H&K Insurance's Blog

Vacant Commercial Properties

hkinsurance — Fri, 25 May 2012 12:29:48 +0000

Building (Photo credit: x-av)

Vacancy Provision

Under a commercial property policy, coverage is often significantly different for buildings that are vacant for extended periods. Usually, certain types of coverage are completely eliminated during the vacancy. Insurance companies are interested in protecting ongoing businesses and premiums are based upon active occupancy. Continued, full coverage may be provided, but that is only at the insurance company’s discretion and it usually means paying more premium after getting the insurer’s acceptance of the increased risk.

Definitions

Before any restrictions can be imposed, the insurance company must define exactly what they mean by vacancy and the definition is affected by the type of occupancy:

Tenant - When the insured is a tenant and the policy covers that insured’s property interest, the definition of building is the unit or suite that has been rented or leased to the tenant. That building is considered vacant when it no longer contains enough business personal property to conduct the customary operations of the insured tenant.

Building Owner Or General Lessee - When the insured is a building owner or general lessee, building is defined as the entire building. The building is considered vacant UNLESS a specified percentage of the TOTAL square footage is rented to a lessee or sub-lessee and used by the lessee or sub-lessee to conduct its customary operations OR is used by the building owner to conduct customary operations.

Buildings Under Construction - Buildings that are under construction or renovation are not considered to be vacant.

Vacancy Provisions

Now that vacancy has been defined, the vacancy condition can be stated. If the building where loss or damage occurs has been vacant (see definition above) for more than 60 consecutive days before the loss:

the insurance company will pay NOTHING if the loss was caused by vandalism, sprinkler leakage, glass breakage, water damage, or theft (including damage from attempted theft).
the insurance company will reduce any loss amount by 15% if the claim is due to any Covered Cause of Loss not listed above.

Vacancy Permit

When vacancy does occur, many companies, for an additional premium, will add a provision (sometimes called a Vacancy Permit). This form changes the policy wording so that it provides coverage for the property during specific time periods that it is vacant.

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Need Flood Insurance?

hkinsurance — Fri, 30 Mar 2012 12:00:58 +0000

Do you need flood insurance? Well, walk to the nearest mirror and ask the person you see if he or she owns much property that could be damaged or destroyed by water. If the answer is yes, then you should seriously consider buying flood insurance. Most persons who need the protection buy coverage offered by the National Flood Insurance Program (NFIP). If your community doesn’t participate in the program, you’ll have to look into coverage from private insurance companies.

Is A Flood Loss Likely?

The chances of your business, home or personal property being damaged by a flood depends primarily upon where you live. They also depend on other factors such as:

how much of a flood warning you receive
the level of flood precautions you take (such as moving personal property from lower levels to higher levels), and
the precautions taken by your community (such as the use of flood controls in construction standards or sandbagging threatened areas).

Floods are related to weather conditions and tend to affect very wide areas. This often makes chances of a flood loss higher than a loss from fires or windstorms. Many people have the obsolete belief that flood insurance is only needed if you live in a flood prone area.

I Live In A Flood Zone?!

If you hear the term “flood zone,” you may think that it refers to locations that are particularly vulnerable to flooding. Wherever you live in theUSA, you live in a flood zone. While your area may have a lower chance of flooding than a coastal area or a location situated near a body of water, your area could still experience flooding. A very dry part of the country can be susceptible to flash floods; hilly locations may be harmed by drainage; snowy locations may suffer from heavy snow thaw; other areas may suffer deluges or flooding due to a heavy rain season which has soaked the surrounding soil. So, if you’ve insured yourself against fire, wind and other causes of loss, it certainly makes sense to also protect yourself from the potential of a flood loss.

Why Worry When Disaster Coverage Is Available?

Are you thinking that, after a flood, your loss may be handled by the government declaring a disaster area? However, you’re still taking a couple of large risks. First, your flooded locale may not be deemed a disaster area. Second, being designated as a disaster area is not a bargain. Disaster area status only gives citizens access to government disaster loans. IF you qualify for assistance, you have replaced insurance protection with an obligation to pay off a large, long-term loan. Is it worthwhile to gamble on an opportunity to pick up more debt? You’ll find flood insurance to be a cheaper and much more valuable alternative.

Don’t Be “All Wet”

You don’t have to leave yourself unprotected. Your agent, an insurance professional, can help you with detailed information on the National Flood Insurance Program. You can also ask for help in getting the coverage you need to “keep dry” and secure in the face of a flood.

