Blog

Will your current business income insurance coverage be enough?

With the material shortage and labor shortage things are taking longer to get done then ever before.  It is time to re-evaluate your business income insurance limits.

Think of all of the claims scenarios.

• • Hurricane
  • Tornados
  • A fire rips through your premises
  • Etc.

If your business is marked as unsafe after a catastrophe, what recourse do you have?

Will all be lost?

Not necessarily, if you have business interruption insurance.

Unfortunately, many entrepreneurs are unaware of the true cost and impact a catastrophe can have on their business operations.

The Federal Emergency Management Agency (FEMA) reports that nearly half of businesses don’t reopen after a catastrophe or other disaster.  And another 25% fail within the year following the disaster.

Many businesses don’t survive because they either lack business interruption insurance coverage.  Or have inadequate business income insurance limits on their policy.

Disaster recovered

Property insurance primarily covers your building and the assets within it. What you need right now is to cover your missing revenue and your other business-related expenses.

Business interruption insurance covers:

• Lost Income: Profits you would’ve earned during the interruption
• Rent or lease payments: Payments owed to your landlord on your damaged location
• Temporary relocation: Costs associated with moving to and renting a new location
• Employee payroll: Wages for your workers
• Taxes: Federal or local taxes that are due
• Loan payments: Outstanding payments due to creditors
• Losses caused by damage that prevents access to your building: Missing income due to authorities imposing curfews or evacuations in the area where your business is located

How is business income insurance paid?

There are several methods that business

Coinsurance Formula: Coinsurance can be anything from 70%, 80%, 90% or 100% or 125%

The lower the coinsurance the higher the cost. But the higher the coinsurance % the more accurate you must be for the coverage amount.

Monthly limitation:  You can choose 1/3, 1/4, or 1/6

With this calculation you have a total limit of coverage and then the most you would receive in any 30-day time period is the limitation you picked.  So if you have $100,000 limit and have a ¼ option the most you can collect In any 30 days is $25,000.

Actual Loss Sustained- this is the actual amount that your loss up to 12 months.  If it takes more than 12 months to restore, then you have no additional coverage.

Let’s use an example to illustrate. 

Kiddie Korner Daycare suffered a 3-month shut down of their business after a fire.  They had a business income limit of $60,000.  There total business income loss for those three months was $65,000.

If we use the 80% coinsurance model:

You would take the $65,000 loss x 80% that is $52,000 so there is no penalty to apply since they had a $60,000 limit, but they would only receive $60,000 since that is the limit of coverage.

If we use the monthly limit of ¼ month 

Then they would receive up to $15,000 ($60,000 x ¼)   a month x 3 months they were closed.  They would be paid $45,000

If we use actual loss sustained

Since they were closed les than 12 months, they would receive $65,000.

This quick illustration shows how important it is to have the correct coverage amount and the correct coverage method on your policy.

Depending on the industry, business, or carrier not all the methods for business income are available.

How do you determine the amount of business income you need?

The only way to accurately do this is to complete a business income worksheet.  Below is the worksheet so that you and your CPA can complete.

When thinking about the time that you can be back open, remember it will usually be 50% longer than your initial thought

Please complete this worksheet and forward it back to us so we can discuss.

What will you need to be paid a business income claim?

The insurance company will look at a profit and loss statement for the current period as well as the same period the year prior.   In addition, they may also compare the quarter before last year to see if you are on incline or decline.

They would need proof of contracts that you lost or could not meet during the loss period.

They will need proof of the continue operating expenses.

It is important for business income claims that you have very good business income reports.  Not having taxes or business financial records easily available will cause a delay in your claim or you not getting paid at all.

Contact Huff Insurance Today

If you want to talk to an experienced insurance agent to go over your business income insurance needs, then call us today at 410-647-1111.

Does your business need Workers Compensation Insurance or Disability Insurance?

One of the most important things you can do as a busienss owner is to make sure your income is protected.

Two workers comp questions I hear all of the time are:

1. I do not have employees, so I do not need workers compensation, right?
2. As the owner, do I have to pay for workers compensation for myself?

First, just because there is not a law requiring you to get a coverage, does not mean that you still can not purchase it.  Or mean that you do not need the coverage.

