Property and casualty insurance: covering life's uncertainties
Property and casualty insurance provides a cushion for many business owners in the event that their companies experience a disaster or other loss. But, how do you know if you have sufficient coverage? On one hand, excessive insurance could result in unnecessary expenses. But on the other hand, insufficient coverage could leave you open to excessive risk and, potentially, excessive loss.
Evaluate Your Business Insurance
 Business needs change over time, often requiring changes to your insurance coverage needs. To help ensure that you are adequately covered, review your policies in the following areas:
Building coverage on a replacement cost basis. In the event of a fire, hurricane, earthquake, or other catastrophe, this covers the cost of replacing damaged or destroyed property with new property of like kind and quality without any deduction for depreciation or obsolescence. A depreciation deduction of 30% or more in the event of a large loss could leave you with a substantial shortfall to cover repairs.
Business interruption insurance. This type of insurance can cover operating expenses during an interim period if work is temporarily halted or interrupted due to incidents such as fire, crime, or an explosion.
Liability coverage. While all businesses have different needs, it is generally recommended that a business secure liability coverage of at least $1 million for business-related injuries and accidents.
Protection for valuable papers, documents, and electronic records. These important records may be difficult or impossible to replace. While many insurers automatically provide coverage for them, evaluate your policy to be sure your coverage adequately meets your needs and potential risks.
Protection from theft in the workplace. An insurance policy should provide coverage in the event company property, or employees' personal property, is stolen, damaged, or destroyed at the workplace.
To protect your business, consider periodically reviewing your property and casualty insurance to ensure it provides an adequate level of protection. Contact one of our qualified insurance professionals who can help evaluate your business risks and offer advice for obtaining the appropriate insurance coverage.
Did You Know?
Group Insurance Coverage
Group insurance coverage continues to be a popular benefit offered by employers, according to a 2010 survey of 400 human resources (HR) professionals conducted by HR news website BLR/HR Daily Advisor. Results showed that 77% of companies offer short-term disability benefits, and 82% offer long-term disability benefits. Other group benefit offerings included auto insurance (5%), homeowners insurance (5%), and prepaid legal services (13%).
Workplace Factors and Weight Gain
A growing number of U.S. workers report that they have gained weight in their current jobs, according to a 2010 survey by online recruitment firm Career Builder. Of more than 4,800 workers, 44% reported gaining weight in their current jobs, up from 43% in 2009. The gain was attributed to factors such as extended sitting (49%), stress (32%), eating out (25%), workplace celebrations (16%), and skipping meals due to time constraints (14%).
Talent Management
In response to signs that competition for key talent is likely to intensify, employers are starting to reshape their talent management programs, according to a 2010 survey by human resources consultancy Mercer. When 400 HR managers were asked to identify the programs that will undergo changes, the top responses were leadership training (88%), workforce training (85%), employee engagement (85%), recruiting (80%), retention (80%), rewards (76%), and performance management (76%) programs.
Termite prevention for business owners
In the natural world, termites digest cellulose and break down the wood of fallen and dead trees, thus facilitating the natural cycle of decomposition. In the business world, however, termites aren't quite so benevolent.
In fact, these tiny wood-eating insects cause an estimated $5 billion in property damage annually, according to the National Pest Management Association (NPMA, 2010). Even if your building is primarily brick or stone, it may still contain wood. If any of the wood comes in contact with soil, termites can gain easy access to your business to feast on your books, your papers, your filtration systems, and even your insulation.
Business owners have long had to deal with infestations by subterranean termites, but their potential destruction has increased in recent years, as storms bring greater moisture to some areas of the country, and as more aggressive varieties of termites are seen. Particularly dangerous are Formosan termites, which are capable of consuming 100 times as much wood per year as the more common subterranean varieties. They are also able to infiltrate structures aboveground, thus outwitting many of the common measures used to combat them.
It's important for business owners to know that there is no insurance available to cover losses caused by such infestations. This is why prevention is essential. There are ways to recognize the presence of termites in the early stages, before significant damage can be done. There are also ways to deter termites altogether. Of course, the more you know, the better you'll be able to protect your number one investment: your business.
Under Construction
If your building is under construction, be sure builders immediately dispose of any cellulose materials on the jobsite that could serve as food sources for termites, such as stumps and roots, wood and cardboard debris, grade stakes, and boards used in concrete forms.
While contractors aren't solely responsible for pest control, their potential liability for infestations that could have been prevented extends well into the future. This is because there are steps they can take to minimize construction defects, thus preventing unwanted moisture and pests from entering the structure. Although the banning of chlorine-based agents once used to deter termites has made protecting buildings more challenging, there are still preventive strategies and protective treatments that can prove highly effective in reducing the chances of a serious infestation.
Moisture, Wood, and Maintenance
Termites rely on moisture for survival, so taking steps to stop water from accumulating near the foundation can reduce the chances of a termite infestation. To control runoff, the soil surrounding the building should be graded away from the foundation, and rainwater should be properly diverted away from the building with gutters, downspout extenders, splash blocks, and drain tiles. In crawlspaces, floor joists should be at least 12 inches above the soil. Any soil beneath floor structures should be covered or treated.
Whenever possible, wooden sections of the building should be at least six inches above the soil. To prevent termites from using a porch, deck, or steps as an entry point, any wooden elements in these structures should be kept above ground on concrete footings, and lattice work or trellises around the building should be made of non-cellulose materials.
