Insurance spreads the risk of loss among every policyholder and the insurance company.
The “coinsurance clause” in a Business Property policy reflects the fact that the coverage divides this risk by setting premiums based primarily on the value of the property. Those who insure their property for less than its actual cash value (ACV) or replacement cost will have to pay the uninsured portion of any covered loss out of their own pocket — in other words, “coinsuring” the risk — which encourages policyholders to buy coverage for the full value of their property.
The coinsurance clause usually requires policyholders to insure their property for 80% of its ACV. For example, if the property of your business is worth $500,000, you would need to purchase a $400,000 policy. If a fire caused $300,000 worth of damage, the insurance company would pay $240,000 (80% of $300,000), leaving you to pick up the other $60,000. However, if you had purchased the full $500,000 in ACV coverage — paying a higher premium — the insurer would cover the entire $300,000 claim.
We’d be happy to discuss the benefits that the coinsurance clause offers. Feel free to give us a call.
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Identifying and preventing the incidences that might harm your firm’s reputation can be a challenge at best.
The explosive expansion of Web-based communications and social media has aggravated the risks of reputational damage, while dramatically reducing response time to counter these threats.
According to Reputation Review 2012, a report from Oxford Metrica sponsored by Aon P.L.C., a public company runs an 80% chance of suffering a reputational risk that can cost at least 20% of its equity value in any month over a five-year period. Privately held companies face similar risks.
These exposures can come from a wide variety of sources, from product safety and unhappy customers to regulatory pressures and behavior by managers. Examples include recent massive breaches of consumer data held by major financial institutions, and the effect on companies that faced supply chain disruptions or radiation fears after the Japanese earthquake and tsunami of 2011 — not to mention the impact of that year’s outbreak of listeria in cantaloupes. Although this infection came from a single farm, other producers (and even companies selling different types of melons) suffered a loss of reputation.
With reputational risks coming in various and sometimes unpredictable forms, experts recommend that you help protect yourself by:
- Creating an “early warning system” to monitor print, electronic, and social media for negative references to the company.
- Evaluating whether a negative comment should have a response (not every tweet or Facebook post matters).
- Getting frontline employees involved in responding to reputational threats, rather than having top management and PR staff deal with them.
Our agency’s experts stand ready at any time to help you discuss your risk, review potential scenarios, and then build and test a plan for dealing with events that threaten your reputation.
Having an effective plan to deal with these threats can actually improve your company’s reputation.
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In the controversial Citizens United case, the Supreme Court ruled that corporations have rights similar to those of an individual. It follows that they have identities and are vulnerable to identity theft.
Although insurance offers one way to manage this risk, it might well be a long time before a company discovers the theft — at which point, it would be too late. To avoid or minimize the danger of having your corporate identity stolen, we’d recommend a three-step approach:
- Storing sensitive information. Sensitive files and information (credit card numbers, medical data, Social Security numbers, etc.) might be stored on computers, external drives, filing cabinets, or mobile devices. It’s wise to consolidate and secure this data either physically behind lock and key or by using electronic network security measures. Be sure to train employees on handling, storing, and disposing of this type of information properly.
- Your business documentation. Identity thieves might use highly sophisticated or surprisingly elementary and low-tech techniques for delving into a company’s records and misappropriating them. These might include intercepting paper mail, stealing trash, or physically taking documents. To safeguard this information, determine what records you need to run the business, inventory them, and use electronic statements to limit the amount of mail containing company information. Never share financial details or documents through e-mail!
- Credit reports. Check your company’s credit reports regularly for unusual charges or bills.
The Federal Trade Commission (http://www.business.ftc.gov/documents/bus69-protecting-personal-information-guide-business) provides a variety of resources you can use to help protect your corporate identity and confidential customer information against identity thieves.
Our agency’s professionals would be happy to offer their help — just give us a call.
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It’s a regular occurrence for contractors: You receive a request from another party (an owner, general contractor, lien holder, other contractor, or a government entity) to add them as an additional insured on your insurance policies. Whether that’s a good idea is up to you — but the party often makes it clear that if you want to do business you’ll need to add them as an additional insured.
However, it’s not necessarily a good idea to add this entity to all of your policies. For example, your Excess Liability coverages — such as those under Umbrella insurance — were probably bought specifically for your own protection in case of catastrophic loss. If an additional insured, who might be well within their rights, is added to your policies with protection up to your basic coverage limits, will they also be allowed to “piggyback” up to the full amount of your coverage?
