“Fires in the West and floods in the South Eastern United States are already having a significant impact on the availability and cost of business insurance,” says Los Angeles-based insurance broker, Karl Susman.
An insurance broker for over 30 years, and expert witness in lawsuits involving coverage and agent mal-practice issues, Susman strongly feels, “Now, more than ever, business owners cannot just assume their agents or brokers will renew policies or sell them insurance coverage that they need, because carriers are trying to minimize their loss exposures.”
He outlined the steps necessary in obtaining commercial property insurance that is tailored to individual needs, beginning with cyber-attacks:
Do not assume your office policy will cover computer hacks
We have all heard of computers being hacked, data lost and ransom wear. “Most people assume their office policy will cover them in the event of a cyber-attack, but that coverage must be specifically requested as it is not included in standard commercial policies. It is sold as a separate policy,” he points out, adding:
“The coverage should reimburse you for lost business and to remain compliant with state and federal laws that dictate how you must handle a computer hack. If customer data has been compromised, both federal and state requirements on how to deal with it can cost hundreds of thousands, to several million dollars.
“Thus far in 2020, small businesses accounted for 28% of data breeches, so having cyber coverage could mean the difference between your company surviving or going broke.”
Do I have coverage in the event of a pandemic?
In 2002 the world faced the SARS virus epidemic which forced cancellation of the Wimbledon tennis tournament and a multi-million dollar loss. Susman explains how that event influenced the tournament organizers:
“Most people never thought to ask about coverage for an epidemic or pandemic with one notable exception, Wimbledon. They purchased a policy that would cover them in the event of the tennis match being cancelled due to a pandemic. They are now receiving a check for 141 million dollars!
“My point is that coverage is available, if you ask. And this raises the obvious question,
‘How do you know what to ask for and can you depend on an agent to suggest needed coverages?”
Ask “what if?”
“Business owners need to examine every aspect of their business and ask themselves what if questions. Think about what it takes to remain in business. For example, if you operate a hot dog stand and are completely dependent on being supplied with hot dogs, inquire about coverage for food borne disease outbreaks. Such an event would dramatically affect your ability run your business.
“If your business is completely dependent on the internet, then ask about all possible insurance products to protect you from loses resulting from internet outages. Remember, nobody knows your business and possible exposures better than you.”
Can I depend on the agent or broker to recommend what I need?
In almost all states, with very few exceptions, an insurance agent is not required to suggest coverages.
Susman makes it clear that for the business owner to be properly insured, especially if there is a unique loss exposure, “Then ask for it to be covered. Almost anything in the business insurance market can be obtained for a price, but you will have to find it, and this initially requires understanding the difference between an insurance agent and a broker.”
He’s absolutely right, it is important to realize that an agent works for the insurance company whereas a broker works for the client and can sell insurance from many different carriers.
“So, if you are working with an agent,” Susman says, “Ask, do you have other options than what you are offering me?’ If the answer is no, it is time to look around, speak with a broker, as one size does not fit all with business insurance.
“As some insurance agents and brokers specialize in insuring certain types of businesses, it may be wise to reach out to someone who has a reputation as a specialist in insurance for your specific kind of business.”
Help the agent help you
Susman believes strongly that for clients to be properly insured, they need to assist their agent or broker with as much information as possible about potential exposures. “That way, they can find the coverage you need.”
He concluded our conversation with this advice:
“Do not assume that an agent or broker knows what you need. If you do not tell us, then we may not offer you the best policy. Just ask, “Is this covered?”
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.