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Insurance Pitfalls


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This presentation goes over two costly mistakes that people make when purchasing insurance. The presentation goes over two important coverages: Hired and Non-Owned Auto and Business Income.

Published in: Economy & Finance
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Insurance Pitfalls

  1. 1. Insurance Pitfalls <ul><li>Hired and Non-Owned Auto </li></ul>
  2. 2. But I Just Sent Her Out for Staples (A Story About Hired and Non-Owned Auto) <ul><li>This small business owner asked one of his employees, (a woman in this case), if she could pick up some staples on her way back from lunch.  The Office Manager had accidentally forgotten to reorder and the office had run out.  </li></ul><ul><li>Well as fate would have it, after picking up the staples from Office Max, this young lady got into an at-fault car wreck driving back to the office.  Nothing fatal or serious but two cars were involved and there was approximately $30,000 in damages.  </li></ul><ul><li>The employee mentioned to the other drivers that she was on an errand picking up staples from Office Max.  A few weeks later the small business owner received a letter in the mail stating his organization could be sued for the damages.      </li></ul><ul><li>Ryan H; But I just Sent Her Out for Staples ,; March 3 2010 </li></ul>
  3. 3. Hired and Non-Owned Auto <ul><li>Covers auto liability for rented, borrowed, and vehicle owned by others including your employees. </li></ul><ul><li>Examples: </li></ul><ul><ul><li>You send an employee to pick up lunch </li></ul></ul><ul><ul><li>While on a business trip you rent a car </li></ul></ul><ul><ul><li>To impress a visiting client, you rent a limo </li></ul></ul><ul><ul><li>An employee makes a run to pick up office supplies </li></ul></ul><ul><li>If you don’t have a Business Auto Policy this coverage is added to your General Liability Policy </li></ul><ul><ul><li>Ref: Non-Owned & Hired Auto – Why Everyone Should Have It , ; Jan 2006 </li></ul></ul>
  4. 4. Business Income Insurance Massey Mining Accident
  5. 5. Massey opted against Business Income Insurance <ul><ul><li>April 5 th mining accident killed 25 workers </li></ul></ul><ul><ul><ul><li>Standard & Poor placed Massey’s BB- credit grade on watch for a downgrade, citing lost production, workers’ compensation payments, and related lawsuits </li></ul></ul></ul><ul><ul><ul><li>Stock price fell 11% the day after the accident </li></ul></ul></ul><ul><ul><li>Competitor Consol Energy Inc. (mining competitor) </li></ul></ul><ul><ul><ul><li>Purchased business interruption insurance </li></ul></ul></ul><ul><ul><ul><li>$50 Million dollar settlement from insurance company due to a 2007 mine closure </li></ul></ul></ul><ul><ul><li>Loss in revenues may lead to lost jobs for many </li></ul></ul><ul><li>Business Week, Massey Opted against business interruption Insurance (Update3), , April 27, 2010 </li></ul>
  6. 6. How long does it take to recover? <ul><li>What if your business burns down? </li></ul><ul><ul><li>Things to consider if you have a total loss and have to rebuild: </li></ul></ul><ul><ul><ul><li>The time it takes to settle with the insurance company (0.5-3 months) </li></ul></ul></ul><ul><ul><ul><li>How long it will take to get permits to rebuild (6-12 months or longer) </li></ul></ul></ul><ul><ul><ul><li>The actual time of construction, including delays (6-24 months) </li></ul></ul></ul><ul><ul><ul><li>Total time until business is open 12.5-39 Months </li></ul></ul></ul>
  7. 7. Other Things to Consider for BI <ul><li>Waiting Period - When something happens to your income, you want to be compensated from that moment. Make sure there is no waiting period, this is worth the extra few bucks. </li></ul><ul><li>Choose &quot;Actual Loss Sustained&quot; instead of a set number or percentage of income. This way you get reimbursed for all of your expenses throughout the period of the loss. </li></ul><ul><li>Dependent Properties </li></ul><ul><li>Are you subcontracting your production to a local factory? </li></ul><ul><li>What if they have a loss and you don't have an alternative supplier? </li></ul><ul><li>What if the store next door burns down, but passage to your store is blocked? </li></ul><ul><li>Extra Expense - This coverage will pay you the difference between the income you had before the loss and what you are making after. It may take you 6 months to a year to get back to your prior revenue level. </li></ul><ul><li>Make sure your sales figures are accurate on the policy . If you are used to making overly conservative estimates on your sales figures in order to pay a cheaper premium, this may come back to bite you. Business income is often based on a percentage of sales. </li></ul><ul><li>Joe Erle; Joe’s Insurance Tips Blog September 3, 2009 </li></ul>
  8. 8. Types of Insurance I Provide <ul><li>1. Workers’ Compensation </li></ul><ul><li>EX: Employee hurts back picking up a box </li></ul><ul><li>General Liability </li></ul><ul><li>EX: Person at restaurant trips on a spilt drink </li></ul><ul><li>3. Property Insurance </li></ul><ul><li>EX: Building and personal property burn in a fire </li></ul><ul><li>4. Business Auto </li></ul><ul><li>EX: Company car gets in an accident </li></ul><ul><li>5. Professional Liability and Errors & Omissions </li></ul><ul><li>EX: Tax Preparer makes a mistake of return </li></ul>
  9. 9. Thank You <ul><li>Find me online </li></ul><ul><li>Company Website </li></ul><ul><li>My Blogg </li></ul><ul><li> </li></ul><ul><li> search Joseph Erle </li></ul><ul><li> </li></ul><ul><li> – Search Joe Erle </li></ul><ul><li> </li></ul><ul><li> follow: InsuranceSaver </li></ul>
  10. 10. Two Common Insurance Pitfalls By: Joe Erle Commercial Insurance Broker 5 th Avenue Insurance Services [email_address] Office: 619-640-3130 x145 Cell: 805-305-0377 License #0603278