Archive for the ‘reduce cost’ Tag

Insurance & Restaurants   Leave a comment

View More: http://deathtothestockphoto.pass.us/brick-and-mortar

Everyone loves to eat out, which in recent years has led to the development of many new restaurants. This can include a wide variety of types of service, from a food truck to a place of fine dining.  As the restaurant industry grows, so do the needs of those involved in the industry – especially their needs for appropriate insurance to protect themselves.

The food industry has reported both job creation and revenue growth over the course of the last six years. This includes a 3.8% revenue increase, and over 14 million people currently employed in the industry.  While it is great that the food industry is doing so well, what does this have to do with insurance?  It means that there is a growing market of business owners that need specialized coverage based on their risks.

For example, if you own a food truck, it’s likely that if you had a fire or other devastating loss it will take you some time to find or build a replacement vehicle.  While this is taking place, do you have coverage to replace the income you’re losing?  How will you pay your bills?

If you own a more traditional restaurant, do you have coverage for a power outage?  What about a power outage due to power lines downed in a storm?  What if your food spoils while the power is out – is your inventory covered for spoilage?  Similarly, if you have a refrigerant/contamination issue – do you have coverage?

The special types of coverage that are listed are just a few of many that agents and restaurant owners alike need to be aware of to help both industries grow and flourish.  Feel free to call or email with questions or concerns you might have!

Motorcycle Insurance – coverage review   Leave a comment

Motorcycle season

It’s motorcycle season!!

Good morning everyone!

For those in Western PA, motorcycle season is very nearly upon us, and if you’re like me, that’s an exciting and gratifying thing indeed.  Four to five very long months of waiting can get rough on us all.

One thing that tends to sit on the backburner is the motorcycle insurance renewal that almost always also comes through at this time.  As such, now is as good a time as any to give a quick run-down on motorcycle coverage and things to consider.

Some of the coverages on a motorcycle policy will mirror those on your auto policy – bodily injury and property damage liability are good examples.  Liability coverage pays for the medical expenses and damages others suffer, for which you are responsible (in an accident).

Uninsured & underinsured medical provides coverage for you and your passenger’s medical expenses in the event of an accident where someone else is at fault and either doesn’t have sufficient coverage, or any insurance at all, to pay for your bills.  And, of course, you can buy physical damage coverage on your motorcycle itself if it’s stolen or damaged.

Beyond that, though, is where the differences start to appear.  For example, many first party benefits coverages either are unavailable or very expensive to obtain.  These coverages provide protection for you in the event that you are injured in an at-fault accident for things like medical bills, lost income, or funeral expenses.

Roadside assistance and/or trip interruption can function differently on a motorcycle policy – depending on the company you go to, you can get coverage for a flatbed tow (not typically available on regular auto policies) or other motorcycle-specific services.  On occasion, you can even get coverage for unexpected expenses resulting from an accident or breakdown – such as the cost of staying in a hotel.

There is also more readily available coverage for accessories and “carried” contents on your bike.  Several insurance companies provide a small amount of accessory coverage automatically when you buy physical damage coverage on your bike.

If you have done a great deal of modification, have an antique or custom bike, make sure to go over the best way to properly insure your baby – otherwise, you might be in a position where you have to cover most of the cost of those same mods out of pocket in the event of a claim. 

One final thing to consider – keep your safety courses up to date (within the past three years).  This will you provide you with a moderate to major discount on your coverage, and is a great refresher for those safety skills you learned years ago.  For Pennsylvania riders, head to the PA MSF website to find and schedule a class.

Shameless plug – as a licensed rider & Harley owner who is registered to provide motorcycle coverage through multiple insurance companies (like Rider, Progressive, AIC, and more!), I am excited to work with you to provide competitive quotes.  We can re-evaluate your coverage, and potentially get you better coverage for less money.  Do business with someone who knows and understands the passion and dangers involved so you can ride with peace of mind.  The quoting process takes approximately 15-20 minutes.  Please complete the following form, and I will get in touch with you soon to begin the process. 

Driverless cars – insurance for the future?   Leave a comment

Sammy driving

The Insurance Dogger isn’t sure if she’s ready to jump out of the driver’s seat just yet!

