commercial insurance Archives - Page 8 of 12

Additional Insured VS Loss Payee

Insurance terminology can be confusing, you’re a business owner, not an insurance expert. It can be difficult to differentiate between terms, but it is crucial to understand the differences in order to ensure that you are getting the right coverage, and that you are in compliance with your plan’s conditions. For example, there are two terms, “additional insured” and “loss payee,” that both describe a third party who requires special protection as part of your commercial insurance policy. The two terms may be similar in some ways, but are very different in terms of the protection offered to all parties involved.

Additional Insured

caucasian hand holding a pen and paper pointing to another set of hands — *You should request to be added to a business’ liability policy if you are being contracted to perform a job. It will protect you in case something goes wrong.*

Simply put, an additional insured is anyone added to an insurance policy who is not the primary policy holder. If your business contracts any outside workers or businesses that could be held liable for jobs that they perform while working with you, those third parties will often request to be added to your commercial liability policy. Adding them to your policy will mean that they will be covered for work done with your business or on your premises. You should also request to be added to a business’ liability policy if you are the one being contracted to perform a job.

For example, let’s say you hire a janitorial company to clean your workplace, and a customer or other person who doesn’t work for your business gets hurt on your premises because of something the janitorial company has done. If you have listed the janitorial company as an additional insured on your general liability insurance policy or business owners policy, BOP, then the janitorial company will be protected under your policy in case they are sued for negligence. The additional insured has liability protection, but they don’t have a legal first right to claim payments from the named insured’s insurance policy.

Loss Payee

A loss payee is a third party listed on a commercial property insurance policy’s declarations page who is entitled to all or a portion of the insurance claim payments in the event of a loss. When there is a loss payee, who is usually a finance company, bank, or other lender, listed on a policy, the insurance company will pay claims directly to the loss payee first before it makes payments to anyone else, including the policy owner. The named insured, or policy holder, comes second because loss payees have an insurable interest in the property.

For example, if your business takes out a loan to purchase a building, the mortgage company who is financing the building might require you to list them as a loss payee on your commercial insurance policy’s declarations page. So, if there is any damage to the property, such as a fire, or an accident, then the mortgage company’s interests will be protected. Whenever you file a damage claim, your insurance company will have to notify the loss payee (your mortgage company). The insurer will then issue a check to pay for repairs, made out to both the named insured (you) and the loss payee (the mortgage company).

The Difference

silver scale with a question mark on each side — *Additional insured and loss payee are similar, but the difference determines what protection you get.*

Additional insured and loss payees are both entitled to receive insurance benefits from the named insured’s (policy owner) policy. The main difference is that additional insured will receive liability protection, whereas loss payees will only receive property damage coverage. Additional insured generally cannot receive any payments for any property claims, unless they have a direct involvement in the claim. For example, if the janitorial service from above did not service an area of your business where a customer was injured, then they would have no ability to file a claim.

Whenever you work with another business that increases your business’s legal liability, you should consider requesting to be added as an additional insured on their policy. On the other hand, if you have a direct interest in investing in another business and are considering becoming their lender, then you should request to be added as a loss payee on their insurance policy. That way your interests are protected, and you will get first rights to claim proceeds from their insurance company in case of any damage.

You can’t add an additional insured or a loss payee to all types of small business insurance; these endorsements are only available on some small business insurance policies. To find out if you can add either to your insurance policy, and which one might be right for you, you should speak to an insurance agent. EZ.Insure offers highly-trained agents who will review your business insurance policies, make sure you are properly insured, and help you determine if a third-party request to be named as a loss payee or additional insured is reasonable. Make sure you’ve got the right coverage for your business at the right price by connecting with one of our agents. To get started, simply enter your zip code in the bar above, or to speak to an agent directly 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.

Commercial Insurance Renewal Checklist

Having commercial insurance is important for your business. The right coverage mitigates any financial risks and protects you in case of any unexpected events. To make sure that your business has adequate insurance coverage, you need to review your commercial insurance policies annually, rather than just allowing them to automatically renew. Using a business insurance renewal checklist will make it easier to assess your current needs and will make the renewal process go as smoothly as possible. You can also use a checklist to prepare you to speak with an insurance agent. An EZ agent will use the info you gather to help make sure you are fully covered, and to see if there are any discounts available.

two pages with data reports on them laying on a table next to a computer keyboard — *Review your financial statements, data, and property values.*

1. Gather Policies, Reports & Data

Before it is time to renew your commercial insurance policies, gather all your financial reports including profit and loss statements, so you can go over your real property values and locations, income generated from those properties, gross revenues, inventories and any other financial details related to your business. Any changes in your revenue affect your insurance; as revenue increases, your premiums will increase as well.

In addition to gathering all of your financial documents, you should also look at all of your insurance policies, and your workers’ compensation experience data rating sheet. Reviewing all of these documents together can help you determine if you need to lower your coverage, increase your coverage, or get rid of certain policies.

2. Review Any Changes You’ve Made to Your Business

If you have opened a new location, purchased new equipment, or updated your current building, this will affect your commercial insurance coverage. If your business has grown, then the coverage that you had from last year will not be sufficient. On the other hand, if you’ve pared down, then you might be paying for insurance that you don’t even need!

