20 IRS Factors and Insurance Guidelines You Need to Know

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2 Table of Contents About This Guide Defining an Independent Contractor and Their Evidence Of Proper Insurance Insurance Requirements to Include in Your Contract Sample Independent Contractor Insurance Requirements Overview of Mover s Choice Program The Mover s Choice Program Advantage Frequently Asked Questions Quote Process Checklist Contact Us Appendix: Moving & Storage Web Resources Loss Control Management Tools Paul Hanson Partners. All rights reserved.

3 About This Guide Dear Moving and Storage Business Owner: I am pleased to provide you with the Guide to Using Independent Contractors 20 IRS Factors and Insurance Guidelines You Need To Know from Mover s Choice. The use of independent contractors in the trucking industry has been occurring for decades. In recent years, however, moving and storage businesses started to feel the crunch from the recession, and began transitioning their traditional local employees to independent contractors. Meanwhile, the recession has also caused a reduction in the state and local tax base, which could be one cause for the prolific auditing by state and federal government. In light of the IRS s crackdown on independent contractors, it is vital that moving and storage businesses seek professional advice before classifying workers as independent contractors. Several things are at stake: 1.) Improper contracts can result in unpaid insurance claims; 2.) Tax audits can be devastating; and 3.) Tort liability for claims under your authority can be adversely construed against you. All these can result in risk not anticipated in your business plan. This guide was developed to provide you with additional information regarding how the IRS classifies independent contractors as well as how to help protect your company from uninsured independent contractor insurance claims. In addition, your independent contractor agreement needs to be prepared to help protect you against the legal and insurance issues that may result in these relationships. In today s challenging economy, moving and storage companies need an insurance program that matches the specific needs of their business. Paul Hanson Partners national Mover s Choice program offers an insurance solution with the coverages you require, and can provide you with the insurance guidelines associated with independent contractors. I hope this guide proves to be a useful resource to help you to understand the IRS factors and insurance guidelines for independent contractors. I also hope you gain a better understanding of how our Mover s Choice program can benefit your business. All of us at Paul Hanson Partners look forward to helping you move your business forward. Best regards, Lisa R. Paul, CPCU President, CEO Paul Hanson Partners MOVER S CHOICE PROGRAM Mailing Address: P.O. Box 5990 Napa, CA Physical Address: 1319 First Street, Napa CA Toll Free (800) Fax: (707) Paul Hanson Partners. All rights reserved. 1

4 Defining an Independent Contractor and Their Evidence of Proper Insurance Knowing your Exposure To truly understand the exposure of using independent contact drivers, it is important to understand the continued controversy surrounding the classification of workers as independent contactors or employees. Reviewing the 20 factors the IRS uses to make this classification determination is key to knowing your exposure. What s at stake? If a worker is an independent contractor, the employer need not withhold income or payroll taxes, nor pay the employer s portion of FICA taxes. Also, health insurance and other employee benefits generally need not be provided. In recent years, a greater number of businesses started to feel the crunch of the recession. These businesses began to treat workers as independent contractors. With the simultaneous reduction in state tax base there has been an increase in state and federal audits on this issue. The IRS has come down hard on the classification issue, targeting the following industries: health care, trucking, construction, messenger services and those companies that tend to use professional consultants. In light of the IRS s crackdown, it is vital that companies considering classifying workers as independent contractors first seek professional advice from their accountant, their insurance broker and their attorney. 20 IRS Factors These factors are used by the IRS to determine whether a recipient of services has enough control over a worker to be an employer. They are intended only as a guide to help determine whether there is sufficient control to show an employer-employee relationship. Answering Yes to ANY of the first 16 factors tends to indicate the person would not meet the IRS standard of being an independent contractor. The IRS indicates that the importance of each factor depends on the facts and circumstances of a particular case, and on the industry and type of services being provided. 1. Instructions. Do you have the right (whether or not exercised) to make the worker comply with your instructions on when, where and how he or she must work? 2. Training. Do you train a worker (on your premises or the worker s) by requiring him or her to work with someone experienced, or by having him or her attend meetings or via correspondence? 3. Integration. Are the worker s duties an integral part of your operation? Is the worker s function necessary to your business? 4. Services rendered in person. Do you require the worker to provide the services personally, or can he or she delegate them to someone else? 5. Hiring/firing. Do you hire, fire and pay the worker s assistants? (If the worker contracts to provide both labor and materials, and is responsible only for the ultimate product, this tends to show independent status.) 6. Relationship. Is there a continuing relationship between the worker and yourself? Are services performed frequently (although irregularly)? 2011 Paul Hanson Partners. All rights reserved. 2

