National Risk Management and Associates

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Business Income & Severe Weather Events

Courtesy of iii.org

With predictions of an above-average hurricane season issued by Colorado State University this week, businesses need to take measures to prepare and increase their chance of surviving, according to the Insurance Information Institute (I.I.I.).

Forty percent of businesses do not reopen after a disaster and another 25 percent fail within one year, according to the Federal Emergency Management Agency (FEMA). But by taking action now to prepare, businesses can increase their chance of getting back on their feet financially and keeping their doors open.

The I.I.I. and the Insurance Institute for Business & Home Safety (IBHS) recommend the following steps:

Develop a Business Continuity Plan

Having a business continuity plan is vital for companies to prepare for, survive and recover from a hurricane. Use IBHS’ free OFB-EZ® (Open for Business) business continuity planning tool to create a plan that focuses on recovering after the initial emergency response. Share your plan with employees, assign responsibilities and offer training so your workforce can collaborate in the recovery of your business. Conduct regular drills to assess and improve response.

Maintain Key Information Offsite

To get your business up and operating as quickly as possible after a disaster, you’ll need to be able to access critical business information. In addition to backing up computer data, keep other critical information offsite such as your insurance policies, banking information and phone numbers of employees, key customers, vendors and suppliers, your insurance professional and others. If you have a back-up site, make sure it’s sufficiently far away so as not to be affected by the same risks that threaten the primary location. Use IBHS’ free EZ-PREPTM severe weather emergency preparedness and response planning toolkit with checklists that can be customized for your company to be sure you have a well-organized plan and are ready to respond when disasters occur.

Create a Business Inventory

Include all business equipment, supplies and merchandise—and don’t forget commercial vehicles.

Review Your Insurance Coverage

The time to review your insurance policy is before disaster strikes and you have to file a claim. It is important that your business have both the right amount and type of insurance for its needs and risk profile. There are two types of policies you can buy as a business owner:

A Business Owner Policy (BOP) is commonly used by small businesses. BOP policies combine property and liability coverage in one policy and are usually less comprehensive than a commercial policy.

A Commercial Multi-peril (CMP) policy combines several coverages—such as commercial property, liability, inland marine and commercial auto—into a single policy. It is typically less expensive to buy a CMP policy than to buy the coverages individually.

Opt for Replacement Cost Coverage

Most commercial property policies provide either replacement cost coverage, actual cash value coverage, or a combination of both. Replacement cost coverage will pay to rebuild or repair property, based on current construction costs. Actual cash value coverage will pay to rebuild or replace the property minus depreciation. Depreciation is a decrease in value due to wear and tear or age. If your business is destroyed and you only have actual cash value coverage, you may not be in a position to completely rebuild.

Consider Tenant Coverage

If you rent or lease a building, consider tenant coverage, which will insure your on-premises property, including machinery, furniture and merchandise. The building owner’s policy will not cover your contents.

Don’t Forget About Flood Insurance

Flooding is not covered by standard commercial insurance policies, so consider buying a separate flood policy. If you’re located in a high- to moderate-risk flood zone, you could be protecting your business from devastating financial loss. Commercial flood coverage is available from the National Flood Insurance Program (NFIP) and provides up to $500,000 in building coverage and $500,000 for contents. You can also get coverage through private insurers.

Visit the Business Insurance section of the I.I.I. website for more information.

RELATED LINKS

Facts and Statistics: Catastrophes

Articles: When Disaster Strikes: Preparation, Response and Recovery; Does My Business Need Flood Insurance?

SOURCES:

Colorado State University

Insurance Institute for Business & Home Safety

National Flood Insurance Program

National Hurricane Center

Seasonal Hurricane Predictions

Small Business Administration

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Renting Your Home through Airbnb & Your Insurance

Courtesy of iii.org

Before you consider renting out your home, your guest room—or even your couch—first contact your insurance professional so you fully understand the financial risks and can take the proper precautions. Here’s some general information to jumpstart your insurance conversation.

If you are considering renting out your home, your guest room or even your couch your first step should be to contact your insurance professional. Peer-to-peer home sharing opportunities such as Airbnb can be a great way to bring in extra money and are increasingly popular; however, they can also leave you financially vulnerable. If your renter starts a fire and damages your property or is hurt while renting your home, will you be protected?

Peer-to-peer home rental

Peer-to-peer home sharing opportunities such as Airbnb are increasingly popular and can be a great way to bring in extra money. However, they can also leave you financially vulnerable. If your renter starts a fire and damages your property or is hurt while renting your home, will you be protected?

Standard homeowners and renters insurance policies are designed for personal risks, not commercial risks. Some insurers now offer a home-sharing liability insurance policy that can be purchased on a month-to-month basis, but there may be exclusions and limitations, so read the policy carefully. If you plan to rent out all or part of your home on a regular basis, many companies will consider this a business use and you may need to purchase a business policy—specifically either a hotel or a bed-and-breakfast policy.

