Flood of Plumbing Claims

Blame corrosion in copper pipes for a flood of plumbing failure claims.

Water utilities are reporting an increase in problems with corrosion and leaks of water pipes in residential areas, according to an insurance industry report. The problems also extend to commercial buildings.

Trouble spots include Washington, D.C., Tennessee, Florida, and Ohio. Some municipalities or cities have gone so far as to prohibit the use of copper in plumbing.

The unlikely suspect in the problem: higher drinking water standards. An ongoing investigation by Virginia Tech and a water utility in Maryland finds that natural organic materials, which form a natural protective layer in metallic pipes, are now being removed from water supplies to meet elevated water quality regulations. As a result, copper pipes are developing pinhole leaks.

The American Water Works Association estimates that water utilities will spend $325 billion during the next 20 years to replace pipes lost to corrosion and to upgrade water systems. The plumbing industry’s top choice for replacing metal pipes is chlorinated polyvinyl chloride (CPVC), according to published reports. Unlike metal, CPVC pipes don’t corrode, pit, scale, or suffer pinhole-leak problems. An added safety factor with CPVC is a cement bonding system to join pipes that eliminates the risk of fire while soldering metal pipes.

Women-Owned Businesses Hit 10 Million

About half of all privately held U.S. businesses are owned by women, according to a study from the Center for Women’s Business Research.

There are 10.1 million privately held (50% or more) women-owned businesses in the United States, generating 18.2 million jobs and contributing more than $2.3 trillion in sales to the economy. These businesses represent 46% of all privately held businesses.

Between 1997 and 2002, the number of privately held (50% or more) women-owned businesses grew by 11%, more than 1.5 times the rate of all privately held firms (6%).

Employment at these firms blossomed by 18%, more than twice the average of 8% for all businesses. Sales were up 32%, compared with an increase of 24% for all firms.

If your business is growing at a healthy rate, you might need to discuss or update insurance issues such as employee benefits and workers compensation. Call our office if you have a question on these or other insurance topics.

Cover Up with Blanket Property

Does your business have several locations? Do you sometimes move property from one site to another to meet shifting needs? Do certain locations have far higher property values to protect than others? Are your locations far enough apart that the odds of a single event (such as a fire or major storm) hitting more than one are slim?

It might be advantageous to you to consider using “blanket” coverage for your property insurance, rather than separate amounts of coverage on each location. With blanket coverage, you have a high single limit of coverage that applies to all of your locations. If a loss occurs at any one location, the entire limit is available to cover this loss. Why is this an advantage? Let’s say that you have two locations, with coverage limits of $120,000 and $300,000, and you suffer a $350,000 loss at the higher-value location. With separate limits, only $300,000 is available. If your coverage had been written with a blanket limit of $420,000, the $350,000 would be fully covered.

There are several considerations in determining if this type of coverage is right for you. Talk with one of our insurance specialists today about “blanketing” your property insurance protection.

Plan for
Worst-Case Scenario

Too busy to craft a disaster recovery plan? Join the club. Most small businesses haven’t taken the time and effort to do so. The problem: They have much to lose in the event of a natural disaster such as a hurricane, tornado, or flood.

A recent insurance company survey found that fewer than 30% of small businesses (with 3-20 employees) have a plan to protect against a natural disaster. More than 60% of businesses with 50 or more employees have such a plan. The bad news: About half of businesses without a plan don’t reopen their doors after a natural disaster. The risk of such a catastrophe is small but measurable: 6% of respondents to the survey said they’d experienced a natural disaster during the past three years. One big risk is that small businesses usually have one location, where merchandise, equipment, paperwork, and computers are stored.

Do you have a recovery plan and risk reducing procedures to limit loss and down time after a disaster? Even if it’s not review time yet, check in with us for advice and creative ideas for business continuation programs.

Online Buying Widens

Businesses are buying more goods and services online. Business-to-business purchasing of goods and services over the internet increased to 9.4% of company purchases in the fourth quarter of 2002, from 5.7% of total company purchasing in the first quarter of 2002. That’s according to a report by Forrester Research and the Institute for Supply Management.

This online buying trend includes goods and services purchased from online retailers, as well as “B2B exchanges” — online marketplaces for businesses to buy and sell goods and services from other businesses. The estimated 700 B2B exchanges fall into three categories: industry-specific consortia; public exchanges open to all companies that meet standards; and, private marketplaces run by a single company.

B2B transactions usually cover complex processes such as looking for vendors, requesting quotations, evaluating bids, negotiating, planning the supply chain, working together on product design, exchanging documents, billing, and paying.

One such exchange is an industry-specific network started by automobile manufacturers. Participants in this network share information and processes in order for vendors and purchasers to work collaboratively. One automaker bought a reported $96 billion of parts and services over this B2B exchange in 2001.

If you’re involved in or are considering participating in an online exchange, be sure to consider the insurance and security aspects. Remember, participating in an exchange means sending business data over the Internet.

Is Being There Worth It?

A slump in business travel, the economic slowdown, and fear of terrorism have led more businesses to hold “virtual” meetings using e-mail, conference calls, video conferences, and web-based meeting services. But, when is it more effective to meet in person than to communicate electronically?

Researchers at Purdue University have some answers. An in-person meeting is more effective than a virtual meeting for more complex tasks, such as negotiating a budget. Face-to-face teams showed higher levels of openness, trust, and information sharing than virtual teams. But virtual teams worked better on brainstorming, the researchers found.

Teams meeting face-to-face communicate better in the beginning stages of a project, but virtual teams catch up. As they gain experience together, virtual teams can communicate openly and share information as effectively as face-to-face teams.

A problem the researchers pointed out was that “virtual” communications might distort important information. When it comes to issues such as safety and risk management, business owners managing remote employees and locations should bear this in mind.

Insurance Required by Your Lease

If you’re a tenant, your lease will include requirements about the amount and type of insurance you must carry to be in full compliance with your landlord’s terms and conditions. Have you checked recently to be certain your coverage is adequate to meet your lease requirements?

For example, the amount of coverage your lease requires might be specified in a manner that makes it unclear if your liability coverage is adequate. A term frequently used in commercial leases is “personal injury,” which usually means bodily injuries to other persons. Yet in insurance terminology, the term for such damages is “bodily injury.” “Personal injury” refers specifically to injuries other than bodily injures (such as libel, slander, and defamation). It’s unlikely the landlord requiring a $1 million limit for “personal injury” in your lease is only thinking of libel or slander.

Don’t let possible misunderstandings or a simple unawareness of lease requirements create potentially painful gaps in your insurance coverage. One of our many valuable services is reviewing your insurance for compliance with the specific requirements of your lease. Give us a call today.

Asking about Insurers

The Better Business Bureau (BBB) was once a phone call away for a worried consumer or business owner who wanted assurance that a company had a good track record.

Increasingly, the BBB is just a mouse click away. It handled more than 41 million consumer queries for business reliability reports in 2002, up 94% in one year.

Among the top 12 categories of queries in 2002: insurance companies. Nearly a quarter of a million consumers asked for BBB reports on insurance companies, up 183% from 2001. That probably reflects rising premiums due to changing market conditions.

If you have a question about an insurer, or if an insurer or insurance broker contacts you, please call our office. We track insurance companies, following such issues as financial ratings, financial strength, competitiveness of rates, service levels, and suitability of products for businesses.