small business 2008

8/14/2019 Small Business 2008

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Small-BuSineSSOwnerS inSurancea guide for consumers

Florida Department of Financial Services

Alex SinkChief finAnCiAl OffiCerStAte Of flOridA


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D F o F o d :Insurance coverage is an integral part of a solid financialfoundation. Insurance can help us recover financially after illness,accidents, natural disasters or even the death of a loved one. Butwith the wide variety of insurance products available, choosingthe correct type and am ount of coverage can be a challenge. Thepolicies and laws that regulate financial matters often change, soit is essential to be aware of new developments.

The Florida Department of Financial Services (DFS) publishes a variety of consumer guides tohelp you understand how different types of insurance policies work . These publications definesome of the industrys terminology and outline your rights and responsibilities. Each guide alsocontains basic information and tips on selecting an insurance agent and company.

Topics include homeowners, automobile, life, health, small-business and m any other types ofinsurance. The Department also publishes guides and brochures covering other financial issuessuch as mor tgages and securities.

You can receive any of our publications by calling the D FS Consumer H elpline toll-free at1-877-MY-FL-CFO (1-877-693-5236). They may also be downloaded from our Web site atwww.MyFloridaCFO.com. For availability of Spanish versions of these guides, please checkthe Web site.

If you have questions after reading this guide, please call our Consumer Helpline toll-free at1-877-MY-FL-CFO (1-877-693-5236) between 7 a.m. and 6 p.m. (Eastern time) Monday throughFriday. The hearing impaired may use a TDD to call 1-800-640-0886 during these hours.

Sincerely,

Alex SinkChief Financial OfficerState of Florida

Types Of Property And Liability Coverage 4

Purchasing Options 8

Insuring Your One-Person Or At-Home Business 12

Health Coverage For Your Employees 12

Small Employers Health Care Access Act 14

High-Deductible Health Plans 18

How To Select An Agent 24

How To Select An Insurance Company 24

Protecting Your Privacy 26

Insurance Fraud Costs Us All! 26

Glossary 28

co t ts

nOte:

Most insurance rates and forms in Florida are regulatedby the Office of Insurance Regulation (OIR). Other financialservices are regulated by the Office of Financial Regulation

(OFR). Although both are administratively housed within theDepartment of Financial Services (DFS), they are separateentities that report to the Florida Cabinet. Because DFShandles consumer-related matters, consumers shouldremember that DFS is their point of contact for allproblems and questions.

DFS distributes this guide for educational purposes only;it does not constitute an endorsement for any service,company or person offering any product or service.

Copyright 2008 Florida Department of Financial Services

Printed on partially recycled paper

TelecommunicationsDevice for the Deaf

1-800-640-0886

or visit our web site at:.m F o d cFO. oinformation

CS C O N S U M

ER S E R V I C E

S

1-877-693-5236helPlineConsumer


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To determine your business insurance

needs, you should review your property and risks.

Small-BuSineSS OwnerS inSuranceFinding the best insurance plan to protect your business is one of the many importantdecisions a small-business owner makes. This guide explains required and optionalcoverage you need to consider.

To determine your business insurance needs, you should review your property and risks.

Your property is the building, possible equipment and inventory you own. Your risks arethe financial responsibilities you have for the people and property your business employs.


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TypeS OF prOperTy anD liaBiliTy cOverageFlorida law requires business owners topurchase workers compensation andcommercial automobile insurance underthe following guidelines:

Workers compensation insurance is requiredfor any non-construction business employingfour or more people and any constructionbusiness with at least one employee.

Commercial automobile coverage is requiredfor businesses that own, lease or operatea motor vehicle.

Workers compensation coverageWorkers compensation coverage providesmedical and partial wage replacementbenefits to employees injured as a resultof work-related activity. This coverage alsoprovides the employer protection from thethreat of a civil lawsuit by an employee with awork-related injury. This coverage is providedby a workers compensation policy, securedby the employer.

The type of businessdefined byclassification codes as either construction ornon-constructionand the business structureare the key factors in determining whencoverage is required.

Applications for election of coverageor exemption from coverage must befiled with and approved by the FloridaDepartment of Financial Services (DFS),Division of Workers Compensation. Theseapplications have specific requirementsand may require submission of additionaldocumentation. Applications and instructions are available at the Divisions Web site at www.MyFloridaCFO.com/wc.

