How to COPE in an Inflationary Environment

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Recently, Hartford did a study that showed that 75% of all commercial buildings were underinsured. And of those that were underinsured, they’re at 40% underinsured. That means that if you have a property that’s worth a million dollars, you’re only having it insured for 600,000.

If you have a catastrophe, you’re only going to get paid the 600,000 for the rebuild costs now, and not the million dollars that it’s going to cost to make you whole again. What’s really important for commercial building owners is to understand how the insurance carriers rate your properties and it’s called COPE, C-O-P-E: construction, occupancy, protection, and exposure.

In this blog, we’ll discuss COPE and learn more about it directly from the founder of Competitive Edge Insurance, Brenda Jo Robyn.

What is COPE?

As a commercial building owner, it’s important to understand how your property is being rated for insurance purposes. The four main factors that go into this rating are construction, occupancy, protection, and exposure (COPE).

Construction is how your building is built. Things like the roof, walls, windows, and doors all factor into how well your building can withstand a disaster. 

  • What is the building made of? 
  • What is the age of the building? 

All commercial buildings are going to be rated on a scale of 1 to 10, with 1 being the best. So if you have a fire resistant building, that would be a 1. If you had a wood frame building, that would be a 10. 

Occupancy is what your building is used for. If you have a lot of people coming in and out of your building, or if you have hazardous materials inside, that will affect your rates.

  • Who’s in it? 
  • Is it manufacturing? Is it retail? 

So if you have a retail store, that would be a low hazard. If you had a chemical plant, that would be a high hazard. 

Protection is what you do to protect your building. Things like security systems, sprinklers, and alarm systems can help lower your rates.

  • What are the protections you have there? 
  • How far away is the fire department? 
  • Do you have a fire hydrant on your block? 

So if you have automatic sprinklers, that’s going to give you a better fire rating. 

Exposure is how likely your building is to be damaged in a disaster. If you’re in a high-risk area for hurricanes or tornadoes, your rates will be higher than if you’re in a low-risk area.

  • What is around your building? Fire brush, lakes, potentials for flood? 
  • What is the neighborhood like? Is it in a crime area? 

If you’re on a busy street, that’s going to be a high exposure. If you’re in the middle of a field, that’s going to be a low exposure.

All these factors are what carriers take a look at. Understanding COPE can help you make sure you’re getting the best possible rate on your commercial property insurance. 

Instability Caused By Inflation

Currently, insurance rates have been increasing and they have also been very unstable for the last year. The instability is being caused by inflation.

Supply Chain Issues

The raw material costs are all over the place. They don’t know how much they’re gonna cost when they get ordered by the contractor. Some can order it a week out and some are being told, “Hey, here’s your bill now, but when it comes in, we’re gonna give you what the real cost is.” Obviously, the sluggish supply chain issues haven’t gone away. 

Demand for Skilled Labor

There’s a high demand for skilled labor. Not only are we having people retire, but we don’t have enough people being apprentices and it’s not being able to translate to more people being able to do a job. 

Lingering COVID Effect

And lastly, the lingering COVID effect. Unfortunately, during COVID, people were placing insurance on buildings that were only looked at over the internet on your desktop. And what they come to find out later is that the building has not been maintained, that there’s storage of plastics in there and there’s no sprinkler system. So this has all led to an increase of rates.

What Can You Do?

And what can you do? In order to be a building owner that’s gonna continue to make money, you have to control your costs. And how do you do that? You have to make a commitment to do so, and you’re gonna do it by controlling your losses. 

Steps to control your costs: 

  • Maintain your buildings 
  • Update the electrical wire, heating, plumbing, roofing 
  • Have good housekeeping 
  • Perform regular safety checks 

What is it that’s been able to be implemented in the last three years so that it protects your office building better now than it was three years ago? All these things will go ahead and poise you into a place where the carrier will look at you favorably and give you more credits. 

When you are able to show the insurance company that you are in a mode of safety, maintenance, and security, carriers will give you rates that you can live with and you won’t have to pass on to your customers. It’s a win-win for everybody.

A Final Word

All of these things go into how the insurance carrier rates your property and what they’re going to charge you for premiums. As a commercial building owner, it’s important for you to understand how your property is being rated so that you can make sure you’re properly insured. If you have any questions about your commercial property insurance coverage, reach out to us today! 


Or if you’re interested in learning more from Brenda Jo, you can check out her other videos including, Why You Need to Audit Your Commercial Property Insurance.

Top Tips to Recession-Proof Your Business

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Over the past several months, most business owners, and individuals alike, have heard mutterings about a recession.