5 Evidence of Proper Insurance (continued) 7. Hours. Do you set hours during which the individual must perform the work? 8. Full time. Must the worker devote all of his or her time to your job? (Independent contractors can work when and where they please.) 9. On premises. Must the worker work on your premises, especially if the work could be performed elsewhere? (Or do you have the right to designate travel routes or times or otherwise control the time and place of performance?) The IRS says that the absence of this factor does not necessarily negate an employee relationship. 10. Ordering. Do you have the right to set the order in which services are performed, whether or not you exercise that right? 11. Reports. Do you require the worker to give you written or oral reports? 12. Hourly, weekly or monthly pay. Do you pay the person by the hour, week or month? (A worker might still be an independent contractor and be paid on this basis. Contractors tend to be paid by the job or on straight commission, but could be paid monthly or weekly so as to spread out contract payments.) 13. Expenses. Do you pay the worker s business or travel expenses? 14. Tools and materials. Do you provide the worker with tools or materials? 15. Right to fire. Do you have the right to fire the worker? There can be a tricky distinction between controlling workers via the threat of firing if they do not follow your instructions which would indicate employee status and having the right to terminate a contract because the contractor has not performed according to specifications. 16. Worker s right to terminate. Can the worker quit at any time? Remember, answering Yes to the rest of the questions tend to show independent contractor status for a worker and are often the top four items the IRS is looking for when determining whether someone is a contractor. The IRS is specifically looking to affirm that contractors have a significant investment in their business and have the opportunity to realize a profit or loss in their operations. The following questions are important to be able to substantiate a yes answer. 17. Investment. Does the worker have a significant investment in equipment or facilities that are not typically maintained by employees? 18. Profit or loss. Can the worker incur a profit or loss as a result of his or her work (in addition to the profit of payment for the work?) A contractor should bear an economic risk over and above the risk of not being paid. 19. More than one job. Does the worker work for more than one business at a time? (Note, however, that the IRS says that a worker could be an employee of numerous service recipients.) 20. Services available to general public. Does the worker offer services to the general public on a regular basis? A final note: A provision of federal law may, under certain limited circumstances, provide relief from withholding responsibility in cases where a business has consistently treated workers as independent contractor. That provision is Section 530 of the Revenue Act of If all of its requirements are met, a worker will not be treated as an employee for withholding purposes even if the worker would be classified as an employee under the IRS s 20-factor test. (Tax letter, Third quarter 1993) 2011 Paul Hanson Partners. All rights reserved. 3

6 Insurance Requirements to Include in Your Contract Occupational Accident vs. Workers Compensation One aspect in deciding what insurance you should require from your contract drivers comes from understanding the difference between an occupational accident insurance product versus workers compensation coverage. Typically, an Occupational Accident coverage policy offers three components: accidental death and dismemberment, accident medical and accident disability. The coverage is not a general medical or health policy, but rather a specific cause-and-effect policy triggered by an accidental injury that occurs in the course of an insured driver s work. That would include injuries sustained in an accident while en route to a delivery or in slip-and-fall incidents in the course of the driver s duties. Workers compensation coverage is required by states law to provide benefits to employees who become ill or injured on the job. The actual insurance policy coverage is defined by each individual State Department of Insurance. The major difference between these two alternatives is the coverage provided and the cost. Occupational accident coverage provides a less expensive alternative, but also provides limited protection. There are several differences between Workers Compensation and Occupational Accident policies. Generally speaking, in the event of work-related accident, there is no limit on the period for which Workers Compensation policies pay until the worker is able to return to work (could be 10 months or 10 years). The better occupational accident policies will pay medical benefits for up to two years from date of covered injury subject to the policy limits. The benefits paid to survivors under workers compensation are also more extensive in most states when compared to occupational accident. Another element that needs to be addressed is the importance of understanding statutory workers compensation coverage for helpers versus occupational accident compensation products. Today, there are occupational accident insurance products available for the helpers which have the same limitation as explained above for the contract driver. However, at least 42 states require statutory workers compensation coverage on employees. If your independent contractor does not carry true statutory workers compensation for their helpers and instead has an Occupational Accident product, then they have not met the Labor Code requirement of an employer in their resident state. In the 42 states that require this coverage, the contractor will fail the state tax audit on this issue alone. Additionally, the underinsured helper of your contractor can then come back against your business for their workers compensation claim. The major advantage of the Mover s Choice Contractor Program is our ability to provide a choice to the independent contract driver of either workers compensation or occupational accident coverage for him/herself. The power of the contract driver election between these two coverages sews up the independent contractor status and provides protection beyond contingent liability Paul Hanson Partners. All rights reserved. 4