For more information on workers compensation insurance, call the DFS Bureau of Compliance toll-free at 1-800-742-2214;the Workers Compensation Employer Customer Service Center at (850) 413-1601;or visit the Divisions Web site at www.MyFloridaCFO.com/wc.

Commercial automobile coverageIf your business owns, leases or operatesmotor vehicles, you must obtain commercialautomobile coverage. Requirements and

options vary, so check with your insuranceagent to determine what types of coverageyou need. You also should contact yourcity and county government and the U.S.Department of Transportation to check forany other requirements.

Commercial motor vehicle coverage is similarto the auto insurance most people carry ontheir personal cars. Most policies includeproperty coverage for your vehicle, as wellas liability coverage for damage caused byan employee driving a company vehicle. Ifyou are using your personal automobile forbusiness purposes, you may not be covered,as the rules and guidelines are different foreach insurance company. Review the businessuse of your personal vehicle with yourinsurance agent to be sure you are covered.

You can purchase coverage through aninsurance company, or you can self-insure your vehicles. For more information on self- insurance, contact the Florida Department of Highway Safety and Motor Vehicles,Division of Financial Responsibility, Neil Kirkman Building, 2900 Apalachee Parkway,Tallahassee, FL, 32399-0 500, or call (850) 617-2000.

City and county requirementsWhile workers compensation and commercialautomobile coverage may be the onlycoverage required by Florida law, the city orcounty you operate in may have additionalrequirements. Call the occupational licenseoffice in your county or city to find out if you

need additional insurance.Banks or lending institutionsThough not required by law, your bank orlending institution may require you to purchaseproperty coverage if you borrow money to payfor buildings, equipment or any other propertyfor your business.

This protects the lenders interest, and it allowsyou to repair, replace or pay off loans foritems that are damaged or destroyed. Leasedequipment or property also could haveinsurance requirements. Check your leaseagreement for details.

The type o businessdefned by classifcation

codes as either constructionor non-constructionand thebusiness structure are the key

actors in determining whencoverage is required.


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OpTiOnal cOverageEven if the law does not require yourbusiness to carry insurance, you may wantto purchase some coverage to protect you,your property and your assets. This coverageis sold as a package policy that includesseveral types of insurance. For example:Property, liability and automobile coveragecould make up a package policy.

Different businesses have different needs.Ask your agent to help you choose the type ofinsurance coverage that best suits you. Hereare some brief descriptions of the many typesof insurance available to business owners.

Bonds guarantee that you will perform aspecific action or provide work of a certainquality. For example, if a bonded builder failsto perform as agreed, the client can get somemoney back through a settlement.

Boiler and machinery insurance pays forloss or damage to your property resultingfrom a sudden and accidental breakdownof equipment.

Business income or interruptioninsurance pays lost earnings if you mustsuspend operation of your business becauseof an insured property loss.

Extra expense coverage reimburses yourbusiness for any added expenses incurredduring the restoration period followingdamage to the business and impairment of itsoperations as the result of an insured loss.

Cargo and transportation insurance coversyour companys goods and products whilethey are in transit.

Errors and omissions insurance protectsprofessionals from losses caused by theirerrors or oversights.

Fidelity insurance covers business clientsor owners for losses due to dishonest acts byowners or employees.

Flood insurance covers losses to yourbuilding(s) and its contents due to flooding.

Liability insurance protects your businessfrom financial loss as a result of injuries, deathor property damage caused by your products,business operations or employees. There aretwo types:

Premises-and-operations providescoverage for accidents, suchas slip and fall incidents, onyour property.

Products-and-completed-operations helps pay for monetary losses resultingfrom injury or damage caused by aproduct or completed job.

Pro essional liability insurance paysliability claims arising from wrongfulpractice by physicians, attorneys orother professionals.

Property insurance protects businessproperty and physical assets. There are threemain types:

Named-peril coverage specifies theevents that the policy will cover. Forexample, you may buy a named-perilpolicy as protection from losses causedby fire, explosion and smoke.

Comprehensive coverage providesbroader coverage for all perils, exceptthose specifically excluded in the policy.

