Tag: Business Owners Package

Retails Sales:

Supply chains and logistics failures. How contingent business income interruption insurance coverage can help cover your loss.

The busiest sales season of the year is fast approaching for retail sales.   If store based retailers don’t have sought after products to sell, buyers are unhappy and leave; or they just order online and have it delivered. Unfortunately, they are not buying merchandise from you if you don’t have what they want. So here you are depending on your supply chains and their ability to manage logistics successfully which includes timely delivery of merchandise to you.  But what if those companies fail to deliver?  Well, you can wait for another type of delivery.

Contingent business income interruption insurance

 

But chance are slim that the goods will arrive in time and you will most likely loose sales.

However, as a realistic alternative, you could purchase a type of little known insurance.  You would think it might be called supply chain failure insurance but it isn’t.  It is called contingent business interruption insurance, or CBI which is “an extension to other insurance that reimburses lost profits and extra expenses resulting from an interruption of business at the premises of a customer or supplier.” See https://www.irm.com/articles/expert-commentary/contingent-business-interuption-gettingallthefacts

Usually commercial general liability and business property insurance are the basic types of insurance a business needs along with workers compensation if the business has employees and inland marine coverage if they have specialized equipment.  There are also various types of additional insurance coverage, usually added by endorsements, which may be appropriate for your business depending on your specific situation. Two of the available endorsements are business income interruption and contingent business interruption.

Business income interruption insurance is a type of insurance which is not covered by CGL or business property. So an ISO endorsement is needed to cover the loss specifically.  This type of insurance covers a direct loss of income at your business location and it can be part of a Business Owners Policy or Commercial Package, if designed in that manner. There are conditions which must be meant for this coverage to kick in, which depend on the loss being directly to the insured’s property and actually sustained. Therefore, a loss which does not impact the insured’s owned property is not covered.

But contingent business income interruption insurance can cover your losses due to a supply chain failure.

 

This is a separate and distinct endorsement which only applies when the insured is not the owner of the property which suffers the actual physical loss.   It specifically applies if the business supply chain is disrupted and income is lost by the insured due to the supplier’s failure to deliver for various reasons such as cargo theft, equipment failure, plant shutdown, cyber-attack or weather-related disasters.  A direct business income interruption endorsement will not cover you in this instance.  These two types are mutually exclusive and only one can actually apply in any given situation.

In older policies and some current policies, insureds had to purchase both primary direct business interruption insurance and a second specific endorsement for contingent business income interruption insurance using the proper ISO form. The insured business had to have the underlying endorsement for direct business loss of income and the amounts specified in the original direct loss endorsement determined what amount your indirect loss limits were. https://marsh.com/insights/research/business-insurance.html.

But in present times, some carriers, including the Hartford, automatically provide standard loss of business income (BI)  in their BOP with a host of additional endorsements available, specifically including Business Income for Dependent Properties (or CBI) in available options,  as well as many others. See: https://www.thehartford.com/business-income-insurance.

As dependence on supply chains evolve, claims have become more frequent. Documentation to verify the loss of income has become crucial to a successful claim.  Algebraic formulas have been developed to calculate loss and are adjusted to take into account seasonality for retail businesses.   http://www.air-worldwide.com/Blog/Supply-Chain-101–Breaking-Down-Contingent-Business-Interruption/

Businesses should be proactive before selecting a supply chain provider and be prepared for any loss.

Ask your supplier these questions before entering into a business relationship:

  • Does your supplier have a contingency plan to deal with natural and man-made disasters which interfere with delivery of goods on time?
  • Does your supplier have marine inland which will protect goods in transit and if so ask for a Certificate of Insurance and to be named as an additional insured on their policy? ( This will forestall any policy interpretation that CBI coverage is not applicable because it did not occur at the supplier’s place of business. This issue may not arise as arguably a business conducting a supply chain owns the transportation vehicle and it is the supplier’s property.  But it never hurts to be doubly insured.)
  • Ask for a Certificate of Insurance for the supply chains general commercial liability policy.
  • Does your supplier have logistics management error and omissions liability policy? If so, also obtain a Certificate of Insurance.
  • Does your supplier have cyber risk insurance which covers third party losses from business interruption if the supplier is shut down due to a cyber-attack? If so, ask for Certificate of Insurance and to be named as an additional insured.

