Water Damage -The leading cause of loss across all commercial structures
November 24, 2021
Destruction of Water Damage -The leading causes of loss across all commercial structures

In June of 2021 the Champlain Towers South, a 12 story, 136 unit condominium complex near Miami collapsed in the middle of the night crushing sleeping residents, killing nearly 100 people in the building and making hundreds more homeless. The investigation into the cause of the collapse was suspected early on and the resounding engineering opinion was of a structural failure due to prolonged and persistent water leaks and years of exposure to corrosive salt to the concrete beams and slabs. The water damage had been noted as early as 1996 when engineering consultants warned the building owners that there was alarming evidence of major structural damage to the concrete slab below the pool deck, and the abundant cracking and crumbling of the columns, beams and walls of the parking garage under the building. Right before the building collapsed a cascade of water in the parking garage was filmed by a passerby.


The price tag of this tragedy to insurers includes claims of property damage, physical damage to the building itself as well as liability from several lawsuits being filed by residents of the condo. The $30,000,000 property policy and the $18,000,000 liability policy will not be adequate to satisfy all parties in this horrible tragedy begging the question, how much insurance is enough?


Although this may seem like an extreme example to use in an insurance scenario, there is good reason to worry. Water intrusion and liquid damage are among the leading causes of loss across all commercial structures, more so than fire, theft, vandalism, and all other insurable perils. According to one major insurance carrier, the leading cause of loss or claims by water damage is accidental discharge. More than half of the claims seen by the carrier were due to general discharge accidents. This may be from a washing machine, hot water heater, a refrigerator, or a dishwasher. The occupancies that tend to have this higher exposure are places such as hotels, condominiums, or other residential buildings with a large number of sinks, toilets, laundry facilities, hot water tanks and HVAC equipment. Other causes of loss by water damage include pipe freezes, sewer and drain backups and sprinkler leakage.


Prevention and action are key to avoiding water intrusion and ensuing liquid damage. Water leaks can go undetected for significant periods of time and can cause damage not visible on the outside. Once released into the building water can cause major issues to physical structures, contents, equipment, and financial loss due to lost rents, unforeseen repairs and even damage to the building owner’s reputation. A practical solution for preventing and reducing loss is to understand the exposure, take proactive measures to avoid the damage and be fully prepared to act in the event of water intrusion to help to drastically reduce the size and number of water damage losses. That means you need a water damage prevention plan that is routinely updated and executed when the need arises.


A good water damage plan is specific to the buildings’ characteristics including size, age, height location and any other unique characteristics such as landscaping or the shape and slope of roofs and eaves.


Here’s how to get started

Conduct a water intrusion vulnerability risk assessment. The three main areas of vulnerability for water intrusion in almost every building are:


1. The building envelope

Includes the roof, walls and floors. You should be checking the siding, foundation, windows, doors, vents, roof eaves, gutters and downspouts for vulnerabilities or poor design


2. Interiors Systems

Piping for interior water, fire sprinklers, wet areas such as bathrooms and laundry rooms, unheated attics, basements, crawlspaces as well as building mechanicals such as the A/C, hot water heater and all appliances.


3. Exterior Exposures

Sloping ground and landscaping, groundwater, irrigation and septic systems.


The Plan

  • Develop a log to track any history of leaks and damage
  • Document all potential sources of water intrusion and entry points
  • Maintain good housekeeping practices such as maintaining heat in all areas with plumbing and insulating pipes
  • Conduct regular inspections of equipment and appliances, and provide all appropriate maintenance
  • Create detailed plans or schematics of liquid piping systems and include the location of all shut off valves
  • Establish a valve shut off protocol and update key personnel regularly
  • Have a cleanup plan in place with the necessary supplies to minimize damage
  • Conduct an annual vulnerability assessment
  • Have trusted repair and remediation 


Be prepared with a cleanup strategy

  • Create a plan of activation of personnel and notification procedures
  • Establish staging areas where teams can meet and organize
  • Begin water mitigation activities              

o  Remove vulnerable materials

o  Remove or protect stocks and goods

o  Remove or protect critical equipment

o  Begin water removal and clean up


Create a water intrusion response kit

  • Flashlights and emergency lanterns
  • Plastic buckets with wet and dry mops
  • Wet and dry vacuums
  • Hoses with any required adaptors
  • Squeegees
  • Pipe wrench
  • Electrical extension cords 


Water damage losses are not always covered under all insurance policies and there are limitations in all policies that do offer coverage for water damage limiting the types of causes and losses that are covered. Furthermore, most policies contain an exclusion for water damage that is defined as a flood. A flood policy must be in place to provide coverage for surface water coming in from the outside and meeting the definition of a flood. Call SimcoHR for more information and ask how you can provide your building with protection from this liquid nuisance. 