Regular maintenance of taps and pipes, along with good ventilation in crawlspaces, basements, and attics can help protect your business from termites. When landscaping the grounds, be sure that plants and mulch are several feet away from the building's foundation. Be sure to store garbage in sealed containers and dispose of it regularly.
Protection and Prevention
Termites are especially prevalent in warm and temperate climates, or in close proximity to wooded areas. Often, large numbers of winged termites, swarming from wood or soil, are the first obvious sign of a nearby termite colony. Another sign are mud tubes, which look like thin tunnels of dried mud that run from the foundation, up the sides of the building. Because termites live in soil and are soft-bodied insects, they need the protection of the mud tube as they move around consuming wood. If you disrupt one of the mud tubes, you may see whitish, opaque ants. These are the worker termites.
An investment in termite protection is an investment in your business. For more information, visit the National Pest Association online at www.pestworld.org.
For Your Information
Disaster Assistance
A business located in a declared disaster area that has incurred damage during the disaster may apply for a loan through the U.S. Small Business Administration (SBA) to help repair or replace damaged property. Disaster loans of up to $2 million are available to qualified businesses of all sizes for permanent rebuilding and replacement of uninsured or underinsured disaster-damaged, privately owned real and/or personal property. For more information, visit www.sba.gov.
Financial Literacy for Business Owners
360 Degrees of Financial Literacy is a national volunteer effort of the American Institute of Certified Public Accountants (AICPA) that provides educational materials for individuals and business owners to help them make sound financial decisions. To learn more, visit www.360financialliteracy.org.
Green Your Home Office
The U.S. Environmental Protection Agency (EPA) recognizes that business owners who work from home, telecommuters, and students can have a big impact on the environment through the choices made about home office supplies and equipment. The EPA provides tips for choosing office equipment and furniture, recycling paper, and using efficient writing tools, as well as resources for reducing waste. For more information, visit www.epa.gov.
Product liability insurance: who's at risk?
 Rigorous manufacturing standards and enhanced quality control are perhaps the best ways to prevent a product liability lawsuit. But things are not always that simple. As the link between companies and consumers weakens, manufacturers, distributors, wholesalers, and retailers are increasingly at risk when customers incorrectly use their products and become injured. While a company may feel it acted responsibly to prevent any potential liability, it may still be vulnerable to lawsuits.
According to the legal doctrine of "strict liability," a company may be held liable for any damages resulting from the use of its products, even when there is no proof of corporate negligence. Any company that sells, distributes, or manufactures a product may risk losing a significant amount of money in direct compensatory and costly punitive damages. Fortunately, companies may be able to protect themselves with the proper insurance coverage. Product liability insurance, combined with procedures to create a safe product, may help secure a business against liability from real or alleged product defects.
Policy Considerations
Generally, a product liability policy covers property damage or bodily injury caused by the product, as well as payment for legal defense costs. There are two basic types of insurance: Claimsmade policies apply to claims made at any time the policy is in effect, regardless of when the alleged defective product was manufactured, and occurrence policies cover losses from use of the product during its entire useful life.
Premiums for coverage under an occurrence policy may be higher because claims can be filed when the policy is no longer in effect. Coverage for recalling and replacing defective products, including the cost of the damaged product itself and any potential losses resulting from nonperformance of the product's intended function, generally is not included in standard policies but may be purchased separately in many cases.
Precautionary Measures
Although product liability insurance provides protection from claims arising from the use of faulty products, this coverage should be used in conjunction with quality control and other precautionary and safety measures. Business owners may consult with an attorney who can review all labeling and advertising, and also thoroughly investigate any product claims. One of our qualified insurance professionals can help assess the potential risks of your business to determine the appropriate insurance coverage.
Security and your business
Burglaries can happen to any company, no matter its size, location, or business type. Fortunately, there are things you can do that may help make your business more resistant to crime.
Inside Protection
- Lights: Bright indoor lighting may help police or others in the area to notice suspicious activity on the premises.
 Strategic placement of goods: To prevent a burglar from working quickly, avoid putting valuable products and money all in one place.- Alarm system: While a silent alarm that directly alerts the police station or a private security agency is ideal, an on-site alarm that rings loudly might scare off burglars or attract the attention of someone nearby.
- Card access system: Card access—where employees have cards that enable or restrict their access to various areas of the business—may prevent break-ins after hours, as well as internal theft.
- Video surveillance: Cameras may be useful in identifying and convicting criminals.
Outside Protection
- Quality doors and locks: Consider purchasing steel doors and deadbolt locks that resist kicking, drilling, and beating, which may hinder criminal efforts.
- "Smart" landscaping: Avoid surrounding your business with trees and shrubs, which can serve as hiding spots for burglars.
- Lights: Keep each entrance to your building well lit to help police or others see who is entering and exiting your place of business.
- Alarm decals: Even if you don't have an alarm, a sticker with the name of an alarm company may trick a burglar into believing that you do.
Oftentimes, it takes an actual burglary to prompt business owners to consider preventive measures. Why not improve workplace security before you find yourself a victim of crime? Please stop by or call us so that we may help ensure you have the proper crime insurance coverage and anti-theft protection for your business.
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