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Coinsurance Clause? Agreed Value? Make Sure You Have Enough Commercial Property Insurance!

Having enough commercial property insurance coverage is crucial to protecting your business. Whether you’re choosing to insure the actual cash value (ACV) or the replacement value of your real property (your building) and business personal property (everything in it), you need to purchase a policy that will cover as much as possible in case disaster strikes. One major storm, one act of vandalism, or one kitchen fire can mean thousands of dollars in repairs, and could even mean closing your doors forever.

There is another reason, though, that you need to purchase the right amount of coverage: your insurance company might actually require you to have a certain amount. Check your policy for what is known as a coinsurance clause, and make sure that you’re meeting your insurance company’s requirements, otherwise you could end up paying for damages to your business out-of-pocket.

What Is Coinsurance?

caucasian hands pointing at a piece of paper that says "insurance policy" on it — *Make sure to read your commercial insurance policy to see if you are required to pay a coinsurance clause.*

Your commercial property insurance can feel like another expense in a very long list of expenses that pile up every month. It might be tempting to cut your premium by skimping on coverage – after all, what are the odds that you’ll be forced to make a claim? Well, commercial property insurance claims are more common than you might think, and more costly than you might think, as well. That means that, if you’re covered by a commercial property insurance policy, your insurance company will have to lay out a lot of cash in the event that you do make a claim. It also means that your insurance company needs you (and every other business with a policy) to pay enough in premiums to keep them afloat.

One way that insurance companies make sure that you’re paying enough in premiums is by adding a coinsurance clause to your policy. You may be familiar with this term as it relates to health insurance, but it works a little bit differently in a commercial property insurance policy. If you have a coinsurance requirement in your health insurance plan, it means that your insurance company pays a certain percentage of the bill, and you pay the rest. If you have a coinsurance clause in your commercial property policy, it means that you need to purchase a policy with a certain policy limit, or maximum amount that your insurance company will pay for a claim.

For example, your insurance company might write an 80% coinsurance clause into your policy. This would mean that you would need to purchase enough insurance to cover 80% of the value of your property. So, if you were insuring a building that would cost $1 million to replace, you would have to purchase at least $800,000 in coverage.

How Coinsurance Works

Coinsurance clauses encourage business owners to purchase enough insurance to make sure that any possible claims are fully covered, and to make sure that insurance companies collect enough premium dollars to keep rates fair for everybody. Not every policy will have a coinsurance clause – check your policy conditions to see if yours has one. If you do have a coinsurance clause, it won’t have any effect on your policy unless you experience a loss that requires you to make a claim. If you make a claim, and you haven’t fulfilled your coinsurance requirements, then you could face a penalty.

If you need to make a claim for damages, your insurance company will compare the insurance limit on your policy to the amount of insurance you were required to purchase based on your coinsurance clause. If you purchased less than you were required to, your insurance company might reduce your claim payment in proportion to the difference. For example, if you purchased 10% less than required, your insurance company might pay 10% less than they would if you had purchased adequate coverage.

For example, let’s say that you have an office that is valued at $100,000, and you have a 80% coinsurance clause in your property insurance. You would have to insure your office for at least $80,000. But let’s also say that you’ve only insured it for $40,000, 50% less than you were required to. There is a fire in your office that causes $20,000 in damages – but because you insured your property for 50% less than you were supposed to, your insurance company will now only pay 50% of the claim, or $10,000. You can see why it’s important to pay attention to your coinsurance requirements!

One other very important thing to note: your insurance company will decide whether you have met your coinsurance requirements based on what your property is worth at the time that the damage occurs. So, if your property has increased in value, and you haven’t purchased more coverage, then you could be hit with a penalty.

Avoiding a Coinsurance Clause

illustration of black hands shaking with a black and white suit on the arms — *if you want to avoid the coinsurance clause, then you will have to buy agreed value coverage.*

One way to avoid a coinsurance clause is to purchase agreed value coverage. An agreed value clause is added to a policy when you and your insurance company agree on the insurable value of your property. In order to reach this agreement, you need to submit a statement of values to your insurer before your policy begins. This statement of values will list everything you are insuring and its value.

Once you have provided a statement of values to your insurer, they will waive your coinsurance penalty for one year (the term of your policy). If you end up making a claim for damages, your property will be assessed based on the agreed-upon value as long as you have insured your property for that amount.

