commercial insurance Archives - Competitive Edge Insurance

The Manufacturing Industry and the Supply Chain Crisis

September 11, 2022/in News /by becca

The supply chain crisis continues to have a massive impact on businesses in nearly every industry. As you might guess, the manufacturing industry has experienced this impact the most.

So, what can manufacturing businesses do to help combat the effects of supply chain issues?

What Is Causing Supply Chain Disruptions?

There are a variety of factors that have led to the supply chain crisis that we’ve experienced over the last few months.

Some of these factors include:

The COVID-19 Pandemic

Though it feels like we’ve surpassed the COVID-related closures, we’re still seeing the effects of business closures due to employees being unable to go to the office in person.

Port Backlogs

Everyone remembers seeing the Long Beach port overrun with ships containing products that were unable to get unloaded. With a shortage of workers to move the ships along, backlogs occurred, and as a result, shipping prices increased.

Cyber Risk

As companies move to a more digital-focused environment, critical data is being shared in a far-reaching global supply chain. With the increase in digital usage comes an increased risk of cybersecurity breaches.

These breaches can cause damage to your business’s operations, finances, and reputation.

Driver Shortage

In 2021, the American Trucking Association stated that the truck driver shortage could hit historical lows of 80,0000 unfilled truck driving jobs in the US. This shortage led to even more backlogged ports, as products cannot be moved.

Production Issues

The increased demand for specific products alongside the factory closures in 2020 and 2021 has caused production issues across various industries.

Natural Disasters

Lastly, the effects of natural disasters always affect the supply chain. Whether it’s a hurricane, flood, blizzard, fire, or any other natural disaster, they may be responsible for postponed deliveries, closed ports, and canceled cargo shipments.

How Can You Reduce the Effects of the Supply Chain Crisis in Your Manufacturing Business?

It’s important to understand how you might be able to mitigate the effects of the supply chain crisis. Below is a shorthand list of what your manufacturing business can do.

Diversify Your Supplier Base

Using one sole supplier for all your business needs can easily cause massive disruption in your manufacturing business’ entire supply chain. Having diversified suppliers allows for the disbursement of risk and reduces the impact of potential disruption.

Ensure You Have Backup Suppliers and Vendors

Similar to a diversified supplier base, you can also combat supply chain issues by ensuring you have backup suppliers and vendors. If, for whatever reason, your supplier is unable to complete an order, you’ll have a backup supplier in place to cover the disruption.

Work Toward End-to-End Visibility

Visibility into the supply chain operational stages allows you to forecast where problems may arise while also tracking progress and ensuring a quick response to issues that might come about.

Have a Risk Management Plan in Place

Risk management is one of the most effective ways to combat any issues within your business. This plan allows you to identify and assess current and potential risks that could disrupt business operations. Procedures and responses can be prepared in this plan, as well as processes to adapt to disruptions within your business.

Invest in Cybersecurity Insurance and Protocols

Investing in cybersecurity protocols helps mitigate the common risks that affect supply chain processes, including breaches, data leaks, and malware attacks.

Alongside the additional protocols and cybersecurity measures, it’s important to invest in a separate cybersecurity policy to ensure your business is protected in the event of an attack.

Review your Insurance Coverage

There are a few insurance policies that can help reduce the impact of supply chain disruptions on your business. Some of these include:

Contingent business interruption insurance
Extra expense coverage
Supply chain Insurance
Natural disaster insurance, and
Production process problems

As a manufacturing company, the supply chain crisis is likely one of the most important issues you may face.

On top of that, there are insurance requirements your business needs to follow to remain in business. Take a look at our article “Complying with Insurance Requirements: Construction, Manufacturing, Tech Start-Ups” to guide you through this process.

Workers’ Compensation Rates are Rising: What Can You Do?

August 21, 2022/in Construction, General Business Insurance, News, Workers' Compensation /by becca

As many business owners may have noticed, workers’ compensation rates are rising. What does this mean? Why is this happening? And most importantly, what can you do as a business owner in response?

