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Heather Wood

FIVE QUESTIONS TO DETERMINE YOUR BUSINESS INTERRUPTION EXPOSURE

By Business Protection Bulletin | No Comments

For many organizations, the loss of income coupled with continuing expenses after a fire or other disaster can be even more devastating than the damage itself.

To increase the chances that a loss will not shut operations down permanently, organizations must assess their exposures accurately by asking some questions.

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  • What is the most the organization could lose from a shutdown? Commercial Property insurance policies define “loss of income” as the sum of the expected pre-tax profit or loss and necessary continuing expenses. For example, if the expected profit is $300,000 and necessary continuing expenses are $100,000, the potential loss of income is $400,000. To calculate their exposure to business interruption losses, organizations should refer to their balance sheets, profit and loss statements, and cash flow statements. Insurance companies also have worksheets available to assist with the calculation.
  • How much insurance should be carried? Once the organization knows the dollar amount of its exposure, it must decide how much Business Interruption insurance to buy. The key considerations are the length of time the insurance is likely to apply and the coinsurance percentage the organization must meet. Coverage usually begins 72 hours following the damage to the property and ends when business resumes at another location or when the building should be repaired with reasonable speed, whichever occurs first. If the organization decided that the coverage period would be around six months, it could buy an amount of insurance that would satisfy a 50% coinsurance requirement. If the interruption would last longer, higher coinsurance percentage and limits would be necessary.
  • How long will it take business to return to normal? Even after operations resume, it could be some time before revenue returns to normal levels. Customers who had gone elsewhere during the shutdown might be slow to return. The standard insurance policy extends coverage for 30 days after operations resume, but some businesses might need more time than that, especially if their businesses are seasonal. For example, a seaside restaurant in New Jersey that makes most of its profits during the summer will need additional coverage even if it can re-open in November.
  • How much of the normal payroll expense will continue during the shutdown? The organization will need the continuing services of some employees while it attempts to re-open, but other employees might not be necessary. For example, accounting staff will be needed to pay mandatory expenses such as property taxes and collect receivables earned before the shutdown. Employees who stock shelves will not be needed if there are no shelves to stock.
  • Does the business depend on other businesses for revenue? A business can suffer a loss even if its own building is untouched. A loss that shuts down a key customer or supplier or damage to nearby property that causes authorities to close off access to the street can devastate a business’s bottom line (this happened to many businesses affected by 9/11). Special insurance coverage is available to protect against this possibility.

Our professional insurance agents can help you answer these questions and identify insurance companies that can meet coverage needs. With some effort and planning before a loss happens, an organization can emerge from a shut down and return to profitability.

ESSENTIAL RISK MANAGEMENT TIPS FOR SMALL BUSINESS OWNERS

By Business Protection Bulletin | No Comments

As every business owner knows, risk is an unavoidable part of doing business. However, it is manageable and controllable. Although it is a challenge that requires time and experimentation, finding a perfect balance between profitability and peace of mind is essential. It’s impossible to eliminate risk completely, so it’s important to set realistic goals. Policies that are enacted in an attempt to fully eliminate risk could actually hamper business growth.

The Importance of Risk Management. The common concept of risk management among small business owners involves simply purchasing regular insurance protection. Other aspects of protection often escape consideration. Risk management is much more complex than simply purchasing insurance and implementing rules. These are both necessary parts of every plan. However, there are many other things to consider.

Tips for Implementing a Realistic Risk Management Plan. It’s best to start with a simple plan that is easy to follow. The prime goals should be mitigation and management of business risks. After trying the plan, analyze it and make any necessary changes or additions. Consider the following steps in order to make a positive change:

1. Identify the Risks. There are some risks that are universal. However, there are also some that are specific only to certain types of businesses. It’s important to conduct a thorough risk analysis to identify them. The best way to accomplish this is to use a standard risk checklist. There is a Small Business Insurance & Risk Management Guide available from the Small Business Administration. This guide is helpful in outlining potential risks. While going through the list, pay close attention. Most business owners are able to think of other potential risks that are unique to their situation during this process. Some of the most important initial risks to consider include:

  • Property losses that occur from loss of use, physical damage or criminal activity.
  • Liability losses that happen to customers and are the fault of the business.
  • Business interruption losses stemming from fires, natural disasters or other unpredictable occurrences.
  • Key person losses or the loss of important employees, which results in a negative impact on the company.
  • Employee injury losses that occur when an employee is injured on the job and must be compensated.

