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Holiday Claims

These Are the 4th of July Claims Underwriters Fear Most

From fireworks to boating accidents, July 4th brings out some hefty summertime claims.
By: | June 27, 2018 • 5 min read

Every year we gather ’round for fireworks and fun, but did you know the 4th of July is considered one of the most dangerous holidays in the United States?

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“What we don’t always realize is that the 4th of July has people gathering together for good times and drinking. It’s summertime and they want to be on the water, which gets us into boating accidents,” said Coleman Brown, vice president, loss control, CBIZ Insurance Services.

“Now combine that with fireworks [and their risks]. Plus there is eating, and food safety becomes a big part. It’s hot, so people need to hydrate to avoid dehydration. It’s a lot of risks for one day.”

Fireworks

We ooh and aah each 4th of July as fireworks light up the night sky. But, the truth is, fireworks are scary things.

People can be killed or injured by these explosives. Burns are most common, while injuring and even losing a hand to premature explosions are a close second. Loud bangs can damage human ears, and pets can find their way to the vet each July 5th with ruptured eardrums.

“People are not used to handling fireworks. They don’t take the time to support a firework with a sand base,” said Brown. He added that about 8,000 to 9,000 individuals each year need some sort of ER treatment for firework-related injuries.

One of the biggest culprits of injury is the least expected: “The metal sparklers we give to kids — if you touch the top of that sparkler, it’s 2,000 degrees Fahrenheit. That can easily start a brush fire. If unattended, that could become a big problem.”

Additionally, cars and buildings are not immune to a firework blaze, and entire forests have been known to go up in smoke thanks to a rogue rocket.

Brown estimated underwriters see about $43 million in direct property costs each year from fireworks.

“It’s always advisable for people to go to public displays put on by professionals,” said Brown. But, if others choose to create their own firework magic, “have a bucket of water available. Have a hose available. Create a designated area with minimal combustible materials away from homes, dry leaves and trees,” he said.

For more at-home safety tips, visit the American Pyrotechnics Association.

Drunk Drivers

The 4th of July is a time for celebration! It’s our nation’s birthday, after all, and for many that means celebrating independence with a toast … or two … or three.

The issue comes in when people decide to drive after their festivities. An estimated 34.3 million people travel by car each 4th. That’s a lot of extra people on the road.

According to Esurance, 40 percent of highway deaths between 2007 and 2011 were caused by drunk driving accidents over the July 4th weekends.

A 2016 4th of July report showed 188 people were killed in drunk driving crashes.

“Ensure that those who decide to drink do not drive an automobile, operate a boat or shoot off fireworks,” Brown said. “Have a designated operator, driver or shooter.”

Drowning Risks

Summer is known as the time for swimming in pools, lakes and the ocean. This also makes summer the key time for drowning incidents, especially for children.

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It only takes a few seconds for the fun in the sun to turn deadly. The USA Swimming Foundation reported that at least 163 children younger than age 15 drowned between Memorial Day 2017 and Labor Day 2017. Nearly 70 percent of the victims were 5 and under.

The USA Swimming Foundation also stated that no child is ever 100 percent water safe — but formal swimming lessons can reduce the likelihood of childhood drowning by 88 percent.

What makes the 4th particularly heinous for swimmers is the extra amount of people in the water. It’s not that lifeguards, or parents for that matter, aren’t attentive; it’s that there is a lot to watch during a 4th of July celebration and a drowning can happen in seconds. The best thing to do is teach basic swimming and water safety to children and never leave a swimmer unattended.

Food Safety

“Cooking and food safety are very important for a safe and enjoyable holiday,” said Brown.

He gave the examples of coleslaw, potato or macaroni salad, all 4th of July staples.

Every year, these side dishes accompany barbecues across the country. With a mayonnaise base, this particular dish is not safe sitting in the sun, yet that’s where it lives each 4th.

“Never leave out for more than two hours at a time, and keep them on ice,” he warned.