3. Review Changes To Your Staff

Have you hired any new employees? Have you lost some? Are some employees doing riskier work now than they were last year? If you’ve answered yes to any of these questions, then your current workers’ compensation coverage might need to be updated. The size of your payroll affects your workers’ compensation rate, so any time that employees join or leave your business, workers’ comp coverage levels should be adjusted. The insurance renewal process is the perfect opportunity to make sure that you have the appropriate workers’ comp coverage.

4. Check Policy Exclusions

When it is time to renew your insurance, make sure to double-check your policy exclusions to determine what events and circumstances your policies will and will not cover. Make sure that you are comfortable with these exclusions, and if you are not, speak to an EZ agent. Our agents will make sure that any particular event you want covered will be covered next year.

claims written on a blue post it note that is on top of a stack of paperwork with the word "claim form" on the top — *The less claims you have made, then the lower your rates may go down over time.*

5. Review Your Claims History

Losses and claims have a major effect on your insurance premiums. A history of claims will drive your premiums up, but if you have a clean loss history, your rates may go down over time. Assess how many claims you have made and why, and see if there is a way to prevent making them in the future. And if you have not had any claims or losses, speak to an EZ agent to see if you can get a discount on next year’s policy.

6. Choose The Right Agent

A good insurance agent will take the time to review all of these documents, statements, and changes to your company. They will also take the time to review your policies and make sure your business will be fully protected in the coming year. Even if there haven’t been any changes to your business, it is still good practice to regularly update your existing policies, and an EZ agent can check to see if there might be a better policy available to you.

Choosing the right agent is the best way to save money on your commercial insurance policies, and EZ has the best agents for the job. Our agents will assess your business’s needs and compare all available plans in your area at no cost to you. We truly care about your needs, which is why our services are always free. To get instant, accurate quotes, enter your zip code in the bar above, or to speak directly to one of our licensed agents, 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.

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.

Expanding Your Business? EZ’s Got You Covered

If your business is really taking off, and you’ve decided to expand, then you’ll need to start thinking about updating your commercial insurance policies. When you first started your business, you purchased the right amount of commercial insurance, but as your business grows and changes, so do your insurance needs. The last thing you want is to lose your business due to outdated or insufficient coverage. There are a few situations in which you need to rethink your commercial insurance coverage.

Adding A New Service

orange round sticker with the word new on it in white — *Adding services to your business does not mean that they are automatically covered by your current commercial insurance policy.*

As your business expands, you might decide to offer new services to your customers. Adding services to your business does not mean that they are automatically covered by your current commercial insurance policy; if you don’t update your policies, you are likely to end up with gaps in your coverage. For example, if you are adding an online service, then you will need to make sure that you get the correct cyber liability insurance.

Unfortunately, many business owners make the mistake of thinking that their general liability policy covers all liability, but this is not the case. Commercial general liability is not likely to cover all the threats that come with conducting business over the internet, such as data breaches. If your company’s information were hijacked, the cost of recovery could be astronomical, and the loss of customers and your reputation could be even more damaging.

Adding other services could also mean needing more professional liability than you currently have. This type of policy is necessary for any business that offers a professional service or regularly gives advice to clients. Let’s say, for example, that you decide to start offering workshops for customers through your business – in this case, you’ll probably need more liability insurance.

If you’re unsure whether you have the right coverage for your expanding business, EZ will go over your current policies to make sure that you are fully covered. We will evaluate all of your current commercial insurance policies, including general liability, BOP, professional liability, and workers compensation insurance. Then we will determine what you need to add on in order to be fully insured without any gaps that could damage your business.

Adding Multiple Locations

Hooray, your business is growing so much that you need to open another location! When adding multiple locations to your business, you have to keep several things in mind, such as:

What is the surrounding area like? Do you need more security, such as cameras or metal shutters? Could the weather in the new location lead to property damage?
Have employees been given the same guidelines and training as at those in the primary location?
What is the risk of injury to third parties at all locations?

Once you answer these questions, you can assess your new needs. To cover your multiple locations, you’ll probably need more commercial property insurance. In addition, adding more employees means you’ll also need to re-evaluate your workers compensation and employee liability insurance. Each location should have its own set of business insurance policies that meets each of its specific needs.

Upgrading Your Business’ Equipment

2 computer screens with a cell phone and headphones — *If you do not upgrade your insurance when you upgrade your equipment, then you might not have enough coverage for the new items.*

Have you recently upgraded all of your computer systems at your business? Have you added more equipment to your office? If so, then your current insurance policy might not include the correct amount of protection for the equipment. If you do not upgrade your insurance when you upgrade your equipment, then you might not have enough coverage for the new items if they are damaged or stolen. The last thing anyone wants is for a very expensive item to get stolen or damaged without any protection to cover the costs of repairing or replacing it. One of our agents will go over all of your upgraded equipment and machinery, and make sure that you are covered properly.

Depending on your type of business, you are likely to need multiple types of commercial insurance coverage. And as your business grows, your commercial insurance coverage needs will change, as well. In order to make sure you have adequate coverage, you need to have an agent that knows what kind of coverage you need and how much of it you should have. EZ’s agents are trained to make sure your most important asset, your business, is secured with comprehensive coverage. If you are looking to increase your insurance coverage, or find out if your business has enough insurance for your current situation, our agents can help you determine that free of charge. To get started, enter your zip code in the bar above, or to speak to an agent call 888-615-4893.

Tag: commercial insurance