Windstorm insurance pays for lossesto buildings and their contents causedby windstorms (such as hurricanes andtornadoes) or hail.

Finding the best insurance plan to protectyour business is one of the many importantdecisions a small-business owner makes. Thisguide explains required and optional coverageyou need to consider.

To determine your business insurance needs,you should review your property and risks.

Your property is the building and equipmentand inventory you own. Your risks are thefinancial responsibilities you have for thepeople your business employs.

Even i the law does not require your business to carry insurance, you may want to purchase some

coverage to protect you, your property and your assets.


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prOperTy inSurance:replacemenT cOSTvS. acTual caSH valueWith property insurance, you can buyeither replacement cost or actual cashvalue coverage.

Actual cash value (ACV) insurance pays thecost of damaged property and goods afterdeducting for their depreciation. For example,if you paid $2,000 for a computer five yearsago, ACV would only pay its current value,say $500.

Replacement cost coverage is moreexpensive. It pays the cost of replacing yourproperty without deducting for depreciation.You should compare the premiums forreplacement cost versus actual cash valuewhen buying or renewing a policy.

In Florida, you have the option of purchasingyour insurance through a variety of insuranceorganizations, depending on the type and sizeof your business.

Many authorized insurers are licensed to sellcommercial insurance in Florida. Also, surpluslines insurers can provide coverage for busi-nesses and professionals in high-risk situations.

There are risks and limitations associatedwith both types of insurance providers.The following sections outline theseorganizations and explain how they arelicensed and regulated.

auTHOrizeD inSurerSAn authorized insurer is a companyauthorized by the DFS to sell insurance. Mostbusiness owners seek coverage throughauthorized insurers and the licensed agentswho represent them.

The Department requires authorized insurers toregularly submit their rates, financial standing,premiums, claims and policy forms for review.

These measures ensure that you are treatedfairly and that the insurance company hasenough reserve cash to pay claims.

Authorized insurers also must contribute to theFlorida Insurance Guaranty Association (FIGA),which pays most claims for policyholders if aninsurer becomes insolvent. Although manybusiness owners choose to use authorizedinsurers, other options may be available.

alTernaTiveS TOauTHOrizeD inSurerSCommercial self-insurance fundsWith this type of plan, a group of businessowners pools its risks and money to provideinsurance through a shared fund. The fundmust have enough assets to guarantee thepayment of claims, and all rates must be filedwith the Department.

A commercial self-insurance fund may providecommercial liability, property and workerscompensation insurance. Commercial self-insurance funds must issue assessable

purcHaSing OpTiOnS

In Florida, you have theoption o purchasing

your insurance througha variety o insurance

organizations, dependingon the type and size o

your business.

legal expenSe inSuranceLegal expense insurance is available to provideyou with modestly priced legal services. It alsoencourages you to consult with an attorneybefore serious problems arise.

DFS issues licenses to companies andagents selling legal expense insurance. Thesecompanies offer various types of plans thatrange from basic consultation to more complexlegal services. Contact Specialty Products Administration at (850) 413-3144 to request alisting of authorized legal expense plans.

You also can get this list and more informationby going to the Florida Bars Web site at www.flabar.org and clicking on Public Information, where you will find the link to Group and Prepaid Legal Services.


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policies. This means that if a businessdoes not have enough money to pay theclaims, the other participating businessesare assessed, or charged, to make up anyshortfalls. Commercial self-insurance fundscannot write insurance outside Florida, andthe Department must approve all formsused by the fund administrators. However,the Florida Insurance Guaranty Association(FIGA) will not pay the claims of failed orbankrupt commercial self-insurance funds.

JOinT unDerwriTingaSSOciaTiOnS (Jua)JUAs are organizations of licensedinsurance companies that provide coverageto consumers who cannot obtain it in thetraditional marketplace. Insurance may bepurchased through various types of JUAs,including the Workers CompensationJoint Underwriting Association and theFlorida Joint Underwriting Associationfor Commercial Auto Risks.

Damage from Floridas recent hurricaneseasons has made obtaining commercialproperty insurance difficult for somebusinesses. As a result, a property andcasualty JUA has been formed to assistbusiness owners who cannot otherwise findcoverage. Call the Citizens Property Insurance Corporation toll-free at 1-877-227-3492.Visit its Web site at www.citizensfla.com.

