Posted by Susie Scherff on Wed, Nov 23, 2011 @ 04:37 PM
(Please also see Hobby or Business – Part One.)
Most individuals use their homeowner or residential insurance policy to handle their hobby activities as a collector or enthusiast. A homeowner (HO) policy usually includes a definition of “business” and some are so broad that nearly any activity qualifies as a business. In such instances, a hobbyist or enthusiast should consider whether separate business insurance is necessary.
Is Your Hobby a Business?
Let’s say you love photography and take pictures at events such as weddings to finance this passion. While you consider this to be a hobby, your insurer may define your activities as a business. If your camera equipment is stolen or damaged, there may be as little as $250 protection under your HO policy. HO coverage for business property differs depending on whether the property is located at or away from your residence.
Imagine being a photographer at a wedding. As you are snapping photos of the wedding party, a large boom stand with hot lighting equipment tips over injuring the maid of honor and the flower girl. If the injured women sue you since the injury is part of a business activity, your HO may exclude coverage.
When Your Job is Out of Your Home
There are numerous types of sales and service jobs. These include cosmetics, clothing, kitchen supplies, home decorator items, computer repair, web site design, photography, music lessons, auto repair and many contractors. Each job involves some type of business property that is excluded or severely limited under the HO policy. Therefore, each situation may need to be covered by business insurance.
Although independent consultants are in business, too often they think their HO policy will provide coverage because they don't have special equipment or leave their home office to run their business. Office furnishings such as laptops, PDAs, desks, chairs and file cabinets are subject to HO policy limitations. Without adjustments to the homeowner policy there may be little or no coverage for property used in a business.
Need More Insurance?
The legal form of the business may create a need for business insurance. If a limited liability company, corporation or partnership is formed, the related activity is a business and needs business coverage. Also, most HO policies will not provide coverage for employees or for any professional liability.
What can you do? First, determine if your activities qualify as a business. Then talk to Sutherland-Scherff to determine what coverage is provided by the policies you currently have and what options are available to fill-in any gaps in protection.
Posted by Susie Scherff on Mon, Nov 07, 2011 @ 12:01 PM
(Please also see our blog post Part 2 for this same topic.)
Did you know that your hobby may significantly affect your personal insurance needs? Hobbies often require a large investment in tangible property and may even create some legal responsibility to other persons or their property.
Are you a collector or an enthusiast?
A collector acquires a category of property such as stamps, sports memorabilia, comic books, dishes or glassware. An enthusiast collects property relating to a physical activity like hunting, music, cyclist, or painting. A collector’s focus is on physical property. An enthusiast’s focus is on this as well as the liability exposure that is inherent in their activity.
Eligibility of Collectible Items
Your special property should be properly insured and most homeowner policies provide minimal protection for collectible property. Why? Collectible items are often fragile, valuable in relation to size, and worth more as part of a collection. The value of collectibles kept in one room may be more valuable than all of the rest of your home's contents. Regular homeowner coverage is not designed to handle high-valued property that is easily destroyed, lost or is vulnerable to theft.
Consider Supplemental Policies
Even when collectible property is eligible for a policy's full coverage, this may not be enough. You may want your special property to be covered from more causes of loss than your family room couch. It may be worthwhile to buy an endorsement to add additional coverage for your collectibles to your homeowner policy. Depending upon the type and value of your collectibles, you may even have to consider specialty coverage which typically makes consideration for replacement cost and for property that appreciates in value.
If your hobby is more hands-on, then be sure you're protected against any legal liability related to your activity. Ask yourself the following:
- Are there any dangers associated with the hobby?
- Does the hobby involve frequent travel to sites or meets?
- Does the activity attract frequent visitors to your home?
- Do you publish hobbyist newsletters or give advice to others?
- Do you actively sell or trade property on or away from your home?
- Does your activity involve equipment that's inherently dangerous to others?
Fortunately, many aspects of a hobby, especially legal liability, are covered by a homeowners policy, but your activity may need special or even business coverage (see part 2 of this blog post). Don't let your enjoyment be interrupted by inadequate protection. Discuss your special interest with Sutherland-Scherff and we’ll assess your coverage needs so you can enjoy your hobby.
