Insurance Insights ~ January 1999

SPECIAL ISSUE

OSHA - Dragon or Dove?

If you are a business owner, the acronym OSHA may tend to strike fear into your heart and send chills down your spine. Maybe your fear of this "Big Brother Government Agency" is making a mountain out of a molehill.

In 1970, Congress established the Occupational Safety and Health Administration (OSHA) as defined in legislation, P.L. 91-596, the Occupational Safety and Health Act of 1970.

Over the past 26 years, OSHA has been working to save lives and prevent injuries and illnesses in American workplaces. During those years, the workplace death rate has been cut by 50%.

Today the federal division of OSHA, has a staff of 2,209 including 1,113 inspectors and a budget of $336.5 million, which covers more than 100 million Americans at more than 6 million workplaces. That responsibility is shared with 25 states that run their own OSHA programs with more than 2,625 employees, including 1,216 inspectors. During 1997 OSHA performed 34,264 inspections.

During 1996-97, OSHA eliminated 981 Federal Register pages of regulations and put another 616 pages in plain English. By the end of 1998, the agency planned to cut about 134 more pages and rewrite three technical standards in plain language.

To enforce standards OSHA conducts unannounced inspections at worksites under its jurisdiction.

Top priorities for inspection are life-threatening situations or accidents involving deaths or three or more workers injured severely enough to require hospitalization. Next are employee complaints. Many of these are now handled by telephone and fax without the need for onsite inspection. Inspections of high-hazard industries and worksites with a record of many injuries or illnesses come next. OSHA also conducts inspections of low-hazard industries and follow-up inspections at companies previously cited for violations.

You cannot predict every objection your OSHA inspector is likely to raise during a visit. But you can anticipate what may happen from historical records. The top five "red flag" issues are:

1. Hazard Communication - MSDS Manufacturers Safety Data Sheets. Should be accessible to every employee showing what chemicals are being used, what their hazards are, and what steps should be taken in the event of accidental spill or human exposure. Keep everything in that file, from paint to toilet bowl cleaner.

2. Record Keeping - Millions of dollars in fines have been levied since 1970 for companies failing to keep adequate records. Every injury that requires medical treatment should be recorded on the OSHA Form 200. Each year a new form should be started. Even if there are no injuries for the given year, a 200 Form should be logged and a new form started. Records must be kept for five years.

3. Machine Guarding - In 26 years the most frequent violations have been failure to properly guard equipment and machinery from accidental contact with operators. Make sure all machinery is inspected and original guards are not removed. No matter who removes the guards, the employer is held responsible.

4. Inadequate Lock Out/Tag Out, Energy Control Program - A relatively new OSHA Regulation covers use of machinery that may accidentally start up or explode. Basically a system to isolate and lock down the machinery.

5. Not Posting OSHA Notice - The most embarrassing infraction is the failure to post the OSHA notice that is sent to every employer. Posting should be in a conspicuous place.

After you have taken care of the five "red flags" listed above, you may wish to take advantage of a free inspection offered by Erie Insurance. Every business owner insured with Erie may request what is loosely called a "Mock OSHA Inspection," performed by the Erie's Commercial Services division. Mock inspections are not a guarantee that all bases are covered, but can help identify potential problems. Contact our agency for details.

If you are cited by OSHA bear in mind that there are relief programs and assistance for Small Businesses.

You may qualify for Penalty Reductions for:

• Size: OSHA may grant reductions of up to 60% for small firms.
• Good Faith: OSHA may grant a 25% penalty reduction if a firm has an effective safety and health program.

Is Your Home Insured to Its Proper Value?

We live in a world affected by inflation, so the amount of coverage you originally purchased on your home may no longer be enough to put it back to its present condition if you have a loss. What's more, most insurance policies recommend that you insure to 100% of your home's replacement cost, but require that you carry at least 80% of that amount. If your dwelling amount is lower than 80% of the estimated replacement cost, and you have even a partial loss, you will not be compensated for the entire cost of repairs. This could leave you with a large out-of-pocket expense, having to settle for a lower quality of materials, or worse, not being able to complete the necessary repairs to your home. Your home is probably your largest investment, and shelters those most important to you. By insuring to 100% of replacement value, you are providing your family security that will enable them to stay in their home.

How do you determine the amount of coverage you should have? To help assure you of maintaining an adequate amount of coverage, your insurance professional can help estimate the current reconstruction cost, with the help of a nationally recognized appraisal system. By reviewing what rooms and building features are part of your home, an estimated reconstruction cost is calculated. This is the amount of coverage that is necessary, if you are to completely rebuild your house in the event of a total loss. An alternative appraisal method uses the square footage of your home to determine the estimated replacement cost.

You also need to notify your agent of any improvements or additions made to your home. This will allow your policy to be adjusted, and to keep an accurate amount of insurance protection at all times.

Don't get left behind! Now that you are prepared with a basic idea on how to determine the correct amount of coverage, call your insurance professional, and let him or her help evaluate your coverage limits, and make certain your home is properly protected.

INSURANCE INSIGHTS is an electronic newsletter published monthly by G. C. Weimer Associates, Inc. Information contained herein is accurate to the best of our knowledge and belief as of 1/1/99. If you have a topic of interest for a future issue, e-mail us at info@gcwinsure.com.