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Importance of Property Insurance for Small and Medium Sized Businesses

Properties (physical assets) make up for the most part of the capital of a business. Any damage caused to these assets can incur huge losses to a business. Especially for small businesses, damage to these costly physical assets may prove detrimental for the survival of the business. Let us discuss in this article the importance of property insurance for small businesses.

SMEs need to secure their investment 

Small and medium sized businesses are usually limited by their budgets, and any kind of unexpected risks to their capital can cease the working of their business. Hence, their huge investments in properties, contents and equipment have to be protected from the risks by taking proper insurance. This will not only relieve the business owner from financial burden, but also helps the business to resume quickly.

Protects businesses from catastrophic losses 

Catastrophes such as typhoons, gales, lightning, flash floods, and earthquakes can cause massive damage to the property of SMEs. The contents are also hit. Catastrophes are unpredictable. They cause immense damage to these businesses, making it difficult to recuperate from such loss. Therefore, it is important for them to purchase the insurance.

Protects monetary value of the property 

Property insurance is beneficial as it covers the damages and repairs because of natural causes such as catastrophes and man-made causes such as vandalism, theft, fire and so on. Such troubles cause significant decline in the value of the property. Also, the property owner would have to repair the breakage and other damage thus, caused to the property. Property insurance will help the policy holder to get the right price to the property, should he want to sell it, thus, keeping the value of the property intact.

Covers loss from theft 

This insurance protects businesses against theft by covering the content including inventory, fixtures, equipment like computers, electric appliances, etc., by employee or others.

Protects business content/stock 

For SMEs, content in the business house or stock of goods are significant for their everyday operations. It is, as such, important to purchase property insurance that covers the damage to content and the stock.

Covers loss of income due to business interruption 

Apart from covering the losses of catastrophes and damages because of vandalism, arson, theft, it also protects SMEs from loss of business by providing income when it is void as a consequence of repairs. Not all property insurance policies offer coverage for business interruption, it is, therefore, important for you to check if a particular company includes business interruption in its policy or not.

Having understood the significance of property insurance, SMEs should consider purchasing it. While doing so, it would be sensible for them to research thoroughly by diverse media including, word of mouth, friends and relatives, and the Internet. The Internet presents numerous brokerage agencies with substantial expertise, which also suggest you the right cover after doing proper risk assessment for your company.

As SMEs are prone to financial sickness due to any damage to the property, and badly need protection against any kind of threats to thrive competitively, purchasing the property insurance would protect them against the vulnerabilities.

Insurance For Truck Drivers

Truck drivers must have proper insurance to drive heavy trucks on the highways. When they work for a trucking company the company takes care of the insurance requirements. Drivers who take the leap to become owner/operator truck drivers or small fleet owners become responsible for their own insurance. At that point they must be very knowledgeable about the type of coverage they need. They should discuss various options with insurance agents to determine the type of coverage and the proper amount of insurance required to cover the needs of their new business.

Truck drivers typically begin their trucking careers working for a trucking company. Usually, the next step drivers sometimes take from working as hired drivers for trucking companies is to become owner/operators. They become business owners and purchase or lease their own trucks, trailers and equipment. As opposed to being hired employees, they hire themselves out to other trucking companies to haul freight for them. Choosing to become an owner/operator puts these drivers in control of the loads they haul. It also puts them in control of where they choose to go. Additionally, it allows them to earn more income.

Typically, after working for some time as owner/operators many drivers decide to take the next leap and become small fleet owners. They can start with one or several trucks. They can choose to hire other truck drivers or owner/operators. They could also decide to be the sole driver for their company.

The trucking industry is a highly competitive industry so new owners must have a plan to ensure their success. New trucking company owners must make decisions as to the type of freight they desire to haul and obtain the proper equipment. This could include dry van trailers, flatbed trailers, refrigerated trailers, etc. They also will need to decide if they plan to hire other drivers. These and other factors will determine the type of insurance their business requires.

Regardless of whether drivers decide to become owner/operators or small fleet owners they will be responsible providing all or part of the insurance for their truck, trailer and other equipment. Owner/Operators may have part of their insurance such as primary liability insurance covered through the company they are leased to. However, they may need additional insurance to cover their truck, plus any other equipment they have. Small fleet owners are entirely responsible for the insurance needs of their company.