And as an owner or officer of a business that has employees, you can opt to exclude yourself form the workers compensation coverage.

In either case above, you need to ask yourself if the cost savings is worth the risk of not having the coverage.

So, you are a sole proprietor contractor, everyday you go to a job to make the money to pay your mortgage, vehicles, food, etc.

What happens to all of that if you are hurt on the job and can not work for 6 or 8 weeks?

If you have medical insurance, that should cover your medical bills, subject to your deductible and co-pays.

• But what is going to replace the loss of income?
• Do you have enough money in savings to cover this?
• What if you were out of work for longer?

You might say that you will get disability benefits from the state or SSI?  Possibly, but it is usually a very long time before this gets approved.  And it is not guaranteed that the benefits will be approved.

So, what are your options to make sure your income is protected?

1. You can purchase workers compensation coverage to cover yourself for your medical bills and loss wages if it is a work-related injury.
2. You can purchase a disability income insurance policy. This will provide coverage if you are disabled due to a work or non-work-related injury.

A disability policy is a better option because the coverage is broader.  This way if you get hurt playing a Friday night softball game, you’ll have coverage.

Think about what the impact to your family and your situation would be if you were out of work for 6 weeks or longer.

How would this affect the necessities of life like food and shelter, but also affect your ability to go on vacation or for the kids to participate in extra-curricular activities?

To find out more about the options available to you then please give our office a call.

For more information on disability insurance please see our blog ….

What Is Disability Insurance And Do You Need It?

CONTACT HUFF INSURANCE

Still not sure if you want workers comp or disability insurance?  Contact one of our experienced team members at Huff Insurance.  Our team will be happy to work with you.  Give us a call at 410-647-1111.

If my property is vacant, does that affect my insurance?

The news is filled with stories about the unfortunate reality of vacant or unocupied properties.

Homes and businesses alike are standing empty. But do they have the right vacant property insurance?

Many owners may have purchased homeowners insurance / dwelling fire insurance or business property insurance policies while the homes or businesses were occupied. Now that there is a vacancy, they may have incorrectly assumed they have insurance coverage in place.

A vacant property is one where there are not belongings or furnishings in the property.

An unoccupied property is a property that still has furninhings or belongings inside, but nobody is occupying the property.

There are many reasons that a home may become vacant or unocupied, such as:

• Home renovation
• Waiting for a tenant
• Owner has passed away
• Owner moves into a nursing home
• Etc.

Vacant or unoccupied properties presents special challenges.

The insurance premiums charged for occupied property does not take into consideration the increased exposures and risks of vacant and/or unoccupied property.

When a property is vacant or unoccupied claim severity of claims increase because there is no one regularly at the property.  So a leaky pipe might run for weeks till it is spotted.

The property insurance provided by most policies is limited, and may not respond at all, if the property has been vacant for more than 60 consecutive days (prior to a loss)!

Many if not most insurance companies will cancel coverage immediately if they become aware of the vacancy. Even if the policy is not canceled, there may be major problems in the event of a claim.

The occupancy status is considered essential (a material fact) to the insurance company. When the use and/or occupancy of a property changes many insurance companies may no longer want to insure the property.

OF MAJOR IMPORTANCE!

Does the property is deemed to meet the definition of vacant or unoccupied in your insurance policy?  If so, the following coverage limitations may apply.  

• Insurance is suspended on glass breakage
• Vandalism and theft is not covered
• There is no coverage for damages caused by freezing plumbing, heating, air conditioning, or automatic fire protection sprinkler systems or of a household appliance if the property has insufficient heat and/or the water system has not been shut off or drained.
• On a commercial building, if there is 31% or less occupancy, in addition to all of the above, ALL claims payments will be reduced by 15%….(unless a vacancy permit/endorsement is attached to the policy)

Depending on the policy and insurance company involved, the entire policy may be void in the event of a vacancy or un-occupancy.

There are, however, solutions.

We pride ourselves on finding solutions for our clients.   There are insurance companies that will write Vacant Property Insurance policies.

We must, however, be first made aware of the vacancy or occupancy.  Please contact us if your property undergoes an occupancy change and we will help guide you through the necessary steps to obtain proper coverage.