As you may have noticed, there is a lot of news coming out lately about driverless cars – Google is one of the main players in the field,  but Carnegie Mellon University made a big splash locally and nationally when it unveiled a very successful test-drive in the Cranberry area nearly two years ago.  A lot has been written in the last couple years about the various pros & cons of driverless cars, so I won’t rehash them here – a simple Google search will reveal just about anything you’ve ever wanted to know about the future of driverless vehicles.

However, as an insurance agent, one of the first things that comes to mind whenever the topic comes up is, how will the insurance policy, and the liability coverage in particular, function when it comes to insuring driverless vehicles?  This is not an easy question to answer, as there are many facets to consider, and much of it is based on speculation because the technology has not put forth a viable “ready for the public” option yet.

There are several legal considerations that, for the most part, I will set aside for now – primarily for the sake of expediency.  One of the big issues at hand is that, generally, each state has autonomy over how insurance laws & coverages are mandated.   I will address issues as broadly as possible, but the situation is still largely theoretical and developing as the technology progresses.

From an insurance standpoint, one of the largest liability concerns is the question of who is at fault (“liable”) when a driverless car is involved in an accident – is it the “driver” of the vehicle?  The engineering firm that put together the software operating the vehicle?  The manufacturer of the vehicle?  All of the above?  This is not an easy question to address, and seems to generate more questions than answers.  Was there an error in the software?  Was the driver able to manually override the vehicle and didn’t?  Did the steering system or brakes fail to receive or comprehend the instructions the software passed along?  Some of these questions will sort themselves out as the technology becomes more “concrete” and less speculative.  But the truth is, I fear, legal liability concerns will not actually be resolved until after the rubber hits the road and accidents occur.

Another concern along those lines is who is responsible for damages to the driverless car itself if it is responsible for an accident in which it gets damaged?  As above, should the software design firm pay for your damages?  The car company?  Are you responsible, as the owner of the vehicle?

A bit more disconcerting – what if your vehicle’s software is hacked?  If the vehicle is dependent upon mobile maps & directions to get from point A to point B, what if mobile/cellular service is lost?  How will the vehicles navigate, and in particular, how will it respond to the ever-changing conditions of roads and construction, closures, traffic, etc?

Lloyd’s of London published a market-watch article (along with its far more lengthy corporate report) about some of these very issues.  While the article isn’t conclusive, it does provide some key insights into considerations and factors at hand: “liability will be a key issue because autonomous and unmanned vehicles involve the transfer of control from direct human input to automated or remote control.  ‘In many cases the technology is there to create fully autonomous vehicles, but the legal and regulatory environment needs to be developed further, and public trust will also need to be fostered,’ says Maran.”

One thought I see being repeated consistently is that, ultimately, the increased safety offered by autonomous vehicles will rapidly outweigh the legal and insurance liability concerns: “Many of the routine claims that currently drive the cost of motor insurance will reduce or almost disappear entirely, explains Powell. The resulting decreased exposure for insurers would probably require underwriters to change the design and pricing of motor insurance products, he says.”

At the end of the day, because the technology is a relatively long way off, the “problems” of insuring driverless cars still bring up more questions than answers.  Regardless of the characteristics of the final product, the technology is coming, and the insurance companies that are able to quickly analyze and adapt to the new risks will be a huge step ahead of their competitors.

Some additional resources, reading, and even some videos to watch:

Insurance Information Institute study, Feb 2015

Wall Street Journal article, August 2014

Auto Insurance Center (undated)

CNBC / AllState CEO, Jan 2015

CNET / YouTube – great review of pros & cons of self-driving cars

Google self-driving car – A First Drive

Wall Street Journal YouTube article

CMU driverless car driven around Pittsburgh

Bill Shuster rides in driverless car

 

Identity Theft, Flood Insurance, and antique coverage – Part Three   Leave a comment

In this final installment of our 3 part mini-series, we are going to review a little bit of information about coverage for antiques and high-value items you may have in your home.

This is a topic that I covered briefly in my post reviewing homeowner’s insurance (HOI) in general.  As discussed there, while most HOI policies provide replacement level coverage for dwelling and contents, there are very specific limitations in place regarding antique, unique, and high value items.  Replacement coverage is defined as “like kind and quality” but does not specify replacing unique items with exact or proximate matches – for example, an antique grandfather clock will typically be replaced with a newer version of the same unless specifically scheduled.

