What is homeowners insurance?
Monday, December 7th, 2009 | Personal Lines | No Comments
December 7, 2009 – Homeowners insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it.
Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners’ responsibility.
How can I insure my home-based business?
Monday, December 7th, 2009 | Business Insurance | No Comments
December 7, 2009 – Let’s face it. Launching and running a business takes capital, motivation and yes, even physical stamina to handle the stress and demands of a new or growing venture. And it’s risky. In fact, one out of every five businesses fails within the first five years of opening.
Handling inventory, scheduling time, purchasing supplies, handling payroll — there are a myriad of procedures every home or small business entrepreneur needs to know, but one of the most critical and often neglected is buying proper insurance coverage.
Taking a Business Inventory
What would happen if a fire or other disaster destroyed your property, making it impossible for you to get back to business right away? Would you remember what property had been destroyed? One way is by taking a complete inventory of all your personal business property, determining its value, and deciding what’s worth insuring. Having an up-to-date business inventory will help you get your insurance claim settled faster, verify losses for your business’ income tax return and help you purchase the correct amount of insurance.
Start by making a list of personal business property, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals you have.
What Is the Right Coverage for You?
Then there’s the question of what types of coverages you’ll need. Aside from personal business property, there is liability insurance, business income, insurance for the building, boiler and machinery, human failure, employee protection and management protection, among others. The type of coverage you need depends on a number of factors including what kind of business you operate.
How to Keep Costs Down
The key to minimizing your insurance cost is to shop around and obtain several options and quotes. An independent commercial insurance broker is able to access multiple carriers and will present a comparison of coverage and premiums for you to consider. Contact Pacific Way at 909-599-1972 to discuss your exposures and insurance needs.
What does a businessowners policy cover?
Monday, December 7th, 2009 | Business Insurance | No Comments
December 7, 2009 – Insurance companies selling business insurance offer policies that combine protection from all major property and liability risks in one package. (They also sell coverages separately.) One package purchased by small and mid-sized businesses is the businessowners policy (BOP). Package policies are created for businesses that generally face the same kind and degree of risk. Larger companies might purchase a commercial package policy or customize their policies to meet the special risks they face.
BOPs include:
- Property insurance for buildings and contents owned by the company — there are two different forms, standard and special, which provides more comprehensive coverage.
- Business interruption insurance, which covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business. It can also include the extra expense of operating out of a temporary location.
- Liability protection, which covers your company’s legal responsibility for the harm it may cause to others. This harm is a result of things that you and your employees do or fail to do in your business operations that may cause bodily injury or property damage due to defective products, faulty installations and errors in services provided.
BOPs do NOT cover professional liability, auto insurance, worker’s compensation or health and disability insurance. You’ll need separate insurance policies to cover professional services, vehicles and your employees.
Small Business Insurance Basics
Monday, December 7th, 2009 | Business Insurance | No Comments
December 7, 2009 – Insurers often combine a number of insurance coverages into a package that is sold as a single contract. The most common policy for small businesses is the Businessowners Policy (BOP).
The BOP includes business income insurance, sometimes called business interruption insurance. This compensates a business owner for income lost following a disaster. Disasters typically disrupt operations and may force a business to vacate its premises. Business income insurance also covers the extra expense that may be incurred if a business must operate out of a temporary location.
To cover specific risks associated with a business, a variety of additional coverages may be added to the basic BOP. For example, if a business has an outdoor sign, the BOP doesn’t cover it unless coverage is specifically added for an additional premium. If a business relies on electronic commerce, the owner can add coverage for lost income and extra expenses in the event the ability of the business to conduct e-commerce is slowed down or stopped due to a computer virus or hacker.
Only small- to medium-sized businesses that meet certain criteria are eligible for a BOP. Factors insurers consider include the size of the premises, the required limits of liability, the type of business and the extent of offsite activity. Premiums for BOP policies are based on those factors plus business location, financial stability, building construction, security features and fire hazards.
Major Coverages
Most small businesses need to purchase at least the following four types of insurance.