7 Insurance Requirements (continued) Contingent Liability Contingent liability is key element that is needed when a motor carrier allows contract drivers the ability to provide occupational accident coverage as a work injury protection solution. In the event a contractor sues a motor carrier to obtain employee status, this insurance policy covers and legally defends the named motor carrier, should an owner-operator be deemed an employee. If an owneroperator is deemed an employee, contingent liability insurance responds to cover losses from onthe-job injuries, relieving the corporate workers compensation policy of this load. Contingent liability insurance benefits motor carriers by providing insured drivers with standard benefit levels, which may be specified amounts or equivalent to statutory workers compensation coverage. Many contingent liability programs have a specified limit in lieu of statutory workers compensation benefits and many do not extend the contingent liability policy to the helpers of the contractor. The contingent liability coverage provided by Mover s Choice has the same limits as statutory workers compensation and can also be purchased to extend contingent coverage for the co-drivers, helpers and passengers of the contract driver. These alternatives are not available in most contingent liability programs. General Liability General liability coverage for a contract driver is when negligent acts and/or omissions result in bodily injury and/or property damage on the premises of a business or customers home, when someone is injured as the result of using the product manufactured or distributed by a business, or when someone is injured in the general operation of a business. It is recommended that all contract drivers provide general liability coverage that names the motor carrier, its officers and employees as additional insured as well as a waiver of subrogation endorsed to the policy in favor of the motor carrier. Cargo Legal Liability The motor carrier and the independent contractor need to determine what limitation will be required if a moving customer has a cargo claim. We recommend the contract driver provides his own cargo legal liability policy that will provide coverage when such event occurs when operating under the authority of your company. The other alternative is to have the motor carrier provide coverage through their insurance policy and charge back a premium. In this scenario we recommend a minimum deductible limit that the contract driver will be responsible for on each claim Paul Hanson Partners. All rights reserved. 5

8 Insurance Requirements (continued) Primary Auto Liability It is recommended the contractor needs to provide auto liability coverage for bodily injury and property damage, liability and auto contractual liability covering all motor vehicles and trailers used or operated by the contract driver while operating under the dispatch of your company. A secondary alternative is to have the motor carrier provide coverage for auto liability on their own policy for the contract driver while under dispatch. The motor carrier would charge back a premium to the contract driver for providing coverage. Non Trucking Liability Non-trucking liability (NTL) insurance provides coverage in case your contract driver causes an accident while using a vehicle for non-business or personal use other than transporting goods or merchandise. Non-trucking liability coverage does not apply when they are pulling a loaded trailer, operating on behalf of a motor carrier/leasing company, or using a vehicle for any revenue generating purpose. These types of activities are covered by primary liability coverage. If a motor carrier is providing primary liability coverage, their coverage will not apply when the contract driver is not under dispatch and the contractor will need non-trucking liability coverage. Non-trucking provides protection for: 1. The owner-operator, for liability when driving the tractor while not in the business of trucking; 2. The motor carrier, from liability when a permanently leased contract driver is not under dispatch Paul Hanson Partners. All rights reserved. 6

