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Insurance Made Simple: Part I – Property Insurance

Helping you and your customers understand the confusing world of insurance!

Insurance companies seem to have their own language. Knowing what coverage to buy and how much of it you need is a mystery to most business owners. Insurance is not as confusing as most insurance companies make it out to be, and I’m here to help you understand it! Here is the simplified version of what coverages are typically offered and why you might need them.

Business owners need to protect their property. If you own the building that your business occupies, property insurance provides a wide range of coverage for the building, furniture, fixtures, machinery and equipment, stock, and all other business personal property owned by you and used in your business.  Losses from fire, severe weather (including windstorms and lightening), theft and vandalism, water damage, explosion, along with many other perils, are typically covered under a commercial property insurance policy.

If you are a business owner that does not own the building you occupy, a commercial property policy will also provide you coverage for your contents that includes furniture, fixtures, machinery and equipment and stock. You can also purchase insurance for the improvements that you have made inside the building that you won’t be able to take with you when you leave the property but still want to be covered if a loss occurs.

Insurance policies offer you the option of insuring your building and/or contents for one of two options: Actual Cash Value or Replacement Cost.

So which one do you select?  Is there a better option? 

Actual Cash Value is what is used to determine how much the insurance company will pay you for the value of the loss or damaged property. It is the value of your building or contents based on the cost to replace or repair them, minus depreciation.  Actual Cash Value is typically the cost that the property could be sold for, which is always less than what it would cost to replace it.

Replacement Cost is the actual cost to replace an item or structure at its pre-loss condition, without any deduction for depreciation.

You still may be wondering which one is better. Well that depends on your individual business plan and how much you want to spend on insurance. Regardless of the valuation option that you select (Actual Cash Value or Replacement Cost), you will never get paid more than the limit of insurance you purchase on your policy. It will cost more for you to insure your property at Replacement Cost because you will need to purchase insurance for the value that it will cost to actually replace the property. There are cost estimators that are specifically made available to insurance companies/agents that help determine the “right” amount of insurance to buy for Replacement Cost.

If you choose the Actual Cash Value option, you need to purchase enough insurance for the cost to repair or replace the damaged property after the deduction for depreciation. This amount of coverage is less than the Replacement Cost option, so the insurance premium will be less. But remember, if there is a loss, you will have to pay the difference out of pocket for the cost to replace or repair the property at today’s prices (since the insurance company will pay you a reduced amount due to the depreciation deduction).

Are you going to rebuild after a loss? Another important factor to consider in determining how you want to insure your property is if you are going to rebuild or replace the damaged property after a loss. Replacement Cost policies will only pay the Replacement Cost if you indeed replace or rebuild after a loss. If you decide you don’t wish to continue your business operation, then the policy will pay you the Actual Cash Value. It will not pay out Replacement Cost if no replacement is being made!

What about flood? Most commercial property policies exclude coverage for flood. So if you live in an area where flooding is prevalent, you will need to purchase a separate flood policy. You can purchase flood insurance from the National Flood Insurance Program that is managed by the Federal Insurance and Mitigation Administration (FIMA). Some individual insurance companies offer flood insurance as well, but it is best to discuss your options with your insurance agent.

Equipment breakdown is another “typical” insurance coverage that business owners should purchase. Many commercial property policies automatically include this coverage. Every business owner has some sort of equipment they need to run their operation, no matter how small the business is. Equipment breakdown provides coverage for air conditioning units, boilers, communication systems, computers, electrical equipment, freezers, P.O.S. registers, security systems, walk-in refrigerators, and almost anything electrical. This coverage protects the business against any equipment repairs or replacement expenses, labor costs, and other expenses to get back in business as a result of a covered loss. State mandated boiler inspections are also included with the purchase of this coverage… Think of it as an added benefit!

Although there are many more property coverages that business owners can purchase, the ones listed above are the “typical” ones you’ll need if you are a business owner.

