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What Is A Waiver of Subrogation?

When reading your commercial insurance policy, you might come across the term “waiver of subrogation.” Waiving subrogation rights means that your insurance company will be prohibited from “stepping into your shoes” and suing a negligent third party. Many companies will require a waiver of subrogation from a business that performs work on their behalf. Since this is a common demand from many clients, it is important to understand exactly what a waiver of subrogation is and how it affects your business insurance coverage, so that you can discuss with your insurance company whether you should waive this right.

What is Subrogation?

two people sitting in a room with files and a gavel in front of them — *Subrogation allows your insurance company to sue a third party in order to recover loss of a claim.*

Subrogation literally means one party standing in the place of another party. In insurance terms, this means that an insurance company has the right to sue a third-party if they were responsible for a loss that the insurer has paid out on. For example, if you are injured or have experienced any damages from an accident caused by someone else, then you have the right to sue the person responsible in order to get compensated for your loss. However, if you file a claim and your insurance company pays you for the loss, then your rights to sue the person are transferred to your insurance company. This means that the insurance company can sue the person/s responsible for the injury or damages in order to recover the payment they gave to you.

To illustrate this principle, let’s say you are working with a client to service your business’ equipment. If something goes wrong with the equipment and injures a worker, you will file a workers’ comp claim and your insurer will pay the claim. Now your worker will have the opportunity to sue the client for the negligence that caused the injury. During subrogation, the insurance company will step in and represent the worker (or you) and sue the client in order to recoup the money they paid for the workers’ comp claim.

When you sign a waiver of subrogation, you give up the right to seek compensation from the responsible party. If your insurance company pays out on a claim you file, then you and your insurance company cannot recover the money from the third-party who was at fault. You might come across business partners or clients who want your business to waive your right to subrogation so that they will not be held liable for damages or loss. Signing a waiver of subrogation will eliminate any potential business conflicts because you will be taking full responsibility for any damages.

Types of Waivers of Subrogation

white silhouette of a person with a large blue question mark next to them — *Considering a waiver of subrogation? Sometimes a client might require you to sign one before working with you.*

Waivers of subrogation are generally used in general liability policies, worker’s compensation policies, and some commercial property policies. There 2 different versions of waivers that insurance carriers use in association with liability policies:

Scheduled Waiver of Subrogation- Every time you are requested to sign a waiver, your insurance carrier must pre-approve and endorse the policy.
Blanket Waiver of Subrogation- Unlike a scheduled waiver of subrogation, a blanket waiver provides automatic or “blanket” coverage to any person or organization that the wording in the waiver applies to.

Should You Consider A Waiver of Subrogation?

Signing a waiver of subrogation is a large risk for your business. It means that you will be giving up your right to recover losses from your client in the event that they are responsible for a claim. In addition, if a client requests a waiver and demands that you add it to your liability policy, your insurance company will most likely charge you more for your premiums. This is because they are taking on more of a risk to insure you, and will not be able to recover money paid for any claims that were the fault of a third party.

Need Help?

In some cases, you will have no choice but to sign a waiver of subrogation. If you are considering a waiver of subrogation or a client is requiring one from you, then understand that it can end up costing you more in insurance premiums. However, you can still save money on commercial insurance by using an EZ.Insure agent. We will provide you with a highly-trained agent who has access to the top-rated insurers in the nation. They will be able to assess your risks and needs, and compare available commercial insurance plans in your area within minutes. To get free instant quotes, simply enter your zip code in the bar above, or to speak to an agent, call 888-615-4893.

How Workers Comp Settlements Work

Unfortunately, workplace accidents and injuries happen. When they do, it can be very costly for a business. If one of your employees is injured on the job, they can claim workers compensation benefits to help pay for their medical expenses, lost wages, and disability benefits. These benefits will be provided by the employer’s (your) insurance company. But, in some cases, an employee may not be happy with the amount offered by your insurance company. Be aware that your employee does not have to accept the insurance company’s offer for their workers comp claim. This is when a workers comp settlement is required.