RISK RETENTION GROUPS

A risk retention group provides commercial

liability insurance to its members. Generally,members are professionals with similarbusinesses, or engaged in similar businessactivities with similar liabilities. Risk retentiongroups must apply for permission to organizein one state (called the certificated state).Once the risk retention group has beencertified in one state, it registers as a liabilityinsurance company in other states in whichit wishes to do business. The Departmentcannot regulate the forms or the rates of arisk retention group that is not certified inFlorida, and FIGA will not cover losses if thegroup becomes insolvent or bankrupt.

SurpluS lineS inSurerSStandard insurance companies often rejecthigh-risk applicants who do not meet theirunderwriting criteria, such as liability forday care centers or property coverage forexpensive business equipment. Surplus linesinsurers fill this need. However, before turningto a surplus lines insurer, your agent mustapply for and receive rejections from at leastthree standard insurers.

Freedom from some regulation allows surpluslines insurers to respond to the needs ofinsurance consumers. The Department does

not issue surplus lines insurers licensesto offer insurance in Florida. Therefore, noregulator in Florida has reviewed theseinsurance contracts, and FIGA does notprovide any coverage for claims if a surpluslines company goes bankrupt. However,when surplus lines insurers provide certainfinancial information, they may receiveofficial approval from the Department.

The Department does not regulate therates these companies charge or the policyforms they use. Therefore, if you obtaina surplus lines policy, it is important thatyou read it thoroughly. These policiesfrequently involve differences in coverageand deductibles not found in other policies.

purcHaSing grOupSBusiness owners or professionals may forma purchasing group to buy commercialcoverage, thereby saving money bynegotiating a group rate through a tradeassociation rather than by purchasingindividual policies.

Before buying coverage for a group ofbusinesses, the purchasing group must getapproval from DFS. Purchasing groups mustbuy coverage from an authorized insurer, arisk retention group or an eligible surplus linesinsurer. Coverage through purchasing groupsis not protected by FIGA.

Be ore buying coverage or a group o businesses, thepurchasing group must get

approval rom the Departmento Financial Services.


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inSuring yOur One-perSOn Or aT-HOme BuSineSSIf you run a home-based or one-personbusiness, most of the information presentedin this guide applies to you as well. Do notassume that your homeowners or rentersinsurance policy will cover the professionalequipment in your home or your liabilityneeds. Most homeowners and renters policiesspecifically exclude coverage for propertyused in a business.

If your home-based business involvesproducts, inventory or walk-in customers,you will need a business insurance policy. Abusiness policy will insure you s eparately withproperty and liability coverage as though youwere renting space for your business.

Many insurancecompanies have

developed specialinsurance policies or at-home businesses.

HealTH cOverage FOr yOur emplOyeeSWhile not required by law, employerssometimes offer benefits, such as grouplife and health coverage, to attract andkeep good employees. The next few pagesaddress health care coverage. If you want to learn more about life insurance, please request a free copy of our Life Insurance and Annuities guide for consumers by calling the Consumer Helpline toll-free at 1-877-MY-FL-CFO, (1-877-693-5236). You also can download it from the Departments Web site www.MyFloridaCFO.com.

TypeS OF HealTH cOverageTraditional health insurance, managedcare plans and dental, vision and disabilityinsurance are among the types of healthcoverage available to small employers.

Traditional Health InsuranceWith traditional health insurance, employersusually offer health benefits to their employeesby purchasing coverage through an insurancecompany at group rates.

Managed CareManaged health care combines the deliveryand financing of health care services. Themost popular form of managed care is the

health maintenance organization (HMO). Youremployees choose physicians and medicalservice providers from a list of HMO contractproviders (hospitals, physicians, specialists,medical services, etc.).

The Office of Insurance Regulation regulatesHMOs financially, reviewing and approvingHMO contracts and rating methods, andmonitoring HMOs for financial solvency. TheFlorida Agency for H ealth Care Administrationregulates the quality of care offered by HMOs.If you have questions or complaints regarding quality of care issues, call the Agency for Health Care Administrations toll-free

Consumer Hotline at 1-888-419-3456.The advantage of an HMO is that, in returnfor the limited choice of doctors and hospitals,HMO members usually pay less out of theirown pockets than people with traditionalinsurance. There also is little or no paperworkfor HMO members to complete when theyreceive care.