Getting the right commercial property insurance policy is one of the most important things you need to do for your business. Being underinsured can spell big trouble, because you could be hit with a coinsurance penalty by your insurance companies. Always make sure that your policy is keeping up with your growing business, and always make sure to go through your insurance conditions with a fine tooth comb. If you need help with either of those things, talk to EZ. Our knowledgeable agents can answer all of your commercial insurance-related questions, find you great policies, and keep them all up-to-date – and we’ll do it all for free! To get started with us, simply enter your zip code in the bar above, or you can speak to an agent by calling 888-615-4893.

Thinking of Canceling Your Commercial Insurance? Read This First

Crisis can hit any small business at any time. Unforeseen circumstances, such as the recent pandemic, can force businesses to temporarily close their doors, leaving their owners wondering how to stay afloat. In cases like this, it is only natural to want to find ways to save money. One of the first things you might consider doing to save some pennies is to cancel your insurance policies. But before you do that, you need to know how that will end up costing you more in the long run. Here are 5 reasons why you should think twice before canceling your commercial insurance.

1. You Probably Won’t Get a Full Refund on Your Premium

caucasian hand pulling out the inside of his jean pocket. — *There is no penalty for canceling, but you will not get a full refund on your paid premiums.*

Let’s say you’ve only had your commercial insurance for a few months out of the year when a crisis hits and you need to temporarily close your business. You might think that canceling your insurance will mean getting a refund on the remainder of the premium that you’ve paid for the year. But that is generally not the case: there is usually a penalty for early cancellation of your policy.

It should come as no surprise that insurance companies have ways of protecting themselves against customers buying insurance, using it once, and then dropping it. One way they do this is with a minimum earned premium, which is the minimum amount an insurance company is willing to take for writing a policy. For example, if you have a policy with a $500 yearly premium and you cancel 6 months into the policy, you would get $250 back if there were no minimum earned premium. However, if there is a minimum earned premium of $300 on your policy, the most you could be refunded is $200. Some policies do not have minimum earned premiums, while some have 100% minimum earned premiums, so check your coverage. And don’t forget that most of the taxes and fees you’ve paid on your policy are never refundable.

2. You’ll Pay More to Restart Coverage

If you’re viewing your closure as temporary, remember that, when you reopen, you’ll need to purchase insurance again. This might not seem like a big deal; after all, you’ve already gone through the process once. But there is a problem with canceling and repurchasing commercial insurance: insurance companies view businesses that have had a gap in coverage as more of a risk to insure. This translates to an automatically higher premium for you when you decide to buy insurance again.

red sign with "sorry we're closed" in white — *If you lose your permit or license, then you will have to shut down your business.*

3. You Might Lose Your Permits or Licenses

Does your business require special licenses or permits? At the very least, you probably needed to obtain a business license when you opened your business. Getting those permits and/or licenses was probably time-consuming at best, and a downright pain at worst – and remember that you probably needed proof of general liability or workers’ comp insurance to get those permits or licenses. If you cancel your business’ insurance policies, you risk losing the permits and licenses you worked so hard to get, and you might need to go through the process all over again. In some cases, you might even struggle to get them back: for example, if you own a restaurant with a liquor license, you might end up losing it to another business, since there are only a limited number of them given out in each city.

4. Your Property Will Be at Risk

An empty business, such as a storefront, will always be at risk of theft and vandalism, even if you’ve boarded it up and protected it as best you can. Your commercial property insurance is what protects you from having to pay for damaged or stolen property; without it, you’ll be left with all the bills.

5. You Could Find Yourself in Default

If you’re like most small business owners, you rely on one or more types of financing: a mortgage on a property, or a lease on equipment. Before you cancel your insurance policies, be sure to check the fine print of your mortgage or lease – you might find that not having insurance will mean defaulting on your loans, even if you’re up-to-date on your payments. You could lose your workspace, or have your valuable equipment repossessed, simply because you don’t have the required insurance policies.

Falling on hard times or facing a crisis is never easy. But add to the mix the business you’ve worked so hard for, and you may end up having to make some difficult choices. One thing to remember, though, is that your commercial insurance policies are there to protect your business, and any money you may save by dropping them can end up being canceled out in the long run. If you need help, or have any questions regarding any type of commercial insurance, EZ.Insure is here with the answers. Speak with your own personal agent, any time, for free. To get started with us, simply enter your zip code in the bar above, or you can speak to an agent by calling 888-615-4893.

