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Coinsurance – It Makes Sense

April 11, 2013 by

What’s coinsurance? Insurance spreads the risk of loss among every policyholder and the insurance company.

coinsuranceThe “coinsurance clause” in a Business Property policy reflects the fact that the coverage divides this risk by setting premiums based primarily on the value of the property. Those who insure their property for less than its actual cash value (ACV) or replacement cost will have to pay the uninsured portion of any covered loss out of their own pocket — in other words, “coinsuring” the risk — which encourages policyholders to buy coverage for the full value of their property.

Coinsurance - How Much?

The coinsurance clause usually requires policyholders to insure their property for 80% of its ACV. For example, if the property of your business is worth $500,000, you would need to purchase a $400,000 policy. If a fire caused $300,000 worth of damage, the insurance company would pay $240,000 (80% of $300,000), leaving you to pick up the other $60,000. However, if you had purchased the full $500,000 in ACV coverage — paying a higher premium — the insurer would cover the entire $300,000 claim.

We’d be happy to discuss the benefits that the coinsurance clause offers. Feel free to give us a call.

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Roof Collapses – 6 Prevention Tips

February 14, 2013 by

Although Punxsutawney Phil predicted that Spring was well on the way, the historic February blizzard (and most residents in the Northeast) begged to differ. Although the landscape is incredibly beautiful and makes for pretty pictures, recent storms have us thinking about heavy snow and the damage it can do to your roof. If left unattended, snow on your roof can turn into a serious issue… one that leaves you having to close your business or relocate your family. Roof collapses are something every building owner should give careful thought to.

A structure”s ability to stand up to weight of ice and snow depends on several factors, including: live and dead load design, age of the building and roof, condition of the roof, elevation, and the way the roof is maintained during and after major snow storms.

To avoid roof collapses, safely remove snow using the following guidance from The Insurance Institute for Business & Home Safety (IIBHS).

6 Tips for Preventing Roof Collapses

roof collapses1. For safe removal that won’t endanger you or damage your roof, consult a roofing contractor. They can offer expert guidance on roof collapses and how you can prevent them.

2. Regulations and standards of the Occupational Safety and Health Association (OSHA). Fall Protection Guidelines, should always be followed.

3. A heavy duty push broom with stiff bristles or a roof rake may be used to brush off the snow down the slope of the roof.

4. Do not pull snow back against the slope or sideways. The snow may get underneath the cover and can break shingles.

5. Do not use a shovel or snow blower on the roof. These can both tear up the roofing system and cause significant damage.

6. If you see indications that the roof is deflecting under the weight of the snow in certain areas, be sure to keep people away from those areas and seek the help of a professional snow removal expert. Sometimes the smartest thing to do is to know what you don’t know, and enlist the help of an expert.

Visit IIBHS for more information on things you can do to avoid roof collapses, and as always, feel free to give us a call any time with questions you may have.

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Trade Credit Insurance: Cover Your Largest Asset

January 15, 2013 by

trade credit insuranceMost companies insure virtually every aspect of their business. Yet, believe it or not, fewer than l0% of American businesses protect their primary source of income: their outstanding invoices or accounts receivable (A/R) – even though losses from customers failing to pay invoices are more common than those caused by fire or theft and can be equally, if not more, devastating.

The solution: Trade Credit insurance, (also known as Accounts Receivable insurance) which guarantees payment, up to the amount under the policy, of A/R owed by customers whose receivables are past due, are unable to pay or refuse to do so, or who are in default, This coverage is essential if a significant percentage of your sales are credit based and/or you sell regularly to new customers.

  • By protecting you against losses from bad debts, it enables you to provide more credit to more customers – which means higher sales.
  • A Trade Credit policy protects your company against the financial impact of a customer going bankrupt because the insurance company must pre-approve all orders, carrying Trade Credit coverage provides you with valuable information on the financial stability of your customers. This enables you to offer more aggressive terms and/or solicit larger orders. Trade Credit insurance allows you to increase the size of your working capital. For example, banks might be willing to lend against 90% of your receivables rather than 80%. In today’s restricted financing environment, banks will be more likely to lend to you and to offer better terms.

