Business Insurance

Additional Items You May Consider

Actual Cash Value

Not to be confused with Market Value. ACV is calculated by taking what the Replacement Cost of the Item would be, minus the amount of the item used (depreciated value), equalling the dollar amount of the remaining life expectancy of the item. We would strongly suggest Replacement Cost Coverage, not Actual Cash Value.

Builders Risk

This coverage can be characterized in extremely broad strokes or thin lines. Basically, builders risk insurance covers a building or renovation projects for loss during construction (usually only provides property based coverages). On one hand, builders risk can provide coverage for equipment used on a specific job site, materials to be installed, fixtures, and sometimes even liability coverage; and on the other hand, builders risk may exclude contractor issues regarding collapse of the structure, improper work, etc. Explore your options with your insurance broker before starting a building project to determine if a builders risk insurance plan is right for you.

Certificate Wording

The first time many businesses purchase insurance is due to a contract requirement. We find contract requirements to usually include a section about insurance as it relates to the specific work the business is conducting. The agreements will likely include general liability insurance but it could also include some of the following lines of business : Commercial Auto (Hired and Non Owned included), Commercial Umbrella/Excess, Workers Compensation, and Professional Liability (just to name a few examples). Further, each coverage listed will usually have a limit of insurance noted; $1,000,000 or $2,000,000 and sometimes upwards of $5,000,000 and $10,000,000. Apart from coverages and their associated limits of insurance, there are other requirements that could include: Additional Insured, waivers of subrogation, primary and noncontributory wording, amongst many others.

Coinsurance

Coinsurance only becomes a problem when you fail to insure the property in question to the appropriate limits. If you fail to insure you property to the appropriate limits, you would face a penalty that could cost your business it’s financial future. Here is our suggestion, insure the property in question to at least 100% of its replacement value, not its Market Value.

Corporate Malfeasance

This is more of an issue than it is an insurance matter. When owners and executives in a business knowingly make ‘bad’ decisions for the business and the business suffers along with others involved in the business, such is a problematic insurance situation. In most cases no matter what kind of coverage you have, there is no coverage for this sort of thing. However, a directors and officers insurance policy could provide some defense costs perhaps. Just keep in mind that just because you have insurance doesn’t mean ‘everything is fully covered.’

Directors & Officers Insurance

Boards of Nonprofits would want to see this coverage active and in force. Directors and Officers Insurance provides defense and liability coverage for which the board members become legally liable for as decision makers of the respective Non-Profit Board. In other words, the board members become personally liable for the decisions they make as board members, and directors and officers insurance (D&O) is what can help protect the business and its board.

Employment Practices Liability Insurance

This type of liability insurance is utilized and activated during the employment process as well as the hiring/firing process. EPLI Coverage can also apply to circumstances when other employees discriminate against fellow employees. Usually the types of Employment Practices Claims seen are workplace conduct claims, discrimination claims, wrongful hiring and firing claims, failing to promote, and the inappropriate and unwanted sexual advances of a manager or employee, just to name a few (you would also want to make sure you add Sexual Abuse and Molestation coverage into your insurance program to ensure the best chance for a positive result). Although you can purchase this coverage as stand-alone we usually see EPLI covered under Directors and Officers Insurance and even under Business Owners Insurance Plans.

False Pretense

This type of insurance would pay up to the chosen limit if you willingly give something of value to someone else, with the expectation of getting the ‘thing’ back in the future, or with the plan of getting paid for that ‘thing.’ An example of this would be the following : Let us look at a clothing retailer as an example of one of our customers. This company, we will call it Kelly’s Fashions, has a bunch of really nice trunk show one-offs from last season. One day, Kelly’s Fashions receives a call from another clothing wholesaler offering to buy last year’s stock for a great price. Kelly’s Fashions sends the merchandise as promised, but there is a problem with the payment that was discovered after Kelly’s Fashions sent the merchandise. As it turns out this was a scam from the get-go – FALSE PRETENSE COVERAGE.

Hired & Non-Owned Auto Insurance

Does your company use your personally owned vehicle for your company? Do you rent trucks or use other peoples’ vehicles during your work? Rental Vehicles that you rent under your business name will require hired and non-owned auto insurance liability. If you have employees’ that are using their own personal vehicles for the production then you would need to carry this hired and non-owned auto insurance liability for producers. Hired and Non Owned Auto Liability protects the assets of the business when operating vehicles not specifically owned by the business. This HNOA (abbreviation for Hired and Non Owned Automobile Liability Coverage). HNOA coverage can typically be packaged along with a commercial package policy or business owners policy.

Liquor Liability Insurance

If you are an establishment that sells, serves, or helps in any way in the purchase or even consumption (in some cases) there is a chance that someone could get hurt and property could get damaged due to someone getting drunk. Liquor Liability Coverage can be purchased for a bar, restaurant, nightclub, and even for events such as weddings, and festivals.