Read on to find out.

Why Workers’ Compensation?

If you’re a business owner or an individual who is planning on employing workers when starting a new business, California state law requires you to invest in workers’ compensation insurance.

Why? Employers purchase workers’ compensation insurance to cover the medical costs and lost wages for work-related injuries and illnesses of employees. In turn, workers’ compensation protects your company against employee lawsuits.

Worker’s compensation coverage can help pay for:

Immediate medical costs (i.e. emergency room expenses)
Ongoing medical costs (i.e. physical therapy)
Partial lost wages while the employee is unable to work

Lack of proper coverage can result in fines and even criminal exposure.

Workers’ Compensation Rates Are Rising

Over the past couple of years, workers’ compensation rates have been steadily increasing across the board. They’ve been rising by 7% on average; however, this figure depends on each industry.

Moreover, in July 2022, the Workers’ Compensation Insurance Rating Bureau of California® (WCIRB) submitted its September 1, 2022, pure premium rate filing to the California Department of Insurance (CDI).

The CDI regulates California workers’ compensation rates with the help of the WCIRB, who makes recommendations based on the state’s loss ratio.

In this July 2022 filing, the WCIRB proposed a set of increased premium rates. On average, these rates are 7.6% higher than those approved the year prior on September 1, 2021.

According to the WCIRB, the average of the proposed September 1, 2022, advisory pure premium rates is $1.56 per $100 of payroll.

Read on for the WCIRB filing.

Why Are Workers’ Compensation Rates Rising?

So, why have these premiums been increasing in the first place?

The bottom line is that workers’ compensation rates are rising because there are simply more workers’ comp claims being filed.

Research shows there are many reasons why claims might be increasing, including:

Medical inflation
Workforce changes
The increasing average age of the workforce
Increased indemnity costs, and
Rising wages

Moreover, as individuals have begun to return to work in person, the number of claims regarding health and safety in the workplace has increased as well. These claims typically include:

Employee concerns about exposure to COVID-19 due to unsafe working conditions, or
Situations where employees allege they were wrongfully denied a request for workplace accommodation or leave

What Can Business Owners Do?

With this rise in claims, what can you do to protect yourself as a business owner? You can prevent workers’ comp claims by:

Prioritizing risk mitigation
Maintaining a safe workplace
Supporting mental health awareness to reduce burnout
Emphasizing proper employee training
Developing and distributing an employee handbook and code of ethics policy
Implementing a handbook auditing procedure

While this list only showcases a few of many ways to avoid high workers’ compensation premiums, it’s important to remember that it’s up to all employers collectively to keep their employees safe—thus, lowering the number of claims being filed annually.

How Much Risk Does Your Business Hold?

If writing your hefty workers’ compensation check has begun to pain you, at Competitive Edge Insurance, we challenge you to ask yourself a question: “Am I, as a business owner, doing everything in my power to create the safest workplace possible?”

If the answer is no (which it typically is), get in touch with our team today to learn what else you can do.

Learn more about 2022 workers’ compensation changes by reading our article “Insurance Trends in 2022: What to Watch For.”

Why an Advisor Should Work with an Insurance Broker

August 7, 2022/in General Business Insurance, News /by Amanda Rogers

Wealth advisors who seek the support of an insurance broker not only set themselves up for success but most importantly, they also do so for their clients looking to purchase real estate.

An insurance broker provides a wealth of knowledge to help understand what potential liabilities ensue from the real estate purchase, as well as mitigate risk.

This partnership will help you as an advisor, guide your client to make the best financial decision as well as plan for the future with the guidance of an insurance broker. Let’s dive into why an advisor should work with an insurance broker.

Infographic of Why an Advisor Should Work with an Insurance Broker

Types of Insurance Needed

The right insurance to cover your client’s upcoming real estate purchase depends on a variety of factors.