What’s not to like?

Our insurance professionals would be happy to offer their advice on the Trade Credit policy that’s best for your business. Please feel free to get in touch with us at any time.

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How to Proactively Manage Employee Terminations

January 7, 2013 by

employee terminationsEmployee terminations and layoffs are stressful, sometimes complicated, and certainly an action that no employer looks forward to taking. The repercussions and disruptions from an employee being fired, laid off, or opting to leave of their own free will can be far reaching. It not only impacts the employee leaving, but also their co-workers and you, the employer.

You can decrease the impact employee terminations have on your business and remaining employees, as well as the potential resulting legal issues, by taking the time to manage the situation carefully. Having an employee termination strategy is a good starting point. As you develop your strategy, you should remember that most terminations will fall under one of these three categories:

  1. Employment that’s terminated by the employer due to the employee’s behavior or performance issues.
  2. Employment that’s terminated by the employer solely due to economic reasons.
  3. Employment that’s voluntarily ended by the employee.

You will find that there are some one-size-fits all guidelines on how to respond to terminations in general. However, each termination category may also call for a response that’s more tailored to the circumstances of the termination. Here are some general tips for all of the above:

Any Type of Termination

  • Set up a process to follow. Following the same set procedure, including a checklist for each termination step, will help ensure that you treat all your employees equally.
  • Consult an attorney to ensure you understand how the employer-employee relationship is regulated legally and all the applicable guidelines.
  • Communicate effectively with your employees so that they understand exactly what’s expected of them and all possible disciplinary actions. This will help you avoid misunderstandings.

Employer Terminates Due to an Employee’s Behavior/Performance

  • It’s vital that all employees understand what you expect and require of them. It’s equally vital to document warnings and counseling thoroughly. This will not only help you protect your business should you ultimately need to terminate an employee, but it will also give you the opportunity to allow some deserving poor performers a second chance to do better.
  • In certain circumstances, an immediate termination will be the most prudent course of action to protect yourself and your other employees. For example, the immediate termination of an employee that steals or poses a danger could be warranted. However, it’s still critical that you understand your legal responsibilities.

Employer Terminates Based Solely on Economic Reasons

  • Layoffs can be very difficult for you, the employees being laid off, the employees staying, and your management team. You can help control anxiety and tension by keeping the lines of communication open and ensuring that all employees are kept in the loop about what’s taking place.
  • The layoff process can be somewhat less traumatic if you remember to let your employees know they’re still valued, appreciated, and respected. It can also help if you’re able to help them secure alternative employment and/or provide a severance package.

Employee Voluntarily Ends Their Employment

  • You’ll want to clearly understand why an employee is ending their employment. An exit interview policy is a great tool to understand why an employee is leaving, how well your company is competing in areas like wages and benefits, and if you have any operational or management problems to be rectified.
  • You might want to make a counter-offer if a valuable employee is leaving and you’d like to retain them; after all, turnover can be very expensive for employers. Discuss the reasons your employee has decided to leave. If the departure is based on wages, then you might find that it would be cheaper to agree to a raise than it would be to recruit and train a new employee.

In closing, nearly every employer will be faced with employee terminations at some point. If you plan ahead and have the proper procedures in place, you can both minimize the effects and protect your business against any legal ramifications.

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Buying Commercial Auto Insurance

December 17, 2012 by

commercial_auto

Every business needs to insure the vehicles it uses. Because such coverage is usually more expensive than Personal Auto insurance, it makes sense to purchase a Commercial Auto policy that provides the best long-term value for your premium dollar. To make sure that you’re getting the right policy at the right price follow these guidelines:

 

 

1. Determine which vehicles you need to insure. In addition to coverage on any vehicle your firm owns, leases, or rents, be sure to cover any personal vehicles that employees will be using on company business.

