Landlord Insurance

What is landlord insurance?

A business is defined as providing goods or services in return for payment. As a landlord, you are providing a place to live or conduct business in return for the rent check. Any business is exposed to risk and should have insurance in place to protect the property and assets of the business and its owner.

It is extremely important to the responsibility and accountability you hold to your tenants, your property, any lien holders, and yourself by the financial risk assumed as a landlord. whether you’re renting out an apartment, a home, an office or an entire building, a landlord policy should be put in place to reduce the risk inherent with being a landlord.

Insure you have proper liability insurance in place. A landlord can be held liable for negligence. Make sure your property is maintained and eliminate safety hazards. Fix problems quickly and periodically check your property.

Review your liability limits and insure you put than minimums in place. Discuss the option of adding an umbrella policy if necessary. Understand that liability is not subject to just physical problems with the building. if you have tenants with a dangerous animal or performing dangerous activity, the liability can fall back to the landlord.

Make sure to insure the buildings or buildings at full value. If not, you can be subject to shared loss or coinsurance in the event of a claim. work with your licensed insurance agent to determine which coverage options work for you.

There are way too many reasons to list as to why you should have landlord insurance.

Whether starting with a duplex, or purchasing an office or apartment building, take the exposure to risk seriously from the start. Owning a property and building equity is a great way to start building assets.

Just don’t risk that hard work by not getting landlord insurance.

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Key Employee Insurance

What is key employee or key man insurance?

Key person insurance is a business insurance policy which is taken out to protect the business from the loss or long term incapacity of a key executive or employee of the company. While there is no clear definition, this form of business insurance has become very popular and sometimes required by a lender to secure financing for the business.

By purchasing key person insurance, a business compensation for financial losses in the event of the death or disability of a key employee.

This insurance will also allow for business continuation during the hiring and training of a replacement. By minimizing the impact of the death or loss of a key employee due to disability, creditors, customers, and employees are assured the business can continue to operate with minimal impact and operating as usual.

Often used to insure management and ownership, key person insurance is being used more and more to insure employees whom make significant contributions to the operation of a business.

For instance, a top sales person who represents a high percentage of the company’s revenue may need to be considered for key person insurance. Another example may be a service person that outperforms their colleagues or may have a specialty no one else may have.

Key person insurance is sold as life insurance and also as disability insurance. The business is the beneficiary of the policy which may then use the proceeds as necessary to continue operation of the business.

Let’s Uncomplicate Business Insurance

Proper business insurance coverage doesn’t have to be complicated.

Putting business insurance in place can be a daunting task. Many business owners starting out often put business insurance on a back burner. They often do this because they either think purchasing insurance is overwhelming, or worse yet, unnecessary.

Either path is the wrong path to take when considering insuring your business.

First, let’s drill down to the basics of business insurance.  Every business should have general liability insurance, property insurance, and if there are employees, most likely workers compensation. While there are a multitude of additional coverage options and types of business insurance, these three cover the basics.

General liability insurance covers damages to third parties such as customers and customer’s property. Property insurance covers the physical assets of the business. Worker’s compensation insurance coverage protects against losses from on the job injuries to employees.

Every business, no matter how small or large, have assets to protect and are exposed to liabilities while conducting business. Therefore, any business owner needs to recognize the importance or securing business insurance.

Life is full of unseen and unplanned mishaps and the main purpose of business insurance is to maintain and protect the ‘life’ of the business. Any of these potential mishaps could literally destroy the uninsured business, and worse, the personal assets of the owner of that business.

In simple terms, one single event could put a business owner at risk to lose their livelihood and income stream, as well as losing everything they presently own. This is why the second path makes absolutely no sense.

Seek out a licensed insurance professional and discuss the options available to insurance your business. Make it a top priority and work with your agent to develop a comprehensive insurance package that makes sense for your business.

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As Your Business Grows, So Grows Your Insurance

Make sure your business insurance grows with your business.

You don’t purchase business just because a bank or landlord requires you carry it. It’s because you know as a responsible business owner you need to protect the assets of the business, your employees, and yourself in the event a claim of wrong doing or neglect is brought against the business. In the event your business suffers a loss such as fire or accident you wanted to protect the business.

As your business grows, there seems to be less and less time in a day, a week. As the owner, your busy running the day to day operations and looking for more customers, employees, inventory and products and services. What often may happen is that as the business grows the coverage in place remains stagnant. That can open up or allow exposure to risk to grow as the business does.

Recently, we reviewed the coverage of retail convenience store. Initially, when the business opened, the owner put a general liability policy in place to protect the business. In addition, a property insurance policy was purchased and workers compensation was added when full time employees were hired about 6 months after opening.

Several years passed, but the owner failed to review his coverage again. We found that thousands of dollars of new equipment was purchased including another walk in cooler, computer system, and company van.  The business also developed and added a website and delivery service of deli foods.

The problem is, the owner never discussed any of this with his licensed insurance professional. He is unaware the risk of using his employees to drive the van for delivery. He hasn’t increased the liability coverage to cover his growing business. He hasn’t increased the limits on his property insurance and looked at adding business interruption insurance and mechanical breakdown insurance. He needs to look at certain types of disaster insurance as the business continues to grow and risk grows with it.

