Friday, November 23, 2007

Securing Your Property with a Landlord's Insurance

Renting out a property has proven to be one of the most profitable investments in the last decade. The risks associated with poorly behaved or unconcerned tenants make rental properties an investment that is fraught with risk and this is complicated by the lack of risk cover available on the market. Landlords insurance that does the job and protects investors from the risks posed by property investment and is essential to maintain profitability.

Even with a damages deposit, when a tenant vacates a property the landlord may still be left with a large bill to put the property back into letting condition for any future tenant. A security deposit may be as much as two or three months rent, but this may not cover the cost of a new bathroom or a new kitchen that has to be replaced or even a basic redecoration and replacement carpets beyond normal wear and tear.

Many tenants carry no insurance of their own, safe in the knowledge that the landlord must by law cover risks associated with maintaining the property in habitable condition. If a property defect causes any injury to a tenant, for instance tripping over loose carpet on the stairs, then it makes sense to a tenant to sue the landlord for damages and there are numerous judgements in favour of tenants just for this sort of situation.

Insurance for landlords has developed in leaps and bounds over the last decade as the buy to let market has matured. Settlements and awards in favour of tenants have become financially viable for lawyers to pursue because there is an investment property that can be attacked to release payments for damages. Insuring the property is not just about protecting it from fire and theft but unscrupulous claims that can be very costly to defend.

The real value of an insurance policy is not the cost of the premium but the ability and record of the company to settle any claims. Investors need to remember that every week that passes by with a claim unsettled is another week of lost income while the associated mortgage costs still have got to be met. You need to pay very close attention to the claims record of your insurer and how well they handle claims, including whether you need to pay out the costs of works from your own funds before you are reimbursed when considering who to use as your insurer.

You need to look very carefully at the various factors that apply to a landlords insurance policy. Make sure that the cover that is offered by a policy provider is adequate to meet your needs and any possible claims by your tenants. The premium may be fantastic, but you really need to get to grips with how well they are going to handle any claim that may arise in the future or risk losing your hard earned investment waiting for paper pushers to make a decision.

The most obvious aspect of insuring your investment property is the condition and risk factors that affect the physical property itself. Too often, not enough consideration is paid to the incoming tenants who are trusted with your investment on a daily basis and may not have your hard earned property investment too high on their own list of priorities.

Closely scrutinise any policy documentation and take pains to compare like with like when choosing your insurer and policy. Do not settle for second best when it comes to insuring your buy-to-let property and remember, you are not just insuring bricks and mortar but your own financial security.

Saturday, November 17, 2007

Choosing The Right Agency Is As Important As Choosing The Right Insurer

Is your business insurance plan wasteful or wanting? Either way it could end up costing your company thousands of dollars. When it's time to review your current program, be sure to avoid the two most common problems:

• Excessive insurance and overlapping coverage

• Under-insurance and coverage gaps

In today's complex commercial insurance marketplace, many employers enlist an insurance agency to help them find the insurance coverage they need. But how do you know your insurance agency is giving you the right advice?

Hopefully, you'll find an answer to that question before it's too late. It is prudent to take some time upfront to evaluate your insurance agency and its use of strategies and services for helping protect your business and your bottom line. Here are three key areas for your insurance agency to look for opportunities:


The many different ways your company can suffer a loss and the multitude of insurance products available to protect you can be overwhelming. Add obtuse insurance concepts and lots of legal language, and understanding your policies becomes a job for a specialist. The experience, knowledge and diligence with which the agency undertakes this responsibility can ultimately save or cost the company money.

• In planning your insurance program, does your agency use a systematic survey/ review of operations, physical facilities and records to identify exposures? Leased equipment, for example, is commonly under-insured-has your agency asked if you have any?

• In addition to providing core coverages, does your agency identify peripheral exposures and coverages common to your industry?

• Does your agency discuss with you and pay special attention to areas where both gaps in coverage as well as redundancies commonly occur? (If your agency aggressively markets added coverages, it would not be uncommon to discover you have multiple policies covering the same thing.)

