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Archive for May, 2014

Ahoy! Ocean Marine Insurance

Saturday, May 31st, 2014

Ocean marine insurance is a type of transportation insurance which is intended to protect goods that are transported on the water.

It covers a large range of causes of loss, usually o a named peril basis, including sea perils like collision, stranding, high waves, loss or damage caused by pirates, jettison, or fire.

Marine insurance can cover the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.

Ocean marine insurance can take the form of a number of different contracts, depending on the requirements of the insured.

Cargo Insurance
Cargo insurance covers the shipper of goods or cargo in the event that the cargo has been damaged or lost.

Freight Insurance
Freight insurance protects the ship owner in case the cargo becomes damaged or lost.

Hull Insurance
Hull insurance is best described as resembling collision coverage in a car insurance policy. It provides coverage against against damage to the ship or other vessel. There is a deductible that goes along with hull insurance.

Hull insurance has an extra coverage, known as collision liability coverage which provides protection for ship owners in the event that their vessel causes damage to another vessel and its cargo, if necessary. This clause does not cover bodily injury liability.

Protection and Indemnity Insurance
Protection and indemnity insurance indemnifies the owner of the ship against liability arising from bodily injury or property damage to those other than the owner of the vessel.

Workers Comp: How To Reduce Your Premiums

Thursday, May 29th, 2014

We frequently hear the complaint that Workers Comp premiums are too high. The fact that it is legally necessary in all but one state leaves only one option: Find ways to reduce those premiums.

The first thing you want to do is to talk to your insurance professional to ensure that you are being billed appropriately.

You want to see to it that your employees are classified properly. The premiums vary, depending on their positions in your business. If they have been promoted or moved to other positions, you want to ensure that this information was received by the insurance company.

Rates are based partly on the amount of benefits paid, so the earlier an employee gets back to work, the lower the benefits paid. Work to get your injured employees back to work quickly. If you need to, you can set up a temporary job for them which is not physically taxing and allows the employee to come back to work on “light duty.”

Start a safety program which is created to keep your insured employees safe. Make sure that the offices are ergonomically correct. If they use industrial machines and equipment, make sure they wear safety glasses and helmets or whatever protective garb is recommended. Require employees who work in a warehouse or delivery truck to wear back braces and make sure they get training in correct lifting.

Whatever you do, you want to keep your carrier informed of safety changes and improvements made to the workplace.

Review your workers compensation annually when you review your other business insurance. Work with your licensed insurance professional and workers comp carrier to make sure your coverage, risk exposure, and premium is where they should be.

So, What If I Get Sued?

Tuesday, May 27th, 2014

We hear it said all the time: We live in a litigious society.

Before we get started, the simple definition of the word “litigious” is: inclined to go to law; tending or wanting to take legal action.

And so we do live in a litigious society! And as a business owner, you should be aware that more likely than not, you will be a target.

In 2010, the number of lawsuits filed in state courts was over 15 million. That is approximately one new law suit every two seconds. In terms of population, that’s one law suit for every 12 adults in this country.

During the same timeframe, the swelling numbers of malpractice law suits and resulting soaring premiums for malpractice insurance forced 10% of American obstetrician/gynecologists to stop delivering babies.

You will want to be sure that your general liability insurance is appropriate for your risk. It is that policy which protects your business when it is sued for something that is alleged your business did or did not do which contributed to property damage or personal injury to another person.

Furthermore, this coverage will pay those damages, but it will also pay toward the attorney fees and court costs, whether the law suit has merit or not.

The exclusions which usually go along with this sort of policy include employees’ claims of wrongful termination or discrimination, harassment, or wrongful termination. These sorts of suits are addressed by professional liability coverage and employee related practices coverage.

Don’t risk all you have worked for by neglecting this important coverage. Your licensed insurance professional will guide you to what coverage is needed today, and more important, how to protect the future as you grow your business.

Business Owner Policy Exclusions

Sunday, May 25th, 2014

A business owner policy is an extremely comprehensive coverage. It is usually written as an all-risk policy unless the insured requests the named peril policy.

All-risk coverage is an insurance policy which covers losses from any and all causes which are not specifically excluded in the policy.

Named peril coverage is a policy which covers only specific losses which are listed on the policy. It is the opposite of all risk-coverage.

Below is a list of perils which are usually excluded from business owner policies.

