Business to Business

You spent time and money preparing a business income policy for your firm that will protect your income should a hurricane, fire or other covered event damage your property to a point where you can’t perform customary operations. Sometimes, though, an incident that happens in a distant location can harm your business’s ability to function.

Damage from a fire, flood or other disaster might not stop at your property line. If the damaging force causes pollutants or contaminants from your property to enter the environment, such as leaking onto a neighboring premises, your business can be held liable for the cost of cleanup.

As freezing weather subsides across much of the U.S., snow lovers are filtering back into their own warm communities. Seasonal businesses that depend on winter-loving residents and visitors will stow away goods, send workers home and wait until the cold weather returns. As these businesses go into hibernation, empty stores and suites can dominate the commercial real estate landscape. For this reason, building owners should remember that important insurance coverage is compromised when a building meets policy vacancy definitions for a period of 60 consecutive days.

Imagine that your business had to close because of a covered loss, such as fire or wind damage. After several months of reordering and restocking inventory and repairing the building, your business is finally ready to reopen. So far, your business income insurance policy has proven to be your business’s key to survival—helping to cover the cost of lost income, of bills and of other expenses to keep you going during the downtime. Now you’re ready to open the doors. Here’s the problem:

Some 25% of businesses that shut down after a declared disaster never re-open, according to the federal government’s www.ready.gov, and few have a catastrophe contingency plan in place. Many enterprises don’t purchase the necessary business interruption insurance coverage to pay bills and other replacement services essential to keeping the business going. Business interruption coverage can be the difference between bouncing back from a disaster and shutting down completely. It can provide income while covered losses are dealt with, and it can cover operating expenses, such as electricity, that continue even though you are not open for business.

Employees who use their own vehicles in the course of business may assume that the employer's auto insurance will protect them from any lawsuit or claim resulting from an accident occurring while on duty. After all, why would employees agree to use their own car on business if they were left to manage the cost of an accident personally? Here's the problem: while business auto policies protect the employer from loss in this situation, the policy does not extend coverage to employees for their personal liability while using their personal autos for business.

Picture this: Fire and smoke enter the room where your firm’s network and server hardware is stored and cause irreparable damage. How will your property insurance policy respond? The good news is that the policy will pay to replace the hardware. The bad news is that it will not extend to replace the data contained within the hardware. Consider the hours spent programming networks, servers, and software applications that make your firm function. The cost to redo the lost work can be tremendous, especially if an outside firm must be contracted to perform the job. Hopefully, your firm has a contingency plan for such a loss. However, statistics show that a very small percentage of businesses back up data daily.

The Chamber's Summer Networking event is designed to give exposure and networking opportunities to its members, local businesses and corporate partners throughout WESTCHESTER in a relaxed and entertaining atmosphere.

Think your business is safe from the dangers of flooding? Consider the following: • Six out of every ten declared disasters involve flooding. • Floods are more common than any other form of natural disaster and have no geographic boundaries. They occur in all 50 states. • In 2008, FEMA spent more than $1 billion in its effort to reclassify flood risk zones across the U.S. This is due in part to the fact that over 30% of properties suffering flood damage in 2007 were not located in a designated special flood hazard area. • Businesses located in areas where new construction, forest fire or storm damage have changed the land may be at greater risk than in the past.

If employees are loading or unloading goods at the workplace and property is damaged during the process, will business insurance pay for the damage? This issue can be tricky because there are two different types of policies that address this situation. For example, damage to property while being loaded in or unloaded from a vehicle by hand, hand truck or mechanical device attached to the auto is covered under a business auto policy. If the property is damaged while it is being moved by an unattached mechanical device other than a hand truck (such as a forklift), the damage would be paid for by a commercial general liability policy. One reason this distinction is important is that many businesses load and unload property all the time at their workplace but do not have business vehicles; thus, there is no business auto policy to cover items damaged while being loaded or unloaded using any of the methods mentioned above. If you think you might have gaps in coverage for loading and unloading, call our service team today. We can help you find a solution.

Without ordinance and law insurance, a property owner can get hit hard by uncovered rebuilding costs that are elevated due to changes in local building codes. Ordinance and law insurance is usually available as an amendment to your commercial property or business owner’s policy. In addition to covering the increased costs of building to current codes, this endorsement covers those expenses associated with the portion of your building that is not damaged. For example, consider a $500,000 building that is 75% destroyed in a fire. Up to $375,000 of the loss is paid by the property policy for the damaged portion. But what happens when a local ordinance says that, because the building is more than 50% damaged, it must be totally destroyed and rebuilt from scratch? The only way the building owner will collect the additional $125,000 needed to rebuild the entire building, as well as the cost to demolish and clean up the 25% not directly damaged, is if ordinance and law insurance had been added to the policy.

