Employee Group Benefits
There are many forms of group insurance for providing benefits for employees.
Included in the following is a brief description of those forms of group insurance benefits that are of greatest current interest.
Group Life insurance. A form of term life insurance written to cover in a specified amount a group of employees of a single employer. Frequently, the amount of insurance is related to an employees earnings and increases as the earnings increase. However, the amount of insurance may be a flat sum. Usually, a specified number of employees must participate.
Group Disability Insurance. If an employee is away from work as a result of a nonoccupational disability, this insurance provides a continuing income during the period of absence. The amount of benefit is usually a percentage of earnings.
Many states have adopted compulsory disability laws.
Group Hospitalization and Surgical Benefits. These forms of group protection are designed to protect an employee from the results of high hospital expense or the expense of a surgical operation. The protection may be written to cover an employee solely or it may be written to cover an employee and dependents.
Group Coverage for Major Medical Expenses. Rates vary greatly, as do forms of policy. The coverage is usually provided on a deductible basis (medical expense less a fixed sum). Frequently a coinsurance feature is included so that the individual protected by such insurance bears part of the cost.
Amounts of Insurance
For a construction manager, the limits of insurance that should be carried by the contractor and the limits that should be carried by the subcontractors are of fundamental importance.
Usually, the contractors limits are set forth in the agreement with the owner.
When the owners insurance limits are not high enough to afford the contractor full protection for the exposure the contractor anticipates, it is often worth the additional cost of increasing these limits. For example, insurance with limits of $500,000 to $1,000,000 for public liability and $500,000 for property damage often may be less expensive in the long run than lower limits that may be the maximum required by the owner. Furthermore, if the general contractor requires subcontractors to carry insurance with the same limits, it may be provident for the general contractor to pay the additional cost to the subcontractor for the increase of limits above what the subcontractor normally carries. When insurance limits are raised from $100,000 to $500,000, or from $50,000 to $500,000, the increase in cost is not proportional to the increase in limits.
