Entries Tagged 'Commercial Insurance' ↓

If you own a business and have auto loans or lease your vehicles, you may want to think about auto loan/lease gap coverage.

If one of the vehicles is totaled in an accident, you might think that you would no longer have to pay off the balance of any loan or lease attached to that car.

However, that is not the case, and it could present your business with a real financial strain.

Your insurance carrier will give you the depreciated value to replace the totaled vehicle. However, that depreciated amount may not be enough to cover the remaining outstanding amount of the loan or lease.

If, for example, a $25,000 car is totaled in the first year of ownership and the loan has not been paid off, you could be in trouble, because the insurance company would give you only the depreciated value of the car. If that figure were $20,000, you’d be responsible for the remaining $5,000 on the loan or lease. Therein lies the problem.

If you are a business owner with many vehicles, you can multiply this scenario to see how it could add up quickly.

Take a few minutes to take an inventory of the vehicles used in your business. If a vehicle is newer, there may be a larger loan or lease than on an older vehicle. Gap coverage could come in handy here. You may not want to replace older vehicles if they are totaled. In that case, gap coverage wouldn’t be needed.

Most insurance carriers offer gap coverage for a very reasonable premium. It could save you a lot of headaches.

Once considered a relatively exclusive form of insurance, errors and omissions (E&O) insurance is now believed to be one of the most important forms of coverage available to many busy professionals.

Who Needs E&O Insurance? E&O provides an additional layer of protection for lawyers, architects, financial consultants and other small-business owners who routinely provide services to others. In fact, nearly anyone who provides services or information to others may be at risk of a lawsuit. Rather than risk your financial future, E&O insurance provides the peace of mind in knowing you are protected in the event of a problem. By transferring risk to the underwriter, you have a powerful partner on your side in the event of a claim.

What’s Covered? E&O policies typically help defray the cost of defending against litigation arising from professional liability claims due to mistakes. Legal costs and damages are usually included up to the specified limit.

What’s Not Covered? Intentional, illegal or fraudulent activities are excluded, along with punitive damages. Specific limitations or restrictions may be included in your individual policy, so it is important to work closely with your insurance agent to select the right coverage options for your specific needs.

Is E&O Insurance Expensive? E&O insurance rates vary by the type of services provided, annual revenue generated, type of policy and prior claim history. In general, E&O can be structured to fit nearly any type of budget, depending upon selected options.

More than 25% of businesses that close due to a natural disaster never reopen, according to research conducted by the Insurance Information Institute. Small-business owners are especially vulnerable. That’s why disaster recovery planning for small-business owners is more important than ever. Following are some tips to ensure that you’re prepared:

Review Your Insurance Options: Loss of income and loss of use of plant and equipment are situations encountered after a disaster. Review existing policies to ensure that you have proper coverage. Most policies exclude earthquakes, fire and flooding, so it is important to purchase riders to ensure that you have full coverage.

Duplicate Data and Important Contacts: Cloud computing is making it easier to back up existing data and important contact information in a secure, off-site location, but it’s important to make sure it is performed on a regular basis and available when needed.

Implement Alternative Work Schedules and Locations: During a crisis, many members of staff may be delayed or unavailable, so it is important to plan ahead. Cross-train employees and provide several alternative forms of communication and work locations, including home, off-site offices and other alternatives. Make sure employees understand how to put the plans into use after an emergency.

Practice the Plan: Disaster recovery should be practiced from time to time. Have a written plan of communication and then actually take the time to implement it on a practice basis from time to time. Allow employees to work from home or other alternative locations, perform duties for which they have been cross-trained, and access information stored off-site.

Once upon a time, general liability insurance was reserved for a select few business owners in high-risk industries. Today, all that has changed.

Lawsuits are a common threat for large- and small-business owners alike. As the cost of defending a claim continues to increase faster than the rate of inflation, even the most cautious business owners may face financial ruin – even if the case is eventually dismissed.

Fortunately, the solution – general liability insurance – is simple and cost-effective.

General liability insurance is simply a policy that provides additional protection against the assets of a business in the event of an accident, injury or other damage.

The policy typically covers the cost of legal representation and face value of a judgment in the event of a successful lawsuit.

It does not protect the personal assets of the business owner, just the company assets.

Purchasing general liability insurance is fairly straightforward, but it does require a bit of advance planning and preparation.

Following are some things to keep in mind:

For example, an insurance company will need a copy of your business name, industry classification, address and other pertinent information.

My office can help you find the policy that meets your needs, taking into account limitations and exclusions.

It may be more affordable to bundle general liability insurance with a business owner policy if the business requires only a minimal liability policy.

Professional employer organizations (PEOs) are a way for small business owners to outsource human resources, payroll, workers’ compensation and employee benefits for a fraction of the cost associated with hiring the same staff in-house. However, there are some pitfalls associated with PEOs to keep in mind. For example:

Workers’ Compensation Conflicts: When an employee is injured on the job, workers’ compensation coverage typically will provide medical benefits. However, determining whether the PEO or company is responsible isn’t quite so straightforward. Savvy small business owners should read the fine print and understand the limits of protection as well as possible areas of additional liability should an injury or accident take place.

