Pardon the (Cost of the) Interruption

Although the threat to your business property from such causes as fire, wind or flood is clear, have you considered how long such damage might force your business to close during repairs? Based on your financial statements and cash flow, how long could your business be interrupted before it seriously endangers your ability to survive?

We’d recommend that you run your business through a “business interruption drill,” just as you’d hold a fire drill or other emergency simulation. Gather employees and staff, create a hypothetical scenario in which extensive damage shuts down your business, and start running the numbers. First question: How long might the interruption last — best case, worst case, most likely case? In each scenario, how much revenue would you lose and how can you minimize these losses? Run through each step to see the results and complications. Before you start, you might do well to read a good book or manual on disaster preparation.

Let us work with you to draft the scenarios and run the possibilities. We can offer your accounting staff templates and worksheets to help develop revenue and profit-loss estimates. Once you feel you have a handle on potential financial losses from a closure, we can provide a menu of coverage and risk management options to minimize your exposure.

Poor Communication Can Be Deadly to Your Business

For those who remember the classic film Cool Hand Luke, the warden uttered this famous line to his prisoners: “What we have here is a failure to communicate.” At the climactic moment of the movie, that failure got Paul Newman killed.

Are your customer communications more likely to build your business or get your revenue killed? Maybe it’s time you took a good hard look. The process can be as complex as using outside professional firms to conduct surveys and focus groups. Or it can be as simple as observing the everyday interactions your staff has with your customers. Some thoughts: • Avoid techno babble and jargon. • Respond to customer concerns instead of looking for openings for a sales pitch. • Make sure the customer is satisfied with the conversation • Give accurate information, and double check the data you receive.

Poor communication can lead to misunderstandings, omissions, errors, and lawsuits. Set good operating procedures and stick with them for business’ sake.

One Size Doesn’t
Fit All

Ever read those ads for “miracle fabric” clothing that claim “one size fits all?” Looking at the various sizes and shapes of people around you every day, do you believe these claims? Neither do we.

The same goes for your insurance protection. Although many businesses might be similar in a number of ways (bakers clearly have far more in common with other bakers than with real estate offices), our experience has taught us that each type of business has its own challenges. Let us help you measure the unique exposures to loss that your business faces. We then can propose the policy forms, endorsements or coverage changes you need for a perfect fit. Add risk management techniques designed to minimize or prevent many of the common types of claims faced by other businesses, and you’ll have as complete a protection wardrobe as we can provide.

Don’t squeeze yourself into coverage that’s too small; or swim in a package policy with a lot of extra, expensive breadth. When it comes to meeting your individual needs, let our professionals “tailor” you a program that’s just the right size.

Is that a Crane or a Truck?   Why Care?

If you use several types of vehicles, it’s important that you classify them properly for insurance coverage purposes. Either of two policies might apply, depending on whether the policy defines the vehicle as “mobile equipment” or as an “auto.”

As you might expect, commercial auto insurance covers your autos, while your general liability policy covers mobile equipment.

As long as we are talking about bulldozers and pickups, there is little confusion about which is equipment and which is an auto, a bulldozer would be classified as "mobile equipment" and a pick-up as "auto" for insurance coverage purposes. But when it comes to mobile cranes and other types of self-propelled equipment, the waters get a bit muddier. And, if you permanently attach a crane or drilling rig to a pickup or flatbed truck, things can get even trickier.

But why should you care? Two words: coverage and cost. Depending on the policy under which the vehicle falls, coverage could vary in both specifics and limits available to pay claims. And because the two types of policies rate coverage differently, the premium will change. There’s one mistake you definitely want to avoid: In the confusion, make sure you don’t wind up paying for a single vehicle under both policies!

However, there’s a silver lining in this potential dark cloud. Our professionals can review your vehicle list and assign each its proper policy, without charging you twice. It’s our job to get it right. If you’re unsure whether your current coverage is treating your trucks as cranes or vice versa, give us a call.

Will Your Fire Extinguisher Be Ready??

Although fire extinguishers are great for combating smaller fires — or preventing a smaller fire from turning into a bigger problem — make sure that yours are ready when the time comes. Consider these tips from OSHA:

Be certain the extinguishers are the type required by your fire exposure. The type of fire determines the type of extinguisher to use:

• Class A fires involve materials such as wood, paper and cloth which produce glowing embers or char.
   
• Class B fires involve flammable gases, liquids and greases, including gasoline and most hydrocarbon liquids, which must be vaporized for combustion to occur.
   
• Class C fires involve fires in live electrical equipment or in materials near electrically powered equipment.
   
• Class D fires involve combustible metals, such as magnesium, zirconium, potassium, and sodium.

Place extinguishers in the proper and easily identifiable locations. Locate extinguishers along normal paths of entry and exit. Make sure that they’re clearly visible. Where you can’t avoid visual obstruction completely, provide directional arrows to indicate the location of extinguishers and arrows marked with the extinguisher classification. If extinguishers intended for different classes of fire are located together, mark them conspicuously to ensure that the proper extinguisher is selected in case of fire.

Maintain portable extinguishers in a fully charged and operable condition. They should be kept in their designated locations at all times when not being used. When extinguishers are removed for maintenance or testing, provide a fully charged and operable replacement unit.

The proper risk management tools are only valuable if they’re available and functioning at the time they’re needed. For more recommendations on keeping your workplace as safe as possible, talk with our risk management professionals. We’re here to help!

Understand that Vendor Endorsement

Contracts between product manufacturers and the businesses that sell or distribute their goods are commonplace. These contracts usually include provisions that name the wholesaler or distributor as an additional insured under the manufacturer’s products liability policy. Such arrangements are customary when the wholesaler or distributor (aka the vendor) has an exclusive marketing relationship with the manufacturer.

The “Additional Insured-Vendors Endorsement” is the standard form for providing additional insurance coverage. The vendor named in the endorsement is made an insured under the manufacturer’s policy with respect to products it sells or distributes on behalf of the manufacturer. The endorsement must specifically identify both the additional insured vendor and the appropriate product coverage.

Now that insurance premiums are rising, some smaller vendors are approaching manufacturers for similar risk-transfer options. Many believe that they can avoid purchasing their own product liability policy if they can obtain a vendor’s endorsement from the manufacturer. However, most experts still advise vendors to purchase their own product liability coverage.

Be sure to let your product liability carrier know if you have vendor’s coverage from the manufacturer, since this endorsement probably will lower your premium. This notification will allow your policy to respond on an excess basis over the manufacturer’s policy on which you’re an additional insured.