June 2021 - Competitive Edge Insurance

Property Investors: Risk Guide

Let’s set the scene – you’re a property investor or landlord. One of your tenants in your residential property overflowed their bathtub, causing damage not only to their apartment but also their neighbor’s personal property. Or, perhaps your tenant creates smoke damage as a result of a carpet installation gone wrong. As a property investor, the first question that likely pops into your mind is: Am I responsible for paying for this? Is my tenant? As a property investor, owner, or landlord, what should you know to mitigate risk? Luckily, we’ve created this guide to help.

Why You Should Negotiate Coverage as a Property Investor

Why should you ask tenants to name you as an additional insured? Well, considering the headache scenarios listed above, it becomes clear as to why you, as a property investor, might want to negotiate coverage with your tenants.

When a property investor, owner, or landlord allows a tenant to use their property, there is always the risk of receiving blame if an injury or damage occurs. Another hypothetical: Let’s say you’re the owner of Acme Corporation (hi, Looney Tunes!). In one of your stores, a customer slips on a loose piece of tile and tries to sue Acme Corporation, stating that as a result of your failure to maintain the premise, you’re liable for their injury.

You, however, know that these claims are not uncommon and have prepared accordingly by including an additional insured provision in your tenant’s lease. This additional provision requires your tenants to list you, Acme Corporation, as an additional insured.

Because plaintiffs assume landlords, property owners, and investors have “thick wallets,” they are often targets for such lawsuits. As a result, these individuals need to take extra care to protect themselves.

Tenant’s Legal Liability Coverage

The tenant’s legal liability (TLL) coverage can cover losses and damages. According to Insuranceopedia, tenants’ legal liability coverage is “insurance for loss or damage of a property resulting from an action of a person renting space at that property.” Tenant’s legal liability coverage, when purchased by a tenant, covers “the cost of the loss or damage caused by the tenant.” An A-rated commercial insurance carrier is typically who underwrites this type of coverage.

Why Invest in Tenant Legal Liability?

The Horton Group describes TLL as “a win-win for the owner and tenant.” But why? Tenant Legal Liability “is one policy [with] virtually no paperwork that can adequately protect all your properties in a state – inexpensively.”

Working as a master commercial insurance policy under the property owner, investor, or landlord’s name, “tenants are [also] named as additional insureds thus providing coverage for both parties.”

The icing on the cake? Tenant legal liability coverage is easy to administer, typically costing just a small monthly fee between $8 to $12 for tenants.

What Doesn’t TLL Cover?

First, it’s important to note that a tenant’s legal liability coverage is different from coverage that insures a tenant’s personal possessions, also called tenant’s content insurance content policy or renters’ insurance.

In many cases, when it comes to TLL coverage, the coverage only extends to fire, smoke, or leakage damage. Coverage, however, can be obtained on all risks but only through the use of a deductible. Tenants can obtain additional coverage to protect themselves against bodily injuries that might occur on your premises.

So, what does tenant’s legal liability coverage fail to cover? TLL does not cover damage that results from wrongful acts, intentional damage, or claims for a tenant’s personal possessions. These damages, however, could potentially be covered on a Commercial Property Insurance policy.

It’s Time to Best Mitigate Your Risk

There are a variety of different scenarios in which enforcing tenant’s legal liability coverage might prove beneficial. Whether your property is commercial or residential, vacant or filled, industrial, multifamily, and so on, mitigating risk as a property owner is of the utmost importance. And as the adage goes, better safe than sorry.

At Competitive Edge, we take time where others may gloss over details. We make sure to learn about your business as a whole because articulating who you are, as more than a series of profit and loss statements, allows carriers to confidently cover you and your business. Connect with us today to see how we can help you.

How to Measure Your Company’s Cybersecurity Risk

in Cyber Insurance, News

With the increase of cyber attacks on the rise, companies every day worry they will become the next victim. According to Cybersecurity Ventures, the number of cyberattacks has nearly doubled since 2019 and quadrupled since 2016 — with a cyberattack incident occurring every 11 seconds in 2021.

At Competitive Edge, we believe all businesses are vulnerable to cybercrimes, not only large tech corporations. Global cybercrime losses are estimated at $400 billion per year. But not to fret — there are preventative measures your company can take, starting with learning how to measure your company’s cybersecurity risk.

Be Weary of Third-Party Risk

According to a recent study, 59% of companies experience a breach because of a vendor or third party. Although most companies have a variety of security regulations in place, many still fall susceptible to third-party or vendor risk.

The biggest challenge considering third-party risk is gaining real-time data. For example, most companies evaluate third-party risk through an assortment of questionnaires, assessments, or tests. This assortment of data gathering makes it difficult to see beyond just the snippet of information provided, and beyond into the ever-changing terrain of cybersecurity risk.

We recommended evaluating and refreshing what cybersecurity metrics and Key Performance Indicators (KPIs) your company is currently tracking. There are many tools that can help evaluate third parties’ risk prior to onboarding—but the diligence shouldn’t stop there. Continue to monitor your third parties and vendors even after they’ve onboarded to ensure they are upholding best safety practices.

