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What is Business Income Coverage and When Do You Need It?

If you own, operate, or manage a business, you know how important it is to track your revenue and financials. But what if that revenue stopped coming in due to a fire? What if a major theft prevented you from being able to pay your bills and payroll? Having business income (also known as business interruption) coverage in place may help lift the financial burden. But it’s very important to understand when and how it can be used.

Let’s take a look at an example to help illustrate the possible coverage and claims scenarios of business income coverage.

Christina owns an independent bookstore and also owns the building where the store is located. A fire damages part of the store, and in the process of putting out the fire, her inventory is destroyed by smoke and water damage. It’s going to be several months before the property can be cleaned and repaired for patrons to safely enter, and new inventory must also be ordered and stocked.

The property policy on the business covers much of the physical damage, and there is also some coverage for inventory. However, Christina knows she’ll have trouble paying her employees and her bills without any revenue being generated. So, what does she need to know if she has business income coverage in place?

  1. What is the actual loss sustained? Christina will need to know the total of her covered losses and how much was covered by other insurance policies.
  2. What is the amount of income lost? Christina will need to be able to provide information on the amount of revenue she would have generated had the store been open as normal.
  3. What is the “waiting period” of the policy? Most business income coverage will have an amount of time that must pass before the coverage can take effect.
  4. What is the “period of restoration”? How much time will the policy cover while the business is closed?

These crucial factors will help determine when, how much, and for how long Christina can expect the policy will pay.

These policies typically have named perils as well. So, while a fire, theft, wind, etc. may be covered, you’d have to check your policy to see if a service line being damaged would be covered. In addition, civil authority may be covered as an interruption after a natural disaster. As an example, if a sinkhole damaged the only road leading to your business and the government ordered closure as a result, you might be covered for business income.

However, and as with any policies, it is extremely important to understand your coverage and limits. Don’t assume you’d be covered for certain situations, talk with your agent and get an understanding of what would trigger this coverage, for how much, and for how long.

To learn more about it, contact Brandon from our team at brandon@ownbyinsurance.com or 865-453-1414 today.

No Coverage for Earthquakes? Don’t be at Fault!

As you likely know, there are two fault lines that run through Tennessee. The first is the New Madrid Fault, which runs approximately 120 miles south from Charleston, Missouri, and part of West Tennessee, near Reelfoot Lake, extending southeast into Dyersburg, Tennessee. The second is the East Tennessee fault line, which runs from Chattanooga through Knoxville and on to North Carolina.

What you may not know is that most property insurance policies exclude damage from earthquakes. And while we haven’t had a major earthquake in Tennessee in the last 100 years, that doesn’t mean they can’t occur. So, what would you need for coverage, and how do these policies work? Let’s discuss it.

How Earthquake Insurance Works

Earthquake (EQ) insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions. And while there are certainly scenarios where major damage can occur, one of the more common issues is the damage earthquakes can cause to foundations and walls of a building. This shifting, cracking, and movement can be very costly and may also damage the structural integrity of your building(s).

If a fire, electrical damage, or water line damage occurs as a result of an earthquake, there is a good chance your current property policy may provide coverage for those losses. But direct damages from the earthquake, whether to your building, auto, or personal property, are unlikely to be covered by non-EQ policies.

It’s important to know that EQ insurance carries a deductible, and this is generally in the form of a percentage rather than a dollar amount. That is somewhat unique compared to other coverages and could be an unpleasant surprise if you don’t understand it in a claims scenario. As an example, an EQ policy may have a 10% deductible, meaning that if the home is replaced at a cost of $250,000, the homeowner would have a $25,000 deductible. These deductibles may be as high as 20%, which can mean a very significant cost to the homeowner.

The cost of EQ insurance can also vary a lot, depending on location, how your structure is built, and the materials used. These policies are provided by private insurance companies, and not the government like many flood insurance policies. As such, EQ insurance needs to be reviewed and compared to understand the coverages and costs.

Does your home or business property need EQ insurance? It’s likely a good idea to have a policy in place for it. While we don’t expect an earthquake anytime soon, the science to predict them is not advanced enough to detect them in advance and one could occur at any time.

Contact Brandon Patterson on our team at brandon@ownbyinsurance.com or call 865.453.1414 and he’ll help you review your options.

Claims for Theft and Burglary: What’s Covered and When?

If you own a business, having something stolen from your company may be an unfortunate reality someday. But is there a difference in how it is covered based on how it is stolen? There may indeed be differences depending on your policy. Let’s review what you may find as you understand these coverages.