EZ Can Help You Avoid Falling Into These Liability Traps

Owning your own business can be a liability landmine. Just one mistake can mean the end of the business that you’ve invested so much time and money in. The biggest mistake you can make is not having the right commercial insurance coverage. EZ knows you worked hard to start your business, and we want to help you keep it going strong. We can guide you through some of the common mistakes business owners make, and the ways we can keep you protected against them.

laptop with a red warning sign on the middle of the screen. — *A cyber attack can leave you feeling violated, scared, and confused, and it can also ruin your reputation.*

Not Protecting Your Business Online

So much of our business is conducted online these days, and not having cyber liability insurance is one of the biggest mistakes you can make. Not only are there a lot of scammers out there working hard to get your financial information, but anyone with access to your company’s accounts – including employees – can steal information and create data breaches. A cyber attack can leave you feeling violated, scared, and confused, and it can also ruin your reputation. If customers’ data is breached, then you will lose their trust, their business, and any future business.

Malware is one of the biggest threats when it comes to cyber security. In 2018, malware cost companies upwards of $2 million, which was an increase of over 10% from the previous year. To keep your business protected from this threat, EZ.Insure offers cyber liability policies that cover:

Lost or damaged electronic data
Computer operations interruption
Privacy & Notification to customers and other affected parties
Lawsuits (in certain types of policy)

Not Protecting Your Workplace

Another major mistake business owners make is not taking into account all of the things that can go wrong at their place of business. Accidents and natural disasters happen. Customers or employees can get hurt at your business, meaning you could end up being sued. A storm could come along and rip through your building. If you are not insured against all likelihoods, not only could you lose your business, but you could go bankrupt, as well.

We’re a business, too, and we get how scary the thought of losing everything can be. That’s why we’ll compare quotes for you on the most important types of commercial liability insurance, like:

General Liability – protects you against lawsuits claiming bodily injury or property damage. It also provides coverage for personal and advertising injury like libel or slander.
Property Liability – protects everything in your business from risks such as fire or theft. There are commercial insurance packages available that will bundle liability and property coverage.
Workers Comp – covers medical expenses and lost wages for an employee who is injured at work. This type of coverage is required by individual states.

Not Delivering on Your Promises

Finally, don’t make the mistake of assuming every customer is going to be satisfied with you and your business. Sometimes you try to offer the best possible service or advice to your customers, but you just fail to deliver. If you break a contract, give advice that leads to loss, or don’t complete a project, for example, then you could end up facing a lawsuit. To protect yourself and your business from these types of claims, you need to have professional liability insurance.

Whether you are starting up a business, or already have one and are looking into commercial insurance, then EZ’s got you covered. We will compare quotes of all the types of insurance policies that your business needs, and will help you choose the best ones for you. Let us help you protect the business that you worked so hard to build. To get free commercial insurance quotes, enter your zip code in the bar above or to speak to an agent call 888-615-4893.

Flood Season Is Here: Is Your Business Covered?

Every year, the U.S. suffers on average $8-10 billion dollars in damages from freshwater flooding. Massive storms in August 2016 pushed that number to around $15 billion. But what do these numbers mean for individual business owners?

At least 13 million properties in the U.S. lie within flood zones, according to FEMA (Federal Emergency Management Agency). If your business is located in a flood-prone area, it is definitely wise to check your flood coverage, as well as check whether or not you are required to be covered.

The average cost to a business affected by a flooding event is a concerning $90,000. Moreover, about 25% of businesses that close due to flood damage never reopen, according to the Insurance Institute for Business and Home Safety. Flooding is obviously a serious issue, so let’s take a look at the ins and outs of insurance coverage for this catastrophic event.

Is Your Business Covered?

The first question you need to ask is whether or not your business is covered for floods. If you have a standard commercial insurance policy, the answer is no. Damage caused by some types of natural disasters – such as those involving lightning or wind – are usually covered, but water-related destruction is usually treated as a separate case. If you want your business to be protected from flood damage, then you will need to buy a special policy.

Is Your Business Required to Be Covered?

