a heart with doctors hands holding stethescopes

Health Insurance Open Enrollment: Group Medical Plans

Did you know that open enrollment for group medical insurance plans may help you improve your health insurance coverage?

There is a lot of discussion nationally about health insurance open enrollment these days.  The one thing that we can all agree on is that it seems to get more expensive each year to provide quality health insurance to our families and employees.

Factors that Impact Group Medical Plans

The best benefits/pricing combination for health insurance is often found in group policies.  These are employer-sponsored plans that provide benefits to eligible employees.

In New Jersey, there are several important provisions in qualifying for a small group plan (under 50 full-time equivalent employees).

  • The employer must contribute to the cost of the plan for each employee. The minimum contribution is 10%.
  • 75% of eligible employees must participate in the plan or be covered by another plan (such as one from their spouse’s employer, or under a parent’s policy).  So, if you have 10 employees (and the owner does not count), you must have at least 8 of those employees enroll in the plan or provide a waiver that shows that they have coverage through a spouse or parent group policy.
  • To qualify as a “group” you must have at least one eligible employee and the business owner does not count in that calculation nor does the business owner’s spouse.

However, and this is an important exception, January 1st is open enrollment for small group plans.  This may be the only time of year small employers are not subject to the participation/contribution requirements.

Client Example

For example, we have a client who has over 20 full-time employees.

Most of those employees are laborers who make close to minimum wage, and many of them are covered by low cost or subsidized health insurance or not covered at all.

It is difficult for these employees to afford any premium contribution.  The employer certainly cannot afford to pay most or all the premium, so for years, they had no group plan.

We were able to set them up on a group plan with an effective date of January 1st, with only one employee enrolled in the plan.  This employee happened to be a relative of the owner who works in the company in a management capacity.

Since the participation requirement is waived, this group is eligible, and the owner can participate as well.

This open enrollment exception allowed the company to provide excellent health insurance to the owner and his family and a trusted, high-level employee, while all the other employees chose to opt-out of the coverage.

This could not be done at any other time of the year.

We're Here to Help

If you are a business owner without an employer-sponsored group benefits plan, contact us to see if a January 1st date opens opportunities for you to access better, and less expensive health insurance.

Please note, these plans must be submitted to the carrier between November 15 and December 15.

We can help you with a full range of retirement and employee benefit plans including qualified and non-qualified retirement plans, group medical, group dental, group life, group disability, voluntary benefits, payroll, human resource consulting and outsourcing and more.


family of five on the beach

A Complete & Simple Guide to Life Insurance Coverage

Written by: Jacob Bobick, CSA

Do You Need Life Insurance?

September is Life Insurance Awareness Month!

It’s probably not marked on your calendars - because it doesn’t sound all that exciting - but it’s a good reminder of the importance of covering ourselves and our families.

Most industry estimates suggest that half of Americans don’t have enough life insurance, and that’s a scary proposition.

I know, I know - it’s easy to say “I’m young, I’m healthy, I’m in great shape”; but not having adequate coverage could have severe consequences on the well-being and future of our loved ones.

Protect the Ones Who Matter Most

We all know that it’s expensive to live in New Jersey.  With the cost of food, shelter, taxes, clothing, college, etc., sometimes it seems like more is going out than coming in.

Insurance is never an “exciting” purchase; it obviously can’t compare with a new car, a pool, or even a new pair of shoes.  Insurance, however, is a relieving purchase.

When set up correctly, our insurances protect us if the worst happens - so at least we’re prepared for it.

Just as we have insurance to protect our homes, our cars, our businesses, our health, and our toys, it’s important to consider the impact of a lost income due to an untimely death.

Back to those expenses for a second… heaven forbid, if part of the household income is lost due to the passing of a family member, life insurance can ensure those bills are paid and the family stays afloat.

Life insurance replaces the lost income.  Life insurance keeps a terrible situation from becoming even worse.

Easier Than it Used to Be

With the timing of the global pandemic, I’ve gotten more questions than ever about life insurance.  It makes sense, as people are more “aware” of the number of lives being lost, so they consider their own mortality.

Believe it or not, the life insurance companies have made it easier for most of us to get coverage.

Because of distancing guidelines, many carriers are doing “non-med” underwriting, which means the applicant might not require an in-person exam to get approved.

For those candidates in good to excellent health, we can get policies issued in a week or two, which is comforting in these uncertain times.  If you’ve had some health challenges, we can still get you covered as well- it just might take a little longer.

The bottom line, as in all insurance planning, is to make sure you are fully covered before something happens!

Two Cups of Coffee

People ask us all the time “how much does it cost?”, which is a difficult question to answer.

Every situation is different, so we have to quote it specifically to the needs of the individual, but the fact of the matter is it’s relatively inexpensive to at least have some coverage.

For example, a healthy 40-year-old man could get a $250,000 policy for less than $12/month.  A 40-year-old female could get it for even less.

At those rates, it’s hard to justify “I can’t afford it”- that’s basically two cups of designer coffee to cover the cost.  We can get you some specific quotes to meet your needs in just a few minutes, so just call us - that is what we are here for!