The main disadvantage of an HMO is thatemployees cannot always visit the physicianor medical facility of their choice. Theymust choose from a group of physiciansthat contracts with the HMO, except in anemergency situation. For more information

Many insurance companies have developedspecial insurance policies for at-homebusinesses. With the help of a good agent,your property and liability needs may beeasy to meet.

If you want health coverage, you may haveto shop around for an individual policy or ahealth maintenance organization (HMO) untilyou qualify for a small-group policy. (SeeSmall Employers Health Care Access Acton page 16.) If your spouse works for anemployer that offers health care coverage, youmay be insurable under his or her employersplan. You also may be able to take advantageof group insurance through your membershipin associations or professional organizations.


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on HMOs, health insurance or other healthcoverage concerns, please request a free copy of our Health Maintenance Organizations or Health Insurance guides for consumers by calling the DFS Consumer Helpline toll-free at 1-877-MY-FL-CFO (1-877-693-5236). You also may download them from the Departments Web site at www.MyFloridaCFO.com.

Association-Based CoverageAn insurance company that markets anassociation-based certificate to a Floridaresident must obtain a license from DF S.

However, the insurer may keep the master

policy in the name of an association or trustbased outside Florida. In addition, the insurermay file its policy forms and rates for approvalin the associations home state.

Small emplOyerS HealTH care acceSS acTThe Small Employers Health Care AccessAct makes health insurance plans availableto small-business employers regardless ofthe health-claims experience of a groupof employees or the health status of anyindividual employee in that group. Hereare the benefits offered by this law:

guaranTeeD iSSueInsurers are required to offer all health benefitplans to small-business employers with one to

50 employees on a guaranteed-issue basis.However, if you are a sole proprietor or the soleofficer of your corporation seeking coverage,you are considered a one-life group. One-life groups must apply for coverage during anannual open enrollment period that lasts theentire month of August. Regardless of whenyou apply in August, your coverage will notstart until the first day of October.

Guaranteed issue means that the policy mustbe issued regardless of the employers or anindividual employees claims history, pre-existing condition(s) or health status. Insurersand HMOs may ask health and medical

questions, but the answers cannot be used todeny enrollment. Although enrollment cannotbe denied, an insured person may be subjectto a waiting period before medical claims arepaid for certain pre-existing conditions.

For an employer with fewer than two employees, a pre-existing condition is anillness that is diagnosed or treated, or acondition for which an ordinarily prudentperson would seek treatment, 24 monthsprior to the purchase of a health insurancepolicy, if the employee has had no priorcoverage. The pre-existing condition periodlasts only 12 months for those w ho havehad prior coverage under a different healthplan. However, that 12-month period will bereduced by the length of time that you havesatisfied a pre-existing condition clauseunder the prior coverage. (See Portabilityin the following section.)

For an employer with two or more employees,the definition of a pre-existing condition is aphysical or mental condition, regardless of thecause, for which medical advice, diagnosis,

Please be aware that this means some ofFloridas most important insurance lawscovering benefits and rate increases maynot apply to out-of-state, association-basedcoverage, even though the insurance issold to Florida residents. In particular, thegovernment of the home state (the state wherethe policy was issued) may not closely reviewor approve the rates involved.

For more information about association-based coverage, you may request a free copy of Health Insurance: A Guide for Consumers by calling the Consumer Helpline toll free at 1-877-MY-FL-CFO (1-877-693-5236), or you may download it from the Departments Web site at www.MyFloridaCFO.com.

While not required by law,employers sometimes o er

benefts, such as group li e andhealth coverage, to attract and

keep good employees.


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It is important to remember that insurance companies

may re use to renew coverageor raud or intentional

misrepresentation by theemployer o the insured.

care or treatment was recommended orreceived within six months of the enrollmentdate or time of application. For theseemployees, the maximum waiting period is 12months, minus any time satisfied under a pre-existing condition clause with a prior healthplan. (See Portability in the following section.)

For employers with two to 50 employees,an insurer that offers group health insurancecoverage may not impose any pre-existingcondition exclusion for pregnancy.