  • Nuclear hazard;
  • Operations executed by the government;
  • Military actions;
  • Weather conditions;
  • Smog or pollution;
  • Water, including flood, seepage, or sewer backup;
  • Earthquakes;
  • Intentional illegal actions performed by the named insured;
  • Criminal acts or fraud performed by the employees of the named insured;
  • Errors in the computer system of the insured business owner;
  • Errors and omissions in computer operations;
  • Explosion of machinery such as engines or boilers;
  • Power failure;
  • Damage or loss caused by normal wear and tear;
  • Loss of market;
  • Losses caused by animals, birds, or insects;
  • Decay, rust, or corrosion; and
  • Property loss resulting from faulty design, planning, or development.

    It is important that a business owner understands the exclusions and realizes that it is probable that different coverages need to be obtained to “fill in the holes” left in these exclusions.

    This is best done by working with a licensed insurance professional who understands what you do and how and can recommend the other coverages you may need to avail yourself of.

    What Is the Difference Between Actual Cash Value and Replacement Cost?

    Friday, May 23rd, 2014

    To begin with, let’s define the terms “actual cash value” and “replacement cost.”

    Actual Cash Value
    “Actual cash value” is a little tricky. The insurance industry’s definition of ACV is “the cost to replace with new property of like kind and quality, less depreciation.” Or course, in the case of outdated or one-of-a-kind items, it can be difficult to calculate what that means. There is also a question in many cases as to whether depreciation includes obsolescence.

    Lately, there have been court cases where the judges interpret the term to mean the amount that a buyer would pay a seller for the damaged item, or fair market value.

    Replacement Cost
    To put it simply, “replacement cost” means the amount of money it will take to replace the property with an item of comparable quality and material. If, however, the cost of repairing the damaged property is less than replacing it, that will be what the insurance company pays for.

    Generally speaking, replacement cost will be the best method to use in cases of stolen or damaged property. If your iMac computer is stolen, a policy which provides replacement cost would reimburse you for the cost of replacing it with a similar iMac. This will be paid without the insurer taking into consideration the fact that you had the iMac for 5 years and it had several scratches on the monitor and had suffered considerable wear and tear over the years.

    Actual cash value would pay for the same iMac computer what it will cost to buy another iMac minus the amount of depreciation from a formula that factors the age and wear and tear of the iMac. ACV will usually be roughly what you might have sold the computer for in the marketplace.

    Naturally, you will want to meet with a licensed insurance professional before you decide which method is best for you and what limits you want to have imposed.

    Do I Need Insurance for My Part Time Business?

    Wednesday, May 21st, 2014

    A 2012 survey reports that 9.5% of households include a home office. Some of these home offices are actually telecommuters who work remotely from home, but most are small businesses of one sort or another.

    If you own one of these small, part time businesses, you want to be sure to put some sort of part time business insurance in place. Do not make the mistake that many small business owners have made: do not assume that your homeowners insurance will cover your business claims.

    Most homeowners policies do not cover business-related losses unless you have negotiated a rider with your insurer which changes that. Keep in mind, however, that a rider will only be effective if you have a very simple business, such as one which uses just a computer or a phone.

    But if you are manufacturing products or doing repair work of some sort it is likely that you will need something more substantial, such as specific commercial insurance. And, of course, unless you live and work in Texas, you will need workers compensation insurance.

    Think for a moment about the risks a home-based business has: theft, natural disaster, damage or perceived damage to a client, and, of course an accident involving your vehicle.

    But the biggest risk of all is not having the appropriate insurances!

    If you have a small, part time business, you should contact a licensed commercial insurance professional as soon as possible. You will want to work with that professional to determine which insurances you need.

    Business Insurance Basics

    Monday, May 19th, 2014

    Whenever you think of business insurance and all the language which those in the insurance industry use, you will want to know these basics. When you begin your journey to acquire insurance and it all seems overwhelming, remember the basics we will discuss here.

    Business insurance will essentially cover one of the following:

    Property
    In insurance-speak, property used in your business will include the building in which your business is located, whether it is leased or owned.

    Property also includes equipment including business equipment such as computers and tools, furniture, and anything else which is used to conduct business, including vehicles. Property policies are created in order to protect these assets.

    People
    People in this case include you and anyone who works for you. As a business owner, your employees are one of your greatest assets. Hence, you might consider offering benefits such as health insurance and life insurance as well as short- and long-term disability insurance.

    As of this writing, worker’s compensation is required in every state except for Texas. Though Texas law does not require worker’s compensation, many customers may require you to carry it.

    Liability
    Business liability insurance is created in order to protect your business from being held liable for error or injury. This includes damage to property, people, and implied damages. Liability insurance covers the cost of litigation for these claims.