How Workers’ Compensation Claims Work

two hands holding a magnifying glass in each hand — *When a worker gets hurt, you must first get them medical help and then investigate exactly what happened for your claim.*

If your employee is injured at work, they have to report it to you, the employer. If this happens, you need to take the following steps:

Get your employee medical attention right away
Investigate the accident by documenting what happened and by taking witness statements and pictures, if possible
File a claim with your insurance provider

Each state has different timelines for filing a claim, but, in most cases, the claim must be reported within anywhere from 72 hours to two years, with a typical requirement of within 30 days from the injury. After the claim is filed, your insurance provider will review the claim and either approve or deny it. Claims are usually approved, but if one is denied, your employee has the right to appeal the denial in an administrative hearing. Your employee can choose to hire an attorney to represent them and possibly pursue a larger settlement. Not all employees will choose to go this route, because it means risking a lower settlement. This course of action is most common for permanent disability claims.

The Settlement Process

If your employee does choose to hire a lawyer to pursue a larger settlement, they will pursue what they (in discussion with their lawyer) believe is fair compensation. In most cases, they will seek a workers compensation settlement that covers:

Attorney fees
Disability payments if the injury leaves the worker permanently impaired
Medical bills
Surgery and future medical treatment
Cost of retraining to perform the job, if necessary
Lost wages and future wage loss

How Workers Comp Settlements Are Paid

Once the calculation is finalized with the employee and their attorney, they will begin negotiations with your insurance company. The settlement will generally be a compromise between your insurance company and the attorney, and can be paid in one lump sum amount or as a structured payment plan. If your employee is not willing to settle, the case will go to trial, also known as a worker’s comp hearing or workers compensation lawsuit.

Once your employee accepts a settlement, they must waive their right to sue you. However, if they got hurt because of your (or a third party’s) direct negligence, then the employee can bypass the workers compensation process all together and instead choose to sue you or the third party for damages.

Employer’s Role During Settlement

There is not much that you can do during the settlement negotiations except to make sure it goes as smoothly as possible. To do this, you will need to keep the lines of communication open and stay updated throughout the whole process. The best way to do this is by reaching out to your insurance company.

Protect Yourself With The Right Insurer

If you currently have workers comp benefits but would like to search around for other options, or if you are starting a business and are in need of workers comp insurance, come to EZ for free instant quotes from one of our licensed agents. Because every state has different rules on workers comp insurance, it is important to know the requirements for your specific state. Your EZ agent will be highly trained in your region’s rules and can guide you through the process, while comparing quotes for all the plans in your area. We will find you the best plan for your budget. To get started, simply enter your zip code in the bar above, or to speak directly with one of our licensed agents, call 888-615-4893.

Ways To Minimize Commercial Insurance Costs

If you own a business, commercial insurance is a must. Depending on the type of business you own, you could need a number of different commercial policies. Having all of these different policies can come with a hefty price tag. The bad news is there’s no getting around having commercial insurance; just one mistake could lead to a lawsuit and even the loss of your business. The good news is that there are things that you can do to reduce the cost of your commercial insurance, and keep the future of your business secure.

Assess What You Really Need

illustration of a woman in business attire looking at a computer screen that says "risk assessment" on it — *In order to save money, you will need to assess what kind of coverage you need depending on the risks that can happen.*

Commercial insurance is 100% necessary, but you should really look at which policies are right for your business, so you know you’re protected but not overspending. The first type of policy to consider is property insurance to protect your building and its contents. If you have employees, you will need worker’s compensation insurance to protect you in the event that an employee gets hurt on the job. You will also most likely need general liability coverage to protect against lawsuits.

After purchasing those three major types of policy, you can determine whether you need other policies like cyber or professional liability insurance. Cyber liability will protect you in the event of a data breach, and professional liability will cover you in the event of an unfulfilled contract, mistake that leads to a client’s financial loss, etc.

No-Lapse Coverage

If you have a business that goes through slow seasons, it may be tempting to drop your insurance coverage when you hit a slow down. But you should know that doing so can have consequences. For example, if you continually drop your insurance, and then pick it back up when sales increase again, insurance companies will think twice about covering you. It is important to remain consistent in the eyes of the insurance company you’re working with. Not only that, but going through a slow season doesn’t mean that an accident or damage can’t still happen to your business! Keep your policies year round so you never have to worry about coverage.

different sized arrows, getting larger the lower it goes, with letters starting from A to G at the bottom — *Classify your employees correctly in order to avoid overpaying premiums.*

Classify Employees Properly

When you purchase workers compensation insurance, each of your workers need to be assigned a workers compensation classification code based on the type of work they perform. Your insurance company will use these codes as part of their formula for determining how much to charge you for your policy. Make sure your employees are classified correctly, otherwise you could end up paying higher premiums than necessary.