Some businesses are actually required to purchase a flood insurance policy. Flood insurance is mandatory if your business is located within a flood zone and is mortgaged through a lender that is insured or regulated by the federal government. Whether you are located in a flood zone is not a matter of opinion; rather, FEMA has created flood maps that designate certain areas as Special Flood Hazard Areas (SFHA). An SFHA is an area that has been determined to have a 1% annual chance of flooding every 100 years. Flood maps are available online; check to see if you are located in one of these areas.

cartoon of a woman pushing a door closed to prevent water from coming in. — *It may be wise to consider flood insurance, especially remembering that the average claim for flood damage is around $90,000.*

Should Your Business Be Covered?

You might feel that if you are not located specifically in an SFHA, then you do not need to purchase flood insurance. While you are not required by the government to do so, it may be wise to consider it, especially remembering that the average claim for flood damage is around $90,000. Some recent studies are suggesting that FEMA’s maps are inadequate and don’t show the full picture of flood risk, so you may be laboring under a false sense of security. Even FEMA acknowledges that over 20% of flood claims come from businesses located outside of SFHAs.

Take into consideration your actual risk. For example, is your business in an area that experiences heavy snows in winter and warm springs, leading to fast thaws? Are you in an area prone to moderate to heavy rainfall? If so, clogged drains could spell disaster. Ask yourself questions such as these and, if the answer is yes, it is probably best to consider adding a flood policy.

How Do You Get Flood Insurance?

Whether you are required to get flood insurance or you have decided that it is best for your business, the only way to get a policy is through the National Flood Insurance Program (NFIP). However, the government does not sell policies directly; you will have to contact an insurance professional who is familiar with the NFIP. To get started, simply enter your zip code in the bar above, or speak to an agent by calling 888-615-4893.

What Does Flood Insurance Cover?

Once you decide to buy flood insurance, it is important to know what it covers (and doesn’t cover). Generally, for small to medium-sized businesses, there are two types of policies:

Commercial Contents: this type of policy provides coverage for your inventory, merchandise, machinery, tools, equipment, fixtures and any other contents within your business. Covers up to $500,000.
Commercial Building: this type of policy covers the actual structure of your business. If you don’t own the building, then the policy will cover any improvements you made to it. Also covers up to $500,000.

You can purchase both types of policy, thus giving you up to $1 million in coverage.

What Doesn’t It Cover?

two hands with pens in them pointing at paperwork. — *Discuss with an agent what type of flood insurance you want and what coverage you are looking for. They will notify you what flood insurance does and does not cover.*

You should also be aware that there are some things these policies don’t cover, including:

Vehicles
Financial losses caused by business interruption
Property and belongings outside of the building
Mildew and mold may be covered, but is evaluated on a case-by-case basis
Damages caused by sewer or drain backup (unless caused by a flood, which is defined as waters covering at least two acres or affecting two properties). Remember that if waters come from above (like rain clogging gutters and leaking onto your inventory), you may be covered by your standard commercial insurance policy.

Now that you have the facts about flooding and the protection available, you can make an informed decision about what is best for you and your business. If you need help connecting with an agent, or have any questions about any aspects of commercial insurance, EZ.Insure is here to help – and we will always do it completely free of charge. And we’ll never hound you with phone calls the way other companies do. To get started, simply enter your zip code in the bar above, or speak to an agent by calling 888-615-4893.

When Can Your Employees Make Mid-Year Changes to their Group Health Policy?

When getting a Group health insurance policy companies understand that people are going to sign up for what they need now, and employees’ needs can often change. Maybe there is a new baby on the way so they want to increase their coverage, maybe they just realize that they are covering a lot of stuff that they don’t need. This leaves many companies and employees wondering when and how they can make additional changes to their policy.

The Standards

The standard is that each year there is one open enrollment period, and this is when people in a group insurance policy can make adjustments to their plan.. However, there are special cases that qualify your staff for a Special Enrollment Period or SEP.

automotive worker fixing a car as employee — *Any industry employee can opt into a SEP. It just depends on why.*

Group Health SEPs are available if your employee has a qualifying event. Here are the most common qualifying events:

Death
Marriage
Divorce
A new addition (child) to the family

The qualifying period starts when the event happens and only extends 60 days. Otherwise, it will not be considered eligible for a SEP. This means if someone gets married June 1st, they have 60 days from that date to change their coverage, after that they will have to wait until that year’s open enrollment period.