9 Sample Independent Contractor Insurance Requirements {Independent Contractor Insurance Requirements Sample provided below by Paul Hanson Partners Specialty Insurance Solutions. This document should be reviewed with your broker and attorney; modifications for your particular risk management needs must be made.} INSURANCE: CONTRACTOR shall at his expense, obtain and maintain the following insurance covering all operations and transportation services to be provided under this Independent Contractor s Agreement. These policies will not be qualified as acceptable or in compliance with these requirements unless the insurance company issuing the policies containing all provisions noted below is rated by Best s as A- or higher and has an adjusted policyholder s surplus of $20,000,000 or higher. Copies of all policies, certified to be true and complete by an insurance company employee, must be sent to and kept on file with the Finance Department COMPANY. If acceptable evidence of insurance as outlined below is not provided to COMPANY within thirty (30) days of effective date, COMPANY will procure the required coverage and collect the applicable premiums through deduction from the CONTRACTOR statement account and remit to the insurance carrier from which such coverage was obtained: A. Workers Compensation Insurance/Employer s Liability Workers compensation insurance shall be provided as required by state law or by any other applicable workers compensation law or regulation and shall cover, in accordance with the law, injury sustained by or benefits due the CONTRACTOR S employees. Employer s liability insurance shall be provided in an amount not less than $1,000,000 each accident for bodily injury by accident, $1,000,000 policy limit for bodily injury by disease, and $1,000,000 each employee for bodily injury by disease. COMPANY must be granted 30 days notice of cancellation or nonrenewal; such notice is to be sent to COMPANY ADDRESS. Coverage for all employees must be provided in all states, in addition to providing the statutory coverage of the CONTRACTOR S state of domicile. All coverage will be endorsed to reflect that coverage applies employees of the CONTRACTOR (sole proprietor) in addition to his employees (including casual labor). Policy will be endorsed with SAMPLE Alternate Employer Endorsement naming COMPANY. Should the contractor elect to exclude himself for coverage under any applicable and allowable state statute for sole proprietors, partners, or corporate officers CONTRACTOR will procure occupational accident coverage for himself with a minimum limit of $1,000,000 Medical, $450 per week TTD and TD and $250,000 death benefit. A contingent liability policy will be afforded to protect COMPANY indicating that statutory workers compensation benefits will apply to COMPANY and applicable defense limits to defend company against allegations of the CONTRACTOR or their employee s are those of the company. The employer s liability insurance shall be included and provided in an amount not less than $1,000,000 each accident for bodily injury by accident, $1,000,000 policy limit for bodily injury by disease, and $1,000,000 each employee for bodily injury by disease. COMPANY must be granted 30 days notice of cancellation or nonrenewal; such notice is to be sent to COMPANY ADDRESS Paul Hanson Partners. All rights reserved. 7

10 Sample (continued) B. Auto Liability Insurance Such insurance shall include coverage for bodily injury and property damage, liability and auto contractual liability covering all motor vehicles and trailers or semi-trailers (including company s trailers or semi-trailers) used or operated by or for the CONTRACTOR under this Independent CONTRACTOR S Agreement. The limit of liability shall not be less than $1,000,000 each accident for bodily injury and property damage combined for intrastate operations and $1,000,000 each accident for bodily injury and property damage combined for interstate operations. Policies must contain no mileage limitations to any vehicles insured and must provide fleet automatic coverage. Uninsured Motorist coverage equal to the minimum requirements of the CONTRACTOR S state of domicile must be carried. All no-fault coverages required of the CONTRACTOR S state of domicile, including but not limited to Personal Injury Protection (PIP) and Personal Property Insurance (PPI), must be carried. Policy will be endorsed providing primary coverage to COMPANY with endorsement CA 2312 or its equivalent. Additional Insured: Company, its officers and employees shall be named as additional insured under CONTRACTOR S auto liability insurance policy; such coverage must apply to all operations of the CONTRACTOR, including situations where the CONTRACTOR is hauling under the operating authority of COMPANY. Such notice is to be sent to COMPANY ADDRESS. Notice of Cancellation: COMPANY must be granted 30 days notice of cancellation or non-renewal, such notice is to be sent to COMPANY ADDRESS. C. Trailer Interchange Coverage Trailer interchange coverage providing physical damage coverage for Company s trailers or semitrailers shall be provided for a limit not less than $45,000. Additional Insured: Company, its officers and employees shall be named as additional insured under CONTRACTOR S auto physical insurance policy; such coverage must apply to all operations SAMPLE of the CONTRACTOR, including situations where the CONTRACTOR is hauling under the operating authority of COMPANY. Such notice is to be sent to COMPANY ADDRESS. Notice of Cancellation: COMPANY must be granted 30 days notice of cancellation or non-renewal, such notice is to be sent to COMPANY ADDRESS. D. Cargo Liability Insurance Cargo insurance shall be provided in an amount no less than $50,000 each truck or each shipment. Coverage needs to include the operations of COMPANY including COMPANY bill of lading Paul Hanson Partners. All rights reserved. 8