It is important to remember that insurancecompanies may refuse to renew coverage forfraud or intentional misrepresentation by

the employer of the insured. Therefore, it isimportant for employees to provide truthfuland accurate health and medical informationto insurers and HMOs.

pOrTaBiliTyPortability allows a covered person ordependent to meet the waiting period for apre-existing condition only once, even if anindividual changes his or her employer orinsurer. To qualify, you must have continuouscoverage with no more than a 63-day break(the maximum number of days you can gowithout coverage before your portabilityrights expire).

Some employers require employees to beemployed for a period of time before theycan join the companys health plan. While thisemployment requirement frequently lasts threeto six months, this delay will not count againstthe 63-day requirement for joining anotherhealth plan in order to qualify for exercisingyour portability rights.

STanDarD anD BaSicHealTH planSThe standard and basic health plans allowemployers and employees to compare pricesand services between health coveragecompanies (insurers and HMOs). Thecoverage of these plans is identical for eachcompany, but they differ in price, service andout-of-pocket expenses.

The standard plan, with some limitations,includes coverage for:

Inpatient hospitalization

Outpatient services

Newborn children

Child care supervision

Adopted and foster children uponplacement in the residence

Mammograms

Handicapped children

Emergency or urgent care outsidethe service area

Prescriptions

The standard plan has higher premiums andlifetime benefits, but lower out-of-pocketexpenses. With the basic plan, the monthlypremiums are lower, but your out-of-pocketexpenses are higher.

Remember that you should consider yourneeds and those of your employees beforedeciding on any health plan. Ask your agentfor complete explanations of all options. Donot waive your rights to these plans withoutreviewing them first.


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An HDHP is an insurancepolicy that satisfes certain

ederally imposed annualdeductible and out-o -pocket

expense requirements.

wHaT OTHer kinDS OF HealTHcOverage may an inDiviDualmainTain wiTHOuT lOSingeligiBiliTy FOr an HSa?An individual does not fail to be eligible for anHSA merely because, in addition to an HDHP,the individual has coverage for any benefitprovided by permitted insurance.

Having additional insurance policies such as:

Accident

Disability

Specific injury (i.e. a cancer policy)

Dental care

Vision care

Long-term care

will not affect your HSA.

mODiFieD cOmmuniTy raTingAll small-group health plan premiums aredetermined using a modified communityrating. The modified community ratingallows five main factors to be considered indetermining an individuals health plan rate:geographic area, gender, age, tobacco usageand family composition.

For small-business owners seeking coverage,the rate can be increased if the employerdoes not have workers compensationinsurance. Also, the base rate can be raisedor lowered based on the employees healthstatus, past claims or length of time insured.

However, the base rates can be raised orlowered by no more than 15 percent in thefirst year of coverage and no more than 10percent in any renewal year due to claims orhealth status. Base rates can also increasedue to health care cost increases.

Group size will generally not affect the ratecharged. However, rates for one-life groupsmay be up to 50 percent higher.

cOBra BeneFiTSThe federal Consolidated Omnibus BudgetReconciliation Act (COBRA) requiresinsurance companies that cover employee

groups of 20 or more to provide healthcoverage to employees who lose eligibilityto participate in the companys health plan.Employees typically lose their eligibility whenthey retire, resign, lose their jobs or havetheir work hours reduced below the minimumamount required to participate inthe companys health plan.

COBRA allows employees enrolled insmall-group plans to receive coverage forthemselves and their insured dependentsfor an additional 18 months following thetermination of regular health plan coverage.An employee or insured dependent who isdisabled at the time of job termination canreceive a total of 29 months of continuedcoverage. Dependents losing coverage(spouse or dependent children) can receiveup to 36 months of coverage under certainconditions. Under this law, the employer orits designee (usually its insurance company)is required to inform the employees of theirCOBRA rights when they lose their eligibility.

mini cOBraFloridas Mini-COBRA law provides similarcontinuation of coverage protection foremployees who work for employers withfewer than 20 employees.