We’d advise you not to set up any procedure that makes all of your coverage limits available automatically to any additional insured. Add them to the specific coverages and amounts that they request, but go no further. If in doubt, consult with your attorney about contractual requirements and possible gaps between what the entity is requesting in being added to your coverage and what your coverage will actually provide.
Once you’re certain what you’re being asked to do, and have decided that it’s in your best interest to meet this request, there’s one more action to take before adding the additional party to your coverages. Contact us to determine if your current coverage already meets the needed conditions, or what modifications (if any) might be required to do so.
Remember: Although we want to help you meet your needs, our focus always remains on protecting you, even if against unreasonable demands from other entities. We’re here to help.
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Whenever you’re asked to bid on a job, you’re usually required to certify that the price is firm and that there won’t be any unexpected expenses and cost overruns once the project is underway. Because this is standard practice in the industry, it’s understandable that some contractors are surprised that their insurance costs don’t operate the same way — especially when the contractor has asked agents for “bids” on the insurance package.
Neither Workers Compensation nor General Liability, two of the key coverages in Construction insurance, usually set fixed premiums. Because payrolls and/or revenues the contractor pays or earns during the policy period determine the premiums, and there’s no way to know these costs in advance, the premiums will also be estimates. Once actual payrolls and revenues are known (usually after an insurance company audit after the end of the policy period), the company will set the final premium based on these figures. The contractor — you — will then receive either a refund (if your insured losses were lower than expected) or a bill for the additional premium due (when these losses are higher than expected).
Although it’s never pleasant to owe more money after a policy has expired, keep two things in mind: First, if the insurer were able to predict the final results accurately, it would have charged this amount in advance. Second, an additional premium due after an audit shows that you had a better year than expected — and that’s always good news!
If you have any questions about how your insurance works or how premiums are calculated, just give us a call. We’re here to help.
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There’s nothing like a celebration to bring co-workers together and make them feel as though they’re one unified work family. Although a celebratory meal or party can bring cohesiveness, employers should be careful not to let celebratory events become a liability. Of course, the entire point is to allow attendees to relax, have fun, and interact on a more personal level. But, the double-edge comes from attendees mistaking a relaxed atmosphere as leeway to behave in an inappropriate manner or attendees becoming so relaxed that they behave in a way that they normally wouldn’t. Out-of-bounds behavior should be of particular concern if there’s alcohol involved in the workplace celebration.
In order to avoid lawsuits, there are several elements that employers should consider prior to any celebratory workplace event. Before the event, employers should make sure that they have informed the attendees of what will be considered improper behavior. It’s a good idea to remind and caution employees that even though the event is a party, it’s still a business event and that inappropriate touching, gifting, and off-color or offensive remarks are still considered inappropriate behaviors. Employers should be mindful that under Title VII, it only takes one inappropriate incident to bring about a timely and costly lawsuit. It might be helpful to have supervisors or managers go over the company policy with employees, especially the sexual harassment section. While going over the company policy, the supervisor or manager can also inform employees if there will be any exceptions to normal company policy made specifically for the party, such as attire varying from the normal dress code.
In the event that clients will be attending a workplace party, employers might have additional concerns that should be addressed beforehand. For example, what should an employee do if a client is making inappropriate advances or conversation? It’s usually pretty clear to employees how to handle such a situation during normal workplace hours, but sometimes employees are specifically told to make sure clients have fun at a party. This can create a recipe for legal disaster if not addressed properly. Make sure to set up a way for any employee that’s been given such an assignment to exit the situation if it becomes uncomfortable for them. This can be accomplished by setting up a room as a coffee bar or lounge and ushering clients that become unruly to the room to calm down or sober up. It’s also a good idea to have a buddy system in place for all employees handling clients. If a client becomes unruly or inappropriate he/she can be passed off to their designated buddy.
If alcohol is served, employers might consider having only a specific time frame for it. This can help to prevent party-goers from becoming intoxicated, belligerent, or driving home intoxicated. It’s also a good idea to have a transportation system, such as cabs or designated drivers, in place for party-goers that overdo it on alcohol.
Although inappropriate behavior directed toward an employee’s guest or family member might not be considered workplace harassment, it can cause a great deal of unnecessary workplace conflict. It should be made clear that inappropriate behavior toward any guest will have disciplinary actions.
One last concern is the first workday following the party. Everything that happened or didn’t happen will be discussed and scrutinized. Conversation and actions that might have been laughed at during the party or intended innocently might not always be so funny or acceptable by the next day. It’s important to encourage an open and honest dialogue about any gossip topics so that misconceptions and hard feelings can be prevented.
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