It is Not Just for Families

While “personal” life insurance might be the most common, life insurance for business planning is equally important.

When there are multiple owners of a business, traditionally there is a “buy-sell agreement” in place.  Essentially, this agreement dictates what happens when one of the partners leaves the business or passes away.

Because an untimely death is often sudden, unlike a retirement, this could cause a strain on the surviving owner(s) to buy out the deceased’s share of the business.

Life insurance is one of the most common ways (and the cheapest) to protect the ownership for the survivor and the family of the deceased.

Example: Matt and Max each own 50% of a business valued at $1,000,000.  They each take out a $500,000 life insurance policy listing each other as beneficiaries.  If Matt passes away, the proceeds of the policy are paid to Max, who uses those funds to buy out Matt’s heirs.  Max now has 100% ownership of the business, and did not have to mortgage a home or the business to make it happen.

Nursing Home Costs

Long-term care planning has become a hot topic over the past few decades.

Understandably, most families don’t want to see their hard-earned money lost to a nursing home or assisted living facility, so long-term care insurance policies have grown increasingly popular as a planning tool- designed to offset the costs of care and shelter you from dipping into your savings.

Many of these policies are built on a life insurance platform to retain as much value and flexibility as possible, giving your family options (and protecting your assets) should extended care services become necessary.

Clever Alternatives

Aside from the “traditional” products mentioned above, companies are creating some “clever” ways to help families amass wealth.

Because of some of the tax advantages of life insurance, we can use it in products designed for retirement to create an income stream when you stop working (while keeping a death benefit intact in case you pass away).

Alternatively, we’ve set up “survivorship” policies, also known as “second-to-die” policies, which are a fantastic way to pass on money to your heirs.

Policies like these give some comfort to retirees who sometimes are afraid to spend their money, knowing they want to leave as much possible behind to their children and grandchildren.

We use a small percentage of their “total assets” to fund the policy, and Mr. and Mrs. Smith can utilize the remainder of their money, without fear of spending down the inheritance.

When they pass away, the lump sum is left to their beneficiaries, tax-free!  In the right situation, it’s a perfect wealth-building tool that allows a family to enjoy their retirement.

Necessary Decision

We can all agree that there is not much excitement in a conversation about life insurance.  But we can probably also agree that it’s a necessary component in a family’s financial plan, however informal that plan may be.

We’ve got the experience to guide you to the right coverage, and the insurance companies have made the entire process more streamlined, so really - there’s no excuse to not get this taken care of.  Your family [literally] depends on it!

Jacob Bobick is our newest associate at G. S. Newborn & Associates, Inc.  Jake has over twenty years of experience helping clients with life insurance, business perpetuation planning, and retirement planning.  Jake is a member of the Society of Certified Senior Advisors.

Contact Jake at jake@newborninsurance.com for more information


Life insurance agent headshot

Welcome to the Team, Jake Bobick: Life Insurance Expert

Jacob Bobick, CSA joins G. S. Newborn & Associates with more than twenty years of experience in the insurance industry.  He is licensed in Life, Health, and Property/Casualty Insurance and holds both the Series 6 and 63 licenses as a Financial Advisor.

Jake has built a career on providing for the needs of his clients in the financial services and insurance arena and has built specialties in the following areas:

Retirement Advisory Services

  • Social Security, Pension, and Income Planning
  • 401(k) Rollovers
  • Medicare Supplemental Insurance Programs
  • Legacy planning
  • Long-term Care Planning

Business Perpetuation

  • Funding of business continuation plans (buy/sell)
  • Key-Person Insurance
  • Tax-Qualified Retirement Plans – 401(k), IRA, etc.
  • Non-Qualified Deferred-Compensation Plans
  • Disability Insurance
  • Employee Benefits
  • Business Insurance

Individual Needs

  • Full range of insurance programs including life, long-term care, disability, automobile, and home
  • Financial Advising and Investment Review

Jake is a graduate of The Pennsylvania State University and resides in Milford, New Jersey.  In his free time, he enjoys playing and watching sports, completing projects around the house, and spending time in the great outdoors.

To get in touch with Jake regarding any of your insurance needs, we encourage you to fill out this form.


Tropical Storm Isaias: Filing an Insurance Claim

Today, many of you were hit by Tropical Storm Isaias, and some of you have been left without power and potential property damage.

If you’ve experienced property damage, we want to provide you with what to do next. See below:

  • Contact your carrier
  • Document everything with pictures and video
  • Make necessary repairs to reduce further damage

While you are doing this, please make sure you are doing so safely. If you have minor damages, are not sure if you should call your carrier or still have questions, you can always contact us by:

We are here to help, so please stay safe and take care!


a farm with red barns and a tractor

Who Needs Farm Insurance in NJ & Why it's Important

Who needs farm insurance?  While this sounds like a simple question, we find that many folks who need farm insurance have no idea that this is something that they need, and more importantly – do not already have.  This creates a tremendous gap in their insurance coverage...