If you found this article helpful then be sure to stay tuned for future Insurance Made Simplearticles:

Part II – Business Income Insurance – ah the mystery of it all!

Part III – Comprehensive General Liability Coverage – how to protect the company’s assets

Part IV – Liquor Liability – who needs and why the CGL policy is not providing coverage!

Sandra Haley is the Senior Vice President of Underwriting and Marketing at Hospitality Insurance Group.


Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

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6 Tips for a Safe 4th of July Weekend

The 4th of July is a time for family, friends and FUN! It’s an all-American weekend known for its barbeques, beaches and fireworks. It also means heavy drinking for some. We want everyone to have a FUN holiday weekend, but we also want you to have a SAFE one.

Here are 6 things we think are important to think about before celebrating this upcoming weekend:

Hydration – When you’re laying out on the beach with your friends or playing horseshoes in your backyard with family, it’s easy to forget to stay hydrated, especially when consuming alcohol. According to the American Heart Association, “Dehydration can be a serious condition that can lead to problems ranging from swollen feet or a headache to life-threatening illnesses such as heat stroke.” They recommend that water is the best thing to drink to stay hydrated, but that doesn’t necessarily mean you need to consume gallons of water. Many fruits and vegetables contain a high percentage of water, such as blueberries, oranges, peaches, pineapples, plums, raspberries, cantaloupe, watermelon, celery, cucumbers, iceberg lettuce and tomatoes, so pack some healthy snacks as well!

Hydration is especially important if you’re going to be drinking. To stay hydrated while consuming alcohol and minimize the likelihood of a hangover, you should:

  1. Have one glass of water for every alcoholic drink you consume
  2. Be sure to drink plenty of water before spending a day drinking in the sun
  3. Choose an alcoholic drink that includes at least some water or mix a bit of water in with your beverage
  4. Choose hydrating snacks, like some of the fruits and veggies mentioned above that have a high water content and limit your salt intake (avoid sodium-filled snacks like potato chips, pretzels and nuts)
  5. Mix alcoholic drinks with hydrating juices and use plenty of ice (frozen cocktails are great for a hot summer day!)

Grill Safety – Nothing says “It’s 4th of July” better than the smell of burgers and dogs on the grill. While indulging in these American staples, it’s important to remember that grills can also be dangerous if not used properly. June and July are the peak months for grilling fires. Gas grills alone have been involved in an annual average of 7,200 home fires from 2007-2011, while charcoal or other solid-fueled grills were involved in an annual average of 1,400 home fires (NFPA’s “Home Fires Involving Cooking Equipment). The National Fire Protection Association offers the following tips for grilling safety:

  1. Propane and charcoal BBQ grills should only be used outdoors
  2. Be sure to place the grill well away from the home, deck railings and out from under eaves and overhanging branches
  3. Keep children and pets away from the grill area
  4. Keep your grill clean by removing grease or fat buildup from the grills and trays below the grill
  5. Never leave your grill unattended
  6. Always have a fire extinguisher on hand or know where one is located if you are not at your home (check it beforehand to make sure it is not expired!)

If using a propane grill, you should also be sure to check the gas tank hose for leaks before using it for the first time each year.

Fireworks – Fireworks are an Independence Day essential. In fact, most people can’t imagine their Independence Day weekend without them. Although beautiful to look at, fireworks can also be extremely dangerous. The United States Consumer Product Safety Commission states that on average, 200 people go to the emergency room every day with fireworks-related injuries in the months round the July 4th holiday. They suggest the following safety tips when using fireworks:

  1. Never allow children to play with or ignite fireworks
  2. Avoid buying fireworks that are packaged in brown paper because this is often a sign that the fireworks were made for professional displays and that they could pose a danger to consumers
  3. Always have an adult supervise fireworks activities. Parents don’t realize that young children suffer injuries from sparklers, which burn at temperatures of about 2,000 degrees – hot enough to melt some metals
  4. Never place any part of your body directly over a fireworks device when lighting the fuse. Back up to a safe distance immediately after lighting fireworks
  5. Never try to re-light or pick up fireworks that have not ignited fully
  6. Never point or throw fireworks at another person
  7. Keep a bucket of water or a garden hose handy in case of fire or other mishap
  8. Light fireworks one at a time, then move back quickly
  9. Never carry fireworks in a pocket or shoot them off in metal or glass containers
  10. After fireworks complete their burning, douse the spent device with plenty of water from a bucket or hose before discarding to prevent a trash fire
  11. Make sure fireworks are legal in your area before buying or using them

It is also important to realize that animals (dogs especially) can be afraid of fireworks and may act out if they’re frightened. Be sure to know how your pets react to the loud noises if they’re going to join you in your celebrations. If you have small children, keep them away from animals you don’t know or are unfamiliar with as you never know how they may react.

Drinking & Driving (and yes, that includes boats and jet skis) – According to data from NHTSA, during July 4th weekend, from 2008-2012, 765 people lost their lives in crashes involving drivers with BAC of .08 or more. These fatalities account for 40% of all motor vehicle traffic fatalities over this same five year-period. Nobody wants a weekend of fun to turn tragic, so do yourself and the millions of other people on the road a favor and use a sober driver. If you don’t want to stay sober, STAY where you are. Your life is more important than anywhere you might want to be. Often times, people learn the consequences of driving under the influence when it’s too late. Don’t let that happen to you – be proactive instead of reactive when it comes to drinking and driving.

Rip Currents – The coastlines are filled with beachgoers over this festive weekend. You may find yourself diving into the cool ocean water for a break from the hot sun, but swimming in the waves of the ocean is much more difficult than swimming in a pool. The ocean currents and conditions can change quickly and drastically, so it’s important you’re aware of the state of the water you’re swimming in. You should be aware of the following things when swimming in the ocean:

  1. Swimming in currents and waves can cause fatigue more quickly than in a swimming pool
  2. Smooth water located between breaking waves could signal the presence of a rip current
  3. Be sure to ask the lifeguard about use of floatation devices before bringing them into the water
  4. Your body cools quickly while in the water, so limit your time and get out of you start to feel cold (although you’ll probably be cold the second you step in if you live in the northeast)
  5. Be sure to check and obey warnings posted on the beaches
  6. Be sure to take your cell phone to the beach and in case of an emergency, when the lifeguard is not present, call 911

Sun Protection – While enjoying your weekend with your family and friends, people often forget to apply and reapply sunscreen. You may not even realize you’re getting a sunburn until the next day when you’re in complete agony and can’t move without feeling a burning pain. Sunburn’s may seem just like a temporary irritation, but long term exposures to excess UV radiation can cause skin cancer, eye damage, immune system suppression and premature aging, especially for children. One blistering sunburn in childhood or adolescence more than doubles a person’s chances of developing melanoma later in life (Skin Cancer Foundation).  To avoid sunburns, you should:

  1. Avoid direct sunlight during the sun’s peak hours (10:00am-4:00pm) or at least limit your direct exposure
  2. Always wear a broad-spectrum sunscreen with a sun protection factor (SPF) of 15 or higher
  3. Reapply sunscreen every two hours – or more often if you’re swimming or perspiring
  4. Cover your skin tightly with women long-sleeved shirts, long pants and wide-brimmed hats (especially children)
  5. If you have fair skin or burn easily, consider laundry additives, which give clothing an additional layer of ultraviolet protection for a certain number of washings. You can also purchase special sun-protective clothing that is specifically designed to block ultraviolet rays

We want everyone to enjoy their 4th of July weekend, but it’s important to recognize and understand the dangers that come with the American holiday. Having seen many tragic accidents, we think it’s better to be educated so you can take the necessary precautions before a great weekend turns bad.



Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

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Insurance: A Necessary Evil

Most people find buying insurance a necessary evil.  No one wants to spend monies for an intangible item like insurance, but having it is not only a smart business decision in order to protect your property and your financial assets, it is usually a condition of getting a mortgage on a building. Some people purchase insurance for peace of mind, some purchase because they are forced to, and others purchase because they have suffered a prior loss and did not have insurance to cover the loss!

Your business faces plenty of threats—from fire to fraud, dishonest employees to dissatisfied customers and disconnected utilities. It’s important to understand the risks your business faces and what coverage you need to protect yourself.

Property insurance, which protects buildings and their contents such as equipment, furnishings and inventory, is the most popular kind of protection for small businesses. Banks and mortgage lenders insist you carry property insurance. Why do they care? Insurance protects the lender’s investment in case the property is damaged.

Business interruption insurance pays not just the lost sales, rent and payroll costs while you rebuild your business after an accident, but it also pays for you to rent a temporary office or equipment so you can get back on your feet quicker.

General Liability insurance is less common than property insurance among small companies but arguably more important. A claim for a serious injury could easily wipe you out. Liability insurance covers any injury or damage your company might cause to other people, their reputation or their property.

Liquor Liability insurance is mandatory in some states if you are in the business of serving or selling alcohol, but in many states it is not required.  Liquor liability pays if you are negligent in serving a minor or in over serving an individual who leaves your establishment and gets into an accident harming themselves or innocent people. When purchasing liquor liability coverage, be sure that your policy includes Assault & Battery coverage!

Before you go shopping for insurance, investigate what perils a company in your industry is most likely to face and which could threaten your company’s survival. It’s always better to play it safe!

Sandra Haley is the Senior VP Underwriting & Marketing at Hospitality Insurance Group. 

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

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Welcome to Remove the Risk

At Hospitality Insurance Group, we live by our motto ‘taking the risk out of hospitality.’ Our goal is to help businesses in the hospitality industry mitigate the risk the industry inevitably brings.

Hospitality Insurance Group made a conscious decision to specialize in the hospitality industry. We see the importance in being able to recognize and accommodate the needs of the niche market we serve and the value of building lasting relationships with our agents and policyholders.

Protecting our policyholders is our first priority.

We do our very best to protect our policyholders against the dangers they face on a daily basis, especially when they are in the business of serving or selling liquor. Each and every day patrons enter our insureds establishments, and with each drink they serve the risk the business faces subsequently increases.

The media is full of reports of tragedies caused by drunk driving or underage drinking, but who is to blame for these disasters? Unfortunately, the liability more often than not lies on the establishment(s). The question is not: Why did the patron that drank too much get behind the wheel and drive home? Or why did the 19-year-old go into a store with a fake ID to illegally purchase liquor? Instead, the question is: Where was the overly intoxicated driver drinking before they got behind the wheel? Or who sold liquor to the 19-year-old with improper identification?

The assurance and peace of mind you need.

It is our job to not only provide the assurance and peace of mind our policyholders need that a claim will be paid in the case that they cannot pay out of pocket, but it is also our job to help our insureds minimize the likelihood that they’ll face a costly lawsuit or a liability claim.

So how do we do this, you might ask?

For us, risk management has taken the form of offering substantial discounts on insurance premiums to subsidizing valuable training for alcohol servers and security staff. But we do not want to settle for employee training and reduced premiums. We want to take things a step further and start educating our agents and insureds about many of the issues the hospitality industry faces.

Knowledge is power.

Education is one of the most powerful tools known to man. The more educated one is, the more success they are likely to see. Remove the Risk Blog is here to educate you on the potential dangers that face the hospitality industry, how you can confront those dangers before they happen, and what the consequences might be if you don’t.

Our team of knowledgeable and experienced insurance professionals are here to help you!

For more information about Hospitality Insurance Group, please visit our website at or call us toll free at 877-366-1140. 


Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.