Business Income Insurance: Disaster Protection

75% of businesses that suffer major property damage close within three years. These businesses lacked a contingency plan and/or proper financing to aid in recovery.

So many possibilities exist for a business interruption to occur that it’s hard to imagine not preparing for one of them. Here in Florida, floods abound. Hurricanes and tropical storms shift course on a moment’s notice, offering little time for people to brace for impact. Is your business prepared for such an occurrence? Will a business interruption present a roadblock that permanently damages your organization, or will proper planning reveal a stepping stone that leads to future success?

Business Interruption Insurance

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National Safety Month

According to NOAA (National Oceanic and Atmospheric Administration), a natural disaster has affected every US region since 2011. Are you prepared? Are your employees prepared? Is your business prepared? There are lots of resources available from FEMA and FloridaDisaster.org, the Florida Division of Emergency Management, to assist with building an emergency plan for businesses and families.

flooded city

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What Does Business Owners’ Policy Cover?

Business Owners PolicyWhile no one enjoys shopping for or paying for insurance, insurance is the most efficient way to finance a business’s risk with minimal costs. Furthermore, small businesses face specific challenges that larger corporations might not face when they decide on their annual insurance policy.

While larger corporations need master property policies with dozens of locations and warehouses, small businesses often have one location that they lease, not own. Larger corporations need an extensive general liability and umbrella insurance policy, but small businesses often only need $1,000,000 to $2,000,000 in limits. A larger company could absorb a few thousand dollars in losses or deductibles, while small businesses often have a tighter cash flow and need to minimize the risk of unexpected expenses.

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The Importance of Cyber Liability Insurance

How does your small business collect and store sensitive, confidential customer data and financial information?  If you said on your laptop, backed up to the cloud and accessible with your smartphone or tablet, you are not alone.  Your business, like most in this increasingly cyber-dependent age, is susceptible to a data breach.  Did you know that 1 in 3 documented data breaches occur in businesses with less than 100 employees?1  Additionally, 60% of small businesses close their doors within 6 months following a cyber attack.

Importance of Cyber Liability Insurance

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How to Prepare for an Insurance Audit

An insurance audit can happen at any time. There are two lines of coverage that require an audit at the end of the policy term: Workers’ Compensation and General Liability.  The insurance company(s) will request either a voluntary self-audit or an audit performed by an auditor representing the insurance company(s).

How to Prepare for an Insurance Audit

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What are the Types of Commercial Insurance? How Will They Protect My Business?

Running a business can be tough, and choosing the right type of commercial insurance can be even tougher. With the wide variety of agents, brokers, products, and services available today, making the right decision is difficult. Choosing the right products and buying them from the right agent often brings fear of the unknown and paralysis of analysis (or the paradox of choice). Cut through the weeds of insurance and streamline your business decision-making process.

Different Lines of Insurance

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Commercial Property Insurance- What is enough?

The right commercial property insurance can ensure your business can bounce back in the event of a disaster or accident. With so many different policies and coverage types, it is hard to determine which one will provide the right coverage for your business. Replacement Cost and Actual Value Coverage will determine the how loss is calculated and the replacement of items after an unforeseen event, based on the value of the item at a specified time.

property insurance

Replacement Cost

Replacement cost policies cover the cost to repair or replace a building with materials of the same or comparable quality. This type of coverage replaces and repairs items to its identical state, so it does not include improvements required by building codes or laws passed since the building was built. It also does not include the value of any land and is determined by the amount needed to hire contractors and purchase materials to repair or replace a building.
Theoretically, the replacement cost of a commercial property insurance policy should be lower than its market value. Replacement cost only has to account  for building materials and labor to determine compensation. However, the costs of material and labor can fluctuate. This makes it possible for the replacement cost of a property to be higher than its market value.

Replacement cost policies offer more financial protection in the event of a loss. It does not take depreciation into account when determining compensations. However, this type of coverage is usually more expensive and may not be the best option for every property. Without continuous maintenance and renovations, the value of a building will generally depreciate over time. It may be better to opt for a less expensive policy that still protects the operations of your small business.

Actual Cash Value

Actual Cash Value covers the cost to replace or repair a property, similar to Replacement Cost. However, under an actual cash value policy there is a deduction in compensation to account for the depreciated value of the original property. Commercial property covered under an actual cash value policy will be replaced or repaired using modern construction techniques and materials. Actual cash value policies generally have lower premiums than replacement cost policies and may make more sense for particular types of properties.

The Difference

Replacement Cost and Actual Value aim to make your business whole again after a loss. The difference lies in how the loss value is calculated. Here’s an example that highlights the difference between Actual Cash Value and Replacement Cost.

A small business owner/cafe installed a large screen TV purchased for $1000 4 years ago. There was a theft and the TV was stolen.

If the owner has an Actual Cash Value policy:

The small business owner will receive the difference between $1,000 and the depreciation for the time he/she owned the TV. The insurance company determines the useful life of a TV is 10 years, so 10% depreciation would apply to the TV each year.