Don’t let third-party risk slip through the cracks!

Define your Company’s Strategy for Measuring and Communicating Risk

Data, data, and more data! When it comes to analyzing cybersecurity risk, it can be difficult to know where to focus your efforts. Risk-based reporting, however, is your best bet. Risk-based reporting, “as opposed to comprehensive, compliance-based, or incident-based reporting… is the approach best suited to reducing your organization’s exposure to cyber threats,” according to BitSight.

Risk-based reporting focuses on the big picture—not the small blips—and forces you to use context to deliver reports, delving into data concerning:

“Past performance
Risk concentration
Industry benchmarks
Financial quantification
Cybersecurity frameworks”

Furthermore, the phrase, “stay in your own lane,” does not apply to companies when measuring cybersecurity risk! In fact, we recommend you look to your competitors to gain further context on your own stance in terms of cybersecurity risk. By measuring your own risk in comparison to similar companies or competitors, you might take more pointed action about where your team’s focus is needed to stay safe.

Make Your Data Digestible

Now, you’ve done all the work, but how can you make it clear and easy to understand? Security ratings are the most widely used and understood language when delving into cybersecurity risk. Ensure that all company team members understand the data and what efforts will be made as a result to combat the risk and why.

Measures You Can Take to Stay Secure

The consequences of poor cybersecurity are catastrophic. Geospatial World says, “The best cybersecurity strategies are ones that are proactive in nature. Being able to respond to and recover from an instance of hacking is important, but stopping the incident before it even starts is what saves your organization more time, money, and pain in the long run.” To avoid these consequences, Competitive Edge recommends you:

Keep a tight rein on who has access to company information
Conduct employee background checks

Create individual accounts for employees
Of course, not only to have strict cybersecurity policies, procedures, and practices but to enforce them

Cybersecurity is the type of threat you don’t want to put off dealing with until it’s too late. That’s where we come in! Talk to our experts at Competitive Edge today to measure your company’s cybersecurity risk and see how you can obtain proper coverage.

Don’t risk it.

Why Bondability Is Important for General Contractors

in Bonding, Construction, News

Congrats! You have bondability, or at least we hope you do as a general contractor… When it comes to the construction industry, there is a high risk involved. When a general contractor has bondability, it means they’re capable of passing an insurance company’s background check of sorts, so a bond can be issued.

Although a client might save a chunk of change by choosing a contractor who isn’t bondable, choosing a general contractor who is bondable is key to their project’s success and safety. The bottom line: Choosing a contractor with bondability is something that clients do to protect themselves during construction.

At Competitive Edge, we understand bondability. We build your case to the carrier to ensure that you get the right coverage at the best price based on your real-world conditions. So, here are three reasons why it’s important for you, as a general contractor, to be bondable.

Bondability Shows Clients That You’re a Safe Option

Whether or not a general contractor has bondability tells you a lot about them. Having bondability shows clients that you’re a safe option to work with! If you don’t have bondability or if your bonding capacity is minimal (typically under $250,000), many clients might view this as an indication of problems you might have faced in the past.

Contractors who are not bondable can give off the impression that they’re inept at finishing a project, keeping up with their finances, or that they take on too many projects at once. It isn’t typical for a client to jump into work with a contractor whose background they aren’t familiar with.

When a contractor has bondability, it gives off the impression that you’re serious about your work, as a surety company must thoroughly investigate, review, and consider a contractor’s relevant information before bonding them.

Bondability Protects a Client’s Financial Investments

As a contractor, you should be bondable to give yourself and your clients financial peace. Picture this: You’re a client who has hired a non-bonded contractor. Fast forward months or years down the road, and your contractor has decided to not complete their work on your project. For you, a client whose contractor is not bondable, your financial investment is torn. A client can be out millions depending on the size of the project if they decide to choose a contractor who isn’t bondable.

General contractors have bondability because it gives clients financial protection—on the off chance that you don’t finish your work. Contractors, in large projects especially, are typically bonded so if their work does not get completed, the bonding company can step in to pay to complete the project.

As a good general contractor, you want to prioritize bondability to protect your clients as well as your reputation.

Bondability Demonstrates Professionalism

When a contractor takes the necessary steps to achieve bondability, it demonstrates that they take their work seriously. Being bondable also shows that a contractor values their clients and has their interests at heart as well.

Mike Lechner, a bonding agent at Guy Hurley, says, “Bonding capacity is an indicator of a contractor’s character, experience, and financial viability underwritten by a professional third party.”

Needless to say, a contractor who does not pursue bondability often lacks the skills to efficiently complete a project. Even if a client’s project does not need a bond cost-wise, be prepared to be asked if you are bondable. Bondability, in fact, is a quick and easy pre-qualification tool that many clients use. And, of course, you don’t want to miss out on work as a result!

Simply put: Clients want to work with professionals who yield low risk. Our team at Competitive Edge can help you be that contractor if you’re not already. If you are a general contractor who is considering bondability, contact us today at Competitive Edge to learn more.