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Commercial Insurance

Business owners – What exactly is the statute of repose?

Saturday, October 26th, 2013

What exactly is the statute of repose?

Beware you may not like what you read here.
OK, that project is done; let the insurance lapse until we get another
job. Regrettably, this seems to be the attitude of many in the
construction – service business. Unfortunately, we are living in
extremely litigious times, and when there is an issue with a construction
site or a product defect, attorneys are diligently looking for anyone to
sue.

Enter the  statute of repose. The what?

According to uslegal.com, a statute of repose provides a date upon which
the action no longer exists, whether it has accrued by that date or not;
it entirely cuts off an injured person’s right of action even before it
accrues. It is a stricter deadline than a statute of limitations because
it may not be tolled by fraud, discovery of injury, etc.

Note the definition states the statute of repose is a stricter deadline
that the statute of limitations, which incidentally are different in every
state. (Click here for your state). If you are in go out of business; do
not think for a minute that once you are out of business you are immune
from a lawsuit from your past work.

If you were required to maintain a license; there is a reasonable chance
you can be hunted down and sued for something you did or failed to do
years ago.

First, if you are in business you must maintain a General Liability policy
without a lapse even through the slow times.

“Quitting the Business. What to do? This would be an excellent time you talk
with both your attorney and your insurance agent. If your business is sold,
acquired, or taken over by a family member have, your attorney draft into the
agreement that you become a director emeritus (for life). This way anything
that would come to haunt you from your past you will have defense and coverage
to pay a claim.

Going out of business is more problematic, you may be eligible to purchase
a discontinuation of operation policy. If that is not available it may be
advisable to maintain a minimum policy in force to survive the statute of
repose.

Posted in Commercial Insurance, Riskywire | No Comments »

What is the difference between Business Income Insurance – Business Overhead Insurance – Key Person Insurance.

Wednesday, June 26th, 2013
RISKYWIRE

What is the difference between Business Income Insurance – Business Overhead Insurance – Key Person Insurance.
A newsletter of NuSurance Corp
(C) NuSurance Corp

 

As those who know me know, I love to talk about insurance and will take any opportunity to field questions. Just recently I had a physician ask me what they needed to adequately protect the practice. This is truly an open-ended question of which I could talk for hours but the question more specifically is how to protect the business from interruption.

What could interrupt the practice’s daily operation?

1. Weather, Fire or some other peril or natural disaster could render the physical plant (office) useless.

2. The Disability of the Principal.

3. The Death of the Principal.

Those of you, who live in Florida or any coastal state, realize that Mother Nature can be a bitch (sorry but true.) Those living in Florida in 2004 – 2006 remember the devastation that occurred. Not only were homes impacted but also businesses, big and small. The business owners relied on coverage called, Business Interruption Insurance also known as Business Income Insurance and some insurance academics refer to it as Time Element Coverage. That is you are covering the loss of time, since we all know time is money.

Whatever name you prefer, it refers to a property insurance coverage that will cover the loss of income that a business suffers directly from a natural disaster, arson, or even terrorism, if you have selected that coverage. This policy comes in two parts, one defining how the income will be calculated as well as how it will be paid out. The other part will be a list of things that can happen to the practice that will trigger the payment. The list of Perils are usually Basic, Broad, and Special or what is known as “Open Perils” with the latter being the broadest and what all should consider.

Once one of those perils damage the facility, in whole or in part, and make it inoperable, the coverage will “Trigger”. After a negotiated waiting period, which was selected at the time of application, usually three days, the policy will then pay monies to cover the business expenses and even the profits of the business until which time the damaged facility can be repaired or replaced, or the practice is moved permanently to another location.

This coverage may be purchased by adding it to a BUSINESS OWNERS POLICY (BOP) or to purchase it on stand-alone basis. Generally, for most practices, adding it to your BOP will be the most efficient way to add this valuable coverage.

Three notes here, first, if you are adding this to your Business Owner Policy, make sure the limit are sufficient to cover a time frame that you think will be reasonable to replace your facility or repair it. Second, ask your agent if “Extra Expense” coverage is available. Finally realize that one of the major flaws for flood insurance is there is NO business interruption contained in the policy.

The Disability of anyone is devastating. But for a business owner this can be excruciating, if they have neglected to purchase Business Overhead Expense (BOE) or Business Expense Insurance Coverage. This is sold by a licensed life and health agent and is considered a “Health” related product. A disability insurance policy is needed to replace the income of a person but a business owner must have two. One policy is needed to cover the loss of their income and the second is to cover the business overhead. Upon the disablement of the principal (as defined in the policy), the policy pays a monthly benefit based on actual expenses, not anticipated profits. These policies are designed for businesses that rely on a few people (or one person) to produce revenue.

Please Note – It is extremely important to request an explanation of the definition of “disability” as this is a price point issue and if you are not careful the cheapest option may become a very expensive decision.

Finally the ultimate, death of the principal obviously can cripple a business. Here the big question is what are the desires of the principals and the families? The desires are expressed in what I call a business will, purchase agreement or perpetuity plan. Strangely enough insurance agencies must have a perpetuity plan before a company will contract and let an agency market their insurance product. The plan outlines what will happen after the principal passes. Who will ultimately run the business? Do you have a friendly competitor? If you are a sole practitioner, perhaps you may want to engage in an agreement for them to purchase your practice after your death. Partners or other stockholders absolutely must have a purchase agreement if that is the desire of the principal. Whatever the agreement, make sure the agreement is funded and the best funding mechanism is a “Key Person” life policy.

I know the next question is what about the deductibility of these policies? And this is where I refer you to your accountant.

For more information contact Nusurance and we can have an agent cover any questions you may have.
 

Christopher Kazor, CIC, Lutcf

Posted in Commercial Insurance, Riskywire | No Comments »

Who is liable in an employee accident?

Sunday, March 13th, 2011

Is it true that if I ask my employee to do an errand and they are in an at fault accident that my business could be held libel?

Absolutely, anytime you ask someone to do something you become vicariously libel for their actions. Check with your agent to endorse your Business Owner Policy or General Liability policy with “Hired and Non-Owned Auto” or if you have a commercial auto policy make sure your policy has Liability , symbol 1 “Any Auto”. Of course you can contact us.

Christoher Kazor, CIC
Nusurance
813.514.6982

ASK AN INSURANCE QUESTION

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Posted in Auto Insurance, Commercial Insurance | No Comments »

What is the best way to cover me in a company vehicle?

Saturday, December 18th, 2010

Q: I have a company vehicle that is assigned to me – I and the company are covered in this vehicle when it is being used for business purposes but what coverage do I need if I happen to be running a personal errand in the company owned vehicle – is it Non-Owned and will it cover property damage, liability and collision????

Carolyn – Gainesville, FL

A: We would add “Extended Non Owned Auto” to YOUR auto policy –

Chris Kazor –
Nusurance

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Posted in Auto Insurance, Commercial Insurance | 35 Comments »
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