If Your Business Leaks Contaminants

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.

In some cases, such as heavy manufacturers, gas stations and waste storage facilities, the risk of contaminants is obvious. However, many businesses, including warehouses, golf courses, landscapers, commercial printers and farms, are also at risk of incurring significant cleanup costs due to contamination. Unfortunately for most businesses, standard liability insurance will not pay the cost to clean up contaminants.

Businesses with small exposure to contamination liability may have the option to amend the general liability policy to help cover the cost of cleanup. For businesses with a greater exposure, a separate liability policy is probably necessary.

We can help identify your contamination exposures and give you coverage options. Give us a call.

Replacement Cost Drives Coverage

Employment for “contingent” or temporary workers has increased 23% since July 2009, according to the American Staffing Association. The Bureau of Labor Statistics additionally reports approximately 166,000 temp jobs have been added over that same time period.

Companies now spend $425 billion annually on contingent labor, which accounts for about 11% of the workforce, or 14 million people, according to Kiplinger’s Personal Finance. Unfortunately, many employers of temporary workers do not realize the risk they are running regarding their commercial liability insurance.

Most commercial liability insurance policies—policies that pay costs to defend and protect firms from claims of bodily injury or property damage to a third party—do not cover the actions of temporary workers. Most policies exclude temporary workers from the definition of “employee.”

Most policies will, however, cover the actions of volunteer workers and “leased workers.” Understanding the distinction in worker status is imperative in determining if coverage under your firm's liability policy is available.

NFIP Limits
Too Low?

The federal government’s
flood insurance plan’s $500,000 maximum coverage for your business’s building is making
some business owners wonder
if there is an alternative to government-sponsored flood insurance.

Flood damage to your building and contents is not covered by your firm’s commercial property policy. The National Flood Insurance Program may be a good place to start, but the program’s limits may not be sufficient to cover your needs. The good news is that excess flood policies are often available.

Give our service team a call. We can help you find an excess flood policy that will provide limits beyond those available from NFIP. Remember that flood insurance typically includes a waiting period of up to 30 days after purchase before coverage is available, so don’t wait until the water is rising. Call today.

Replacement Cost Drives Insurable Value

Many building owners believe market value is the fundamental element in determining the insurance value of a property. Unfortunately, this misunderstanding is why many owners find out after the loss that their insurance limit is inadequate.

The fundamental element in establishing value is replacement cost. Specifically, how much will it cost to replace the building in the event it is totally destroyed?

Replacement cost is tied to construction costs. Contrary to market value, which has dropped significantly over the past two years, construction costs have increased almost 3% since 2008, according to MSB, a leading supplier of building-cost data. While labor costs have declined, the cost of materials, especially petroleum-based materials such as pipes and shingles, has increased. Other factors leading to increased construction costs, according to MSB, include increased taxes and fees and the increase in insurance costs of contractors.

Determining adequate insurance value is essential to avoiding a costly penalty at the worst possible time: after the loss. For more information on factors involved in determining an adequate policy limit for your building, call our service team today.

Peak-Season Inventory
There are certain times of year when your retail business booms.

During those times, whether it’s a few days, weeks or months, chances are the value of your inventory rises with the demand.

To protect your business from suffering a penalty for underinsurance during one of these time periods of escalated inventory, your business owners policy includes an important insurance coverage called “Peak Season.” This coverage automatically increases your contents limit by up to 25%, thus offering access to more coverage if the loss happens at the height of your inventory.

This additional 25% could be a life-saver for your business’s bottom line. However, receiving it requires diligence. Specifically, at the time of the loss, you must be able to prove to the insurance company that the limit of insurance you normally carry on your contents for non-peak times is equal to 100% of their replacement value. Stated differently, if the insurance company discovers that your policy limit is inadequate during non-peak times, you will not be eligible to receive the 25% additional limit during your peak season.

The best way to ensure full coverage is to review your contents and your limits regularly and submit any changes to your insurer to update your policy.

Online Posts Can Be Risky

A recent survey conducted by a major insurance company shows evidence that blog posts, tweets and other online communication could have deleterious consequences for individuals and their employers.

“A foolish post or a tweet could cost you a job or even trigger a libel lawsuit,” says Christie Alderman, vice president of Chubb & Son and new product and services manager with Chubb Personal Insurance. “We all should think twice before posting any comment online.”

One of the major concerns for employers is when employees fail to obtain permission to share copyrighted materials on employer-sponsored sites and intranets. The survey showed that 60% of respondents said they rarely obtain permission to cut and paste articles, artwork and other information before e-mailing them or printing them out.

The pervasiveness of online communications may make it impossible for your firm to edit every post or action generated by an employee. If the worst happens and their actions land your firm in a libel or copyright infringement lawsuit, do you know if your firm’s general liability policy will pay?

We can help you determine what coverage may be available under your current liability insurance program and, if necessary, what steps may be taken to get coverage. Call today.


Changes to Business Owners Policy

Traditionally, a business owners policy (BOP) offers businesses an excellent alternative to purchasing business income insurance on a standalone basis. While most BOPs still include business income insurance, many providers have taken measures to limit this coverage.

Businesses should pay close attention to renewal policies because changes designed to limit coverage may be present. For example, traditional BOPs include business income coverage on an “actual loss sustained” basis for a specified time period, usually 12 months. One measure taken by some insurance companies to limit this coverage is the addition of a maximum dollar value (policy limit) and a provision that says it will pay the greater of either a time frame—such as 12 months—or the policy limit. A further limitation is that the policy limit may include a coinsurance requirement, thus placing more financial pressure on the policyholder.

Other BOP insurance companies may limit business income coverage available by industry. For example, one insurance company indicated that it is capping coverage for certain manufacturers at 65% of total sales. Others are imposing limits based on the type of equipment that is damaged, such as an expensive press at a commercial printer.

The traditional BOP is changing. For assistance in evaluating changes to your policy, the effect they have on your operations and possible solutions to deal with the changes, give us a call.


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  Company Parties and Liability

Planning to replace the expensive employee retreat with something more local and low-key this summer or fall?

Employers looking for ways to trim costs without sacrificing camaraderie may look to a staffer’s home, a rented facility or even the office as possible locations for a weekend company party. Generous employers might even choose to provide food and drinks. If those drinks include alcohol and an employee drinks too much and causes an accident with injuries or damage, even off the premises, the employer could be named in a liability suit.

As long as your firm is not in the business of selling, manufacturing or distributing alcohol, your general liability insurance policy will defend your firm if included in litigation. This coverage, commonly known as “host liquor” liability, is typically included in general liability insurance. It is also usually covered by your firm’s excess liability or umbrella policy, although such policies may contain separate terms and conditions, so it’s important to review the coverage for details.

COPYRIGHT ©2010. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is understood that the publishers are not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert advice is required, the services of a competent professional should be sought. 06/10