    Income
    Your business cannot survive very long if your income stops. If disaster hits, business interruption insurance can provide a revenue stream while you  rebuild  or relocate to another location, either temporarily or permanently.

    Use this basic information to work with your licensed insurance professional. Together, you can determine the coverages your business needs and how to maximize your coverage.

    Part Time Business from Home

    Saturday, May 17th, 2014

    In this economy, working from home can be a practical way to supplement your income, and in the 21st century, there are plenty of ways to do that.

    You may run a desktop publishing business, or you may make soap. Perhaps you want to sell the quilts you used to make as a hobby or try your hand at creative garden landscape design.

    Whatever you decide to do, you must remember that it is a business, even if you only do it on weekends, and make sure you get the proper insurances.

    Unfortunately, all too many people who work out of their homes assume that their renter’s or homeowner’s policy will cover any losses incurred due to the home business.

    Sadly, those policies do not cover businesses risk. Furthermore, personal automobile insurance policies usually do not cover your auto when it is being used for business purposes.

    It is also important to make sure that your home business has all of the permits and licenses required by your city or town, as many policies have exclusion provisions for “illegal acts” which would include business being conducted without those things. Make sure, therefore, to check the specific ordinances and business permitting required by your city or town.

    If you are just starting your home business, be sure to meet and discuss with your licensed commercial insurance agent so that together you can determine the right coverage for your home based business.

    Do not risk your home and assets on not knowing. If you have a business, you have risk.

    What Is an Agreed Amount Endorsement?

    Thursday, May 15th, 2014

    So, we’ve defined the difference between replacement cost and actual cash value, but to reiterate in a short sentence: The difference between the two is that actual cash value allows a deduction for depreciation.

    It is important to note that both methods deal with the cost to replace damaged property with new property.

    Agreed Amount Endorsement
    The definition of “agreed amount endorsement is this: “An endorsement to a policy made by the insurance company wherein it waives the coinsurance clause on the specified property. As long as this endorsement is in effect, there would be no coinsurance penalty at the time of a claim.”

    Coinsurance
    Co-insurance is the amount, in percentage form, of the value that the insured must pay as a sort of penalty if the property was insured for less than the amount of money the insurance company determines it was worth. The coinsurance clause applies to property insurance, not liability insurance.

    Most commercial insurance policies use the coinsurance of 80%. So here is the simplified formula to determine the coinsurance.

    Take the amount that you insured the property for and divide it by the amount you should have insured it for. Then multiply it by the amount of your loss.

    Example
    So, let’s use this example: You have an office that is worth $10,000 to replace. You have an 80% coinsurance clause which mandates that you need to insure the office for at least $8,000. Let’s also say that you have insured the office for $4,000.

    Let us now say that you have a fire in your office, and you suffer a $1,000 loss. So we divide the $4,000 you insured the building for by $8,000 which is the actual value of the office. That equals 50%, which we now multiply by the amount of the loss, which is $1,000, which is, of course, $500. The insurance will pay $500 minus any deductible you have, and you are responsible for the other $500 because you were paying premiums on property which was more expensive than you declared it to be.

    It is essential that you speak with your licensed insurance professional in order to ensure that you have a reasonable valuation.

    Just Starting Your Business? Part 2

    Tuesday, May 13th, 2014

    In the first part of this discussion, we went over a few scenarios which illustrate various types of coverage you might need for your new business.

    Let’s now go over a few more.

    • Unbeknownst to you, a local newspaper interviews one of your employees about the business climate in town. She is quoted in the article as having said that your competitor is “a man without scruples or ethics who offers shoddy products and overcharges his customers.” Upon reading the article, your competitor files a lawsuit against you and your business.
    • You pull into the parking lot of your office one morning and see that the window has been shattered, there is crime scene tape around the building, and there are four police cars parked there, each with lights still rotating.
    • You invite a client to take a seat in your office, and he does so, only to have the chair collapse, leaving him sprawled on the ground. As you finish calling 911, he tells you that he cannot move or feel his legs.
    • Your computer causes a short circuit overnight and you arrive at work to find that the building you leased has burned to the ground, destroying your office and its contents as well as those of four other businesses.

    Now, reading through these scenarios, can you figure out which coverages are best for each situation? No? Well, worry not. Your licensed insurance professional most certainly can.

    Your job is to remember that there are risks associated with any venture, and that your highest priority before you open is to make sure that you have the proper business insurances in place.