1. Property Insurance
Property insurance compensates a business if the property used in the business is lost or damaged as the result of various types of common perils, such as fire or theft. Property insurance covers not just a building or structure but also what insurers refer to as personal property, meaning office furnishings, inventory, raw materials, machinery, computers and other items vital to a business’s operations. Depending on the type of policy, property insurance may include coverage for equipment breakdown, removal of debris after a fire or other destructive event, some types of water damage and other losses. It may also provide operating funds during a period when the business is trying to get back on track after a catastrophic loss.
2. Liability Insurance
Any enterprise can be sued. Customers may claim that the business caused them harm as the result of, for example, a defective product, an error in a service or disregard for another person’s property. Or a claimant may allege that the business created a hazardous environment. Liability insurance pays damages for which the business is found liable, up to the policy limits, as well as attorneys’ fees and other legal defense expenses. It also pays the medical bills of any people injured by, or on the premises of, the business.
3. Business Auto Insurance
A business auto policy provides coverage for autos owned by a business. The insurance pays any costs to third parties resulting from bodily injury or property damage for which the business is legally liable, up to the policy limits.
4. Workers Compensation Insurance
In all states but Texas an employer must have workers compensation insurance when there are more than a certain number of employees, varying from three to five, depending on the state. Workers comp insurance, as this coverage is generally called, pays for medical care and replaces a portion of lost wages for an employee who is injured in the course of employment, regardless of who was at fault for the injury. When a worker dies as a result of injuries sustained while working, the insurance provides compensation to the employee’s family. An extremely small business, such as one operated by one or two people out of a home, may not need workers compensation insurance. But it often needs more property and liability insurance than is provided in a typical homeowners policy.
Other Types of Business Coverages
1. Errors and Omissions Insurance/Professional Liability
Some businesses involve services such as giving advice, making recommendations, designing things, providing physical care or representing the needs of others, which can lead to being sued by customers, clients or patients claiming that the business’s failure to perform a job properly has injured them. Errors and omissions or professional liability insurance covers these situations. The policy will pay any judgment for which the insured is legally liable, up to the policy limit. It also provides legal defense costs, even when there has been no wrongdoing.
2. Employment Practices Liability Insurance
Employment practices liability insurance covers (up to the policy limits) damages for which an employer is legally liable such as violating an employee’s civil or other legal rights. In addition to paying a judgment for which the insured is liable, it also provides legal defense costs, which can be substantial even when there has been no wrongdoing.
3. Directors and Officers Liability Insurance
Directors and officers liability insurance protects directors and officers of corporations or not-for-profit organizations if there is a lawsuit claiming they managed the business or organization without proper regard for the rights of others. The policy will pay any judgment for which the insured is legally liable, up to the policy limit. It also provides for legal defense costs, even where there has been no wrongdoing.
4. Key Employee Insurance
Life or disability income insurance can compensate a business when certain key employees die or become disabled. These coverages cushion some of the adverse financial impact that results from losing a key employee’s participation.
5. Umbrella Policies
As the name implies, an umbrella liability policy provides coverage over and above a business’s other liability coverages. It is designed to protect against unusually high losses. It provides protection when the policy limits of one of the underlying policies have been used up. For a typical business, the umbrella policy would provide protection beyond the general liability and auto liability policies. If a company has employment practices liability insurance, directors and officers liability, or other types of liability insurance, the umbrella could provide protection beyond those policy limits as well.
Call Pacific Way at 909-599-1972 to discuss your small business insurance needs.
Developing a Small Business Disaster Recovery Plan
Monday, December 7th, 2009 | Risk Management | No Comments
December 7, 2009 – Of all businesses that close down following a disaster, more than 25 percent never open their doors again. While there’s no way to lower the risk of a natural disaster like a hurricane, there are critical measures that can be taken to protect your company’s bottom line from nature’s fury. A disaster plan and adequate insurance are keys to recovery.
Develop a Disaster Recovery Plan
No matter how small or large a business, a business impact analysis should be developed to identify what an operation must do to protect itself in the face of a natural disaster. Large corporations often hire risk managers to handle this task and some companies hire consultants with expertise in disaster planning and recovery to assist them with their plans. But small businesses can do the analysis and planning on their own.