If you raise crops, vegetables, trees, or animals used for food – you need farm insurance.

If you live on a farm and rent the land to a farmer or get a farmland tax assessment on your property – you need farm insurance.

If you have children who raise animals for a hobby or as a lifestyle choice – you may need farm insurance.

If you live on a property that once was used as a farm and have outbuildings that were originally used for or designed for farming – you may need farm insurance.

The Coverage Gap

Most homeowner insurance policies exclude from liability coverage any business activities or pursuits.  By definition and in common law (court precedent), farming is a business activity.  This holds even if farming is not your primary source of income and even if you lose money or make very little money at it.  Here is a common situation:

The Smiths live in a renovated farmhouse situated on twelve acres.  Most of the land is wooded, but there is a five-acre field that they arrange to be farmed by a neighbor.  The farmer gives them a small amount of the hay that they use for their children’s pet goat.  The Smiths get a farmland assessment on their property tax statement every year.

The Smiths post their land with 'No Hunting' signs and do not give anyone other than a handful of family and friends permission to hunt on their property.  On the back end of their land, there are trails that the local teens sometimes use to ride their quads (of course without the Smith’s permission).

In this situation, The Smiths have a farm exposure which qualifies as a business that is excluded from coverage on most regular Homeowners Policies.  You may argue that they are not really farmers since they do not do the actual farming, but each year they receive a benefit from the farming of their land which is a business activity.  By getting a farmland assessment they are establishing that they have a business operation on their property.

Without special farm liability coverage added to their policy (if that coverage is available), the Smiths are vulnerable to a declination of coverage arising from any liability claim that arises from their business operations.  In this case, this could be from anything that happens on their property!

One of the local teens hits a rock on the trail and is badly injured when she falls from her quad.  The parents bring a suit against the Smiths for not properly maintain the trail.

While cutting hay, the local farmer brings up a rock that hits a car passing by on the road adjoining the property.  The owner of the car sues the farmer and the Smiths for the damage to the vehicle and the mental anguish and pain and suffering suffered in the event.

One of the Smith’s pet goats escapes the pen and eats the neighbor's prized rose plants.  The damage to the flower bed is extensive.

In all these claim scenarios, the insurance carrier could decline liability coverage because of the business (farm) exposure and the policy’s exclusion for business operations and pursuits.  We are not saying that the Smiths would necessarily lose these cases, but if their insurance company declines to cover them, they will certainly have to spend their own money to hire attorneys, etc. to defend themselves from the allegations.

Property Insurance Issues Too

Up to this point, we have focused solely on liability insurance issues, but the farm situation may also cause property insurance gaps in coverage.  Many standard Homeowners Policies also have a business and/or farm exclusion for property.

This could apply to any other structure on the property that was originally designed for or is currently used for farming.  In the Smith Family example we have been using, this could mean that the old carriage house that is now used as a game room or two-car garage may not be automatically covered by the policy since it was originally designed as a farm building.

The same may be true of the small barn that is now used to house the pet goats and to store the hay that is cut from their property as this building could be considered to be used in the farming operations.

What is the Fix?

An experienced farm insurance agent (like us) has many tools to properly cover everything from a sophisticated farm operation to the smallest hobby farm.  We use specialized policies or endorsements that are designed to cover both your personal and farm liability and property exposures.

Contact us if you have questions on Farm Insurance.


Do I Need a Workers Compensation Policy in NJ?

Written By: Gary Newborn, G. S. Newborn & Associates, Inc.

In New Jersey, the question, “Do I need a Workers Compensation policy” is not as simple as it may appear. If a business has employees, Workers Compensation is mandated by the State of New Jersey and it is a necessary and needed coverage. It gets a bit more complex when a business has no employees. Here’s the reason…

What is Workers Comp?

A Workers Compensation Insurance Policy provides benefits to workers based on each State’s statute. In New Jersey, the statute does not define who is entitled to these benefits other than the term, “employee”. The problem is that you may not know who exactly your “employee” is until after something bad happens and the court makes a ruling in your case. Of course, by that time, it is too late to purchase the coverage.

An Example of Workers Compensation

Let’s say that you are a small business in NJ that does kitchen remodeling and renovations. You are doing a project for a good customer that includes new cabinets, appliances and more. You hire a sub-contractor, George, to do the tile work for the kitchen floor.

You have known George for many years, and he has done work for you often in the past. The day the tile work is scheduled, George’s brother, Harry shows up at the job, tells you that George is sick, and he does the tile installation. The work is fine, and you call George the next day to see how he is feeling. George tells you that Harry put his back out while doing the job and is seeing his doctor. You do not hear anything for several weeks.

Then you get a letter from an attorney representing Harry indicating that Harry was injured on the job and that you should submit the information to your Workers Compensation insurance carrier as they are petitioning for benefits under your policy. In this case, Harry was an occasional worker for George who did not carry a Workers Compensation insurance policy. Because you are the General Contractor in this case, NJ statute makes you responsible for the injuries to Harry (the employee of an uninsured sub-contractor).