Is Your Home Winter Ready? – Pt. 3

hkinsurance — Fri, 16 Mar 2012 12:00:23 +0000

In this part we discuss a different hazard of the winter season.

Firing Up A Hearty Loss

Do you own a fireplace, wood-burning stove or portable heater? What about a gas or an electric furnace? If so, you need to take steps to make sure that they are safe and used properly. This should be done well before the arrival of the heating season.

Have your furnace inspected to make sure that it will operate properly in cold weather. Clean filters and vents will go a long way to keep your furnace a source or warmth rather than a cause of a fire loss. An inspection should also make certain that your furnace is not a creating a dangerous carbon monoxide buildup.

Fireplaces and wood-burning stoves should also be inspected and, if necessary, thoroughly cleaned. Creosote, a tar-like byproduct of burning wood, builds up in chimney and stove flues very quickly. Even a single wood-burning season could produce enough buildup to create a fire or severe smoke hazard. Don’t do the inspection yourself. It’s worth the cost to have a professional inspect and clean your fireplace or stove. Also, make sure that you don’t burn softwood or paper. Using anything other than hard woods exposes your fireplace or stove to quicker creosote buildup (softwood) or more intense heat (paper), which could clog or contribute to cracking a flue or liner.

Be very careful with the use of portable heaters. Depending upon the type, they can be prone to malfunction or could be a hazardous source of burns, especially for children. Further, many types can be easily tipped with the combination of heat source and fuels, creating a serious fire hazard.

Finally, make sure you have fire/smoke and carbon monoxide detectors properly installed and in good working order. Test them and put in new batteries. Small expense, big payoff.

As always, insurance professional is a valuable source of safety and insurance information. Don’t hesitate to contact an agent to discuss your questions. If you haven’t had the chance, please be sure to read parts one and two of “Is Your Home Winter Ready” which discusses other winter concerns.

Is Your Home Winter Ready? – Pt. 2

hkinsurance — Fri, 02 Mar 2012 13:00:17 +0000

In this part we discuss an important legal responsibility created for homeowners by the winter season.

Creating A Clear Liability

Snow doesn’t show favoritism. Instead of conveniently falling onto unused areas, it covers homes, sidewalks and driveways. As a responsible homeowner you should arrange to make travel across your property safe. This calls for clearing your walkways of snow and ice. It is also important to clear your property of items such as rakes, shovels, tools, toys and similar items. Remember that it takes only a small amount of snow to hide items that, during clear conditions, are easily seen and avoided. So take time to move such property and make repairs to uneven or cracked pavement.

Keep in mind that clearing walkways (including stairs) is an invitation for pedestrians to use the path. So, once you clear an area, it has to be kept clear and safe, especially from ice. Also, avoid creating piles of snow that can block either a driver’s or a pedestrian’s view. Finally, be sure that your property is safe for children who are enjoying winter. Don’t allow children to slide around without being aware of pedestrians or motorized traffic and don’t let anyone throw snow or ice balls at cars (you could be sued for any accident caused by careless play) related from the use of your property or premises.

Don’t forget the inside of your home. Visitors should be kept safe from harm. Be sure to keep interior stairs and floors clear of the watery remains of melted snow. Keep things dry and consider using mats that provide good traction and an area where folks can clear snow and ice from their shoes or boots.

As always, an insurance professional is a valuable source of safety and insurance information. Don’t hesitate to contact an agent to discuss your questions. If you haven’t had the chance, please be sure to read parts one and three of “Is Your Home Winter Ready” which discusses other winter concerns.

Is Your Home Winter Ready? – Pt. 1

hkinsurance — Fri, 17 Feb 2012 13:00:10 +0000

If you live in a climate that includes cold winters, you know the season creates special challenges for homeowners. In this article, we discuss an icy situation.

Ice Dams

An ice dam refers to ice that has formed along a roof’s edge. The dam of ice blocks additional water and the pooling water backs up and finds pathways into a home’s interior. This water may cause deterioration and decay to interior wood and plaster, drywall or other insulation materials. Once an ice dam has forced paths into a home, the roof becomes more susceptible to future ice dams and water damage.

