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Three Reasons NOT to Buy Flood Insurance

With all of the horrifying pictures in the news of flooded cities around the country, you might be thinking about flood insurance.  If you have it, do you have enough?  If you don’t have it should you purchase it? Your insurance broker may have tried to sell you a flood insurance policy in the past, but you had a good reason to decline the coverage. After all, who wants to pay for something you don’t really need? That’s probably what all of those businesses in Houston thought, too. Here are some (not so) good excuses for declining to purchase flood insurance. Your Bank Doesn’t Require It Maybe you don’t have a mortgage on your property. Or perhaps, because of location, you aren’t required to have flood insurance to secure or maintain your mortgage. Does that mean you shouldn’t purchase the coverage? While bank flood requirements account for a large portion of flood insurance policies sales, even those without mortgages or those who are not required to purchase coverage should still consider flood insurance policies.  Why?  Because even properties where flood insurance isn’t required are still subject to flooding. If you are in a flood plain (or even if you aren’t) floods may still occur and you could be affected. Your Bank Purchased Flood Coverage “For You” Bank provided insurance (often called force-placed insurance) is when the bank either offers to insure your property or forces the coverage on you because you have failed to provide your own. Some may find this option more convenient than shopping for your own policy, but be warned: force-placed coverage does not benefit you...

Does My Mobile Cannabis Business Need Insurance?

It is a fallacy that many mobile cannabis businesses fall into: if I don’t have a retail location, I don’t need insurance.  The truth is, if you have a business of any type, you need insurance to protect yourself and your investors. No Retail Location? You Still Need Insurance. Many only equate the need for insurance with business locations and landlords. However, if you run your business out of your home you still need insurance coverage.  Why? Because both typical and atypical business pursuits are excluded by your homeowners or renters insurance. Personal lines policies exclude any business done in the home or anywhere on the home premises. The policies exclude the work being done, the work product, employees, inventory and business equipment. Some policies may even cancel coverage for homeowners operating businesses out of their homes. If you are storing stock in your garage or in your spare bedroom, there is no coverage for it in the event of a fire, theft or other hazards. Liability coverage under your homeowners policy also will not extend to business pursuits. There will be no coverage for customers on premises, products liability, or personal or advertising injury, as businesses are excluded from the policy. The good news is both of these coverage lines can be written on your business even if you are operating out of your home. No Commercial Auto? You Still Need Insurance We have previously blogged about the need for commercial insurance for delivery services. The exclusions for livery use of personal vehicles applies whether the car is owned by you, your spouse, or an employee.  The only...

Should You Buy Insurance Online?

You may be tempted by the slogans: “Think of the Savings!” and “Coverage at Your Fingertips, Anytime Day or Night”. Buy insurance in your pajamas? This must be a dream! That dream, however, could turn into a nightmare. After all, you’re not buying a jar of peanut butter, you’re buying a risk management tool in case something bad happens to you. Here’s why you should avoid buying insurance online: No Comparison There are very few insurance aggregator websites out there. If you want the best price, you’ll have to enter your information on a number of websites. Besides the margin for error, you might get finger cramps. And really, who is to say that the best price is really the best price for comparable insurance coverage? All policies are not created equal, so the option with the lowest price may also offer the lease amount of coverage. How can you tell?  By reading and comparing all of the policy documents! Who has time for that? Luckily, an independent insurance broker has the skills and knowledge to not only get quotes from multiple carriers, but also to compare the coverage and help you determine what coverage options are worth the premium. You can’t get that expertise from a machine. No Coverage Advice While some online quoting websites tout “coverage options” what do they really mean? The website is often referring to a list of different endorsements that may be available for the policy you are quoting with pricing options for those endorsements. But what do those options really mean?  The website may give a brief description of what would be...