The case goes to the special workers compensation court in NJ where they award Harry benefits under your policy. Do you have a policy? If you don’t, you are still responsible to provide Harry with the benefits that the court has awarded him (these will be out of your pocket if you don’t have a policy). In addition, you will face fines and penalties from the State for not having a policy.

This is just one situation where someone who you would never think of as your employee becomes your responsibility under NJ statute. Other situations would include a temporary or occasional worker, a relative who helps you out for the day, or a sub-contractor who is not covered under their own workers compensation policy.

Independent Contractors

This information may be very different than what you have been told by your bookkeeper or accountant. That is because there is a very real difference between an accounting relationship and a legal relationship. Just because you pay someone as a 1099 sub-contractor does not make them one under the various laws that deal with employer-employee relationships. For more about this subject, see our blog about Independent Contractors.

Type of Business Structure

The type of business structure affects your need for Workers Compensation as well. If you are structured as a Corporation, corporate officers are considered employees (even if there is no payroll involved) and are subject to the workers compensation statute. If you are structured as an Individual/Sole-Proprietor, a Partnership, or a Limited Liability Company (LLC), the owners (individual, partners or members of the LLC) are not considered employees and are not automatically eligible for workers compensation benefits under the NJ statute.

However, you may elect coverage for this class of owners to provide coverage if desired. It is not unusual for a General Contractor to require all Sub-Contractors to elect coverage under Workers Compensation.

Contact us if you have questions on your need for a Workers Compensation Insurance Policy.


Car rental sign at the airport

Rental Car Coverage: What Coverage Do You Need?

Renting a car? It seems that every week we take a phone call from a client asking us what they need to do when they rent a car. It can be a long conversation.  Here is an in-depth look at the insurance concerns for rental car coverage and what protection you need.

Signing the rental agreement = entering a contract!

Renting a vehicle is a business transaction and your obligation as the renter is guided by the terms you agree to by signing the rental agreement.  Keep in mind that you don’t have much of a choice, if you want the car you must sign the agreement.  The signing of the agreement is presented as part of the transaction, but don’t be fooled – this is a contract full of indemnifications, assumptions of risk and highly in favor of the party who drafted it in the first place.

Let’s start with the coverages in your personal automobile insurance policy that apply to a rented vehicle.  Disclaimer here:  we are assuming that you have a standard policy (ISO version) without any strange and unusual endorsements or exclusions.  You should note that not all policies are the same and there are many carriers who do not use the standard, ISO version of the policy.

How am I protected by my policy for accidents in the rental car?

Liability coverage for bodily injury and property damage protects you for allegations or claims that you have caused damage to another party.  Most rental agreements provide very limited liability coverage for the renter (you).  This is typically limited to the State minimum limits for liability in that jurisdiction.

Your liability limit from your personal automobile policy follows you around for most vehicles that you may drive or use, including a rental car.  It may not apply to a truck that you rent for business purposes of any type but that is a discussion for another day and article.  It is important to note that the liability coverage provided by your personal automobile policy only applies within the policy territory outline in the policy (the United States, its possessions, and Canada).

If you have a personal umbrella policy, the coverage will apply to a rental car.  If you rent a car outside of the policy territory on your automobile policy, a personal umbrella will usually provide first-dollar coverage less a retention limit as outlined in your policy.

What about damage to the rental car?

Most rental agreements require you to be responsible for damage to the vehicle you have rented.  You provide this physical damage to a car by buying comprehensive and collision coverage.  If you have Comprehensive and Collision coverage on at least one of the vehicles on your personal automobile policy, this coverage will apply to a rented car as well.  If you do not have physical damage coverage on your policy – you will not have this coverage for a rented car.

Be careful of the fine print!

It is important to note that there are some types of damage to a car that are not covered by either comprehensive or collision that you may still be responsible for under the rental car coverage agreement.  I’ll outline these types of losses:

  • Mechanical breakdown, wear and tear, war/riot/civil commotion, road damage to tires, car-sharing services, and delivery services (business use).  These types of damage are not typically covered by an automobile policy and therefore the coverage would not transfer to a rented car.
  • You are likely responsible for the rental company’s loss of revenue for the time period that they do not have the use of the vehicle because of the damage for which you are responsible.  We call this, Loss of Use and it is usually not covered by your personal automobile policy.
  • You are likely responsible under the rental agreement for the reduction in value of a vehicle that has been involved in an accident for which you are responsible.  This would apply even if the accident or damage is not legally your fault because this is responsibility that you are accepting under a contract not through common law.  We call this, Diminution of Value and it is usually not covered under your personal automobile insurance policy.

So, what do you do?

Based on this information, we suggest to our clients that, if they have adequate limits of liability on their personal automobile policy, they do not need to purchase any additional liability protection from the rental car company.

