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Tag: Business Interruption Insurance

How Does Safety and Risk Management Impact Your Business’s Insurance?

Posted on by Ownby Insurance Service

As a business owner or manager, you have enough to worry about without safety incidents impacting your team and what you do. That’s why it is so important to have proper safety procedures and risk management efforts in place – and to train your team on those policies. And while it may be common sense that better safety could lead to improvements for your business’s insurance, there may be more impacts than you realize. Here are some of the important impacts to consider as you develop your strategy.

Risk Management: Reduce Exposure

One of the most immediate benefits of implementing rigorous safety and risk management procedures is the reduction of loss potential. When businesses invest in training their team and ensuring that safety measures are consistently applied, they create a safer work environment. This proactive approach minimizes accidents and incidents, typically reducing the number of business insurance claims. Not to mention, fewer incidents means your team’s efficiency and effectiveness should increase, improving your bottom line.

Improved Employee Satisfaction

Employee satisfaction is another critical impact of robust safety and risk management protocols. Workers who feel safe and valued are more likely to be engaged and productive. High levels of employee satisfaction can lead to lower turnover rates, fewer absences, and a more positive workplace culture. Happy employees are also less likely to file complaints or claims, further reducing insurance costs.

Lower Insurance Premiums

Insurance companies review loss history, analyze risk factors, and – in some cases – review a business’s risk management procedures to determine premiums. Insurance companies view businesses with comprehensive safety and risk management plans as lower-risk, resulting in more favorable rates for their coverage. By demonstrating a commitment to safety, businesses can often negotiate better terms with insurers, thus reducing overall operating costs.

Industry Example: Manufacturing

The manufacturing sector provides a compelling example of how effective safety and risk management can lead to lower insurance costs. Manufacturing companies with clear, written, and team-reviewed safety procedures can significantly reduce the risk of injury and illness.

In fact, the Occupational Safety and Health Administration (OSHA) reports that safety efforts in the industry have led to a significant drop in worker injuries and illnesses—from 10.9 incidents per 100 workers in 1972 to 2.7 per 100 in 2022.1 This dramatic reduction not only lowers the human cost but also translates into substantial savings on insurance premiums.

Spend the Time – See the Results

Investing time, effort, and resources into safety and risk management is not just a regulatory or a compliance issue – it can be a strategic business decision if done correctly. By reducing loss potential, enhancing employee satisfaction, and lowering insurance costs, businesses can create a safer and more financially stable environment.

For small business owners, risk managers, and business managers, the path to lower insurance premiums and a safer workplace lies in proactive safety and risk management. How can you get started on a safety and risk management plan for your business? Check out the tools available from Liberty Mutual’s SafetyNet program at https://business.libertymutual.com/services/risk-control/liberty-mutual-safetynet/

If your business wants to discuss how the safety measures you already have or are implementing can help with your insurance, contact Brandon Patterson on our team at brandon@ownbyinsurance.com to get the support you need today!

1-per https://www.osha.gov/data/commonstats

How Much Insurance Does Your Business Need?

Posted on by Ownby Insurance Service

Owning a business is a lot of work. It often involves managing people, making decisions, keeping track of many things at once, marketing, selling, and a slew of other tasks. When it comes to insurance, most business owners don’t have the time or resources to seek out what they need on their own. They rely on an agent to help them assess their risks and review their policy options. But even with an agent involved, it is best to understand your coverages and what insurance you may not have as well. So, how “much” do you need? Let’s review a few of the ways to find out.

Do You Sell Product(s) or Services?

Whether you offer products or services significantly affects your insurance needs. If you sell products, you may need product liability insurance to protect against claims related to product defects or injuries caused by your products. On the other hand, if you provide services, professional liability insurance (also known as errors and omissions insurance) can cover claims related to professional mistakes or negligence.

Do You Own or Lease Property for Business?

If you own or lease property for your business, you need to consider commercial property insurance. This type of insurance covers damages to your building, equipment, inventory, and other physical assets due to incidents like fire, theft, or vandalism. For those leasing property, make sure to check the terms of your lease to understand your insurance responsibilities.

Do You Have Employees?

Having employees introduces additional risks and responsibilities. You’ll need workers’ compensation insurance to cover medical expenses and lost wages for employees who get injured on the job. Additionally, employment practices liability insurance can protect against claims related to employee rights violations, such as wrongful termination or discrimination.

Do You Have Vehicles You Use for Business?