If you are doing the renting

If you are the one using a peer-to-peer network to rent a space from someone else, check your own homeowners or renters insurance policy. In most cases, if your personal possessions are stolen or damaged off-premises, you can simply file a claim with your own insurer. And if you accidentally injure someone, you should also be financially protected.

Occasional home rental

There may be times when a major event in an area—the Super Bowl, say, or a graduation at a major university—depletes local hotel space. In these cases, it’s fairly common for people to rent out their home or part of it for the extra cash it brings in.

Many insurance companies take this situation into account when creating a homeowners or renters policy and, with sufficient advance notice, will extend your coverage to the renter on a one-time basis. Other insurance companies may require the purchase of an endorsement to the policy to provide broader coverage for the renters in your home.

In both cases, be sure to let your insurance company know ahead of time, so you can be prepared.

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Insuring Your Student

Courtesy of iii.org

With burglaries constituting approximately 50 percent of all on-campus crimes, it’s important for college students and their parents take steps to prevent theft, adhere to safety measures—and review their insurance coverage.

Campus coverage basics

It’s best to consult your insurance professional for the details of your family’s specific coverage and where you might need additional protections, but here are some general guidelines:

  • Students who live in a dorm are covered under their parents’ standard homeowners insurance policies – That is, their possessions are protected by “off premise” coverage. However, some homeowners policies may limit this amount of insurance, so make sure you understand your own policy.
  • Students who live off campus are likely not covered by their parents’ homeowners policy – Your insurance professional can tell you whether your homeowners or renters policy extends to off-campus living situations. If it does not, to protect student belongings, those living off campus may need to purchase their own renters insurance policy.
  • Computers and smartphones may carry stand-alone insurance – If you’re getting these items new, at the time of purchase you may be offered insurance or other protections against theft or loss. Also, check the credit card used for the purchase, to see what protections might be available.
  • Consider a stand-alone policy specifically designed for students living away at college – This can be an economical way to provide additional insurance coverage for a variety of disasters.
  • If your college-bound student is leaving the car at home, make sure to tell your insurance agent – Depending on how far he or she is going away to school, you might be eligible for a premium discount.
Take pre-campus precautions with belongings

It’s better to prevent a loss than to deal with the aftermath. To help prevent loss:

  • Leave valuables at home, if possible – While it may be necessary to take a computer or sports equipment to campus, other expensive items—such as valuable jewelry, luxury watches or costly electronics—should be left behind or kept in a local safety deposit box. These items may also be subject to coverage limits under a standard homeowners policy, so if they must be brought to campus, consider purchasing a special floater or endorsement to the homeowners policy to cover them.
  • Engrave electronics with IDs – Permanently engraving a name and other identifying information on computers, televisions, smart phones and other electronic devices can help police track stolen articles.

Guard against theft or damage of personal belongings while on campus

According to the National Center for Education Statistics, burglaries constitute more than 50 percent of all on-campus crimes. In addition, carelessness can cause other types of damage. To help prevent losses, students should:

  • Always lock dorm room doors, and keep the keys with you at all times – Know that most dorm thefts occur during the day, and even if you leave briefly, lock up. Share the theft statistics with your roommates, and get agreement that they’ll do the same.
  • Don’t leave belongings unattended on campus – Classrooms, the library, the dining hall or other public areas are the primary places where property theft occurs, so keep book bags, purses and laptops with you at all times.
  • Buy a laptop security cable and use it – A combination lock that needs decoding may be just enough to dissuade a thief.
  • Be aware of fire hazards – Most campus fires are cooking related so be careful about the types of hot plates or microwaves you to bring to school, and how you use them.

 

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Classic Cars & Auto Insurance

Courtesy of iii.org

A classic, custom, collectible or antique car requires insurance that reflects your vehicle’s uniqueness and value. If you own—or are thinking of owning—a special set of wheels, find out about the kind of policy you need.

What types of vehicles need special insurance?

A classic, collectible or antique car is no ordinary car—and regular auto insurance is not sufficient to protect such a vehicle against damage or loss.

That said, there is no uniform definition of a classic car. If a car’s value exceeds its original selling price, then it might be considered collectible and a candidate for specialized classic car insurance. In general, vehicles that might warrant classic car auto insurance include:

  • Antique and classic cars, usually at least 25 to 30 years old
  • Hotrods and modified vehicles
  • Exotic and luxury autos—think James Bond
  • Muscle cars
  • Classic trucks

You might also seek specialized insurance for vintage military vehicles, classic motorcycles and antique tractors.