The Cyber Risk YOU Should Worry About

We have written on this blog many times about the importance of cyber liability insurance for businesses. Even with all of the articles and advice, the coverage still isn’t taken as seriously as other parts of the insurance portfolio. The fact is, you may think that your business isn’t big enough to worry about cyber risk. After all, foreign hackers are more interested in big business. What would they want with your little company? Just as there are large businesses, there are large hackers. And there are small hackers who would be happy to take down even a small business for the potential windfall. The thing that might surprise you isn’t WHO wants to get your data, it’s HOW they are going to get it.  The easiest way?  Through your employees. Accidental: The Lost/Stolen Laptop Your employee stops at the airport bar to have a drink prior to a flight and leaves the laptop on the floor. By the time he realizes it is gone, he’s already in Poughkeepsie and the bag is in Orlando.  Maybe it got turned into the lost and found, but more than likely it didn’t. A lost or stolen laptop for most people and businesses may just be a nuisance. The cost to replace the laptop these days can be minimal, but what about any customer data that may be on the laptop, or proprietary information? In the wrong hands that data can translate to stolen identities and thousands of dollars in lost revenue for your business. Calculate the cost to notify your customers, as well as the cost for credit monitoring and loss...

Cannabis Delivery Using Employee Vehicles

One way to stand out as a cannabis dispensary is to offer delivery service. It can be relatively inexpensive to offer delivery: your employee uses his own vehicle, thus negating the expense of purchasing a delivery vehicle or insurance for said vehicle. Unfortunately, this is incorrect thinking and could lead to high costs for both you and your employee that you may not be aware of.  Here is the danger and how to correct it. But I Have / My Employee Has Insurance! It is always a good idea when hiring a delivery driver to be sure that the employee has a clean driving record, a valid drivers license, and current insurance for that vehicle.  However, be aware that your employee’s insurance is typically going to be a personal auto policy, and as such there may not be coverage for delivery. Most personal auto policies do allow for the incidental business use of personal vehicles titled in the name of an individual. This would include errands, bank runs, etc. However, most personal auto policies exclude coverage for livery services – that is transporting passengers or packages for a fee. This includes flower delivery, pizza delivery and yes, even package services such as cannabis delivery. So if your employee’s personal auto policy doesn’t cover delivery service, then where is the coverage?  That’s right, your business will cover it – even if you don’t have insurance! How Do I Get My Business Covered? If you do not have a business auto policy for your business, and you are relying on your employee’s personal auto policy to cover your business, then both...

Insurance for DIY Automotive Repair

The availability of information online to consumers increases every day. The average American can learn anything from how to replace windshield wipers to how to replace a transmission in their vehicle just by looking at Youtube. Though they may want to do automotive repairs on their own, finding the information to repair a vehicle is the easy part. Many repairs require special tools and equipment, as well as comfortable work space to perform repairs. Whether your automotive repair service station is 100% DIY or a combination of standard service and self-service auto repair, allowing the general public to work in your facility requires insurance coverage that protects both them and your business. Here is what you need to think about. Premises Liability Insurance While waivers should be required for any renter using your facility and tools, waivers are no guarantee that you won’t be sued in the event of an accident on your premises. General liability insurance for your premises is the most basic, yet most important coverage you should purchase for your business. This policy will protect your business in the event of something as simple as a slip-and-fall and as complex as a lift malfunctioning and injuring a patron. Tools & Equipment The lifeblood of automotive repair businesses is your tools and equipment. They are also the main reason why do-it-your-selfers come to your business: they don’t have certain tools or equipment in their homes. Insurance for tools and equipment will cover whether the tools are broken or stolen. It may also offer coverage for lost income while you wait for certain items to be repaired or...

Should You Buy An Umbrella or Excess Policy?

When purchasing liability policies, the large limits of coverage such as $1,000,000 per occurrence and $2,000,000 aggregate may seem like enough. However, in certain circumstances, these limits may not be adequate. While some insurance companies may allow you to increase these limits, that is often the upper limit for most companies. In order to increase these limits you would need to purchase an umbrella or excess liability policy. When Should You Buy This Coverage? Umbrella or excess liability, like other insurance, should not be purchased after a claim has occurred. The policy is usually triggered by bodily injury or property damage that occurred during the policy period. Serious accidents happen. Between legal fees and claims payouts, a liability policy per occurrence or per claim limit can be easily exhausted. Umbrellas and excess policies can pick up where the underlying policy leaves off. What Is the Difference Between Umbrella and Excess? Some brokers use these terms interchangeably, but there are differences between umbrella and excess liability policies. Umbrella policies pick up where liability policies leave off. In addition, they may offer drop-down or gap coverage in the event of a claim where the underlying liability policy does not offer coverage. These policies typically cover over more than one line of underlying coverage. Excess policies do not offer drop-down or gap coverage, but cover the same things the underlying liability insurance covers, in the event the liability policy limits are exhausted. These policies only cover over one underlying policy, usually the General Liability. For either type, it is important that these policies “follow form”. This means the umbrella or excess policy...

