The Basics for First Timer Buyers

First time buying business insurance? Here’s the basics:

First, when beginning to look for business insurance, you need to remember it is different than your personal insurance you have now.  You need to take some time and look at the different types of coverage that is available to your business.  These types include liability insurance, property insurance, casualty insurance, and commercial vehicle insurance.

You don’t need to be an expert on business insurance, but you need to understand that property insurance protects the location and contents, while liability protects against a claim against you, your employees, and the business.

Understanding what risks your particular business may be exposed to and what the future may look like as your business grows is very important.  If your business has an industry association, it is a great starting point.  In fact, don’t be afraid to call around and speak to members to see what they have in place and why.  Your state department of insurance can be a great resource to you as well.

Have a business plan and detailed description in place you can review with a commercial insurance agent when you begin to look for the insurance.  The more information you can provide the better coverage you can put into place.  Interviewing and choosing your insurance professional will be much easier and rewarding by doing this exercise.

It is also easier for your insurance professional to understand your business and the vision you have to make sure you cover as much exposure as possible.  Don’t be afraid to ask for commitments from your insurance professional such as 24 hour turn around on phone calls.  Get a standard billing date agreed on and make sure it’s the same every month.

Once you settle on the insurance package, don’t file it and forget it.  It is important to review it often and make you keep adequate coverage as your business grows.  Make your commercial insurance professional a trusted advisor and resource.

Get together at least at least annually and do a complete review either in person or on the phone.  Your commercial insurance isn’t buy once and done, it must grow right along with your business.

Keep Your Commercial Insurance Up To Date!

As your business grows, make sure your commercial insurance coverage is up to date.

You went into business knowing you had a good thing going.  You’ve worked hard and things are really starting to fall into place. Business is good, growing, and you continue to exceed expectations and your plan. Your banker is ecstatic, your employees are excited, and it’s a fun time to be in business.  Have you let your commercial insurance broker know how well your business is doing?

When a business first opens, a somewhat standard business insurance package is put into place.  Depending on the business, some type of general liability insurance and business property insurance is put into place.  Many times, the coverage is adequate, and sometimes lean to help keep premiums down.  Now, back to the business description noted above, the first key is new employees.

As soon as an employee is hired, with rare exception, you are required to have workers compensation insurance.  Besides the employee benefit, with workers compensation coverage, the employee cannot sue the business for being injured on the job in most cases.  Imagine what could happen if it wasn’t in place!

As your business grows, your business insurance needs change.  The business insurance package you put into place is not static any more than the any other changes in your business.  There is nothing worse than growing your business, seeing great success, and having one incident cause financial crisis by being under insured, or, worse yet, have no coverage for that event.  Let’s look at how to avoid that happening in your business.

Again, with the quick example above, business is thriving.  It’s probably time to up the coverage limits, perhaps even write new insurance.  As your business grows, it may be time to look at business interruption insurance which may also be known as loss of income.  It’s quite possible you need mechanical breakdown insurance, or now should add some additional disaster insurance such as flood insurance if your area warrants it.

Talk with your commercial insurance broker to determine if product liability insurance may be needed.  Do you need to add professional liability insurance?  What coverage may fit now that didn’t early on? Do you need to raise your general liability limits?  Is it time for commercial vehicle coverage?

The rewards of growing a business are numerous.  Don’t risk it by not growing and evaluating your risk exposure along the way.  Make time to speak with your commercial insurance agent at length at least once a year, perhaps more if needed while growing your business.

Business Insurance Should Be Simple

Any new entrepreneur considering starting a business needs to look at business insurance. Commercial business insurance covers a broad spectrum of protection that includes your property, you and your employees, and your liability. It’s normal to have questions regarding the type of coverage your business requires. The ultimate goal is to make sure you are never under-insured or exposed in the event of an incident or disaster while not having double coverage or unnecessary insurance.

Business property insurance will cover losses to your building, and the property inside of it. Computers and phone systems, furniture, finished goods, as well as carpeting, lighting fixtures and supplies will be covered. There are two options, either actual cash value, which is purchase price less depreciation, or the replacement cost of the item. Discuss these differences in more detail with your agent to determine what is best in your situation.

Almost all businesses are required to have workers compensation insurance. This covers the employee from lost wages while protecting the business against being sued by the employee. More specific information is available from the insurance department of your state government and your commercial insurance agent.

General business liability insurance must also be in place to protect the business and the owner against lawsuits. A general liability policy will cover most situations that may arise. There are specific types of liability coverage for risks not covered within the general liability policy. An example would be realtor liability insurance which is a separate coverage generally taken out by real estate brokers and agents. Ask your commercial insurance agent what else you should be looking at for specialized coverage.

Knowing What’s Covered

Many business owners believe their property insurance will cover damage from a disaster. That is a myth.

As a matter of fact, many disasters may not be covered at all.