Most commercial property insurance policies include a mechanism whereby the more risk you are willing to self-insure in the form of a deductible, the lower the premium. The appropriate balance between deductible-related premium savings and out-of-pocket loss coverage is unique to each company. Rather than just pass along policies with "standard" deductible levels, skilled agents recognize both the premium savings and increased exposure that higher deductibles represent and undertake in-depth analysis to achieve the best balance.


Many business insurance policies provide coverage for exposures that change over time. Without regular monitoring and adjustment, these "time element coverages" can rapidly become inadequate or excessive-exposing your company to the cost of an under-insured loss or premiums for coverage you don't need.

If your business is growing, for instance, loss of income coverage (in the wake of an insured peril) based on sales three years ago may not come close to covering the lost income you might suffer if a fire shuts down a production line next week. If your sales have contracted, you may be paying for a level of insurance you can't use. A good agent proactively initiates annual reviews of all time element coverages, working with clients' financial officers and others to assemble an up-to-date picture of time element related insurance needs.

• Has your agency identified for you all the time element coverages included in your policies along with the factors that need to be monitored to assess appropriate insurance levels?


Once in place, commercial insurance is an ongoing, active function. There are claims to process; changes in equipment that require corresponding coverage adjustments; certificates, proofs of insurance and bonds to be issued; and questions to be answered. In fact, contact with your agency may be frequent. And if time is money, timely service is money saved.

• Does your agency guarantee your phone call will be returned no later than the end of the next business day?

• Does your agency provide a designated account team with multiple contacts that assures a person with direct familiarity with your company and coverage is always available?

• Does your agency provide offices and resources in other states where you have facilities or are bidding work?

• Are certificates of insurance and ID cards available online 24/7?

If your agency can't say "yes" to the questions posed here, you may want to re-evaluate the relationship. A sound risk management and insurance program is vital for a strong foundation for success.

Monday, November 12, 2007

Essential Insurance for Small Businesses

Whether you are just starting a new business or running an existing one, there are many kinds of insurance that are not only prudent to maintain - they are required by law. It's important to consider the insurance needs of your business, your employees and your customers, both for your peace of mind and to keep your business on a proper legal footing.

One insurance essential of all small businesses is employer's liability insurance, which covers the cost of compensation for employees should they become injured or ill because of the work that they do for you. This insurance is legally required for any small business that employs even a single person outside of your immediate family. It will protect both your employees, who will be eligible for compensation for injuries and illnesses sustained at work, and it will protect you. You should not even consider operating without this insurance or you could suffer being shut down and heavily fined, even if you do not have any employees that make a claim. The minimum amount of cover you must have by law is £5 million, which covers compensation payouts and legal fees, but taking more coverage means that you will be less likely to run out of money before any legal case is settled. Most policies automatically provide cover of £10 million.

Public liability insurance is equally important, and will cover any injuries that a member of the public sustains on your property, plus any damage to their personal property that is caused by your business. Compensation for damages and injuries like this can run into the millions of pounds with legal fees adding to the total.

You should also look into office cover that will take care of your office building (if you own it) as well as the equipment and other contents of your office in case of flood, fire and theft, etc. A good policy will cover your office equipment like furniture and copiers, your lost income because of business interruption, and the loss of any cash that was on the premises.

Professional indemnity insurance or product liability insurance are also both important to doing business in an era where lawsuits are the norm. Professional indemnity insurance covers the advice and the services that you and your company provide, protecting you from bad advice, mistakes, and misinformation that lead to any kind of damages, harm or loss to your customers. Product liability insurance covers the more tangible, with cover that protects you from damages sought against you because of a fault with your product.

As a business, you are liable for the damages that are caused by the products you sell or the services that you offer, so you should take care to maintain liability cover for your own legal and financial security. The right insurance can protect you from the high costs of compensation or a lawsuit due to anything from a mis-calculation to product spoilage or bad manufacturing quality, keeping you open for business to fix your mistakes and move forward unhindered.

