Introduction to Property Insurance

This is an excerpt from the article “Introduction to Property Insurance”. For more information, please visit the Business Insurance section of

Property insurance insures your business against loss or damage to the location of the business and to its contents. It will also insure against loss or damage to contents under your control. Finally, if your business rents or leases a location or travels to other physical locations, then your business will be required by the property owner to carry property insurance by the terms of the lease or contract.

The more kinds of loss the policy covers, the higher the premium. Property insurance comes in two forms:

  • Broad Form – This type of policy identifies a number of different types of disasters and covers against loss from all identified causes in the policy.
  • Single or Specific Peril – This type of policy insures against loss only from the identified peril. This is typically a separate fire policy. However, other single perils can be insured against, for example, terrorism.

For most small businesses, a broad form property insurance policy is included in a packaged policy known as the “business owners’ policy” and will be the best coverage for the premium dollar. Some businesses, however, either because of specific risks or unusually high risk, may not be eligible for such a package. In that case, several specific peril policies may need to priced and examined.

Electrical Safety Checklist – Light Bulb Safety

This is an excerpt from the article “Electrical Safety Checklist”. For more information, please visit the Electrical section on

Light Bulb Safety

Light bulbs can cause their share of problems in a home. Putting a bulb with wattage too large for a socket is a problem. Always be sure the bulb is screwed into the socket securely. Loose connections between the bulb and its contacts cause the bulb, socket, and wiring to heat up, causing bulbs to burn out quickly and can lead to electrical fires. Wire insulation can break down when overloaded. You can replace regular incandescent bulbs with compact fluorescent bulbs (CFL’s) that not only use a fourth of the energy incandescent bulbs do, but also last up to ten times as long.

Business Insurance Checklist – Information for Every Location Where You Do Business


Meeting with your agent or broker is critical in proper business insurance planning. Use the checklist below to make sure you have all the information you will need to fill out the various applications, have a meaningful discussion with your insurance professional, and to insure that you purchase the right business insurance for your company.

Information for Every Location Where You Do Business

You will need all of the information for every location where you do business this includes:

  • Addresses of all locations
  • Copies of relevant leases
  • Names and addresses of all landlords
  • Names and addresses of any location where your employees operate as contractors
  • How each location is constructed (masonry, metal, or wood)
  • Whether the location has sprinklers
  • Square footage and the type of space
  • The number of floors in the structure.

Information for Every Titled Vehicle Owned By The Business

You will need:

  • Vehicle Identification Number (VIN)
  • Model year
  • Color and make

for every titled vehicle owned by your business. Note: this is not limited to automobiles! All titled vehicles include: trailers, watercraft, road equipment, motorcycles, anything that is titled.

The is an excerpt adapted from the article, “Business Insurance Checklist.” For more information, please visit


Estate Planning for Business Owners – Learn the 6 Steps to Exiting Your Business

This is from the article “Estate Planning for Business Owners – Learn the 6 Steps to Exiting Your Business”.  For more information please visit the Business Owners section on

At some point every business owner will want to “exit” their business. Many times, however, the owner won’t be able to leave voluntarily but will be forced to do so either due to incapacity or death. Without a proper business exit planning strategy, the involuntary loss of a key person can devastate a business by forcing liquidation during a chaotic time. Thus, proper exit planning should be an important part of a business owner’s financial and estate plans. This type of planning, also commonly referred to as “business succession planning,” consists of six important steps:

1. Setting Financial Goals

The first step in creating a viable business exit plan and strategy is to determine the owner’s long term income needs and retirement goals. From this, the owner will be able to determine how much money the sale of the business must generate in order for the owner to retire comfortably.

2. Figuring Out the Current Value of the Business

Once the owner’s long term financial goals have been determined, the next step to creating a viable business exit plan is to figure out the current fair market value of the business. This is done by analyzing the books of the business and comparing it’s profits and losses with similar businesses in the area. The current value will then dictate whether or not Step Three – Building Business Value – is necessary and, in turn, the approximate time frame for the owner’s exit from the business.

3. Building Business Value

If the value of the business is what the owner expected, then the owner’s exit will most likely fall in line with the financial goals established in Step One. If, however, the value of the business is not as much as the owner expected, then the owner will need to stay active in the business for a longer period of time in order to bring the value up to the level that will allow the owner to exit the business comfortably. This will be the time for the owner to look at ways to increase the value of the business through expense and debt reduction, tax planning, and creative accounting.

4. Selling the Business

Once the owner’s time frame for leaving the business has been determined, the owner should examine the pros and cons of selling the business to an outside third party or insiders such as family members or key employees. The type of purchaser will dictate future employee compensation and incentive packages and tax planning strategies for minimizing capital gains.

5. Creating a Contingency Plan

Even with a comprehensive business exit plan in place, things can go wrong. The owner could become physically or mentally disabled, a key employee could leave or die, or a fire or hurricance could completely destroy the business. Planning for these and other types of unexpected situations should be built right into every business exit plan. Things the owner should consider as part of a contigency plan include buy-sell agreements, key employee incentive programs, and purchasing business, disability, and life insurance.

