COLUMBUS - Tornado. Wildfire. Hurricane. Flood. The spring and summer months can bring all kinds of potentially damaging weather, Now is the time for small business owners to get prepared for the possibility of disaster by reviewing their business insurance needs and policies. As we learned on June 5 and 6 in Wood, Ottawa and Fulton Counties, Ohioans never know when disaster will strike. Here is a checklist from the Ohio Department of Insurance to get your review started.
Is your business ready for disaster?
- Do you have an emergency response plan for employees and customers?
- Do you have copies of important papers and information stored off site?
- Does the information include: receipts, photos, insurance policies, contact details for your insurance agent or insurance company, an employee roster, etc.? These documents will assist you when you file a claim later.
Minimize your insurance risks by:
- Installing fire and security alarms.
- Planning and training employees for emergencies on the premises, such as fire evacuation drills.
- Having employees keep wallets and other personal items in a secure place. Keeping the business’ cash and other valuables in a safe.
- Keeping office space in good physical condition.
Review your insurance needs and your current policies.
- Are your policies up-to-date with your insurance coverage needs and are the limits for each coverage at a level that protects your investment?
- If you question the types of insurance your business needs, find out more about your options at www.insurance.ohio.gov.
Your property insurance policy covers you for damage or theft of the physical property and equipment of your small business. If you own the physical structure of your business address, your property insurance should cover both the structure and its other assets. If you lease the space you occupy, you are responsible for insuring your personal property/contents. As a leaseholder, you need to have a contingency plan in case your landlord or your landlord’s insurer is not able to promptly repair the building where your business is located.
Here are a few things you should know about your property insurance policy:
- There are three types of property insurance – each covering a wider range of perils. Know which form your business has – Basic, Broad or Special – and what perils are covered or excluded with your policy.
- Check to see if your property will be replaced for the actual cash value (ACV) or replacement cost. ACV reimburses the cost to replace, rebuild or repair damages, taking depreciation into consideration. Replacement cost does not factor in depreciation.
- Consider any improvements to your business that have been made since your property was last appraised. If there have been changes since the last time your insurance company assessed your property value, it may be time to update your policy.
- What is your limit of liability or the maximum amount insurance will pay for covered loss? Is this enough?
- Flood is not a covered peril in a standard business property insurance policy. You can purchase flood coverage from the National Flood Insurance Program (NFIP), administered by FEMA. You generally have to wait 30 days for a flood insurance policy to go into force. If you are worried about damage from flood, find out more about the NFIP at www.floodsafe.org. If the flood insurance property limits from the NFIP are inadequate to cover your business, check with your insurance agent about coverage options.
Business interruption insurance covers lost earnings due to circumstances stated in your policy – such as fire– that shut down your business for an extended period. Business interruption/continuation insurance covers expenses associated with running your business, like your payroll and utility bills, based on your company’s financial records. Business interruption/continuation may also help pay for the extra expenses to keep your business in operation until you recover.
A few things to check in your Business Interruption/Continuation coverage:
- What perils – or covered occurrences – are listed? What is excluded?
- What expenses are covered and is the limit adequate?
- Benefits under this kind of coverage may not be payable for a certain number of days after the business interruption has occurred. Check to see if your coverage has a waiting period and make sure you have sufficient funds to tide you over for that time.
Liability insurance, also called Commercial General Liability (CGL), covers four categories of events for which you could be held responsible: bodily injury; damage to others’ property; personal injury, including slander and libel; and false or misleading advertising.
Here are a few things to know about your liability insurance when preparing for a disaster:
- There are three types of legal damages people may sue you: policy compensatory damages, general damages and punitive damages. The first two types are typically covered by an insurance policy while punitive damages are uninsurable in Ohio.
- Medical payments coverage is a separate coverage section of a liability policy and has a separate stated limit. If someone is hurt on your premises – whether you are responsible for the injuries or not – up to your medical payment limit is the amount your policy will pay for immediate care and treatment. Check your medical payment limit and decide if this amount is enough for your needs. If not, you might consider raising your medical payment limit.
- Premiums for your liability policy may be impacted by the addition or reduction of employees, inventory; or sales If any of this has changed, you may want to talk with your insurance agent or company to reevaluate your policy and premiums.
- A commercial umbrella liability policy provides extra protection above a standard liability policy or a commercial automobile policy. . This type of policy will increase the amount of liability paid per incident. . An umbrella policy will have its own terms and limits, so make sure to review it closely to see when it kicks in over your underlying policies. Small business owners may want to consider an umbrella policy if they are worried about protecting their personal assets or the assets of their business from lawsuits.
Commercial Auto Insurance
Automobile liability insurance covers medical expenses for injured persons and damages to the property of other individuals as a result of a motor vehicle accident caused by the insured’s negligence. Typically, commercial auto insurance policies have higher liability limits than a personal auto insurance policy. They also may have provisions that cover rented and other non-owned vehicles, including employees’ cars driven for company business.
Here are a few things to check in your auto insurance policy:
- If you are relying on either a personal auto insurance or personal umbrella liability policy to provide you with protection for your company’s use of vehicles, look closely at the provisions, as business-related liability may be excluded.
- Does the policy reflect up-to-date information on: where you garage the vehicle, who drives it, your desired liability limits and deductibles? These factors can all affect your premium, so if anything has changed, be sure to contact your insurance agent or company for a policy review.
- Know your liability limits and check to see if the policy places limitations on the vehicles’ drivers.
Ohioans with questions about their insurance coverage can call the Ohio Department of Insurance at 1-800-686-1526 or visit www.insurance.ohio.gov