Sunday, November 11, 2007

Inside the Mind of an Underwriter - Demystifying the Underwriting Process

Have you ever wondered who that person is behind the curtain? Contrary to what you may think, it's not the Wizard, but the insurance company underwriter. Believe it or not, there is a real, live person on the other end of your insurance contract. The underwriter is the central figure in determining what you will pay for your insurance. Wouldn't it be nice to know what makes an underwriter happy? Conversely, wouldn't it be nice to know what upsets an underwriter?

There is a direct correlation between the quality of the information given to your underwriter, and the price you pay for insurance. Like the old adage, the less you put in, the less you get. The more you put in, the more you get. I know what a lot of you are thinking; "I'm not the one filling out the application, the broker is." This is of course true; but if you give the broker poor information, the underwriter will get that same poor information.

As brokers, we complete applications with an endless supply of "underwriting questions." If you've ever quoted your insurance, you know exactly what I'm talking about. What seems mundane to you is very important to the underwriter. I'm sure you've asked yourself (and your broker), "why do they want to know that?" Trust me; there are valid reasons for the underwriter's questions. Bottom line, the better the information given, the better the quote.

Are there multiple named insureds? Wouldn't it be wise to list all of the named insureds, and give a description of what they do? If you know you are going out to bid, make sure you have at least four years of currently valued loss runs before you ask someone to quote. There is nothing worse than sending up a submission without losses, and then finding out three weeks later that your losses are a lot worse than we were led to believe. You know the agent is going to ask for a complete drivers list; why not have it ready? Are you assigning markets so competing agents don't go to the same companies? You should.

Have you ever taken a good hard look at your website? Is it completely accurate? Are there maybe some things on the website that aren't completely true? Business owners are proud of their company and their capabilities. Sometimes they have a tendency to boast about things they don't (or haven't) done. For example, a manufacturer might say he is capable of producing products for the aerospace industry, when, in fact, they never have. Are they capable? Sure they are, but they never have.

Underwriters actually look at your websites. In fact, good underwriters go over it with a fine toothed comb. What might be prideful boasting to you (above example), is a red flag to the underwriter. Do you think your underwriter is going to be aggressive, or even quote an account that does work in the aerospace industry? Not in a million years! I know it's tempting to overstate your capabilities, but realize your prospects aren't the only one's looking at your website. Only highlight what you actually do, nothing more, and nothing less. Don't give the underwriter reasons to ask even more questions, especially it they are unwarranted.

I would be remiss if I didn't mention the relationship between the underwriter and the loss control representative. Loss control is the eyes and ears of the underwriter. Very rarely does an underwriter get to visit with an insured either during the quoting process, or after they've become a customer. They rely on the findings of the loss control department. If you want to impress the underwriter, you must first impress loss control!

You should do everything you can to make sure the loss control visit goes smoothly. The loss control rep's job is to do a physical inspection and report back to the underwriter with his/her findings. Do you have bad housekeeping? Are the proper safeguards in place? What is your attitude towards safety and the minimization of losses? Are you receptive to their suggestions? Are you confrontational? Believe me, all of these things get back to the underwriter and are reflected in the pricing.

One of the worst things an insured can do is quote his insurance every year. I know the temptation is to save money. If your broker is doing his job, and not taking you for granted, he will work with the existing carrier on a competitive insurance program. If you quote your insurance every year, you are doing yourself a disservice. Insurance carriers like to quote business they think they have a legitimate shot at writing. Say in 2004 you quote your insurance with a few carriers. In 2005 you do the same thing again. In 2006 you decide to go out to bid again. Believe me; the carriers who quoted, and didn't get your account in the two previous years, more than likely won't be quoting in that third year. They will do one of two things: either not quote, or they'll just throw out a number without dedicating any time or energy to your account.