11 Sample (continued) Additional Insured: Company, its officers and employees shall be named as additional insured under CONTRACTOR S cargo liability insurance policy; such coverage must apply to all operations of the CONTRACTOR, including situations where the CONTRACTOR is hauling under the operating authority of COMPANY. Such notice is to be sent COMPANY ADDRESS. Notice of Cancellation: COMPANY must be granted 30 days notice of cancellation or non-renewal, such notice is to be sent to COMPANY ADDRESS. E. General Liability Insurance CONTRACTOR shall carry general liability insurance including coverage for: 1. Premises and Operations 2. Products and Completed Operations 3. Contractual liability insuring the obligations assumed by Contractor in this Agreement. The Limit of Liability: shall not be less than a combined single limit for bodily injury and property damage of : $1,000,000 each occurrence $1,000,000 aggregate Additional Insured: Company, its officers and employees shall be named as additional insured under Contractor s general liability insurance policy; such coverage must apply to all operations of the Contractor, including situations where the Contractor COMPANY ADDRESS. A waiver of subrogation in honor of COMPANY will be endorsed to the policy. Notice of Cancellation: COMPANY must be granted 30 days notice of cancellation or non-renewal, such notice is to be sent COMPANY ADDRESS. F. Off-dispatch/Non-trucking Liability (Bobtail) SAMPLE CONTRACTOR shall carry a minimum limit of $1,000,000 CSL for off-dispatch/non-trucking liability (Bobtail). Uninsured motorist coverage equal to the minimum requirements of the driver s state of jurisdiction must be carried. All no fault coverages required of the driver s state of jurisdiction, including but not limited to Personal Injury Protection (PIP) and Personal Property Insurance (PPI), must be carried. Additional Insured: Company, its officers and employees shall be named as additional insured under CONTRACTOR S off-dispatch/non-trucking liability insurance policy; such coverage must apply to all operations of the CONTRACTOR, including situations where the CONTRACTOR is hauling under the operating authority of COMPANY. Such notice is to be sent COMPANY. Notice of Cancellation: COMPANY must be granted 30 days notice of cancellation or non-renewal, such notice is to be sent COMPANY ADDRESS Paul Hanson Partners. All rights reserved. 9

12 Overview of Mover s Choice Program The only program that provides the choice of occupational accident or workers compensation to the contract driver Independent Contractor Program Over recent years the moving industry has seen a deterioration of insurance products provided to independent contractors. Many motor carriers and national van lines have moved to only allowing statutory workers compensation on the contractor and the employee and this has arisen because there has been a reduction of insurer s willing to offer workers compensation on helpers without requiring the contractor to have workers compensation as well. Additionally, there have been fewer alternatives for local contractors who require statutory workers compensation coverage. Mover s Choice has launched a program that has a benefit rich occupational accident or workers compensation option for the contractor as well as statutory workers compensation for casual hire helpers and fleet drivers. Many of our competitors only provide occupational accident for helpers. This does not meet the statutory obligation that an employer has for their employees in most states, thereby not making the contractor more likely to be defined as your employee and exposing your company to unanticipated losses, income taxes and federal and state withholdings retroactively. For interstate and intermediate contractors, a flat monthly premium is available. A distinguishing characteristic of this program compared to other insurance providers is that the contractor is allowed a choice between occupational accident and workers compensation. This further strengthens the independent contractor s status with the IRS and state regulatory agencies in that this is a business that has made their own insurance decisions. For interstate and intermediate contractors that haul for a motor carrier that requires workers compensation for the contractor in addition to the helper, this is available as well. Clearly, the occupational accident alternative would not be a choice for these fleets. Local contractors have access to the payroll based statutory Workers Compensation program. All Occupational Injury Program options have additional coverages available for passenger accident, non-trucking liability and auto physical damage. Paul Hanson Partners Specialty Insurance Solutions is a full-service Program Administrator for our exclusive package program for the moving and storage industry. Our program, Mover s Choice, is underwritten by either Zurich in North America* or Chartis Insurance Company. These programs are available to moving agents and van lines across the country. We are proud to be associated with two of the leading international insurance organizations and among the largest underwriters of commercial and industrial insurance Paul Hanson Partners. All rights reserved. 10