Generally speaking, your property insurance will cover you from a loss of a common risk like an accident, vandalism, or theft.  Fire is normally covered under you property insurance. But flooding may not be.  In fact, even disaster insurance may not cover flooding.  Talk to your agent regarding damage from flooding, winding, and other natural disasters.

In the world of insurance today, there are various packages available to cover a multitude of risks.  The key is to maximize coverage without duplication.  Work with your licensed insurance professional, your commercial insurance agent to figure out specifically what coverage is needed to protect your business property.

Get together with your agent or broker and determine what coverage and risk your particular business could face.  You’ll need to compare policy coverage, premiums, risks, deductibles, and many factors in selecting your final property insurance coverage.

Like many business people, after weighing the options, you’ll want to choose the most coverage you can afford.  Obviously, get the coverage in place as most likely to least likely if affordability is an issue.  Even with disaster insurance, look at the details of the policy and coverage options.

It’s also important to remember the effect of any type of disaster.  Loss of income insurance should be discussed.  Often, we forget about the down time a disaster will bring to the business.  Loss of income insurance can cover the liabilities and owner’s income while reopening the business after a disaster.  Check with your agent about this important coverage.  Often, it is added as an option and sold as a separate policy.

Finally, you should also consider all the coverage with one insurance company.  Generally, multiple policies are afforded discounts whether personal or business insurance.  Do not hesitate to ask your licensed insurance professional if discounts are available.

Bakery Insurance

Bakeries are in a unique segment of the food service industry.  Such a business might be in a retail storefront, or segmented to serving only wholesale, or a combination of both.  You desire to create tasty creations that result in creating smiles when consumed.

Baking fresh sweets, muffins, breads, and other scrumptious treats involves long hours and tireless dedication to details.  Don’t miss the details of designing a menu of insurance coverage which fits your unique bakery business.

Like baking, there are many ingredients which can be used to create a good bakery insurance policy.  These ingredients, or policies, each work together to reduce risk and bring peace of mind to the bakery owner with the coverage provided.  Let’s look at the basic requirements needed for a good solid foundation and then some additional options as you would any dessert.

Every business needs a general liability policy to protect the assets of the business.  A quick summary is that a general liability policy will cover injuries caused to a third party.  Depending on the business, the size, the assets, and corporate structure will determine the type(s) of liability policy for that bakery.  Your licensed agent will help determine those choices with you.
Next, you need to have property insurance in place whether the space is owned or leased.  Property insurance covers losses to real or personal property within the limits of the policy coverage for a number of scenarios.  For example, damage from a fire to an office, or damage to a vehicle owned by the business or that of another vehicle involved in an accident if liability is determined.  It’s often possible to include property insurance and general liability insurance in a Business Owner’s Policy.  Ask your agent if this may be an option for your bakery.

If your bakery has employees, then worker’s compensation is a normal requirement.  Your state department of insurance and your licensed agent will work with you to determine what is necessary for your bakery.

Additional coverage which a bakery may wish to consider is known as specialty coverage such as plate glass and signage.  Food born illness is another specialty coverage option to be considered.  Loss of use or business interruption insurance will protect cash flow should a loss occur which closes the business for a period of time.  Work with your licensed agent to create a 5 star bakery insurance package.

What Policy Do I Need for My Store?

Anyone involved in the insurance profession is familiar with the common mistakes people make regarding business insurance.

Setting limits too low: Oftentimes, business owners do not understand that the largest amount of money in a policy is the initial policy, and that extra coverage is usually a very small amount. It is, in fact, often possible to double one’s limits for less than 10% more money.

Not reading the policy: Although insurance policies are usually long and involved, they are contracts, and it is important that the policy be read before you sign it. If you simply cannot do it, you should get an attorney to do it for you.

Not understanding duties: Business owners’ policies carry with them duties to defend or indemnify, and it is essential that the business owner understand those duties. It needs to be clear in your mind whether or not your insurer will defend you if you get sued as well as what they will pay if there is a judgement against your business.

Neglecting business interruption insurance: While you are probably covered for such things as fire or flood, you will quite likely want to be insured for the loss of income during the time your business might be closed due to those incidents and their aftermath.

Finding the right insurance company: The importance of finding the insurance company and policies which will suit your needs cannot be stressed enough. Given that an uncovered lawsuit could mean the end of your business, it is essential that you find just the right company.

Discussion with your licensed insurance professional is the first step to avoiding all of these common errors.

Property Insurance and Natural Disasters

My small business property insurance covers a natural disaster, right?

In today’s small business insurance market, it is possible to get some disaster coverage in your small business property insurance coverage.  However, as a business owner, it is up to you to understand what is covered and what’s not.  In many cases, certain disasters and types of storm damage are not covered.

Your property insurance covers property from the every day risks for things like theft or damage from an accident.  Disaster insurance will cover the immediate loss and impact to your business and property from a specific occurrence like a flood.