Policies and guidelines will differ from company to company, but in general, HOI policies do not provide adequate coverage for your specialty items:

Antiques:  Typically this is an item that is at least 50 years old, is out of production, and generally can be considered challenging to replace.  It can be just about anything – Griswold Cast Iron Skillets , Seth Thomas Mantel Clocks, or antique jewelry are just a few examples – and will need to be specifically scheduled on the policy to receive the appropriate level of coverage.  An appraisal will almost always be required.

Unique Items & Artwork:   Another broad category of items, this would include collectibles (like Hummel figurines), collections (like baseball cards), and a vast array of artwork – paintings, pottery, statuaries & sculptures, and more.  This coverage typically applies to higher value or difficult to replace items, will need to be specifically schedule, and will require an appraisal.

High Value Items:  This is basically a catch-all for items that don’t fall into one of the first two categories, and most commonly is non-antique jewelry.  Coverage can be placed in two ways: in a blanket format (one total limit for all pieces) for mid-level values (individual pieces typically less than $2500-$3000), or on a scheduled basis (each piece individually listed) for high value items (greater than $3000 each).  For high value scheduled items, an appraisal will be required.

These scheduled items will be covered on a policy form called “Inland Marine.”  I won’t bore you with the history of why it’s called that, but it will provide you with the more detailed and specific coverage you are seeking for your high value and unique/irreplaceable items.  For the amount of coverage purchased, especially since most Inland Marine policies or endorsements carry $0 deductibles, you will pay a relatively minor amount of premium.  I hope that you found this series to be enlightening and informative, and if you have questions, you can always feel free to email me at scott@poleskyagency.com or find me on Facebook!

The Insurance Dogger does not have a great deal of respect for delicate items!!

The Insurance Dogger does not have a great deal of respect for delicate items!!

Not funny, Insurance Dogger!  Not funny!

Not funny, Insurance Dogger! Not funny!

 

Identity Theft, Flood Insurance, and antique coverage – Part Two   Leave a comment

Hello everyone, we’re back again! This time we are going to briefly review the debacle that is flood insurance.  Operated by the National Flood Insurance Program (under the auspices of FEMA) or NFIP for short, flood insurance has gone through quite the upheaval lately.  This is due, in large part, to the fact that the program is about $20 BILLION in debt.

As a result, Congress passed the Biggert-Waters Act in 2012 in an attempt to bring the NFIP’s budget deficit back in line.  This was to be accomplished primarily by removing subsidies from policies in heavily flood-prone areas so the premium reflected the real risk of insuring a homeowner in such an area.  As you can imagine, this created quite a bit of backlash from property owners along the coast, particularly those in Louisiana.

The resultant premium increases imposed by Biggert-Waters were shocking and dramatic, far higher than what was originally predicted.  Instead of removing subsidies over time, as was initially proposed, they were yanked all at once for thousands of property owners nationwide.  For example, one of our clients saw her premium jump from a little less than $500 to nearly $3,000 in one year.

Thus Congress & the Senate recently passed the Homeowners Flood Insurance Affordability Act.  Boiled down, the HFIAA basically sets annual limitations on premium increases to attempt to raise rates in (very small) steps.  However, even a glance at FEMA’s overview page outlining the changes reveals confusing and challenging definitions and procedures.  When I called the company about getting our client’s premium scaled back due to the change, I was told, almost word for word, “We don’t know whether the new act is going to affect her premium, so we are going to wait until FEMA tells us to do something.”

Very simply, I would summarize all the changes to flood insurance this way:  Our government took a program that was quite literally drowning in debt, put together a knee-jerk and poorly executed solution, and reversed it in a similarly ineffective fashion in response to public outrage.  This article puts it all together perfectly.

The government had a chance to fix a broken program that had previously served constituents relatively well.  It had its problems, as most government programs do, but it was completely blindsided by the severity of storms like Katrina and Sandy.  Instead of scaling up property owner premiums over 5 or 10 years to more accurately reflect the risk that they carry, a “NOW NOW NOW” followed by a “LATER LATER LATER” mentality prevailed.  As usual, it will ultimately be the property owners and tax payers who foot the bill.

Sammy is this covered

Sammy thinks these flood changes are all wet….