Huff Insurance is a full service Independent Insurance Agent We have been dedicated to Protecting Lifestyles™ since 1960. We offer a full array of Personal Insurance, Commercial Insurance and Life Insurance & Health Insurance products. Call us at 410-647-111

 

What is the difference between a claims made insurance policy and an occurrence insurance policy?

Different types of coverage are commonly written on different types of policy forms.  The most popular form is an occurrence policy, such as most general liability insurance policies.   Certain policies such as cyber insurance, pollution libility insurance, professional insurance (E&O), and employment practices liability insurance (EPLI) policies are more commonly written on a claim made insurance form.

It is imperative that you know what type of policy form that you have, especially when looking to replace a policy because going from a claims made form to an occurrence form could leave you with an unexpected gap in coverage and could result in an unpaid claim.

What is an occurrence form?

• Generally, an occurrence form will respond if the injury or damage occurred during the policy period, regardless of when the claim is delivered.
• Occurrence coverage applies to a loss
  • If it occurred during the policy term
  • The loss took place in a covered territory
  • The loss arises out of the insured’s work or premises

What is a Claims Made Insurance Form?

• The trigger for a claims made insurance form is when the claim is reported. Insurance coverage usually only applies during the policy period and subsequent extended reporting periods.
• The 4 dates to remember with a claim made policy
  • The date the injury occurs
  • The date the work was performed
  • The policy effective date
  • The retroactive date. This is a huge one!   The retroactive dates is typically the date on or after which the work that caused the loss must be performed.
• The claim made insurance coverage usually applies to a loss if:
  • The loss took place in the coverage territory arising out of the insured’s work
  • The insured’s work did not occur before the retroactive date shown on the declaration page or after the end of the policy period
  • The claim or suit is first made against insured during the policy period
• A claims made insurance policy typically includes an automatic extended reporting period (ERP), or commonly referred to as a Tail. This period only provides additional time to report a claim that occurred between the retro date and the policy term.  It does not provide for an extension of coverage.

What happen if you wish to replace your coverage with another company?

• If you go from a claim made insurance to an occurrence insurance policy, you would need to purchase an extended reporting period from the claims made policy.
• If you renew the coverage with another carrier on a claims made form, you need to keep the retroactive date from the expiring policy.  Failing to do this it could significantly reduce your coverage.

There are advantages and disadvantages to both coverage forms.   A claims made policy may be lower in price initially.  But as the coverage continues and the retro date grows older, the premium could increase over time.

With occurrence insurance coverage, the limits set for a policy remain the same, regardless of when the claim is made.   But with a claims made insurance policy, there may be broader coverage or higher limits over time.

Typically, cyber, pollution, professional liability and employment practices liability are claims made because the job might be completed today but the claim does not occur for several years later.

For example, in 2000 you might have had a $1 million dollar limit  when you completed the job, but today you have $5 million limit, a covered claim being reported today, even though the work was done in 2000 would then have $5 million dollars of coverage afforded rather than the $1 million it would have had if the policy was an occurrence.

Knowing the policy form that you have when shopping for replacement coverage is crucial.   You must make sure that you match not just the limits, but the retroactive date as well.

Closing your business?   

If you have a claims made insurance policy you need to purchase an extended reporting period.  This allows time for claims that occurred from the work that you did since the retro active date to be reported.

Turky Frying Safety Tips

It’s hard to believe that we are days away from Thanksgiving 2021. I personally love Thanksgiving. A day to eat, hang out with family and take a nap not a bad way to spend a Thursday. My mom is a volunteer fire fighter in Rehoboth Beach Delaware Station 86, and she shared a fact that I found so interesting. Thanksgiving is the No. 1 Day for house fires. I thought to myself, ‘Okay this woman might be either going a tad insane or she is on to something here.’ So, like the millennial I am I went to google to find out if there was any truth to her “interesting fact.” If you google “what is the number one day for house fires” you will see that it is in fact Thanksgiving. This was a good sign to me, I thought to myself “okay, so my mother has not completely lost it and is just making up random facts now.”