Insurance for theft typically covers any stolen property, regardless of where it was stolen. Insurance for a burglary may only cover property that was stolen when a forced entry into a building or structure was involved. If you have commercial property insurance, you may think theft is covered. But that isn’t always the case, especially for crime-related losses.

However, if you have a commercial crime policy, there is a good chance you are protected from losses occurring from business-related crimes, including:

Employee Theft

Protects you against dishonest acts committed by your employees, including theft of money or property.

Robbery and Premises Theft

Protects your property inside your premises while you’re open for business. You’re even covered if you or your employees are ever robbed while doing business offsite.

Computer Fraud

May help cover losses when employees or hackers commit fraud or theft via computers. As an important note, crime insurance will typically not cover losses as a result of data breaches. This type of loss would need to be covered by cyber liability coverage.

Forgery

Helps protect you if documents are forged or altered in schemes that typically involve the false acquisition of your funds.

Theft of Money or Securities

Protection for physical theft of money or securities and may help protect you even if this theft occurs off premises of your business.

As you can see, there is more than one may realize when it comes to protecting your business from theft, burglary, or crime. Contact Brandon Patterson on our team at brandon@ownbyinsurance.com or call 865.453.1414 and he’ll help you understand these risks and your options.

What Do You Need to Cover Business Auto Use?

If your business regularly uses autos for business needs, you likely have risks. Whether it’s a fleet of vehicles or just one, and whether it is vehicles you own, lease, or your employees own – having the right coverages for business-use autos is critical.

Employer-Owned Vehicles

If your business owns autos for business use, you likely need a Commercial Auto policy. This will usually provide you coverage for liability damages, collision, or comprehensive auto property damage, bodily injury coverage, and property damage for other vehicles/property.

Additional coverages may include reimbursement for rental vehicles, under/uninsured motorist coverage, and/or medical payments coverage. Personal use of the vehicle may also be covered, but typically not by others (such as family members using the auto).

Non-Owned Vehicles

There are plenty of scenarios where your business may be using vehicles it doesn’t own. Maybe you’ve rented, leased, or borrowed a vehicle. Maybe your employees are using their own vehicles. For these situations, the risks are different, as you likely need coverage for property damage or bodily injury that your business is at fault for in an accident.

Hired and Non-Owned Auto coverage is often the solution here. The “hired” coverage provides protection for your business when you’ve rented, leased, or borrowed a vehicle. The “non-owned” coverage extends protection from and for your business over the employee’s personal auto policy. This likely adds to the limit that could be paid in the cases of property damage or bodily injury.

However, this is typically a “liability” only coverage, and doesn’t coverage damage to the non-owned property (the auto itself). That’s why it’s important to understand the underlying property coverages, such as the employee’s personal auto policy or the auto’s rental agreement coverage.

HNOA coverage might be available to add your business’s general liability policy, or it might be available to purchase separately as a “standalone” policy.

Additional Coverages

If you have greater risk potential for your business’s use of autos, you may want to consider adding a commercial umbrella. This type of policy may give you higher limits that could be paid on a claim for property damage, legal costs, medical bills, or even legal settlement payments. A variation of this may be excess liability that is specifically added for commercial auto coverage.

Whatever auto use your business has, it is important to understand the risks and coverage options available for you. This is also a scenario where understanding the exclusions of policies is extremely important.

Contact Brandon Patterson from our team at brandon@ownbyinsurance.com or 865.453.1414 to discuss your options for covering business autos.

Risk Management and Your Team’s Role in Lowering Risk

Risk Management and Your Team’s Role in Lowering Risk

Workers’ compensation rates have been steadily dropping for the last decade in Tennessee and other states. And while factors like market competition and legal system improvements are factors, one of the biggest impacts has come from a reduction in claims frequency and claims severity. How has this been achieved? Safety and risk management programs. When better procedures are in place to protect employees, fewer accidents – or less damaging accidents – occur. So, could this be applied elsewhere to lower your businesses risks?

Preparing Your Team for Success

Onboarding, training, screening, and testing of employees and potential hires can help you lower risk. And this isn’t just for jobs with physical risks. Training your employees on cyber risks, onboarding them for customer interaction, screening them for past loss history, and intermittently testing them on what they’ve learned can all help with your risk management. Let’s review some examples of how this approach can be impactful.

Cyber Liability Prevention

Most businesses store customer data or personal info in some fashion. Whether it be loyalty info like names and birthdays or financial info like credit cards stored for recurring payments, this data is sensitive and must be protected. If you train and test your employees on avoiding cyber risks like phishing, hacking, and human error, you’ll be helping lower your cyber risk.

