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The Basics of Property Insurance
The more successful your business becomes the more assets you accumulate Commercial Property Coverage provides the protection that you need to make sure those assets are safe. Occurrences such as a fire, burst pipe, hurricane or flood could damage or destroy your business’s building, machinery, or other assets. And, while you recover from such a disaster you may have trouble paying your employees because all of the business funds are going to repairing damage.
Commercial Property insurance coverage comes in many forms to suit your specific needs. Before purchasing coverage, take a complete inventory of all your business property to determine what you need to insure and the cost of replacement.
Types of Property you may need to Insure
Types of Property Insurance Policies
Basic Property Insurance covers losses due to fire or lightning, including the cost to remove property as a way to protect it from further damage. Should you want to purchase more than basic coverage, you can buy a standard policy that provides coverage for extended perils, such as theft, flood, windstorm, hail, earthquake, acts of terrorism, explosion, riot, smoke, civil commotion, and damage by aircraft or vehicles. Coverage for vandalism and malicious mischief can also be included.
Are You Buying Enough?
One of the most important aspects of purchasing Property Insurance is making sure that you buy enough coverage to provide for the replacement of your damaged property. A typical policy will provide the replacement cost value for your building and business property. Replacement cost value is the amount that is necessary to replace or rebuild your building or repair damages with similar materials, without considering depreciation. Actual cost value, on the other hand, is the value of your property when it is damaged or destroyed. This amount is typically determined by subtracting the depreciation from the replacement cost value.
Most property insurance policies include a coinsurance clause, which requires you to provide the insurance company the cost to replace your property, within a given percentage (the coinsurance percentage). The proper valuation allows for you to receive enough to replace your damaged property.
While you will never collect more than the value you provide, under-insuring your property (whether on purpose or not) will not only result in receiving less than required to replace the damaged property, but you may incur a penalty. Your claim payment will be diminished by the same percentage the property was undervalued- which can add to thousands of dollars!
Are You Covered in Case of a Business Interruption?
If a fire caused your business to temporarily close, what would you do? Ideally, you would move to a temporary location while your permanent place of business was being repaired. While the fire damage to your property would be repaired by your Property Insurance policy, Property Insurance does not automatically cover the loss of income or extra expenses you might incur as a result of the fire. Business Interruption Insurance, also known as Business Income coverage, will provide coverage for these exposures.
What is included in a Business Interruption Insurance Policy?
Considerations for Business Interruption Insurance
What is Extra Expense Insurance?
Extra Expense Insurance is another valuable addition to a Property Insurance policy. This additional coverage provides funds to cover additional (or extra) amounts incurred to run your business as a result of a covered loss. Depending on your loss, Extra Expense Insurance may be sufficient to provide financial relief without having to utilize Business Interruption Insurance.
Insurance experts agree that Business Interruption Insurance is the most valuable additional Property Insurance coverage available. Yet, it is often overlooked by business owners. Since Property Insurance only covers the cost of physical loss or damage to buildings and contents in the event of a disaster, Business Interruption coverage provides coverage vital to maintain cash flow while your permanent business location is being repaired.
General Liability Insurance: Your Defense Against Liabilities
The only way to effectively protect the assets of your business from the claims of third parties is to carry adequate Commercial General Liability (CGL) Insurance coverage. General Liability protects your business from bodily injury or property damage for which your business is determined legally liable.
What Does General Liability Cover?
A typical General Liability policy provides coverage for claims of bodily injury or other physical injury, personal injury (libel or slander), advertising injury and/or property damage as a result of your products, premises, or operations, and can be offered as a package policy with other coverages such as, Property, Crime, Automobile, etc.
As a safeguard against liability, General Liability enables you to continue your normal operations while the insurance company defends you against real or fraudulent claims of negligence or wrongdoing. General Liability policies also provide coverage for the cost to defend and settle claims. Additional General Liability coverages include:
How Much Coverage Does Your Business Need?
The amount of coverage your business should purchase depends on three factors: perceived risk, where you operate your business and the type business you operate.
Errors & Omissions Insurance: A Cost-Effective Approach to Protecting Your Business
It’s a good news, bad news situation. The bad news: Lawsuits- once a measure of last resort- are now commonplace in settling disputes. The good news? You can protect yourself, and your business and reputation, by investing in professional liability coverage, also known as Errors and Omissions (E&O) insurance.
