commercial insurance pitfalls
DESCRIPTION
Debra Verstegen, Dickenshied Cravillion Insurance Services, presentation to De Pere Area Chamber of Commerce February 13th, 2013 De Pere at Dawn. "Financial Fitness" panelTRANSCRIPT
Protecting Your Business: Commercial Insurance Pitfalls
Presented by Dickenshied Cravillion Insurance Services
Introduction
Debra Verstegen, Agent
Over 15 years of experience in commercial property & casualty, commercial health
insurance, life & disability insurance, business continuation planning, and estate planning.
Dickenshied Cravillion Insurance Services is a full service independent agency located in East De Pere, serving Northeast Wisconsin
since 1872.
Pitfall #1: Underinsurance
Pitfall # 1: UNDERINSURANCE
Recent Example:
Total blanket Replacement Cost for 3 buildings and
Business Personal Property was listed on a business policy for $789,000.
Realistic Replacement Cost is really $1,850,000.
The business had been with the same agent for years. The agent had supposedly been doing annual reviews.
Pitfall #2: Mismatched! Owner’s intentions and the contract
If my building was destroyed, I would….
Build the same building …same floorplan, square footage, materials, etc.
Build a completely different building
Take the money and move to a warmer climate
REPLACEMENT COST : Build the same building …same floorplan, square footage, materials, etc.
FUNCTIONAL REPLACEMENT COST or AGREED VALUE: Build a completely different building.
ACTUAL CASH VALUE: Take the money and move to a warmer climate. Depreciated value.
Pitfall #3: Legal Liability for Leased Locations
The property owner is responsible for primary
coverage of his building, unless you have a triple net lease that requires
you to cover the building.
What if you, the tenant, are
responsible for the damage?
SUBROGATION
Pitfall #4: Material Misrepresentations can void coverage.
Incorrect information in insurance contracts may be the fault of
the insured client…..or the agent.
It’s YOUR legal contract. Make
certain it is right.
Pitfall #5: The Exclusions
One area in which the insurance industry falls short is….
DISCLOSURE.
Take the time to read the exclusions in each policy part. Especially watch out for
PUNITIVE DAMAGES EXCLUSIONS
(Insurance companies must pay punitive damages in Wisconsin, unless the carrier
specifically excludes them.)
Pitfall #6: Owners and Work Comp
C corp: Owners are included unless they exclude themselves.
S corp: Owners are included unless they exclude themselves.
LLC: Owners are excluded unless they include themselves.
Sole proprietorship: Owners are excluded unless they include themselves
Owners & Work Comp: Medical and Disability Exposures
If you are excluded from Work Comp, you need to be certain that your health insurance coverage has 24 hour coverage (would cover work-related injury).
If you are covered under a spouse’s plan, you definitely do NOT have 24 hour coverage.
If you are on a group or individual plan, your carrier likely needs to be notified that you need 24 hour coverage, and there may or may not be a charge for it.
Strongly recommended: Long-term disability coverage to protect your income in the event you are unable to work.
Payroll for Owners on Work Comp: 2012
S or C Corp: Minimum payroll $13,312 Maximum payroll $66,612
LLC, Sole Proprietorship, Partnerships$44,408 flat
payroll
Pitfall # 7: Employment Related Practices Liability…Do you have it?
If you have employees, you
need this.
General Liability coverage does
NOT cover employment
related liability claims:
harassment, discrimination, and
wrongful termination
The 7 Protected Classes
Race Color National Origin Religion Sex Age Disability
Why carry EPLI?
Risk management help. Have best practices in place.
Document, document, document.
Your insurance carrier will defend you. Defense costs.
Insurance limit available to pay judgments.
Thank You