October 2017

The Federal Emergency Management Agency (FEMA) reports that over 40 percent of businesses affected by a disaster do not reopen. Whether your business faces a natural, technological or human-caused disaster, you can get back to business quickly in several ways.

Anticipate Disasters

Of course, you cannot always predict disasters, but you can anticipate them. Consider this list of common disasters your business could face.

1. Natural disasters

• Floods
• Earthquakes
• Hurricanes
• Tornadoes
• Widespread illnesses or pandemics

2. Technology-related disasters

• Computer failure or malfunction
• Software malfunction
• Data breach
• Cyber attack
  
  

3. Human-caused disasters

• Accidents
• Intentional acts such as theft or fraud
• Acts of violence
• Terroristic acts

Access Your Business Contingency Plan

After creating a list of disasters that could affect your business, you’re ready to create a business contingency plan. It’s part of your emergency preparedness strategy. This backup plan outlines the steps you’ll take if you ever face a disaster, and it will address:

• Business continuity
• Emergency response
• Crisis communications
• Information technology
• Incident management
• Employee assistance

Some of the questions this document answers include:

• Who is the go-to contact?
• How will we accept, fill and track orders?
• What alternatives are available if our vendors are non-operational?
• What’s the best way to secure data?

Examine your business contingency plan today and make sure it addresses all your needs. With it, your business can regroup quickly after a disaster strikes.

Purchase Insurance

You probably carry typical business insurance such as liability, property and employee coverage. Read these policies carefully, and store copies of your insurance documents in a safe place where they are easily accessible any time.

If you see gaps in your coverage or notice that you don’t have coverage for certain disasters, purchase additional policies. An umbrella coverage or flood insurance are two examples of insurance products that protect your business. For more details on how to prepare insurance-wise for an emergency of any kind, talk to your insurance agent.

Seek Assistance

Several organizations are available to help your business rebuild after a disaster strikes.

1.The Small Business Administration – Apply for a low-rate, long-term loan through the SBA’s Office of Disaster Assistance.

2.Your bank – Talk to your banker about a low-cost loan or other financial assistance.

3. Insurance agent – File a claim and discuss your ongoing needs.

4. Community – Ask your community, including neighbors, clients and vendors, to help clean up, rebuild and return to business as usual.

When disaster strikes, your business must be prepared. These steps can help. If you don’t have these steps in place, consider implementing them today before a disaster strikes. One day, you may be very thankful you were prepared!

Your small business insurance may cover data breaches, auto accidents and weather damage. To get reimbursed, though, you need to file a claim. Use these six steps to ensure your insurance claim is processed quickly and properly.

1. Contact your insurance agent immediately.

Before you touch anything, contact your insurance agent. He or she needs to see the the full picture of the damage in order to give you all the benefits to which you are entitled. Rest assured that most insurance companies employ quick-response teams that specialize in assessing damages and filing claims quickly.

2. Document all damages.

In some cases, you may need to move inventory or make repairs right away to prevent further damage. For instance, if the water line breaks and floods your office, go ahead and move furniture and equipment. Just be sure to always take pictures or a video before you move or fix anything. Even small details such as where a chair was sitting when the office flooded could be an important factor in ensuring you receive the full insurance benefit.

3. Assemble witnesses.

Eye-witness accounts of accidents and other events affect your insurance claim. Ask any witnesses to share what they saw. Their testimony verifies the event and can help you prove your case with the insurance company.

4. Save all damaged good.

The moldy insulation that caused a company-wide illness or the faulty ladder that caused an employee to break her leg is evidence. Instead of tossing damaged goods into the trash, save them for the insurance agent to inspect. These items can affect your insurance claim.

5. Know what your policy covers.

While you have a basic understanding of your business property or auto insurance policies, your coverage might not cover damages caused by natural disasters or accidents involving personal vehicles. You certainly can call your insurance agent to verify coverage, but also understand your policy. You’ll save valuable time if you skip the claims process for any damages not covered by your business insurance policies.

6. Appeal an unfair insurance estimate.

Insurance agents are on your side, but they also have to report to the insurance underwriter. That’s why you may get an estimate for damages that’s lower than what you expected. In this case, you can appeal the decision. Ask for a second opinion from an impartial party as you get the amount you deserve.

Take these six steps when you file an insurance claim. They help you and your agent process the claim as quickly as possible so you can return to business as normal. Why not take time right now, though, to review your business insurance policies. Ensure they provide adequate coverage for your needs.

Consider the following chain of events:

An engineer designs the site and grading plan for a construction project. After the project’s completion, the developer finds that the parking lot is not draining.

In March, the developer writes to the engineer, accuses him of failing to follow recommendations in a geotechnical report, and orders him to create a plan to correct the drainage problem.

The engineer responds by saying that his design was sound but the contractor’s work was defective.