According to the 2008 Natural Disaster Business Risk Study, commissioned by business property insurer FM Global, 96% of financial executives said their companies have operations exposed to natural disasters, such as hurricanes, floods, and earthquakes. Less than 20% said their firms were "very concerned" about the effect of a disaster on the bottom line. "The findings reveal a surprising and concerning gap between the levels of natural catastrophe exposure among North America's largest companies and their level of preparedness," says FM Global Executive VP Ruud Bosman. With winter storms looming, floods and hurricanes give way to ice and snow. Disaster preparedness is key to business survival after a natural catastrophe, be it floodwaters or paralyzing ice. Key elements include remote backup of data, access to power if the local grid fails, and uninterrupted communications (by phone rollover or Internet access), among others. Make plans now for your business to survive nature's assaults, and include a call to your agent to talk about business interruption insurance, which can help you bridge the gap between shutdown and reopening.

Price competition among providers of "green" products to businesses is making the green dream a reality for business owners hoping to reap the rewards of an ecofriendly workplace. According to Fortune Small Business, it costs owners between 2% and 4% more to outfit a green office, down substantially from just a year ago. Further, many of these investments pay for themselves in just a few years. If you plan to go green at your workplace, reevaluate your business insurance policy. Refitting with environmentally friendly building components can increase the insured value of your property—both structure and contents—and you will want your policy to reflect that change. In addition, it is essential that you keep sales records and receipts of your improvement purchases to help ensure the insurance company will replace the damaged items with an equally eco-friendly version.

It's back to school time, and businesses far and wide respond to the demands by increasing inventory and promoting services like hair coifs for the kids and extra cafe lattes for mall-weary parents. If your business is one that has a peak season, consider amending your business property insurance to cover the temporary inventory bulge. The business personal property or "contents" portion of your business insurance has a dollar limit that probably reflects your average inventory and often doesn't account for or adjust to that isolated time frame when you bulk up your inventory. That limit is what the insurance adjuster will base your payment on if a loss occurs. If a loss happens during your peak season and the value of your inventory exceeds the dollar limit of your policy, a portion of your loss would not be covered.

Organized retail crime is a growing industry of shoplifters and burglars targeting retail goods that are easy to resell quickly. The FBI reports exponential growth of these organizations in recent years. Being struck by these thieves is serious-and expensive-business. Products that are favorites include over-the-counter medications, apparel and baby formula-all items that are relatively costly and easy to resell.

Traditional auto, property and liability insurance policies contain gaps a catering business owner should understand. Auto Insurance — Many personal auto policies contain exclusions for autos used in the business of catering. Depending on the type of catering and equipment, business auto policies may contain similar exclusions. Property Insurance — Most property insurance policies limit or exclude the use of business personal property away from the insured's premises. This poses a significant risk for caterers since a majority of catering is done off-premises. General Liability Insurance (CGL) — The good news is that most traditional CGL policies provide coverage anywhere within the coverage territory. Alcohol — Alcohol service may pose a threat to coverage. Caterers who sell alcohol at events likely have no coverage under a CGL for claims of legal liability (e.g., a caterer serves someone too many drinks, then that person becomes intoxicated and causes an accident). Caterers who are not in the business of selling alcohol or are pouring drinks provided by someone else probably still have coverage under a CGL. For more information on getting the best coverage for your catering business, call our office today.

If you are the lessor of a commercial property containing multiple tenants, take note of the vacancy provision in your commercial property policy. Most property policies limit or exclude coverage for buildings considered "vacant” by the policy and might require an endorsement to amend that. Vacant, as defined by the policy, means 31% or less of the building is occupied. A building under construction is not usually considered vacant.

Companies that lease staff from employment leasing firms are often concerned with how their insurance coverage will apply to both liability claims caused by the leased worker and injuries to the leased worker. The commercial general liability (CGL) policy extends liability coverage to the insured organization for claims resulting from the actions of an "employee."

Depending on your type of business, general liability insurance may be your costliest insurance coverage. Following are suggestions on ways to help control costs and avoid unexpected surprises in a policy audit. Use Loss Control — See if your insurer offers premium reductions for certain loss control policies, such as theft prevention systems, emergency preparedness plans and the like. Then implement those policies and let your insurer know.

Many businesses are aware of the cost associated with repairing or rebuilding their property if damaged by a covered loss. What many commercial property policyholders may not realize is the extent of the costs of cleaning up the damaged property. While the property policy may be clear on how it will pay to repair or replace the damaged property (actual cash value, replacement cost, etc.), a valuable coverage that may not be as clear is the cost to remove debris.