Steps for Developing a Business Recovery Plan
- Set up an emergency response plan and train employees how to carry it out. Make sure employees know whom to notify about the disaster and what measures to take to preserve life and limit property losses.
- Write out each step of the plan and assign responsibilities to employees in clear and simple language. Practice the procedures set out in the emergency response plan with regular, scheduled drills.
- Compile a list of important phone numbers and addresses. Make sure you can get in touch with key people after the disaster. The list should include local and state emergency management agencies, major clients, contractors, suppliers, realtors, financial institutions, insurance agents and insurance company claim representatives.
- Decide on a communications strategy to prevent loss of customers. Post notices outside your premises; contact clients by phone, email or regular mail; place a notice in local newspapers.
- Consider the things you may need initially during the emergency. Do you need a back-up source of power? Do you have a back-up communications system?
- Human Resources. Protect employees and customers from injury on the premises. Consider the possible impact a disaster will have on your employees’ ability to return to work and how customers can return to your shop or receive goods or services.
- Physical Resources. Inspect your business’ plant(s) and assess the impact a disaster would have on facilities. Make sure your plans conform to local building code requirements.
- Business Community. Even if your business escapes a disaster, there is still a risk that it could suffer significant losses due to the inability of suppliers to deliver goods or services or a reduction in customers. Businesses should communicate with their suppliers and markets (especially if they are selling to a business as a supplier) about their disaster preparedness and recovery plans, so that everyone is prepared.
- Protect Your Building. If you own the structure that houses your business, integrate disaster protection for the building as well as the contents into your plan. Consider the financial impact if your business shuts down as a result of a disaster. What would be the impact for a day, a week or an entire revenue period?
- Keep Duplicate Records. Back-up computerized data files regularly and store them off-premises. Keep copies of important records and documents in a safe deposit box and make sure they’re up-to-date.
- Identify critical business activities and the resources needed to support them. If you cannot afford to shut down your operations, even temporarily, determine what you require to run the business at another location.
- Find alternative facilities, equipment and supplies, and locate qualified contractors. Consider a reciprocity agreement with another business. Try to get an advance commitment from at least one contractor to respond to your needs.
- Protect computer systems and data. Data storage firms offer offsite backups of computer data that can be updated regularly via high-speed modem or through the Internet.
Review Your Insurance Plan
Make sure you have sufficient coverage to pay for the indirect costs of the disaster—the disruption to your business—as well as the cost of repair or rebuilding. Most policies do not cover flood or earthquake damage and you may need to buy separate insurance for these perils. Be sure you understand your policy deductibles and limits.
New additions or improvements should also be reflected in your policy. This includes construction improvement to a property and the addition of new equipment.
For a business, the costs of a disaster can extend beyond the physical damage to the premises, equipment, furniture and other business property. There’s the potential loss of income while the premises are unusable. Your disaster recovery should include a detailed review of your insurance policies to ensure there are no gaps in coverage. Your policy should include business interruption insurance and extra expense insurance. Even if your basic policy covers expenses and loss of net business income, it may not cover income interruptions due to damage that occurs away from your premises, such as to your key customer or supplier or to your utility company. You can generally buy this additional coverage and add it to your existing policy.
Basic Commercial Insurance to Consider
- Building Coverage provides coverage up to the insured value of the building if it is destroyed or damaged by wind/hail, or another covered cause of loss. This policy does not cover damage caused by a flood or storm surge nor does it cover losses due to earth movement, such as a landslide or earthquake, unless added by endorsement.
- Business Personal Property provides coverage for contents and business inventory damaged or destroyed by wind/hail, or another covered cause of loss.
- Tenants Improvements and Betterments provides coverage for fixtures, alterations, installations, or additions made as part of the building that the insured occupies but does not own, which are acquired and made at the insured’s expense.
- Additional Property Coverage provides for items such as fences, pools or awnings at the insured location. Coverage limits vary by type of additional property.
