Business interruption insurance becomes an essential risk management tool

Business interruption insurance is a key risk management strategy for small businesses.

For business owners, these can be the best or worst of times.

It can be the best of times if you are running your business well, finding a niche in which you can thrive and experiencing success. However, the worst of times can be inflicted upon you by outside forces: crime, weather or some other power beyond your control.

Unfortunately, we see it time and again. Over the past year, we’ve seen businesses trashed by civil disturbances in Ferguson, Missouri, and Baltimore, Maryland. While 2014 was a relatively benign year for hurricanes in the United States, they still caused tens of millions of dollars in damage. Last year there were at least 831 confirmed tornadoes in the United States according to the NOAA. Now as we head toward summer, we’re looking at the start of another tornado season in the Midwest, and hurricane season in the Southeast.

While we hope these events will not occur, hope is not a strategy. A forward-thinking business prepares for potential calamity while hoping it never comes.

Unexpected events can happen anywhere, at any time, and could deal your business a crippling blow. According to the Small Business Administration, as much as 60% of small businesses never reopen their doors following a disaster. Small businesses are frequently underinsured and many do not carry sufficient business interruption coverage.

Whether it’s protests that get out of control, flooding caused by a hurricane, wind damage from tornados or the rising tide of cybercrime, businesses need to prepare for business interruption. Unfortunately, many small- to medium-sized companies fail to take time to do the needed scenario planning to protect their interests from disasters, and yet their survival may be at stake.

Business interruption insurance has become an essential risk transfer tool. Coverage provides resources that aid in recovery following a catastrophic event and can help get a company back on its feet quickly, enabling it to pay staff, meet credit obligations, and provide peace of mind for employees and shareholders.

Here’s how business interruption insurance works: Coverage is composed of two parts – business income and extra expense.

Business income coverage insures net income that would have been earned. “Would” is the key word here because unlike a loss due to physical damage, business income is based on assumptions of what would have happened had there been no loss. Business income insurance provides coverage for operating expenses that continue even after a loss such as payroll, leases and mortgages, and employee benefits. This insurance is a tremendous incentive for key employees to continue working for the business rather than seeking employment elsewhere.

Another component of business interruption insurance is extra expense coverage. This covers potential costs beyond normal operating expenses, including any expense that helps avoid or minimize business downtime and allows operations to continue. For instance, the cost of renting office space at a temporary location would be covered. Relocation expenses and costs to equip and operate a replacement or temporary location are also considered extra expenses.

Recent news headlines put the emphasis on an additional component of business interruption coverage that should be considered: civil authority insurance, which covers a loss of business triggered by a governmental action (police commissioner, mayor, state attorney general, etc.) that restricts access to the insured premises. A great example is an ordered evacuation ahead of a hurricane that’s about to come ashore.

Determining the exact business interruption coverages your company needs can be a rather complex process. It takes time to do scenario planning and work through the various potential calamities that could befall a business.

While many business owners and managers don’t want to consider these pessimistic scenarios, taking a cold, hard look at the possibilities is a smart thing to do. After all, there’s some truth to the title of the business book from former Intel CEO Andy Grove, Only the Paranoid Survive.

But don’t consider planning for calamity as paranoia. Think of it as advanced preparation that just might help your business survive if a disaster strikes.

Contact us for all your Insurance needs! (321)725-1620 

Bob Lancaster Insurance

Serving Florida since 1964

A Newbie's Guide to Flood Insurance

“Here I am. Rock you like a Hurricane”

Hurricanes are great as long as they are kept in song lyrics or as team names. Unfortunately, they can cause unspeakable damage to homes, businesses and when “Raindrops Keep Falling on My Head”, floods can cause billions of dollars in losses. Of course, it’s not only hurricanes that cause flooding. Flooding occurs most commonly when “A Hard Rain’s A-Gonna Fall” and when natural watercourses do not have the capacity to convey excess water. If you’re new to flood insurnace, here are a few things you need to know:

• Flooding happens in all 50 states
• Just a few inches of water from a flood can cause thousands of dollars in damages
• About a foot of water can move a car
• Only 6 inches of water can knock a person off their feet
• ‘Flash Floods’ often bring walls of water 10-20 feet high

Homeowners insurance does not cover damage from floods. Even if your home is NOT in a special flood hazard area (High Risk Zone), you can still suffer from the effects of flooding. Fun Fact: 25% of all flood claims come from low hazard flood zones. Homeowners who want flood protection have two basic choices: Standard or Preferred Risk Policies.

Standard Policies
The coverage that is available under a Standard National Flood Insurance Policy usually includes building and contents coverage. Replacement coverage is only available to select policies that must meet the following conditions:

1. Insured building must be a single family dwelling.

2. It is your principal residence, meaning you live in the structure a minimum of 80% of the year.

3. The building coverage is at 80% of replacement cost. Or at the maximum limit of 250k.

 

Preferred Risk Policies
Preferred Risk Flood Policies were created for homeowners and tenants in low to moderate flood hazard areas. To qualify for a Preferred Risk Flood Policy, you need to own a one-to-four family dwelling or non-residential property in a low to moderate flood hazard area that meets certain requirements.

So, when your neighbors are asking, “Who’ll Stop the Rain?” you’ll be the one “Singin’ in the Rain” knowing your home and its contents are covered!

                                 Contact us for all your Insurance needs! (321)725-1620

Bob Lancaster Insurance

Serving Florida since 1964

Hitting the Road on 2 Wheels? Plan Ahead for Maximum Fun

Prepare and Pack for a Motorcycle Trip

Whether you’re headed to the nearest state park or traversing multiple state lines, a little planning will help you make the most of your summer motorcycle getaway.

Not sure where to start? Our tips will help you figure out where to go, what to pack (spoiler alert: not too much) and how to get there safely.

Where to Go
No, you don’t need an exact plan. But you do want to have a general idea of where you’re headed; you can always switch it up on the fly.

• Trip-planning resources abound online. Try Harley-Davidson’s ride planner or locate great bike routes in all 50 states at motorcycleroads.us.
   
• Book hotels online or by phone. Often you’ll get better rates than you would by just showing up at the front desk.
   
• When you have a general plan, be sure to let friends or family know where you’re going and when you’ll be back.

What to Pack (and What Not to Pack)
Packing smart – not just light – is one of the best ways to prepare for an extended motorcycle ride. We’ve all been on a trip with someone who brought four bags for three days. Don’t be that person.

• Make a list or you’ll forget something. Guaranteed.
   
• Go light on the clothes. Plan to wear things multiple days and to do laundry during one of your stops.
   
• Bring a spare key, along with emergency contacts (family members, insurance company, roadside assistance, etc.).
   
• If you’re on the fence about bringing something, consider leaving it out — and then buying it on the road if you really need it. Odds are you won’t.

How to Get There Safely
Regular motorcycle maintenance is vital, but so is inspecting your bike prior to hitting the road.

• Before each ride, follow the T-CLOCS inspection protocol: Check Tires and wheels, Controls, Lights and electrical, Oil and other fluids, Chassis and Stands.
   
• Keep the right equipment on hand in case of trouble: A repair kit, your owner’s manual, your insurance identification card, a first-aid kit, a GPS device or map, emergency flares and a flashlight.
   
• Distribute weight evenly when you pack the bike – a road trip means you’re carrying more stuff than you typically do for a shorter ride.

Finally, know your limits when it comes to how much ground you can cover in one day. The more well rested you are, the safer you’ll be — and the more fun you’ll have. See you on the road!

Contact us for all your Insurance needs! (321)725-1620

Bob Lancaster Insurance

Serving Florida since 1964

Homeowners Guide to Assignment of Benefits

What is Assignment of Benefits? Learn what you need to know and avoid the pitfalls of signing the wrong documents.