2. Select the right type of policy. Although Personal Auto insurance will cover a vehicle used for business purpose as long as the title is in your name, if the company owns the vehicle you’ll need Commercial Auto coverage (which is more expensive).

3. Choose the coverages you need. These should include Liability, Comprehensive, Collision, Uninsured/Underinsured Motorist and (in some states) Personal Injury Protection, which pays medical expenses for the insured driver, regardless of fault.

4. Comparison shop. Because every Auto insurance company has its own way to calculate premiums, your cost, the amount that you will need to pay can vary widely from one carrier to another. As independent insurance agents, we’ll be happy to offer our professional advice on selecting the coverage and price that’s best suited to your needs.

Do you have other questions about buying Commercial Auto Insurance? Give us a call!

 

 

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5 Security Tips for Your Business this Holiday Season

December 12, 2012 by

Christmas burglarThe holiday season is in full swing and for many companies, increased “business” = “BUSY-NESS”. In addition to the myriad of personal obligations on the calendar, and spending much anticipated time with family and friends, this is also the season when the security of your business may be threatened the most. Protect your business with these 5 Holiday Security Tips.

1. Long lines and lots of exhausted (and sometimes cranky) shoppers can leave your sales people and cashiers distracted. Counterfeiters take advantage of these circumstances and use this time of year to pass fake currency. The best way to detect a bad bill is to know the real thing. Check out “Know Your Money” at www.secretservice.gov to learn how to guard against this threat.

2. Instruct employees to refrain from using company computers to shop online. This practice could make your company vulnerable to attacks from computer viruses, phishing scams and malware attacks, according to a survey conducted by the Information Systems Audit and Control Association (ISACA), an information technology professional trade group.

3. Santa checks his list twice, and your cashiers should do the same with signatures. Training your staff to examine signatures — and even ask for ID, if necessary — can go a long way toward reducing your risk of loss due to fraud.

4. Make sure you have security cameras installed and that they are fully functional. Not only do security cameras serve as a deterrent to crime, they also provide film that can help you find — and prosecute — offenders.

5. Examine your policies to see that you have adequate and appropriate insurance limits. Many businesses operate with an increased level of inventory through the holiday season. Do your insurance policies account for that? Give us a call today with any questions.

Define your risk. Protect your business. Let us help, so you can be assured of a safe and successful season.

 

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Revisit Coverage Annually – Part 2

November 26, 2012 by

In our previous post, we discussed the importance of reviewing your risks and insurance coverage annually. As your business goes through different cycles, your insurance program might need to adapt to those changes. We looked at General Liability and Property Insurance last time; this week we’ll look at three other areas that could stand a once-over annually.

Business Interruption Insurance. Most businesses are reasonably insured for their property losses.  When a business fails due to a loss most often it is because the loss of income to pay continuing expenses during restoration was not adequately considered.  Here, risk can be quantified by considering expenses that will continue, your ability to handle them and for how long.  Things to consider include the maximum probable time for restoration, whether salaries will need to be continued and to whom, as well as taxes, utilities etc.  While thinking about your interrupted business think about that critical supplier or customer and what affect their interruption might have on you.

Workers Compensation. The premium you pay is largely dependent on your experience.  Your experience largely depends on attention to safety.  An annual review is a good time to review your experience.  It’s a good time to be sure you are meeting changing regulatory requirements.  As businesses grow and change there may be significant differences in the tasks of employees.  Changes in operations may impact your costs, perhaps favorably.  You also have the opportunity to review changes in insurance offerings and take advantage of new approaches such as “pay as you go” in handling your premium costs.

Insurance Protection of Executives. The annual review provides an opportunity to focus on trends in your industry and society in general.  New exposures or exposures that in the past seemed remote arise and change all the time.  Allegations of discrimination and harassment in the work place are more common.  Management’s responsibility for employee benefit plans such as 401K is changing.  Breach of security in regard to customer information carries some significant responsibilities for the breached company. These things and more may be examined in relation to your operations giving you the opportunity to consider management of ever changing risks.