- Business Income provides coverage for lost revenue and normal operating expenses if the place of business becomes uninhabitable after a loss during the time repairs are being made.
- Extra Expense provides coverage for the extra expenses incurred, such as temporary relocation or leasing of business equipment, to avoid or minimize the suspension of operations during the time that repairs are being completed to the normal place of business.
- Ordinance or Law provides coverage to rebuild or repair the building in compliance with the most recent local building codes.
For more information and free consultation with Roobik Galoosian call Pacific Way at 909-599-1972.
Do I need professional liability insurance?
Monday, December 7th, 2009 | Business Insurance | No Comments
December 7, 2009 – Professionals that operate their own businesses need professional liability insurance in addition to an in-home business or businessowners policy. This protects them against financial losses from lawsuits filed against them by their clients.
Professional liability insurance is a specialty coverage. Professional liability coverage is not provided under homeowners endorsements, in-home business policies or businessowners policies (BOPs).
Call Pacific Way at 909-599-1972 to discuss your professional liability exposures.
What is employment practices liability insurance (EPLI)?
Monday, December 7th, 2009 | Business Insurance | No Comments
December 7, 2009 – EPLI covers businesses against claims by workers that their legal rights as employees of the company have been violated.
The number of lawsuits filed by employees against their employers has been rising. While most suits are filed against large corporations, no company is immune to such lawsuits. Recognizing that smaller companies now need this kind of protection, some insurers provide this coverage as an endorsement to their Businessowners Policy (BOP). An endorsement changes the terms and conditions of the policy. Other companies offer EPLI as a stand-alone coverage.
EPLI provides protection against many kinds of employee lawsuits, including claims of:
- Sexual harassment
- Discrimination
- Wrongful termination
- Breach of employment contract
- Negligent evaluation
- Failure to employ or promote
- Wrongful discipline
- Deprivation of career opportunity
- Wrongful infliction of emotional distress
- Mismanagement of employee benefit plans
The cost of EPLI coverage depends on your type of business, the number of employees you have and various risk factors such as whether your company has been sued over employment practices in the past. The policies will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements. The policy covers legal costs, whether your company wins or loses the suit. Policies also typically do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies such as workers compensation are excluded from EPLI policies.
To prevent employee lawsuits, educate your managers and employees so that you minimize problems in the first place:
- Create effective hiring and screening programs to avoid discrimination in hiring.
- Post corporate policies throughout the workplace and place them in employee handbooks so policies are clear to everyone.
- Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor. Make sure supervisors know where the company stands on what behaviors are not permissible.
- Document everything that occurs and the steps your company is taking to prevent and solve employee disputes.
Call Pacific Way at 909-599-1972 to discuss EPLI coverage for your business.
Do I need workers compensation insurance?
Monday, December 7th, 2009 | Workers Compensation | No Comments
December 7, 2009 – Employers have a legal responsibility to their employees to make the workplace safe. However, accidents happen even when every reasonable safety measure has been taken.
To protect employers from lawsuits resulting from workplace accidents and to provide medical care and compensation for lost income to employees hurt in workplace accidents, in almost every state, businesses are required to buy workers compensation insurance. Workers compensation insurance covers workers injured on the job, whether they’re hurt on the workplace premises or elsewhere, or in auto accidents while on business. It also covers work-related illnesses.
Workers compensation provides payments to injured workers, without regard to who was at fault in the accident, for time lost from work and for medical and rehabilitiation services. It also provides death benefits to surviving spouses and dependents.
Each state has different laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services and how the system is administered. For example, in most states there are regulations that cover whether the worker or employer can choose the doctor who treats the injuries and how disputes about benefits are resolved.
Workers compensation insurance must be bought as a separate policy. Although in-home business and businessowners policies (BOPs) are sold as package policies, they don’t include coverage for workers’ injuries.
Cash Flow Management Crucial to Small Businesses
Thursday, June 25th, 2009 | Business Insurance | No Comments
June 25, 2009 – The heartbeat of any small business is its cash flow. That’s why it’s so important for small businesses to pay careful attention to successfully managing their cash flow.