Christmas Outtakes   Leave a comment

As promised last weeks, here are some of the more amusing outtakes from last week’s photoshoot for our Christmas “card”:

Sammy

She just couldn’t stay awake!

These next three would’ve made an amusing gif.  It appears almost as though she’s singing “Joy to the World!” like Clark Griswold.

Sammy

JOY

Sammy

TO

Sammy

THE WORLD!

This is one of my favorites of all of them:

Sammy / Mork

Nanoo Nanoo
Oh, wait – too young for that joke?

These last pictures show just how hard it is to keep Sammy’s attention, even with treats!

Sammy steps

Who’s upstairs?

Cute bored dog

Are we done yet? Pretty bored over here…

Sammy looking down

What’s that?

Sammy treats

I’m coming to get my treat now!

Sammy housetop

Up on the housetop, click click click….

(for reference on that last one)

A review of Personal Insurance – Home Owners (Part 1)   1 comment

dog blog

Sitting at home, blogging away!

Homeowners coverage.  Where to begin?  With your home, of course!  In this “installment,”  I’m going to review a couple things to keep in mind while reviewing or considering insuring your home – based on the assumption that you own, not rent.

The primary “concern” of homeowners is protecting the actual dwelling itself.  As there are quite a few formats to do this, I’m only going to cover the most common form, called an HO5 policy

Under an HO5 homeowners policy, the dwelling is covered for comprehensive perils at replacement cost valuation.

  • Comprehensive Perils – CP is actually easier to explain by starting with its counter-part, named perils.  A named perils policy means that only claims (causes of loss or perils) specifically named on the policy are covered – if it’s not listed, it’s not covered.  Comprehensive perils is the opposite – if a cause of loss is not specifically excluded, it’s covered.  Every company has its own list of excluded losses, but some common ones are flood, acts of war, intentional acts of the homeowner (arson, for example), and wear and tear (in other words, maintenance is typically NOT covered!).
  • Replacement Cost Valuation – RCV describes how payment for a loss will be made.  When you carry RCV coverage, a loss will be paid out based on the true cost to repair or replace damaged goods (less your deductible).  Actual Cash Value, by contrast, pays based on the cost to repair or replace MINUS depreciation (typically based on age and condition). 

Understanding RCV is what typically causes frustration.  The easiest way to understand how this works is by using an example.  If you have a fire in your home, and the kitchen is destroyed, RCV dictates that the insurance company pay the cost of restoring your kitchen (as closely as possible) to its original condition, REGARDLESS of the age of materials there.  In other words, your cabinets may be 15 years old, but an RCV policy pays for the cost of brand new cabinets (comparable – “like kind and quality”).

The replacement cost valuation of your home is commonly found by entering in the characteristics of your home into software designed for this purpose – how many square feet, how many stories, year built, updates, style, construction, etc etc.  A common source of confusion is that the RCV of your home is often greater than the market value of the house – this occurs because the cost to rebuild per square foot is almost always higher than the actual market value per square foot – but this works in your favor!  If a home policy were written based on market value, and you had the kitchen fire described above – guess what!  The cost to repair would not be paid in full: unless your kitchen were brand new, it’s virtually impossible that it’s market value would be anywhere close to what the replacement value is!

Contents Coverage – Another important component of your homeowners policy is contents, or personal property, coverage.  This is for the actual contents of your home – simply put, anything that’s not permanently attached.  So all of your clothing, furnishings, appliances/electronics, decorations, etc etc.  This is almost always calculated as a percentage of your building limit – 60, 70, and 80% are the most common levels. 

Something important to remember – if you have high-value, unique, antique, or difficult to replace items, it’s generally a good idea to schedule them on the policy.  Most policies have limitations or exclusions for these items that generally mean that you are only going to get a fraction of what they are actually worth.  In addition, by scheduling items, you can typically get minimal or zero dollar deductibles, which drastically reduces your out of pocket expense in the event of the loss.  The coverage tends to be more expensive than general contents (PP) coverage, but in the long run is far more beneficial!