Although we in no way can predict what’s coming, at Competitive Edge Insurance, we thought it’d be helpful to provide business owners with the top three tips they can take to recession-proof their businesses.

Let’s dive in; first, with an overview of what’s going on.

What Is Going On?

Many Americans might already be feeling the heat with decades-high inflation, record gas prices, and hefty grocery bills.

​​Bloomberg Economics says there’s close to a 75% probability there will be a recession by the start of 2024.

But how did this happen? And what is a recession?

What Is a Recession?

A recession, as defined by the National Bureau of Economic Research (NBER), is a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

This period of time is when the economy contracts and business activity slows down. This can be caused by a number of factors, including a:

  • decrease in consumer spending
  • increase in taxes
  • decrease in government spending 
  • natural disaster

Businesses typically suffer during a recession, as there is less money circulating and people are more likely to save rather than spend. This can lead to layoffs, closures, and decreased profits.

As a business owner, it is important to recession-proof your business as much as possible. This means taking steps to ensure that your business can weather a recession and still remain profitable.

Contributing Factors

There are many contributing factors that have led the U.S. economy to tip its way toward a recession—inflation, supply chain issues, a nationwide labor shortage, the list goes on.

Moreover, The Washington Post notes that the Federal Reserve’s efforts to temper demand and tame prices have also been a contributing factor.

Oracle writes that “since 1950, recessions have lasted between two and 18 months.” This period can be “stressful for business owners, since they don’t know how long it will last. A business can freefall without an end in sight — if it isn’t ready.”

So let us help you prepare.

How Can You Recession-Proof Your Business?

There are many things you can do to recession-proof your business. For example, business owners can create a business emergency fund, assess their risk tolerance, reduce overhead, and more.

Minimize Workers’ Compensation Claims

One thing you don’t want in the midst of, or prior to a recession, is workers’ compensation claims being filed against your business. Why? It’s expensive.

Employers face both direct and indirect costs when a workers’ comp claim is filed.

Most obviously, when an employee is out on workers’ compensation, a business owner essentially “loses” their work. You then have to pay for another employee to pick up the slack (overtime in some cases), which can be costly.

Additionally, workers’ compensation claims can:

  • Increase your insurance premiums
  • Damage your public reputation, and
  • In some cases, a business can be penalized up to $136,532 per person by the Occupational Safety and Health Administration (OSHA) for repeated or willful violations

(Yikes, that’s a lot of money!)

This considered, it’s crucial (especially during this time of teetering toward a recession) to do everything you can to make your workplace safe, and therefore, reduce workers’ compensation claims.

Interested in learning how workers’ compensation plays out for remote workers? Read our article “What Does Workers’ Comp Look Like for Remote Employees?”

Create Trust and Safety Among Employees

Significant layoffs can already be observed across the nation. This considered, a recession can be an especially scary time for your employees.

During this time, as a business owner, it’s especially important to create trust and safety among your employees. Consider doing the following to build employee retention:

  • Keeping an open, honest line of communication
  • Listening to your employees
  • Utilizing employee engagement data
  • Offering consistent and effective feedback
  • Recognizing a job well done
  • Not letting team building fall to the wayside
  • Encouraging health and wellness and work-life balance

Invest in Insurance

The last thing you want during a recession is to get hit without the proper insurance. Typically, business profit is already top-of-mind during a recession.

If a cyber attack occurs, you receive high levels of workers’ comp claims, or an injury takes place on your commercial property, you want to be sure that you have the right insurance in place to keep your business financially protected.

Without proper insurance, a business owner may have to pay out-of-pocket for costly damages and legal claims against their company.

Additional Steps to Help

Minimizing workers’ comp claims, creating trust and safety among employees and investing in insurance are our top three tips, but there are so many other steps that you can take to help your business during a recession, such as: 

1. Diversify your revenue streams

Don’t rely on just one source of income. If possible, try to have multiple, different streams of revenue coming in. That way, if one or two of them dry up, you’ll still have money coming in from the others.

2. Cut costs where you can

During a recession, every penny counts. Take a close look at your budget and see where you can cut costs. Even small savings can add up over time and make a big difference.

3. Build up your cash reserves

Having a healthy cash reserve is always a good idea, but it’s especially important during a recession. This will help you weather any tough times and keep your business afloat.

4. Focus on customer retention

During a recession, it’s more important than ever to hang onto your existing customers. Keep them happy and they’ll stick with you, even when times are tough.

