Risk & Business

One of the more difficult areas for the small business owner to address when setting up their business insurance policy is setting up the property damage limits. There are 2 standard approaches, either using replacement cost, (RC), or actual cash value, (ACV). Replacement cost is defined as the cost to replace the property new today with material of like kind or quality. ACV is replacement cost less physical depreciation. Remember that when insuring real property, either through the RC or ACV options, to exclude land value value since nearly all policies exclude coverage for any damage to land, landscaping or pavements. Usually the best place to start is with a professional appraisal when arriving at insurable values. The best place to start is in your local directory or by searching locally on the internet for appraisal firms. Typically, appraisals are prepared for the market value of the property, using either a cost approach, an income approach or a market approach. The inc...

When a small business owner is setting up a property/liability policy for their business, an important area, not often given enough consideration, are properly identified insureds in the policy. Remember, the insurance policy is a contract, and while you expect the insurance company to fulfill it's obligations should a covered loss occur, the same is expected of you. Remember, an entity not identified in a specific schedule of insured entities will not be covered for its insurable interest in direct damage to its real and personal property. Additionally, real and personal property of an entity not identified as a named insured may be overlooked when creating a schedule of insured locations and insurable values. The best way to ensure you have all entities covered is to create a master list showing all entities to be covered under the policy and including their insurable interest and any location or locations their interest applies to. Remember, many small business owners m...

Most of you are aware of business income coverage, coverage that protects against loss of revenue due to a covered loss of property. While this is the most often used income coverage, there is another out there that you might not be aware of and it could possibly be of great importance to some of you. The coverage in question, Contingent Business Interruption Coverage is for loss of income due to damage by an insured peril to non-owned property. Many of you have a contingent business interruption exposure that you might have overlooked if you haven't thoroughly reviewed your exposures. The exposures this coverage would apply to are - Key Suppliers - if a sole supplier of a key component used in the insured's product suffers a major property loss and the insured is unable to replace the product with another, the resulting loss of revenue can be insured; Key Customers - if 10 percent or more of revenue is dependent on a single customer, coverage can be purchased to insure the...

In reviewing your policy you probably have seen the above term, "Ordinance or Law Coverage" and probably didn't pay much attention, believing it to be just another of those insurance terms stuck in to your policy having no real impact upon you and your coverage. It might be important for you to pay attention to this coverage and how it impacts you. Ordinance or Law Coverage protects against the increased loss incurred by the insured due to the enforcement of building, zoning, or land use laws. Such costs could include changes to comply with the Americans with Disabilities Act (ADA), new earthquake reinforcement requirements, or new life safety requirements. This coverage would most likely be of greater importance to those business owners that own their own building. This coverage can be broken down into four parts - Demolition Cost - Pays the cost to demolish and clear undamaged parts of the property due to enforcement of building, zoning, or land use laws...

Oftentimes clients have called in requesting a performance bond on a new job they have successfully bid on. While access to these types of bonds is fairly easy to obtain, more often than not most insureds are unaware of the actual implications of the bond and what is required to successfully obtain one. The typical bond required by most construction type risks is the performance bond. A performance bond is a type of surety bond that is typically required to obtain the contract and provides financial guarantees to the owner that the contractor will fulfill the contract according to the parameters laid out in advance. In order to obtain the bond the surety company will conduct an investigation into the contractor's fiscal health, usually through the use of tax returns, corporate financial statements, etc. Once the surety is satisfied then a bond is issued in the amount specified under the contract. An important note for the contractor to take into account is that if they fail t...