Liability Coverage – The last of the major coverages I will review today is liability coverage, which covers damage or “injury” for others.  The most common example of a liability situation would be if a person (NOT a guest of yours, who are covered by “Medical Payments” coverage) were on your property, slipped and fell, and required you to pay for their injury and rehab costs.  This would be covered by the liability coverage on your policy.   Other examples of common liability claims would be if you happened to accidentally damaged someone else’s goods – knocking over the TV in their house, hitting a baseball through their picture window, etc.  It would also cover injuries caused if your dog bites someone.  Contact your agent if you have questions about what would and wouldn’t be covered by your liability coverage. 

A common situation that often causes consternation – what if your neighbor’s tree fell over onto your property and damaged your home?  Would that be covered by your neighbor’s liability coverage, or your dwelling coverage?  Everyone’s favorite answer:  That depends.  If the tree is long since dead and your neighbor has been negligent in removing it, then his liability policy would cover your damages.  HOWEVER, if the tree is still alive, and was simply blown over by the wind, or some other similar “unforeseeable” incident, then the damages would be paid out of your dwelling coverage (and subject to your deductible). 

Some other coverages to consider:  Loss of Use, Other Structures, Medical Payments, Inland Marine Floater (see Scheduled goods)

Blog

Tuckered out after a long day of writing!

A review of personal insurance – Auto insurance (physical damage)   3 comments

Dog Blog

I’ve been waiting for a little while now….

OK OK I know that I said I’d be back to finish up auto coverages a few days ago.  Business being what it is, it’s taken me a little while.  But here we are, and off we go!

Last week we reviewed liability and injury coverages.  This week, we are going to review the coverages in place to protect the damages to your vehicle itself and ways to save on them.

  • Collision  – Even though this is “backwards” from how the coverages appear on your policy, it’s easier to explain starting with Collision.  Collision provides coverage for your vehicle when it collides with some other inanimate object, or is hit by another moving vehicle.  In the state of PA, unfortunately, that includes when your car is hit by a shopping cart.  Some examples of collision claims:  if your car is parked and gets hit by another car (or shopping cart!), you hit a patch of black ice and slam into a tree, or you are at fault in a multi-vehicle accident.  Ways to save – see note after Comprehensive
  • Comprehensive (Comp) – Comprehensive is most easily explained as “all other covered forms of physical damage to your vehicle,” hence the name.  In PA, comprehensive coverage does pick up one type of accident that would otherwise be considered a collision – hitting an animal or pedestrian.  These damages would be covered by comprehensive.  Other examples of comp claims:  if your car is stolen, catches on fire, suffers flood damage, a tree falls on it, etc.  Windshield and other glass damage is covered by comp (unless caused by a non-animal collision).  Ways to save – Easiest and most common way to save is by increasing your deductible.  Be wary of two things, though – first is that collision is far more expensive than comp, so it’s far more effective to increase your collision deductible.  Second is that you should be aware that the savings by increasing the deductible will not offset (in one year) the increased out of pocket cost in the event of a claim.
  • Comp or collision pay for a total loss of the vehicle based on the depreciated (Blue Book) value of the car.  All other (partial) losses are paid based on the actual expense of repairs (less the deductible).
  • Rental Reimbursement (RR) – RR provides coverage if you need to pay for a rental car as a result of a covered comp or collision claim.  In other words: you have a covered claim.  Your vehicle will be in the shop for two weeks.  You need a car in the interim.  You pay for a rental vehicle.  RR coverage will reimburse you for the cost, up to specified daily limits and maximum duration (typically, $30 a day for 30 days).  Ways to save – only real way to save here, outside of not purchasing it at all, is to carry lower per day limits.
  • Towing & Labor (T&L) – T&L provides coverage in the event that you need some form of roadside assistance (change a flat tire, charge a dead battery, keys locked in your car) or need to be towed for virtually any reason (mechanical breakdown, run out of gas, etc).  No real way to save here, it’s generally very inexpensive to begin with.  Only thing to consider – if you are paying for this AND AAA or some similar road service, be aware you may be paying twice for the same coverage.
  • Gap Coverage – This provides coverage for new cars that are purchased using a car loan.  As noted above, in the event of a total loss to your car, the policy will only pay for the depreciated value of the vehicle, NOT the loan amount.  Typically, the loan amount is higher than the depreciated value, creating a “gap” in coverage.  Gap coverage fills the void by paying for the difference.  This coverage can be purchased through the dealership or on your auto policy.  Compare BOTH terms and pricing before choosing where to buy the coverage!