What kind of real estate is your client purchasing?
Where is the real estate located?
What is the size of the real estate?
What is the purpose of the purchase (personal or for business)?
Is the real estate located in a climate that requires additional coverage (i.e. fire zone, earthquake zone, etc.).
And more

All of these answers will help advisors understand potential additional costs that may go towards insurance coverage (or even potential damage should an unforeseen issue arise).

The different types of insurance policies your client may need for their real estate purchase include:

Homeowner’s insurance
Fire insurance
Flood insurance
Earthquake insurance
The list goes on

The Benefits of Working With an Insurance Broker

An insurance broker can assess the real estate property to see what potential risks the property has. If the piece of real estate is located in a fire zone, the insurance broker can identify what coverage would look like.

Essentially, working with an insurance broker helps list out all of the different insurance possibilities your client needs. Basic homeowners insurance or umbrella insurance may come with exclusions for coverage for fires, floods, etc.

Knowing what additional policies may arise allows you to sit with your client and discuss their financial strategy to help them maintain their goals.

Once you have the full picture from the insurance broker you’ve partnered with, you can then budget appropriately. You then have all of the materials necessary to make sure you can give a holistic overview to your client and tell them, “this is a financially smart decision” or, “let’s find a different route for you.”

The main benefits of working with an insurance broker can be boiled down to these three factors:

You help your client mitigate risk
You save your client money both short term and in the long run
Your client will have better knowledge of the real estate investment they are making
As a broker, you will then understand where you can save your clients money and where they may have to invest more

Read on for more information on risk mitigation.

The Coverage Pitfalls of Insurtech

July 31, 2022/in General Business Insurance, News, Video /by Amanda Rogers

With the rise of technology comes the rise of a new sector disrupting the insurance industry: Enter insurtech.

But what is insurtech, and what are its coverage pitfalls? Here, we have Brenda Jo Robyn, founder of Competitive Edge Insurance, on video to discuss the coverage pitfalls of insurtech.

What is Insurtech?

First, what is insurtech? Insurtech is a combination of the words “insurance” and “technology,” and refers to “technological innovations that are created and implemented to improve the efficiency of the insurance industry,” according to TIBCO.

Research shows that the insurtech industry is expected to reach a market size of $114 billion by 2030. This doesn’t come as a surprise considering that this tech helps large insurance companies explore new insurance options without the need for human efforts. Using information gathered from observed behavior, TIBCO says this could include:

“Dynamically-priced insurance policies
Small business insurance, and
Social insurance options

Insurtech also provides insurance companies access to data streams from IoT devices.”

An internet of things (IoT) device is a physical object “with sensors, processing ability, software, and other technologies that connect and exchange data with other devices and systems over the Internet or other communications networks.”

Read on for more information on IoT devices.

The Pitfalls of Insurtech

Insurtech’s technological innovations can scour the internet, pulling information from a host of websites to make an informed insurance assessment.

While technology can sometimes work smarter than traditional insurance methods of insuring a business, insurtech also has its pitfalls.

Insurtech and Underinsurance

When it comes to evaluating and preparing property insurance, insurtech might be able to provide you with information including:

When the building was constructed
Permitting information
When there were last upgrades or renovations completed

Insurtech, however, cannot give you the details of what is inside a specific building. It will not be able to tell you information regarding:

The tenancy inside a building
Rooms of high value inside of a building that might require additional coverage (i.e. computer rooms)

So, because of this lack of information, you have a lot of very underinsured individuals when it comes to using insurtech.

Insurtech and Human Touch

As it’s been made clear, you do not receive the same human touch when you opt for insurtech.

At Competitive Edge Insurance, we believe it is helpful to have a professional as your advocate to take a look and give you options—not a technological innovation!

The most important thing that you receive with that human connection, according to Brenda Jo, is that this professional can share that an individual has options.

