Archive for March, 2013

Death, Disability, Retirement: Now What?

Posted on: March 29th, 2013 by Commercial Insurance No Comments

With the exception of very few, none I can think of, all owners of privately held businesses will benefit from a buy-sell agreement (aka; continuation agreement, buyout provision, etc). A Buy-Sell agreement allows for the orderly transfer of business interests amongst owners. Some common events that lead to changes in ownership include an owner’s death, disability or retirement, under retirement we can include departure or disenchantment where the owner just wants out. Without planning and a buy-sell agreement, businesses can expect financial and tax problems coupled with large legal fees that could cripple an otherwise healthy business. Buy-Sell agreements can prevent owner, friend and family infighting and keep a business on solid financial and good will footing until transfer of ownership is complete.

A common example has you as part owner of a business split 50/50. The other owner dies. Immediate questions arise; how will the business continue? Is the surviving spouse your new partner? Do you have a financial obligation to the other owner’s family? What’s the business worth? Can you close the business down and start a new business under just your name? Some answers may come easy, most will not. The cost of a buy-sell agreement is peanuts compared to what you are potentially faced with without one.

The good news is with up front conversation and planning the owners can lay out exactly their wishes for the business, their ownership piece, and their families. You can also fund many of the events raised with life and disability insurance. Someone dies; the business has life insurance to buy the owner’s family out. Someone is disabled; the business has disability insurance to provide an income stream to the affected family or income to the business to account for lost revenue from losing a key employee. Someone retires (or leaves), a schedule of payments is agreed upon over several years so as to not unfairly burden the business making the payments, don’t kill the golden goose.

One of the advantages of having the difficult conversations up front are the reality the conversations aren’t that bad. One thing neither owner knows is who is going to activate the buy-sell agreement first. When ages and family life are similar amongst owners, no one knows who will be first to leave the business. The uncertainty of which side of the payout you’ll be on, usually leads to easier conversations and motivated owners to get the agreement completed. As a general rule of thumb, any buy-sell agreement you put in place is better than none.

While buy-sell agreements are built in many ways, don’t delay in building yours. If you already have a buy-sell agreement in place, when was the last time you reviewed the agreement? We strongly recommend agreements are reviewed at a minimum of every five years. People and their needs change over time, especially business owners.

Talk to your lawyer, talk to your accountant or talk with us. We have the answers.

Business Overhead & Your Business

Posted on: March 22nd, 2013 by Commercial Insurance No Comments

Often ignored or worse yet never discussed, is the important role and impact Business Overhead Expense (BOE) insurance can have on a business at a time when the business is most vulnerable. Businesses are successful because they have something to offer, or provide a service better than the other guy. Typically the competitive advantage rests with the leadership, marketing, technology, sales or production of the business and typically these advantages can be tied to a person or team of people that make the company successful. So what happens when a “rain maker” in a company can no longer work due to disability, enter Business Overhead Expense (BOE) insurance.

Business Overhead Expense (BOE) provides an income stream for the business to help cover a drop in income that may result from the loss of a key employee due to disability. Businesses where the owner or partner are the “product/service” are most at risk; think doctors, lawyers, accountants, engineers. When the owner’s direct professional work determines the amount of income, and they are not able to work, the income for the business stops. BOE will provide income to the business to offset the lost income to help pay the ongoing business expenses. These expenses would include employee salaries, utility expenses, rent/mortgage, taxes and other miscellaneous expenses.

A common example we see every day is the medical group with two doctors, ten employees and monthly income of $150,000. One of the doctors is out of work due to injury or illness and unable to work for up to one year. The income in the medical group drops by 50% but the expenses for the medical group remain unchanged. BOE gives the medical group a life line to pay their bills in the short term while they come up with plan B. Is this a short term problem and the doctor will return to work or are we looking at a long term problem and need to find a doctor to assist the medical group or a permanent replacement. With up to 24 months of coverage available, BOE gives the owner(s) time to breathe, assess all options and make decisions in the best interest of owner(s) and employees.