4 years x 10% per year = 40% depreciation

$1,000 x 40% = $400 depreciation

$1,000 – $400 = $600 Actual Cash Value.

So the payment from the insurance company would be $600 minus any applicable deductibles.

If the owner has a Replacement Cost policy:

The small business owner would receive the total amount it would cost to buy the same (or very similar TV) at a store today…with a receipt. Using the same example from above, the insured would receive 1 check for $600 which is the Actual Cash Value and with proof of purchase showing the same or very similar TV, he would receive a 2nd check for $400. Both checks total $1,000, or the Replacement Cost Value. The business owner must factor in a deductible, if applicable.

What’s Right for Your Business?

When deciding between Replacement Cost and Actual Cash Value for your commercial property insurance policy, it is important to review the exclusions carefully. The exclusions will determine if additional policies are necessary to meet your business’ specific needs. Also, some business loans have requirements on the type of coverage the business must have. Be sure to check with your lender for these requirements.

The specific elements of your business will also help determine which policy is right for you. For example, a store located in a very old building in a popular urban environment will not depreciate as quickly as a new office building located in a business park. The store is more location-sensitive and does not require a specific type of building to operate. An actual cash value policy with lower premiums may make more financial sense than a replacement cost policy with higher premiums.

If you are still unsure on the type of commercial property insurance that is right for your business, contact one of our agents at Wallace, Welch & Willingham. We will be happy to assist you in determining the right coverage for your business.

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Is Your Golf Course In Danger?

With the presence of Arnie in the 60’s, Jack in the 70’s, and Tiger since 1996, the game of golf has grown into one of America’s favorite past-times.  According to the National Golf Foundation, an estimated 25.7 million Americans played at least one round of golf last year.  The game is no more popular than in the state of Florida.  According to the AARP, our great state has 1055 golf courses.

Golf club owners, managers, and superintendents have an invaluable amount of real estate to protect in order for Floridians to continue playing our courses.  This actual experience below brings to light potential exposures, where you may think your insurance agent and insurance provider are going to protect you in the event you suffer a loss.

A client of ours was recently exposed to the outer rain bands of the season’s first tropical storm.  I recall emailing him the night prior to express concern over his property and to reassure him of our commitment to protect his business in the event they suffered a loss. He woke up the next morning to something out of a horror movie.  His facility had suffered 6 inches of rain and experienced significant washout of many of his bunkers, flooded fairways, downed trees, and backup from many of the course drains due to debris. Without a doubt, the club had sustained significant damage!

Golf Course Insurance

A major washout near the tee area of a local golf course after a recent storm.

Is your club prepared to deal with this sort of catastrophe?

More importantly, does your agent representative truly know how to interpret the policy they sold you and can they help remedy the situation so that you may re-open and restore the integrity of your golf club in an expedited manner?

Wallace Welch & Willingham has extensive expertise insuring Golf and Country Clubs throughout Florida.  We are prepared to be your partner in times of need and have every resource available to help you get back in business when disaster strikes.

David Cosper | Hospitality and Risk Practice Leader

727.522.7777 ex 110 | dcosper@w3ins.com


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Hurricane Season: What kind of insurance does your business need?

Hurricane Season: What kind of insurance does your business need?Hurricane season started once again on June 1st. So what does this mean for your business? There are several coverages that could make or break you should the right storm hit at the right time.

Property Coverage

Hurricane insurance coverage is provided in your property insurance. Depending on your location, your proximity to the coastline, and your carrier, you will have several different types of coverage under your policy.

All Peril – This is the most comprehensive coverage – covering everything except for what is specifically excluded in the policy.

Named Peril – Will cover ONLY what is specifically noted in the policy. It’s usually less expensive but offers little coverage.

Wind and Hail – this is the most restrictive of the three coverages and only covers damage caused by wind or hail.

All Peril, Named Peril, and Wind & Hail will all have a percentage deductible attached. It can vary from a dollar amount to a percentage amount. A deductible is the amount of loss paid by the policyholder before the insurance will begin.

Flood Insurance

Water damage is not the same as wind or storm damage. Most commercial property policies exclude coverage for losses caused by rising water. Much of the damage caused by hurricanes in coastal areas involves rising water which is not covered under most insurance policies. In cases where homes or businesses sustain concurrent wind and rising water damage, some insurers attempt to separate the covered wind damage from the uncovered rising water damage and pay what they owe. Other carriers deny the claims entirely citing the flood exclusion. It’s very important to make sure you are covered for both wind and rising water.

Business Interruption Coverage

Even if you have proper coverage under your property and flood policies, your business could be in danger. Could your business survive being closed and non-operational for 30 days or more during repair time? Most small business will find this lack of income detrimental for their business, and it causes many to close their doors. Business Interruption insurance will kick in after the 72-hour deductible period.

Make sure you are covered this hurricane season and contact your insurance advisor to go over your policies.