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Business Protection Bulletin
831-661-5697 Website

WHY AN ANNUAL BUSINESS INSURANCE REVIEW IS CRUCIAL TO YOUR EVOLVING BUSINESS

Bookmark and Share Most new business owners are concerned that everything is favorable for the success and safety of their business, which includes obtaining the protection of business insurance. However, longevity and success can cause complacency. Let's say you started your business 10 years ago with just a small space and computer desk. Today, you have an office full of employees and equipment. Do you still have the same insurance policies from 10 years ago? If so, you might not realize how under-insured you've become. Business owners need to ensure they're reviewing their business insurance programs annually. Errors happen and circumstances change, even when policies were initially obtained with care and caution. Without yearly examinations, substantial expense and risk can ensue. It's common for small businesses to start out with basic insurances, such as Commercial Property and General Liability policies. However, as they evolve, most find they need other types of insurance, such as:
  • Excess Liability or Umbrella - covers claims exceeding your standard policy's limits.
  • Workers Compensation - once your business reaches a certain number of employees, this type of insurance will actually be required in most states to provide payments for an employee's lost wages and medical expenses following a workplace injury.
  • Professional Liability - covers your service-provided mistakes and usually your attorney fees.
  • Auto, Hired and Non-Owned - protects your business should an employee cause a vehicle accident in their personal or rented vehicle.
  • Commercial Auto - coverage not under personal auto policies, such as to your business and for employees unloading and loading.
  • Employment Practices Liability - coverage for HR issues, such as those related to termination, harassment, and discrimination laws.
  • Directors and Officers liability - financial protection for directors and officers should they be sued for wrongful acts stemming from performance of their duties.
  • Employee Benefits Liability - covers liability issues from an omission or error in the administration of an employee's benefits that results in the employee incurring a cost, such as a terminated employer losing benefits after not being providing with COBRA information.

Depending on your business, many of these insurances may be essential to adequately protect yourself. An annual insurance review is an ideal time to discuss these insurances, as well as your need for them, with your agent. Ensure the following elements are considered as you begin the review:

  • Revenue - more business is good, but it also means a greater potential for liability. Have annual sales changed?
  • Property - have you added equipment, computers, and such that would create a need to increase your commercial property policy's limits?
  • Location - your business owner's or general liability policy could be impacted if you've added, closed, or moved locations.
  • Travel - a hired and non-owned auto policy may be needed if your employees are frequently driving rented vehicles.
  • Employees - have you had an increase in your workforce, turnover rate, or use of contractors? Consider employment practices liability insurance for high turnover rates. Workers' compensation insurance may be a new requirement if you've added to your workforce.
  • Services - are you offering additional services? For certain types of work, you may need additional endorsements to your general liability policy.
  • Customers - are you serving new clients or industries? This may cause problems with your professional liability policy if you're servicing high concentrations of high-risk clients/industries.

The answers will be different for every business and usually won't remain the same over the business's life, and that's why insurance isn't a one-size-fits-all, unchangeable product. Take advantage of these attributes and annually review your business for exposures and insurance needs. Insurance may not cover everything, but it can certainly mitigate your risks. Start your annual business insurance review today with one of our insurance agents.

Scurich Insurance Services 831-661-5697 Website
 

QUESTIONS YOU NEED TO ASK BEFORE BUYING DISTRESSED COMMERCIAL PROPERTIES

Bookmark and Share The economic downturn that began in late 2007 has taken a severe toll on all sectors of the U.S. economy, but it hit the real estate sector especially hard. Real estate research company Green Street Advisors reported in March 2011 that commercial property values were 17% below their peak in August 2007. CoStar Group reported that the values of the highest quality office buildings, relatively new retail and industrial properties, and apartment complexes were down 33% since June 2007. These large price decreases might attract investors in search of good buying opportunities. However, potential buyers should look beyond the low purchase price when they evaluate these properties. The properties’ physical state, legal issues, and insurance considerations also affect whether they are smart investments.

Many of these properties were only partially completed when the financial crisis hit, so buyers must assess their economic viability and physical condition. They need to ask:

  • How much of the project has been completed and how much remains to be done?
  • Does any of the work need to be repaired or redone because the builder, facing financial difficulty, took shortcuts in material quality or construction?
  • Do the original construction plans comply with current building codes? Are there any design errors that need correction?
  • Are there any significant changes the buyer would like to make to the project?
  • What liabilities (debts, lawsuits, penalties, etc.) will the buyer assume with the property?
  • Who will be legally liable for any defects in the design or construction of the project?
  • If the original owner and builder are responsible for the problems, can the buyer recover from them?
  • What insurance covered the original project? Did one program apply to the entire project, or did each individual contractor have its own coverage?
  • Will the insurance apply to construction defects?
  • If a single wrap-up insurance policy covered the project, did it include a deductible or self-insured retention? If so, and the insured owner or contractor has declared bankruptcy and is unable to pay it, will the insurance still apply?
  • Are there special conditions that must be met before the policy will apply when the deductible or SIR cannot be paid?
  • Does the original wrap-up policy extend completed operations coverage beyond the policy’s expiration date? If so, for how long?

Prospective buyers need to pay special attention to Builders Risk insurance on the project. If the original developer bought this coverage, the policy might have cancelled after work on the project stopped. A policy purchased by the general contractor might still be in force, but the buyer should review its terms and conditions carefully. Due to the long period of inactivity, vacancy and unoccupancy provisions might have taken effect. The buyer should also check to see if the policy covers catastrophic perils such as flood and earthquake; lost income and extra expenses resulting from delays due to covered perils such as fire or vandalism; and the extent of coverage for testing.

Regardless how low a property’s price might be, it is no bargain if it comes with a host of physical and legal problems. Arranging insurance on a property with severe problems might be very difficult or even impossible. An insurance agent or broker experienced in obtaining coverage for such properties can help sift through the issues and identify appropriate policies. There is no substitute for a careful examination of a property and all that comes with it. Buyers who do their homework will uncover the profitable opportunities.

Scurich Insurance Services 831-661-5697 Website
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