FEMA Facts

According to FEMA, “The average number of reported residential building fires on Thanksgiving Day was more than double (2.3 times more) the average number of fires in residential buildings on all other days.” (NFIRS Data Snapshot, 2021) Well, this “interesting fact” led me down a rabbit hole of wanting to know more about Thanksgiving safety. The majority of the pages I read all spoke about cooking safety. The most important safety tip that these articles had in common was cooking safety for deep frying a turkey. on the website kids in the house, Hilary Anderson, MA, with the American Red Cross, states “The number one cause of home fires is cooking–unattended cooking. Unfortunately, the #1 day of the year for most home fires is Thanksgiving. Holiday preparedness in general–really, really big on the Red Cross’s agenda.” (Hilary Anderson, n.d.)

In FEMA’s Thanksgiving Day Fires in Residential Buildings (2014-2019) Cooking fires in residential buildings occurred more often on Thanksgiving Day than any other day of the year. Cooking was, by far, the leading cause of all Thanksgiving Day fires in residential buildings at 74% followed by heating at 8%. By comparison, cooking was the cause of 51% of residential building fires that occurred on all days of the year other than Thanksgiving. (NFIRS Data Snapshot, 2021)

Okay so in this research so far, I’ve learned NOT to leave cooking unattended… got it! I thought that was kind of a thing everyone knew though?! But I digress. Onto the deep frying of a turkey. Now I personally have never had a deep-fried turkey, but I would 100% eat one. (I would not attempt to cook one after my trip down this rabbit hole).  Here are some turkey frying safety tips i discovered in my research.

Here are some of the Do’s and Don’ts I found on deep-frying a turkey. From 99.5 QYK Tampa

• Don’t use a frozen turkey or a partially frozen one. If you’re not sure if your turkey is frozen, stick your hand inside and feel for any ice crystals.
• Do make sure your turkey and pot are completely dry.   “Oil and water never really mix, especially in this circumstance.”
• Don’t fill your pot with too much oil.  “Because if you put a turkey with too much oil into that pot, the oil is going to boil over and cause a potentially catastrophic fire.
• Do put your turkey in the pot and fill with water beforehand. Once the water is a quarter of an inch over the turkey, take the turkey out and measure the waterline. That’s how much oil you’ll need to use later.
• Don’t deep fry your turkey anywhere in, or near your home, garage, under a covering, or on your deck. You want to be at least fifty feet away from your home.  “Your porch or your deck is often made of combustible materials and any potential for that fire to extend into the deck or porch area could create a much larger problem for you.”
  • To add more clarification to “near” your home, The Rome Sentinel states, “we would like to remind everyone if they are deep frying a turkey to make sure it is outside and at least 10-feet away from the house, and always use a thawed, dry turkey.” A turkey that is still frozen will erupt in flame when dunked in hot oil.” (Lacovissi, 2021)
• Do use peanut oil. It will heat faster without burning.
  • Sophie Bushwick for Popular writes of hidden danger to keep in mind when deep frying. Grease fires are the obvious drawback to deep-frying, but don’t overlook another danger: undercooked poultry. You should cook the turkey for roughly three minutes per pound. (Bushwick, 2019)

Reading through these Do’s and Don’ts all I could imagine were videos of frozen turkeys rocketing out of deep fryers (if you have not seen such a video before be sure to check Youtube for a shaking your head at humanity moment).

Alright so here are some more terrifying facts about Thanksgiving Day fires

In FEMA’s Thanksgiving Day Fires in Residential Buildings (2014-2019) for each year from 2017 to 2019, an estimated average of 2,300 residential building fires were reported to fire departments in the U.S. on Thanksgiving Day. These fires caused an estimated annual average of 5 deaths, 25 injuries and $26 million in property loss.

Additional Turkey Frying Safety Tips

Now you may be wondering, “Okay what if Uncle Bill comes over and things get a little wild and the bird does end up becoming a flaming fireball?”

• The first step do not drink and fry.
• Second, keep a fire extinguisher nearby just in case, and protect yourself with oven sits, tight-fitting long sleeves and safety goggles.
• Don’t forget to clean up this mess you are bound to make.
• You’ll want to make sure to let the oil cool down before disposing of it.
• Use a thermometer to check that it has reached a safe temperature before beginning your cleanup.
• Do. Not. Pour. It. Down. A. Drain. Seal it into disposable containers and throw them away in the trash. If you’re worried that those containers will leak, leave them in the freezer until the oil congeals into a solid, then throw them away.
• Finally, clean the grease off your fryer and stow it away until next year. (Bushwick, 2019)

If you do sustain damage to your home this Thanksgiving, you may need to report a claim to your homeowners insurance company.  Most companies have a 24 hour claim number to call, even over the holidays.