In closing it is always a good practice to establish a good working relationship with your key suppliers and engage in any working supply chain group to solve problems both  before and after they occur.

Image Credit:  Pixabay CCO Creative Commons free for commercial use.

Automobile Repair Shops:

Ways to keep your Automobile Shop running like “Greased lightning”

Automobile repair shops are one of the most needed and highly utilized businesses in the car loving culture of America.  Despite the vast popularity of cars, the repair industry has a somewhat tarnished image.  So why do people who love cars or those who just really need a car for transportation have a negative viewpoint about automobile repair shops?

People often feel that they were mistreated and/or deceived,treated rudely, charged unfair prices; or faulty workmanship was performed. They then tend to label the whole industry as bad.  Likewise, repair shops experience all varieties of customers and are subjected to rudeness theft, fraud, disloyal clients who purchase a cheaper product from a competitor while asking you for your advice, and other unpleasant situations.    Unfortunately, this is reality in the car repair business.

Automobile Repair Shop

There are numerous types of automobile repair shops in the industry ranging from one owner with just a few employees to chains stores that feature oil changes and minor repairs to full service garages and huge dealerships. There is no one right formula for success for all.  This article focuses on general auto repair shops which provide a wide range of repairs to the public. Of course customers are vital to the industry, and you are codependent on customers just as they are on you.  What steps can you take to establish or improve the public perception regarding this symbiotic relationship?

People just really want to be treated fairly.  And they want to have their “baby” looking and running like greased lightning.  For non-musical car lovers “Greased Lightning” was the white 1948 Ford Deluxe convertible hot rod emblazoned with shooting silver and gold flames on the fenders which conveyed the image of being fast as lightning in the musical “Grease.” This car became an icon in the movie industry and to the public. It was known as a “chic magnet” by the members of the T-Birds gang led by Danny Zuko (John Travolta) in his famous portrayal of their leader.   “Greased Lightning “was restored in the movie and roared to life after the proper care and attention of the T-Birds and their shop teacher. The rival gang leader drove Hell’s Chariot, a 1949 Mercury, which featured black paint and red shooting flames.  This car was lost for a time after the movie, and later it was also lovingly restored in real life, by its original builder, after setting dormant for many years on the Paramount Lot.

You can take an example from “Grease”  and use the process of restoration to establish or rebuild a favorable image for your automobile repair shop by combining   good old fashioned excellent customer service combined with CYR (Cover your risks). A few suggestions for this are:

Antique automobile repair shop

Set the bar for a pleasant customer experience

  • When a potential client enters, greet and assist them or indicate you will be with them very shortly.
  • Direct them to the waiting area. If you provide coffee or water say so or post the price.
  • Have a play area for kids if possible, with quiet inexpensive activates such as coloring.

Combine aesthetics with customer safety

  • Keep the waiting area in a safe area of the building where no one is exposed to an injury.
  • Keep the public waiting area and restroom clean and visually appealing. Routinely inspect the area for hazards/risks such as puddles on floor and use fall prevention measures.
  • Keep the outside parking lot safe, fix holes in parking lot and sidewalks, provide outdoor  lighting, routinely police the area for broken glass, contraband and contaminants, such as needles, which carry blood borne pathogens.

Learn to appreciate the customer’s input and put it to good use.

  • Ask the client what they feel is the problem, listen and acknowledge their opinion and solicit more information with questions.
  • Explain what else the problem might be and what your procedures are:
  • If you need to run diagnostics tell them upfront whether it’s free or there is a charge and why it needs to be done.
  • Be aware of client’s financial situation: If a client suddenly declines upon learning about the fee, offer them options. (Monetary embarrassment to the customer is a driving factor in their decision making) If they do not have the ability to pay immediately work with them to set a price and a time line for fixing issues one at a time if at all possible. If they cannot proceed immediately due to finances, thank them for their business let them know you will be willing to assist them when they are ready.
  • (Mechanics liens usually prevent the client from being able to simply not pay for your services).  An explanatory brochure on mechanics lien should be available that you can have the customer read.  If they want to proceed having the client sign a contract which says a mechanics lien can be used if they default is s a good risk management practice and puts the client on notice.
  • If you start work on a vehicle and have to revise your estimate let the client know ASAP and get their consent.
  • After service, advise the client of upcoming needed repairs and maintenance. A print out would be great.
  • Be patient with complaints, acknowledge and fix the problem if at all possible.
  • And try to keep calm and carry on!