The engineer and developer hold several meetings to determine what caused the problem. The engineer sticks with his version of events.

In May, the developer writes again to the engineer, accusing him of committing design errors and shirking responsibility for the problem.

In August, the engineer notifies his liability insurance company that the developer is making a claim against him.

Sometime later, the developer sues the engineer, architect and contractor.

Question: When exactly did the claim occur, and when should the engineer have reported it to the insurance company?

In this case, the company said it did not have to provide defense or coverage because the engineer violated the policy conditions by reporting the claim late. In the company’s opinion, the developer’s March letter was a claim that the engineer should have reported. A court said that the case would have to go to trial, as the report’s lateness was unclear. The policy insured against claims occurring during the policy period and made within 60 days after the end. When, however, does a dispute become a claim, triggering the obligation to report it to the company? The answer turns on the policy’s definition of “claim”:

The court applied this definition to the March letter, asking whether a reasonable person would have considered the circumstances known to the engineer as a possible claim. In the court’s opinion, the answer was no. Until the developer’s May letter, the court said, a reasonable person could have concluded that the developer was unsure as to who was responsible for the drainage problem.

The letter ordered the engineer to develop a plan to correct the problem. The engineer believed he would be paid for creating this plan, an assumption the court found to be reasonable. Because one reasonable view of the letter was of a request and not a demand for services as compensation for damages, the court said that the case must go to trial to resolve the question of facts.

This case illustrates a dilemma for all sorts of organizations. If they fail to report incidents that eventually turns into lawsuits, their insurance companies might try to deny defense and coverage because of late reporting. Conversely, if they report every incident, no matter how minor, their companies could eventually decide to drop their coverage because of frequent losses, even if most of the reports amount to nothing. To deal with this problem, some policies permit circumstance reporting.

The policy that ultimately covers the claim is the one in effect when the insured reports the circumstance to the company, if a claim results from that circumstance.

Check with one of our insurance agents to find out what the reporting requirements are in your professional liability policies. Know what’s in your policy and what it requires you to do so that you don’t jeopardize your coverage.

The ISO Commercial General Liability Coverage Form can seem like a map that starts you out on a main road, takes you smack into a dead end, but offers you a right turn that you can take if you meet certain conditions. It begins with a broad promise and a hint that the promise isn’t quite that broad, then continues with a list of items that narrow that promise.

However, some of those items contain a few words that actually make the promise a bit broader again. Somewhere in that twisting road lies the answer to whether the insurance will cover your business’s legal liability for an accident.

The form actually has three coverages, but the one most business owners are concerned with is Coverage A, Bodily Injury and Property Damage. The first part of Coverage A is the Insuring Agreement, which states that the insurance company will cover the insured person or organization’s legal liability for bodily injury or property damage to others. A key phrase, however, is that the company will pay amounts for occurrences “to which this insurance applies.” How do you know when the insurance applies? That’s where the list comes in.

Right after the Insuring Agreement is a section labeled Exclusions. This section begins with the sentence, “This insurance does not apply to: … ” and goes on to list 17 categories of occurrences. The insurance does not apply to any occurrences that fall within the meanings of those categories. The categories include things like pollution; injuries to the insured’s employees; ownership and use of motor vehicles, aircraft and watercraft; causing or contributing to a person’s intoxication; damage to property the insured owns or possesses; and loss of electronic data.

While these items narrow the insurance coverage considerably, some of them contain clauses that add a little coverage back in. For example, while the insurance does not apply to property damage arising from a contractor’s completed work, the exclusion gives back coverage if the property damage arose from work a subcontractor performed on the contractor’s behalf.

In a claim situation, different burdens of proof apply to either the insurance company or the insured organization, depending on what each one is claiming. The insured has the burden of proving that an accident falls within the Insuring Agreement. To do this, the insured must show that an “occurrence” that took place during the policy term caused bodily injury or property damage to someone else. If the insured cannot prove any one of these elements, the policy will not cover the loss.

The policy defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Therefore, the insured must prove that an accident (a piece of lumber falls and strikes another contractor’s employee on the back) occurred during the policy term and caused bodily injury or property damage.

Once the insured meets that burden, the insurance company now has the burden of proving that one of the exclusions applies. For example, it must prove that damage to an HVAC system the insured installed arose out of some defect in the system. If it cannot, then the insurance applies to the loss and the company must pay for the damage. If it can, then the burden shifts back to the insured to show that an exception to the exclusion applies.

If the insured can show that a subcontractor installed the defective components that malfunctioned and damaged the HVAC system, then the exception to the exclusion applies and the insurance company must pay the claim.

Contractors should work with insurance agents who are knowledgeable about the CGL policy and can answer complex coverage questions. This policy can provide millions of dollars in protection for a business, so it is important for the business owner to understand it.