2. Determine How Vulnerable the Company Is to Various Risks. Consider the various risks and how much each one would cost the company. Not all types of companies are as vulnerable as others. Companies with high vulnerability to expensive risks need to make those specific areas a strong priority in their risk management plan. The risks that aren’t worth worrying about should receive a much lower priority. Keep in mind that it’s not feasible to eliminate every possible risk. However, some need much more consideration than others. For example, a paper manufacturing company should consider the risk of employees losing limbs on dangerous presses in the manufacturing line before they become concerned with possible paper cuts to fingers of employees in the inspection department. As an overall rule, the cost of preventing the risk should never exceed the amount the estimated loss that might result from that risk.

3. Create a Contingency Plan. There is more to this aspect than purchasing insurance. Be sure to implement plans that place employee safety higher than efficiency. Install a security system to protect all property from theft and damage. Avoid transactions with unknown customers. Implement plans to train supervisors to minimize loss of key employees.

4. Purchase Adequate Insurance. In addition to purchasing enough insurance, it’s imperative to purchase the right types. Some of the key types of coverage to purchase include:

  • General Liability insurance, which covers the legal liabilities faced from injuries to third parties. Medical expenses, property damage and bodily damage are typically covered.
  • Professional Liability insurance, which covers allegations of malpractice, negligence and other errors in services.
  • Product Liability insurance, which covers the expenses related to injuries or damages resulting from a defective product. This is essential for all companies producing tangible products.
  • Commercial Property insurance, which covers loss and damage costs for business properties. Business interruption is typically covered by this provision.

5. Revise as Necessary. Be sure to review and update risk management plans regularly. Reassess risks and make any necessary changes. It’s important to have regular review meetings with department heads, owners and a risk management consultant. Be sure to inform the insurance company of any changes or new risks.

Business owners who plan to raise capital from investors must be especially vigilant in their risk management planning. Having a good plan and updating it regularly is important for gaining their trust and making them comfortable with the opportunity to invest.

TOUGH DAYS AHEAD FOR MANAGERS WHO DON’T WANT TO BE LEARNERS

By Your Employee Matters | No Comments

Today’s ‘pandemic’ economy in which we’re trying to get more out of everybody and everything, without having to pay for it, put managers under overwhelming pressure to perform. What can you do about it?

  • Keep growing and pushing yourself to work on your “highest and best use.” Focus on those “A activities” that produce bottom-line results. Next, delegate or outsource the B level activities (administrative functions) to the extent possible. Finally, ditch the C activities, which are simply time-wasters. Be a freak about doing this if you want to survive without burning out.
  • Become a great communicator. Whether you’re passing along the leadership vision, mission, goals, and values of your organization; working on an individual employee’s performance; or trying to learn more about what motivates employees, train yourself in communication. To be great at managing conflict, change, performance, engagement, career paths, strategic planning, and so forth without studying these disciplines, you’ll need more than experience or osmosis. So turn off your TV or computer game, ditch that fantasy league or online gossip, and pick up a book or program that will help you learn in these areas. Of course if you have access to the HR That Works program, the special reports, training modules and webinars would be a good place to start.
  • Learn what employees want from you:
    • -Be clear with them
    • -Don’t play favorites
    • -Do what you say you’re going to do, when you said you’ll do it
    • -Provide feedback on a regular basis
    • -Help define their career path
    • -Keep yourself emotionally balanced

-Remember, a poor relationship with managers is one of the top three reasons for employee turnover. Managers also influence the other two reasons (hiring a misfit, or failing to provide career growth and opportunity).

DISCLOSURE, HOME INSPECTION, AND A FINAL WALK THROUGH CAN HELP ENSURE YOU’RE GETTING THE RIGHT HOME

By Personal Perspective | No Comments

When buying a home, one with walk-in closets, a big kitchen, a big yard, or other attractive features is nice, but even the best features are a moot point if the physical condition or legal status of the home is problematic. Many potential buyers are completely confused when it comes to knowing what information on known material facts of a property must be disclosed by the seller.

Details about the legal status or physical condition of a home are called material facts. These details are often issues that aren’t obvious to a potential buyer just from looking at the home. For example, a legal status issue could stem from an ownership rights claim on the home by an ex-spouse of the seller or a structure built by a neighbor on the property line (encroachment). Whereas, physical conditions might include a leaking roof, termites, or foundation crack.

Much of the confusion regarding property disclosure is due to the fact that the law regarding property disclosure isn’t uniform. Most states do require a property disclosure form be completed by any homeowner attempting to sell their home. However, the law greatly varies by state as to what legal and repair issues must be disclosed by law. Real estate agents are an excellent source to find out what types of disclosures are legally required by the state the home is being sold in.