Security Is A Must

If, like most businesses, your business operates online, you have a lot of your customers’ sensitive information in your hands – and they expect you to protect it. To protect their information from security breaches, and your business from lawsuits and reputational damage, make sure you’re doing all you can to minimize the risk of cyber crime. Upgrade your systems, use VPNs, and talk to your insurance agent about cyber liability insurance.

Bundle Policies

As we mentioned above, your business will probably need at least general property and liability policies to be sufficiently covered. You might also need a few other types of policies. If you are looking to buy multiple policies, consider bundling to save money. Purchasing a business owner’s policy (BOP) can be cheaper than buying different policies individually.

Reduce Risks

If you want lower insurance rates, you will have to reduce risks within your business. If your insurance company sees your business as high risk, they will charge you more for your premiums. However, if you constantly train your staff, make sure that your business is clean and safe, and do everything you can to minimize claims, you can lower your premiums.

two bundles of money — *Policies with higher deductibles will have lower monthly premiums, which can help you save more.*

Opt For A Higher Deductible

Policies with higher deductibles have lower premiums. If you are looking for ways to save, consider opting for a higher deductible insurance plan to save on your monthly bill. Remember, though, to continue to minimize the risk of claims so you won’t have to worry about meeting your higher deductible.

Compare Plans

The best way to save the most money is by comparing all of your options. To do this quickly and easily, speak with an EZ agent, who will assess exactly what you need for your business. EZ.Insure works with all of the top-rated insurance companies in the country and can compare quotes instantly for you. One of our licensed agents will work with you to review your needs, and guide you through the whole process, at no cost to you. You could end up saving thousands of dollars a year just by working with one of our agents!. To get free instant quotes, simply enter your zip code in the bar above, or to speak to one of our agents call 888-615-4893.

Why Cyber Liability Claims Are So Costly

You have probably heard or read about something like this in the news- a large company is hacked, leading to a major data breach. For example, not too long ago, big box store Target was the victim of a hacker, and thousands of customers had their sensitive information exposed. Fortunately for big companies like Target, they are large enough to survive a cyber liability lawsuit. Unfortunately, many small businesses aren’t so lucky. In fact, more than 60% of small businesses go under within 6 months of a cyberattack. Cyber liability breaches (and claims) come with expensive legal settlements and large fines, not to mention damage to your reputation and brand. It is important to have the right cyber liability insurance policy, because recovering from a cyber security breach can drain your business’s time and money.

How Much Can Cyber Claims Cost Your Business?

a hundred dollar bill on fire, burning. — *A data breach can cost your business thousands, even millions of dollars.*

Data breaches can cost your business an enormous amount of money. There is a lot you need to do in the case of breach, which all adds up. You have to notify all of your customers whose information was affected as soon as possible (as required by state law). You must also investigate and correct the breach, which can cost a lot of money, and take months or even years. A study from the IBM/Ponemon Institute found that data breaches cost businesses $242 per stolen record on average. That means the average U.S. data breach costs more than $8 million.

The reason cyber liability claims cost so much is that they include the costs of:

Finding and repairing the cause of the breach– Hiring an expert can cost anywhere from $200 to $2,000 per hour.
Notifying customers– Contacting the affected parties can cost anywhere from $1 to $5 per notice.
Credit monitoring for affected customers for two to three years– This can cost anywhere from $10 to $30 per individual, and needs to continue for at least 2 years.
Fines or penalties
Client’s financial losses if you are sued– The average cost for legal defense is $740,000, while the average legal settlement is about $2 million.
Defense costs and legal fees

What Cyber Liability Insurance Covers

While some small business owners might think that cyber liability insurance is only necessary for big companies, this couldn’t be further from the truth. Any business, no matter the size, can be hacked, and a network failure or breach can end up costing you hundreds of thousands of dollars. Any business that operates online and handles sensitive information needs cyber liability insurance. For example, if customers use credit cards to pay for your services on your site, then you are at risk of a breach.

Cyber insurance provides protection for your business from financial losses as well as the cost of data loss to your customers. It covers:

Cyber Extortion– If a hacker accesses your database and is holding it for ransom, cyber liability insurance will help recover those losses.
Forensic Support– Your policy will cover investigation-related expenses and consultation fees.
Legal Fees– Cyber liability insurance helps pay for legal help and advice when dealing with a lawsuit brought by clients or staff.
Business Interruption– A data breach affects your day-to-day operations, which leads to additional losses of income and revenue. Cyber liability can help cover these losses.