Too much heat rising from the home to warm the roof is the most frequent cause of ice dams. The process occurs unevenly with the warmer area at the higher part of the roof melting the snow and then the cooler, lower area, particularly the roof edge, permitting the water to refreeze and then accumulate. Inadequate insulation lets too much heat escape into the attic and this creates a warmer roof. Improper ventilation creates moisture and heat buildup due to the lack of air movement.

How To Detect A Problem

Compare the way the snow is melting from the living area of your home with how snow appears on the roof over an unheated area such as a garage or shed. How does any snow coverage on your roof compare with your neighbors’ homes? Check for icicles. They can be pretty, but heavy icicle buildup means that interior heat is melting a lot of snow and may contribute to ice dams.

How To Prevent Ice Dams

There are a number of ways to help prevent ice dams:

Clear excess snow from the roof. However, in order to minimize damage to the roof and roofing, hire a professional to remove the snow.
Add rubberized or special roofing adhesives to help prevent pooled water on the roof from finding entry into the home’s interior.
Inspect the attic and roof for cracks, holes, or joints that permit warm air to escape to the roof, and seal or repair these areas.
Add the recommended amount of insulation to the attic and exterior walls of your home to minimize escaping heat (this also reduces your heating costs).
Reduce your home’s thermostat and throw on warmer clothing during extended cold spells.
Clear your gutters and downspouts so that water is properly shed off your roof.

As always, an insurance professional is a valuable source of safety and insurance information. Don’t hesitate to contact an agent to discuss your questions. If you haven’t had the chance, please be sure to read parts two and three of “Is Your Home Winter Ready” which discusses other winter concerns.

Loss (Reporting) Control

hkinsurance — Fri, 03 Feb 2012 13:00:50 +0000

Daily, insurance consumers experience all types of losses to their property. Depending upon how serious the loss is, property owners have to consider their next action. Typically, the next move is to get an insurance company involved. When a loss amount is high, this may be the only practical thing to do. However, when a loss involves a more modest amount, it may be prudent to carefully consider if it is appropriate to file a claim.

Any entity that carries insurance should always evaluate how insurance affordability or availability may be affected by filing minor claims. Insurers are focusing more of their attention on loss history. They closely scrutinize how past losses affect a given business that they insure or are considering insuring. In the current insurance environment, reporting a minor loss could make you a two-time loser. First, depending upon loss circumstances, coverage may be denied. Second, the fact that the loss occurred may cause your insurer to take a closer look at you.

Insurance companies want to have as much information as possible in order to decide whether to offer or continue to offer coverage. Loss history has always been important to insurers. However, an increased emphasis is being placed on using past losses as a way to predict the likelihood of future losses. The difference is that insurers have abandoned asking only about losses that exceed a certain amount. They now look for information on every conceivable loss. This increased sensitivity to losses may cause an insurer to increase premiums or even decide not to renew coverage when, in the past, minor or unpaid claims were not treated as problems.

Insurance consumers need to be aware of how they handle losses and of how insurers currently respond to their customers’ (or applicants’) loss activity. You owe it to your organization to manage losses in a manner that is in sync with the new reality. Handling more small losses as an operating expense instead of through your insurer may be good business and could help preserve insurance availability for serious situations. More organizations are becoming aggressive and creative in managing losses, especially as insurers have changed their attitude toward losses and underwriting.

Insuring Jewelry (hkinsurance.wordpress.com)

Personal Injury

hkinsurance — Fri, 20 Jan 2012 13:00:50 +0000

Unlike accidental events that result in a person suffering a serious injury (called Bodily Injury) or property that is damaged or destroyed (called Property Damage); Personal Injury usually involves one person’s alleged interference with another person’s legal rights. It also applies to incidents that damages another person’s reputation. Personal Injury commonly includes the following acts:

False arrest, detention or imprisonment

Example: A homeowner suspects that her teen daughter’s friend has stolen jewelry while visiting her home. She locks the teen in her bedroom for an hour until the police arrive and it turns out the teen did nothing wrong.

Malicious prosecution

Example: A gentleman accuses his neighbor of stealing a laptop from his home and files charges with the police

Wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy

Example: A boarder comes home from work and finds his room’s door padlocked. The homeowner/landlord did it after the boarder, for the third night in a row, plays his stereo loudly;

Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services

Example: A homeowner is the president of her parent and school organization. She also publishes articles for the organization on her Website. After an argument with another organization officer, the president recounts the incident on her site and includes some insults and false items about that person

Oral or written publication of material that violates a person’s right of privacy

Example: A woman is visiting a friend. During the visit, she overhears her friend’s conversation with her doctor. The next day, the person reveals to others that the friend, a young, single female, is having medical problems due to an unexpected pregnancy.