Insurance options will need to be carefully considered. First and foremost is liability insurance. Federal law requires truckers to have liability insurance to drive on the road. Primary liability insurance is the insurance which protects others on the road. Primary liability insurance protects the financial costs of the victims of accidents such as large medical bills, injury benefits, death benefits and damages done to the other vehicle(s) involved in the accidents caused by you or one of your drivers.

Cargo insurance is the insurance which covers the loss of freight that is in the care, control and custody of the carrier. The amount of cargo insurance needed will be determined by the type of freight to be hauled. Generally, the minimum amount is $100,000. A higher amount may be required for hauling high dollar freight and the amount of cargo insurance obtained should be adjusted accordingly.

Having the proper insurance in place for your business enables you to financially protect your business. You may require extra coverage in addition to liability and cargo insurance. Your insurance agent should advise you accordingly. Take the time to choose your coverage wisely.

Do You Have Key Man Insurance to Cover Your Highest Performing Employees

Most companies have one or more "ringers." In your company, you know who these people are: top salespeople or "producers," key executives, owners, etc. In small- to medium-sized businesses especially, these are the people crucial to success because of their talent, specialized skills, experience, knowledge of your company and many other factors.

Simply put, they're the ones who get the tough jobs done and keep revenue streaming into your business.

Now, imagine if one of your ringers was suddenly gone due to death or disability. What would the short- and long-term effects on your company be?

Key man insurance - which may also be called "key employee," "key person" or "key executive" insurance - could be the answer to protect your company.

How Key Man Insurance Works

Key man insurance is a life and disability insurance policy that companies take out on key personnel, usually with a specific dollar-amount benefit for each individual covered. In the event of a covered employee's death or disability, the company - not the employee - receives the benefit.

How Much Coverage Do You Need?

Once you've determined who your key employees are, your insurance agent can help you walk through a number of factors to determine how much coverage you need. At a minimum, you want to make sure you're covered for the considerable cost of recruiting, hiring and training someone capable of taking a key employee's place.

Other things to consider if you were to lose a key employee:

Would you experience falling sales?

Would you lose critical management skills that could lead to reduced productivity?

What would your short- and long-term revenue losses be?

Certain businesses - in particular professional service firms - have other factors to consider. For example:

A law firm or medical practice usually can't replace a 30-year veteran with a recent graduate - or if they do, can't expect the replacement to generate the same revenue until years later.

If the key person is a partner in the firm, who will inherit his or her share of the business in the event of death? If it's a family member, are they being groomed to step in as a partner, or will they need to be bought out?

It's important to remember that while life insurance is an important part of a key man policy, the odds of disability are much higher. So, make sure any policy you consider provides both life and disability coverage. Also, keep in mind that in some cases, premium for these policies can be written off as a business expense -and any benefits received are usually tax free.

Talk To Your Insurance Agent

You want to ensure that your company can continue to run properly (and profitably) if you lose a key employee. Your agent can answer many complex questions and help you determine the right amount of key man coverage for your company, so talk to him or her today. It's one of the best moves you can make to protect your company in the event of an unforeseen tragedy.

Commercial General Liability - Who Is An Insured

Commercial General Liability - Who is an insured?

1. Named Insureds

a) Individual including the spouse. As an individual you are covered for the conduct of any business of which you are the sole owner.

b) Partnership or Joint Venture. Includes partners, members and their spouses. Coverage is limited to the conduct of your business.

c) Limited Liability Company. Includes members and managers. Coverage for members is limited to the conduct of their business and coverage for managers is limited in respect to their duties only.

d) Corporation. Includes executive officers, directors and stockholders. For Executive officers and directors, coverage is limited to their duties. For stockholders, coverage is limited to their liability as stockholders only.

e) Trust. Includes trustees. Coverage is limited to their duties as trustees only.

2. Others

a) Employees and volunteer workers, other than executive officers of corporation and managers of Limited Liability Company. Coverage is limited to acts within the scope of their employment or while performing duties related to the conduct of your business.

b) Persons other than employees and volunteer workers. Coverage is limited to while acting as your real estate manager.

c) Any person with temporary custody of your property if you die. Coverage is limited to liability arising out of maintenance or use of that property.

d) Your legal representative if you die. Coverage is limited in respect to their duties.