Ratings: Most PEOs carry a master policy that then provides coverage for the PEO-leased workers. Experience modifiers, a way for the policy to rate the risk associated with each policy, can alter the rates fairly dramatically. Small business owners should do their due diligence to understand the experience modifier of the PEO company as well as the manner in which they are able to pass along savings to the small business owner.

Understand Obligations: A PEO can provide valuable services, but if the PEO fails to do its job correctly, that can also have ramifications for your business. A small business owner remains liable for injuries, ambiguities and other damages that arise from the hiring of a PEO, even if the PEO is at fault. Always verify that the PEO is paying payroll taxes and that it is audited annually and retains all state and federal requirements in place at all times. More important, speak with my office about the best way to structure the relationship.

Employment practices liability insurance (EPLI) helps protect small business owners from claims that arise from employees in relation to how the owners conduct their business.

For example, employees might file a claim for discrimination, wrongful termination, sexual harassment or wrongful discharge. With the average settlement for this type of claim now approaching $180,000 to $250,000, it is easy to understand why more small business owners than ever are taking steps to protect themselves from this growing threat.

Following is some information to help small business owners choose EPLI:

Determine Coverage: EPLI can provide coverage for employees, independent contractors and even leased employees as well as third-party providers such as salespersons. Coverage for off-site, remote and independent contractors is especially important, given the lack of direct supervision associated with performance.

Determine Deductible and Other Limitations: EPLI can be purchased in amounts ranging from $1 million to $25 million with corresponding deductible levels. Many policies will also include specific exclusions that limit or omit coverage during events such as a merger or major downsizing. Criminal conduct or other deliberate actions are also excluded.

Determine Your Small Business Risk: Every small business should have a written code of conduct as well as other pertinent personnel policies in place. My offfice may ask to review these before making a final determination on the cost of the policy, so be sure to keep them up to date and reflective of the day-to-day operations and expected conduct of employees. Nonprofit organizations are also at risk.

Determine Effective Dates: Policies are written on a “claims made” basis, and a policy must be in effect before a claim will be considered. Retroactive claims are available only as a special policy addendum and are most frequently used in combination with an acquisition or other unique event.

Annual Review: EPLI may be part of a comprehensive directors and officers policy or a stand-alone policy. It is important to do an annual review. Be sure your insurance changes with the company, including new situations, growth or downsizing, or other unique needs and demands. Call my office to coordinate each form of insurance so they complement rather than compete with one another.

Prevention is Still the Best Policy: The very best plan of action is to try to prevent this type of litigation from occurring in the first place. In a perfect world that may be possible, but today even the most diligent business owners face financial ruin from an unfounded lawsuit. According to the Society for Human Resource Management, 57% of respondents to a survey indicated their organization had faced an employment-related lawsuit in the prior five-year period. Even if a business owner wins, though, the owner may still be on the losing side simply due to the cost of defending the company. In fact, it’s not uncommon for employers to settle out of court in an attempt to cap out-of-control costs. By working with a knowledgeable agent, it is possible to develop a plan of action and human resource guide that reduce the bad behavior and unanticipated outcomes that could result in an employee-related lawsuit.

One of the worst possible scenarios for the average small-business owner is the inability to conduct business. It could be due to a natural disaster or something as small as a major supplier going out of business.

Whatever the cause, the impact is clear – a loss of earning potential and inability to fulfill orders or conduct business.

Fortunately, there is a way to prepare for the worst by purchasing business interruption insurance.

This special type of policy provides protection in the event a business is not able to operate or function. It typically will reimburse the business for lost profits and provide additional funds needed to pay continuing expenses, including the need to reopen in a temporary location or the cost to relocate. Unlike traditional insurance policies that cover damages liability claims or damages to property, business interruption insurance helps offset the indirect costs associated with other losses.

Many small business owners find this an invaluable form of protection. In fact, nearly any small business owner who cannot afford to lose an income stream is likely to benefit.

It is becoming standard practice for business partners, suppliers and providers to demonstrate some level of interruption insurance or other accountability in order to become an exclusive vendor.

Otherwise, it’s wise to have a secondary supplier for critical items or services.

Small business owners wishing to compete for exclusive service rights are especially likely to benefit from the additional layer of protection that is offered by interruption insurance.

Obtaining commercial auto insurance coverage can be confusing.

Following are some ways to take the sting out of shopping for insurance:

1. Take Inventory: Take time to evaluate current coverage options and needs. Make a list of all automobiles and vehicles used in the course of your business, including personal use of company cars and business use of private vehicles. In general, it is better to be safe than sorry when allowing the personal use of a company car or the business use of a private vehicle. When in doubt, buy commercial coverage. Keep track of:

• Make and model of all vehicles and percentage of time used for business purposes.
• Type of business, name of business, industry and clients served.
• Ownership of each vehicle.
• Driver of each vehicle.
• Primary business use of each vehicle and location.

