Property Owners

by By Sandra Haley By Sandra Haley No Comments

Insurance Made Simple Part III: Comprehensive General Liability Coverage – How to Protect the Company’s Assets

Why worry about and purchase General Liability coverage? Most banks do not require CGL insurance to get a mortgage, so why is it important?

Accidents can and DO happen! If someone should sue your business as a result of a real or perceived loss, the high cost of legal defense and/or settlement could be enough to put you out of business.

General Liability insurance coverage is purchased to protect businesses from monetary damages it may become legally obligated to pay because of bodily injury or property damage to a third party that results from an accident or occurrence.

Restaurants, caterers, bars, taverns and social clubs all have potentially serious general liability issues due to premises and operations exposures. Whenever a patron enters your establishment, your business could be found liable should an accident ensue. To safeguard against the unpredictability of accidents, oversights and lawsuits, General Liability insurance is a must!

General Liability insurance has three major coverage parts: Coverage A – Bodily Injury and Property Damage, Coverage B – Personal and Advertising Injury and Coverage C – Medical Payments.

Coverage A – Bodily Injury and Property Damage

Bodily Injury – Your business operations could cause serious bodily harm or even death to patrons. General liability insurance will defend your business and indemnify a third party if you are responsible for the injury, disease or sickness.

Property Damage – This coverage pays for damage or loss to someone else’s property caused by an incident that you are legally responsible for.

Coverage B – Personal and Advertising Injury

This coverage responds to the following types of claims: publishing, verbally or in writing, false information that libels or slanders a person or organization; copying another company’s style of doing business or advertising concepts; and/or infringing on another businesses title, copyright or slogan.

Coverage C – Medical Payments

Medical payments coverage is available for emergency medical treatment in the event that a person is injured on your premises. This coverage responds without any regard to legal liability or fault. Medical Payments is considered “good will” coverage and hopefully prevents an injured person from suing to collect monies to pay their medical bills.

The National Restaurant Association states that slips and falls are the most frequent general liability claims made across the industry. Spills, slippery floors, poor maintenance of parking lots and floors, dim lighting, and stairs without handrails all contribute to unsafe conditions.

The U.S. Center for Disease Control (CDC) estimates that 48 million cases of foodborne illness are reported each year. Improper cooling, infected employees, failure to reheat food to proper temperatures, cross contamination, improper cooking or cooling, and foods from unsafe sources are just a few of the causes of foodborne illness.

What can you do to prevent or reduce the chances of patron injuries and claims?

Implement some risk management techniques or simple safety best practices.

Prevention of Slip and Falls:

  • Perform timely weather-related maintenance of parking lots and entry areas
  • Conduct periodic inspection/repair of flooring, stairs, sidewalks and parking lots
  • Implement a maintenance program to inspect and repair furniture and fixtures
  • Install handrails on stairways and ramps
  • Maintain adequate lighting both internally and externally
  • Ensure quick cleanup of spills
  • Use slip-resistant floor materials and treatments
  • Install restroom soap, hand dryers and paper towel dispensers in areas where soap and water drips are minimized

Prevention of Foodborne Illness:

  • Educate employees about food safety and hygiene by training them in a Serv Safe Food Handling Training program (or similar program)
  • Implement a hand washing program for employees
  • Install hands-free ice dispensers
  • Require the use of disposable gloves for any food contact
  • Maintain proper refrigeration and cook all food to appropriate temperatures
  • Avoid cross contamination by employing proper cooking and surface cleaning procedures
  • Implement a stored food dating system with shelf life labels
  • Restrict sick employees from food handling areas

Egress and Fire Safety

  • Install smoke and fire alarms wherever needed
  • Regularly test emergency power sources for egress lighting
  • Ensure egress areas are maintained, free and clear
  • Adhere to maximum occupancy regulations

Purchasing General liability insurance is a MUST for any business owner to protect their business. However, it is important that business owners implement some risk management techniques to prevent them from happening in the first place. Protect your reputation, protect your livelihood – you don’t want a lawsuit to put an end to your business.

Sandra Haley is the Senior Vice President: 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.

by By Stephanie Connon By Stephanie Connon No Comments

The Claim’s Perspective: Simple Solutions to Big Exposures

Meteorologists predict a below average hurricane season for this year though business owner policyholders know that forecasts are not an exact science. Unpredictable weather patterns pose an ever present threat of moderate to catastrophic physical damage and interruption to their business operations. Case in point is Revere, MA.

On June 28, 2014 it may have surprised you to learn that a tornado with wind gusts of up to 120 mph touched down north of Boston and in only four minutes left many businesses uninhabitable because of extensive physical damage to buildings, flooding and widespread power outages. What is worse than being a business owner impacted by this tornado is an owner who, as a result of this event, learns that he or she is underinsured and will not be able to restore their employees’ jobs and resume their business operations. Knowing the scope and nature of the commercial property insurance you purchase, when you purchase it, makes an unpredictable weather event more foreseeable in terms of the degree to which it might impact you, your employees and your patrons.

Just as important as understanding the extent of coverage afforded to you by your commercial property policy is a business owner’s responsibility to inspect and diligently maintain the exterior and interior of their business. This can not only mitigate the extent of potential property loss, but it can, in some instances, completely eliminate loss exposures such as flooding and fire.

Unlike storm related events, this type of loss exposure is both predictable and almost entirely preventable, yet we still see catastrophic losses that threaten the lives of employees and patrons and/or result in devastating physical damage and loss of business income. This exposure is created when a business owner fails to routinely inspect, clean and maintenance their commercial cooking operation and fire protection systems. Kitchen exhaust fires are becoming more common, and the burden is ultimately on the business owner to select a contractor that can provide the proper service and help him/her comply with national and industry standards that pertain to fire safety requirements. Simply hiring an unqualified or the cheapest contractor (with no or inadequate insurance) will not prevent the cost of a fire.

Too often we have business owners sustain flooding throughout the interior of their buildings, which leads to temporary closure, clean-up costs and food spoilage losses. As we investigate these types of losses, we occasionally discover that the cause of the flooding is not direct physical damage to the building by a covered cause of loss but rather a poorly maintained or dilapidated roof that allowed water to damage the interior contents and building structure. Consequently, these business owners must then absorb the cost of the repairs on their own if the commercial property insurance policy they purchased does not cover damage caused by wear and tear of the roof. Whether you are the building owner or a tenant, routinely inspect your business, and if you discover something in need of repair, don’t hesitate to fix it. You will likely find that the repair cost is a small fraction of the cost you may incur if a water damage claim is not insurable under your commercial property insurance policy.

Below are a few best practices of commercial property insurance policyholders:

  1. Carefully choose commercial property insurance policy that best fits your business operations. Be sure to consider the inherent and not so inherent risks associated with it
  2. Adhere to a schedule of routine inspections for cleanliness or possible repairs
  3. Upon discovery of any issues, incur the cost and do not delay action
  4. Do not let a property loss be the only opportunity you have to learn the nature and scope of your commercial property insurance policy
  5. Contact your agent if there is a property insurance coverage you do not currently have but would need to resume operations in the event of a loss

Stephanie Connon is the General Counsel, VP of Claim Operations and Assistant Secretary 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.

by By Sandra Haley By Sandra Haley No Comments

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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