Personal Risk Management for the Business Owner in 3 minutes

Personal Insurance

  • Check your Limits on all policies

  • Personal Umbrella should be carried. Look at higher limits than just 1,000,000. The Umbrella extends the limits of all your personal policies.

  • Make sure your boats, RV’s, UTV’s, Motorcycle covered under Umbrella

  • Make sure Vacation homes and Condo’s are Under Umbrella.

Health & Life

  • Life Insurance - Check current limits, if it’s a term policy consider rewriting every 5 years if you are healthy to extend term.

  • Health Insurance/Medicare - lots of changes here. Talk to your agent/broker about all your options.

  • Long Term Disability - Look at a group policy for your company as an option as the cost can be about the same as a policy just on you and involve much less underwriting.

Estate Planning

  • Establish a Trust?

  • Don’t place Everything in the Trust - Look at (Payable on Death for Bank accounts and Transfer on Death on Vehicles) A Revocable trust does not provide the protection many people think. You can also use LLC’s that are owned by the trust to provide layers.

Other Stuff

  • If you are on Board, does your Umbrella give you Directors & Officers Liability? Does your board provide coverage for Directors & Officers?

  • What contracts have you assumed liability in (Condo’s, Boat Rentals, etc)

  • Consider any Foreign Travel Risk and related insurance to purchase. You can buy Kidnap and Ransom Insurance with your business and Emergency Travel Insurance from specialty insurers.

  • Domestic Workers? - Can you cover them on your homeowners insurance or do you need Workers Compensation?

Mother Nature and Deductibles

If you live in the Midwest region of the country, or “Tornado Alley”, it is almost inevitable you have experienced some form of wind and hail that may or may not have resulted in an insurance claim. Whether it was your personal home, auto, or maybe a rental dwelling, you have seen the damage that Mother Nature can cause during the storm season.

As a landlord, these storms can impact to your bottom line and it is important to understand how your properties are covered against these perils. There are few different approaches to structuring your insurance deductible, and choosing the correct deducible for your portfolio could mean the difference in thousands of dollars to your bottom line. When explaining deductibles, the Insurance Information Institute says,

“A deductible can be either a specific dollar amount or a percentage      

of the total amount of insurance on a policy. Generally speaking,

the larger the deductible, the less a consumer pays in premiums for

an insurance policy.”

There is not a universally correct deductible option for everyone and it is not a certainty that you will have the liberty to choose which form will apply to your policy, but there are a few factors to understand how your deductible will affect your policy.

Percentage vs. Flat Deductibles

If you have a flat $1,000 deductible, that money would be deducted from your claim. So, if your insurance company has determined that you have an insured loss worth $10,000 you would receive a claims check for $9,000.

Percentage deductibles are based on a percentage of the property’s insured value. So if your house is insured for $100,000 and your insurance policy has a 2 % deductible, $2,000 would be deducted from the amount you are reimbursed on a claim. In the event of the $10,000 insurance loss, you would be paid $8,000.

Per Location vs. Per Occurrence Deductibles

Realizing how your deductible will apply to your property schedule is crucial. Say you have 10 rental dwellings and a single hail storm damages all 10 roofs. If you have a $1,000 per location deductible, that would equate to $10,000 in total deductibles you would pay if you were to file a claim to replace all your roofs.

Using the same situation where all 10 properties are damaged by one storm, if instead you have a $5,000 per occurrence deductible, you would only pay one $5,000 deductible if you were to file a claim to replace all your roofs.

Not all carriers will offer a per occurrence deductible, and depending on the number of locations you have and the total insurable value of your portfolio, it may not be the right fit for you. It is important that you consult your agent to explore all the possibilities that are available to you and figure out which deductible structure suits you the best.

If you have questions or would like to learn more about our unique programs for rental dwellings you can reach me at 405-507-2734 or nbritten@pi-ins.com

Costs to consider when bidding for jobs

These days everyone wants to know the upfront cost of a project.