5. Invest in marketing

Marketing is vital for any business, but it’s especially important during a recession. Why? Because that’s when people are scaling back their spending and being more particular about where they spend their money. If you want to stay top of mind, you need to keep marketing.

Keep Your Eye On the Prize

It’s easy to get discouraged during a recession, but it’s important to remember why you’re in business in the first place. Stay focused on your goals and don’t let tough times get in the way of your long-term success.

As a business owner, recession-proofing your company is vital to ensuring that success.

Interested in learning more about how to keep your business safe? Read on to find out what types of insurance your business needs during a recession.

Cyber Liability: Mitigating BYOD and E-discovery Risks

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The prevalence of employee-owned smartphones and other devices in workplaces across the country has grown considerably in the last few years and shows no sign of stopping. A recent study by Bitglass found that 85% of organizations surveyed allowed their employees to use their personal devices for work functions. If it wasn’t obvious already, the “bring your own device” (BYOD) era is here to stay. While there are numerous benefits of implementing a BYOD policy at your workplace, it can be problematic from an e-discovery standpoint, should your company enter litigation.


E-discovery Basics
Electronically stored information, or ESI, can be subject to discovery, which means it can be requested as evidence in court cases. ESI is a category of discoverable information separate from print documents, and includes both structured and unstructured data such as emails, instant message logs, Word® documents, PowerPoint® presentations and scanned documents.

In litigation, e-discovery is the process of identifying, collecting, preserving, reviewing and producing relevant electronic data or documents as evidence. Determining which ESI is relevant is not simple due to the lack of precedence and established standards; however, it is important to be able to quickly access the right ESI. While failing to produce all required ESI can be considered negligence, handing over too much data could mean disclosing privileged competitive information and jeopardizing corporate strategy or product plans.


BYOD’s Skyrocketing Popularity
Allowing employees to use their personal phones, laptops, tablets or other devices for work purposes has quickly become the new norm. Employees enjoy being able to use their own devices for several reasons:


· They can get more work done on their own devices with a more flexible schedule.
· They may prefer the operating systems of their own devices.
· Company-provided devices may lack the functionality that employees desire.
· Bringing personal activities into their work lives can lead to happier employees and more productivity.

Employees aren’t the only satisfied party. Employers can save money by not having to buy company-owned devices for employees to use, including technical support costs associated with diagnosing problems employees may have. In addition, many employers can save on telecommunication costs, as employees are often willing to self-fund their own mobile plans.


BYOD Litigation Risks
Allowing employees to bring their own devices can seem like a pretty good deal for both sides. However, there are inherent risks with the practice, especially from a legal standpoint. Employers must consider the following risks that may hinder the e-discovery process:

· Since you do not own employees’ devices, you do not have total control over the devices and how they’re used.
· There are many different types of data on devices, depending on the operating system, applications used, etc., and
· separating personal data from business data may be difficult.
· Data on devices can be stored in several locations.
· It is difficult to protect data on employees’ devices from harm, including theft and hacking.
· Employers cannot just seize an employee’s device for discovery—they need consent from the employee.


Best Practices for BYOD Policies and the E-discovery Process
If you have a BYOD policy at your workplace, or are planning to implement one, consider the following to ensure it is comprehensive and e-discovery-friendly:


· Have employees sign an agreement that lets them know how e-discovery requests will be handled, should the need arise.
· Consider using Mobile Application Management (MAM), which allows employers to control how applications perform on employee devices. It can control application encryption and even wipe sensitive data off the phone of a former employee.
· Consider purchasing and implementing one of the many applications capable of separating business data and personal data, making it easy for employers to locate discoverable data.
· Mandate that employee devices be configured to save certain information directly to the company servers.
· Create an acceptable use policy that lets employees know how you want them to handle company data on their personal devices.
· Prohibit employees from uploading sensitive company data to any third-party cloud storage system, such as Dropbox, Google Drive or Box.
· Sync data between employee devices and company servers regularly.
· Educate employees on best practices for keeping all data on their devices safe—the devices may contain sensitive company information.
· Mandate that employee devices be password-protected.
· Ensure that your BYOD policy is forthright and outlines the exact process for e-discovery, including a clear chain of custody.
· Ensure your IT and legal teams are on the same page. Your IT team should be able to advise the legal team on exactly what kinds of data are stored on employee devices and the best way to retrieve the data. The legal team, whether employed or contracted, should be familiar with the e-discovery process to advance the procedure as quickly as possible.
· Require compliance with your BYOD policy. In addition, keep the policy flexible to keep up with the ever-changing data landscape.
· Determine how you will handle the data on phones of former employees. Some companies remotely wipe former employees’ devices, but that can bring up questions about the ethics of deleting personal data from a device.
· Carefully decide which employees can use their own devices. BYOD may not be relevant or useful for all employees.
· Consider listing what devices are and are not acceptable. BYOD does not mean employees are free to use whatever device they wish. Employers may not want to offer support for certain devices due to the particular operating system or inherent security issues.
· Always put data security ahead of employee device security. Your company’s data should always be your number one concern.