That about does it for this review.  There are other liability and physical damage coverages available, but these are by far the most common (at least in PA).

Relax

So just relax and enjoy the ride – knowing you are well covered!

A review of personal insurance – Auto insurance (liability)   Leave a comment

Miss me

Hi everyone! Did you miss me?

Hey everyone!  It’s been too long since we’ve posted anything.  We’ll try to blend the purpose of this post between a good mix of information and ways to save.  Since our prior posts focused on business insurance, we’re going to start in a more widely useful direction – personal insurance.

Auto insurance is, at least in the state of PA, a legal requirement – but probably far less than you think.  In fact, state regulations only require that you carry liability coverage for the bodily injury and property damage of others, as well as your own personal medical expenses.  The limits required by the state are similarly low – only $15,000 per person & $30,000 per accident for bodily injury, $5,000 for property damage, and $5,000 for medical expenses.

Here are some of the coverages you can purchase, as well as ways to save on them:

  • Bodily Injury (BI)BI covers your liability for injuries people NOT in your vehicle sustain in the event of an accident for which you are at fault.  BI claims can get very tricky in PA.  If you are responsible for an accident that injures the passengers of another vehicle, typically the medical payments coverage on the policy on the OTHER (non-responsible) vehicle responds first.  It can quickly get convoluted, so in the interest of brevity, contact your agent for additional details of how coverage applies in the event of an injury.  Ways to save – see notes after Property Damage.
  • Property Damage (PD) PD covers your liability for the damage done to the property of others in an accident for which you are at fault.  For example, if you rear-ended a slower moving vehicle, back into a parked car in a parking lot, or take a turn too quickly and end up in someone’s front yardWays to save in general, liability coverages are the most difficult to reduce your costs on – the most convenient way to save is by lowering your limits.  However, especially if your driving record is clean, you won’t save as much by reducing limits as you might think.   Other ways to reduce your rates include changing driver/vehicle assignments on your policy (the youngest driver on the oldest car, for example), purchasing a safer car, or doing something to reduce your daily (commute) or annual mileage.
  • Uninsured/Underinsured Motorists (UM/UIM) – this coverage is similar to BI but in reverse.  If you or your passengers are injured in an accident where another party is at fault, and that party either does not have any BI coverage (uninsured) or they don’t have enough BI coverage (underinsured) to pay for your injuries, UM/UIM will pick up the difference (up to your policy limits).  Ways to save the best way to save without reducing your limits (if you have multiple vehicles on your policy) would be to reduce your limits and add stacking.  Stacking multiplies your UM/UIM limits by the number of vehicles on your policy.  So, if you have two cars on your policy, and carry $50,000/$100,000 unstacked limits, you can reduce your limits to $25,000/$50,000 and stack the coverage.  You will maintain the same total coverage (as long as you have at least two vehicles!) and pay less.
  • First Party Benefits (FPB) I will address these as a group, as they are typically lumped together in a batch on your policy.  Additionally, they can be combined into one large limit for the whole group of coverages, instead of having separate limits for each.  This is typically called blanketing coverage.  I digress – the four FPB coverages are medical expense, income loss, accidental death, and funeral benefits.  Each FPB coverage pays if you or your relatives (residing in your home) are injured or killed in an accident, regardless of who is at fault.  Medical Expenses operates similar to health insurance – covering your actual medical & rehab costs.  Income loss operates similar to disability coverage – covering your lost wages if you are injured in an accident and are unable to return to work.  Accidental Death and Funeral Benefits, similar to life insurance, provide coverage in the event you pass away as a result of an accident.  Ways to save in order to get higher limits for less money, consider purchasing the combination option, where you get one lump sum for all four coverages, which you can divvy up as necessary.  For example, instead of maintaining higher limits on each individual coverage, consider carrying combination coverage of $100,000 or $177,500.  Additionally, if you already have health, disability, or life insurance, consider reducing or removing the applicable coverages from your policy.

In the interest of your sanity and keeping this short, I will stop for today.  We’ll review the physical damage coverages you can purchase on your vehicle itself tomorrow.
In the meantime:

Sammy Dog Blog

Keep on riding!