13 Overview (continued) Types of Coverages Available Our program is unique in that it is specifically designed for the moving industry and provides a comprehensive coverage form at a competitive price. Our cargo and warehouse legal liability coverages are among the most comprehensive in the industry, and our auto, property, and general liability forms are second to none. Unlike other moving and storage programs, our adjusters have specific moving and storage claims experience and understand release valuation, depreciated value, declared value, and replacement cost coverage. Mover s Choice Program includes the following coverages: All Risk Trip Transit Coverage All Risk Transit Insurance is a contract between the customer and the insurance company. The coverage provided is for direct damage or damage by a third party, or damage due to an unforeseeable act (such as windstorm, flood, lightning, etc). All Risk coverage is paid directly by the insurance company and is regulated by the Department of Insurance. Like most insurance contracts it has a clause for co-insurance or insuring to value that valuation does not. Auto Physical Damage coverage in the event an insured's automobile is damaged, destroyed or lost through fire, theft, vandalism, malicious mischief, collision, or windstorm. There are three types of physical damage coverage for motor vehicles, collision, comprehensive and specified perils. - Collision coverage addresses losses resulting from the collision of an insured vehicle with any object or from the vehicle overturning. - Comprehensive coverage reimburses the insured for loss caused by something other than collision (such as fire, falling objects, explosion, hail, vandalism or contact with animals) subject to exclusions. - Specified Perils covers many of the same exposures as comprehensive, but it covers only named perils (those specifically named in the policy) and has a lower premium. Business Income Coverage coverage for loss of income suffered by a business when damage to its premises by a covered cause of loss causes a slowdown or suspension of its operations during the time required to repair or replace the damaged property. Cargo Legal Liability There are two basic forms of cargo insurance. The carrier s form covers a common carrier s liability for damage to or destruction of a customer s property when that property is being transported. The owner s form covers cargo owners against loss or damage to their own property, from covered perils, while being transported. Crime Coverage The commercial crime coverage form provides insurance for your benefit only as a first party coverage. It provides no rights or benefits to any other person or organization (Third Party). Any claim for loss that is covered under this insurance must be presented by you as a direct loss to your business or judgment made against you. Once a judgment has been made against you and you have paid out the settlement, a claim may be filed for reimbursement from the carrier Paul Hanson Partners. All rights reserved. 11

14 Overview (continued) Garage Keepers Liability covers a garage risk s legal liability for customers autos in the care, custody or control of the garage. General Liability coverage for an insured when negligent acts and/or omissions result in bodily injury and/or property damage on the premises of a business, when someone is injured as the result of using the product manufactured or distributed by a business, or when someone is injured in the general operation of a business. International Cargo Coverage is a cargo insurance program for Freight Forwarders whose operations are responsible for the international radius movement of household goods and personal effects, office equipment, furniture and fixtures. This cargo program is able to provide international insurance coverage that meets the specific valuation limits required by the Military Traffic Management Command (MTMC). Mover s Equipment Coverage provides coverage for loss or damage to the insured's moving equipment, both warehouse and in-van. Mover s Extended Coverages The Inland Marine form is specifically designed for the moving and storage industry and provides legal liability protection. The coverage form provides a significant list of coverage extensions with separate sub-limits including pollutant and debris cleanup and removal, uncollectible charges, earned warehouse charges, van line subrogation, inventory costs, miscellaneous tools, portable electronic equipment, etc. Property coverage that provides protection against most risks to property, such as fire, theft and some weather damage. Property is insured in two main ways open perils and named perils. Open perils cover all the causes of loss not specifically excluded in the policy. Common exclusions on open peril policies include damage resulting from earthquakes, floods, nuclear incidents, acts of terrorism and war. Surety Bonds The Mover's Choice Program has the ability to provide several types of surety bonds specially designed for the transportation industry. The following are a few samples of the bonds we can provide: MTMC, FMC, ICC, DOD, NVOCC, and PUC. Truck Liability provides coverage for the ownership and operation of vehicles that a company will use in the course of conducting its business. Liability coverage is not optional, as most states require the purchase of insurance for bodily injury and property damage that may result from a vehicular accident occurring while an insured or their employee is driving on business. Umbrella Coverage coverage that provides liability over and above an underlying policy. Warehouse Legal Liability coverage against liability that might be incurred by businesses that store property of others for a fee. *This is intended as a general description of certain types of insurance and services available to qualified customers through the companies of Zurich in North America. Your policy is the contract that specifically and fully describes your coverage. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy. Insurance coverages are underwritten by individual member companies of Zurich in North America, including Zurich American Insurance Company. Certain coverages are not available in all states. Some coverages may be written on a nonadmitted basis through licensed surplus lines brokers Paul Hanson Partners. All rights reserved. 12