The Strange Case of General Motors In Venezuela

Venezuela has made headlines in recent months due to the ongoing economic crisis in that country. Most recently the country made news by nationalizing an American corporation: General Motors. In April 2017, the government seized control of the GM plant in Valencia, Venezuela, nationalizing the factory and sending GM officials and American workers back to the United States. The move reportedly cost GM in excess of $100 million. Many industries in Venezuela have been nationalized since 1999, including oil and telecommunications. If you have business operations in other countries, how can you protect your business? What is Nationalization? Nationalization is the process whereby a national government seizes the assets of a private company and takes them over for government use. This seizure most often occurs without compensation to the private company, resulting in financial losses to that company. What Is The Risk? Nationalization of businesses happens all over the world, though the risk is higher in some countries than others. Even in the United States, nationalization of certain industries has occurred. Typically nationalization of private industries occurs during wartime or times of economic depression. The more economically unstable a country is, the more likely it is to want to nationalize industry to increase government profit. Some companies may choose to sue for lost assets and revenues. Usually, these lawsuits end in an award that is a mere fraction of the loss, and in most cases, no lost assets are ever recovered. GM has said that they plan to fight the government seizure. However, it is unlikely that the company will regain control of the plant anytime soon, if ever....

The ABCs of Elder Care

As the Baby Boomer population continues to age, the number of assisted living facilities in the US grows. Everything from nursing homes to independent living communities, to those facilities with respite and Alzheimer’s care are available to the more vulnerable of our citizens: aging seniors. Working with the elderly can render these facilities vulnerable, as well. Abuse and other types of crime are easy to perpetrate, exposing elder care facilities to claims of abuse and neglect, whether it be physical or financial in nature. Here are insurance coverage options that every facility should have. Abuse, Neglect and/or Molestation The National Council on Aging (NCOA) reports that 1 in 10 Americans aged 60+ has been a victim of some sort of elder abuse. Seniors in assisted living facilities are particularly vulnerable to abuses of all kinds. Coverage for abuse and molestation should be included in your assisted living facility insurance portfolio. This coverage protects the facility not only against actual cases of abuse, but also offers legal help to those facilities that may be wrongly accused of abuse. This coverage is not included under a standard Commercial General Liability policy, as intentional acts are excluded from coverage. While it may be included under some package policies for care facilities, it may need to be purchased separately in some cases. Board of Directors Many assisted living facilities are run by a board of directors. As such, the board members themselves may be subject to scrutiny on a personal level due to decisions made as a board member. Directors and Officers Liability (D&O) insurance should be in the portfolio of any company...

WannaCry? Ransomware Is Latest Cyber Risk

May 2017 found many organizations scrambling to neutralize the latest ransomware threat: a cryptoworm named WannaCry. Large portions of the National Health Service in the UK, FedEx, and many other companies were affected, unable to provide services to their clients and customers, as their computers systems were on lockdown. Data on their servers was being held for ransom. WannaCry spread quickly. It was estimated that 230,000 computers were infected in just the first 24 hours after it was released, crippling businesses all over the world. How is ransomware like this spread, and what can you do to protect your business? How Is It Spread? WannaCry and other ransomware viruses are spread via email. The email contains a harmless looking link that, when clicked, can take down an entire network. Data on the network is then held hostage by the WannaCry hackers until a specified sum of money (usually in bitcoin) is paid for release. You can keep your company from becoming a victim of this ransomware by learning (and teaching your staff) to recognize fraudulent emails.  Signs of suspicious email include: You do not recognize the sender. You know the sender, but the message doesn’t look like something this person would send. The subject and/or attachment name is vague or confusing. The email contains spelling or grammar errors, or random capitalization of words. Many people within your organization are cc’ed on the same message. You were not expecting the message or it is not related to business. Such suspicious emails should be deleted unopened if at all possible. If opened, do not click links that appear unusual, or are...