Typical property disclosures would inform the buyer of the following issues:

  • Leaking roof or foundation walls
  • How old shingles and roofing materials are
  • Mildew or mold damage
  • Termite damage
  • Sewer and septic system issues
  • The square footage of the home
  • Property taxes
  • Any person with a pending property claim
  • Any road plan that will subtract at least 10 feet from the front yard of the property
  • Any structure on the property for sale that also falls on an adjacent property
  • A home that’s in the flight path of the local airport
  • If any gas or oil tank is buried in the property


A disclosure form is extremely helpful in identifying any legal or physical problem(s) with a potential home, but it shouldn’t be the only precaution taken. Once the home has been appraised, the potential buyer should employ a certified and licensed professional home inspector. The inspector will examine the home for existing and potential problems. The potential buyer will then be alerted if there are any unknown problems that they want the homeowner to be responsible for prior to closing; and if there are possible future problems that they might be responsible for in the future. The potential buyer can also better evaluate if the home has a fair asking price related to any necessary repairs.

After the home inspection is complete, the home inspector will provide the potential buyer with a written report detailing the inspection results. This usually takes about 15 days post-inspection to receive. It’s important that a buyer allots enough time in their purchase offer to review the inspection report thoroughly.

The buyer might want to consider negotiating with the seller to pay for part of the repairs before closing if the report unveils too many problematic areas. When negotiation fails and/or the buyer feels the home is unfairly priced, the purchase can be canceled. If the offer of purchase included a time frame by which the buyer retains the right to back out of the deal, there usually isn’t a cancellation penalty if the purchase is canceled within the specified time frame.

As one last assurance that this is the right home, walk through the property about five days prior to closing to ensure that negotiations have been followed through with or that the home is in the agreed upon condition. Keep in mind that unless specified in the purchase offer, the seller can refuse a final walk through.

Promote Workplace Eye Wellness Month With These Tips

By Employment Resources | No Comments
During the month of March, your company can commemorate Workplace Eye Wellness Month and Save Your Vision Month. Several tips assist you in promoting healthy eyes and these important events among
your employees.
Evaluate and Adjust your Workspace
Staring at a computer screen or repetitively assembling widgets for hours at a time strains eyesight. Remind employees to evaluate their workspace, identify any strain or damage risks, and make adjustments that protect their eye health, such as:

  • Turn down the screen brightness and reduce blue light.
  • Reposition work materials to between 20 and 26 inches from your eyes.
  • Adjust your chair and posture so your worksite is slightly below your eyes level.
  • Look at something 20 feet away for at least 20 seconds once every 20 minutes.
  • Increase the screen font or use a magnifying glass to see small items.
  • Blink regularly throughout the day or use eye drops to prevent dry eye.

Wear the Correct Eye Safety Equipment

Employees who work with hazardous materials or operate equipment need to wear the proper eye safety equipment. Glasses, goggles and helmets, along with three steps, protect their eyesight.

  • Wear eye safety gear at all times.
  • Ensure the eye protection fits properly.
  • Replace worn or torn eye safety equipment immediately.

This month, schedule an eye safety equipment inspection. Additionally, remind employees of the procedure for reporting eye accidents or injuries. You may also offer a refresher course on how to use the eye wash and first aid stations.

Encourage a Healthy Diet

The right foods can prevent eyesight deterioration and protect eyes from damage. For optimal eye health, encourage your employees to eat foods that are high in zinc, vitamin C, vitamin E, and omega-3 fatty acids, such as:

  • Green leafy vegetables.
  • Non-meat proteins, including eggs, beans and nuts.
  • Oily fish like tuna and salmon.
  • Citrus fruit and juice.

To promote an eye-healthy diet, stock these foods in the break room or serve them during employee lunches. Also, include recipes that feature these eye-friendly ingredients in your company’s monthly newsletter.

Promote Regular Eye Checkups

An optometrist checks for vision changes and reviews eye health. The eye’s health and condition can even indicate an employee’s risk of developing diabetes, hypertension or other chronic illnesses.

If possible, provide vision insurance so your employees can visit an eye doctor at least once every year. Remind employees this month to take advantage of their vision benefit and ensure their eye health.

During Workplace Eye Wellness Month, you can follow these tips to protect your employees’ eye health and eyesight. Your insurance agent can provide additional tips that promote eye wellness this month and all year.