Posted by Susie Scherff on Mon, Nov 07, 2011 @ 12:00 PM
Garage operations have hybrid coverage needs: there’s a blur and overlap between the general liability for the operations and the automobile liability exposures. A general liability policy does not provide enough coverage and a commercial auto policy provides too much. Fortunately there is a way to properly handle this need.
The Garage Coverage Form contains premises liability, products liability, automobile liability and automobile physical damage coverages. Operations that should be protected with the Garage Coverage Form include the following:
- franchise and non-franchise auto dealers
- truck dealers
- motorcycle dealers
- snowmobile and recreational vehicle dealers
- new and/or used trailer dealers
- vehicle repair shops
- service stations
- storage garages and
- public parking places
The Garage Coverage Form is flexible, having the ability to cover a wide variety of automobile loss exposures. Besides covering vehicles that are owned by the covered business, it may also cover vehicles that are non-owned (rented or borrowed), trucks and other non-private passenger vehicles, trailers and mobile equipment. Coverage may even apply to vehicles that are privately owned by employees, but were involved in a work-related loss; say an employee who has a collision in his personal car while returning from picking up lunch for his boss and co-workers.
A garage policy may also be written to customize how coverage applies to different types of vehicles. For instance, Joe's Towing Service has a fleet of four tow trucks, as well as a sedan used by the owner. The towing service also does repairs and regularly has customer vehicles on their premises. Rather than having both liability and physical damage on all cars the services either owns or handles, Joe selects the following:
- Liability and Physical Damage - for his two newer tow trucks and his sedan.
- Liability only - for his two, older tow trucks
- Physical Damage Liability only - for vehicles belonging to customer
Like other types of policies, a garage coverage form also provides legal defense coverage. In other words, the policy handles the costs associated with defending the policy owner against claims and lawsuits. This protection does not affect the separate limits of insurance that are selected for the liability coverages.
Garage Coverage Form is a great solution for auto service businesses, but not all businesses warrant its comprehensive coverage. Contact your Sutherland-Scherff insurance professional to learn what level of coverage is best for your business.
Posted by Susie Scherff on Thu, Nov 03, 2011 @ 10:00 AM
Restaurants, auto repair shops, real estate offices and nearly all other businesses have signs that tell their customers their name, address, hours of operation and so on. Signs may be simple or complex and many businesses typically use lighted signs. The Sign policy created by Insurance Services Office is available to insure against the loss or destruction of signs, including fluorescent, neon, automatic or mechanical sign. Coverage also extends to lamps. However, fixed, non-lighted signs (such as billboards) are not eligible under a sign policy, even if they are illuminated by separate electric lights.
A policy requires that, in order to be covered, each sign must be specifically described including lettering information, the sign's location and coverage amount (limit). If the business buying the coverage wants to reduce its coverage cost by using a deductible, it has to accept one equal to 5% of the applicable coverage limit.
Example: An insured’s Sign policy has a limit of $10,000 and a 5% deductible applies. Later, the insured files a loss and the insurer determines total damages of $1,329. Because of the deductible and limit, the insured is paid $829 ($1,329 - $500 [10,000 X 5%]).
The policy protects against any risk of tangible damage that is not excluded or limited in the coverage form. Some of the events that could cause loss that is not covered include:
- Governmental Action - such as property seized by authorities for emergency use
- Nuclear Hazard
- War and Military Action
- Consequential (indirect) loss - such as a storm destroys a source of power and a company's sign can't be lit for several weeks
- Any breakage that occurs during transportation, installation, repairing or dismantling
- Dishonest acts - such as a custom sign made of expense, in-laid glass panels is stolen by an employee of the covered business
- Short-circuiting or electrical surges
- Tricks or fraud - such as crooks take the sign by posing as municipal electrical inspectors
The size, geographic location and specific location are all elements that an insurance company would study before deciding whether to provide sign coverage. The larger the sign, the more potential damage can occur. Signs that are located away from the main premises are more vulnerable to vandalism and theft. Signs are very easily damaged by windstorm and hail so geographic considerations must be made.
Call Sutherland-Scherff today and we can help make sure that your signs are covered properly.
Posted by Kay Zoldos on Mon, Oct 31, 2011 @ 01:05 PM
Which Homeowners Policy is Right for Me?
If you own a home; you’ll want to think about the best way to insure it. One goal is to match your needs to the right company. Some companies like new, high-valued homes while some companies do well with older or historic preservation homes. Others are comfortable with country homes or old farm homes. It pays to shop around, both for the best coverage and for a company that likes your type of home.