Third Party Liability Prevention

How does your team interact with customers? If there is a physical location that customers visit for goods, services, or transactions, is it well-maintained? Does your team know to clean up spills, report malfunctioning equipment, or notify management of unsafe conditions? Quickly acting on these concerns not only makes for a better customer experience, it may also reduce your risk.

Property Damage Prevention

If you work on or interact with customer property, having your employees properly trained is critical. Whether it be a $20,000 car or a $1,000,000 piece of equipment, the work your employees do shouldn’t put position you for a claim. And while accidents happen, the better the training, the less likely they are to occur.

Good risk management leads to better options for your insurance, especially as your business’s loss history continues to be good or improves from prior claims. Contact Brandon Patterson at 865.453.1414 or email brandon@ownbyinsurance.com to discuss how it could help your business.

Is Increasing Your Deductible a Good Idea?

Is Increasing Your Deductible a Good Idea?
We’d all love to save more money, and insurance isn’t something people typically enjoy spending money to purchase. There are ways to decrease the cost of your insurance premiums, and one that is often mentioned is increasing the deductible of the policies. But is this a good idea? That depends on your specific situation.

What is a Deductible?
As you probably know, your deductible is the amount you’ll be responsible for if you have a claim paid by the company that insures you. For example, on a home insurance policy, “cheaper” insurance often has higher deductibles, meaning a claim resulting in $10,000 of damages might cost you $5,000 out of pocket on that cheaper policy, while a “more expensive” policy may only result in only $1,000 out of pocket expense.

So, I Can Save That Money Now, Right?
If you purchase a less expensive policy with a higher deductible, you may indeed save money on the front end. But what about if you have a claim? Since none of us knows when a claim will occur, a plan to save on the front end until you have a claim may not work out for you. Let’s take a look at why with an example of premium and deductible differences on a home with $350,000 in dwelling coverage:

Average Annual Home Insurance Premium1                  Deductible

$1,595                                                                                                    $1,000

$1,522                                                                                                    $1,500

$1,441                                                                                                    $2,000

With these averages in mind, raising your deductible from $1,000 to $2,000 would save you $154 per year. But if you have a claim in the first twelve years of your policy term, you haven’t saved any money once you pay your deductible. And what if you have another claim soon after? Your deductible is typically paid at each claim occurrence, so that means another $2,000 out of your pocket.

Does it ever make sense to increase your deductible. Yes, there are instances where it would based on the premium differences and the individual’s financial situation. But that is something you’d want to review carefully with your insurance agent.

Our agents can discuss your options and help you find the coverage that’s best for you. Let us help you find the insurance policy terms that are right for you!

1 – Quadrant Information Services. Averages are for $350,000 worth of dwelling coverage.

The Changing Marketplace for Cabin Insurance

In case you haven’t noticed, the insurance market has changed significantly this year. Prices are up and the options for coverage are fewer. So, what does that mean for insuring your cabin or vacation rental property? It means you need to work with someone who understands what’s going on and how it impacts your specific risks. Let’s take a look at what’s happening and how you can approach your insurance needs.

What Has Happened?
Natural disasters and other claim impacts have led to many property and casualty (P&C) insurance companies losing money. Some reports say that the P&C industry won’t be profitable again until 2025. Wildfires, hailstorms, tornadoes – all of these unexpected occurrences and more can add up quickly on claims – sometimes in bunches of the same times and locations. For many cabins and vacation properties, the impacts are greater because they are in more remote locations with less recovery and response service in place.

As a result, the premiums for most of these properties have continued to escalate. In addition, some companies have stopped offering coverage for them, either in certain areas or completely.

What Can be Done?
There is still coverage available for almost any property but finding it can be more of a challenge. Independent agencies like ours have access to multiple markets and can help research what’s available for your property. Once we identify your options, we can help you review the offering and the cost to discuss what’s right for you. We can also help you understand measures that might make your property less of a “risk” when these companies are underwriting your application for coverage.

Being proactive is critical when the market is in this state. Let us help you review the needs you have and help you find the right coverage for your cabin or vacation rental property. Give Brandon Patterson a call at 865.453.1414 or email brandon@ownbyinsurance.com and he’ll help you start the process!

Insurance Premiums and the Economy – What’s Happening?