An Illustrated Guide to Fake Certificates

This blog has addressed the topic of fake certificates in the past. These fraudulent documents happen in nearly ever industry, but are most commonly provided by contractors to homeowners. A homeowner recently attempted to file a claim with Hayes for work done by a tree trimmer. The tree trimmer provided a certificate of insurance to the homeowner from Hayes, using an old certificate from when they were insured by Hayes years prior. This fraudulent certificate provides a wealth of information on how to spot fakes. From The Top The certificate date appears to be in a slightly larger font that the rest of the type on the page. It also could be more centered.  Most likely, the perpetrator scanned the certificate and edited it without checking the font size. The Contact Name shows a department name rather than a contact name at the agency. The phone number is also invalid. The number listed should be a valid number for the agency. Insurer B on this particular certificate does not actually do business in California. KEMI is a Kentucky based insurance carrier. The Middle There are a couple of things wrong with the middle section. To the left, there are handwritten Xs in the boxes. While this may have been common in the past, technology today makes checking a box as easy as clicking a radio button in the software. Many policies may have a Per Project Aggregate and a Per Location Aggregate on the same policy, but the certificate will usually only indicate one or the other. The middle box shows the same policy number for the General Liability,...

Hayes Insurance Attends Legal Conference

In February 2017, Galen Hayes and his team were asked to meet with California attorneys who wish to better serve the cannabis community. The conference was held in San Francisco, and was also attended via teleconference by lawyers in Los Angeles. These legal firms sought to better understand the unique challenges of cannabis-related industries. In particular, they wanted to discuss various types of insurance coverage and the protection those policies offer to both medical and recreational marijuana operations. Among the questions asked was whether marijuana businesses may obtain insurance coverage for governmental action. At this time, this coverage is not available to this business sector, but as the legality of medical and recreational marijuana continues to spread across the country, it is believed that this coverage will become available. There is still quite a bit of risk involved with marijuana operations, as this industry is still not legal at the federal level. It is important that cannabis industry owners and operators retain the counsel of competent attorneys, as well as proper insurance coverage through the most knowledgable brokers in the industry, Hayes...

Work Comp for Business Owners

It is often said in business that the largest single expense to employers is actually their employees. Many business owners agree, especially when you include benefits, paid time off, and insurance. One place a business owner may look to save money is on Workers Compensation Insurance premiums. In particular, the owner may elect to exclude himself from coverage.  Here are some things to consider when deciding whether to exclude yourself from coverage under the Workers Compensation policy. When It’s A Bad Idea To Exclude Yourself In most states, coverage is automatically extended to an owner or officer.  This is a good thing, for the following reasons: Your medical insurance won’t cover you for an on-the-job injury. Coverage can be denied and referred back to workers compensation in the case of an on-the-job injury. Your family needs your income. A major on-the-job-injury might mean you can’t work for weeks, months or longer. If you don’t have short or long term disability insurance, your lost income could be a burden to your family. Owner/officer payroll is capped. No matter what your take home pay, there is usually a cap in most states on how much of your owner/officer payroll can be used to calculate premium. Your insurance broker can tell you what the cap is. Certificate Holders require it. Some certificate holders, particularly government entities and large contractors, may require that all employees be covered, even owners. When It’s A Good Idea To Exclude Yourself Any good insurance broker would recommend that owners and officers be included on the Worker’s Compensation policy. However, there may be a couple of instances when...