They can:

Cover their property at certain limitations, or
Decide to self-insure

A traditional insurance professional can help determine what self-insurance might look like. For example, what will they be insuring? Is the self-insuring simply increasing the deductible or not having that type of coverage altogether?

Our team at Competitive Edge can help take a look at your unique circumstances to help determine your areas of risk, where you’re covered, where you’re underinsured, and how to amend these pitfalls.

Interested in learning more? Read on in our article “How Does a Building Owner Know if They Are Underinsured?”

Understanding D&O Insurance: What You Need to Know

July 17, 2022/in General Business Insurance, News /by Amanda Rogers

While the term ” D&O insurance” may seem like just another one of the many acronyms floating around the insurance world, this form of liability insurance is essential in protecting corporate directors and officers.

Let’s chat about directors and officers liability insurance, also known as D&O insurance. We’ll break down what it covers, who needs it, and why all corporate directors and officers should be familiar with this little acronym.

What is D&O Insurance?

Directors and Officers (D&O) liability insurance is insurance coverage that helps protect “the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued… for actual or alleged wrongful acts in managing a company.”

The parties suing a director and/or officer could include:

Employees
Vendors
Competitors
Investors
Customers, or
Other parties

What Does D&O Insurance Cover?

Typically, D&O insurance helps not only protect your business but also helps pay for lawsuit-associated losses (i.e. legal fees, settlements, etc.) when the insured is found liable.

There are, however, three types of insuring agreements—titled Side A, Side B, and Side C—in a typical D&O policy. Read on for more on the different types of directors and officers liability insurance.

What Does D&O Insurance Not Cover?

While “breaches of fiduciary duty, failure to comply with regulations, lack of corporate governance, creditor claims, and reporting errors” are typically covered by D&O insurance, according to Investopedia, D&O insurance does NOT cover the following:

Outright fraud
Illegal profits
Criminal activity, and
Lawsuits between managers within the same company

Who Needs D&O Insurance?

So, when do D&O claims pop up? Most often, directors are officers are sued for:

“Breach of fiduciary duty resulting in financial losses or bankruptcy
Misrepresentation of company assets
Misuse of company funds
Fraud
Failure to comply with workplace laws
Theft of intellectual property and poaching of competitor’s customers
Lack of corporate governance”

This considered, you might be wondering: “Does my business need D&O insurance coverage?” The answer might be yes—depending on the size and nature of your business.

Any business that has a board of directors or similar corporate or advisory committee—whether you’re private, public, or even a nonprofit—should consider investing in D&O insurance.

Why? Claims against businesses and their directors are increasing. Plus, if you work with vendors or government entities or even just have employees or customers, you are prone to exposure that could make your organization vulnerable to costly D&O claims.

Interested in learning more about what insurance you need as a business owner? Read on in “how does a building owner know if they are underinsured?”

Why You Need to Audit Your Commercial Property Insurance

July 10, 2022/in General Business Insurance, News, Video /by Amanda Rogers

Commercial property insurance is a necessity for commercial buildings and business owners. Why? Commercial property insurance helps protect a business’s physical assets from unforeseen events. Some examples of these events include:

Fire
Explosions
Theft
Vandalism
Storms

According to Nationwide, additional coverage is often also available for floods, earthquakes, equipment breakdown, and other causes of loss to your business.

Here, we have Brenda Jo Robyn, founder of Competitive Edge Insurance, sharing a story of a client who did not have the proper commercial property insurance, and why you need to audit your commercial property insurance to avoid a similar experience.

What Can Happen if I Don’t Have Adequate Commercial Property Insurance?

“We had a client who had a sewer backup in a four-story concrete building. On the second floor, the bathrooms backed up, causing severe flooding into the first floor—which happened to be a restaurant.

This flooding damaged all of the restaurant equipment. The claim ended up being just under $400,000.”

The worst part?

They didn’t have the necessary coverage. This particular client, in fact, only had about $50,000 worth of sewer backup coverage.