General Liability insurance only provides indemnification for claims of bodily injury and/or property damage alleged by a third party to have been caused by your business. It provides no coverage for claims alleging other losses (such as monetary loss) where there is no bodily injury or property damage.
E&O insurance is supplementary liability insurance that provides this important coverage in the event of a lawsuit due to a negligent act, error or omission. In addition to claims of error, omission, or negligence, it can also protect against slander, libel and breach of contract.
Who needs E&O coverage?
It is a very important coverage for anyone who gives advice, makes educated recommendations, designs solutions, or represents the needs of others. Service professionals, such as accountants, computer consultants, software developers, planners, architects, engineers, contractors, etc., are prime candidates for E&O insurance. Specialized forms of E&O coverage are also available to professions such as appraisers, real estate agents, insurance agents, home inspectors, notaries, and Lawyers.
E&O policy overview
E&O policies generally have both a limit per claim and an annual policy limit. The claim limit is the maximum amount paid for any single event, and the annual limit is the maximum paid in any one policy year. Typical limits range from $250,000/$500,000 (per occurrence/aggregate) to $2,000,000/$4,000,000 and differ depending on the type of business.
To be eligible for this specialized insurance, candidates normally have to have to provide proof of licensure in their “covered class of business” and a summary of their experiences in their particular field or line of work.
Count on the experts
There are many different forms of professional liability insurance and multiple factors to consider when purchasing E&O coverage for your business. Because there isn’t a standard policy, an experienced agent who understands your company and can knowledgeably design a policy to meet your needs is very important.
Workers’ Compensation Insurance: An Overview
Workers’ Compensation provides benefits to workers injured on the job, including the cost of medical care, up to two-thirds of lost wages, and possibly a permanent disability. It also provides funds for funeral expenses and death benefits to dependants for employees killed from a work-related accident.
Workers’ compensation insurance is heavily regulated by the states. Individual state statutes and court decisions have shaped the handling of claims, evaluation of impairments, settlement of disputes, provision of benefits and control of costs.
Background of Workers’ Compensation Insurance
During the 19th century, the size of the country’s workforce grew exponentially. Unfortunately, workplace safety did not keep pace, and workplace accidents grew as well. At that time, the only way injured workers could obtain compensation for their injuries was to sue their employer. Many legislative proposals emerged early in the 20th century, focusing on compensating injured workers for their medical care and lost wages.
By 1949, all states had a system in place to provide compensation for injured employees. Under these systems, injuries were deemed “no fault”, and the employer was made responsible for providing compensation for the cost of medical care and lost wages. In exchange, the employee gave up his/her right to sue the employer for injuries. Currently, Texas is the only state where workers’ compensation is not mandated for all employers. Workers’ compensation insurance was initiated to indemnify the employer for these new, uncertain liabilities.
As part of the insurance package, the injured workers’ medical, rehabilitation, and lost wages are paid by the insurance carrier on behalf of the employer for as long as the worker’s injuries persist.
Unfortunately, not all injuries are completely cured. If a work-related injury results in an employee’s disability (even partially) , the disability will fall into one the following categories: temporary total, temporary partial, permanent partial or permanent total disability. The insurance carrier will pay a “permanency award” based on a series of factors proscribed by state law, including the age of the employee, the nature of the injury, and the percentage of permanence.
Workers’ compensation insurance can be purchased through by private insurers, state funds or the National Council on Compensation Insurance (NCCI).
The Employer’s Responsibilities
Employers are required to do the following to comply with Workers’ Compensation Insurance laws:
What you can do to manage your Workers’ Compensation Costs
There are many things that companies can do to lower their workers’ compensation costs-
These are just a few of many actions you can take to reduce workers’ compensation costs. When it comes to Workers Compensation it is very important to work with an agency that has the experience and knowledge that can help reduce these costs.
All You Need to Know About Automobile Insurance
Automobile Insurance comes in two parts- liability insurance which serves as a safeguard against financial hardship by indemnifying you in the event of an at-fault auto accident where you cause bodily injury or property damage. The second feature of an automobile insurance policy provides payment for damages to your vehicle. All states except New Hampshire and Wisconsin, require vehicle owners to carry liability insurance.