No person or organization is an insured with respect to the conduct of any current or past partnership, joint venture or limited liability company not shown as a Named Insured in the Declarations of the policy.

Note that employees, volunteer workers, persons other than employees are defined in your policy language and should be reviewed with your agent. Some common definitions are as follows:

A. Employee: "Employee" includes a "leased worker". "Employee" does not include a "temporary worker".

1. Leased Worker: "leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker".

2. Temporary Worker: "Temporary worker" means a person who is furnished to you to substitute for a permanent "employee" on leave or to meet seasonal or short term workload conditions.

B. Executive Officer: "Executive officer" means a person holding any of the office positions created by your charter, constitution, by-laws or any similar governing document.

C. Volunteer Worker": "Volunteer worker" means a person who is not your "employee"' and who donates his or her work and acts at the direction of and within the scope of duties determined by you, and is not paid a fee, salary or other compensation by you or anyone else for their work performed for you.

Contractors Insurance Costs Lowered by Safety Procedures

Despite increasing competition from a multitude of contractors, construction can be a great business, but this industry also carries more than its fair share of risk. It is important for every contractor to carry sufficient contractors insurance to protect the company in the event of a lawsuit.

Construction insurance provides a range of protection, including coverage for legal liability that could result from poor work by subcontractors or employees. By knowing and understanding the factors that affect premiums, savvy business owners can take the necessary precautions to reduce their legal exposure and costs as well.

Identifying the risks

Keep in mind that underwriters will use both objective and subjective measurements when assessing risk. While those criteria will play a large role in the premiums for the policy, each company that writes construction insurance policies will use its own proprietary models and underwriting criteria. Knowledgeable contractors can save themselves money by knowing which factors will likely be used.

One of the factors an insurance company uses to determine risk is the type of construction. Construction deemed high risk would carry higher premiums, while contractors involved in lower-risk projects will generally enjoy lower premiums.

Putting proper safety procedures in place

A key factor in writing these types of insurance policies is the degree of safety precautions in place at the job site. Implementing strict safety rules in writing is always the smart choice, and those rules can also lower the cost of insurance. So before shopping for insurance, consider the following:

Do the workers always wear hard hats and eye protection on the job?

Are visitors to the site also instructed to wear safety gear?

Are hazardous areas clearly marked with signs and physical barriers?

Are non-employees barred from active job sites?

If written safety procedures are not already in force, implement and enforce them at once. Safety should be a primary concern as it is the number one prevention of most accidents.

Flood Insurance Not Enough Coverage for Hurricane Sandy

Hurricane Sandy has left a devastating toll on millions of property owners and potentially thousands of small and medium sized businesses. Conservative estimates have calculated insured losses to exceed $30 billion with many having to wait weeks or even months before they will receive compensation or reimbursement for their loss of property, equipment and or damage to other forms of assets. For those businesses especially in the coastal regions and near large bodies of water who were smart enough to purchase flood insurance, they are in a much better financial and mental position than those who elected to decline this coverage.

However, purchasing flood insurance will only cover the cost of repairing or replacing damaged building(s), property, equipment and stock. But what if a business is in an area where mass destruction and flooding will take weeks or even months to clear up. How will these businesses survive with no income and expenses that still have to be paid?

A natural catastrophic event is a perfect example as to why Business Interruption Insurance should be purchased. This form of coverage can usually be added onto a business insurance policy otherwise known as a CGL-Commercial General Insurance for a relatively small cost varying between 5-10% of the annual premium. Business Interruption insurance provides coverage when an insurable loss forces a business to shut down their operations. It will compensate the business owner for the loss of net profits and will cover ALL necessary expenses until the business is ready to open again. The amount of coverage depends on the limits chosen by the insured. For example, a takeout pizzeria that generates $20,000 a month should consider a minimum business interruption limit of $80,000 (4 months coverage). Other forms of BI coverage includes extra expense which will cover the cost of relocating and operating out of a temporary location until the primary location is ready to open again. Note that offering these limits will require the business to provide substantiated proof in the form of financial statements.