Auditing Your Commercial Property Insurance

This example considered, it’s extremely important to periodically audit your commercial property insurance.

This particular example actually encouraged our team to take a look at additional insurance areas that might be lacking. It became an opportunity.

For example, this same client had executive suites full of costly desks and computers—but no business personal property.

Hypothetically, if the sewer backup had flooded onto that executive suite floor, what would have happened? Remember, insurance audits are all about thinking ahead and considering the ‘what ifs?’

“So, our team at Competitive Edge went around and took a look at everything. We looked at the HVAC system; the client didn’t have enough insurance for that system to be replaced if something happened. Moreover, this client provided computer services to its clients and had server rooms next to the elevators. These rooms also weren’t covered.

During our insurance audit, we went in and did a full assessment of both:

The structure of the building
What was inside the building and what the client was responsible for

Interested in learning more about commercial property insurance? Read on in our article “Property Owners: What Commercial Insurance Do You Need?” for five types to consider.

Property Owners: What Commercial Insurance Do You Need?

May 29, 2022/in General Business Insurance, News /by Amanda Rogers

As a commercial property owner, do you know what types of commercial insurance you need to keep yourself and your building protected? Let’s discuss the five types of coverage you should consider.

Five Types of Commercial Insurance Property Owners Need

At the minimum, there are five types of commercial insurance a property owner should be carrying.

Property Insurance

This one most likely came up as a no-brainer.

Commercial property insurance, according to Nationwide, protects “physical assets [i.e. building, equipment, tools, inventory, personal property, furniture] from fire, explosions, burst pipes, storms, theft, and vandalism.”

It’s good to note that natural disasters like earthquakes and floods aren’t typically included in commercial property insurance policies; however, they can be added to a policy.

So, how much will property insurance cost you? It depends. Some factors that might contribute to the premium you pay include:

Location
Building materials used to construct your property
Industry
Your building’s level of theft and fire protection

Liability Insurance

As a property owner, you also need liability insurance. This type of coverage protects against “claims resulting from injuries and damage to people and/or property [and] covers legal costs and payouts for which the insured party would be found liable,” according to Investopedia. Intentional damage, contractual liabilities, and criminal prosecution are not covered by liability insurance coverage.

Rent Loss Insurance and/or Business Interruption Insurance

Rent loss insurance, also known as fair rental value coverage, is for landlords and “covers a loss of rental income if your property becomes uninhabitable to a current tenant due to covered damages beyond your control.”

An example of this damage might include perhaps a tree falling on the roof of your property or a burst pipe.

Business interruption insurance, on the other hand, is coverage that can replace “business income lost in a disaster.” This disaster might include a fire or natural disaster.

Business interruption insurance, however, is sold as an add-on; not as a standalone policy.

Flood Insurance

Heavy or prolonged rain, melting snow, coastal storm surges, blocked storm drainage systems, or levee dam failure… Oh my! All of these scenarios can cause flooding in your commercial property.

(And secret’s out… Water damage isn’t as cheap to repair as you think it is! Water damage can cost a business owner anywhere from $5,000 to $50,000…)

The solution? Flood insurance is a type of property insurance “that covers a dwelling for losses sustained by water damage specifically due to flooding,” according to Investopedia.

Premises Liability Insurance

Premises liability coverage pays claims for accidents that involve guests that take place on a business property. Regardless, a property owner, by law, is responsible to make appropriate efforts to ensure those visiting their property are entering a safe environment.

Of course, this is not a comprehensive list of all the commercial insurance you might need as a property owner. The coverage necessary will vary depending on your industry, location, etc.

What Happens If You’re Underinsured?

So, what happens if your coverage doesn’t cover what you need? Well, here Brenda Jo Robyn, Founder of Competitive Edge Insurance provides an example.