15 The Mover s Choice Program Advantage Paul Hanson Partners has developed a reputation as an expert in insurance products and services for the moving and storage industry. Established in 1993, Paul Hanson Partners provides risk management and insurance placement services to the transportation industry throughout the U.S. In 1998, we launched Mover s Choice as part of our national Program Administration division. Several van lines and state associations endorse Mover s Choice as their exclusive and recommended insurance provider. We provide our customers with superior loss control service. On site loss control analysis and services Online safety training videos with managerial report capabilities which are ideal for the contract driver. Online loss control consulting for qualified customers When it comes to ease of doing business, our customers know we re the best. Since 1998, more than 92% of our customers have renewed their insurance program with us. Driver eligibility criteria provided to expedite driver hiring. All certificates and filings are issued within 24 hours. We re the only national moving and storage all-lines program that has been issued on A -rated paper for the past 10 years with no disruption to your bids, contracts, per-line requirements and military work. We can help you run your business profitably. Customer access to extensive, on-line library of training videos available for you and your employees. Direct communications with our customers to help you better understand how your business decisions will affect your risk. The unparalleled financial strength of our insurance carriers help provide Mover s Choice with the power to provide stable, quality insurance coverage at competitive price even in the toughest of insurance markets. Paul Hanson Partners is available and responsive. 18-hour/6-day operation Completed submissions are quoted within 14 days. Policies are issued within 20 days. All endorsements are processed within 30 days. Completed submissions are never declined due to time constraints, and 90 percent of submissions are handled within 24 hours Paul Hanson Partners. All rights reserved. 13

16 Program Advantage (continued) Mover s Choice programs are designed to fit your business. Independent Contractor Work Injury Program designed for the independent contactor that works exclusively under contract with one motor carrier. This is the only contractor program that has the ability to provide workers compensation and/or occupational accident coverage alternatives to the contract driver. National Commercial Package Program for all types of movers with or without a warehouse operation Workers Compensation Program designed to go along with our commercial package program to provide coverage to the household goods moving and storage industry. Surety Bond Program Mover s Choice has received the authority to underwrite several speciallydesigned, transportation-related surety bonds, including MTMC, FMC, ICC, DOD, NVOCC, PUC, ERISA, Lease Guarantee, and Job Performance. International Cargo Program to help provide the appropriate cargo coverage for your international move exposure Remote Staffing Resource Pro can improve the efficiency, turnaround speed and quality of service in your back office with significant reductions in your operating expenses. Mover s Choice Program highlights: Cargo and warehouse legal liability coverages are among the most comprehensive in the industry. Auto, property, and general liability forms are second to none. Adjusters have specific moving and storage claims experience and understand release valuation, depreciated value, declared value, and replacement cost coverage. Wide variety of on-site safety and loss control services specially designed for the transportation industry can be facilitated by our experienced transportation staff. Our goal is to be part your safety management team. The Last Mile Delivery Program - insurance for furniture & appliance delivery Paul Hanson has launched the Last Mile Delivery Program. We are pleased to offer you this specialty insurance product that was designed to insure both the last mile delivery company and their contractors. Coverage includes: Workers compensation, auto/liability /auto physical damage, cargo/warehouse legal liability, commercial property, commercial general liability, excess/umbrella, and independentcontractor occupational injury coverage. To learn more about this product, contact us today Paul Hanson Partners. All rights reserved. 14

17 Frequently Asked Questions 1. Who Is Paul Hanson Partners? Paul Hanson Partners was established in 1993 to provide risk management and insurance placement services to the transportation industry. Paul Hanson Partners Specialty Insurance Solutions is a full service Program Administrator for our exclusive package program for moving and storage industry called Mover s Choice. 2. What Is The Mover s Choice Program? The Mover s Choice Program is a specially designed insurance program for the moving and storage industry administered by Paul Hanson Partners. The following coverages are currently available in the Mover s Choice Program: Auto liability Auto physical damage Workers compensation Cargo legal liability Warehouse legal liability Property Commercial general liability Crime Surety bonds Umbrella International cargo Independent Contractor Work Injury Program including non-trucking liability and physical damage 3. What type of submission requirements does Paul Hanson require for their Mover s Choice Independent Contractor Work Injury Program? To submit an application, Paul Hanson needs a completed submission which includes the following: Completed Sponsoring Motor Carrier application Complete list of contractors 4 years loss history by contractor or motor carrier group Motor carrier annual financial statement (income and balance sheet) Vehicle information by contractor Sample of independent contractor/owner operator lease agreement 4. Does Paul Hanson Partners offer any safety and loss control services with the Mover s Choice Program? Yes, to support our transportation customers, Paul Hanson conducts training for safety and loss services. This training covers topics such as: Individual company management and fleet survey 2011 Paul Hanson Partners. All rights reserved. 15

