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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.

The Vacation and Cabin Rental Excess & Surplus Insurance Market

The property insurance marketplace remains in what is called a “hard market” as we progress through 2024. Factors including cost of materials, catastrophe losses, supply chain interruptions, and increased time and cost of labor have resulted in insurance companies reducing the amount of risks they want cover, restricting locations, and raising premiums.

These impacts are often higher in the areas that are popular for vacation and cabin rentals. For example, beach rentals are higher to insure due to coastal risks, and mountain rentals are often harder to insure due to wildfire risks. But there are still options for coverage and an independent agent can provide you with information on your choices, as they are not tied to a single insurance company like a direct writing insurance agent may be.

That being said, these options may have intricacies you are not aware of, as all insurance companies are not the same, nor or they regulated the same.

The Excess & Surplus Market

With fewer insurance companies willing to cover the risks of vacation and cabin rentals, some are turning to the Excess & Surplus (E&S) insurance market for coverage. These companies typically offer non-admitted insurance policies, which means they do not fall under the state regulations and have not been “approved” by the Department of Insurance. However, they are still reviewed by regulators, and the companies themselves may often have the same financial ratings and reviews as other companies on a national or regional level.

The positives of these options are the flexibility of the policies and rates. They can move quickly to adjust what they offer and respond to volatile markets like what we’re seeing now. They may have lower rates than competing programs, but it is important to understand if coverage differences are responsible for those rates.

The concern of these options is they are not subject to the states’ Guaranty Fund protections. This means, if the insurance company were to become insolvent, there would not be state government protection to pay claims from a fund that has already been established.

There are, however, ways to determine how great of a concern this should be for you. The financial ratings and reviews we mentioned can be reviewed by the public. Organizations like Fitch, AM Best, and/or Demotech may have reviewed the companies’ financial data and provided reports of their current standing and future outlook. These reports are fairly standardized and straightforward, often assigning letter grades like “A” to resulting reports.

So, is an E&S market the best option for your risk? In Tennessee, you may need as meaning as three admitted companies to decline your risk before you are eligible to access the E&S market. But in the current marketplace, that may not be much of an impediment. The key is to understand what is available to you, and what differences are in the policies you’re considering.

Our agents can help you do just that! We’ve been helping insure cabins and vacation rentals for many years, and we’re here to help you understand your risks and options. Contact Brandon Patterson to get started today – brandon@ownbyinsurance.com or 865.453.1414.

Steps for Better Personal Risk Management

You could probably guess that companies need to take steps to reduce their risks, including safety programs, cybersecurity, and more. But should you be taking risk management steps for yourself? Do you have ways you can lower your own risks and potentially reduce the chances you have a loss or an insurance claim? The answer to both these questions is “yes” of course!

Driving Risks

Over 36,000 automobile accidents occur every day1 in the U.S. Many of these accidents are caused by distracted driving. One of the simplest steps you can take for better personal risk management is to avoid using your devices while driving. And while texting may be the most obvious, many people are using their phones for searches, looking up directions, or even watching videos! Avoid these while you aren’t parked in your vehicle whenever possible.

In addition, keeping your car in good working order is also a way to reduce your risk. Keep your tires properly inflated, have brakes and safety mechanisms checked, change windshield wiper blades as needed, and keep up regular maintenance to prevent mechanical issues that could cause an accident.

Cyber Risks

The average American accesses the internet for around seven hours of their day!2 Much of that may be for work, but many Americans also work from home. If you’re using your personal devices, take steps to protect your data:

  1. Protect your passwords and create stronger passwords whenever possible.
  2. Use multifactor authentication when it is an option for logins.
  3. Avoid using “open” or unsecured internet network connections.
  4. Be careful visiting websites and especially entering data on sites that do not have SSL encryption (https://).

Liability Risks

Lawsuits are on the rise in our country, and larger verdicts and judgments are more common. You can protect your own liability at home by taking steps that include:

  1. Fence in your yard, especially if you have a trampoline, pool, treehouse, etc.
  2. Avoid “overserving” alcohol to adults at your home – even friends and neighbors.
  3. Monitor and control your dog and/or other pets, even if they haven’t been known to bite.
  4. Talk with your family about being careful in their interactions with others, and the importance of safety.

These are just a few of the examples of ways you can be safer and also lower your risks. But accidents can still happen, and you need to have the right coverages in place in case they do. Contact Brandon Patterson from our team to better understand what those coverage options may be for you – brandon@ownbyinsurance.com or 865.453.1414.

1-per Progressive Insurance data

2-per Forbes data

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.

Covering Your Trailer and the Objects You’re Hauling

As the weather warms up, more and more people are getting outdoors to enjoy nature. Maybe it’s boating on the water, taking an ATV off road, setting up camp in the woods, or getting projects done outside. And one thing all these might have in common is that trailers may be involved to move the items to their intended destinations. As you’re hauling, you may be wondering – am I covered? Let’s review some of the circumstances.