2. Evaluate Options: There are several coverage options available when selecting commercial auto coverage. For example, you need to think about fleet insurance versus individual auto policies. In general, fleet insurance tends to be more cost effective for larger needs, but it often depends on the total number of vehicles, usage patterns and other criteria.

3. Ask About Discounts: Commercial auto coverage can be reduced via careful planning and preparation. Call my office about discounts for any of the following which may apply:

• Safe drivers.
• Type of vehicle.
• Higher deductibles.
• Anti-theft and other safety devices.
• Location of business operations, parking and off-site storage.
• Number of prior claims.
• Coverage limits and exclusions.

4. Consider the Name: Deciding how to list the insured driver isn’t quite as simple as it may sound when working with a commercial policy. Depending on the type of business, ownership of the vehicle and even status of the driver, the insured party needs to be specified in the policy. Be sure to speak with my office to assure the name of the insured is properly recorded when purchasing or amending a policy.

5. Liability Limits: Commercial auto coverage typically includes higher liability limits. For example, even $1 million or more might not be sufficient, especially if your business deals with transportation of vulnerable populations, hazardous materials or expensive items. Ask me about liability limits and other special considerations.

6. Additional Options: Many small business owners find it helpful to purchase additional layers of protection when buying a commercial auto policy.

7. Equipment and Addendums: Do not make the mistake of assuming that all equipment is included in the standard commercial policy. Specialized vehicles that hold equipment, generators or other attached machinery may require additional coverage addendums.

As a small-business owner, you are accustomed to taking risk.

After all, building a business takes a lot of hard work and effort with little guaranteed reward.

One way to reduce risk and save money on insurance premiums and claims is to know how to appropriately respond to an accident or injury.

Fortunately, with a bit of planning and preparation, it’s possible to dramatically impact the outcome of an accident.

Following are some tips to help you reduce risk and make sure everyone remains as safe as possible:

1. Remain Calm and Objective: Even if you suspect an employee contributed to the accident or that the accident is unrelated to the workplace, it is important to remain as levelheaded as possible. Treat every accident as legitimate and respond to the situation with appropriate measures, including first aid or medical attention, and refrain from voicing personal concerns, objections or accusations.

2. File Accident Reports: Workers’ compensation laws vary from state to state, but it is important to file an accident report as soon as possible if there are job-related injuries. Be sure to collect a statement from anyone involved in an accident, as well as from bystanders. Remember, several different agencies and organizations may be involved, including your commercial auto policy, small-business liability, personal umbrella policy and workers’ compensation, depending upon the nature of the accident and persons impacted. If you suspect foul play or intentional misrepresentation, contact the police and your insurance agent as soon as possible.

3. Document Everything: Take plenty of photographs, obtain written statements and retain all records related to an accident for at least seven years even if there were no additional claims. Obtain an accident report and copies of any other documents that may be pertinent. In the event a problem arises later on, you will have all the necessary information required to respond to a claim.

4. Prevention Is the Best Practice: Without a doubt, the best defense is a good offense when it comes to responding to accidents. Protect yourself by creating a comprehensive safety process that covers how accidents are to be reported, the use of company property and other expectations. Be sure every employee is provided with a copy when hired. It’s a good idea to work closely with your insurance agent to make sure the policy reflects the forms of coverage held by your company and to identify potential areas of concern.

5. Review Annually: Gaps in coverage can easily occur when new assets or employees are brought on board, so be sure to review policies and coverage options at least annually. Workers should be notified in writing of major modifications to the safety policy with a letter of acknowledgment included in personnel files for future reference.

6. Obtain Legal Advice When Needed: If you aren’t sure about your options, it might be worth the time and effort to have your attorney review items beforehand. Common examples include filling out insurance forms, meeting with insurance representatives and even signing checks. In most instances your insurance agent will be able to provide the guidance and information needed, but specialized circumstances may dictate the need for additional counsel or legal advice.

Enterprise Risk Management (ERM) is a term making the rounds through small business entities across the nation.

There are a number of things you should know about ERM.

ERM refers to the methods and processes adopted by a business to control risk.

Forms of Risk Commonly Managed

There are several areas that may fall under the ERM category:

• capital management
• financial management
• operational risk
• strategic risk

Each area presents unique liabilities, which can be detrimental to the health of a company. Properly managed, each possible problem is defined and then weighted according to the likelihood and impact. Steps are then taken to reduce risk.

Issues and Insight

Research indicates that nearly 45% of small business owners do not have an ERM in place, yet more than one in three also indicate they were caught off guard by an operational surprise. Unfortunately, in an effort to avoid problems and limit risk, some small business owners actually create even larger problems by implementing ineffective protocols or even illegal provisions. It’s essential to work with a knowledgeable insurance agent to avoid complications.

Those seeking funding should also implement an effective ERM as soon as possible. Standard and Poor’s and banks intend to incorporate ERM into credit rating scores by the end of 2010.