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Environmental Insurance Policies

So, you’re looking to open a gas station, and you want to know what insurances you are going to need.

Well, you are wise to ask that question, because operating a gas station without all of the permits and insurances which are mandated by the government could result in huge fines even if you do not make a claim.

The laws which regulate what permits and insurances your new business needs are set by the state in which it is located, so you will need to look into that with someone knowledgeable in your own state, but most of these permits require the business owner to have associated insurance policies.

Now, given that you are a loyal reader of this weblog, you already know that I am going to tell you that you need general business liability. We don’t need to go into that, as we’ve discussed that repeatedly over the past few years.

Many states mandate that a gas station owner have environmental insurance, which covers you from otherwise uncovered environmental liabilities you end up facing. This kind of policy will help you to undergo remediation projects as well as discovery of new contaminants and hazardous materials. It will cover you for leaks or spillage.

In case you’re wondering whether you REALLY need this coverage, I want you to think back to last week and count up how many ads you saw with an earnest-looking attorney talking about getting money from this company or that, for this toxin or that contaminant.

So now, thinking to the future, imagine that same earnest looking attorney talking to audiences all over the place about your gas station and his willingness to help that audience bring a lawsuit against you.

Remember the old adage about being pennywise and pound foolish and call your licensed insurance professional to discuss what you need to do about insurance for your business!

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Who Needs Business Interruption Insurance?

The short answer: ALL business owners need business interruption insurance!

In the event of a catastrophe, you have insurance to cover physical damages and insurance to cover injuries; you have insurance to cover inventory, and you insurance to cover injured employees. But do you have insurance to cover the money you will not be making because you are unable to open your business after a fire, hurricane, or when a car barrels through your picture window?

From our own experience, we know that many — if not most —  people think that these things are covered byproperty insurance or general liability, that that is not the case at all!

Business insurance does that.

It will compensate you for profits which you would have earned during the time you cannot operate your business.

It can cover fixed costs, meaning the expenses you still have to pay while the business is closed, such as leases, insurance premiums, licenses, and staff costs.

It may make you whole for expenses that are necessary in order to operate our business while your regular place is being repaired or rebuilt.

Many business interruption policies will reimburse you for operate your business temporarily from another locations. These expenses can include moving your operation and things that you need to rent or even buy while you’re there.

You don’t buy a business interruption policy. Instead, it is sold as an additional coverage to your business owner’s policy or your property insurance policy.

Talk to your licensed insurance professional to see if you have business interruption in your arsenal of coverages and, if not, when he can arrange it.

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Don’t Lose the Key…Person!

There are employees, and there are trusted employees; there are knowledgeable employees, and there are experienced employees. And then there are key employees, who generally fit the bill by being two, three, or even more of those descriptions.

All businesses, regardless of their size, have at least one key person — a person who is absolutely crucial to the business. It might be the owner or founder of the company, or it may be a supervisor or manager who has been with the company for years. Or it might be that dynamic and prolific salesperson who brings in the bulk of your income.

These are the people that key person insurance is made to insure.

In the event that an insured key person dies or becomes disabled, the company will be paid benefits which can include hiring someone to take the vacant position, training a replacement, or purchasing the key person’s shares of the company.

While the premiums for key employee insurance is not deductible, any benefit paid

In short, key person insurance allows the company to continue to function by paying the company, which is the beneficiary, for the loss of your key person or people.

You will want to meet with a licensed insurance professional to decide the amount of the benefit, who your key person or people are, and how much you should be paying in premiums for your key employee insurance.

You will also want to discuss whether you want to cover the risk of your key employee(s) death or disability. Or both.

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Special Event Insurance

Special event insurance is sometimes known as commercial general liability insurance, spectator liability insurance, or simply event insurance.

Event insurance is an insurance policy which provides protection in cases where an event planner, event holder, sponsor, or the venue itself is sued for property damage, bodily injury, or other loss which is alleged to have occurred at a private or public event.

Generally, the coverage includes most liabilities which arise from the event, the personal injuries, and even false advertising.