As noted above, it is now possible to add coverage to your existing policy for specific disasters like flood, earthquakes, and acts of terrorism.  It is important to review your present coverage and look for any specific exclusion written into your existing business property policy.

Depending on where your business is located and what types of natural disasters may occur will generally help you understand any exclusion in your property coverage and gaps you may need to fill with a separate policy.

Typically, disaster coverage deductibles are a percentage of the loss unlike your business property coverage which will have a set deductible.  Depending on the amount of the loss, that can be a significant number.  Work with your licensed insurance professional to determine what risk exposure your business has, and how to best manage the risk with a combination of business insurance and separate disaster coverage.

Don’t be afraid to ask questions and get a clear understanding of how your coverage will work in the event it is needed.  If you have business interruption insurance or mechanical breakdown, review that coverage and any exclusion as well.

Talking with your licensed insurance professional is important before determining what coverage is necessary and how it works in conjunction with your existing property insurance.  What you are trying to accomplish is a combination of coverage and policies which reduces your risk and doesn’t duplicate coverage.  You want your premium dollars working for you for the maximum coverage.

Tornado Outbreak With Hurricane Irene

Continuing with Hurricane Irene preparedness, I want to remind our Atlantic coastal friends about possible tornados which may accompany Irene.  It is quite common for a significant number to form and create havoc causing much of the damage as the hurricane itself.  These usually begin with the thunderstorms created with the hurricane and often produce large hail, damaging winds, and possible tornados.  Being from Oklahoma, we are well acquainted with tornados and their destruction.

 

Most generally tornados begin as transparent, whirling wind until they pick up debris.  Oklahoma has an excellent warning system in place and is home to the National Weather Center in Norman, Ok. located on The University of Oklahoma’s campus.  The watch and warning systems in place are critical in reducing loss of life and property.  With this hurricane approaching, citizens especially within the band width area of Irene need to be watchful and aware of how quickly these tornados may occur.  The number one thing to remember is to know where shelters are located in your community and number two is decide if you have enough warning time to get there.  After that decision, do not second guess it and never try to outrun a tornado.  If it appears standing still, it is coming directly to you.  Seek shelter immediately.  Listen to the storm’s approach on TV or a NOAA weather radio and take precautions advised.  If in a building, go to the lowest level available.  If a lower level does not exist, move to an interior room or hallway and cover your head and body as much as possible to avoid flying debris.  I have used bicycle and football helmets for my children.  Stay away from windows and doors.  Mobile homes and small steel buildings should be abandoned.  If driving, get out and seek the closest, lowest level for shelter watching out for rising creeks and culverts.   Your insurance policy should cover damage to your property, but if you have questions, please ask your agent or one of ours.

What To Expect After A Catastrophic Event.

 

What would you expect if your business burned to the ground?  Confirm all employees, guests, clients and management are ok.  Then what?  Call your agent, report the loss and let us go to work for you.  We are going to help with assessments.  Are neighboring businesses going to be impacted?  We are going to pull your management team together and provide a plan of action.  That plan of action needs to include communication with employees, media, vendors, and security.  We will be able to help with insurance coverage provided by your policy.  We will be able to help explain some of the additional coverage which the insurance adjuster is providing and breaking those down to layman’s terms and explaining how those affect your operations.  Understanding and working with your agent will help enable your business get back into operation in the soonest possible time frame.  After all, insurance is designed for catastrophic events and to put your business back into the financial position before the loss occurred.  Your commercial insurance agent should be one of your most trusted business advisors before the loss and not after one.  Call one of ours.  We will be happy to talk with needs specifically for your business operations.

 

Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect.  Always check with your chosen professional as to statements made in this blog for your particular situation.

 

 

 

Determining cost of insuring commercial property on replacement basis

There have always been disagreements of valuation of commercial buildings between the client and insurance company.  Today, even more so.  Construction costs are up and rents are down.  This leads to more frustration than usual.  Valuations for companies many times are to reflect “replacement” cost.  In other words, what would it cost the insurance company to re-build or replace the building.  While most
owners are thinking about the building’s value out on the market.  Each of these thought processes may be worlds apart.  Especially now when rents are low and vacancy rates are high.  However, our clients should evaluate what the cost of under-insuring their investment will truly be.  For instance, in case of a total loss by fire, tornado, etc.  Would you be willing to accept the amount you have requested as insured value?  Can you replace the building for the value paid and would you?  More importantly is coverage in a partial loss situation, where the building is damaged, but not a total loss.  After your chosen deductible, will you have enough money to make the repairs for occupancy?  Remember, in catastrophic losses, costs of materials and labor is going to rise.  Un-repaired damage for a length of time will be more costly due to possible mold, mildew, vandalism and other perils.  Also, one needs to consider potential lost revenues due to damage of the property.  What will it cost in terms of time and additional expense to occupy the building?  All these things should be discussed with your agent. Please call one of our agents who will work with you in protecting your financial assets.

Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect.  Always check with your chosen professional for your specific situation.