          

 

It’s a scene that has been portrayed countless times in movies and on television. A desperate individual in a rush, usually due to an emergency or stressful circumstance, is persuaded into signing a document by the promise of a quick fix to their problem. As the story unfolds, the individual is shocked as the unforeseen consequences of the hastily signed document come to pass. This enduring Hollywood plotline has become a harsh reality for numerous Florida home insurance customers who have signed a document that includes Assignment of Benefits (AOB) language following a household emergency. To prevent becoming the next unwitting star of an AOB drama, please learn how you can protect yourself and your family.

 

How Assignment of Benefits Starts

Following a pipe leak or other household accident, your first instinct might be to call the proper contractor to help you get your home back to normal – fast! The contractor is ready to start working, but before he begins repairs he asks you to sign some “standard documentation.” He might say something like “I can’t begin working until these documents are signed.” He might even offer to help relieve you of the “burden” or “headache” associated with dealing with your home insurance company. Wanting to resolve the problem as quickly as possible, you sign the paperwork, unaware that it’s an assignment of benefits document or a contract that includes an assignment of benefits clause.

 

Important fact: You should always call your Florida homeowners insurance company first to ensure that your loss is properly documented and maintain control of the process.

What Does Assignment of Benefits Mean?

So what exactly did you just agree to? By assigning your benefits (claims proceeds) to your contractor, you’ve just signed over all rights to your claim. The contractor is now in total control of reporting the amount of loss to your insurance company and negotiating the payment. You, the homeowner, are no longer in control of your insurance claim.

The Issue

Now that your contractor is in control, he can bill your insurance company for work he hasn’t done, overcharge your insurer, or simply take your proceeds and never even begin working on your home. Either way, you can on the hook to pay for your contractor’s scams.

The Consequences

If the inflated bill exceeds what is covered by your homeowners insurance policy, you’re on the hook to pay the difference. The contractor could place a lien on the home, and contractor liens in Florida can be enforced by foreclosure. This type of fraud, while extremely costly to individual homeowners who’ve fallen victim to the scam, affects all Florida homeowners. Fraud is currently one of the primary drivers in home insurance premium costs. AOB fraud is far from a victimless crime!

 

Good to know: Although AOB scams are often associated with water extraction claims, unscrupulous roofing contractors are a growing source of AOB fraud.

How to Prevent Yourself From Becoming a Victim

• Following water damage or a home emergency, the first call should be to your homeowner’s insurance company. They can refer a licensed, experienced and reputable contractor. This will also help expedite your claims process.

 

• Never partner with a contractor who requires you to sign an assignment of benefits document.

• Ask the contractor for proof of liability insurance.

 

• Never sign a document you don’t fully understand. When in doubt, call your homeowners insurance company for help.

 

• In the event of a family member’s home emergency, make sure to tell them not to sign anything that requires them to assign their benefits to a contractor.

 

                                     Contact us for all your Insurance needs! (321)725-1620

Bob Lancaster Insurance

Serving Florida since 1964

Hiring a Home Contractor Guide

When hiring a contractor, there are several important factors to consider and research prior to making a decision on who you’ll hire.

The State of Florida requires that certain trades require specialized training and licenses. The state also has limits on what functions contractors can do on-site. Contact your homeowner’s insurance company for recommendations of contractors in your area, and as you continue your research, please use these helpful tips.

Your Contractor Should be Licensed and Insured

Check that the contractor's license exists and is in good standing.

When you receive the state license number, verify that it is a real license number associated with the contractor’s name and is in good standing with the state of Florida. Visit the State for Florida Division of Professional Regulation website at http://www.myfloridalicense.com/dbpr and click on the “Verify a License” link in the top menu. Here you will see the current status of the license and when it expires. After you’ve checked the validity of the license, make sure there aren’t any complaints by clicking the “View License Complaint” link at the bottom of the screen of any selected license.