Is it inflation? Is it a recession? Is it just weird? Our nation’s economy is definitely in flux right now. And while what exactly is happening might be debated, there is no debate that it is impacting everyday Americans. One of those impacts is in the cost of insurance. How and why? Let’s review the impacts and discuss your options.

Social Inflation
Referring to increases in lawsuits, the amounts awarded, and general impacts of litigation, social inflation is on the rise. Litigation funding is even a thing now, as firms and investors are “betting” on cases by backing the plaintiffs as a way to make money.

Cost of Claims
The costs to repair and replace are also a factor impacting premiums. Parts and materials, whether it be for a car, roof, building, or otherwise, are costing more and also taking longer to complete. Insurers are paying more for repairs, rental cars, loss of use, and more. Even if the amount of claims is lower, the severity of the claims is higher with these added costs.

Deductibles and Premiums
Some may suggest that saving money on your insurance is as simple as raising your deductible. And while that certainly can reduce your premium, the whole point of insurance is to help indemnify the party or parties that suffered the loss. With a higher deductible, you’d receive less money in the case of a large loss, and also have a higher threshold of when it would even make sense to file a claim. Raising your deductible is sometimes a solution, but it may only be a short-term fix.

What Can you Do?
We can help you review the coverages you have, look for options, and even consider variables like bundled coverage for saving money. There isn’t always a need to lower your coverage amounts to save money, and we want to help you understand your choices. In addition, we can discuss if you really have the proper limits and endorsements to make sure the things you want to protect are truly covered. Because sometimes, spending money can save you money in the long run.

Let us go to work for you! Give Brandon Patterson a call at 865.453.1414 or email brandon@ownbyinsurance.com and he’ll help you start the process!

What Coverage do you Need for Signs and Murals?

If your business’s building has a mural painted on its walls, or a monument sign that helps brand your location, you know that these things often add character to your property. If they were damaged, destroyed, or vandalized, you’d want them restored in the best way possible. However, some commercial property policies may not have the coverage you need to do so. Let’s talk about why.

Limits

Your commercial property insurance likely has some coverage that would pay for damage to signs or murals in a covered loss. The question is, what are the limits? If you paid an artist $3,000 to paint a mural on the side of your building, and someone drives into that wall – how much coverage do you have? Your insurance would likely pay for repairs to the wall, but would you have enough to have the mural redone?

The same may be an example for a roadside monument or elevated sign. If you have a BOP for your business’s insurance, there may not be coverage for outdoor signs that aren’t connected to the building. They likely can be added by an endorsement to the policy, however, and the same question about limits needs to be asked. How much would it cost to replace your sign and

Exclusions

Another thing to note about your signs and murals is what may be excluded from being covered. Some policies may exclude vandalism from coverage, and others may have specific language about lighting for signage. If you are currently having a mural painted, you may want to ask about coverage for it while it is in-process as well. Especially if it is a large financial investment.

Let’s talk through your signage and mural needs that may be unique, and make sure you have the coverage in place to protect them. Contact Brandon Patterson at 865.453.1414 or brandon@ownbyinsurance.com

What Does Your Small or Hobby Farm Need for Coverage?

If you have land on your property that you use for farming, you may think that you don’t need additional coverage if you don’t farm commercially. But the answer to that depends on your specific situation. Let’s take a look at what may be some common risks for small and hobby farms.

Property 

The coverage you need for farm property is typically based on how much land you use for it, and what those activities encompass. If you have a farm that is used primarily for enjoyment and not as a profit source, you likely have a “hobby” farm. It is unlikely that your home insurance policy properly covers your hobby farm, and you should discuss the additional options for your coverage. A farm insurance policy may be the best option, and

Equipment 

If you do any farming, you probably have equipment that you utilize for the work. If you have a “blanket” farm policy, your equipment may be covered. But not all farm policies offer blanket coverage, and even if they do, the limits may not be high enough for what you need.

Livestock

Even with one cow or just a few chickens, you’re adding to your risk by having livestock. And while you may not need expanded coverage like a Livestock Risk Policy, you may be able to add an endorsement for livestock coverage onto your farm policy.

Liability

Have a pumpkin patch, corn maze, apple picking, etc. as activities on your farm? If you allow visitors onto your property – even for a small window of time – you should consider the liability you may incur should someone get injured. And although you may take the necessary precautions for safety, accidents happen. Small Farm Insurance may be the answer here, and the parameters of your use will determine the coverages you need.

Let us help you review the risks of your farm and help you understand the options you have for coverage. Contact Brandon Patterson at 865.453.1414 or brandon@ownbyinsurance.com