Contact Competitive Edge Insurance today for more ways to help make sure your BYOD policy properly protects your company’s data.

Inflation and Property: What You Need to Know

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Inflation is one of those economic concepts that everyone has heard of—especially today—however, few people understand what it means.

In essence, inflation is a rise in prices across the economy. This phenomenon can have several consequences for property owners and investors. This considered, it’s important to understand how inflation works and how it affects property owners.

Below, we’ll discuss:

  • The relationship between inflation and property values
  • Why property owners need to be aware of each (that is, if you want to make smart decisions about your investments!)

What is Inflation? What Causes It?

First things first, what is inflation, and what causes it? Inflation is defined as the rate at which the prices of goods and services increase over time. This can be caused by a variety of factors, such as an increase in the cost of raw materials, or a decrease in the supply of certain products.

While inflation is caused by several factors, the most important one is simply too much money chasing too few goods. When there is more money in circulation than there are goods and services to buy, prices go up.

This is because people have more money to spend, so they are willing to pay more for things.

One of the most important things to understand about inflation is that it is not evenly distributed. Some prices will go up faster than others, and some might even go down. This means that while your rent might go up by a lot, the price of bread might not change much at all.

How Does Inflation Affect Property?

Inflation can have several different effects on property values.

The most important one is that it erodes the value of your money.

This is because, as prices go up, each dollar you have buys less and less. So, if you own a property that you bought for $100,000 and inflation is running at two percent per year, then after five years, your property will be worth $110,000 in today’s money.

In other words, you’ve made no real gain on your investment—inflation has just eaten away at the value of your money.

Of course, this doesn’t mean that property values never go up. They can, and do, go up in nominal terms (that is, in the actual dollar amount). However, if inflation is high, then these nominal gains might not be worth very much in real terms (that is, after taking inflation into account).

Secondly, inflation can affect your mortgage.

If you have a fixed-rate mortgage, then your monthly payments will stay the same even if inflation goes up.

But if you have an adjustable-rate mortgage, then your monthly payments could go up if inflation increases. This is because your interest rate will be tied to an index, like the Consumer Price Index (CPI), which measures the overall level of prices in the economy.

How Does Inflation Affect Property Insurance?

When inflation goes up, so do property insurance rates. This is because insurers must account for the increased cost of repairs and replacements when setting premiums.

The cost of rebuilding your property goes up due to the cost of materials and labor increasing from inflation. As a result, your property insurance rates will likely go up—and if you’re not prepared for this, it could have a serious impact on your finances.

Moreover, inflation can lead to higher deductibles on policies. For example, if you have a $500 deductible on your policy and inflation increases by 20%, your new deductible would be $600.

Ways to Minimize Inflation on Your Property Insurance

So, how can you minimize the impacts of inflation on your property insurance as a building owner?

Luckily, while inflation can have a significant impact on your property insurance rates, there are some things you can do to minimize the impact:

  1. Make sure you have an insurance policy that covers inflation. This way, your coverage will automatically adjust to keep up with the rising cost of rebuilding your property.
  2. Consider raising your deductible. This will lower your premium, although you’ll have to pay more out-of-pocket if you need to make a claim. Make sure you have enough savings to cover the deductible.
  3. Don’t forget about discounts! Many insurers offer discounts for things like installing security systems or being claims-free for a certain period. Make sure you’re doing everything you can to mitigate your risk.

Read on to learn more about risk mitigation.

A Final Word

Of course, there are a lot of other factors that affect property values, such as the state of the economy, interest rates, and demographics. Inflation, however, is one of the most important—and least understood—factors that property owners need to be aware of when making decisions about their investments.

By understanding the relationship between inflation and property, you can take steps to protect your finances and ensure that your property is properly covered. 

Interested in learning more? Contact us today to speak with one of our insurance professionals about what inflation-related changes you should make to your policy.

After all, with a little strategic planning, you can safeguard your property against inflationary increases! Learn more in our article “Top Three Tips to Recession-Proof Your Business.”

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