My Insurance Question - Get the best answers to your Automobile Repair Shop Questions.

 Show off your talent:

  • Display large pictures of cars you have lovingly restored or fixed with their happy owner’s as well as showcasing automotive industry awards and Certificates of Membership from  industry associations which address customer excellence.
  • Display testimonials or thank you letters from clients
  • Use miniature cameras to record your employees work to prevent mistakes and complaints. Then furnish a complimentary picture for the client showing them with their car smiling.

There are many other things you can do to feature your company in a positive light and focus attention on the quality of your work.

At the same time you want to take every step possible to protect your business from any bad apples while also protecting your valued clients and employees with comprehensive insurance coverage.

  • General Auto repair shops are in the business liability category of Automotive Services and Sales.
  • The SIC Business Code would most likely be the General Automotive Repair Shops-7538.
  • The NAICS Liability Classification would be 811111-General Automotive Repair.
  • The ISO General Liability is 10073 Auto Sales, Repair and Service and the Worker’s Compensation Class code is 8380 Auto Repair.

Various types of insurance will be necessary. All automobile repair businesses will  need worker’s compensation which is mandatory if they have employees and do not have the ability to self-insure.

Employers Insurance Company has created this great video about the Workers’ Compensation Insurance needs of Automobile Repair Shops.

You will need General Liability (slips and fall) and business property.  You may want a BOP with the following:  Business income and extra expense, Hired and non-owned auto, Commercial Crime,  and Umbrella.  Be aware that some business property policies do not cover signs which are not attached to the building, so you would need a rider.

Automobile repair shops also need to determine whether they need Garage Liability, or a Garage keeper’s policy. These two types are not identical. They address different needs.  Generally speaking Garage Liability is more useful for a dealership that does auto repairs than a stand-alone auto repair shop.  Many times a dealer will need both garage liability and garage keepers if they do auto repairs.

Garage keeper’s is best for a non dealer auto repair shop which may combine legal liability, direct primary and direct excess for customer’s automobiles.  Commercial General Liability has an exclusion for client’s cars which are in the care, custody and control of an auto repair  shop  including test drives. Garage keepers covers what would be missed under the exclusionary language of the GLC policy and function much like Bailee’s insurance.

If your repairs fleets  of autos for government, large corporations or schools; most of them will require Garage keeper’s with direct primary coverage and a Certificate of Insurance.  Some may require that they be listed as an additional insured.

Cyber insurance is also highly recommended in light of the Payment Card Industry Standards and threat of data breach. You could be liable for the invasion of privacy, notification costs and damages should a customer’s data or identity be stolen.

Other types of insurance worth considering: Employment Related Practices, Moneys and securities, Accounts Receivable, Computers, Goods in transit, Valuable Papers and Records, Employee Benefit, Environmental Impairment and or sewer back up.

With all of the clients concerns and safety addressed and insured you can focus on your main priority. Making cars run like greased lightning!

Cable Installers Liability Needs

Cable Installers, are you an employee or a 1099 contractor?  (Or “The elephant hiding in the closet”)

There is a vast movement afoot in the cable and satellite installation industry to have cable installers become a 1099 contractor rather than an employee of the cable company.   See “Consider the Cable Guy”: The Grind Investigation Fund. Many major cable companies are requiring their employees to make this change involuntarily. Why you might wonder?