We have a much different recommendation regarding your responsibility to the car that you rent under the rental agreement.  Because your personal automobile policy provides Collision and Comprehensive but does not provide Loss of Use or Diminution of Value, we strongly recommend that you purchase coverage through the rental agreement for Physical Damage of the rental vehicle.

This is typically called the Collision Damage Waiver or the Damage Waiver.  This is not really insurance, but you are buying out your responsibility for the rental car from the rental car company.  Some of these provisions may contain a deductible or a limit that you are responsible to pay before the waiver kicks in.

They have your credit card!

Keep in mind that you probably give the rental car company a credit card for payment.  The final amount of the charge for the rental is open-ended since you may have to pay an additional amount due to the level of gasoline, tolls assessed to the car during your rental, the time you return the car or the mileage driven during the rental period.

Understand that damage to the vehicle for which you are responsible could result in a charge made against your card as well.  In short, they probably won’t ask your permission they will probably just charge you for your obligation to them under the rental agreement which could include the cost to repair the vehicle, the loss of use of the vehicle and the reduction in value of the vehicle because of the damage.

Do I have coverage under my credit card?

Speaking of credit cards, some credit card programs may include some coverage for rental car situations.  I have seen tremendous variations on these programs and each program has its own provisions, waivers, terms and conditions.  Please read the program carefully before depending on a credit card program to handle all the obligations you assume under a rental car agreement.

I’ve had some bad luck with rentals myself…

I have been fortunate to have done some traveling over the years.  We have rented cars throughout the United States and in several foreign countries.  We always purchase the Damage Waiver and have, unfortunately, needed to use it on several occasions.

Our most recent misadventure took place this year in New Zealand.  Someone (I’ll never tell), forgot to put the car in park when running into the grocery store.  They drive on the wrong side of the road there and the car is set up backwards too – driver on the right side of the car.  This makes some of the controls wrong handed.  Not fun to come out of the store to see your rental car in the middle of the parking lot having run into another car while you’ve been shopping for snacks!

It is a nice feeling to turn in the car at the rental counter and know that my responsibility under the rental car agreement has been satisfied.  For us, the cost of deductibles, time, and aggravation that we otherwise would have spent because of our rental car coverage mishaps have far outweighed the collective cost of the Damage Waivers that we have purchased.

Rental car coverage checklist:

  • Check your liability limits – you should have limits that you are comfortable with based on your net worth, social responsibility and ability to sleep at night.
  • Purchase an Umbrella Policy to give you higher limits of liability and give you worldwide protection for rental car situations.
  • Try and read your rental car agreement.
  • Review your credit card programs to see what if any protection they provide for rental car situations.
  • Consider purchasing the Damage Waiver next time you rent a car.

A blonde white female freelance worker

Independent Contractor vs. Employee: Do You Have A Choice?

Many businesses in various sectors depend on the use of Independent Contractors to supplement their work force.

Deciding when a worker is an Independent Contractor vs. Employee has always been a bit of a sticky issue with varying government and insurance interpretations, and little consistency between Federal and State rules.  The rules regarding Independent Contractors and employees are constantly evolving.

However, in New Jersey due to recent court cases and a renewed interest in the subject by the State government, we have seen a general consolidation of the rules that give us a better view on exactly how the State, at least, determines who is an Independent Contractor and who is an Employee.

Why It Matters To Employers?

There are certain advantages for an employer to consider a worker an Independent Contractor vs. Employee.

Generally, in this type of relationship, the employer does not provide employee benefits, workers compensation insurance, or share in payroll contributions such as State and Federal taxes, FICA (social security and Medicare taxes) and unemployment insurance.  In addition, regulations for things such as Family leave, sick time, prevailing wages, overtime and other hour/wage issues are not in play.

Your Independent Contractor relationships can be overturned by the Federal government (IRS), a State government (Department of Labor), or by court ruling as a consequence of a legal action.  If this happens, the Employer could be responsible for past wages, benefits, overtime, and taxes along with penalties and interest payments.  At the end of the day, any time you set up an Independent Contractor relationship you want to know for sure that it is solid and could withstand scrutiny by the government and the courts.

New Jersey Making It Difficult

The trend across the nation is narrow on those eligible for Independent Contractor relationship.  New Jersey is a leading State in this effort.  In fact, this is a focus point of New Jersey Governor Murphy’s administration.

“Misclassification is an unfair business practice and it is illegal,” Murphy said.  “if you are a contractor engaging in these practices, we are either, A, going to bring you into compliance or, B, we are going to put you out of business.”  To fortify enforcement efforts in this area, the State has added new investigators and has trained Division of Consumer Affairs investigators in misclassification.

We have had numerous clients, mostly in the construction industry report that they have been subject to an inquiry by the State.

What Are The Rules?

Determination of the status of a worker in New Jersey will now likely depend on the ABC Test.

The ABC Test is taken from the New Jersey Unemployment Compensation Law and is now the primary test to determine Employee status with the State of New Jersey.  The test presumes that every worker is an Employee unless three standards are met:

  1. The worker has been and will continue to be free from control or direction over the performance of the work both under the terms of the parties’ contract and in fact.
  2. The work must be outside the usual course of the employer’s business, or, the work is performed outside of all places of the employer’s business
  3. The worker is customarily engaged in an independently established trade, occupation, profession or business.