[Insert Video: https://drive.google.com/file/d/1MV72vxmwmHykFSiALeteiCjp_wjkbqrT/view?usp=sharing]

According to Brenda Jo, some individuals are having difficulty placing property coverage for a building. Why? Because many buildings today now have solar panels.

Interestingly enough in some of these cases, the property inside the building is actually worth more than the building itself.

“So, now you have solar panels, which introduces a possibility of a leak. The panels may be installed perfectly; but in California, you have earth movement and water can intrude over time.

“I see many companies approaching California building owners who have flat roofs, selling them solar panels because then they can self-generate electricity for the building and gather back income.

If you have a manufacturing unit inside a building that has property that’s worth more than the building itself, that’s now an issue in California because of the potential for earth movement and therefore, weather intrusion.”

This weather intrusion poses an issue for a building owner looking to get insured. It’s important to consult your broker prior to investing in commercial property, or commercial property enhancements, as it could lead to greater issues down the line.

Want to find out if you need to up your coverage? Read on in “How Does a Business Owner Know If They Are Underinsured?”

Complying with Insurance Requirements: Construction, Manufacturing, Tech Start-Ups

May 22, 2022/in Construction, News /by Amanda Rogers

Insurance for your business isn’t one size fits all. As we’ve well learned, various industries have different requirements. This rings true, especially for insurance requirements regarding construction, manufacturing, and even tech start-ups.

Requirements can be regulatory or contractual. Moreover, depending on your industry you might need varying levels and types of insurance. Let’s discuss some aspects that stand across the board.

Workers’ Compensation Insurance

Workers’ compensation insurance, purchased by employers, is insurance that covers the medical costs and lost wages for employees who are injured during the course of work for the insured.

Workers’ compensation benefits and wages are provided in exchange for eliminating the employee’s right to file a lawsuit against their employer’s negligence.

Workers’ compensation insurance is required by law in California, and can help pay for:

Immediate medical costs (i.e. emergency room expenses)
Ongoing medical costs (i.e. physical therapy)
Partial lost wages while the employee is unable to work

Lack of proper coverage can result in fines and even criminal exposure.

Workers’ compensation insurance is extra important in the construction and manufacturing settings, where accidents are more likely to occur. This considered, businesses within the construction and manufacturing industries might opt for higher levels of workers’ compensation to keep their employees and business safe.

General Liability Insurance

General liability insurance (GLI), also known as business liability insurance or commercial general liability insurance, “helps protect your business from claims of bodily injury or property damage that can come up during normal business operations.”

This is important for construction and manufacturing businesses where hands-on work is occurring but also for tech start-ups. According to Insureon, general liability insurance covers “the cost of legal fees and settlements if your company is sued for:

Client injuries
Client property damage
Advertising injuries, like copyright infringement, libel, and slander

General liability insurance is often required as part of a property lease, mortgage, or client contract.” Moreover, the cost of your GLI will depend on the level of risk your company faces.

If you don’t have GLI, medical expenses and property damages will need to be paid for out of pocket. Depending on the injury or event, not investing in general liability insurance could cost you your business.

Employment Practices Liability Insurance

Employment Practices Liability Insurance (EPLI) is insurance that “provides coverage to employers against claims made by employees.”

Claims can be made for an assortment of reasons, including:

Wrongful Termination
Sexual Harassment
Wage-Related Claims
Claims of Unequal or Unfair Pay Discrimination Claims (i.e. age, race, gender, sexual orientation)
Third-Party Claims
And more

The primary industries that are susceptible to EPLI claims include healthcare, professional services, restaurant, food services, retail, and manufacturing and construction.

Read on to find out if your construction business needs EPLI.

Cyber Liability Insurance

In our digital age today, more businesses than ever are falling victim to cyber-attacks. Having a cyber liability policy in place, for any business, is crucial to keeping your business and your clients safe. This stands even more true for tech start-ups that manage sensitive information and high volumes of data.