Different Cyber Liability Insurance

There are two kinds of cyber liability coverage:

First-party cyber liability insurance covers costs from a cyberattack or data breach on your own network or systems.
Third-party cyber liability insurance protects businesses from lawsuits related to a cyber incident that affects a client.

Cyber liability insurance might seem pricey, but when considering the cost of cyber liability claims, it is a necessary expense. If you are worried about the cost, remember that there are many different plans that can be tailored to your specific business and needs. You can choose how much coverage you need and how much you can afford to spend. Most business owners add first-party cyber liability insurance coverage to their general liability policy, so you might be able to get a deal if you bundle your policies.

If you are interested in cyber liability insurance, and do not know where to start or what type of coverage you need, EZ can help. EZ.Insure understands just how important it is to protect customer’s information. We will provide you with an agent to help you find the right plan to fully cover you and protect your customers’ privacy. Your agent will compare quotes from all plans available in your area, and find the best plan at the best price. Even having the best cybersecurity does not completely eliminate the risk of a data breach, so it is best to protect your business with insurance. To get instant free quotes, simply enter your zip code in the bar above, or to speak directly to an agent, call 888-615-4893.

Common Errors & Omissions Claims

When you own a small business that offers advice or services, there’s always a risk of lawsuits due to errors and omissions. Even if you have done your job to the best of your ability, something can still go wrong. Sometimes customers just aren’t happy with your work, and they could decide to sue your business. However, a lot of errors and omissions (E&O) claims can be resolved before they become costly lawsuits. In order to prevent, or quickly resolve, any errors and omissions claims made against your business, you have to know what to expect. Here are the most common errors and omissions claims:

piece pf paper that says contract on it torn in half — *Breaking your contract can result in your customer losing money, in which they can sure you for.*

Breach of Contract

If you have a verbal or written contract with a customer, you have to adhere to that contract. If a customer suffers any financial loss due to a breach of contract on your part, they can sue to recover their financial loss. For example, if you missed a deadline to put up a website for a company you’re under contract with, they can sue you for any money that they are losing while the site isn’t up and running. The types of breach of contract include:

Anticipatory breach– a business tells the customer that they will not be fulfilling the terms of their contract
Minor breach– a business fails to live up to a small detail in the contract.
Material or fundamental breach– a breach that is extreme enough to nullify the contract completely.

Misrepresentation

One of the biggest mistakes that businesses can make is overstating their expertise, promising their clients something they cannot deliver, or not fully disclosing information. If your company misrepresents itself or doesn’t disclose information, resulting in financial or reputational loss to the customer, then you can expect a lawsuit to follow. The lawsuit will be labeled as intentional or fraudulent misrepresentation. For example, if a car dealer lies about the history of a used car and their customer later finds out their car was in an accident, this would be considered fraudulent misrepresentation.

different colored signs that says lying on them — *If you lie or even partially lie, then you can be sued for misrepresentation.*

If you’re not careful, you can be slapped with a lawsuit, no matter whether you have intentionally or unintentionally misrepresented your company. E&O misrepresentation claims can include:

Making a statement that is partially true.
Making a statement that is completely false.
Omitting details, or failing to disclose important information.

Negligence

Claims of negligence often occur when a business’ poor oversight leads to financial or even physical injury of another party. You could also be considered negligent if you communicate poorly with your customer, or if you fail to take reasonable care or control when providing your services. Even if you fully explain your prices and expected outcomes, a customer might form unrealistic expectations for your work. If you don’t meet their expectations, they might sue you.

Protecting Your Business

In order to protect your business, you should:

Create a detailed contract that both parties review and sign before work begins. Include expectations about deadlines, payments and any other agreed-upon expectations between you and the customer.
Make sure that you document everything that you’re doing so that you can prove you are getting the work done.
Always keep an open communication with your clients, especially if something goes wrong while you are under contract, or if there is a minor glitch. Prioritize honesty and transparency with your customers and let them know if you are going to miss a deadline, so you can manage expectations and work together to solve the problem.

Errors and omissions insurance is the best way to protect your company from a lawsuit and reduce the risk of losing your business because of a mistake. If you are sued, E&O insurance will pay your legal costs such as attorney’s fees, court fees, and settlement costs. As long as your policy is active at the time of the incident, you will be protected. You do not want to wait until something happens in order to be insured. Make sure that your business is fully protected in the event of an incident by speaking to an EZ agent. To find an affordable plan that gets you the most coverage with the most savings, enter your zip code in the bar above, or to speak directly to a licensed agent in your area, call 888-615-4893.

