"8 Million Strong and Voting!" Small business is the heart beat of the United States economy. This blog searches for issues and answers to helping small business survive and thrive in California and the United States.
Monday, January 25, 2016
As I think you all know I own an insurance agency. I don’t usually write email under Small Business California that are insurance coverage related but over the weekend we had a client that had their building totally destroyed by a fire. The business did not own the building.
In reviewing their insurance at the time of renewal the insured chose to keep all their coverages as is. The fire occurred and in a meeting with the client their contents were one third of what they actually had on a replacement basis. Fortunately their business interruption was on an actual loss sustained basis so they should be okay here but the loss on their contents was about $400,000 more than they had covered. The take away here is review your coverage closely at every renewal. It was not applicable here but see if your policy has a coinsurance clause. If it does, make sure your coverage meets the coinsurance percentage because if it does not you will suffer a penalty for the amount you are under insured.
On the liability side, the insured had $1 million coverage. I don’t know what their lease said so I am not clear whether they had a waiver of subrogation from the building owner. I also don’t know what caused the fire but if it is determined that our insured caused the fire, the building owners insurance will most likely come back against my insured. We always asked for a copy of the lease but had not received it.
There was also damage to buildings on both sides of the burned out building. Again if the insured caused the fire the other building owners insurance company will come back on our insured. The take away here is to read your lease and seriously consider getting an umbrella to have proper protection.
I strongly recommend you review all of your insurance coverages at least on an annual basis and think seriously what would happen if your building was totally destroyed. Do you have a plan to get back into business after a loss?
Scott Hauge President Small Business California 2311 Taraval Street San Francisco, CA 94116 email@example.com 415-680-2188
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Small Business California engages in lobbying activities on behalf of its members. Approximately 35% of your dues contribution goes to support these lobbying activities, and, we believe, is not deductible as a business expense under Section 162(e) of the Internal Revenue Code. Please consult your own accountant or tax attorney.