It has been the busiest week of the year at our company with hundreds of callers inquiring about purchasing flood, earthquake and other forms of natural disaster coverage. Take out a few moments to review your policy for this coverage and if required, contact your broker and have them discuss the different options. A few hundred dollars towards upgrading your coverage can potentially save your business tens of hundreds of thousands while keeping your brand operational even through the worst possible scenarios.

Insurance Guarantees More Attractive In Romania

Insurance guarantees have emerged as an alternative to letters of guarantee issued by banks. There are two basically types of guarantee instruments that can be used in Romania:

1. Unconditionally guarantees (issued in the form of "bank guarantees letters" issued by banks)

2. Conditional guarantees (issued by insurance companies)

Financial problems, and particularly the lack of liquidity, arising from the financial crisis which affected Romania from 2008 until in the present, forced companies from Romania to switch to insurance guarantees offered by insurance companies to the detriment of banking products such as letters of guarantee. Thus, the government decision with nr. 834/2009 mention that the guarantees issued by insurers are expressly accepted forms of guarantee by public institutes to participate in awarding the public auctions. However, nearly four years after the implementation of the new legal provisions, warranty insurance market is underdeveloped in this area.

By providing guarantees, insurer undertakes to pay compensation if the beneficiary is insured and it shows faults that can not fulfill its obligations under the contract of work / service. Most contracting authorities require companies participating in the auction bank guarantees, although the guarantees issued by insurers are expressly incorporated into the category of eligible collaterals. Companies that participate in auctions organised in Romania must know that contracting authorities do not have the right to choose or to impose what kind of guarantee is needed.

The insurer covers risks arising from failure or improper performance of the contractual obligations assumed by the Insured under contract with the beneficiary.

There are four types of collateral as it follows:

- Providing tender guarantee (Bid Bond). According to statistics in Romania, this type of insurance is the most used from the guarantee insurances. This is because this type of insurance is required in the vast majority of auctions organised for various types of projects.

- Performance guarantee insurance contract (PERFORMANCE BOND)

- Providing Guarantee for advance return (ADVANCE PAYMENT BOND)

- Provide warranty period maintenance / maintenance (MAINTENANCE BOND). Regarding the fact that in Romania the infrastructure is quite poorly developed and there are many building sites to improve it, more and more companies, especially construction companies realized lots of infrastructure projects. Many of those projects deteriorated in a short period of time after completion of works. Therefore it was decided that one of the main condition for receiving a construction work will be the presenting of a performance bond insurance.

Depending on the type of collateral required, the Insured may be:

- Bidder - Guarantee Clause of the tender offer. The term Provider means any economic operator who has submitted the tender following the announcement / invitation to tender (manufacturer, supplier, contractor, contractor, provider). or

- Contractor - for other types of collateral.

The term Contractor refers to the tenderer which has become, under the law, a party to a public contract or framework agreement (builder, contractor, subcontractor, supplier, contractor, provider).

The Insurance product guarantees offered covers the performance of contractual obligations for public and private construction projects.

Bid Bond - Guarantee Clause of the tender offer

By this clause, the Insured and the Insurer mainly in the alternative is firmly committed to ensuring Employer obligations arising from the tender offer.

Advance Payment Bond - guarantees the return clause advance

Mainly insured and insurer, in the alternative, for damages Beneficiary guarantees, if the insured is guilty of failure or improper performance of obligations under the Contract relating to the use and return of the advance, up to the amount insured.

Performance Bond - Clause guarantee of good execution of the contract

Mainly insured and insurer, in the alternative, for damages Beneficiary guarantees the maximum amount insured if the insured is guilty of failure or improper performance of obligations under the contract of work / service and the beneficiary finds some weaknesses, shortcomings, defects in the works.

Maintenance Bond - Guarantee Clause during maintenance / maintenance

Mainly insured and insurer, in the alternative, for damages Beneficiary guarantees, if the insured is guilty of failure or improper performance of obligations under the Agreement on technical maintenance and address any deficiencies receiver, warranty of the work for which it is liable under the contract execution.

The Insurance guarantees are issued under a contract between the insurance company, contractor-insured (person who needs insurance) and the beneficiary (the person who will receive insurance if the insured fails to honor its obligations under contracts or provision of services).

Providing you can use to guarantee the bid, performance guarantee of work or services, advance return guarantee, warranty or maintenance period for a service or maintenance work performed.