Liquor liability will cover risks which stem from the mistakes or misdeeds of the bartender, whether he or she allowed minors to drink alcohol or contributed to a person’s intoxication who then caused injury to a third party. Cancellation insurance helps you to pay off any debts incurred by that cancellation, including deposits paid and returning money to fans or attendees. You my buy these insurances for extra money.

Sometimes the venue where you are holding a conference, wedding, party, concert, fireworks display, or other event will have a special. But frequently, you will need to buy a policy and show proof of that coverage to the owner or management of the venue.

If the venue has coverage already, you might consider purchasing additional coverage, based on how much coverage the venue has.

As always, talk to your licensed insurance professional to discuss the type of event you are organizing or working on, details about what is involved, and what coverages you will need.

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Employment Practices Liability Insurance

A gentleman who runs a small call center in New England asked me a while back whether he needed employment practices liability insurance on top of his general liability policy.

Employment practices liability insurance, or Epli, covers discrimination of many types including race, color, creed, national origin, gender, sexual orientation, religion, handicap, and age. Additionally, it can cover wrongful termination, and sexual harassment.

The Civil Rights Act of 1991 gives employees and ex-employees the right to a jury trial and allows them to get punitive damages from employers who are found to have violated civil rights laws. We call the violation of these civil rights workplace discrimination.

Congress can add new protected classes of people and the definition of discrimination can change, and if any class is not listed as covered in an EPLI policy, the employer is not fully covered.

Your licensed insurance professional can take a look at your policies regarding hiring, firing, training, and dispute settlement, and based on those items, provide you with good, solid advice and recommendations to help you reduce your risk.

EPLI will also cover a situation where one employee harasses another, an act which may be an intentional tort and therefore may command larger court awards.

Whistleblower claims, which are claims wherein employees allege that they were fired or the target of other adverse decisions based on their disclosure of illegal or unfair practices by the company or employer, may also be covered in your employment practices liability insurance policy, as can wave and hour claims and other employment-related claims.

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Commercial Earthquake Insurance

When you think about earthquakes in the United States, most people think about California. But earthquakes happen in many other states.

The worst quake in the country was the 1964 Alaskan Earthquake. The first of the New Madrid earthquakes in 1811 were centered just north of Memphis. The first one was so strong, it changed the course of the Mississippi, rang church bells in Boston and woke President and Dolley Madison up in the White House.

Montana, Oregon, Hawaii, and Idaho all had earthquakes in the top 25. Last month, there was an earthquake centered in Millinocket, a small town in northern Maine.

The point here is that everyone needs to look into earthquake insurance.

Premiums and deductibles for earthquake insurance vary wildly from state to state, based on the likelihood and average intensity of quakes.

So, here are the things you need to look at and discuss with your licensed insurance professional:

  • Will your insurance pay actual replacement value or market value of your belongings or your house if it is destroyed?
  • Will your insurance pay for living expenses such as hotel and restaurants if your house is too damaged for you to stay in?
  • Do you need just your home covered? Or are there outbuildings such as sheds, workshops, or garages which should be covered as well?
  • Are there limits or exclusions on the policy?

Californians are unique in that they buy their earthquake insurance, whether homeowners or renters, through a public-private partnership called the California Earthquake Authority through a handful of insurance companies. The standard earthquake coverage has a deductible of between 10% and 15%.

Everyone else need only discuss their needs with an insurance professional to see what it is they need to cover.

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Insurance for your Home-Based Business

Congratulations! You have finally realized your life-long dream. You have started your own business in your home: a desktop publishing business. Now you can go to work barefoot and without blow-drying your hair.

But wait! You have your computer, your printer, your telephone, and all the office supplies you need. But do you have the necessary insurance?

Here is a nightmare scenario: You put together a glossy brochure for a local car dealership. You have some gorgeous pictures of the brand new Chrysler 200S convertible in the brochure. It’s candy apple red, leather seats, with a retractable hardtop. Three weeks after your gorgeous brochure is put out in public, the dealer calls you, screaming.

Instead of the MSRP of $33,445, the brochure offers the car for $334.45. This is going to cost the dealer a pretty penny, no matter how he handles it. And guess where he wants to get the money from?