There is both first and third-party coverage available. Implementing a quality cyber liability policy can help pay for regulatory fines and penalties, credit and fraud monitoring services, crisis management and public relations, finding and addressing the security defect, and more.

Complying with Insurance Requirements: Things to Note

The insurance policies listed above are not, of course, an exhaustive list of insurance requirements all construction, manufacturing, and tech start-ups need to meet; but rather, a list to get you thinking about insuring your business.

You might also need automobile liability and property damage Insurance, commercial property insurance, errors and omissions insurance (E&O), the list goes on.

Regardless, there are additional elements to consider regarding insuring any one of these three businesses. Let’s discuss some final things to note.

Occupational Safety and Health Administration

The Occupational Safety and Health Administration, also known as OSHA, has particular requirements regarding insurance as well as health and safety practices for a variety of industries.

Visit the OSHA website for additional information.

Certificates of Insurance

In any project, it’s important to make sure you have the proper insurance to protect yourself and all parties involved.

Every contract with a vendor or a customer will have an indemnity or insurance section of what they want to see from you as far as insurance is concerned. This includes documents that extend your policy to cover them. Those requirements are contractually driven, which means a certificate is necessary.

A Certificate of Insurance (COI) gives a summary of what coverages someone has, whether it be general liability, workers’ compensation, or property. A COI can also include a description of coverages that might be there or attached; such as additional insured status or waivers of subrogation.

Read on for more on what you need to know about certificates of insurance.

Contract Wording

A written contract is a printed document that is legally binding and details what parties can or cannot do. For this reason, the contractual language is extremely important. Contracts for construction, manufacturing, and tech start-ups might include hold harmless clauses and/or indemnification clauses.

Hold Harmless Clause

What is a hold harmless clause? According to Investopedia, “a hold harmless clause is used to protect a party in a contract from liability for damages or losses. In signing such a clause, the other party accepts responsibility for certain risks involved in contracting for the service. In some states, the use of a hold harmless clause is prohibited in certain construction jobs.”

Indemnification Clause

An indemnification or indemnity clause protects “one party from liability if a third-party or third entity is harmed in any way. It’s a clause that contractually obligates one party to compensate another party for losses or damages that have occurred or could occur in the future.”

For this reason, the wording in such contracts must be crystal clear.

With the influx of remote employees in current and previous years, it’s important to consider how workers’ compensation policies might change. Read on for more information on what workers’ compensation looks like for remote employees.

How Does a Building Owner Know if They Are Underinsured?

May 8, 2022/in News /by Amanda Rogers

As a building owner, the consequences of your building being underinsured can be detrimental. Even so, 75% of commercial buildings are currently underinsured. As a building owner or property investor, how can you make sure your building is adequately insured?

Today, we have Brenda Jo Robyn, founder of Competitive Edge Insurance, on camera to answer this question. What elements can you look at to identify if you’re underinsured? What steps can you take to stay adequately insured?

Let’s see what she has to say.

Elements That Can Show a Property is Underinsured

Picture this: You have a building, but don’t know the last time it was evaluated in terms of a replacement cost. The building has most likely had some renovations in the last five to 10 years.

This considered, what elements do you need to look at to see if your building is underinsured?

Increase in Building Costs

As many have well noticed, the average cost of buildings has gone up. In our community, where the Competitive Edge office is housed, prices have jumped from $275 a square foot to $325 a square foot.

When you’re insuring your building, it’s really important to take this shift into consideration. Moreover, consider appraising the building for the replacement to rebuild from the ground up (but more on this later).

Water Damage Claims

Secondly, most building owners have little or no protection for water damage claims. Hold on… Don’t roll your eyes yet!

While most building owners have fire on their radar, many don’t think about water. However, they should—considering over 44% of homeowners or property investors have experienced water damage inside the residence.

Water damage can cost a business owner anywhere from $5,000 to $50,000. Today, we’re seeing more $50,000 to $75,000 claims being paid. And why is that?