Patent Insurance

There are two different types of applicable coverage when dealing with patent based insurance coverages. Liability Only – This type of Patent Infringement covers the liability you may cause if you infringed on someone else’s patent. Patent Litigation insurance, a 1st Party type property related coverage, helps hire attorneys and compile a case in the event that you have found your intellectual property (patent) has been infringed.

Host Liquor Liability

Only provides coverage under the general liability form if the insured is not in the business of manufacturing, selling, serving, or furnishing alcoholic beverages. Full Liquor Coverage provides coverage under a separate liquor liability form.

Owner Controlled Insurance Program – OCIP & WRAP

Building projects requiring forensic type insurance programs for the purposes of control: An OCIP policy will provide the ability for contractors to submit bids irrespective of their experience modifications or their insurance program pricing. Plus, the buyer of the OCIP or WRAP policy (usually the property owner) has complete control over claims submissions, policy correspondence, etc.

Vehicle Use by Employees

Often, employees will use their own personal vehicle when conducting business dealings on behalf of their employer. When this happens, the employee is assuming the liability personally for this type of vehicle use. Further, any damage sustained to the employee’s vehicle during the business use is the responsibility of the employee. So, what ends up happening is the employee would end up submitting a personal auto insurance claim. Due to what could be an issue, many companies will ask their employees to show adequate liability limits and comprehensive and collision coverage on their personal policy (at least 100/300/100, call us if you are not sure what those numbers mean :)). There are a few things the business can do to protect itself for financially burdensome situations due to an accident involving an employee’s use of their own vehicle : The business should have Hired and Non Owned Auto Liability Insurance Coverage which would pick up liability claims for which your employee is responsible for over and above what their personal auto insurance covers. Establish an area of your employee handbook/manual that outlines vehicle use and who is responsible while operating a personal vehicle for business. If your business outlines in a signed agreement with your employees that your business is 100% completely responsible for the personal vehicle while used on business times, you could add Hired and Non-Owned Auto Liability Coverage along with Hired Car Physical Damage coverage and your business could actually fix the damages to your employee car and be the primary payer on an auto liability claim in which your employee was responsible for (while on business time).

Water Related Damage

As an example, let’s discuss an art gallery’s insurance program. An art gallery owner (named Ray) rents space directly from the building owner, there is no management company or sales office. The building owner/landlord is a shrewd businessperson, making life difficult for the tenants working and residing in the building. Before signing the lease, the art gallery owner knew that the landlord was ‘difficult,’ but the rent was cheap and the location was amazing. The owner of the art gallery thought the demeanor of the building owner was manageable considering the proposed amenities seemingly outweighed any negatives. Fast forward 11 months later and 5 or 6 fresh water spots on the ceiling of the art gallery from what appears to be a leak of some kind. After seeing the damage on a regular basis, the art gallery owner gets fed up. The landlord wasn’t actively making life troublesome for its tenants, but doing so in a passive manner through a complete dereliction of duty. So, the art gallery calls their insurance agency to submit a claim. The art gallery purposely spends a little more on insurance than most just to make sure they have all their bases ‘covered,’ and to all but guarantee

Workers Compensation

It is common practice, or at least it appears to be common, to see business owners excluding coverage for themselves under workers compensation insurance. We find this to be the case due to the cost savings to the business, and the usual health insurance that is in place for the owner in question. The problem is, primary health insurance is not meant to cover injuries and illnesses that occur on work time. Medicare coverage also indicates that it is not meant to cover work related injuries, either. So, if a business owner is injured on the job and assumes his health insurance company will pay for it without question, that is not necessarily the case. Plus, if you end up not being able to work due to the injury or sickness that happened on the job, your health insurance will not pay you for the time you had to take off from work. Workers Compensation, if the owners elect coverage, will not only provide the medical expenses, but also the wages (or cash equivalents) for those things that happen on the job. Apart from the above, if you have employees you are required by law to carrier workers compensation insurance. Another consideration regarding sub-contractors and 1099’s: If you are 1099’ing someone and it happens to be their only gig, and its a long gig, and you have alot of involvement in direction or proximity to this 1099’d person, you should probably consider purchasing workers compensation insurance. California recently passed a law regarding ‘gig workers,’ that points to the sentiments here in this section.

Workplace Violence Insurance

Although a difficult concept to consider, workplace violence related losses could be an exclusion on most of your insurance policies. In fact, it is more than likely that unless this coverage is specifically endorsed, there is no coverage. An example of this would be if a few patrons are injured due to an altercation at your establishment. If any of those patrons sued you due to the ‘fight’ that took place, you would need Workplace Violence coverage in order for such a claim to be paid. Usually Bars and Nightclubs would elect this coverage along with Documentary Filmmakers or Reality Show Producers.