In Case You Have To Leave

When living abroad, the social and political climate in the country isn't always stable. Whether it is due to political unrest, natural disasters or other unexpected issues involving personal safety, people sometimes need to be evacuated quickly. This interruption of daily life has several effects that can cause trouble for expatriates who are not covered by international insurance. This coverage includes a host of expenses and circumstances for organizations and their employees. The issues covered by evacuation and repatriation insurance will make the situation less stressful for those affected by it.

Expulsion 

In countries where political unrest creates an unsafe situation for foreigners, some employees living abroad may be asked to leave their posts. Unrest and danger are both cause for voluntary and mandatory flight from operations. Groups and individuals may be seen as an unwanted presence or even as potential casualties should they remain. Organizations may need to evacuate quickly, and emergency evacuation insurance provides protection for those expelled or advised to leave due to military or political events. Coverage includes the cost of transportation to the nearest safe place and confiscation of certain property items. Property is also typically covered under this international insurance policy.

Salary 

When unforeseen events cause an organization's employees and representatives to be removed from an unsafe location, eligible individuals' salaries can be continued under special international commercial insurance plans. When they are displaced, they may be able to continue their work in another location or may be suspended from operations until it is safe to reclaim their positions. This is often in place for up to a year, depending on the circumstances of the abandonment of the post and duration of the dangers.

Return 

Abandoning operations can be a stressful situation for everyone involved. Even more stressful is the cost and reality of return when authorities have given the all-clear to an organization. Special policies for international insurance not only cover emergency evacuation, but also the costs to return and re-establish operations after abandonment for safety reasons in the host country. Organizations must be able to present assurance that their presence in the former location is safe before making claims and returning to the country in question.

For organizations operating overseas, keeping their employees safe is a priority. Although their locations abroad may seem safe at the time they station people on assignment, the climate can sometimes change quickly. Those covered by international insurance policies for evacuation and salary continuation can regroup and move forward more quickly.

Business Interruption Insurance - Things Every Business Needs to Know

Any business, small, medium or large is susceptible to damages from events like natural calamities, or man-made disasters. They may be forced to shut down their business due to lack of sufficient financial support. During these situations, they need to have a backing that covers for the loss of income. Business interruption insurance is one such solution to cover up for lost income.

In this article, we will discuss about the importance of business interruption insurance and why every business should be prepared for the unpredicted.

Business interruption insurance should be a crucial part of every business owner's plan. Business interruption insurance acts as a supporting system for your business when it is closed down due to unexpected events such as natural disasters, accidents or any unforeseen risks.

Business interruption insurance provides sufficient coverage when your business is not in action and will help you pay the ongoing expenses. In this way, you will get some time in rebuilding your business. Small businesses who do not purchase this insurance would suffer closure soon because the expenditure for revival is beyond their financial capacity.

Can be an add-on to any policy 

This insurance is generally not sold as a separate policy; you need to buy it in addition to your existing liability insurance or any other insurance policy. It comes as a rider, or additional benefit with others like property insurance. This add-on policy to your excising policy will help you have liquid cash in hand, even when your business is not operating.

Coverage offered by the policy 

If your business is unable to function as a result of damages to the business premises and loss of revenue, this insurance would be helpful. Further, there can be interruptions because of a general economic downturn. In all the cases, as there is no transaction, there is loss to the business. However, you have to bear the essential cost. Under these situations, business interruption insurance will cover your business continuity operation expenses like the electricity bills, staff wages and rent, repairs of damaged equipment, etc.

Every business should consider business interruption insurance 

Whether, it is small or a large business, it is very much essential for every business to be covered under business interruption insurance for a secured and risk-free business. In business, losses are not predictable. During these difficult situations, this coverage will help you in rebuilding your business premises and also your self-confidence.

It is advised to buy this insurance through an insurance brokerage firm for better deals. But selecting an insurance brokerage or insurance adviser for your business may, however, be tedious, but you need to figure out the best brokerage firm that can offer you better deals. You can do this by researching on the Internet.

And before buying business interruption insurance policy, you need to discuss with the brokerage firm the things that are included and excluded in your policy. Choose a brokerage firm that will offer most of the things at a minimal cost compared to other brokerages and that promises to protect your business at times of adversity.