In summary, to safeguard your business and make the best use of the dollars you spend for insurance an annual review is time well spent. You may discover that changes in your business, regulations or trends in litigation have exposed you to new risks. Likewise, insurance premiums are a significant expense and it’s possible you could find you’re paying more than necessary to meet your objectives by covering exposures that are no longer relevant.

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Advertising the Safe Way

November 19, 2012 by

That new signage outside your office is the talk of the town. Congratulations! It’s no wonder that advertising forms a critical element in the success of some companies. For most businesses, however, it’s an incidental activity that’s not part of the firm’s primary business.

All advertising involves a risk exposure. In many cases, your Commercial General Liability policy will include Advertisers Liability protection. However, be aware that this coverage is limited.

Generally for coverage to apply, a third party must have suffered a business injury as a result of certain specific actions that occurred during the course of your company’s advertising activities. Among the most common activities are:

  • Oral or written publication of material that slanders or libels another
  • Oral or written publication that violates a person’s right of privacy
  • Misappropriation of advertising ideas or style of doing business
  • Infringement of copyright, title, or slogan

If your company has a potential advertising liability exposure that might fall outside these areas, the chances are that you need specific coverage. In any case, it’s always a good idea to review coverages so that you’re aware of the risks that you might face — whether you decide to insure them or not.

For a review of your business coverages, please feel free to get in touch with us today.

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Revisit Coverage Annually – Part 1

November 13, 2012 by

Every business goes through different cycles of profit and loss. This means that your risks and potential exposures are being affected similarly. At the same time, Commercial insurance coverage is also evolving and changing. Nothing in either your business or the insurance industry remains static. This is why you should re-evaluate your insurance coverage at least once a year. A regular insurance audit will help you plug any coverage holes that might impact your bottom-line severely should an unexpected loss occur.

In deciding what’s important, ask yourself: How much risk are we prepared to accept for our business? Essentially, any risk that would damage you severely if you had to absorb a loss needs to be managed.  This means the risk needs to be reduced to a manageable level, avoided all together or transferred.  The reason insurance exists is to allow the efficient transfer of risk.  In evaluating the amount of risk you might assume, there are a number of key areas that should be examined. This week we’ll look at General Liability & Property insurance.

General Liability.  Evaluating risk requires quantifying how badly you can be hurt.  Liability exposures don’t lend themselves to being quantified.  It’s hard to know what serious injury to someone else may be worth in a judgment.  This is the place where transfer to an insurer is essential.  A risk management professional may be able to help by examining trends in damage awards but this is not the place to skimp.  If your exposures are low the cost of insurance will be low.  The adage “never risk a lot to save a little” certainly applies here.

Property Insurance. It’s fairly easy to quantify property risks.  You know what things cost to replace and can estimate pretty accurately the cost of rebuilding.  Always think about the maximum probable loss that may occur and consider deductibles that reflect your ability to retain risk, transferring the excess to an insurer.

Our next post will look at Business Interruption insurance, Workers Compensation, and Insurance Protection of Executives — and the things you should look at to make sure your current program is up to date with your needs.

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Hurricane Sandy – Be Prepared

October 26, 2012 by

“Monster threat.” “Frankenstorm.” These are just a couple of the phrases being used to describe Hurricane Sandy as it bears down on the East Coast. Think of it… a winter system moving across from the West, meets frigid air streaming down from Canada. Add to that a hurricane coming up from the south and you have the recipe for a super storm. As if that weren’t dramatic enough, the storm will hit during a full moon, when tides are at their highest, increasing coastal flooding potential, according to the National Oceanic and Atmospheric Administration (NOAA).

 

Given the potential of this storm, it makes sense to take precautions to minimize the damage. Check out our Hurricane Preparedness Checklist to ensure you and your home are ready for Hurricane Sandy. As always, give us a call with any questions.

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