6. Planning for Death

Once the owner has both a comprehensive business exit plan and a contingency strategy in place, the owner will be able to focus on their overall estate planning goals. Much of the estate plan may be tied directly to the sale of the business if it is to be sold to one or more family members, and this, in turn, will have a significant impact on the owner’s estate plan. On the other hand, once the business is actually sold, the owner’s financial position and holdings will change drastically from what they were while the owner still owned the business. Therefore, the owner must look at their estate plan at each and every phase of the business exit plan and update their estate plan accordingly.


Act Quickly if Water Intrusion Occurs

This is an excerpt from the article “Protect Your Home from Water and Moisture Damage.” For more information, please visit

Act Quickly if Water Intrusion Occurs

If water intrusion does occur, you can minimize the damage by addressing the problem quickly and thoroughly. If water is flowing into the home from burst piping or damaged appliances, shut off the water supply, typically found outside the house or at the meter. Immediately remove standing water and all moist materials, and consult with a licensed building professional who can determine the extent of the repairs necessary. Water damage left unattended can result in structural failure or, potentially, mold growth.

Should your home become damaged by a catastrophic event such as fire, flood or storm, take appropriate actions to prevent further water damage once it is safe to do so. This may include boarding up damaged windows, covering a damaged roof with plastic sheeting, or removing wet, damaged rugs, carpet, or personal belongings. Fast action on your part will help minimize the time and expense for repairs, resulting in a faster recovery.

Electrical Safety Checklist – Circuit Breaker and Fuse Safety

This is an excerpt from the article “Electrical Safety Checklist”. For more information, please visit the Electrical section on

Circuit Breaker and Fuse Safety

Circuit breaker sizes and wire sizes go hand-in-hand. Never connect an electrical wire with an amperage rating less than the circuit breaker that is protecting it. For instance, if a wire is connected to a 20-amp circuit breaker, it needs to be rated for 20 amps also. Look on the outer sheath of the wire to determine what wire size it is. If a circuit breaker trips or a fuse blows, you can bet there is a problem somewhere. Continually resetting breakers and replacing fuses is not the answer to your problems. In fact, you are likely to have an electrical fire if you don’t address the problem. GFCI breakers can be used on circuits exposed to weather and areas prone to water.

Ground Fault Circuit Interrupters for Safety

Ground fault circuit interrupters, called GFCI’s, are used in bathrooms, kitchens, laundry rooms, basements, garages, and outdoors to protect the person using them. If there is a difference of potential in the circuit, the GFCI will trip and open the circuit so you won’r get electrocuted. They come equipped with a test and also a reset button. Monthly checks should be made to test the GFCI’s for functionality.

An Introduction to Workers’ Compensation

This is from the article “An Introduction to Workers’ Compensation”.  For more information please visit the workers’ compensation section on

If your business has employees, you will need workers’ compensation insurance.

Workers’ compensation is a system set up by the state to insure all employees in the state in case of a work place injury. Under common law, the master (employer) is responsible for the injuries that occur to their servant (employee). Before workers’ compensation an employee could sue an employer for their injuries on the job. The employer could defend against the suit by showing the employee was negligent or not doing their job at the time of the injury. Understandably, this system led to a good deal of litigation – none of it benefiting workers, their families, or their employers.

Over time, states set up a system of insurance where all employers were required to participate and in return employees were no longer entitled to bring a law suit for their injuries. Instead, employees submit claims to the insurer and the claims are paid.

By law, you will be required to participate in workers’ compensation. There are exceptions, but the exceptions are few. The exceptions also differ by the state you do business in. As a general rule, if you are self-employed, you do not need to have workers’ compensation insurance. However, you can “opt in” as a self-employed business person.

When you start in your business your premiums will be based on the claims experience of your particular industry. Claims experience is a historical set of data kept over time which statistically predicts the number of injuries (claims) that are likely to occur in an industry. The roofing business and construction contractors typically have the highest claims experience and workers’ compensation premiums are higher for those businesses. Businesses where there is less chance of injury have lower premiums.

After a few years your business will be rated on its claims experience. Typically this rating process will penalize your business with higher premiums for higher than average claims and reward your business with lower premiums for lower than average claims.

Most states also have voluntary employer training/safety programs that can lower premiums. Some states allow businesses to become self-insured by retaining private insurance outside of the workers’ compensation scheme.

If you will have employees, you will need this insurance by law. In a properly constructed business insurance plan, the premiums for workers’ compensation insurance should be considered first and a budget for premiums for other types of insurance considered only after this legally mandated insurance is considered.

Prevent Water Damage Through Good Home Maintenance

This is an excerpt from the article “Protect Your Home from Water and Moisture Damage.” For more information, please visit

Prevent Water Damage Through Good Home Maintenance

You can help prevent future leaks and water intrusion by regularly inspecting the following elements in your home and making sure they remain in good condition.

Flashing: Flashing, which is typically a thin metal strip found around doors, windows, thresholds, chimneys, and roofs, is designed to prevent water intrusion in spaces where two different building surfaces meet.

Vents: All vents, including clothes dryer, gable vents, attic vents, and exhaust vents, should have hoods, exhaust to the exterior, be in good working order, and have boots.

