Business Protection Bulletin

Business Interruption (BI) insurance makes sense. Consider Allison Dorst, a New Jersey resident who operates three e-commerce web sites selling sportswear. Last fall, Superstorm Sandy brought a prolonged power failure that shut down Dorst’s customer-service lines, causing sales to evaporate. She’ll also see lower sales because of a month-long delay in the delivery of next season’s styles. Fortunately, her Business Interruption coverage will reimburse the profits lost because of this lost revenue.

Although most middle-market business owners and managers understand the need for BI, they don’t always have the information they need to choose the right coverage. Some companies don’t have enough insurance to remain in business after they suffer a major loss, while other businesses might be buying more coverage than they need. When it comes time to renew your BI insurance, be sure to take a close look at the insured or reported values for the policy, as well as on the various coverage extensions that apply to your business, based on its operations. It also makes sense to consider additional coverages such as:

• Contingent Business Interruption
• Claim preparation fees
• Extended period of indemnity
• Expediting expense
• Service interruption/power outage, including overhead transmission and off-premises lines
• Extra expenses
• Ordinary payroll coverage
• Selling price of finished goods inventory
• Ingress/egress
• Loss of attraction
• Civil authority
• Sue and labor

We’d be happy to offer our advice, free of charge, in selecting the amount and types of coverage that can minimize your financial risk and keep you in business after disaster strikes. Feel free to get in touch with us at any time.

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.

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.

In the controversial Citizens United case, the Supreme Court ruled that corporations have rights similar to those of an individual. If 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:

1. 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.
2. 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!
3. 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.

The nationwide debate over gun control in the aftermath of the Newtown massacre has raised a number of issues — including potential insurance liability for businesses in states that permit citizens to carry concealed weapons. Here’s why:

A company that allows customers or visitors on its premises has a legal obligation to exercise “reasonable care” in keeping them safe, a responsibility that includes warning them about any hidden dangerous conditions. For example, in states with “concealed carry” laws, a store owner might need to post warnings that sales clerks are armed.

Let’s say that an employee carrying a concealed weapon negligently or deliberately shoots a customer who is legitimately on the premises of the business — and the customer then sues the employer for bodily injury. On the other hand, suppose that an employer forbids workers from carrying weapons on the job. If an employee is attacked and beaten at work, he or she might sue for damages from bodily injury, claiming that the employer’s ban on firearms in the workplace impaired the employee’s ability for self-defense.

Although your Commercial General Liability (CGL) policy should provide coverage against such claims, it makes sense to minimize this risk by taking pre-emptive action. One effective approach: To seek an exemption from the scope of the concealed-weapon law (if one doesn’t already exist), giving you the authority to forbid weapons in the workplace. Make it clear to all employees and potential employees that company policy forbids bringing weapons onto the premises. You might also conduct comprehensive pre-employment screening to help hire stable, sensible people who are unlikely to settle disagreements with lethal force.

To learn more about protecting your business against the potential problems created by concealed carry laws, feel free to get in touch with us.

In signing a contract to do business with another entity, you agree to add them as an insured under your Liability insurance. Several months later, an accident arises from the contracted job, and the other party sues you for damages. Can you file a claim for this suit under the policy that covers both of you? If so, isn’t this like the party suing itself, because the same policy that covers them as an insured is the one under which they’re now attempting to collect damages?

The answer to the first question is “yes, you can file that claim.” A standard Liability policy will cover a suit by one of its insureds against another unless there’s a specific endorsement prohibiting such coverage. Under such a “separation of insureds” clause, all policy provisions apply “separately to each insured against whom a claim is made or suit is brought.” So, from the policy perspective, the key issue is whether an insured is being sued — not who’s bringing the suit. As with any other claim, whether the policy pays for the damages will depend on a determination of liability and applicable coverage limitations and exclusions.

Although the insured party is attempting to collect under a policy that covers them, legally they aren’t suing themselves, but another insured; and the “separation of insureds” clause allows coverage for such situations.

Protection for “insured vs. insured” claims provides a valuable benefit under your liability coverage. However, bear in mind that any damages for such claims will drain your coverage limits. So, be careful about which and how many additional insureds you allow to be covered by — and yet still sue you and collect under — the policy you purchased just to protect yourself!