There are two common levels of coverage that you may consider:
Named causes of loss coverage - The policy only covers certain causes of loss to your property. You must prove to the company that one of the covered causes damaged your property.
Risks of physical loss – This covers all causes of loss except those that are excluded. The company must prove that one of the excluded causes of loss damaged your building.
You may want to discuss other types of homeowners coverage if you own a different type of residence such as a modular home, mobile home, apartment, town home, condominium or you have personal living space in a commercial building.
A Basic Homeowners policy usually provides the following:
- Coverage for your building (ask about coinsurance and replacement cost issues).
- Coverage for your outbuildings - garages, sheds, barns, cabanas
- Coverage for personal property is usually 50-75% of your building limit
- Limitations - many policies have special limits on certain types of property, such as theft loss to Jewelry and gems ($1,000), Furs ($1,000), Gold, silverware, pewter ware ($2,500), Guns ($2,000), Building supplies - no coverage for theft. Further, very little coverage may be available of other types of property, regardless of the cause of loss, such as, money, stamps, fine arts, antiques, electronics, boating equipment, etc.
- Additional living expense - pays the extra cost of temporary housing, food and other increased costs of living when you are forced from your home by a covered cause of loss.
- Liability coverages - should you accidentally injure other people or damage their property
- Defense costs - includes hiring and paying for a lawyer (if necessary) and paying most court costs.
- Medical payments coverage is for minor injuries to people other than residents of the household. You don't have to be sued or be negligent.
If this short article has raised more questions about your coverage…call Sutherland-Scherff today and we can answer them and find the best policy for you.
Posted by Susie Scherff on Sat, Oct 29, 2011 @ 10:50 AM
Does your restaurant or food services business use independent contractors for delivery services to customers? It’s a wonderful way to serve customers and grow your sales – but its also a risky operational exposure and needs to be managed properly. At Sutherland-Scherff we specialize in restaurants and have the experience to help you build a solid risk management program for delivery services.
For most of our clients the service is provided by an independent contracto
r, either an individual or a larger company specializing in providing this service. You should always use an independent contractor agreement that specifically requires the independent contractor to provide both Commercial Auto Liability insurance, as well as Commercial General Liability insurance.
You should also require that your restaurant be named as an Additional Insured on both of those policies. You should require the contractor provide evidence of all insurance policies (via a standard Certificate of Insurance) and ask for a waiver of subrogation on the Workers Compensation policy.
When you take the order and create the relationship with the customer, you are also increasing your legal exposure if the driver winds up committing some act of physical or personal injury against the customer. For example, your contractor provides a driver who is a convicted sex offender (of which you had no knowledge) and delivers an order to a single female customer. Later that night the driver returns and sexually assaults the customer.
This all sounds very serious and you may not want to deal with all of these issues yourself – great! Call Sutherland-Scherff today and we can custom develop a program for managing risk across all of your operational exposures.
Posted by Kay Zoldos on Thu, Oct 27, 2011 @ 09:00 AM
Hiring and firing decisions are legal minefields that are best navigated by the use of Employment Practices Liability Insurance (EPLI).
It is important that your business (restaurant owners, auto services and garages, property management firms are some of the specializations at Sutherland-Scherff) have clear policies that are applied consistently to each employee. Such policies must directly relate to the duties of their job. Do you know what type of decisions could trigger a claim? For example, is it legal to terminate:
- a driver with a bad driving record?
- an employee who is rude to your customers?
- an employee who swears at customers?
The answer is not simple. A business’ action may depend upon circumstances such as whether an employee’s duties involve driving a company vehicle, or directly involves customers and if the company can prove that such behavior fails to meet the applicable job standards.
One key issue is documenting the essential job functions and establishing measurable standards for each position. Another key issue is having access to legal counsel that has expertise in this special area of the law. Use of regular performance reviews and applying the standards equally to each employee is a smart employment practice. The best defense against employment practice claims is to know the law in California, or any state in which you operate, and then having policies and procedures that meet or exceed its legal standards.
The U.S. Department of Labor offers a Small Business Handbook from their website. The U.S. Equal Employment Opportunity Commission also offers numerous publications addressing different employment laws from their website.