Qualifying for classic car coverage

A car’s age is not enough to qualify for specialized classic car insurance. While requirements differ from company to company, most cars need to meet the following criteria in order to qualify:

  • Limited use – Your classic car cannot be used for everyday commuting or errands, and your policy may include mileage limitations and proof the car is being properly garaged if you do travel with it. In some cases, insurers may require that you also own a primary car for everyday use.
  • Car shows and meetings – The limited use provision of a classic car policy allows for travel to car shows and auto club meet-ups; however, this coverage may be restricted by some insurers. If this is the case, there are insurers that can provide specialized coverage for car shows and meetings. Before choosing a classic car insurer, it’s worth checking whether they have travel restrictions if you plan to take your car on regular, multi-day, high mileage drives.
  • Secure storage – When not in use, your special vehicle must be stored in a locked, enclosed, private structure, such as a residential garage or storage unit.
  • A clean driving record – You may be disqualified from classic auto insurance if you have serious offenses on your driving record, such as reckless driving, repeat speeding violations or driving while intoxicated.

Not every vehicle, however special, will meet the qualifications of every insurer. For instance, some insurers may not cover vintage off-road vehicles. Insurers may also decline to insure vehicles that are in poor condition or have been previously damaged.

What you should know about classic car policies

Your classic car policy will include provisions found in standard auto insurance policies, notably property damage and bodily injury liability coverage. But there are some differences, as well:

  • Your car’s value – Because each car’s condition is unique, there is no set “book value” for specific makes and models. The first step in insuring your classic car is for you and your insurer to reach an agreement on the value of the vehicle. This value will be specified in your policy and your car will be covered up to that value without depreciation.

Note that, unlike everyday vehicles that depreciate over time as you add miles to them, classic cars may gain value. Make sure you adjust your coverage as the value of your auto appreciates.

  • Specialized repair or restoration – Your policy should you the flexibility to bring your vintage Mercedes, Ferrari or Corvette to a specialist—even if the rates may be twice, or three times, the cost of a typical car repair at a traditional auto body shop.
  • Special towing and spare parts – Coverage for towing is commensurate with the special demands of transporting a classic car. Spare parts coverage, too, needs to be aligned with the cost of replacing valuable and perhaps hard-to-find vehicle components, such as wheels, transmissions, and engine parts.

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Hurricane Insurance and You

Courtesy of iii.org

  • Florida accounted for 13 percent of all U.S. insured catastrophe losses from 1987 to 2016: $70.8 billion out of $364.3 billion, based on data from the PCS division of ISO. (Adjusted for inflation by ISO using the GDP implicit price deflator.)
  • Six of the 10 costliest hurricanes in U.S. history have impacted Florida. Four of these storms occurred within just two years: 2004 and 2005. (See chart.)
  • The costliest hurricane, based on insured property losses to Florida, was 1992’s Hurricane Andrew. It caused $25.4 billion in damage to Florida and Louisiana (in 2018 dollars). (See chart.)
  • Standard homeowners policies typically do not cover flood damage. Flood insurance is covered by the federally managed National Flood Insurance Program, but private flood insurance is becoming increasingly available.
  • Florida leads the nation in the number of flood policies, according to the National Flood Insurance Program, with about 1.8 million policies in force in 2017.
  • The number of people living in coastal areas in Florida increased by 4.2 million, or 27 percent, from 15.6 million in 2000 to 19.8 million in 2015, according to the U.S. Census Bureau. About 98 percent of the total population of Florida lives in one of the coastal counties.
  • In Florida, 2.8 million homes were at risk in 2018 for storm surge damage from hurricanes up to Category 5 strength, according to CoreLogic, Inc. These homes would cost $552.4 trillion to completely rebuild, including labor and materials.
  • Given the growth in the number and value of insured property, a repeat of the hurricane that devastated Miami in 1926 would have resulted in approximately $130.2 billion in insured damage in 2016, according to Karen Clark and Co.
  • After its establishment in 2002, when the state passed legislation combining two separate high-risk insurance pools known as the Florida Windstorm Underwriting Association and the Florida Residential Property & Casualty Joint Underwriting Association, Citizens Property Insurance Corp. (CPIC) experienced exponential growth. As a result, Florida Citizens has evolved from a market of last resort to the state’s largest property insurer.
  • Florida Citizens Property Insurance Corp. provides multiperil and wind-only insurance coverage to Florida homeowners, commercial residential and commercial business property owners.
  • Direct homeowners insurance premiums in Florida written by Citizens was $460.9 million in 2017 down from $795 million in 2014.
  • Citizens was the state’s fourth leading homeowners insurer in 2017, with a market share of 5.0 percent, down from 9.1 percent in 2014.
  • Florida Citizens had 482,765 policies with an exposure of $112.3 billion in fiscal year 2017, according to the Property Insurance Plans Service (PIPSO).

 

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24 Hour Hotline: (407) 415-8528

National Risk Management & Associates
220 Magnolia Avenue
Sanford, FL 32771
Phone: (407) 767-2950