Well, this is a very effective cost cutting measure for the cable companies. They need people to install the systems, wiring and equipment that operate and control the media service they are selling.  This job cannot be performed without a human at this point in time. However, if cable companies utilize a fleet of 1099 contractor’s as cable installers instead of employees:

  • It reduces the employer’s costs considerably as the employer no longer collects or pays FICA or federal and state income tax on the cable installers.
  • Cable companies does not pay employer taxes in to the government.
  • Cable companies often charge the 1099 contractor cable installers for such things as uniforms, tools, equipment and use of a truck. Conversely, as an employee, the installer would most likely have received those items at no cost from the employer. These measures both reduce the cost and bring in revenue from the contractor.
  • A Cable companies also save vast amounts of money on reduced insurance payments as the burden of carrying certain types of commercial insurance switches to the 1099 contractor.  This reduces the number of employees and conversely reduces the premium cost for the employer as well.

So, if a cable installer begins working as a 1099 contractor they really are functioning as any small business owner would. The installer will need all the types of insurance that any company in the cable  installation business should carry including general liability, errors and omissions, business property, inland marine, commercial auto (if you are furnishing the vehicle), commercial property and loss of business income and perhaps an umbrella policy or a technology  policy.   As a 1099 contractor, you can obtain these as part of a business owner’s package or as standalone policies.

You should speak with your agent to gain knowledge about the best options for cable installers within the Class Codes your business comes under listed below:

Business Liability Category: TV and Media Installation

SIC Business Insurance Codes:

  •   4841- Cable and Other Pay TV Services

NAICS Liability Classifications:

  •   517110- Wired Telecommunications Carriers
    •   515210- Cable and Other Subscription Programming

Business ISO General Liability:

  •   Code: 91315- Cable and Subscription TV Companies

Common Workers Compensation Class Codes:

  •   7536- Cable Installation and Construction
  •   8901- Cable and Telecommunications- Office Employee
  •   7600- Cable TV or Satellite- Other Employees and Drivers
  •   6325- Conduit Construction- For Cables or Wires
  •   8742- Outside Sales Persons
  •   Code: 91315- Cable and Subscription TV Companies
  •   Code: 91315- Cable and Subscription TV Companies

Plus, as a 1099 you will need health insurance which covers your own health needs.  This means obtaining health insurance which is most likely not part of a group plan in most cases.  Individual health insurance is usually very expensive no matter who the insurance carrier may be.  An alternative is to join a union or an association of workers in this field that offers health insurance to its members thus forming a group (E.g. Communication Workers of America).

But the biggest concern related to insurance is Workers Compensation.

Since you no longer are an employee, just as you are no longer covered by the Cable Company’s group health plan, you are no longer entitled to worker’s compensation through your client the Cable Company.   That means even if you get hurt on the job while installing for the cable company at a property you were sent to by the cable company you are not covered by Workers Compensation. (There is that elephant hiding in the closet with a not so great surprise!)

Whether your required to carry Worker’s Compensation insurance for yourself (as a single employee) is another question altogether and depends on many things. Some states require that a single employee company carry workers compensation while other states do not. In some states you are exempt if you have less than 4 employees. Some states exempt members of an LLC.   Whether it is required by the state should not be the end of the inquiry because if you don’t cover yourself for Workers Compensation, no one else is, and you may be definitely letting the elephant loose to trample you if you are injured severely on the job. Additionally, your old employer (the cable company) who is your “client” who sends you out to cable company users homes to do installations can and often does require that you carry workers’ compensation and that you make the cable company an additional insured on your policy when you go out to install systems for their customers.

You may think you are covered by your own health insurance that you just bought, however; many times your health insurance carrier will deny coverage if you were injured on the “job” and if you don’t have workers compensation the injury is not covered at all unless a third party  or the cable company was negligent.

This can be quite a tragedy if you are injured and have not obtained the insurance needed to protect you.  The Bureau of Labor Statistics shows that 3 million workers were injured on the job in 2014.  So if you find yourself in the position of a new 1099 contractor make obtaining commercial insurance one of your top priorities.

Insurance needs in the Food Truck Industry.

Amazing Innovations in the Food Truck Industry spark new Insurance needs

 

One of the most delightful culinary happenings in history is here to stay. Food trucks have made major inroads into the restaurant industry and are one of the fastest growing areas due to new innovations in this field. From sleek and savvy to cute and sassy the designs, structure, overall look and utilization of food trucks are being reborn, and taking root in America.food-truck-images

The widespread advances throughout the food truck industry sparked a remarkable change in the food world because of the unique melding of two types of business into one. That is a hybrid restaurant on wheels but not the stereotype ice cream truck or cold sandwiches and snacks served in a factory parking lot.  The public wanted outrageously good food, with appetizing aromas and an enticing appearance served in a fun atmosphere.

