How to Determine If a Business Risk is Insurable Or Not

Business insurance is designed to protect your IT company against risk, or the likelihood of a loss. But it’s important to understand that even the most comprehensive insurance policies don’t cover every type of risk, and don’t offer unlimited compensation in the event of a claim.When you buy commercial risk insurance, you pay premiums to the insurance carrier, which in turn agrees to pay a claim in the event you should suffer a covered loss. By pooling premiums from many policyholders at once, insurers are able to pay for the claims of the few who do run into problems, while providing protection to everyone else in the pool in case they need it.Coverage provided on business insurance policies differ from insurance carrier to insurance carrier. So, it is always wise to seek the broadest coverage you can afford. However, because some losses are impossible to value or are too costly, too probable, or too susceptible to manipulation, insurance companies don’t cover them at all. These are known as “uninsurable risks.” For example, most professional liability policies won’t cover you if a client sues you for not paying a bill or for stealing a customer or employee. And, of course, any allegation related to a criminal act or intentional wrongdoing on your part is generally uninsurable. For example, if you intentionally damage your own property or injure someone, your property insurance coverage won’t apply.Consequential losses are also generally uninsurable. For example, if you’re sued for a mistake you made while providing services to a client, your policy may pay the claim for the error. However, if as a consequence of your mistake, the client stops doing business with you and you go out of business, those losses aren’t covered.Carriers may also choose not to insure risks that are considered inevitable, such as providing property insurance to a business when a wildfire is burning just miles away. They also don’t cover gradual damage to property related to maintenance or wear and tear, such as a old, leaky roof.For a business risk to be insurable, it typically must meet a few criteria:- The risk is potentially costly enough that a business is willing to pay a premium to protect against it.- The risk can’t be so catastrophic that the insurer would never be able to pay for the loss (i.e. act of war).- The risk is well-defined and has a clear, measurable value that can’t be influenced by the policyholder.- The risk is random, not within the policyholder’s control; and the policyholder cannot cause or influence the loss.- There must be a sufficient number of insured’s subject to the same risk, so that all policyholders’ combined premiums can share in the cost of any losses, but it must be unlikely that all policyholders will suffer a loss at the same time.Limitations of CoverageUltimately, whether or not a specific risk will be insured is defined by the policy. Some types of high-risk occurrences may be covered, but only up to pre-determined monetary limits. Even in the same policy, different types of covered losses may have different limits or exclusions. There may also be limits on the total amount of covered losses that an insurer will pay.Depending on the type of coverage, there may also be deductibles that apply. For example, if your property insurance policy has a $10,000 deductible, the insurer won’t pay any claim less than $10,000, and will pay only for losses beyond the first $10,000. In other words, if an applicable loss totals $30,000, the insurer will pay $20,000, and you will be responsible for the $10,000 deductible.In many cases, the policyholder may choose to pay a higher premium for insurance with higher payout limits and/or lower deductibles, or to pay less in premium for a policy that provides lower benefits in the event of a claim.Know Your PolicyBe sure you understand your specific policy benefits, as well as what isn’t covered. With the exception of property coverage, the insurance company will generally not write a check to reimburse a customer (an insured) for its losses. Additionally, liability insurance policies do not pay for an insured’s costs when the insured sues another party. Liability coverage pays only for the defense and settlement of claims filed against the insured.Insurance is just one part of a comprehensive risk management strategy, so you may need to employ other tactics to mitigate risk exposure. For example, for some risks that can’t be covered by insurance, many small businesses create clauses in their client contracts that protect their company against specific losses. Such clauses might, for example, address protection of confidential business information or prevent the client from hiring away your employees or re-distributing any software you license.If you’re concerned about securing coverage for a specific kind of risk, contact a small-business insurance broker for an IT risk assessment to determine your risk exposure, to learn what coverage options may be available, and to receive a no-obligation quote to learn about coverage rates for the protection you need.