Note: Under this law, the employee must notify the insurer within 63 days of losing

group eligibility that he or she is eligibleto continue coverage. If you have specificquestions, call the Consumer Helpline toll-free at 1-877-MY-FL-CFO (1-877-693-5236).

cOnverSiOnAfter you exhaust COBRA, you m ay qualifyfor a conversion plan, which is guaranteed-issue, individual coverage that the group planinsurer must offer you. You should receive twoconversion plan options with different levelsof comprehensive, major medical benefits.However, these benefits may differ from thoseoffered by your previous group plan. If aconversion plan is not available, please call the Consumer Helpline toll-free at 1-877-MY-FL-CFO (1-877-693-52 36) ,since you may have other options.


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COBRA allows employees enrolledin small-group plans to receive

coverage or themselves and their insured dependents or an additional

18 months ollowing the terminationo regular health plan coverage.

DiSaBiliTy incOme inSuranceYou also may offer your employees disabilityincome insurance to provide themwith income if they become disabled fromillness or injury and cannot work. Disabilityincome insurance replaces a significantportion of an individuals income throughperiodic payments while the individual isdisabled due to sickness or injury. Disabilityincome benefits provide monthly or weeklypayments of a specified amount for aperiod of time stated in the policy.Disability income insurance comes inboth short- and long-term coverage.

Short-term disability income insurancegenerally refers to policies with amaximum benefit coverage of two yearsor less, although some companies mayapply this designation to policies withbenefit coverage of up to five years.

Long-term coverage includes policieswith maximum benefit periods of 10years, to age 65, or in a few instances,for the lifetime of the insured.

For the first 12 months of the disability, thistype of income policy must provide benefitsif the policyholder is unable to performmaterial and substantial duties of his or herregular occupation. After the first 12 m onths,the company may base the continuance ofbenefits on the persons ability to perform anywork for which he or she is reasonably trained.


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HOw TO SElEcT aNINSURaNcE aGENTWhen selecting an agent, choose one whois licensed to sell insurance in Florida.Some agents have professional insurancedesignations such as the following:

CEBS Certified EmployeeBenefits Specialist

CFP Certified Financial PlannerChFC Chartered Financial Consultant

CIC Certified Insurance CounselorCLU Chartered Life Underwriter

CPCU Chartered Property andCasualty Underwriter

LUTCF Life Underwriting TrainingCouncil Fellow

RHU Registered Health Underwriter

Make sure you select an agent with whomyou feel comfortable and who will beavailable to answer your questions.Remember: An agent may represent morethan one company. To verify whetheran agent is licensed, call the ConsumerHelpline toll-free at 1-877-MY-FL-CFO(1-877-693- 5236). You can also go towww.MyFloridaCFO.com and click on theVerify Before You Buy button at the bottomof the page to search for licensing information.

HOw TO SelecT aninSurance cOmpanyWhen selecting an insurance company, it iswise to know that companys rating. Severalorganizations publish insurance companyratings, available in your local library and onthe Internet. These organizations include:A.M. Best C ompany, Standard & Poors,Weiss Ratings Inc., Moodys Investors Serviceand Duff & Phelps. Companies are rated ona number of elements, such as financial data(including assets and liabilities), managementoperations and the companys history.

Before buying insurance, verify whethera company is licensed to sell insurancein Florida by calling the DFS ConsumerHelpline toll-free at 1-877-MY-FL-CFO(1-877-693- 5236). Be sure to have thefull, legal name of the insurance companywhen you call. You can also go towww.MyFloridaCFO.com and click on theVerify Before You Buy button at the bottomof the page to search for licensing information.

As with any major purchase, it is a good

idea to shop aroundto make sure you are

getting the most or your money.


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prOTecTing yOurprivacyYour Insurers and Financial InstitutionsUnder federal law, some banks andinsurance companies may have the rightto share sensitive and personal informationabout you with other entities and businessinterestswithout your permission. As thepolicyholder, you must take the lead inprotecting your personal information.

Many companies will send you a privacynotice that will give you the opportunity to tellthem that you want your personal informationkept confidential. Unless you complete andreturn these forms, your personal financial andmedical information may be shared with othercompanies. You may have to complete theseforms on an annual basis.