Control

If the employer (remember the State is presuming that everyone is an employee in these situations) directs the worker in any way, the worker is an Employee vs. Independent Contractor.  Things that illustrate control include directing the work, establishing start and finish times, and use of the employer’s tools, equipment, vehicles, materials or supplies.

Outside Of Usual Course Of Business

To be an Independent Contractor, the work done must be outside of the normal work done by the employer or the work is done away from any premises or job site of the employer.

This is problematic for any business who uses workers to do essentially the same jobs that are done by other employees in the company even for a short-term basis or for a specific project.  It is hard to see how an Electrical Contractor could ever call another electrician an independent or sub-contractor.

It is also difficult to see how a technology firm can utilize a contract programmer working remotely as an independent contractor if some or all their programming employees also work remotely.

Established Business

Part C of the test may be the most difficult, especially in the construction industry.  It is impossible to see how a worker who is only working for one company can ever be called an Independent Contractor.

Under this standard, the Independent Contractor would have business cards of their own, a sign on their truck if applicable, insurance coverage, would invoice the employer for work done rather than have the employer track their hours, and perhaps even have a proposal, purchase order or written agreement for the work to be done.

What To Do?

While this is an evolving area, it is clear that the State of New Jersey is serious about the issue of independent contractor vs. employees and will be stepping up their enforcement efforts.  It is also clear that the construction industry is a primary target for initial efforts.  We will probably see this spread to the health care, hospitality, and technology industries soon.

We strongly recommend that any company using independent or sub-contractors review their procedures, assess their relationships and consult with their attorney and accountant to make sure that they comply with New Jersey (and Federal) statues.

G. S. Newborn & Associates, Inc. can help you meet with an employment attorney to discuss these matters. Make sure to discuss with us the insurance implications of using Independent or Sub-Contractors.


A young couple with their daughter at home

Personal Lines of Insurance: A Complete Guide

Buying insurance for your home, automobile, motorcycle, boat or other personal assets seems like one of those routine, necessary things that everyone must do but no one wants to do.  You are bombarded with messaging telling you that it is all about the price, the convenience, the time and the name.

No one is telling you that the difference between a policy that meets your needs and one that misses the mark is in the coverage details and how you choose to make the policy fit your needs.  In this article, we’ll discuss the common “personal lines of insurance and give you straightforward and realistic information to help you buy the right insurance for you.

Homeowners Insurance

Your home is likely the largest purchase you will ever make.  There is a broad range of coverage available out there today with tremendous variation in coverage, each one being sold under the same label as a Homeowners Insurance Policy.

To add to the confusion, there are different types of Homeowners Policies for different types of ownership situations.  The chart below illustrates the various types of Homeowners Policy forms.

Form Known As Used For
HO-3, HO-5 Homeowners Policy Fee simple ownership (you own the land and the dwelling). Must be owner occupied.  May be one or two family structure.
HO-4 Homeowners Policy

Tenant Homeowner

Rental Policy

Tenant in an apartment, house, room, or condominium that they do not own.
HO-6 Homeowners Policy

Condo Unit Owners

Those who reside in a condominium unit that they also own. In some cases, this form may be used for an owner of a condominium that is occupied by a tenant.

Moreover, there are many versions of each form, some standardized and some carrier specific.  It is very difficult to determine if the policy being sold to you as a “Homeowners” Insurance Policy meets your needs or not unless you delve into the specific coverages in more detail.  For purposes of this article, we will focus on the HO-3 and HO-5 forms for fee simple ownership.

Keep in mind that the Homeowners Policy is built to serve the average homeowner.  An average policy probably has too much coverage for half of the people and too little for the other half.  Let’s break down what coverage is included in the Homeowners Policy.

Coverage on the dwelling is typically stated on the declarations page.  Most insurance companies will increase this limit each year to keep up with inflation in building materials and costs. One of the most important issues in designing a Homeowners Policy is to determine the correct limit to carry on the dwelling.

This section of the policy covers the actual building and all the items attached to the building such as electric wiring and fixtures, pipes, fixtures, flooring and more.  It is most often insured on a Replacement Cost basis – which means that the insurance is intended to pay for the cost to replace the damaged property or item with no penalty for the physical depreciation of that property.

It is important to remember that replacement cost has little or no relationship with the market or sales value of the property.

What Is Replacement Cost?

Replacement Cost coverage does not mean what most people think.  This is a form of settlement that is outlined in your insurance contract.  In its simplest form, Replacement Cost means you get “new” for “old”.  To be more technical, it is a payment without a penalty for physical depreciation.

Most insurance contracts, including homeowners policies, include an insurance to value clause that forces you to insure for some percentage of the actual replacement value of the structure in order to receive full benefits from the insurance policy at the time of a loss.  For most homeowners policies, the important threshold is 80%.  So, if you do not insure for at least 80% of the replacement value your loss will have a depreciation factor applied.