If all goes well you should have a delicious golden brown deep-fried turkey, your house will still be standing, and no one ends up in the Emergency Room.

Happy Thanksgiving & Happy Frying!

 

Understanding service line insurance coverage

Do you have service line insurance coverage?

What type of coverage do I need to cover the pipes and lines going from my home to the road?

Until recently, if you had a pipe or a service line that was damaged between the home and the road, there was no insurance coverage.   The standard homeowners insurance policies do not cover the underground service lines.  But now, many insurance carriers are offering options for service line insurance coverage.

Service line insurance coverage provides protection for costly and unexpected losses for the underground piping, valves, wiring, and other devices connecting a home to a service system.

The most common line claim is when a tree root grows through a sewer line.  This requires excavation to dig up the pipe to repair or replace it.

Extreme cold weather days can cause a pipe leading from the street to the home to freeze and crack.  Emergency repairs will need to be done.  When the weather warms up, final repairs can be made.  This may cause your family to make temporary living arrangements while the home is without water.  Without service line insurance coverage, these bills are your to pay.

What types of claims are covered by service line coverage?

• Damage to an underground service line
• Costs required to replace or repair an underground service line
• Water service
• Waste disposal
• Natural gas lines
• Underground electrical or phone wiring
• Landscaping or concrete demolition and repair to access the underground service
• Additional living expenses incurred if the home is unlivable while the service line is unavailable

Service line failure may be caused by the following:

• Wear and tear, marring, deterioration, or hidden decay
• Rust or other corrosion
• Mechanical breakdown, latent defect, or inherent vice
• Weight of vehicles, equipment, animals, or people
• Vermin, insects, rodents or other animals
• Artificially generated electronical current
• Freezing or frost
• Tree or root invasion
• External force from shovel, backhoe, or other form of excavation

Service line insurance has been one of the most popular homeowners’ insurance endorsements that clients have been looking for.   Each carrier varies on the amount of coverage available.   But limits are generally $10,000, $15,000 or $20,000 limit.

The service line endorsement is relatively inexpensive.  It is typically $40-$75 a year depending on the coverage limit.

Contact Huff Insurance

Not sure if you have service line coverage?  Contact one of our experienced team members at Huff Insurance.  Our team will be happy to work with you.  Fill out the request form on this page or give us a call at 410-647-1111.

Trust Me, Identity Theft Can Happen To Anyone

I was just getting ready to get off work, on the Friday before a long holiday weekend.  Then I get a call from the Small Business Administration (SBA)  asking me if I have applied for a loan from them for my business.  I had NOT!  Then it hit me.  I have become a victim of identity theft.

In conversation with the SBA representative, I discovered that someone had applied for a loan in my name.  And in doing so they had the following information:

• My date of birth
• My social security number
• The tax id number for my business
• My addresses for my home and work- they had reversed them, but they were correct
• They provided bank statements, to a bank that is not mine, of course, but had the business name on them

Now there were some errors on the applications, that caused the examiner to question it:

• Email address was not to my name or anything like my name
• Phone number for me and the business were out of state number from where the business was located
• Addresses were reversed
• Bank was not located in the same state as the business

According to the examiner they were 4 hours away from funding a $120,000 into the bank account of this person.

But the final examiner was alert enough to research our agency.  She went to our website to verify names, phone numbers and email addresses.  If she had not taken these steps, there would have been a fraudulent loan in my name and business name granted.

Come to find out they SBA had pulled my personal credit report about 6 weeks prior to this phone call.

SCARY! Right?

So, what to do?

First I needed to confirm that the person who says that they have all this information is really from the SBA and that this call is not a scam!

Second, I notified my homeowners insurance company because I have identity theft coverage on my homeowner’s insurance policy.

They were able to walk me through the process of freezing my credit will all three of the reporting agencies.  A simpler process then one would think!