When you receive a privacy notice form,read it carefully before signing it to avoidunintentionally giving the company permissionto share information about you. If you havequestions or concerns about these forms,call the Consumer H elpline toll-free at1-877-MY-FL-CFO (1-877-693- 5236).

inSurance FrauDcOSTS uS all!Insurance fraud costs each Florida familyan additional $1,500 per year* in increasedpremiums. In fact, it can inflate your premiumsby as much as 30 percent, according tothe National Insurance Crime Bureau. Thisincludes the money you pay for life, auto,health, homeowners and other types ofinsurance. You can protect your personal andfamily pocketbook by learning about the manydifferent types of fraud schemes and scams.Some common examples include:

Fictional Injury An attorney informs asmall-business owner that a client sufferedserious injury after falling at the owners placeof business. Actually, the attorney and clientwork together to bilk insurance money throughphony accident claims.

Rigged Robbery A small-business ownerfiles a phony claim of stolen property orexaggerates the value of missing items.

Arson or Proft The co-owner of afinancially strapped business intentionally setsfire to the workplace in hopes of obtaininginsurance settlement money.

Unauthorized Re errel A laboratory billsan insurance company for a patients testsusing information stolen from a referringphysician. Actually, the laboratory has nevertested the patient.

Deceptive Claim An employee whosuffers a minor injury at work exaggeratesthe loss or uses a pre-existing injury to file forworkers compensation.

There are many other types of insurancefraud. If you suspect such a crime has occurred, call the DFS Fraud Hotline toll-free at 1-800-378-0445. You can protect your personal

and amily pocketbook bylearning about the many

di erent types o raudschemes and scams.

*Source: Coalition Against Insurance Fraud


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glOSSaryLoss A loss is an occurrence or eventresulting in damage or destruction of property,injury or death. A policy may cover, limit orexclude certain losses, depending on theterms of the policy.

Named Perils Named perils are specific,named causes of losses that are covered ina property policy. Some examples are fire,windstorm, theft and smoke damage.

Pool A pool is an organization of insurersthat band together to write insurance jointlyfor applicants who are unable to get coveragethrough ordinary methods.

Pre erred Provider Organization (PPO) A PPO offers another kind of providernetwork to meet the health care needs ofconsumers. A traditional insurance carrierprovides the health benefits. An insurercontracts with a group of health care providersto control the cost of providing benefits toconsumers. These providers charge lower-than-usual fees because they require promptpayment and serve a greater number ofpatients. Consumers usually choose whowill provide their health services, but payless in coinsurance with a preferred providerthan with a non-preferred provider.

Risk Risk is a chance of loss to insuredpersons, liabilities or properties.

Risk Management Risk management is themanagement of the various risks that might

affect a business. Its purpose is to identifypotential loss situations and to controlor reduce them through safety andinsurance programs.

Third-Party Administrator A third-partyadministrator is a business licensed byDFS to handle claims for insurancecompanies or self-insured programs.

Unauthorized Insurer An unauthorizedinsurer is an insurance company not issued aCertificate of Authority to conduct business ina particular state.

Agent An agent is a person who sellsand services insurance policies. Agentsmust be licensed by DFS to sellinsurance in Florida.

Authorized Insurer An authorized insurer isan insurance company that has a Certificate ofAuthority from DFS to operate in Florida.

Commercial Liability Commercial liabilityis an insurance policy written for businessesto cover negligent acts that cause injury ordamage to persons or property unrelatedto the business.

Deductible A deductible is the amount thata policyholder must pay before the insurancecompany pays.

Domestic Insurer A domestic insurer is aninsurance company formed under Florida laws.

FIGA (Florida Insurance GuarantyAssociation) A non-profit corporation oflicensed property and casualty insurancewriters that pays most claims for policyholdersif an insurer becomes insolvent.

FLAHIGA (Florida Li e and HealthInsurance Guaranty Association) Anassociation comprising all life and healthcasualty companies authorized to operate inFlorida that pays most claims for policyholdersif an insurer becomes insolvent.

Foreign Insurer A foreign insurer is aninsurance company formed under the lawsof a state other than Florida, but which offers

policies in Florida.Group Insurance Group insurance is aninsurance policy written on a group of peopleunder a single master policy.

Insured The insured are persons and itemscovered under an insurance policy.

Insurer The insurer is the company thatprovides the insurance.

Liability Limits The liability limit is themaximum amount of benefits your insurancecompany will pay for liability claims or losses.


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