Overview of Homeowners Insurance

Homeowners Insurance is a very complex but important aspect of owning a home. Actual laws and policies differ from state to state, but I will give basic details, applicable to most policies. Specifics for your state and area can be determined from a licensed agent. If you are just renting a home, you would need renters insurance while there are also different mobile home insurance and vacation home insurance policies, basically similar in concept but with extra wording applicable to the those types of risk. Any standard homeowner insurance policy will cover damage to the structure and personal possessions, up to a limit specified in the policy, caused by the following perils: storms (wind, hail, rain and snow) and tornados, fire, and lightning.PLEASE NOTE: Homeowners in high-risk states (Alabama, Florida, Louisiana, Mississippi, North Carolina, South Carolina, and Texas) need to buy special Windstorm Insurance for protection against tornado, hurricane, hail and flood damage. This coverage is not available on a standard homeowner insurance policy and is more expensive. Earthquake insurance in California is also a separate and more expensive ($800 – $1600 per year premium) policy.Components of Homeowners InsuranceThe liability portion (coverage E) protects the homeowner against accidents or events that occur on the covered property. With this protection the home owner is protected from lawsuits that result from these events. Note that this coverage does not cover transfer of disease nor does it cover issues that arise from the exchange of drugs and controlled substances.The property portion of the contract protects the home owner against loss due to fires, theft, and minor weather damage. It is important to note that most times major weather damage is not included in standard contracts. Insureds who live in areas that are prone to natural disaster should be advised to purchase extra protection to cover those risks. Flood, earthquake, hurricane, and tornado damage are not necessarily covered in standard contracts, so make sure to take precautions based on where you reside.Additionally liability insurance covering injury or damage to members of the public or the property caused by an accident on your property is also covered, up to specified limits, as well as loss of use, due to down time while repairs are being made.SMART TIPYou should make sure that the coverage limits in your policy contract are high enough to cover complete replacement as well as other expenses in case of a disaster. A licensed home insurance agent will be able to advise you fully.Insurance riders and exclusionsThere can also be riders and exclusions attached to a policy. Insurance Riders give coverage for items that are not normally covered or they can raise the standard limits of coverage. Exclusions do just what they say which is excluding specified items or risks from coverage. Flood and earthquake damage is excluded from a standard policy, therefore you would need to purchase extra cover for these risks.In addition, If you operate a business from home or work from home you will need additional cover forage work-related risks, such as people coming to see you on business. Expensive jewelry or other items of high worth will need to be specified in a rider against damage or loss, for an additional premium. Otherwise there is a limit of coverage on jewelry, antiques and electronic equipment. If standard limits of cover are inadequate to cover your belongings, then you will need to have them increased.SMART TIP:Be sure that the loss or damage is covered at replacement cost, not actual cash value. It costs more, but the actual cash value may be well below what it costs to replace an item (think what it costs new vs. what you can sell it for). Get it right up front and don’t fight about it later.A good tip for any homeowner is to read your policy carefully and make a brief summary of what is covered and what is excluded under your policy, as well as what action you might need to take and what time limits you have for reporting incidents. Ask a licensed professional for help if there is anything you don’t quite understand in the wording. This summary will help if something happens and you need to take quick action in case of an emergency. Make the effort up front and save yourself a heap of trouble later, particularly if you know that your area is prone to various issues.If our house caught on fire can I file a claim on my homeowners insurance?Under a standard insurance policy, fire hazard is certainly covered. Your only responsibility after filling the claim is your deductible, which is usually between $500 to $1000 and pales in comparison to the damage amount. Other than that, your insurance carrier will usually even provide you for a place to stay while your house is being repaired. Your homeowners insurance will take care of your family’s daily expenses, up to a certain limit until your home is repaired.Someone broke into our house and took all my expensive jewelries, can we claim that to our homeowners insurance?Theft is also covered under homeowners insurance policies all be replace by your homeowners insurance policy. This is a primary example why you should make sure you have adequate coverage limits on your policy. Having adequate limits means that you are properly compensated for the value of your belongings.What do we need to provide when filing a claim to our homeowners insurance?Wen you file a claim, you will need to coordinate with your insurance agent and they will turn over your claim to their insurance adjuster. You will need to provide your adjuster a copy of the police report and the list of all your personal belongings that are missing. You will also need to make sure that you have copies for your file. Your insurance adjuster will process your claim and they will make sure to get back to you within the next few days and settle the entire claim.Homeowners insurance is one of the most important aspects of owning a home. It is the one sure way to maintain some stability should you run into a rough time.