Let’s review an example of how this works.  Say that you have a home that is about 3,000 square feet in area.  Based on the type of construction, your State and county, the age of the house and other physical characteristics we calculate that the full replacement cost of the house is $750,000 (or $250 per square foot).

However, your homeowners policy shows a limit of coverage for the home of $550,000.  In a strong gust of wind during a rainstorm, your 20-year-old roof is damaged and must be replaced.  The estimate you receive to replace your damaged roof is $10,000.  If you insured the house for at least 80% of replacement cost, your loss settlement would be at replacement cost and you will receive $10,000 less your deductible.

Because you did not insure for at least 80% (which would have been $600,000), your loss settlement is at a depreciated value (we call this ACV or actual cash value).  A 20-year-old roof is probably through two-thirds of its expected life (if your roof has 30-year rated shingles), so the loss settlement will be $10,000 less two-thirds, or $3,300 less your deductible.  Imagine the effect on this if you have a partial fire loss of $100,000 or more.

It is important to carefully consider the amount of insurance that you purchase.  Keep in mind that when it comes to insurance, you are dealing with construction costs and not market value.  Market values tend to fluctuate and can go up and down depending on the economy and many other factors.

Construction costs generally trend upward based on inflation, but they rarely ever go down.  It is not unusual in these times to see a home where the construction or replacement values is much higher than the market value.  We also remember times when the opposite was true, and you could insure a home for much less than the purchase price.

Questions on Replacement Cost & How to Pick the Limit on Your Homeowners Insurance

Most “on-line” quotes you receive will be for a HO-3 Form.  We prefer to use a HO-5 form whenever possible.  The HO-3 form includes Special Perils for the Building and Broad Perils for Personal Property (contents).  Special perils are better, and the slight price difference is usually worth it!

If you spill fingernail polish on your hardwood floors, your sofa and on your expensive oriental rug is it covered?  Under a HO-3 form only the hardwood floors are covered.  If you purchase a HO-5 form, all those items are covered.

Deductibles: Watch Out For The Hidden Ones!

It is normal to have a deductible of $1,000 or higher for property losses on your Homeowners Policy.  There are some excellent points to consider even higher deductibles.  We do caution you for two types of deductibles that you may not even know that you have (and you may have to dig down to the very fine print on the on-line quote you received).

Hurricane Deductible.  This is a higher deductible that applies only to damage done because of a named storm or hurricane.  Often these deductibles are 2 - 5 percent of the coverage limit on the dwelling or higher.  If your home is insured with a limit of $700,000 on the dwelling, that could be a deductible as high as $35,000.  Some carriers place hurricane deductibles on all New Jersey and most Pennsylvania policies regardless of proximity to the coast.

Age of Roof Penalty.  While not listed as a deductible, some carriers are sneaking into their quotes a limitation on replacement cost coverage for older roofs.  In this case, you receive a depreciated value rather than the replacement value for the damage.  For example, if you have a roof that is 30 years old with 40 year rated shingles, you may only collect 25% of the cost of the new roof because of depreciation.  This acts like a 75% deductible on your roof.  You would certainly want to be aware of this limitation in advance.

Jewelry & Other Special Items

Most Homeowners Policies have limitations for loss by theft on jewelry and other valuable items such as silver, gold, silverware, guns, stamps, coins and money.  There are different ways to increase the limits of these items either by adding specific coverage for each item or by adding to the overall limit of coverage on the type of item.

We suggest that you consider adding a special coverage endorsement (sometimes called a rider) on these items to get both full value for the item and broader causes of loss.

More Info On Jewelry & Special Items Coverage, Plus Why A Rider Makes Sense

There are certain categories of property that are limited in your homeowners policy. Some types of property are limited to a dollar amount for all perils while others may be limited to a dollar limit for only theft.

For example, there is no limitation for jewelry for the peril of fire, but you may only have $2,500 of coverage for the peril of theft. All policies are different, so make sure to read yours to review these limits, but here is a chart that may be useful to identify the kinds of property that are generally limited.

Property (limited for all perils) - Money, bank notes, bullion, gold, accounts, deeds, letters of credit, passports, tickets, stamps, watercraft, trailers, property used for business purposes, electronic apparatus and accessories while in or upon a motor vehicle.

Property (limited for theft) - jewelry, watches, furs, precious stones, firearms, silverware, goldware, platinumware, pewterware, and gold, silver, platinum, or pewter plated items.

Why Purchase A Rider?

You may add coverage for all the items listed above on an endorsement we often call a “rider” or “floater”. There are many advantages to do this. You may expand the coverage – the actual perils that are covered for that property. A rider is usually an economical way to get the higher limits of coverage that you need on a cherished item.

In addition to the items listed above, it may be advisable to consider special coverage for collectibles, glassware, antiques, fine arts, paintings, musical instruments taken off the premises and sporting equipment. In general, think about any personal property that has a high value, special meaning or you cannot replace and consider a customized coverage solution.