There are many ways this can happen. Imagine this scenario: A building owner goes away for the weekend, and there’s been a leak he or she doesn’t know about. Or, maybe it’s in a commercial building and a toilet is leaking into the floor below. Again, the owner is three to four days out, and all of a sudden now there’s mold. It may be in the walls and have to be remediated. It can be quite costly to repair that.

Regardless, many people have a mere $5,000 worth of water damage on their policy. It’s not enough.

What Can I Do to Make Sure My Building Is Properly Insured?

There’s one primary thing a building owner can and should do to ensure that their building is adequately insured.

Property Valuations

The first place Brenda Jo recommends starting is ensuring every building owner has a currently valued property.

Having a currently valued property looks at a replacement cost estimate, which no, it’s not intended to replace the original asset (unless it’s a reproduction), but the valuation is intended that the new building would be able to serve in the same purpose that the old building existed for.

Every building is unique. So, how do you calculate this cost estimate?

A building’s cost estimate is based on:

Similar designs
Construction standards
Quality of workmanship
Uniqueness or complexity (i.e. standard building vs. a super custom building)
Building age
Common elements
Current building codes
Hard construction costs (i.e. materials)
Soft construction costs (i.e. design plans, demolition costs)
Location (Is the building in the city or rural?)

Conducting an annual insurance review is also key, and takes little to no time.

It can be difficult to arrive at this figure yourself, which is why our team at Competitive Edge Insurance is here to help.

Now, we’ve talked about water… Let’s chat about protecting your building from fire. Read on to find out why you need fire insurance as a property investor.

How to Protect Your Business From a Fire

April 3, 2022/in California, General Business Insurance, News /by Amanda Rogers

As a business owner, there are many things to keep track of: revenue, expenses, profit, client information, the list goes on. We’re guessing, however, that protecting your business from fire isn’t at the top of your list. We’re here to get you thinking about how to protect your business from fire.

Tips on Protecting Your Business from a Fire

Fire season is right around the corner. So, what can you do to protect your business? At Competitive Edge Insurance, we have a few strategies in mind.

Have an Active Fire Protection Plan

Ensure your business has an active fire protection plan in place. An active fire protection plan includes water spray systems, deluge systems, sprinkler systems, fire water monitors, etc. Make sure that all of these systems are tested and in good working order (functioning with fresh batteries, etc.)

An evacuation plan should be crafted and distributed to all employees. Perform practice drills with your team members to ensure everyone understands their role in the event of an emergency.

Spring Cleaning

Spring cleaning is important! When it comes to fire protection, this might look like:

Carefully storing combustible and flammable materials
Cleaning the perimeter of your building (i.e. eliminating dry brush and quick-burning foliage)

Read more in this article from VFS Fire & Security Services for everything you need to know on prepping the outside of your commercial building for summer.

Perform Routine Building Maintenance

The last thing you need during an evacuation is a blocked walkway or doorway. Ensure all fire lanes are clear and access to fire hydrants is unobstructed.

Moreover, the address of your building should be visible from the street in the event that emergency personnel are called onto the scene.

Invest in Fire Insurance

Fire insurance is defined as “a form of property insurance that covers damage and losses caused by fire.” Although most homeowners’ policies include some amount of fire protection, additional coverage is often considered in the event that property is lost or damaged due to fire.

What Could Your Business Face Without Fire Insurance?

The consequences of not having fire insurance can be detrimental considering your business is likely one of your largest assets.

Fire insurance can be essential depending on where you live. For example, in California, we’ve seen an uptick in wildfires in recent years, according to the California Air Resources Board. In fact, the area burned by California wildfires has been increasing each year since 1950. Eight of the state’s historical 20 largest wildfires have occurred since 2017.

Fire insurance can help minimize the financial burden in the event that a fire at your business does occur. For more information on how to insure your property, contact our team of experts at Competitive Edge Insurance. Until then, read up on risk mitigation for property investors.

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