Hi hi! I’m back this week to see what we can do to help our local business owner’s out. Last week we went over some basic insurance annoyances. This week we are going to take a look at how to avoid some of that pain come claims time! The three main coverages we are going to review apply to virtually every business – but I’m also going to go over a special one just for contractors & one for restaurant owners! It’s a busy week!
Employment Practices Liability (EPL) – The first coverage I’m going to dig into is quite possibly the most relevant one for any business owner with employees. It’s also one that many people never heard of!! Coverage is going to vary from company to company, but I’ll give you a basic break down – if you have employees, and one of them sues you for wrongful termination, sexual harassment, EEOC violations or discrimination, failure to hire/promote, etc, EPL will cover two things – the cost of defending yourself against the suit, and any settlement or award that’s granted (up to policy limits, of course!). There are other coverages that can be added (such as making wage or overtime errors, or harassment of a client or vendor), but that’s the general idea! Even with a lower limit, you can at least hire an attorney to protect you with minimal out of pocket cost.
Employee Dishonesty – While we are on the topic of employees, why not look at it from the other direction? Let’s say that you have an employee who is stealing money or goods from you – how would you cover that loss? Obvious answer here – Employee Dishonesty! “Wait a minute,” you might say, “that’s already covered on my policy!” “Well, yes and no” says Sammy. You might have policy that includes a throw-in amount of this coverage, but it’s usually minimal – $10,000 or $25,000. If you have a larger operation, or sell higher valued items (cars, machinery, jewelry etc), it may not be enough! What if an employee at a jewelry store decides they are quitting, and on their last day walks out with a handful of diamond rings? Or, consider this – there was a case recently where an employee of an auto dealership had been stealing smaller amounts of money from each sale, and ended up getting caught after stealing MILLIONS! $10,000 is a drop in the bucket in cases like these – and you have to cover the rest of the loss yourself! Basically, take a look at what you’ve got and make sure you are comfortable with it!
Business Income & Extra Expense (BI/EE) – Are you running an operation that depends on a building, or the contents within? Who isn’t! Virtually everyone could have a BI/EE loss, but not everyone is carrying the coverage. To make it simple, BI/EE provides you with the income that you lose out on in the event of a covered loss (a fire, theft, etc) that prevents you from operating your business for any length of time. For example, you run a store that sells widgets, and you have a fire that destroys your location – the building and all your contents are gone. Not only have you lost those goods, but you are also losing income while the business is rebuilding! BI/EE protects you against this loss! It’s complicated to explain, and would take a lot more space to go into in depth. Basically, business income protects the actual income that’s lost, while extra expense provides you the ability to do what you can to start earning income again ASAP. It’s the extra expenses you incur to start earning income again – for instance, renting a second location to sell widgets while your original one is being rebuilt.
Phew! That’s a good start! Now, on to coverages specifically for contractors or restaurant owners!
Voluntary Property Damages – Contractors: Do you ever find yourself moving a client’s TV, furniture, appliances, etc in order to complete your work? Happens all the time, right? Guess what – if you drop or break any of those things, that’s almost never covered by your general liability policy! Boy, I’m chock full of good news today….! However, there is a quick and easy remedy for this situation – add Voluntary Property Damages! For most smaller operations (1-5 employees), $5,000 or $10,000 of this coverage should be sufficient, commonly includes a $250 or $500 deductible, and is relatively inexpensive. Better to have and not need……
Utility Services Off-Premises Power Failure – Direct Damage & Time Element – Whew, that’s a mouthful, eh restauranteurs? But make sure you can say it to your agent – it’s a crucial one! “But I’ve got spoilage coverage” says you. “Not if the food spoils due to an interruption of power off your premises” says Sammy. If someone crashes their car into a telephone pole a quarter mile from your building, for instance, that loss would be excluded under your ordinary spoilage coverage – you’d need the coverage above. Direct Damage provides for the food that’s lost, while time element is for the income you lose while replenishing your stock.
Well, I hope that you made it through all of this information alive and well! If you have any questions, you can always feel free to comment, email, or call my daddy – he loves telling people about insurance coverages!