What is cash flow? It’s the difference between receipts and payments and it shouldn’t be confused with profit and loss or income and expenditure. During these rocky economic times, cash flow management is often a challenge, particularly when small businesses are faced with paying large premium down payments for their workers’ compensation insurance.
Roobik Galoosian of the Pacific Way states, “There is a new solution to this old problem for small businesses – a pay-as-you-go premium payment service for those small businesses that have a Hartford workers compensation policy and use Intuit® QuickBooks®.” This new service is named XactPAY Web®. It’s a payroll-based premium calculation and billing service offered through Hartford agents that allows small business owners to take care of workers’ compensation premium payment on a pay-as-they-go basis, one pay period at a time.
Roobik adds, “QuickBooks dominates the “do-it-yourself” payroll management software market with over 3 million small business customers.” Of these 3 million, 1 million utilize QuickBooks to manage their payroll. The Hartford is the first insurance carrier to offer a pay-as-you-go workers’ compensation premium payment services for QuickBooks’ customers.
XactPAY Web integrates fully with a business’ Intuit QuickBooks Payroll software and automatically calculates the premiums for Hartford-issued workers’ compensation policies each time payroll is run using QuickBooks Payroll. This new system helps improve the business’ cash flow by eliminating the need for large down payments and minimizing the potential for year-end audit adjustments. Traditional billing methods have crimped cash flow by requiring employers to pay all or part of the year’s workers’ compensation premiums in advance, potentially tying up thousands of dollars at the beginning of each year.
Roobik adds, “This free solution can help small businesses where it matters most – keeping more cash in hand.”
To learn more about XactPAY Web and Intuit payroll, visit www.qbpayroll.com/xactpay or call Pacific Way.
QuickBooks® is a registered trademark and service mark of Intuit Inc. in the United States and other countries, and is displayed herein with permission. XactPAY Web® is a special edition for QuickBooks users with (1) a 2007 or newer version of any PC Desktop version of QuickBooks, and (2) a subscription for Intuit QuickBooks Basic, Standard, Enhanced or Assisted Payroll (XactPAY Web is not available to QuickBooks Online Payroll subscribers). Intuit Inc. receives a royalty fee from The Hartford in connection with The Hartford’s use of the Intuit name, marks and other property, which are used for purposes of marketing the XactPAY Web service. The purchase of a Hartford Workers’ Compensation policy is necessary to utilize the XactPAY Web service. All insurance policies offered by The Hartford are sold through licensed insurance producers or agents appointed by The Hartford.
Tempted to Cut Back on Insurance? Think Twice.
Thursday, June 25th, 2009 | Business Insurance | 1 Comment
June 25, 2009 – During these trying financial times, you may be looking for ways to trim the monthly expenses of your small business – perhaps you’ve toyed with the idea of cutting back your insurance coverage.
Roobik Galoosian of Pacific Way suggests that you think twice. “An underinsured business may not have the coverage needed to survive a fire, a theft or an accident on your premises.” Roobik adds that the best course of action is to go over your insurance coverage with your insurance agent.
You may have made improvements to your building or purchased new equipment. That may mean you need to update your coverage. Or, the value of your real estate may have fallen and it might make sense to reduce coverage. But, it’s never wise to decide against the coverage you need to help your business survive. For example, business interruption insurance may be available through your business owner’s policy, or BOP. This insurance provides coverage for a business’ expenses and lost profits if the business can’t operate for a variety of reasons. While this coverage may increase your premium payment, it can make the difference between survival and failure if your business can’t operate because of a disaster.
Your insurance agent can help you to understand your insurance and to evaluate your level of coverage. Roobik Galoosian says, “You may also find that your business needs a policy that is tailored to your particular line of work. The Hartford has a particularly good BOP that can be custom-tailored for the unique needs of your industry with competitive prices.”
For more information, you can visit the Insurance Information Institute Web site: http://www.iii.org/smallbusiness/intro. You’ll find explanations of a variety of business coverages and also descriptions of specific coverages that might be needed in various industries.