If your business uses vehicles for operations, commercial auto insurance is essential. This insurance covers damages and liability in case of accidents involving your business vehicles. Make sure to include coverage for all vehicles used for business purposes, whether they are owned, leased, or rented.

Do You Store Client/Customer Data?

In today’s digital age, data breaches and cyberattacks are significant threats to businesses. If you store client or customer data, consider investing in cyber liability insurance. This insurance helps cover costs associated with data breaches, including legal fees, notification expenses, and credit monitoring for affected individuals.

Additional Coverages

Apart from the key considerations mentioned above, there are other types of insurance you may need based on your specific business needs:

  • General Liability Insurance: Covers a wide range of risks, including bodily injury, property damage, and advertising injury. This coverage is often included in the base policy for your business, such as in a Business Owners’s Policy (BOP).
  • Business Interruption Insurance: Compensates for lost income if your business operations are halted due to a covered event, such as a natural disaster.
  • Directors and Officers (D&O) Insurance: Protects your company’s leadership against personal losses resulting from legal actions taken against them due to their corporate decisions.

What About the Dollar Amount?

Are recent Blog on Total Insurable/Insured Value (TIV) may be able to help you calculate the amount you should have for the total insured limits on your policy. There are many factors involved here, and we’d encourage you to read more about it!

Even with all the above in mind, there may be risks that are very specific to the work you do. It is best to discuss your business with a licensed agent to really determine what you may need. Contact Brandon Patterson on our team if you’d like to discuss your business’s insurance!

Why Total Insurable Value (TIV) is Important to Understand

Posted on by Ownby Insurance Service

Total Insurable Value (TIV) [sometimes called Total Insured Value] is the complete value of property, inventory, equipment, and business income covered by a company’s insurance policy(ies). Should one insurance company be the insuring carrier for all these policies, it is the maximum amount that they would pay out if there were a covered actual total loss. In other words, if your insured property was damaged or destroyed to the point it could not be restored or recovered.

Seems pretty straightforward, right? Yes, but as an insured, it is critical for you to understand the proper calculation of your TIV. Leaving out key pieces of equipment or inventory might result in an important difference in the amount you for which you are covered.

In most insurance policies, there is a Valuation Clause that will contain a formula for your TIV. You may need to review tax records, purchase orders, sales records, and other financials to properly calculate the amount. In the case of business income, a 12-month window is typical to determine revenue generated for insurance purposes.

As you might expect, a higher TIV comes with a higher insurance premium. Some business owners decide on a lower TIV amount or a higher deductible to offset costs. But there are concerns with both these approaches.

Choosing a Lower TIV

Opting for a lower than actual TIV may save you on the front end, but should you have a total loss, consider what you may be faced with:

  • Is your property completely paid off? If not, what might you owe?
  • Will you have bills for inventory, taxes, or other outstanding debts that still need to be paid?
  • Is there compensation for yourself, your family, and/or your team that will still be needed?
  • Will you want capital to restart this or another business?

Those items can add up quickly. Saving several hundred dollars per year could cost you thousands in this scenario.

Choosing a Higher Deductible

Similarly, costs might be high and money might be tight if you have a total loss that puts a stop to your revenue. A higher deductible might save you a small amount per year, and those savings may take many years to equal what you would forfeit should a total loss claim occur.

In addition, some policies contain co-insurance provisions for claims. This means that in addition, to your deductible, you are responsible for a certain amount of the TIV. Talk with your agency to better understand how co-insurance may factor into a potential claim, as it may give you a better perspective on how much money you might actually receive for a total loss.

When making your decision on TIV, start with the most accurate calculation possible. Then determine the amount of risk you want to take compared the amount you want to place on your insurance policies. This can give you a better perspective on the value of your coverage.

Reach out to Brandon Patterson on our team to discuss your TIV and better understand how you can be covered if the worst were to occur.

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

Posted on by Ownby Insurance Service

If you own, operate, or manage a business, you know how important it is to track 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.

Business Income Coverage Examples

Let’s take for example, 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.

Named Perils

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.

Understand Your Business Income Coverage

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!

Posted on by Ownby Insurance Service

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 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-earthquake insurance policies.

It’s important to know that earthquake 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 earthquake insurance 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.

Earthquake Insurance Costs

The cost of earthquake 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, earthquake insurance needs to be reviewed and compared to understand the coverages and costs.

Does your home or business property need earthquake 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.