I think everyone can relate to how an underwriter thinks when it comes to a company that quotes every year. I'm sure most of you have "suspects" of your own that always want you to give them a price, with no intention of ever giving you the business. They simply want to keep their current supplier "honest." Do you yourself put much time and effort into these accounts? The answer is probably no, so why should an insurance company be any different? By quoting your insurance every year you get a bad reputation, and no reputable broker will be willing to work with you. I know it's tempting, but don't do it! Of course if your relationship with your current broker has soured, then by all means you should look elsewhere. Insurance companies look at the relationship as a partnership and like companies that are willing to work with them. I'm not saying don't look at your insurance, just don't do it every year.

My last point is the underwriter's time. Underwriters need time to effectively underwrite an account. Ideally, they like 2-3 months lead time. Reason being, if you wait until the last minute, and your insurance comes up during a busy time of the year, they might not have the resources available to provide you with a competitive quote.

Most underwriters are good at what they do, and they should be respected. Typically, insureds don't know what makes an underwriter tick, and hopefully this article has enlightened you as to how they operate behind that "curtain."

Saturday, November 10, 2007

What's The Best Business Insurance Coverage?

Running a small business is a gamble where, as a small business owner or manager, you try to undertake the least amount of risk you can with an eye toward reaping the greatest gain. Small business insurance is your best tool for keeping your risk level low. Since this isn't a game for you or your employees, small business insurance isn't a luxury but an absolute necessity. So finding the best small business insurance coverage for your company becomes your goal.

When considering what the best coverage to have is, you need to start with the basics: general liability insurance, property insurance, and workers' compensation. The purpose and function of the latter two are relatively straightforward.

Workers' compensation insurance grants monetary awards to employees who are injured or disabled due to job related circumstances. This coverage is often required and may be regulated by state laws.

Property coverage for small business insurance guards against the loss of physical assets due to fire, accident, or theft. It allows you to replace or repair furniture, office equipment and supplies, inventory, and sometimes even the building itself. This type of small business insurance may either cover your loss at the replacement value of lost items or for their depreciated cash value. The best option for you depends on the capital you have on hand. Taking depreciated cash value coverage, also known as actual cast value (ACV), will save you money in the short term from lower premiums but will cost you valuable time in the event of an actual loss. Additionally, the items you need to replace may not be available at the depreciated cost no matter how much time you expend searching for a comparable replacement, and you may end up with substantial out-of-pocket expense. When possible, replacement cost small business insurance coverage is the superior alternative as it transfers a greater degree of risk to the insurance company, which is the purpose of having insurance in the first place.

General Liability small business insurance is a little more complicated. It protects you against legitimate or fraudulent lawsuits brought against your company for:

• Bodily Injury - Harm to a non-employee due to an action or inaction on the part of your company, including a fatal injury. Note that harm to an employee is covered under your small business insurance workers' compensation plan.
• Personal Injury - Which includes, but is not limited to, libel, slander, wrongful entry, false imprisonment, and malicious prosecution carried out by your company or an agent of your company.
• Property Damage - Destruction of privately owned items or real estate by an action of your company or by the action of an employee while carrying out his or her duties for your company.
• Advertising Injury - Harm to an individual or a corporate body due to your company's advertising activities, including character defamation, plagiarism, and unfair competition.

General liability small business insurance not only covers damages assessed against you, but also your legal fees. Even if you win a lawsuit, a court case can be quite expensive. With a general liability policy, you are compensated for attorney's fees, court costs, witness fees, and loss of earnings while in court.

How much general liability small business insurance should you get? The simple answer is: As much as you can afford. You certainly want enough to cover the dollar amount value of your business. One suggested baseline is a minimum of one million dollars per incident and three million aggregate, but this answer is too simplistic to cover the breadth of eventualities that comprise every small business owner's risk. Individual cases will have different exposure and insurance needs. Does your firm interact extensively with the public? Do you manufacture goods that could be dangerous if handled incorrectly? You should also consider recent court awards for your type of business and in your locale as well as the general liability requirements of companies you may do business with. To determine the best option for you, consult with your small business insurance agent.