Policies and premiums for this type of coverage vary tremendously among insurers. Many companies offering the coverage also offer assistance in writing policy and procedure manuals and other ways to reduce the potential for claims involving sexual harassment, wrongful termination or discrimination. No business is immune from these claims.
Posted by Susie Scherff on Mon, Oct 24, 2011 @ 01:24 AM
Does your restaurant or food services business use independent contractors for delivery services to customers? It’s a wonderful way to serve customers and grow your sales – but its also a risky operational exposure and needs to be managed properly. At Sutherland-Scherff we specialize in restaurants and have the experience to help you build a solid risk management program for delivery services.
For most of our clients the service is provided by an independent contractor, either an individual or a larger company specializing in providing this service. You should always use an independent contractor agreement that specifically requires the independent contractor to provide both Commercial Auto Liability insurance, as well as Commercial General Liability insurance.
You should also require that your restaurant be named as an Additional Insured on both of those policies. You should require the contractor provide evidence of all insurance policies (via a standard Certificate of Insurance) and ask for a waiver of subrogation on the Workers Compensation policy.
When you take the order and create the relationship with the customer, you are also increasing your legal exposure if the driver winds up committing some act of physical or personal injury against the customer. For example, your contractor provides a driver who is a convicted sex offender (of which you had no knowledge) and delivers an order to a single female customer. Later that night the driver returns and sexually assaults the customer.
This all sounds very serious and you may not want to deal with all of these issues yourself – great! Call Sutherland-Scherff today and we can custom develop a program for managing risk across all of your operational exposures.
Posted by Susie Scherff on Thu, Oct 20, 2011 @ 05:46 AM
A commercial property insurance policy can usually be depended upon to handle direct loss to structures, equipment and related property that are owned by a restaurant or other food service business. However, what happens when weather conditions take a turn for the worse and cause indirect damage by knocking out utility services to your establishment? Examples of losses include damage by heat-induced transformer breakdowns; or broken power lines, including compressors, motors and switches, which could result in food spoilage.
Equipment damage may also occur due to an accidental and sudden loss of power. Power surges may harm expensive equipment. A commercial property policy may be of little or no help for such instances. Generally, such policies exclude coverage for loss that involves the failure of utility services. Therefore, your food service business could be harmed when a utility failure or interruption of any type occurs away from the insured business location.
Fortunately, you can buy additional, optional coverage to protect against utility service-related losses. A restaurant usually has the option to buy the type of coverage it needs, such as services for water, telephone/communications (either including or not including land lines), gas and electric power.
A company that selects such coverage usually has the option to protect different classes of property including what business locations to insure, type of property (the firm’s own property and/or property that belongs to others, such as customers), and the sources (perils) of loss covered. The choices usually have to be reflected on the insurance policy itself, meaning that the information has to be listed on a policy declarations page or schedule.
Where available, the coverage option usually defines the utility services listed on the schedule. If your business is concerned about its vulnerability to power-related loss, be sure to check with Sutherland-Scherff about this valuable coverage option. We’re available to assist you anytime so feel free call us at 888-400-1133.
Posted by Susie Scherff on Mon, Oct 17, 2011 @ 02:34 PM
Recently a national restaurant chain was hit with a lawsuit from the U.S. EEOC alleging that the chain’s hiring practices discriminated against older workers. At Sutherland-Scherff we specialize in restaurants and take a wide view of the risks facing your business.
Employment practices liability insurance (EPLI) was developed in the early 1990s in response to societal trends. Millions of small businesses, and large, now buy EPLI coverage but many miss out on the additional benefits that are offered by some insurance companies.
For example, many of the underwriters who specialize in EPLI are happy to have their law firm review your employment application forms and hiring practices. It’s less expensive for them to help you avoid a lawsuit than to react to one.
Furthermore, some carriers will also offer free training services for your management team to reduce poor employment practices within the company. Had the restaurant group in question in the lawsuit been proactive, they could have done an internal review, with their insurance company, of the results of their hiring practices and perhaps identified this situation before it mushroomed into a lawsuit. An ounce of prevention is worth a pound of cure in this case.
Protect your food service business with the professional services of Sutherland-Scherff insurance agency. We will help you review Employment Practices Liability Insurance and select the right insurance company – including those that provide the type of valued-added services that can prevent the next lawsuit.
Please contact us today at 888-400-1133 to discuss other ideas for protecting your business.