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Top 5 HR Trends That Will Shape Businesses in 2025

January 7, 2025
As 2025 kicks off, the HR landscape is evolving faster than ever before. Technology, shifting workforce expectations, and the need for businesses to be agile in a dynamic global environment are all driving change. What worked yesterday may not be enough today, and companies must adapt to stay ahead. Here are the top five HR trends you’ll need to watch closely in 2025: 1. AI is Changing the Hiring Game Artificial intelligence is no longer just a buzzword in HR—it’s a game-changer. Tools that can scan resumes, match candidates to roles, and even conduct initial assessments are becoming staples for businesses aiming to save time and improve hiring outcomes. In 2024, many organizations began integrating AI to remove unconscious bias and make their hiring practices more inclusive, and this trend is expected to accelerate. 2. Flexibility Isn’t Just a Perk Anymore Hybrid and remote work models are here to stay, but the conversation has shifted. In 2025, it’s less about offering flexibility and more about making it work effectively. Companies are adopting sophisticated tools for remote collaboration, redefining performance metrics, and ensuring policies address the nuances of managing both in-office and remote teams. The focus is on maintaining productivity without compromising employee well-being. 3. Wellness Goes Beyond Gym Memberships In recent years, wellness programs have evolved beyond basic offerings like gym memberships to address a wider range of employee needs. As companies recognize the link between employee well-being and productivity, they’re broadening their focus to include mental health, financial stability, and holistic support. In 2023 and 2024, for example, Delta expanded its employee wellness initiatives by improving access to mental health care. The airline worked with Spring Health, a new EAP provider, to create a larger and more diverse network of mental health professionals, offering better support for both employees and their household members. Looking ahead to 2025, wellness will become more deeply integrated into company cultures. Expect companies to go beyond providing reactive support to fostering proactive wellness through personalized tools, such as mental health apps, financial coaching, and enhanced benefits like paid leave for caregiving. With these programs, businesses are not just addressing immediate health concerns but also empowering employees to manage their overall well-being in a more holistic way. The focus will be on creating a supportive, sustainable work environment that helps employees thrive both at work and in their personal lives. 4. Upskilling is a Competitive Necessity Technology is evolving faster than ever, and companies are racing to keep up. Upskilling employees in areas like data analysis, AI, and emerging tech became a priority in 2024, and it’s clear that this trend will only grow. Businesses that invest in continuous learning programs—whether through certifications, on-the-job training, or digital learning platforms—are better positioned to stay ahead in their industries. 5. Data is Driving HR Decisions HR is leaning heavily on people analytics to guide decision-making. Instead of relying on intuition, businesses are using data to understand employee engagement, pinpoint reasons for turnover, and improve productivity. The emphasis on metrics like employee sentiment and workforce utilization gained traction last year, and more organizations are embedding analytics into their HR strategies to tackle challenges proactively. Final Thoughts The HR landscape in 2025 will be shaped by these transformative trends. Businesses that embrace innovation and prioritize their people will find themselves not just adapting but thriving in the evolving workplace. As these trends unfold, staying proactive and flexible will be the key to turning challenges into opportunities.

IRS Announces 2025 PCORI Fee Update

January 6, 2025
The IRS has released the 2025 Patient-Centered Outcomes Research Institute (PCORI) fee , which will increase to $3.47 per covered life —a $0.25 increase from 2024. This fee applies to plan years ending on or after October 1, 2024 , and before October 1, 2025 . What is the PCORI Fee? The PCORI fee was introduced as part of the Affordable Care Act (ACA) to help fund the research conducted by the Patient-Centered Outcomes Research Institute (PCORI). This research focuses on improving healthcare outcomes by comparing different medical treatments. The fee is levied on insurers, as well as self-insured and level-funded health plans. The fee is calculated based on the average number of covered lives under a plan and is due once a year, with the filing occurring during the second quarter on Form 720 , the Quarterly Federal Excise Tax Return . The payment is due by July 31 each year. Key Details for Employers and Plan Sponsors Who is Affected? : The fee applies to health insurers, self-insured health plans, and level-funded health plans. When is it Due? : The fee must be reported on Form 720 and paid by July 31 each year. How is it Calculated? : The fee is based on the average number of covered lives during the plan year. The updated $3.47 per covered life fee will be in effect for health plans with policy years ending between October 1, 2024, and October 1, 2025. Employers should be prepared to account for this increase when filing for 2025. For more information on the PCORI fee and its reporting requirements, consult the IRS Bulletin 2024-49 , published on December 2, 2024, or visit the IRS PCORI Fee page . 