Verify that the contractor is insured.

During the interview process, ask the contractor to provide you with proof of workmans compensation and liability insurance.

               

Watch for Red Flags

Pay attention and look for signs if the contractor...

• Doesn’t make eye contact or take notes; is not friendly.
• Promises guarantees as a sales pitch. It’s only a reliable guarantee when it is supported by a warranty company.
• Wants to work “off book” to get paid cash and save you money.
• Offers you discounts for getting your friends, family or neighbors to hire their services.
• Offers you a discount for using material left over from another job. The material could be stolen or defective.
• Solicits door-to-door. This may not be a concern, but be wary if they are not local.
• Asks you to sign an “Assignment of Benefits” agreement.
• By signing this agreement, you could end up paying for more than what’s covered in your policy. If your repairs are claim related, check with your insurance company first.
• Pressures you for a quick hiring decision.

 

Entering into Contract

You and your contractor need to agree on the project plan, establish the cost of material, and create a scope of work.

 

Leave nothing to chance: discuss with your contractor the repair or replacement of doors, windows, trim, wall coverings, flooring and other structures. Everything that goes into a project should be put in writing. Make sure your selections are documented and are included as part of the contract.

Doublecheck the plan. Check measurements and make sure all of the electrical and plumbing requirements are what you need.

If you have any questions, ask your contractor early in the process. You should have a clear understanding of what is involved to repair or replace the damage to your home. It is a good idea to consult with legal counsel to review the proposal the contractor provides you. An experienced attorney will be able to identify if any information is inaccurate or missing.

                                Contact us for all your Insurance needs! (321)725-1620

Bob Lancaster Insurance

                                                                 Serving Florida since 1964

4 Factors That Can Make Convertibles Expensive to Insure

Check Car Insurance Costs Before Purchasing a Drop Top

So your heart’s set on driving off the dealership lot with the top down and the sun on your face, the envy of each onlooker you pass. But, have you checked in with your insurance agent about the cost of insuring a convertible?

You may think it’s only a myth that convertibles are expensive to insure, but, in many cases, there’s some truth to the notion.

It’s important to have realistic expectations about the cost of insuring a convertible. To help, here are four reasons why you may spend more insuring a convertible than you would a less envy-evoking ride (the best way to know what will or won’t impact your rates, of course, is checking insurance costs with your local agent):

1. Convertibles Cost More to Purchase, More to Insure
   Car insurance rates can vary greatly from vehicle to vehicle. In general, the more your car is worth, the more it will cost to insure. Convertible cars cost more to purchase than a similar model with a fixed top and not just because they’re so fun drive. It’s because they have added safety features and additional moving parts that operate the top. Therefore, convertibles can also cost more to insure.
    
2. Higher Horsepower, Higher Insurance Costs
   If your convertible just so happens to be a sports car with a V6 or V8 engine, too, you should expect to possibly pay more for car insurance. Cars with a higher top speed are at greater risk of a high-speed collision.
    
3. Soft Top Convertibles Are Prone to Theft and Vandalism
   Slicing open your convertible top may be an act of vandalism, a way for thieves to steal items from inside your car or a way to make off with the car itself. Because of these soft-top risks, convertibles may cost more to insure.
    
4. Hardtop Convertibles Have Added Weight
   The weight of your vehicle can factor into your car insurance premiums. A retractable hardtop adds considerable weight, and possibly insurance costs, to your vehicle.

Of course, many other factors influence how much you’ll pay to insure a convertible. These include your age, your driving history and the amount of driving you do. So, don’t skip the check-in with Bob Lancaster Insurance on your way to purchase a convertible. Be certain you can afford both the monthly car payments and the monthly insurance costs.

It may sound like we’re trying to sway you from the car of your dreams, but we’re not. We just want you to be financially sound and protected when you’re rolling with the top down.

Contact us for all your Insurance needs! (321)725-1620 

Bob Lancaster Insurance

Serving Florida since 1964