Types of Coverages
A basic Automobile Insurance policy contains these coverages:
Bodily Injury Liability and Property Damage Liability
Personal Injury Protection and No-Fault Coverage
Uninsured/Underinsured Motorists Coverage
Optional Additional Coverages
There are several important endorsements available to enhance your automobile coverage and ensure that your business vehicles are properly covered. Here are just a few:
Excess Liability (Umbrella) Insurance
Excess Liability Insurance (ELI), more commonly known as Umbrella Insurance, is one of the most important types of insurance your company can secure. It adds additional limits of coverage as well as protects your business from potential coverage gaps or reduced limits in your primary liability policies. Just as you carry an umbrella to protect you from a potential downpour, Umbrella Coverage protects your company from catastrophic claims that could close your business.
Businesses choose Umbrella Coverage to increase the amount of insurance contained in their primary liability policies- commercial general liability, business automobile, workers’ compensation employer’s liability, and professional liability. Umbrella Coverage adds additional liability protection to not only cover exceptionally large single occurrences, but to increase the total amount of annual coverage available in the policy year. Without Umbrella Coverage, large events are financially devastating to most companies. And, Umbrella Policy costs are well less than those of increased primary policy limits.
Who should consider Umbrella Coverage?
All companies benefit from Umbrella Policies because it extends coverage so dramatically at a relatively small additional cost. The amount of coverage needed depends on the total value of your assets- because that’s what you’re exposed to in a lawsuit. Here’s how it works:
Following an at-fault automobile accident, a jury orders your business to pay $3 million in damages, but your general liability policy has a $1 million limit. Your company is responsible for the additional $2 million out of your pocket! However, a $2 million Umbrella policy will step up to cover the difference.
The Value of Surety Bonds
The fashion in which public and private project owners evaluate and manage risk on construction projects can result in fiscally responsible decisions to ensure timely project completion. Since owners cannot afford to gamble on a contractor who is usually the low-bidder but whose ability may be uncertain, or who could end up bankrupt prior to completing the job, a surety bond is a great safety net for their investment.
What is Suretyship?
Suretyship is a very specialized line of insurance that is created when one party (an insurance company) guarantees performance of an obligation of another party.
What is a Surety Bond?
A surety bond is a written agreement whereby one party, the surety, obligates itself to a second party, the obligee, to answer for the default of a third party, the principal.
Types of Bonds
Contract (or Corporate) Surety Bond
The Contract (or Corporate) surety bond provides financial security and assurance for building and construction projects by assuring the project owner (obligee), that the contractor (principal), will perform the work, complete the project, and pay subcontractors, laborers, and material suppliers, as outlined via contract.
Contract surety bonds include:
Commercial Surety Bond
Commercial surety bonds guarantee performance by the principal of the obligation or undertaking described in the bond.
Commercial surety bonds include:
Janitorial service surety bonds are sometimes referred to as custodian bonds and are really just a specialized business service bond for the home and business cleaning industry. The janitorial bond protects your customers from losses incurred by dishonest acts of your employees.
Why do you need a janitorial service surety bond?
Can you trust all of your employees? If you are providing custodial services in homes or business you know just how vulnerable you and your business are to dishonest acts by your employees. Even if you have never had a claim and you have the utmost trust in your staff, the reality is you, your business and your employees are easy targets for blame if something goes missing in a client’s home or business.
Likewise, a janitorial surety bond allows you to rest easier knowing you are covered. They’re also a good way to instill confidence in your customers.
How do you get a janitorial bond?
Getting a janitorial service bond is very easy. All we will need from you is to fill out a short application and in most cases we can get your bond back to you the same day. We will need to know how much coverage you want and how many employees and owners you have and want covered.
Coverage amounts vary from $5,000 to $100,000 and your bond can be issued for 1 or 3 years depending on your preference.
How much does this bond cost?
Janitorial surety bonds are considered very inexpensive for the amount of protection they provide and how much consumer confidence they can instill. A $5,000 bond for five or fewer employees can be issued for as little as $100 a year while a $100,000 bond for up to 20 employees can carry a premium less than $650 a year.
How is Suretyship Different from More Common Forms of Insurance?