How Do You Insure Rented Property?

Running a small business often means finding ways to save money. One way that many small business owners do this is by leasing their property rather than buying it. There are multiple reasons to go this route: for example, not only will your initial investment be less when you rent property, but renting your property means that you don’t have to worry about maintenance duties and also that you can retain your mobility if you want to be able to easily change locations. One thing you do need to think about, though, is how renting affects your insurance coverage. You need to be familiar with your commercial policies, so that you aren’t hit with any surprises in the event that there is a loss while you’re occupying your rented premises.

Damage to Property Rented to You

illustration of a red home with black roof and money in front of it by the ground — *If your landlord’s property gets damaged, your landlord can make you pay for the damage.*

One thing that you need to know when renting a commercial property is that most landlords will require you to have a commercial liability insurance policy. Landlords are naturally going to worry about things that are beyond their control, like your business’ day-to-day operations. Your business might involve doing things that might damage your landlord’s property, or you or an employee might have an off day and do something negligent. In addition, having a commercial lease means splitting liability between you and your landlord: your landlord takes on the responsibility for repairs and maintenance, and you have to pay for any damage you cause. If your landlord doesn’t require liability coverage, then they may have to bear the full cost of repairs.

If your landlord’s property does get damaged, your landlord could demand compensation for the damage. Most standard commercial insurance policies will provide some coverage to you, the tenant, when your rented property is damaged during the course of your business operations, but that coverage might be very limited. For example, commercial general liability insurance policies automatically include a type of coverage known as Damage to Property Rented to You. As the name implies, this provides coverage for damages made by the tenant to premises rented from the owner. It offers two coverages:

Coverage for claims or suits that arise from fire damage to rented premises: this part of Damage to Property Rented to You only covers you if your landlord is demanding compensation for damage caused by fire and only if the fire was your fault/caused by your negligence.

Coverage for claims or suits that arise from damage due to any cause other than fire, to premises that have been rented for 7 or fewer days: this part of the coverage covers claims made for damage due to any peril (not just fire), but only for short-term rentals.

The Limitations

While having Damage to Property Rented to You included in your commercial liability insurance will provide some help in the case that your landlord makes a claim against you, it is pretty clear that there are limitations to this coverage. This coverage:

Only applies to the premises, and not to furniture, stock, or equipment – If you rent office space and equipment from your landlord, and you sustain a loss due to fire, the policy may only cover the building damage, and not replacing or repairing the equipment.

Is limited to fire damage, unless it is a short-term rental

Only covers damage for which you are legally liable – For example, let’s say a storm causes power lines to fall on your rented property, and those downed lines spark a fire. If your landlord demands that you pay for the damage, you will not be covered by Damage to Property Rented to You because the fire was caused by an “Act of God” and not by something that you are legally liable for. It is also important to note that liability assumed under a contract with your landlord is not covered.
Is limited to a specific amount outlined in your policy – a common amount for this type of coverage is $100,000.

Your Options

So what can you do to fill in some of the gaps in coverage if you’re renting your property? You have a couple of options for expanding your coverage. You can purchase:

caucasian man and woman sitting with a cauasian man with a suit on — *Consider getting extra rental insurance so you don’t end up losing a lot of money.*

A Tenant Liability Endorsement – this endorsement, or add-on, to your general liability policy is similar to Damage to Property Rented to You, but with some extra coverage: it generally expands the amount of coverage to $1 million, and expands coverage beyond that for just fire. Be aware, though, that you still have to be considered legally liable for the damage in order for it to be covered.
A general property insurance policy – this could be a more comprehensive option, but it will be a lot more expensive and may duplicate some of your coverage under your liability policy, as well as the commercial insurance property that your landlord already has. Check to see what kind of coverage they already have and what you might need to purchase to supplement it – speak with an EZ agent to determine what’s best for you.

Renting a commercial property for your small business could be a good choice for a lot of reasons, but you have to take everything into consideration, including how you’re going to protect yourself and your assets. Whatever choice you decide is right for you, you need to have the right commercial insurance – and EZ can definitely help you with that. Coverage for rented property can be a little bit complicated, but we can answer all of your questions, and find the right policies with the right coverage for your business. We’ll work with you every step of the way – from quotes to purchasing a plan – and we’ll do it all for free! To get started with us, simply enter your zip code in the bar above, or call 888-615-4893 to speak directly with an agent.

Tag: business insurance