Federal DOL Restores Simplified Tip Credit Rule: Employer Guidance

January 6, 2025
In a move welcomed by many employers in the hospitality and service industries, the U.S. Department of Labor (DOL) has officially reinstated the pre-2021 tip credit rule. This change, effective December 17, 2024, follows a recent court of appeals decision that vacated the “80/20/30” tip credit rule that had been implemented under the Trump administration. If you’re wondering what this means for your business, don’t worry—this update doesn’t require any immediate action on your part. What Was the "80/20/30" Rule? Before we dive into the implications of the DOL’s latest rule change, let’s quickly review the "80/20/30" rule. This rule, introduced in 2021, placed specific restrictions on how much time tipped employees (such as waitstaff and bartenders) could spend on non-tip-generating duties (e.g., cleaning, setting up, and other side work). The rule essentially required that tipped workers spend at least 80% of their work hours on tip-generating activities to continue qualifying for the tip credit. Moreover, under the "80/20/30" rule, employers could no longer use the tip credit to offset wages for certain non-tip-producing activities, and they had to ensure that employees spent no more than 30 minutes at a time on side duties. This increased the burden on employers, as it required more careful tracking of employee duties and work hours to remain in compliance. Why Was the Rule Vacated? The court of appeals decision in August 2024 ruled that the "80/20/30" rule was too restrictive and inconsistent with the intent of the Fair Labor Standards Act (FLSA), which allows employers to take a tip credit for workers who perform both tipped and non-tipped duties. The court found that the new rule created unreasonable administrative burdens and restrictions that were not in line with past practices or legal precedents. In response to this ruling, the DOL moved quickly to restore the pre-2021 tip credit rule. What Does the Reinstatement of the Pre-2021 Rule Mean for Employers? With the reinstatement of the pre-2021 tip credit rule, the DOL has effectively simplified the way employers can apply the tip credit to their workers. Under the prior rule, employees who perform a combination of tipped and non-tipped duties can still qualify for the tip credit, as long as their primary job responsibility is related to tipped work. Employers no longer have to track the precise breakdown of time spent on tip-generating vs. non-tip-generating activities in the same way. This returns to the more flexible guidelines where as long as tipped employees perform "related" duties (e.g., cleaning their station, setting up for service), they can still receive the tip credit for those hours, provided those activities don’t dominate their workday. What Action Is Needed from Employers? For most employers, this change will not require any immediate action, as the final rule effectively restores the pre-2021 approach. The main thing to note is that employers should continue to comply with the broader requirements of the Fair Labor Standards Act (FLSA) and ensure they are properly paying employees at least the federal minimum wage (including tips) when they apply the tip credit. Here are a few things to keep in mind: Reassess Timekeeping Systems: While the rule change simplifies some aspects of record-keeping, employers still need to ensure they have a timekeeping system in place that accurately tracks the hours worked by tipped employees. It is essential to ensure that the wages (base pay plus tips) equal at least the federal minimum wage. No Need for Immediate Adjustments: If you were already applying the pre-2021 tip credit rule, no changes are necessary on your part. For those who had adjusted to the "80/20/30" rule, reverting back to the previous method should not require significant changes. State and Local Laws: Employers should still be mindful of any state or local laws that may have stricter requirements than federal law. Always check your state’s labor regulations to ensure full compliance. Why Is This Change Important? The reinstatement of the simplified tip credit rule provides relief to many employers, particularly in industries like restaurants, hotels, and other service-based businesses where tipping is common. The pre-2021 rule is seen as more employer-friendly, offering more flexibility in how tipped employees can spend their time without losing eligibility for the tip credit. For employers, this means less administrative burden, reduced risk of compliance issues, and potentially fewer legal challenges. This shift is a step toward simplifying labor law compliance for businesses already struggling with the complexities of wage and hour rules. Looking Ahead As we move further into 2025, it’s important for employers to stay informed of any future changes in federal labor regulations. While this change restores a previous rule, the DOL’s stance on tip credits and wage issues can continue to evolve. Employers in tip-dependent industries should continue to monitor updates from the Department of Labor and legal rulings to ensure ongoing compliance. The DOL’s restoration of the pre-2021 tip credit rule is a welcome change for many businesses, offering a return to simpler guidelines and less restrictive requirements. For most employers, no immediate action is required, but it’s always a good idea to review your practices to ensure they align with the updated rule. If you need further assistance in navigating these changes, reach out to Simco to ensure your business stays compliant in 2025 and beyond. 

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