Coverage For Your Finished Basement

You will find huge variations in the coverage offered by different insurance companies for Water Back Up Coverage.  This is a very important coverage if you have a finished or partially finished basement.  We routinely see policies that exclude this coverage.

Most policies will allow you to purchase some limit of coverage for this – a typical limit may be $10,000.  We have options as low as $5,000 of coverage up to an unlimited amount (subject to the building coverage limit).  This is an area where it is important to make sure the policy fits your needs.

There are many other important coverages that are not often included in the quote you may receive when you are offered a cookie cutter solution for your home insurance needs.  We think these are some of the very important ones.

Service Line Coverage

This is a special coverage to cover damage to underground utilities and appliances for which the homeowner is responsible. This is a relatively new coverage that has become available.

Items targeted by this coverage are water, sewer, and electric lines that may run under your property to the municipally owned connection point. We have had many cases where an insured is reimbursed for thousands of dollars of damage to such an underground line.

Equipment Breakdown

Equipment Breakdown coverage fills a gap that is not otherwise covered by property insurance. This contemplates the breakdown of mechanical or digital systems that may be subject to unusual losses.

Some examples of this would include electrical arching, explosion or tearing asunder of a pressure vessel (boiler, hot water heater, etc.), or breakdown of an air conditioning compressor. This coverage is not a product warranty and generally does not coverage normal wear and tear or aging.

Flood Coverage

Flood is a peril that is excluded from homeowners and other forms of property insurance. There is a federally backed system of flood insurance available in the United States which you may purchase through our agency. The cost of flood insurance varies greatly depending on the location of the property.

There is a federal program of flood zone mapping that largely determines the cost of flood insurance and may determine if a flood insurance policy is required by your mortgage company. We have strong relationships with flood insurance programs for federal coverage, private carrier coverage and excess flood coverage.

It is important to note that each year there are millions of dollars of flood damage to homes not in a flood zone. We suggest that you review the benefits of a flood insurance policy regardless of the requirements of your mortgage company.

Earthquake and Earth Movement Coverage

Earthquake and earth movement are excluded causes of loss in the typical homeowners policy. Depending on the location of your home, we may be able to add this coverage for an additional premium to your policy.

Did you know that New Jersey is near a major fault line?

Sinkhole Collapse Coverage

Sinkholes are another excluded cause of loss from the homeowners policy. The issues of sinkholes are usually a geographic concern as they seem to be more prevalent in some areas of the country than others.

There have been instances of isolated sinkhole issues which have generally been traced to mining operations and abandoned mine shafts nearby. If you live on Coppermine Road, or Mine Street – you may want to think about adding this coverage to your policy.

The Homeowners Policy Also Provides Very Broad Personal Liability Coverage

The Liability coverage does what you think it does – protects you if someone gets hurt or injured on your property.  But it also provides protection if you cause bodily injury or property damage away from the premises during your personal (not business) activities.

For example, if your child is playing golf and accidentally hits another golfer causing some injuries that result in needed medical attention, loss of work, and ongoing treatment – the Homeowners Policy provides coverage (defense and settlement/judgement up to your liability limits).

Make Your Liability Coverage Fit For You

We think it is important to make sure that your Liability coverage includes some extra coverage that you can add to your policy – you’ll be surprised at the low cost of these enhanced coverages.

Personal Injury Liability

Personal Injury liability extends your liability coverage beyond Bodily Injury and Property Damage. Typically included in Personal Injury coverage is slander, libel, false arrest, and wrongful eviction. Often, this coverage is included for first dollar protection on a personal umbrella policy.

We think that in our litigious society, it is important to add Personal Injury Liability to your coverage program either through your homeowners policy or a personal umbrella policy.

Incidental Farm Liability

The typical homeowners policy excludes liability coverage from any and all business operations. Farming, even if not for a profit, is considered a business operation. Therefore, it is critical to make sure that your homeowners policy includes liability for farming if you have any farming exposure.

Farming exposure would include any or all the following:

  • You get a farmland tax exemption from your municipality or township
  • You raise, breed, or board any animals
  • You grow, raise, or sell crops, hay, eggs, fruit, vegetables, animals, or any other farm product to others
  • You lease land to others for farming purposes
  • Ownership of tractors or other equipment for farm use
  • Anything else that looks like farming

Not all insurance carriers will add this specialized liability coverage to a homeowners policy and many small farms may need another form of insurance called a Farmowners Policy for adequate coverage.

We have more than 30 years of experience in agricultural insurance. Call us if you are not sure if you need farming liability coverage.

Short-Term Rental Liability Coverage

If you are using any portion of your home or your premise for short-term rental (such as Airbnb, or VRBO) you may not have liability coverage for this portion of your exposure. Some of the rental platforms may include limited coverage for the property owner but we urge you to consult your attorney to gauge the adequacy of any coverage provided.

Some insurance carriers will endorse your policy for an additional premium to pick up this liability exposure.

Personal Automobile Insurance Policy (PAP)

COMING SOON!