All such acts are examples of incidents that could result in lawsuits. However, they are also the sort of events that are excluded from coverage by the typical homeowners policy. The major reason for their exclusion is that they are deliberate acts rather than being accidental. One way to secure coverage for personal injury losses is to purchase personal umbrella coverage. It may be worthwhile to discuss your possible need for personal injury coverage with an insurance professional.

Snowmobile Safety

hkinsurance — Fri, 06 Jan 2012 13:00:18 +0000

Bounding over trails through woods, over fields and across frozen ponds or lakes with cold blasts of air whipping around are all part of the fun that thousands and thousands of people enjoy during winter in their snowmobiles. Snowmobiling’s fun should not mask the fact that it still involves the use of fast, heavy vehicles that, in collisions, can cause severe injuries and damage to property. Some models of snowmobiles and all-terrain vehicles operate at speeds that rival automobiles. Unlike autos, they are open vehicles, lacking the structural protection of even the smallest auto; therefore the danger to snowmobile users is far higher.

The danger of being injured while operating snowmobiles is compounded by some important factors. Snowmobiles are operated over rough terrain with obstacles that are often hidden by snow. They are operated in areas where the drivers are not familiar with paths or trails. Novices and older operators with poorer reflexes are attracted to recreational snowmobiling and these vehicles are often used very late at night, in remote areas. Another consideration regarding use of snowmobiles is that operators also combine driving with drinking and alcohol intensifies the other dangers.

Naturally there are practices that can help lower the chances of being in a serious accident. Snowmobile operators should:

Avoid solo snowmobiling – having another person around in case of an accident is probably the greatest safety practice.
Properly maintain the snowmobile to insure safer operation
Dress in appropriate safety gear and clothing, including water-repellant apparel
Operate snowmobile at speeds that are appropriate for conditions and terrain
Do not drink alcohol while operating a snowmobile
Use marked trails and don’t stray off of them
Carry a first aid kit, as well as other emergency equipment, especially tools, flashlights, compass, matches, etc.
Avoid crossing bodies of water as breaking through ice is a major peril (drowning is a chief source of snowmobile accident fatalities).

Claims by Candlelight?

hkinsurance — Fri, 23 Dec 2011 13:00:37 +0000

There’s Something Happening With Candles?

If things haven’t got complicated enough for persons concerned with protecting their homestead, it appears that the soft, soothing glow of a candle’s flame may disguise some problems. Specifically, the use of candles may result in:

reducing the internal air quality of your home
increasing the chance of fire losses
damages by particulate deposits on interior and exterior walls, carpets, furniture, appliances, window treatments, floors and other surfaces.

Further, their use may also contribute to health problems from inhaling particulate matter or ingesting harmful chemicals.

What’s The Problem?

Actually, there are a number of problems and they have been accentuated by a change in the market for candles. The last few years have seen an explosive growth in the popularity of candles. They are increasingly used for their traditional, decorative purpose and they are now marketed as scented candles for deodorizing and for a health-related purpose called aromatherapy.

Of course, to boost sales, candle-makers find that they have to offer products with an intense scent. This is accomplished by adding scented oils into their wax mixture. This often causes the candle to burn improperly and increase the production of soot.

A Sooty Situation

It looks like soot, which is a carbon residue produced by burning, can create a large, expensive problem. Since soot is particulate matter that can be carried through the air, it can seriously stain walls, carpets, and personal property. Studies show that electronic and plastic components are also vulnerable to soot damage. Unfortunately, soot produced by improperly burning candles bonds very strongly, making it difficult to impossible to clean. Further, soot may contaminate a home’s heating system, including ductwork. The soot can then be spread throughout a home, creating widespread damage that is difficult to repair. Property stained by soot may have to be cleaned by professionals and, often, the property has to be replaced.

What’s in those things anyway?

You may have assumed that the only materials found in candles were the wick and some type of wax. Surprise! Here’s a list of ingredients which may either be found in a candle or may be created during combustion:

Acetone Benzene Trichlorofluoromethane
Carbon disulfide 2 Butanone 1 1- Trichloroethane
Trichloroethene Carbon tetrachloride Tetrachloroethene
Toluene Chlorobenzene Ethylbenzene
Styrene Xylene Phenol
Cresol Cyclopentene Lead

Another surprise is that the candle-making industry is not required to tell consumers about the ingredients used in their products, including when a wick is used which contains a lead core.