Undercooked meat and food contamination also plague festivities each year.

Salmonella, E. coli and Campylobacter are the top bacteria responsible for causing an estimated 76 million cases of food-borne disease in the U.S. every year, according to the California Department of Public Health.

Grilling Accidents

Though grilling is a summer activity, the 4th may bring out the worst in your George Foreman.

“Grilling accidents happen when people leave the grill unattended,” said Claudia Cervantes, personal lines claims consultant, Golden Bear. There could be leaks in the propane lines or a buildup of grease, and explosions or fires can occur, she said.

“Failure to clean is a leading cause of fires.”

Cervantes also noted that, every year, fire departments respond to nearly 10,000 home fires involving grills, hibachis or barbecues, which could add up to more than $133 million in direct property damage per year.

Smoke, soot and ash can also be an issue.

“There’s cleaning your property. But smoke and ash can also get inside, into the AC unit and ducts,” Cervantes added.

So here is what you can do to prevent a grill fire:

  • Check the connection between the propane tank and the fuel line for any leaks or blockages
  • Don’t overfill the propane tank
  • Wear tighter-fitting clothes around an open grill flame
  • Don’t add lighter fluid to an already-lit grill
  • Douse hot coals with plenty of water and stir them to guarantee the fire is out
  • Grill outdoors; indoor grilling is a slippery slope to carbon monoxide poisoning

Boating Incidents

 The American Boating Association calls the 4th of July “the busiest, and often deadliest time of the boating season.”

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Why?

Boating activity increases during the summer months, particularly on the three top holidays — the 4th, Memorial Day and Labor Day. More boats in the water leads to higher rates of accidents. Often, the holidays are the first and only time people enter into the water as a boat captain, too, which places inexperienced drivers in the middle of uncharted waters — literally.

Every year, the U.S. Coast Guard Auxiliary offers several tips to stay safe on the 4th, including always wearing a life vest, never mixing alcohol with boating and being aware of the other boats on the water. &

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Workers' Comp

Do You Have Employees or Gig Workers?

The number of gig economy workers is growing in the U.S. But their classification as contractors leaves many without workers’ comp, unemployment protection or other benefits.
By: and | July 30, 2018 • 5 min read

A growing number of Americans earn their living in the gig economy without employer-provided benefits and protections such as workers’ compensation.

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With the proliferation of on-demand services powered by digital platforms, questions surrounding who does and does not actually work in the gig economy continue to vex stakeholders. Courts and legislators are being asked to decide what constitutes an employee and what constitutes an independent contractor, or gig worker.

The issues are how the worker is paid and who controls the work process, said Bobby Bollinger, a North Carolina attorney specializing in workers’ compensation law with a client roster in the trucking industry.

The common law test, he said, the same one the IRS uses, considers “whose tools and whose materials are used. Whether the employer is telling the worker how to do the job on a minute-to-minute basis. Whether the worker is paid by the hour or by the job. Whether he’s free to work for someone else.”

Legal challenges have occurred, starting with lawsuits against transportation network companies (TNCs) like Uber and Lyft. Several court cases in recent years have come down on the side of allowing such companies to continue classifying drivers as independent contractors.

Those decisions are significant for TNCs, because the gig model relies on the lower labor cost of independent contractors. Classification as an employee adds at least 30 percent to labor costs.

The issues lie with how a worker is paid and who controls the work process. — Bobby Bollinger, a North Carolina attorney

However, a March 2018 California Supreme Court ruling in a case involving delivery drivers for Dynamex went the other way. The Dynamex decision places heavy emphasis on whether the worker is performing a core function of the business.

Under the Dynamex court’s standard, an electrician called to fix a wiring problem at an Uber office would be considered a general contractor. But a driver providing rides to customers would be part of the company’s central mission and therefore an employee.

Despite the California ruling, a Philadelphia court a month later declined to follow suit, ruling that Uber’s limousine drivers are independent contractors, not employees. So a definitive answer remains elusive.

