Business Insurance Basics 2

Are there any disasters my property insurance won't cover?
Yes. Floods, earthquakes and acts of terrorism are generally not covered unless added as extra coverage.

Property insurance policies usually exclude coverage for flood damage. Find out from your local government office or your commercial bank whether your business is located in a flood zone. Also ask around to find out whether your location has been flooded in the past. Government projects to map flood zones may be slow to keep up with new developments. If you need to buy a flood insurance policy, contact your insurance agent.

Coverage for earthquake damage is excluded in most property insurance policies, including homeowners and business owners package policies. If you live in an earthquake-prone area, you'll need a special earthquake insurance policy or commercial property earthquake endorsement.

Earthquake policies have a different kind of deductible - a percentage of coverage rather than a straight dollar amount. If the building is insured for $100,000, with a 5% deductible, for example, in the event of an earthquake, your business would be responsible for the first $5,000 in damage.

Remember that business interruption insurance, which reimburses you for lost income during a shutdown, applies only to causes of damage covered under your business property insurance policy. If your business premises are shut down due to earthquake damage, you'll need to have earthquake coverage to make a claim under a business interruption policy.

Only businesses that purchase optional terrorism coverage are covered for losses arising from terrorist acts.

How can I disaster-proof my business?
Businesses that recover quickly are those that plan in advance. This involves not only purchasing the right insurance, but also developing and maintaining an adequate recovery plan.

Minimize the risk of damage in advance of an emergency by:

Training employees in fire safety, particularly those responsible for storage areas, housekeeping, maintenance and operations where open flames or flammable substances are used.

Modernizing the electrical system since faulty wiring causes a large percentage of nonresidential fires.

Situating your business in a fire-resistant building - a structure made of non-combustible materials with firewalls that create barriers to the spread of fires - and in a building with a fire alarm system connected to the local fire department. It is also a good idea to have a sprinkler system to douse fires.

Limiting storm-related damage by making sure the building conforms to damage-resistant building codes.
Develop a disaster recovery plan by:

Keeping up-to-date duplicate records of both computerized and written records. Under federal law, if companies fail to maintain and safeguard accurate business records, the company may still be held liable.

Identifying the critical business activities and the resources needed to support them in order to maintain customer service while your business is closed for repairs.

Planning for the worst possible scenario. Do research before a disaster strikes by finding alternative facilities, equipment and supplies, and locating qualified contractors to repair your facility.

Setting up an emergency response plan and training employees how to execute it.

Considering the resources you may need to activate during an emergency such as back-up sources of power and communications systems. Also, stockpiling the supplies you may need such as first-aid kits and flashlights.

Compiling a list of important phone numbers (including cell phone numbers) and addresses, including emergency management agencies, major clients, contractors, suppliers, realtors, financial institutions, insurance agents and claims representatives. The list should also include employees and company officials. Keep copies off the premises in case the disaster is widespread.

Deciding on a communications strategy to prevent loss of your customers. Clients must know how to contact your company at its new location. Among the possibilities to explore, depending on the circumstances, are posting notices outside the original premises; contacting clients by phone, email or regular mail; placing a notice or advertisement in local newspapers; and asking friends and acquaintances in the local business community to help disseminate the information.

Review your plan on a regular basis and communicate changes to key employees.

How do I file a business insurance claim?
When a fire, accident or theft occurs at your business:

Contact your insurance agent and company right away. Any burglaries or theft should also be reported to the police immediately.

Read your insurance policy so that you know what your responsibilities are to your insurance company after a loss.

After a disaster, take steps to protect your property from further damage by making temporary repairs. If immediate repairs to equipment are necessary, save the damaged parts in case the claims adjuster is interested in examining them.

Get at least two bids on the cost to repair or replace damaged property.
When filing a business interruption claim, be able to show the income the business was generating both before and after the loss. Keep detailed records of business activity and the extra expenses of keeping your business operating in a temporary location during the interruption period. If you are forced to close down, include expenses that continue during the time that the business is closed, such as advertising and the cost of utilities.

If you are unhappy with how your claim was handled:

Talk to your insurance agent or claims manager to explain your point of view.

Call the consumer affairs or complaint department of your insurance company and tell them your story and why you think you deserve a larger settlement.

Contact the insurance regulator in your area about your problem.

If you've tried all other options, consult an attorney who specializes in insurance matters to see if he thinks you have a valid claim that is worth a lawsuit. Provide the lawyer with all relevant documents and a copy of your insurance policy. Tell your attorney about any settlements offered by your insurance company and the attorney will judge whether you have a legitimate case that might result in a much larger settlement if brought to trial. Attorneys work on an hourly basis or on a contingency basis in which case they receive a portion of whatever settlement you ultimately receive. Get your lawyer’s fee structure in writing before you pursue your case, and make sure you are kept current on the status of the case as it progresses. You must agree to any settlement reached between your attorney and the insurance company before it is made final.

What's the difference between cancellation and non-renewal?
There is a big difference between an insurance company canceling a policy and choosing not to renew it. Insurance companies cannot cancel a policy except when:
- You fail to pay the premium
- You have committed fraud or made serious misrepresentations on your application.

Non-renewal is a different matter.

Either you or your insurance company can decide not to renew the policy when it expires. Your insurance company must give you a certain number of days' notice and explain the reason for not renewing before it drops your policy. If you think the reason is unfair or want a further explanation, call the insurance company's consumer affairs division. If you don't get a satisfactory explanation, call the insurance regulator in your area.

The company may have decided to drop that particular line of insurance or to write fewer policies where you live, so the non-renewal decision may not be because of something you did. On the other hand, if you did do something that raised the insurance company's risk considerably, like committing fraud, the premium may rise or you may not have your policy renewed.

If your insurance company did not renew your policy, you will not necessarily be charged a higher premium at another insurance company.

Do I need workers compensation insurance?
Employers have a legal responsibility to their employees to make the workplace safe. Contact the Workers' Compensation and Insurance Board in your area for details. However, accidents happen even when every reasonable safety measure has been taken.

To protect employers from lawsuits resulting from workplace accidents and to provide medical care and compensation for lost income to employees hurt in workplace accidents,businesses are required to buy workers compensation insurance. Workers compensation insurance covers workers injured on the job, whether they're hurt on the workplace premises or elsewhere, or in auto accidents while on business. It also covers work-related illnesses.

Workers compensation provides payments to injured workers, without regard to who was at fault in the accident, for time lost from work and for medical and rehabilitiation services. It also provides death benefits to surviving spouses and dependents.

Each province has different laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services and how the system is administered. For example, in most states there are regulations that cover whether the worker or employer can choose the doctor who treats the injuries and how disputes about benefits are resolved.

Workers compensation insurance must be bought as a separate policy from Worker's Compensation. Although in-home business and business owners policies (BOPs) are sold as package policies, they don't include coverage for workers' injuries.