If you are counting on your homeowners insurance to get you out of this mess, you are mistaken!

While it is quite likely that the dealership does not have to honor the erroneous price, the customers could sue, and even though the lawsuit would be a frivolous and unsuccessful, it still costs money and time for the dealer to go to court and, if necessary, for you to do the same.

When you sit down with your licensed insurance professional, you will want to bring up the topic of Errors & Omissions insurance as well as a commercial general liability policy.

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Terrorism Risk Insurance

In 2002, President George W. Bush signed the Terrorism Risk Insurance Act (TRIA) of 2003 into law.  TRIA created a federal program, administered by the Treasury Department, which facilitates a system of compensation for insured losses which result from an act of terrorism.

The law has been extended several times and it is now scheduled to sunset on December 31, 2014.

Essentially, In essence, what this law does is provide reinsurance coverage to insurance companies in the event of any event which is declared terrorism.

Prior to the attacks on 9/11, commercial insurers did not exclude acts of terrorism, nor did they charge for them but the estimated $40 billion loss triggered the realization that there was a need for such coverage.

The losses from those attacks were largely borne by reinsurers who were hit so hard that they left the terrorism market. Once there was no available reinsurance, primary insurers began excluding terrorism incidents, causing a vacuum in the industry, which Congress fixed by enacting TRIA.

The definition of an “act of terrorism,” for purposes of terrorism risk insurance, is “any act certified by the Secretary of Treasury…to be an act that is dangerous to human life, property, or infrastructure and to have resulted in damage within the U.S…committed by an individual or individuals, as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion.”

Acts committed as part of the course of a war are not covered, nor are various specific types of attacks, such as nuclear or biological.

Terrorism insurance covers numerous lines of insurance, including business property, loss of rents, and directors and officers liability.

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Commercial Insurance Audits

Premiums for general liability, workers’ compensation, and for other insurance products are calculated based upon estimates of a business’s exposure. Some of the items which are scrutinized during an insurance audit include receipts, sales, and payroll, for example. These things are looked at closely during the policy year, so in order to ascertain what a business’s premiums are, an accurate overview of the exposure is necessary.

Insurance audits are the events which ensure that insurance policies reflect accurate information about ratings by verifying such things as payroll, annual sales, job descriptions, and number of employees.

These items help to determine what your risk classification should be. They also make sure that your premiums are the right amount for the risk the company is insuring.

Once the insurance company gets the information from your audit, your premium will be adjusted up or down, depending on the information you provide them.

The more important thing, however, is that if your business is incorrectly classified, you might be denied coverage. Yes if the insurance company determines that your business is not in a category they would normally insure, you could have your policy denied or cancelled.

Or your policy might be voided because of misrepresentation.

Don’t be caught short by the surprise of an audit. Detailed and well-maintained records will allow the auditor to finish the audit quickly.

Since businesses change over time, you will want to keep your insurance professional abreast of any changes you might make to the business.

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Avoid a Flood of Woes

You might think, if your business is inland, that you are safe from flood damage. In the words of the late Johnny Carson, “Au contraire!”

Ice jamming is caused when a stream or river becomes clogged with ice, causing a backup and eventual overflow

Snowmelt occurs when frozen ground becomes saturated and fails to absorb the excess water.

Flash floods happen during and after heavy rain.

Mudslides affect hills and mountainsides after heavy or prolonged rain.

Storm surges, particularly in areas which experience hurricanes, are responsible for all sorts of flood damage.

Construction or lack of proper infrastructure which may cause land or streets to have trouble draining.

As a matter of fact, more than 80% of all natural disasters declared by the federal government involve flooding. The average commercial flood claim in the past decade has been approximately $33,000, and at least a quarter of all businesses which close after disaster events close and never re-open.

General insurance policies don’t cover flood damage, so it doesn’t take a rocket scientist to realize that it is always a good idea to at least consider flood insurance!

All commercial flood insurance agents are accountable to the National Flood Insurance Program, which is backed by the federal government and sold by private insurers.

More often than not, there is a 30-day waiting period between the day you buy your policy and the day it goes into effect, so the time to talk to your licensed insurance professional is sooner, rather than later.