Restaurant entrepreneurs responded to the public’s desires and now diverse menus with every food imaginable served from fantastic wickedly designed trucks provide adventures in dining to the public’s delight.

As more and more food trucks enter the business world and develop their own style or “brand” many other industries seek to cash in on this phenomenon by providing goods and services designed specifically for the food truck scene.

Among those wanting to collaborate with the food truck industry is the commercial insurance industry.  Thus the food truck BOP insurance policy came into being because every business needs insurance which fits their specific needs. Especially a state of the art customized truck fit to feed a queen and king or better yet, you and me.

With that thought, what type of insurance does an amazingly clever entrepreneur need to keep his mobile eatery and victuals protected from peril? 

While the insurance needs for a food truck are similar to the needs of a restaurant there are many differences and concerns which are not present in a brick and mortar restaurant so restaurant insurance is just one piece of the protection puzzle.  Additionally you need excellent comprehensive vehicle coverage for your food truck; especially since you have lovingly crafted the ideal truck with the right atmosphere using your imagination to create a dining experience extraordinaire for your clientele.

Initially, the insurance industry did not share the vision and were really divided into two camps. Auto insurance carriers offered business add ons to policies and commercial restaurant insurers offered add ons for company vehicles, but very rarely did insurers have a specifically designed business owner’s policy for a food truck. To meet the growing desire for “specialty” policies, insurance carriers adapted and developed packages tailored for food trucks and more options became available. No matter which carrier you utilize a specialty tailored policy should include these basic elements:

  • A comprehensive commercial general liability insurance policy (required by law)
  • Commercial auto/truck policy.
  • Business property and equipment/inland marine
  • Business Loss of Income with extra Expense
  • Workers Compensation for your employees (Required by law)

The business liability category for Mobile Food Trucks is Eating and Drinking Places

This means your classification codes used to classify and rate coverage premiums would generally fall under:

SIC Business Insurance Codes

4812 – Eating Places

NAICS Liability Classifications

  • 722320 Food Caterers
  • 722310 Food Service Contractors
  • 722330 Mobile Food Services

Business ISO General Liability:

  • Code 11039 – Caterers and Mobile Food Service

Additional insurance options are:

  • Food Spoilage/contamination
  • Cyber-security/data breach
  • Liquor Liability (If you serve beer, wine or alcohol)
  • Commercial Umbrella
  • Catering/Special Events
  • Employees Dishonesty

Special concerns may arise when choosing your businesses commercial automobile coverage and your businesses commercial property insurance.

  • Coverage for employees sent on errands for the food truck with their personal auto.
  • Special riders that cover the unique painting and finishes on your truck in the event of a wreck
  • Coverage if you have retractable awning or parts that expand the size of the vehicle. You may need extended coverage or a rider similar to a policy for an RV
  • Coverage for refrigeration units, both if the unit breaks or the truck itself is broken or damaged and coverage for any foods that spoil
  • Coverage for cooking equipment and apparatus giving special attention to whether there is any exclusion for types of cooking units or types of fuel used. A good example of this is exclusion for a propane fuel cooking system due to the spate of recent explosions.
  • Coverage for nearby buildings, and objects damaged by fire or explosion

(You will also want to develop a fire and safety plan with training components for employees to help with your insurance costs. You will also need a gas detector suitable to the type of cooking fuel you use.)

  • Coverage for lease or rental of additional commercial kitchen space
  • Coverage for use of your home kitchen to cook a portion of the food in ,needs to be specifically covered in your property insurance.
  • Coverage if you have a home office, computers or other equipment used for the business located in your residence, which should be specifically listed and included.

Another category of concern is raised by the frequent use of credit card readers which leaves your food truck vulnerable to data breach.  This seems unlikely but really is not. Credit card information is eagerly stolen by criminals who want to make profit from its usage.  Approximately 43% of all business in US have had data breaches.

Now that you built your dream on wheels keep on, keeping on protecting your dream by being a connoisseur of your insurance needs.