Poor candle design or practices

Besides the use of oils and chemicals, candle-makers sometimes create problems because they make other mistakes. Candles may also burn improperly (causing soot) because a candle’s wick may be off-center or there may not be a proper amount of air in the candle mixture. A candle may have a higher likelihood of causing a fire loss due to:

an improper candle mixture which results in intense heat or high flames
improper holders (glass that shatters or spills flammable liquid)
wood holders that catch fire
flammable items imbedded in the candle mixture such as potpourri

Coverage Under a Homeowner Policy?

Damage to a home or personal property due to soot can create serious problems for both an insurer and a homeowner. Losses involving soot can create thousands of dollars in damages. Depending upon the details surrounding a loss and the wording of the particular homeowner policy, coverage for the damage may not be available. Why? Because the source of loss might be considered the result of pollution, which may be excluded. Another reason for rejecting a claim may be an assumption that the damage was gradual instead of sudden, so it wouldn’t be considered accidental and sudden damage. A claim could even be affected by the knowledge of the insured. For instance, even if the policy covers soot-related losses, a claim could be denied if a homeowner knew that the type of candle they used could cause damages.

Since the damage is caused by matter that is invisible to the naked eye, it could be difficult to prove that the loss was sudden. Tests can be used to determine the cause of stained or discolored property, but the testing can be expensive and the cost may have to handled by the homeowner.

What To Do?

It’s all up to you. You might wish to ask more questions about the type of candles you use or curtail your use. You can also discuss whether coverage is available under your homeowner policy with an insurance professional. If you do use candles frequently, you may also want to check your home thoroughly for any stains or discoloration, including any contamination of your heating system. Candle, candle, burning bright? Not if you cause a claim tonight.

Office Functions and Alcohol

hkinsurance — Fri, 09 Dec 2011 13:00:18 +0000

The office picnic, office-sponsored sports activities, holiday party, and client party are events that may involve serving and consuming alcoholic beverages. Can a business be held responsible for injuries or damages that result from serving alcohol? Is the current insurance program sufficient to address this concern? Is it necessary to purchase special insurance? State alcohol laws (called Dram Shop Laws in most states) determine a business entity’s liability for injury or damage arising from serving alcohol. Laws vary, but most assign liability for serving persons who are minors or are visibly intoxicated.

The Commercial General Liability (CGL) policy provides coverage for Liquor Liability but EXCEPT for businesses ‘in the business of’ selling, serving, or manufacturing alcoholic beverages. If the event offers alcohol without a charge, it could be stated that the insured is not ‘in the business of’ selling or serving. If persons have to pay, even if the charge is only to offset the alcohol’s expense, that fact could create a different legal situation.

When hosting an event that includes liquor, some businesses have decided that hiring a bartender will reduce their risk of being held liable. This step at least offers the benefit of another party being held primarily responsible and reducing the amount the business might be required to pay. The main issue is obtaining proof from the bartender to confirm that he or she carries an adequate level of Liquor Liability insurance. Proof should be obtained PRIOR to the event. Otherwise, it may be too late when you find out that there isn’t a policy or that the limits are insufficient.

Society is less tolerant of drinking and driving. An impaired driver who causes an auto accident is much more likely to be sued. Besides the driver, a lawsuit will likely include a business that provided alcohol. Why, because such a business is considered as contributing to the loss and is called on to share (or fully bear) the cost of injury or damage. The Commercial General Liability policy could provide the necessary defense for the business.

Example: Business A and Business B are both insured by CGL policies and each company recently sponsored a Christmas party. After each party, a very inebriated employee leaves and, before reaching home, causes a collision. The injured drivers sue the businesses along with the drunken employees. Business A is an accounting office and its CGL handles the lawsuit. Business B is a tavern; its CGL denies the claim.

The solution is to discuss the types of events your business sponsors or hosts with your agent to determine if you need to purchase special coverage. This discussion may also help you take steps to reduce potential lawsuits. Some businesses may find it easiest and safest to ban drinking during business hours, including business lunches, dinners or other events. Your insurance agent and legal counsel can assist you in determining ways to protect your assets.