If BOE is new to you and you have not looked at the options for your business, we are pleased to bring the coverage to your attention. Although larger companies may have the resources to handle the loss of a key employee, the fact remains small to mid-size companies probably will not survive a prolonged drop in income. Today LLC’s and multi-owner corporations are common, BOE and Buy-Sell agreements will help you avoid major in fighting and costly attorney fees if you take the time to plan up front.

For more on Business Overhead Expense and how this one coverage could one day save your business, give us a call. We have the answers.

March Madness at Herlihy Insurance Group

Posted on: March 18th, 2013 by Herlihy Insurance Group 1 Comment

It is March and the games are on! Growing up with six brothers we played our share of basketball in the drive way. Some of us had jump shots. Some of us could dribble and others had really sharp elbows and forceful hip checks. And yes, we were “playing” basketball.

So as March Madness starts up each year, I always spend a few moments recalling some of our better games and the many hilarious antics and strategies of our family and friends that played basketball in our driveway.

There are several things that I love about March Madness. I love that the tournament is single elimination. You win and you go on. You lose and you go home. No “do overs”. I love that effort that the teams put forth in tournament and I also love that fact that we always gather people that we do not typically see during the year to “watch” the games.

Thanks to a few savvy Facebook users in our agency, this year the Herlihy Insurance Group is inviting all of our friends, families and clients to share March Madness with us. Simply go “like” our Facebook page and then follow the link to www.cbssports.com to join our Herlihy Group Bracket. (password: basketball). The winner of the Herlihy Group Bracket for March Madness 2013 will be eligible for a $100 prize.

Please join us in our own March Madness! All brackets need to be submitted by Thursday 3/21/13. We look forward to all predictions.

Sandy, Title Washing and Scrubbed Cars

Posted on: March 18th, 2013 by Personal Insurance No Comments

It has been almost six months since Hurricane Sandy wreaked havoc on the east coast. Many families and businesses are still struggling with the after effects of this devastating storm. Since this storm did not hit Massachusetts as hard as other areas, we tend to forget the magnitude of the damages.

One item that we would like to share with our clients is what is happening to many of the damaged vehicles from this storm. The Insurance Crime Bureau estimates that over 250,000 cars were damaged by sea water filling engines and interiors with sand and corrosive saline. Many of these damaged and totaled cars have been sold at car auctions and have made their way into the New England states for resale. Once these vehicles are in New England, because of inconsistencies in state laws, buyers will have no idea that these vehicles were so damaged by floodwater that they were totaled by an insurance company.

What is a buyer to do?

We recommend that you always ask for a car fax for any used vehicle that you are purchasing.

Because of hurricane Sandy we also recommend that you check with the National Insurance Crime Bureau if you have a concern about a vehicle that you are purchasing. The NCIB’s website www.nicb.org provides consumers with free access to vehicle salvage records of participating insurance companies.

If you have any questions on titling, registering or insuring any “new” used car, please let us know! We at Herlihy would be pleased to assist you with your questions on this topic. We look forward to hearing from you.

Worksite Life Insurance, A Business Owner Good Idea

Posted on: March 15th, 2013 by Commercial Insurance No Comments

I remember the day like it was yesterday, a very formal invitation for a fundraiser for a long time employee that suffered a massive heart attack and died at the age of 48. The invitation was from the employer reaching out to other workers of the company and business clients asking for their help supporting the family left behind; a wife and three children under the age of ten. What really got my attention was the employer was a prominent insurance company and the former employee was head of their Life insurance department. I found it, still do, hard to comprehend how someone who worked in the life insurance industry every day could not see the value or the urgency of life insurance for his own family.

Unfortunately it’s a sad story we have seen repeated over and over with families we work with.

As most successful business owners will attest, the most important competitive advantage they have, the one piece they have to have and find difficult to replace, are their employees. To care for your employees and their families and offer benefits that are there when they need them is the right thing to do and good business. Most recently we introduced a new Worksite Life Insurance Plan to our employees. Worksite Life is a new product offering and at little or no cost to employer, should be included with all your company benefits.