It’s easy to get wrapped up in the day to day operation of your business. Schedule an annual review of your business insurance coverage with your licensed insurance professional. Make sure to inform your agent as changes take place in your business as well. Communication will help you reduce and manage the risk your business faces day to day.

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The Business Owner’s Policy and You

Is a business owner’s policy, often called a BOP, right for you?

In past articles we’ve discussed the basic insurance needs a business needs to protect itself starting out and in the early years. These basic insurance types are general liability, property, and if you have employees, worker’s compensation insurance. A Business Owner’s Policy or BOP may be a good starting point for your new or small business.

BOP’s can cover many of the risks associated with a business while keeping the premium you pay in balance with a small business. It’s important to note that worker’s compensation must be purchased as a separate policy.

Business Owners Policies are quite inclusive of the coverage options provided for the business. It is important for you as a business owner to review the specific coverage in detail with your licensed insurance professional. More important however, is a review of the exclusions. You need to know what is not covered as well as what is. Here are some of the common exclusions to BOP’s you want to be aware of as you consider a BOP.

Boiler and Machinery insurance, also known as “equipment breakdown” or “mechanical failure,” is often not included in a business owner’s policy. Review with your licensed insurance professional if this is a coverage your business would need. Debris Removal insurance is also coverage generally excluded by a business owner’s policy.

Businesses located in areas where tornadoes, hurricanes, and flooding exist may want to consider this type of coverage. Property insurance will generally cover rebuilding, but not the clean up and debris removal necessary to get the rebuilding process started.

Commercial Fleet (vehicle) insurance is generally not covered in a business owner’s policy. Since vehicles are an expensive asset, it is important to maintain coverage on them. The loss of a truck, a delivery van, or other vehicle(s) critical to your business could have a serious impact on your business and its cash flow.

Business owner’s insurance will generally have business interruption insurance included. This type of coverage will pay fixed expenses and even salaries in the event the business closed or even temporarily relocated as a result of a covered incident. Professional liability coverage can also be added.

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Ask your licensed insurance professional if a business owner’s policy may be appropriate for your business.

Optional Coverages

Every business should consider optional coverage depending on their need.

We often discuss the basic insurance needs of any business. Liability insurance, property insurance and workers compensation insurance fall into this category. In addition, there are coverage options within the general liability and property insurance, or separate insurance which may need to be considered. In this article, we’ll begin to explore the options which should be explored by business owners.

Professional liability insurance should be considered if you recommend and advise or offer a service such as accounting or law.

Equipment breakdown insurance will protect from losses suffered if machinery or equipment vital to the business breaks.

Business interruption insurance will provide income to cover costs if the business in closed or unable to operate for a period of time.

Flood and disaster insurance is not generally covered.  As your agent for the specific coverage in your existing policy.

Debris removal is generally not covered in business property insurance.

A commercial umbrella policy will kick in if cover limits are exceeded for further protection of business assets.

Glass insurance for protection against broken store and plate glass windows.

Crime insurance will protect against burglary, theft, and robbery from outside parties and employees.

Directors and Officers Liability Insurance is for protecting the officers and directors from lawsuits.

Kidnap and Ransom insurance is designed to protect individual and companies working around the globe.

Employment practices insurance deals with hiring and employment issues such as wrongful termination, sexual or other discrimination, privacy issue and more.

Obviously, there are numerous coverage options and endorsements. Work with your licensed insurance professional in determining what makes sense in design your business insurance package.  Remember to review your coverage at least annually, and inform your insurance agent or broker of changes with your business. This includes employees, new types of products or services and how your project your business to evolve.

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Workers Compensation and the ADA

Social Security Disability Insurance, essentially the first American worker’s compensation plan, was loosely based on the Prussian system, a system which inspired the gloomy author Franz Kafka, who worked within the bureaucracy of the Prussian workers compensation system.

Modern-day workers compensation insurance has at its core the concept of no-fault insurance. The system is set set industrial accidents are going to happen no matter how careful employees are. This system was set up in order to deal with those events.

In the United States, workers comp claims are handled by state compensation boards which are created and overseen legislatively. Each state handles worker’s compensation claims differently, but all of them assign monetary amounts for various body parts and/or injuries.

American workers compensation insurance remained static up until the 1990s.  The impetus for drastic change was the Americans with Disabilities Act, which became law in 1990.

The Americans with Disabilities Act mandated that employers make “reasonable accommodation” for employees with disabilities. Due to the ADA, then, employees who suffered back injuries which would previously have gotten them a permanent disability, were now able to continue working due to the fact that their employers were now mandated by law to make accommodations to make their continued work possible.

Because the ADA no longer recognized many disabilities as permanent and complete disabilities, the long-accepted payment schedules no longer made sense.