Then they had me sign a limited power of attorney so that they can notify the FCC and none of my information can be provided to get any of those pre-approved credit card offers for the next 5 years!

In addition, the SBA has notified the officials of another fraudulent application was received.

Earlier in the year, there was a claim made that I filed for unemployment.  From my own company!

Both the SBA and the unemployment commission have had hundreds of thousands fraudulent claims, which are bogging down the system.  They worked for 6 weeks on my application before I was even notified that anything had been submitted.

Id theft is a huge issue!

Imagine that they were given this loan for $120,000- would the person that got the money ever paid it back?  I do not think so, and then this loan and the delinquency would be on my credit report!

I was lucky, this was found before the loan was funded.  Even so, it took me about 2 hours to get everything locked down and the paperwork filed.  But it could have been much worse.

If this happened to you would you know what to do?  If not then make sure that you have identity theft protection so that you can get the guidance you need to walk you through all of the steps.

Contact Huff Insurance

Do you have identity theft coverage on your insurance policies?  If you are not sure, call one of our experienced team members at 410-647-1111.

 

Insurance implications of working from home

Thanks to Covid-19, many employees have the flexibility to work from home.  This can be either full time or a part of the week.   This flexibility does increase the exposures for the employer and employees alike.

A homeowner’s insurance policy is meant to cover a home, a place where you reside.  It is not designed to cover a business.

Even if the business is not your business, there is still business exposures that need to be addressed when working from home. 

1. Liability insurance coverage– your home insurance liability has an exclusion for all business-related activities.  Therefore, if someone comes to your home for business purposes and is injured, there is no coverage under your policy.   Nusiness liability can be endorsed on the policy for an additional cost to cover on premises exposure.  However, remember that liability extended from the homeowner’s policy only provides on premises coverage.
2. Property used in business – Generally, most carriers only allow $2500 for business personal property on premises and $250 off premises.  Some carriers will offer more.  So you need to check with your insurance agent.   Additional limits can usually be purchased for an additional cost. So, are you using your personal items like desk, chair, and computer?  If so,  those items are now items used for business purpose and the limits would apply.
3. Property of others– if the equipment like a phone or computer is loaned to you by your employer, then you should confirm with them that they have listed your home as a premises on their policy and extended their coverage to your location. If not, generally the policy includes $500 for property of others in your care, custody, and control.    Many carriers will not allow you to increase this coverage.

Why would your employer want you to change your insurance?

Businessowners are trying to limit their exposure for employees working from home.  Many employers are designing work from home or telework policy.  Make sure that you review these policies carefully.  You need to understand what it is that is you are expected to do and the coverage that you are required to have in place.   Make sure that any requirements for insurance are forwarded them to your agent to review and discuss BEFORE signing the document.

The best way for the employer and the business to handle working from home is to do the following:

1. Have the employer provide all equipment necessary for the business and for you to work from home.  Especially computers and devices that are connecting to the company’s computers.  This is so that they can have control over the equipment and to help reduce the cyber exposure.  Please visit this blog working from home for more information on this topic.  The new normal for working from home blog.
2. The employer needs to list the premises that the employee as an insured premises on their business insurance.  I.E. list the employees’ home as a location on their policy.  In doing so they can have liability insurance protection at this location for business purposes.  And they can add the business personal property insurance coverage to that location.  In doing this, it is imperative that if the employee moves or relocates the equipment to another address that they notify the employer immediately.
3. The employer needs to list that location on their workers compensation policy as a location. In the past if employees went to the office and the office was in MD all payroll was MD payroll.  But now people may work from their home that is in VA, or PA for example.  In these cases, those states need to be added to the workers compensation policy and the payroll moved to those states, accordingly.

Many people are enjoying working from home, but this is causing issues that have not been seen in the insurance world before now. 

If you are working from home for your own business or working for someone else, then please let us know so that we can discuss the options with you for your insurance coverage.  Or, if your business has employees working from home then please let us know so that we can make the appropriate adjustments to your coverage.

Contact Huff Insurance

If you are working from home and want some guidance for the insurance aspect, please feel free to call us at 410-647-1111.

If you are an employer and have questions about using remote employees, we can help you as well.

Don’t let remote working cost you your business.  Call us today.