Attics: Check for holes, air leaks, or bypasses from the house and make sure there is enough insulation to keep house heat from escaping. Among other things, air leaks and inadequate insulation results in ice damming. If ice dams collect around the lower edge of a roof, rain or melted snow can back up under the shingles and into the attic or the house. Check the bottom side of the roof sheathing and roof rafters or truss for water stains.

Basements: Make sure that basement windows and doors have built-up barriers or flood shields. Inspect sump pumps to ensure they work properly. A battery backup system is recommended. The sump pump should discharge as far away from the house as possible.

Humidity: The relative humidity in your home should be between 30% and 50%. (We offer an Indoor Humidity calculator on the Home Planner Welcome Page.) Condensation on windows, wet stains on walls and ceilings, and musty smells are signs that you may have too much humidity in your home. Check areas where air does not easily circulate, such as behind curtains, under beds, and in closets for dampness and mildew. Be sure to use bathroom exhaust fans following warm showers or baths. When going on trips, turn the temperature up on the air conditioning, not off. The air conditioning system helps remove moisture from your home. If you are concerned about the humidity level in your home, consult with a mechanical contractor or air conditioning repair company to determine if your HVAC system is properly sized and in good working order.

Air Conditioners: Check drain pans to insure they drain freely, are adequately sloped toward the outlets and that no standing water is present. Make sure drain lines are clean and clear of obstructions. Drain pan overflows usually occur the first time the unit is turned on in the spring. Clean prior to first use with compressed air or by pouring a water-bleach solution down the drain line until it flows freely.

Expansion Joints: Expansion joints are materials between bricks, pipes, and other building materials that absorb movement. If expansion joints are not in good condition, water intrusion can occur. If there are cracks in the joint sealant, remove the old sealant, install a backer rod and fill with a new sealant.

Electrical Safety Checklist – Electronic Devices and Appliance Safety

This is an excerpt from the article “Electrical Safety Checklist”. For more information, please visit the Electrical section on


Electronic Devices and Appliance Safety

If your electronic devices and appliances have ever given you a jolt when you touch them, be sure the ground connection on your cord has not been removed and also check that the outlet has a ground on it. It may be that your appliance has an electrical short to case ground, but the device doesn’t have a path to ground through the wiring. If so, you may need to call an appliance repairman to determine the extent of the problem and possibly an electrician to update the wiring and devices in your home. It could be as simple as a burnt oven element laying on the oven base causing such a problem.

Product Liability Insurance

This is from the article “Product Liability Insurance”.  For more information please visit the product liability insurance section on

Product liability insurance protects the business from claims related to the manufacture or sale of products, food, medicines or other goods to the public. It covers the manufacturer’s or seller’s liability for losses or injuries to a buyer, user or bystander caused by a defect or malfunction of the product, and, in some instances, a defective design or a failure to warn. When it is part of a commercial general liability policy, the coverage is sometimes called products-completed operations insurance.

To understand the need for this coverage it is critical to understand the potential liability. There are generally three types of products “claims” a company may face:

  • Manufacturing or Production Flaws– A claim that some part of the production process created an unreasonably unsafe defect in the resulting product. Recent claims against Chinese manufacturers regarding the presence of dangerous chemicals in their products are an example of this type of claim.
  • Design Defect– A claim that the design of the product is inherently unsafe. The most memorable example is the series of Pinto car cases against Ford in the 1970’s.
  • Defective Warnings or Instructions– The claim that the product was not properly labeled or had insufficient warnings for the consumer to understand the risk. The McDonald’s “coffee case” is an example.

The damages awarded in these claims include medical costs, compensatory damages, economic damages, and, in some instances, attorneys’ fees, costs and punitive damages. Product liability claims can and do put businesses out of business – just ask any of the officers from any asbestos manufacturer.

All to often, resellers, gray market commercial sellers, and retailers fail to secure this coverage. The logic is that, since they did not “manufacture” anything, the coverage is not necessary. However, manufacturers are not the only ones subject to product liability exposure, retailers and wholesalers are often brought into a lawsuit for alleged negligence by the consumer. Most states follow the “stream of commerce” model of liability. This means that if your company participated in placing the product into the “stream of commerce,” it can be held liable for damages to the end-user.

If your company provides any products to the consuming public, then your company needs product liability or completed-operations coverage. In most cases, some form of this coverage will be present in the standard commercial general liability or business owners’ policy. You will need to confirm this with your insurance professional. You will want to have a clear understanding of what is covered (for example, some policies will cover economic damages, but not punitive or statutory damages).

Finally, the premiums on such policies are based upon the type of product, volume of sales, and the role of the insured in the process. Thus, under reporting the volume of sales may seem like a good way to lower premiums or the idea may be to insure only a part of the sales. Don’t under report or try to insure less than the actual amount of sales. This is because there are usually substantial under insurance penalties applied when the insured under insures. On the other hand, you will want to make absolutely sure that your products are properly identified. For example, if you supply step stools, you do not want them categorized as ladders. Ladders will have a much higher premium because of the risk potential.