In one of the most famous workers compensation cases, an employee at the Santa Fe railroad won more than a quarter million dollars as a settlement for permanent total disability under workers comp. His doctor had testified he would never be able to work again to to a back injury he acquired on the job. Less than a week and a half after the settlement, he filed a lawsuit under ADA because he said he was wrongfully terminated due to his disability which was covered under the Americans with Disabilities Act.

The lawsuit was thrown out, of course, but this serves to illuminate the reader as to the massive changes that then had to be done.

The Terminology of Business Insurance

Don’t be overwhelmed by the terminology in your business insurance.

Terminology in used insurance can intimidating.  Don’t allow pride or failing to fully understand your commercial insurance policies have a serious financial impact.  Don’t be afraid to have anything in your policy explained until you understand.  Your licensed insurance agent is there as a resource, use it.  Review your policies and coverage on a regular basis.

Here are just some basic terms and their definitions:

Actual cash value: Method of determining loss after deducting depreciation.

Additional insured: A person or entity added to a policy for coverage.  The coverage may be temporary or more permanent in nature.

Adjuster: Is charged with determining the extent of loss and whether the loss is covered under the existing policy.  There are three types of adjusters you may deal with.  The first is an employee adjuster, the second and independent, and last is a public adjuster.

Claim: A demand made by the insured for payments as provide by the policy.

Coinsurance: This is a requirement to insure a minimum amount of an asset’s value.  If the insured fails to purchase the required amount, they become a co-insurer of any loss.

Coverage: The scope of protection provided by the policy.

Endorsement: An endorsement, sometimes called a rider, is a written document attached to the policy for a specific modification of the insurance policy.  An endorsement can be added when the policy is written, or later during the term of the policy.

Exclusion: This is a provision in the insurance policy which eliminates coverage of certain losses.

Occurrence: An event which triggers a claim to be filed for coverage under the policy. An occurrence is often equated to ‘accident’ but any number of incidents can be called an occurrence.

Replacement cost: This is the method for calculating the replacement value of a loss without a deduction for depreciation of the asset.

These are just some of the many, many terms used.  Speak with your insurance agent and understand what is covered and more importantly, what is not by your business insurance.

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How Can I Reduce My Workers Comp Premiums?

Reducing workers compensation premiums takes planning and work.

In the decade or so, workplace safety has been the focus of many companies and industries. As a result, workers compensation claims and costs have declined. Even so, certain industries continue to tick up against the overall patterns.

In order to reduce your workers compensation premiums, you need to attack safety and performance in your business rigorously. If you’re paying workers compensation premiums in your business, you need to establish a risk management plan. In the beginning, your workers compensation carrier should have risk experts available to you and your employees.

Develop regular risk assessment and management meetings with your key employees and the experts at your insurance carrier. As you grow, it may make sense to hire a full time risk manager to work on this for your company.

Meanwhile, it is important to implement your own workplace safety program. Consider developing written procedures for both safety and returning to work. Resources to do this are available from your insurance carrier, the state department of insurance and your licensed insurance professional. Take the time to check how your payroll and employee classifications are relayed to the carrier.

Overtime and bonuses as well job descriptions and classifications which can have an impact on cost if not reported correctly. Investigate claims on your policy and implement written action plans and corrective action plans. Keep both your licensed insurance professional and the insurance carrier informed of any changes and improvements made in the workplace and your risk management program.

Evaluate your workers compensation coverage annually when you review your other coverage for the business. Work with your licensed insurance professional to help you manage both costs and your risk management program. Stay involved as the owner with your risk management and workplace safety programs.

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Your Commercial Insurance Agent: Key Member?

Is your commercial insurance agent a key member of your team?

If you look at your business insurance as a necessary evil to be in business, you’re not alone. Do you have to look at a policy or an insurance bill to remember your agent’s name? If so, you’re in the majority of business owners, but it isn’t where you want to be.

It’s important to make your licensed insurance professional part of your key advisory team. No doubt you use a CPA for your taxes and attorney for your legal issues, but do you consider your commercial agent in the same category? If not, let’s examine why you should change that outlook.

You took a great number of risks to start your business. You took a financial risk. You took great number of personal risks. Your reputation, your relationship with your spouse and family, you risked a great deal to start your business. Why would you now continue to expose yourself to further risks? One frivolous lawsuit can ruin a business.

Do you know if your general liability would cover that type of lawsuit?

Do you know whether or not you need additional liability coverage from Professional Liability insurance?

Is your equipment and office fully covered under your present property insurance?

Do you know how the value of the claim will be determined?

Is it replacement cost or actual cash value?

Do you need loss of income or mechanical breakdown insurance now? What natural disasters are covered?

Your licensed insurance professional knows the answers to these questions and many more not asked here.

Successful big companies have a board of directors. While you’re growing your business to that level, why not create your own?

Your business attorney, accountant, and yes, your business insurance agent are the core of your board. Each should be a trusted advisor who you speak with on a regular basis. Your business insurance professional needs to become a key part of your team. Bring them up to date and spend some time with them. Let them know what has changed in your business and where you project the future to be so are fully covered.

Make sure you have the proper coverage in place to protect the hard work and passion you bring to work every day. Work with your advisors, all of them. Make them a resource and use them to further grow your business.

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