priced into the bid like all of the taxes and insurance premiums. Paid on top of the $78.98. On some construction trades the workers compensation premium alone is 10% of wages paid.

The other advantage you may encounter is when on prevailing wage jobs the contractor’s tend to extend these jobs out a bit longer because of the increase in wages. If you carve out the fringe rate and not pay them in cash equivalents that motivation decreases.

To bid on Federally funded jobs a contractor should register with the General Contract Registration CCR
The CCR eliminates the need for contractors to apply separately to each federal agency. Once you are registered at the CCR, the contractor can bid on construction opportunities listed on the Federal Business Opportunities web site Federal Business Opportunites. I recommend that you sign up for email alerts within this web site. You can get pretty granular in terms of type of jobs and work you wish to pursue and within what state. It’s worthwhile to check out especially armed with levering the split rate technique that most open shop construction firms have no idea on how to execute.

In Summary:

A) This is a strategy that gives open shop construction firms pricing tools that put them on par with their Union competitors.
B) Calculate the split rate and provide “bona fide” fringe benefits for that prevailing rate job only, for laborers and mechanics.
C) Deduct the above taxes, fees and insurance premiums from the fringe rate component to achieve your savings, lowering your labor component of your bid making you more competitive.
D) The savings is not a result of a lower prevailing wage rate, but lower indirect wage costs above the prevailing wage rate, (i.e. taxes, fees, and insurance premiums).
E) If you are a G.C. firm biding on these federally & state funded programs push your open shop trades to comply with B & C, to capture and apply D so your bid is that much more competitive. You will lose to firms that are employing this technique (minority), and you will beat the firms that are not (majority).

I plan more future articles on these types of topics. I find it critically important putting our clients in position to win. Their success is definitely our success as we are all on the same food chain. If this topic was helpful let me know so I can get off my insurance coverage soapbox every now and again.

Kind regards,

Insurance Mic

NYC Dept of Buildings Clarifies Why Certificates of Insurance Cause Brokers and Contractors Headaches

Here is the scenario:

You are feeling pretty good with yourself, you finally bound your liability and workers compensation insurance 2 weeks prior to the effective date, which never happens. The coverage is strong and the pricing competitive. Your broker issues the renewal certificates which you in turn hand over to your expediter with a big fat check to renew your permits. Your feeling so good you might take the wife out for a nice dinner now that this headache is behind you.

On the way to the restaurant the expediter calls and tells you the Certs are no good. Your permits are going to expire with a lapse because the building department will not input your "new" insurance information into the system until the effective date of the new policy, which leaves a gap. Moments from breaking out the defibulator in the trunk you call your broker and ask him how we solve for this. You have 6 jobs running; if they get shut down will cost hundreds of thousands of dollars . You don't care what it costs, you need to pull permits ASAP. I had actually had this very conversation.

Your broker after scratching his head till it bleeds comes up with an innovative solution. You need to back date your coverage using today's date on your new policy, so you can get in the Building Departments System immediately so you can have the permits issued. You tell your broker you don't care if you have duplicate coverage for two weeks, just get it done. The cost is thousands of dollars no matter how slice it.

WHY ???

On January 20th, the Queens Bronx Building Association invited Robert Lamandri the NYC Buildings Commissioner to speak to our membership. During this meeting I brought this Certificate conundrum up which he graciously accepted my invitation to look into the matter. To the commissioner's credit they followed up with Robert Altman our Association Lobbyist into my query. At the suggestion of both Robert Altman and Gino Luongo Architect I was put in touch with Danielle Grillo who is head of Contractor Licensing for the D.O.B. Ms Grillo was both patient and gracious as she revealed that she is well aware of the issue and the problem. However due to the limitation in the Dept of Buildings Computer System capability there is very little that she could do. It seems the present database that's in use cannot archive , or track prior insurance terms or policies. When a new certificate term is recorded for both a contractor's general liability and workers compensation policies, the prior term is "wiped out'. It's as if the information never existed. I know this is hard to believe ; in today's day and age you can stand in front of a restaurant take a photo of the restaurant with your cell phone, and the restaurants Zagat review pops up without you entering one search term. This is done automatically using intuitive algorithmic software that is available free over the internet.

The department's solution is that two entire industries (Insurance & Construction)must laboriously amend , pay for , duplicate processes and cost just to get past the building permit renewal process. The cost of this work around as an inefficiency tax must runs in the millions of dollars in lost productivity, duplications , costs and surcharges. I cannot begin to imagine the hardship it costs the NY Workers Comp Board in letters and inquiries when a firm changes the effective date of their comp which drives alot of reporting functions within the Comp Board's tracking system. One caveat, you will only encounter this problem when you switch insurance carriers. If you do not switch carriers, then the renewal should be status quo with the usual and customary hardships.

Long Term Solution

It would be easy to throw the Dept of Buildings under the bus here for this costly friction, however the folks at the Building Department have to use the tools they are given to get the job done. In this case the tools that are in use are one step from an Abacus. Danielle Grillo understand our plight however her hands are tied in terms of fixing the problem. Only a system upgrade, replacing the system entirely using 21st century technology will suffice. Personally this is n ideal situation to apply stimulus money to a costly problem with the net effect of a long term substantive impact on the cost of doing business with and in the City of New York . A feasibility study of the D.O.B.'s system , flaws and limitations, with suggestions on both amending the current legacy system and the cost associated with that or replacing the system outright needs to addressed.

Short Term Solution

When I encountered the problem I had to essentially bind coverage immediately for the client so they can get into the D.O.B.'s database, which created a duplicate coverage scenario and duplicate cost. I then had to request cancel at an early date the old policy so we didn't have duplicate coverage in place, and hope that the client would eventually get the several thousand dollars in refund they were due. Thankfully it was only liability, and not workers compensation insurance which is a whole different can of worms. This event is triggered only when a new carrier is providing the coverage on a go forward basis.

Next Step

As is customary at the Department of Buildings when someone actually really gets to know the department , staff and the challenges well, they get moved. As of this writing Danielle Grillo is leaving her position as head of Contractor Licensing , and is being replaced by Aisha Norflett. It is my hope that I can pick this up with Aisha, however I feel the solution lies with getting the system upgrade funded thru the Mayor's office. At the very least let's get them to do a cost analysis . It's my hope than any cost analysis or feasibility study that's done will show that an investment in the new system will prove critically cost effective. Keep our fingers crossed. Please add comments below as this article is being circulated and read by thousands of folks whose opinions matter to the City of New York. We need your help to get this done.

Insurance Mic