Flood Insurance for Businesses

Flood insurance is more important now than ever. Flood events across the country in the last few years are affecting not only homeowners, but also businesses. In August 2016, Louisiana experienced flooding that cost over $3.8 billion in losses. Included in that figure were over 6,000 businesses, many uninsured. What many business owners don’t know is that flood is not a covered peril under your business package insurance policy. It also cannot be included in these policies. Flood insurance is always a separate policy, but it can be purchased in different ways. Here is what you need to know about flood insurance for businesses: Basic Flood Insurance The National Flood Insurance Program (NFIP) offers basic flood insurance limits for businesses. Because this is a government program, coverage is limited to: $500,000 or replacement cost value per structure at any one location, whichever is less. $500,000 or replacement cost value in contents coverage per structure at any one location, whichever is less. In addition, policies are limited to one structure per policy.  Even if your building is worth more than $500,000, the limit may not exceed $500,000. Underwriting requirements include a flood elevation certificate, two pictures of the structure front and back and payment in full of the policy premium. Unless the insurance is for a loan closing, there is typically a 30-day waiting period before the policy goes into effect. Private Market Insurance While NFIP used to be the only game in town, this is no longer the case. There are private insurers available to insure businesses for the peril of flood. The good news is that these insurers...

Domestic Employees: Should You Pay Under The Table?

It is a common complaint this time of year: taxes are complicated and expensive. Between your mortgage, your earnings, your itemized deductions and your domestic employees, filing taxes can be a long and arduous process. Wait, what do domestic employees have to do with taxes? According to the Internal Revenue Service (IRS) Publication 926, you should withhold taxes from pay made to domestic employees. How do you know who to pay and how much? What Are Domestic Employees? The IRS says that if you pay someone to do work around your home, and you control not only what they do but also how they do it, that is considered a domestic employee. These include: Nannies Cleaning People Caregivers Drivers Yard workers Maids Other types of employees may qualify as domestic employees. Check with the IRS to determine if a worker in your home is a domestic employee. Service providers who control their own tools, hours and services may or may not be considered domestic employees. These include plumbers and lawn services, or any other service that hires and pays their own employees. Some service providers could be considered employees for tax and workers compensation purposes. To find out how to determine who is or is not an employee, click here. What Should Be Withheld? For tax year 2017, any domestic employee paid more than $2,000 in the tax year must have Social Security and Medicare deductions withheld. In addition, their employer must also pay Social Security and Medicare on their behalf. Federal taxes do not need to be withheld unless the employer and employee agree to this in advance....

Case Study: Cuisinart Products Liability

In December 2016 Cuisinart was the talk of the town, and not in a good way. Consumers of Cuisinart food processors began reporting mouth injuries and tooth damage related to pieces of processor blades that ended up in their food. Cuisinart announced a massive recall of the riveted blade products sold in the US and Canada. The recall encompassed products sold from July 1996 to December 2015. The large window for item production causes other issues, which we will address in a moment. What Does Products Liability Cover? Products liability insurance is the coverage that would respond to bodily injury and property damage claims caused by products produced by the policyholder. Sometimes this coverage is included in a general liability insurance policy, but for companies that produce large numbers of consumer products it is often stand-alone coverage. This insurance protects against medical claims for bodily injury or illness, financial claims against property damage, and legal defense costs should a claim turn into a lawsuit. A large number of claims due to a product or products could result in a class action lawsuit, like in the case of the Cuisinart recall. With such a lengthy timeline of products being sold, where is the products liability coverage? Which Policy Responds? This is a complex question with many possible answers: All of the Cuisinart blade injuries have been reported in the last several months. Products liability for any bodily injury or property damage may come from the current policy. Or would it? The affected products were sold over a 19 year period. Products liability coverage is typically triggered by a claim, so...

Flood Insurance FAQs

Most insurance policies can be purchased through private insurers. Flood insurance, however, can usually only be obtained through the National Flood Insurance Program (NFIP). This government program has rules and regulations that are different from private insurance, and these differences can cause frustration and confusion for consumers looking for flood insurance. Below are some frequently asked questions about flood insurance and their answers. Why can’t I buy flood insurance RIGHT NOW? Flood insurance is one of those policies that people don’t think they need until they do. The storm of the century is bearing down or the levy is about to break, and those without flood insurance want to purchase it right away. Insurance is meant to mitigate accidental risk, those things that cannot be foreseen. With a flood bearing down, it is not in the best financial interest of the flood insurance carrier to sell a policy that might pay out face value before the premium check even clears the bank. NFIP has a 30-day mandatory waiting period on all new flood policies, meaning the policy goes into effect 30 days after the purchase date. They do allow for policies with no waiting period, but only in the event of a loan closing where the mortgagee or bank requires flood coverage. Buy flood insurance before you need it, so if you ever need it, it will be there for you. Why is flood insurance so expensive? The price of flood insurance depends on many factors: Your proximity to waters that may be subject to flooding (oceans, gulfs, bays or rivers). The height above sea-level where your home or...