When you bid jobs, the General Contractors (GC) look at cost along with what you will do and what material you will use. Let’s look at some costs to consider when bidding for jobs.


Auto Coverage

For ease, let’s assume all your drivers have clean motor vehicle records (MVR). For a one-ton truck, you are roughly looking at a $1,000 annual premium with $1,000,000 liability and a $500 deductible for comp and collision. A variable would be if you have a fleet of ½-ton trucks. 

Now, are you having the employees who drive your trucks provide their MVR’s? Many factors play into you having their records. One example would be the cost of having a driver who has 2 DUI’s vs. a driver with a traffic ticket for rolling a stop sign. But hey, that’s what insurance is for……right? The easy answer is “yes” but you could end up spending your valuable time away from a job site with dealing with these issues. 


Workers Comp Coverage

Again for ease, let’s assume you keep perfect books and split all of your payroll between landscape maintenance and landscaping. As you know, landscape maintenance has a much less expensive rate than landscaping. There is a lot that goes into calculating the workers comp premium, but let’s say your maintenance rate is $4.50 per $100 in payroll and the landscaping rate is $9.00 per $100 or $4,500 per $100,000 and $9,000 per $100,000 in payroll. These figures are based on no workers comp claims within the past 5 years.

What is your protocol when an employee is injured? Do you have a doctor you trust or are you relying on an unknown doctor who keeps your employee in the workers comp system for an unknown length of time, ballooning your claim? Also, do you stay in touch with the injured employee? Do you keep an open line of communication to prevent them from getting bad advice?


Equipment Coverage

Let’s say you have $140,000 worth of equipment and it’s insured for a premium of $1,000 and a $500 deductible. Damage? Destruction? If you have provided the equipment year, make model and serial numbers, we can get you replacement cost as opposed to actual cash value. What is actual cash value? In essence, it’s depreciation. Kind of like a used car value. We have the only company our there that will give replacement cost on equipment. They don’t just write you a check, they’ll find you the equipment just like the one you lost.


General Liability

What types of contracts are you getting yourself into? Are you doing large jobs for larger contractors or sticking with smaller residential companies? Do you hire sub-contractors? If so, is there a written contract? There are certain coverages in an insurance policy that kick in as long as there is an actual contract in place. NO HAND SHAKE DEALS. Friendship goes out the window when large sums of money are involved. Make sure you are protected. Have contacts in place with sub-contractors and let us look at the contracts you are signing.


Did these topics bring more questions to mind? If so, let’s talk. This is what we do. These are the questions we ask. 
 

Understanding co-insurance in today's commercial property market

What is Co-insurance?
Most people associate co-insurance with health insurance; however, it’s not exactly the same thing when dealing with property coverage.  The co-insurance clause was implemented as a tool to ensure property owners were not under insuring their properties.  

How does it work?
Just like car dealers use the NADA Guide for car values, we use the Marshall Swift & Boechk (MSB) guide for commercial building values.  Now, these are not market values but rather rebuild estimates. At the time of a loss, our adjuster enters information in the MSB system to determine the rebuild cost of a property.

An example:
Let’s say your property is insured for $500,000 and the insurance policy has an 80% co-insurance clause, meaning you must insure the property for 80% of the cost to rebuild it.  If the adjuster determines that the cost to rebuild is $1,000,000 then the minimum you can insure the property for is $800,000 (80% of $1,000,000). Since the property is insured for $500,000, the claim check will now show a co-insurance penalty because the property was under insured. his is calculated by dividing what you should have insured the property for into the amount you did insure it ($500,000/$800,000 = .625). The penalty figure is multiplied by the loss amount, which let’s say is $50,000 and that amount is listed on the claim check ($50,000 x .625 = $31,250). A claim check for $31,250 on a $50,000 loss and that’s without even applying the deductible!

I say all this not to confuse you; but rather, to take the burden of calculating the building value of your property off your shoulders.

We know the questions to ask and the information to gather to provide you with the best insurance coverage for your property.

Let’s talk.