Other Qualifying Events

Another qualifying event is loss of health insurance. This could happen when someone is covered under their parent’s plan and ages out if they are covered under their spouses’ plan and they lose that plan, or several other reasons. If this happens your employee has 60 days from the date that their current insurance plan ends to get new coverage or change their coverage through you.

Employee writing on a white board with a blue pen — *Qualifying events are special circumstances that allow entrance to a SEP. These can be as simple as moving.*

A change in residence also gives entitles an employee to a SEP. These mid-year changes are:

Moving to a shelter
Transitioning as a seasonal worker
Going to a new location for school
Entering the US
Moving to a new home

In this instance, the employee must have health insurance before then to qualify. Also, a small move like an extended vacation or sabbatical does not allow for a SEP.

Additional circumstances that might qualify for a SEP:

Starting service in an organization like Service Year or Americorps
Leaving incarceration
Becoming a member of a First Nationer tribe
Becoming a US citizen

The last thing to keep in mind is if any of these qualifying factors do arise, employees will need to have the correct information to verify an SEP. They all require documentation, but those papers are easily found. For example, a birth certificate for a child is mandatory, this is a valid proof of documentation for the verification process.

business owner speaking with her employees about special enrollment periods — *Talk to your employees about these periods. It can be a confusing time, and they will appreciate both your knowledge and guidance.*

If you find yourself looking for a new, or first group health insurance plan, EZ.Insure offers solutions. Your agent will answer any questions you have, compare the plans available to you, and even sign you up when you are ready, free of charge. To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing [email protected], or calling 888-998-2027. EZ.Insure makes the entire process simple, easy, and quick.

Differences Between Commercial Insurance and Medicare

Both Medicare and Commercial Insurance have their strengths when it comes to coverage. In this time of debate over insurance and its costs, it’s more important than ever to know the differences between the two.

For business owners, you might be nearing the Medicare age and wondering which insurance you should focus on, or even how to balance them. While both have their merits, they each shine in their own way.

people in a meeting over commercial insurance and medicare — *It’s easier to see the difference between two concepts if you know how they work independently.*

Basically, Medicare was created to absorb risk for people with complex or expensive health issues. Commercial Insurance is a mandatory business expense for companies to operate in our economic sphere. One is social; the other is commercial.

Let’s expand more on these concepts, and how they actually help you.

How Commercial Insurance Helps

You can refer to our guides for commercial insurance if you are starting a new business, but for everyone else, the simple answer is minimizing risk.

Commercial insurance works to protect businesses from extenuating circumstances. From Worker’s Compensation to Business Owner’s Policy, these coverage types are put into place specifically to help businesses navigate through bad luck or human error.

Without this insurance, the negligence cases alone would bury any small business trying to set up. Any theft or property damage could cripple a company, not to mention the rising rate of cybercrime. It’s a dangerous world and the protection offered by this type is critical, if not enforced as mandatory by the state, to make sure business can continue.

How Medicare Helps

Medicare is completely different in conception. Instead of strategically sidestepping risk, it instead was created to help as many people as possible. American citizens pay into it throughout their careers so that when we arrive at either old age or a disability, we can access health care.

Medicare provides protection in these cases only, not for lawsuits or property damage. So, it is more effective for the average citizen. There is still confusion over whether Medicare offers the most coverage or an employer’s group health insurance. For more on that topic, read this.

One For Each Need

With what we’ve covered, commercial insurance is fantastic in the business world, as it has been designed to work in that sphere. On the other hand, Medicare, as a federally administered program, is a different beast entirely.

people discussing commercial insurance and medicare — *A simple look: Medicare is for everyone, while commercial insurance is just for businesses. Each individual must see how these stack in their case.*

While they can be used simultaneously, the different insurance types must be used properly in specific situations. These can be overwhelming to look at, especially if you want to use both to the best of respective strengths. Ready to get your best coverage?

EZ.Insure can give you the help you need to navigate both Medicare and Commercial Insurance. Your agent will answer any questions you have, compare different plans for you, and even sign you up when you’re ready, free of charge and without having to worry about being hounded by endless calls. To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing [email protected], or calling 888-350-1890. EZ.Insure makes the entire process easy, and quick.

Tag: business insurance