If you’d like more information, please feel free to get in touch with our Business insurance professionals. We’re here to serve you.

If you’re a tenant, you might believe that you have avoided many loss exposures, such as fire damage to the structure, associated with owning the building. However, have you read your lease lately? Really read it?

Many leases contain extensive insurance requirements that the tenant (you) must agree to meet. Although these usually include liability from your actions and responsibility for covering your property for loss, it’s easy to overlook the extent to which you might have agreed to cover exposures usually assumed to be the responsibility of the building owner.

For example, retail shopping areas often have an abundance of external glass windows. Although these are clearly the property of the building owner, many leases transfer any responsibility for damage to the windows to the tenant. The idea is that because you directly control the potential loss exposures for the glass (such as vandalism, accidental breakage, and maintenance inspections), you should provide the insurance. Similar reasoning might lead you to being held responsible under the lease for other losses not directly attributable to your own negligence.

Now is the time to pull out that copy of your lease. Review it with your legal counsel to see if there might be language or agreements that need addressing. Then let us review the document for its insurance implications (be forewarned — they won’t all be contained in a paragraph titled “insurance”). We’ll sit down with you to review what your lease requires, how your current insurance program matches up with these requirements, and then offer guidelines for making any necessary changes to your protection.

In today’s “service economy,” more and more businesses (such as auto body shops, dry cleaners, and parking lot owners) are taking temporary responsibility for property or equipment owned by others. Loss or damage to any property under the care, custody, or control of your firm could cost thousands of dollars — unless you have Bailee insurance.

This Inland Marine policy covers the liability of a business (the “bailee”) for the property of customers under its care, custody, or control. Most Property policies don’t provide coverage for this type of exposure, unless it’s included specifically. You can also purchase Bailee insurance on a no-fault basis to protect customers’ property against any loss or damage and subsequent liability, regardless of negligence.

You should buy enough coverage to pay for the total value of other’s property that might be in your control at any one time. Many types of Bailee insurance are tailored to the specialized needs of a particular type of business (Jewelers Block policies, Furriers Block policies, etc.).

As an alternative to Bailee insurance, you can obtain coverage as part of a comprehensive Property policy that includes a “property of others” clause.

We’d be happy to help you evaluate your needs and find a solution to insuring property under your care, custody, and control. Just give us a call.

What’s your company’s “brand?” Whether you’ve had one developed professionally or simply let it happen, experts all agree that you definitely have a brand.

Call it “image” or “reputation,” but it’s there — and it goes far beyond advertising and marketing. At its core lies the emotional connection your products or services make in the minds of your customers or prospects: Either terrific or toxic. The question is whether your brand is enhancing or detracting from your success.

A crucial attribute for any business is trust, based on an ethical approach to every relationship and transaction. Is your brand trusted? Ask your customers and prospects what your brand says to them.

We’d also like to ask what our brand means to you. We want nothing less than to be your trusted advisor. Let our professionals take your concerns about protection and insurance issues off your plate, so that you can focus on building your brand into a valued enhancement to the future of your business.

The spread of social media has revolutionized not only the way we connect with friends and family, but also how we conduct business. However, this asset can quickly turn into a liability if misused – for example, in recruiting your company’s most valuable asset – its employees.

Many employers begin the hiring process by using social-media outlets to screen applicants. LinkedIn and Facebook can provide a wealth of information about applicants’ education, their friends, and their personal behavior. Some companies reject candidates based on the content of their social-media pages. This might include anything from inappropriate photos or comments, discriminatory or slanderous statements, and references to alcohol and substance abuse, to sharing confidential information about their previous employers(s), displaying poor communication skills, or exaggerating their qualifications.

Although all of these indicators raise red flags, you could be risking a costly and annoying discrimination lawsuit if you access social-media sites which contain protected class information that’s not privileged in the normal hiring process.

To minimize this risk, it makes sense to:

1. When hiring, use outside third parties such as background-verification companies and/or recruiters who document content from social-media sites in selecting candidates.
2. Develop and enforce a comprehensive social-media usage policy.
3. Purchase an Employment Practices Liability Insurance (EPLI) policy

For more information, please feel free to get in touch with our agency