In most cases, a business owners policy, or BOP, will be the most affordable option. A BOP combines property and general liability coverage, as well as other useful coverage such as vehicle coverage, into one small business insurance policy. Generally available to companies not engaged in high risk activities, a BOP is simpler for you and more efficient for the insurance company, resulting in lower premiums.

Friday, November 9, 2007

When Minimum Coverage Is Not Enough For Your Business

The name of the game in insurance is risk management. As a small information technology business owner or manager, you transfer the risk of loss to an insurance company in exchange for a premium. Of course you don't want to spend more on that premium than you have to; nobody does. But skimping on your liability insurance could cost you your business. Litigation costs are rising, particularly for IT companies. More and more businesses are completely dependent upon their software. If that software fails, the IT Company which supplied it is going to end up paying. But if that IT firm has the right professional liability coverage, then it's their insurance provider who does the paying.

So, are you one of the lucky ones who can get by with having only the minimum amount of liability insurance coverage? That depends on your assets but even more on your exposure. And if you're running a high tech business, don't count on it.

You need to consider both professional liability and general liability insurance. General liability insurance protects you in the event that your business is responsible for a bodily injury or the destruction of property. If your firm is open to the public or if your employees regularly interact with other companies or with the general population, you'll want to bump up this coverage. If the manufacturing of your product is hazardous, again, you'll want to raise your liability insurance. Most agents will be able to advise you on how much general liability insurance you'll need.

But in this modern world, only having general liability insurance isn't enough. It doesn't protect you against claims that your product failed or did not perform as advertised. And even if your product works perfectly, defending against a spurious lawsuit can easily cost you hundreds of thousands of dollars in legal fees. To protect you in these situations, you need professional liability coverage. Okay, but how much?

You need to consider where your product will be sold. With the Internet, we often take doing business in a global marketplace for granted. However, most minimum coverage professional liability policies only apply to North America (assuming you reside in the United States). Furthermore, minimum coverage will not only have limits on the amount payable per case, but also on the aggregate amount payable per year.

A few court cases could put you over that limit. Let's look at this possible IT firm scenario:

• Your software lacked adequate security and allowed hackers access to your client company's customers' financial information-case settled for $300,000 plus legal fees.
• Your software corrupted data in a client's database-case settled for $700,000 plus legal fees.
• Due to your court cases, you cannot make a deadline in your contract to another business- case settled for $500,000.
• Worst of all, your company's software does not live up to the extravagant claims of your salesman, and the case goes to a jury to determine damages-judgment against your firm for several million dollars plus legal fees.

That's a lot of money, more than most small businesses could pay. While you hope that your product will perform better than the one illustrated above, liability insurance of any kind isn't about hope, it's about the realities of the industry.

Thursday, November 8, 2007

Don't Ignore This Otherwise You Will Lose Everything

Each and every type of business whether big or small needs insurance protection. Insurance is of equal importance for all business activities, assets and individuals working in it. Insurance capacity of a business firm depends upon its nature and size. There are number of risks all around us and we don’t know their time, date of their happening. So, to cover such events, insurance is needed.

Purchasing business insurance is very important task and such decisions are to be formulated properly. The business insurance should be of such type, which covers each and everything of your business. If the business needs were not properly investigated before taking or applying for business insurance, it would result into wastage of money or death of your company.

There different types of insurance policies available for your business include: Property insurance means protection of your assets or business properties from theft, natural calamities or physical damages. General liability insurance protects business proprietors and its operators from various liability coverages. Workers' compensation insurance protects a business to wrap different job-related damages or sicknesses. Auto insurance is designed to insure business vehicles. The other type of business insurance includes health insurance, key person life insurance, business interruption insurance, excess liability coverage, employment practices liability coverage and travel insurance.

There are numerous providers of business insurance so, it becomes important to select best insurance company providing all insurance services under one roof and on cheap rates. A business firm has to pay insurance premium, which is based on the degree of risks involved. Firstly the insurance company appraises the situation and then decides the premium rates.