Consumer Alert: The Latest Scams

We reported recently on an IRS tax scam that affected businesses. A scammer would contact a business via what appeared to be a legitimate email requesting payroll information for employees. This information was then used to file fraudulent tax returns. Scammers don’t just target businesses, they also target senior citizens, and even younger citizens for fraudulent purposes.  Here are a few of the latest scams and a few tips on how to prevent them. Can You Hear Me Now? This scam has been widely reported by news outlets and social media venues. Here’s how it works: Someone calls claiming to be from the IRS, but may sound garbled or the volume may be too low. The caller will then repeat clearly “Can you hear me now?” When the person being called answers “Yes” the response is recorded. The caller will then hang up, call back and ask the consumer if he or she is aware of money being owed and asking if the consumer plans to repay the debt. The call recording is then manipulated using the previously recorded “yes” response to make it seem as though the consumer owes the caller money. How to protect yourself or your loved ones: With the prevalence of caller ID, many consumers no longer answer a call from an unknown or unrecognized number. A legitimate caller will leave a voicemail message if the matter needs your attention. Don’t say “yes”. While this may take some getting used to, there are plenty of ways to answer in the affirmative without saying yes. Try “I can hear you now” or “you sound fine to me”....

The Basics of the WCJUA

Every state has laws for businesses regarding Workers Compensation insurance. What these regulations don’t take into account is how difficult it is for certain industries to obtain coverage. Fortunately, state labor departments and insurance departments have created Workers Compensation Joint Underwriting Associations (WCJUA) to handle hard-to-place policies. What is the WCJUA? The WCJUA or JUA goes by different names in different states. It may also be called the high risk pool, a residual market or an assigned risk plan. Insurance companies that do business within your state are required to write a certain percentage of high risk customers. These companies may split the risk with other insurance companies contracted to write these businesses. JUAs are heavily regulated by the state and require strict application and underwriting procedures. Because of the typically high risk nature of JUA customers, premiums are higher than in the open market. Who Needs the JUA? A JUA is almost never the first stop for any business, and is usually the insurer of last resort for employers. You may need the JUA if you fit into any of the following categories: High number of high payment claims. High risk industry (for example: roofers, tree trimmers, circus, skydivers, etc.) Chronic premium payment issues. Small number of employees. New business owner with no prior industry experience. Your insurance broker may be required to submit your application to at least three other open market insurers and receive declinations prior to submitting an application to the JUA. What To Expect The WCJUA is much the same as any other workers compensation insurer in that they offer both employers liability coverage...

Case Study: Samsung Galaxy Note 7 Product Recall

In the fall of 2016, Samsung found itself with a problem: the Samsung Galaxy Note 7. Just a few weeks after their latest product was released, consumers were reporting charging problems with the battery. These weren’t just any problems, either. The batteries were catching fire and exploding.  They issued a voluntary recall to anyone concerned about the battery. Samsung thought they had solved the problem by changing battery manufacturers, but the problems persisted.  Soon they issued a formal recall of all Note 7 devices, even going so far as to issue a software update that would render these devices inoperable (though some wireless carriers refused to push the update). Product Recall Coverage Products liability insurance would cover bodily injury and property damage to consumers that were injured by the exploding batteries. This would include damage to clothing, furnishings, or vehicles. Medical expenses related to burns experienced by consumers would also be covered. However, the costs to recall products that may cause damage or injury is usually not covered under a standard products liability policy. That’s where product recall insurance would come in. Product recalls are happening every single day, and they can have a massive impact on the cost of doing business. In December 2016 the Food & Drug Administration (FDA) reported 51 separate product withdrawals or recalls, nearly 2 per day. In the first 8 days of February 2017, the Consumer Product Safety Commission reported 5 product recalls. Costs of Product Recall The Samsung recall affected not only the Note 7 in its first iteration, but also the faulty phones that were issued to replace the original faulty...

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