Restaurants & Caterers – some great things to know   Leave a comment

The article that I’m pasting below is something that I wrote for the New North Business Matters insurance issue (yours truly is on page 18).  I’m going to post it here, as I haven’t really put anything up in quite a while during the research phase for the Marcellus Shale post(s).  I’ve read quite a bit about Marcellus Shale and the implications for homeowners and businesses, and it’s actually quite troubling.  I’m hoping to have something very soon (a week or less)!

Without further ado, an article I wrote providing tips and information for food service owners looking to improve their insurance:

“I’m paying for a product that I hope I’ll never use.”  It’s a common complaint of any business owner purchasing insurance, and it makes sense.  No one wants to go through the stress of a claim, even if it’s handled efficiently by the insurance company.  If you insure your restaurant properly, however, you can dramatically reduce the amount of anxiety and tension you face – both when putting the policy in force and if you have a claim.

How do you insure your restaurant properly?  There are several things you can do to soften the blow by obtaining cost effective and thorough insurance coverage.  Additionally, there are some specific coverages you can put in place to protect against the unique exposures that food service operators face.  While most of my suggestions apply to restaurants, you can modify them to fit any style of food service operation.

There are several things you can prepare to obtain the best rates If you have deep fat frying, make sure that you have a UL300 approved Ansul wet system, and that it’s under contract for service on at least a quarterly basis.  Your hoods and ducts should also be under contract for quarterly cleaning and servicing – and the filters (baffles) should be run through dish on at least a weekly basis.  The cleaner that your filtration and safety systems are, the more likely it is an underwriter will be to give you great rates.  Make sure that your service tags for all systems are prominently displayed!  And, of course, the overall cleanliness and attractiveness of your restaurant, the more desirable it will be to the insurance company.

Other things that can help reduce your rates:

  • Have an employee handbook with enforced guidelines on safety and food handling protocol.
  • Make sure that any employee that will handle alcohol on a regular basis is either TIPS or RAMP certified.
  • Hold regular safety meetings, and if you can, have a certified safety committee.
  • Make sure that ALL areas of your location(s), inside and out, are very clean and well-maintained.

Have some basic information handy when getting quotes – square footage and seating capacity of each location, gross sales (including a break down between food & liquor), and your updated annual payroll (this MUST include tips!).  The more information you have available, the faster the quoting process will be.  Anticipate filling out an application for liquor liability coverage.

The coverages below are indispensable for food service operations, yet many policies don’t address them appropriately.  Companies like Travelers, Zurich, Nationwide, Ohio Casualty, Erie, and Penn National offer excellent policies for food service operations, but PLEASE take the time to discuss the following coverages with your agent when quoting – regardless of what company offers you quotes.

Spoilage and contamination coverages: Make certain that they’re addressed by your policy – and make sure that the limits provided are adequate!  I insure an upscale restaurant who had adequate coverage for the food they maintained on premises – but not nearly enough to protect their extensive wine and liquor stock!  Make sure to review your limit AND your inventory when purchasing these coverages!

Utility Services coverage, direct damage and time element:  This is essentially an offshoot of spoilage coverage that protects against either your product spoiling, or you losing income, due to a water or power failure.  Make sure that it INCLUDES off-premises occurrences.  You MUST include off-premises occurrences, and make sure that overhead lines coverage is provided!  This means that if the power failure occurs due to something that happens off your premises, your spoiled product and lost income will be covered (distance/radius limitations will often apply).  I had a client who had this coverage and thought he would never need it…. Until someone crashed into a telephone pole down the block and he lost power for over 24 hours!

Employment Practices Liability (EPL):  Simply put, EPL provides protection in the event of a lawsuit due to sexual harassment, discrimination (age, gender, race, etc), wrongful termination, and more.  It can even include vendors and customers if third party coverage is added.

Employee dishonesty will reimburse you if an employee is stealing money, product, or other goods from the business.  If possible, make sure to specify Discovery Basis!

If you provide Valet services, make sure to let your agent know and get quotes for garagekeepers liability.  Last, make sure to include business income and extra expense coverage on the policy – actual loss sustained is the best format, if available.

Fine print time – make sure to ALWAYS discuss coverages thoroughly with your agent.  Each company will handle coverage differently.  These suggestions are good starting points, but they are by no means comprehensive or always applicable.  Your agent will go over in more detail the coverages above, and hopefully some additional things for you to consider.  Good luck and rest easy – insurance is in place to protect you and your business!

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