Covered by Your Auto Policy?

In most cases, the coverage of your trailer – while in use for hauling – will fall under the policy of the auto hauling it. But keep in mind that if you have liability only coverage for your auto, the same would apply for your trailer. In addition, the contents you are hauling on your trailer are not typically covered in these policies.

Boat Trailers

If you have a specific trailer for your boat or other watercraft, you may be able to purchase coverage under your boat insurance policy. However, unless you have designated the trailer as “dual purpose” on your policy, you are unlikely to be covered if you haul something on the trailer other than your watercraft.

Camper Trailers

Because of their different risks, you will likely need a separate policy to cover any kind of pop-up or camper trailer. In addition, the value of a campers “contents” alone would likely make it a wise decision to have specific coverage in place for them.

Other Coverages

Trailer-specific coverages, personal umbrella policies, and additions or endorsements to other policies may be available to cover your trailer and its contents.

In Tennessee, there is not a requirement for registration or insurance if you have a boat, farm, utility, or pop-up trailer. Other trailers do have registration laws in Tennessee, and since insurance for the auto hauling the trailer is required, there are still some approximate rules for coverage in the state no matter what you’re hauling with your trailer.

Contact Brandon Patterson from our team at brandon@ownbyinsurance.com or 865.453.1414 to discuss your trailer risks and options for coverage.

Cyber Risks: Managing Versus Insuring

No doubt you’ve heard about the cyber risks that continue to increase for businesses, whether it be data breach, hacking, phishing, or otherwise compromising systems. And hopefully, if your business stores any customer or sensitive data, you have measures in place to protect it. But there are two pieces of the risk management for cyber liability, the security plans in place, and the insurance for if an incident occurs. Let’s take a look at their differences.

Cyber Protection
Whether it is the Windows Defender program that may have come with your computers, or an extensive plan with monitoring, having a plan for defending your data is critical. Business.com1 suggests these steps that every organization should take:

  1. Teach your staff about cybersecurity.
  2. Set internal controls to guard against employee fraud.
  3. Keep your software updated.
  4. Use difficult-to-guess passwords.
  5. Guard your wireless networks.
  6. Use encryption on all types of data.
  7. Back up your data every day.
  8. Switch to the cloud.

And we’ll add one more – use multifactor authentication (MFA) for logins. In fact, MFA combined with teaching your staff and keeping software updated may be the three most important steps to get started.

Cyber Liability Insurance
Even with a great plan in place, cyber incidents can occur. If you do have a breach or other cyber breach, having the right insurance can help you recover. Depending on the policy, there may be coverage to help you:

  1. Notify affected customers.
  2. Restore systems.
  3. Assist with legal liability.
  4. Third party liability for business partners impacted by the breach.
  5. Ransomware demands to restore our data.

Some other business policies may offer our include coverage for cyber liability. However, it is often not enough to protect you form the scale of incidents that typically occurs. A “standalone” policy that suits your business’s specific needs may be a better fit for your coverage.

Contact Brandon Patterson from our team at 865.453.1414 or brandon@ownbyinsurance.com for more information on cyber liability coverage options for your business.

1 – Per https://www.business.com/articles/7-security-practices-for-your-business-data/

Restaurants, Alcohol Sales Percentage, and Liquor Liability

Restaurants and bars have specific, and sometimes unique, risks to cover. One of those risks centers around alcohol sales and consumption on their premises. And while it may seem obvious, how much they sell is key. But how much is too much? The corresponding coverage for this risk is called Liquor Liability Insurance, and there are a few ways it is underwritten by most carriers.

Many insurance companies measure alcohol sales risk by comparing it to the amount of food sold by the venue. If the percentage of alcohol sales is high, the classification of a restaurant may be changed to a “bar” instead. If that “bar” also has a stage, live music, a dance floor, etc., it may be considered a nightclub. Both bars and nightclubs have higher risk potential when considered by underwriters.

In addition, different states have very laws around liquor sales. Often called “Dram Shop Laws,” these regulations take into account the potential of alcohol contributing to liability claims. This might include actions that a patron took after being served alcohol by the establishment. In very strict states like Alabama, this is more prevalent, while in a state like Nevada, there may be less liability.

As mentioned earlier, the type of venue is a key piece of liquor liability coverage. A restaurant may have less risk in an underwriter’s eyes, while a nightclub or tavern might have a higher level of concern for them. And again, the key to that determination may center around alcohol sales as well as the characteristics of the venue.

So, what does liquor liability actually cover for these establishments? In most cases, these policies will help cover damages caused by a patron that has been served alcohol by the venue. These damages may be related to bodily injury or property damage. One of the best ways for a venue to protect themselves is to have proper risk management in place for the sales and service of alcohol, and to have the right liquor liability coverage in place in case an incident does occur.
What is the right policy for your restaurant? We can help you determine that! Contact Brandon Patterson from our team at 865.453.1414 or  brandon@ownbyinsurance.com.

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!