Protecting Your Business: Commercial Insurance Pitfalls

Presented by Dickenshied Cravillion Insurance Services

Introduction

Debra Verstegen, Agent

Over 15 years of experience in commercial property & casualty, commercial health

insurance, life & disability insurance, business continuation planning, and estate planning.

Dickenshied Cravillion Insurance Services is a full service independent agency located in East De Pere, serving Northeast Wisconsin

since 1872.

Pitfall #1: Underinsurance

Pitfall # 1: UNDERINSURANCE

Recent Example:

Total blanket Replacement Cost for 3 buildings and

Business Personal Property was listed on a business policy for $789,000.

Realistic Replacement Cost is really $1,850,000.

The business had been with the same agent for years. The agent had supposedly been doing annual reviews.

Pitfall #2: Mismatched! Owner’s intentions and the contract

If my building was destroyed, I would….

Build the same building …same floorplan, square footage, materials, etc.

Build a completely different building

Take the money and move to a warmer climate

REPLACEMENT COST : Build the same building …same floorplan, square footage, materials, etc.

FUNCTIONAL REPLACEMENT COST or AGREED VALUE: Build a completely different building.

ACTUAL CASH VALUE: Take the money and move to a warmer climate. Depreciated value.

Pitfall #3: Legal Liability for Leased Locations

The property owner is responsible for primary

coverage of his building, unless you have a triple net lease that requires

you to cover the building.

What if you, the tenant, are

responsible for the damage?

SUBROGATION

Pitfall #4: Material Misrepresentations can void coverage.

Incorrect information in insurance contracts may be the fault of

the insured client…..or the agent.

It’s YOUR legal contract. Make

certain it is right.

Pitfall #5: The Exclusions

One area in which the insurance industry falls short is….

DISCLOSURE.

Take the time to read the exclusions in each policy part. Especially watch out for

PUNITIVE DAMAGES EXCLUSIONS

(Insurance companies must pay punitive damages in Wisconsin, unless the carrier

specifically excludes them.)

Pitfall #6: Owners and Work Comp

C corp: Owners are included unless they exclude themselves.

S corp: Owners are included unless they exclude themselves.

LLC: Owners are excluded unless they include themselves.

Sole proprietorship: Owners are excluded unless they include themselves

Owners & Work Comp: Medical and Disability Exposures

If you are excluded from Work Comp, you need to be certain that your health insurance coverage has 24 hour coverage (would cover work-related injury).

If you are covered under a spouse’s plan, you definitely do NOT have 24 hour coverage.

If you are on a group or individual plan, your carrier likely needs to be notified that you need 24 hour coverage, and there may or may not be a charge for it.

Strongly recommended: Long-term disability coverage to protect your income in the event you are unable to work.

Payroll for Owners on Work Comp: 2012

S or C Corp: Minimum payroll $13,312 Maximum payroll $66,612

LLC, Sole Proprietorship, Partnerships$44,408 flat

payroll

Pitfall # 7: Employment Related Practices Liability…Do you have it?

If you have employees, you

need this.

General Liability coverage does

NOT cover employment

related liability claims:

harassment, discrimination, and

wrongful termination

The 7 Protected Classes

Race Color National Origin Religion Sex Age Disability

Why carry EPLI?

Risk management help. Have best practices in place.

Document, document, document.

Your insurance carrier will defend you. Defense costs.

Insurance limit available to pay judgments.

Thank You