1. What is business interruption insurance and why is it so important to business owners?

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2. My policy has a coinsurance clause, how am I affected by this?

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3. Should my commercial auto liability limits be as high as my commercial general liability limits?

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4. In a time when home values are depressing, can I lower my insurance coverage and save some money?

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5. The value of my business inventory varies greatly by season. What can I do to avoid paying higher premiums for inflated values during periods of reduced inventory?

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6. I lease a building to an outside business but I'm worried about liability exposure from my tenant's business. What can I do to protect myself?

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7. I have health insurance through my employer, but was offered an additional policy to fill in any gaps. I'm worried about the high cost of health care for my family and myself but I don't want to spend money foolishly. What should I do?

Answer - Question 1

In the event of a significant loss, business owners are exposed to far more than physical damage to their property.  For example, if a retailer's store is destroyed by a severe fire the owner might be forced out of business, even if insured against property loss, due to cessation of earnings because the store is unusable.  Business interruption coverage provides either replacement of lost earnings and/or an additional expense allotment until the premises is repaired.  Business interruption coverage is not a "one size fits all" proposition.  Different policy forms fit different types of businesses.  Consult with your agent first to ensure that your business interruption coverage is appropriate for your type of business.

Answer - Question 2

Property coinsurance is designed to penalize policyholders that intentionally or inadvertently under insure.  Insurers consider this adverse selection and impose a claim settlement reduction if the property is insured for less than 80% of its value.  For example, if Mr. Jones insures his building valued at $100,000 for $60,000, a $30,000 claim would be settled as follows:

60/80 X $30,000 = $22,500 (Amount of Settlement)

Coinsurance has an entirely different meaning in hospital or major medical insurance. Here the coinsurance limit (usually 80%) specifies the amount of covered expenses paid by the insurer with the balance absorbed by the policyholder.

Answer - Question 3

The operation of autos usually represent a greater exposure than other sectors of a business operation. This is due to frequency of use and higher accident probability. Yes, your auto liability limits should be at least as high as your general liability limits.

Answer - Question 4

Home sale values and real estate tax appraisals do not move in synchronization with rebuilding costs. Labor and building material costs generally move up, and so should your coverage limit. Use a higher deductible to save money.

Answer - Question 5

Business personal property can be covered under a reporting form provision that allows the insured to report changing values to the insurer periodically or by seasonal increase endorsement.

Answer - Question 6

A landlord can be added as an additional insured to a tenant's general liability policy by endorsement. Often office and personal lease agreements require the lessor to be designated as additional insured under the lessee's policy.

Answer - Question 7

It depends on the type of health coverage being offered. If the policy is a hospital expense supplemental or hospital indemnity policy designed to pay a periodic specified amount during hospital confinement, then you may be on the right track. This type of policy does not coordinate benefit payments with any underlying insurance. However, traditional hospitalization or major medical policies will coordinate benefit payments with any primary insurance. In this case, you would be paying more in premium with no added protection.