18 FAQs (continued) Workers Compensation Fraud Education Program Forklift Training Program Regional seminars Claims reviews of all claims Back to Work and Rehabilitation for injured workers Consulting and preparation for insurance company inspections Agent safety manual DOT/OSHA compliance 5. What are the advantages of doing business with Paul Hanson Partners? Paul Hanson Partners has developed a reputation as an expert in insurance products and related services to the moving and storage industry and currently insures more than 2,000 moving and storage agents, van lines and contract drivers throughout the U.S. Some of the Paul Hanson advantages include: All inquiries are generally answered within one hour. Instant response is provided for driver qualification. All certificates and filings are issued within 24 hours. 18-hour/6-day operation Policies are issued within 20 days. Completed submissions are quoted within 14 days. All endorsements are processed within 30 days. Completed submissions are never declined due to time constraints 90 percent of submissions are handled within 24 hours. 6. How do I obtain a quote from Paul Hanson Partners? You can either complete a request a quote form which is available online at moverschoiceinfo.com or contact Cory Tiebout via phone at or via at coryt@paulhanson.com. 7. What is the turn-around time to get a Mover s Choice quote? In many cases, Paul Hanson Partners can turn around a Mover s Choice quote in 14 days assuming all of the necessary submission requirements have been completed. 8. How can I contact Paul Hanson Partners? You can contact Paul Hanson Partners corporate headquarters by calling , Monday through Friday, 7:00 a.m. to 5:30 p.m. PST. Or, you can Paul Hanson Partners at coryt@paulhanson.com Paul Hanson Partners. All rights reserved. 16

19 Quote Process Checklist Typically, it is best to contact a broker and start preparing for your insurance renewal days before your policy s effective date. We suggest gathering the following information in preparation for your first meeting: For a commercial package quotation: A copy of your current policy that includes a list of coverages, limits, and deductibles 4 years loss history for all lines Annual financial statement (income and balance sheet) Drivers list which includes name, driver s license number and date of birth of all drivers Vehicle Schedule which includes year built, type, Model, VIN # and coverage needed A copy of your bill of lading and warehouse receipt Property information including year built, construction and protection of your premises For an independent contractor work injury quotation: Complete list of contractors and current coverage limits being provided 4 years loss history by contractor or motor carrier group Motor carrier annual financial statement (income and balance sheet) Vehicle information by contractor Sample of independent contractor/owner operator lease agreement During the initial information-gathering meeting, the insurance broker will review your current policy and will discuss in detail your current operation. The broker will also need to tour your location for potential hazards and develop an understanding of your current loss control management tools. This initial meeting normally takes minutes Paul Hanson Partners. All rights reserved. 17

20 Contact Us The Mover s Choice Program is nationally marketed through an extensive insurance broker network that specializes in providing insurance to movers. Please contact us directly if you would like us to provide you with a quotation, and we will refer you to a local insurance broker in your area. If you would like us to work with your current insurance broker, please have them contact us regarding the opportunity to become a Mover s Choice insurance broker. Don t forget the Last Mile Delivery Program that has been added to our product line. Contact us today to discuss this program and its benefits to you. Like the Mover s Choice Program, we will refer you to a local insurance broker in your area for a quotation. Paul Hanson Partners Specialty Insurance Solutions 1319 First Street Napa, CA P: (800) F: (707) Website: coryt@paulhanson.com 2011 Paul Hanson Partners. All rights reserved. 18

21 Appendix Moving & Storage Web Resources Below are some Web sites that provide useful information geared toward the moving and storage industry: AMSA International Association of Movers Household Goods Forwarders Association of America Department of Transportation Surface Deployment and Distribution Command (SDDS) US General Services Administration Loss Control Management Tools The Mover s Choice carriers provide some free loss control management tools exclusively designed for their transportation customers. Click on the links below to access these resources on the Mover s Choice site: Developing an Effective Loss Control Program Developing a Driver Orientation Process Slip, Trip, and Fall Prevention The Importance of a Return-to-Work Program Working Partners for an Alcohol- and Drug-Free Workplace Understanding the Major Causes of Loss Facing the Moving & Storage Industry Techniques on How to Properly Climb into a Truck Warehouse Fire Loss Prevention Wet Pipe Sprinkler System Inspection and Maintenance 2011 Paul Hanson Partners. All rights reserved. 19