Highlights of Worksite Life Insurance include;

  1. Life Insurance for all Employees, Spouses, Children even Grandchildren
  2. Guaranteed Issue, meaning No Medical Exam
  3. Premiums are Level for 20 Years
  4. Monthly Premium is Deducted directly from employee’s paycheck
  5. Completely Portable, Employee can take insurance with them if they are no longer employed

A payroll deduction insurance program that offers the benefit of individually owned life insurance for your employees at no direct cost to you is a no brainer. Far too many people believe their life insurance as part of their benefits is adequate to take care of their family. In most cases they are wrong. Play an active role in educating your employees and providing solutions to their problems.

For more on Worksite Life Insurance or other employee benefit offerings and ideas, call us.

We have the answers.

A Tale of Two Siblings

Posted on: March 11th, 2013 by Personal Insurance No Comments

We are pleased to report from our household that we are “launching” our residents.

They are moving out. They have become ” RN” also known in our house as revenue neutral.

As they pack up to relocate to their new places they are shocked by all of their expense items that they face when having their “own” places. Phone, cable, groceries, electricity, parking, internet and as we all know, this list goes on.

Because they do live with an insurance agent, I of course added the “renters insurance” bill to the pile for consideration.

So as the two siblings brainstormed on how to save money, it was interesting to hear one was going to add renters insurance to the pile and the other was not. Because they have spent their lives around insurance people, they both agreed that they should have renters insurance to cover all of their stuff. Yet this was all that they agreed upon!

One sibling will be moving into a residential apartment in a two family home and the other sibling will be moving into a basement unit in an apartment building that I will not be visiting after dark. Both have assured me that they will be perfectly safe in their new places.

Guess which sibling is going with the renters insurance? I would have guessed that the cellar dweller would be the insurance buyer. However she has decided that this renters insurance bill is not going into her bill pile for her first year.

The other sibling who will live is a quiet residential area that I would visit after dark has opted for the renters insurance bill.

In this tale of Two Siblings who is right and who is wrong? From my chair both are right. They understand how the renters insurance works and that it provides coverage for all of their personal belongings. One of them is insuring their things and the other is not. This is pretty straight forward.

Each day we have options to accept or transfer our risk of loss for our personal belongings, properties, businesses and our cars.

The siblings have made their choices. Did I tell you that a renters insurance policy for each of them only costs 69 CENTS a day? I will keep you updated on their move!

Vacationing Dilemmas – To Buy or Not to Buy

Posted on: March 4th, 2013 by Personal Insurance No Comments

Car in pool

If you have ever flown some where with your significant other and then headed to the Car Rental Counter, you may have heard things like this…

“I don’t know if we need it.”

“They said we had comprehensive coverage.”

“I am positive the credit card company will cover this.”

And my personal favorite… “I have no idea. Didn’t you check on that?”

In honor of all of these statements we thought we would share with you a few important facts about a Massachusetts car insurance policy and rental car insurance options.

Your Massachusetts Car Insurance policy does extend some insurance coverages in some cases when you are listed as a driver on a rental car contract.

The coverage we get the most questions about is the CDW (Collision Damage Waiver) option on a rental car. The CDW on most rental contracts is NOT insurance. It is an agreement between you and the rental company that usually says that if your rental is damaged or stolen, you will not be liable.

If you are listed as a driver on the rental contract and your Mass car insurance policy has comprehensive and collision coverage, these coverages will typically extend to your short term car rentals.

A few more things to consider when you are renting a car…

Location does matter! Your rental does need to be in the United States. The coverage will not extend out side of the US.

Your deductible will apply! $500 – $1000

If you rent a mobile home, truck or a larger van your coverage may not be adequate!

And other charges from rental companies to consider…

Your Massachusetts car insurance policy will pay for covered direct physical damage to the rental car. Rental car companies may also charge you for…

Dimunition of value of the rented car and revenue lost by the rental agency while the damaged rental is being repaired.

They can not rent a damaged car! These charges can add up.

So what do we do when we rent cars? Some times we buy the CDW and some times we do not! Many times it depends on where we are and how long we will have the car. There is no right answer for this one! Rental car renters beware.

If you have any specific questions on this, please let us know! We would be happy to assist.