A Legislative Movement

Misclassification of workers as independent contractors introduces risks to both employers and workers, said Matt Zender, vice president, workers’ compensation product manager, AmTrust.

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered.”

Misclassifying workers opens a “Pandora’s box” for employers, said Richard R. Meneghello, partner, Fisher Phillips.

Issues include tax liabilities, claims for minimum wage and overtime violations, workers’ comp benefits, civil labor law rights and wrongful termination suits.

The motive for companies seeking the contractor definition is clear: They don’t have to pay for benefits, said Meneghello. “But from a legal perspective, it’s not so easy to turn the workforce into contractors.”

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered in the eyes of the state.” — Matt Zender, vice president, workers’ compensation product manager, AmTrust

It’s about to get easier, however. In 2016, Handy — which is being sued in five states for misclassification of workers — drafted a N.Y. bill to establish a program where gig-economy companies would pay 2.5 percent of workers’ income into individual health savings accounts, yet would classify them as independent contractors.

Unions and worker advocacy groups argue the program would rob workers of rights and protections. So Handy moved on to eight other states where it would be more likely to win.

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So far, the Handy bills have passed one house of the legislature in Georgia and Colorado; passed both houses in Iowa and Tennessee; and been signed into law in Kentucky, Utah and Indiana. A similar bill was also introduced in Alabama.

The bills’ language says all workers who find jobs through a website or mobile app are independent contractors, as long as the company running the digital platform does not control schedules, prohibit them from working elsewhere and meets other criteria. Two bills exclude transportation network companies such as Uber.

These laws could have far-reaching consequences. Traditional service companies will struggle to compete with start-ups paying minimal labor costs.

Opponents warn that the Handy bills are so broad that a service company need only launch an app for customers to contract services, and they’d be free to re-classify their employees as independent contractors — leaving workers without social security, health insurance or the protections of unemployment insurance or workers’ comp.

That could destabilize social safety nets as well as shrink available workers’ comp premiums.

A New Classification

Independent contractors need to buy their own insurance, including workers’ compensation. But many don’t, said Hart Brown, executive vice president, COO, Firestorm. They may not realize that in the case of an accident, their personal car and health insurance won’t engage, Brown said.

Matt Zender, vice president, workers’ compensation product manager, AmTrust

Workers’ compensation for gig workers can be hard to find. Some state-sponsored funds provide self-employed contractors’ coverage.  Policies can be expensive though in some high-risk occupations, such as roofing, said Bollinger.

The gig system, where a worker does several different jobs for several different companies, breaks down without portable benefits, said Brown. Portable benefits would follow workers from one workplace engagement to another.

What a portable benefits program would look like is unclear, he said, but some combination of employers, independent contractors and intermediaries (such as a digital platform business or staffing agency) would contribute to the program based on a percentage of each transaction.

There is movement toward portable benefits legislation. The Aspen Institute proposed portable benefits where companies contribute to workers’ benefits based on how much an employee works for them. Uber and SEI together proposed a portable benefits bill to the Washington State Legislature.

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Senator Mark Warner (D. VA) introduced the Portable Benefits for Independent Workers Pilot Program Act for the study of portable benefits, and Congresswoman Suzan DelBene (D. WA) introduced a House companion bill.

Meneghello is skeptical of portable benefits as a long-term solution. “They’re a good first step,” he said, “but they paper over the problem. We need a new category of workers.”

A portable benefits model would open opportunities for the growing Insurtech market. Brad Smith, CEO, Intuit, estimates the gig economy to be about 34 percent of the workforce in 2018, growing to 43 percent by 2020.

The insurance industry reinvented itself from a risk transfer mechanism to a risk management mechanism, Brown said, and now it’s reinventing itself again as risk educator to a new hybrid market. &

Susannah Levine writes about health care, education and technology. She can be reached at [email protected] Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]