Business Income Insurance Ensures Peace of Mind

Consider this scenario: The business next to yours catches fire, and it quickly spreads to your insured commercial building. The fire is extinguished, but your building is damaged and uninhabitable for several months. In addition, much of your merchandise is destroyed. How will you replace your earnings under these circumstances?

Business income insurance can help replace your income after a covered loss and can be purchased with your property coverage. When endorsed on your property policy, coverage is triggered by a covered event such as a fire. Most carriers do not cover events such as an emergency evacuation or civil disobedience, although this can be added by endorsement.

When triggered, business income coverage protects your lost earnings, defined as revenues minus ongoing expenses. This means you won’t be fully reimbursed for expenses such as utilities at your temporary location, because these are ongoing expenses in your permanent location. Pre-loss earnings are the basis for reimbursement under business income coverage.

There are several factors to consider when purchasing this coverage, including how long it would take for your business to become fully functional after a serious event and whether comparable space in your area is readily available. If you rent, consider whether your business is adequately protected – as it should be for you to obtain business income coverage.

It’s easy to add business income coverage to commercial property coverage, and you’ll get peace of mind knowing you’ll be protected if a covered loss leaves your building temporarily or permanently uninhabitable.

Five Steps You can Take to Avoid Layoff Liability

While many are now talking about recovery, recession is still very much on people’s minds these days and some employers are planning to reduce their workforce. The last thing any business owner wants to do is to lay off employees, but you need to be prepared to deal with the negative reactions a layoff can engender both within your company and in the community.

As well as playing havoc with employee morale, there are other problems caused by layoffs: According to research by the private nonprofit mutual insurance company Louisiana Workers’ Compensation Corporation, workers’ compensation claims may increase by as much as 50% during layoffs.

If you must lay off employees, how can you avoid post-layoff claims and protect your experience modification factor? Here are five steps you can take to avoid potential workers’ compensation claims during times of layoffs or restructuring.

Step 1
Ask your workers’ compensation and employment practices carriers to help you design and implement a layoff strategy to protect your organization. But don’t rely solely on your carriers. Consider hiring a consultant with expertise in this area. Even just a few workers’ compensation claims can devastate your company’s loss history.

Step 2
Conduct exit interviews with each employee who will be laid off or terminated, and ask at least one company executive and a human resources consultant to attend the interview. This should be treated like a normal exit interview in which the employee is asked for input on items that will help ease the transition as well as for feedback on improving the corporate culture.

Use a checklist to ensure that you cover the same questions with all employees. If the employee raises concerns, be sure to answer his or her questions and write down comments made by the employee and the company representative. Document the interview; you may want to ask the employee to sign the checklist receipt so it can be included in his or her personnel file.

Step 3
Think twice before you ask an employee to sign a waiver stating he or she is not injured at the time of layoff, as some experts recommend. Waivers rarely work as intended, and asking laid-off employees for waivers may damage your company’s goodwill in the community. Ask for advice from legal counsel before asking your workers to sign waivers.

Step 4
If your plant is closing, it likely will generate publicity; be prepared for the media to closely scrutinize your handling of the situation. Keep the closure as transparent as possible, and hire a media consultant ahead of the announcement if you anticipate unwanted media attention.

Step 5
Be prepared for some laid-off employees to file workers’ compensation claims after they are terminated. Ensure that your managers and your insurance carriers thoroughly investigate any incidents that occur.

If you must reduce the number of employees, it is critical that you empathize with the feelings and stress that accompany a layoff. Treat employees with the utmost respect, but also ensure that your organization is protected during the process.

Home-Based Business Owners Face Unique Risks

More and more people are running businesses out of their homes. Here are some of the potential issues home-based business owners face both in the start-up phase and as the company grows.

Personal property coverage

Most homeowner’s policies limit coverage for personal property used in business. Why take chances? If they’re stolen or damaged, the cost of replacing your computers, printers, scanners and fax machines can add up. Coverage for business property on the premises is limited to a few thousand dollars, and off premises it’s more like $250.

Injuries on the premises

If your Aunt Edna falls at your house or your dog bites your child’s best friend, your homeowner’s policy is there for you. However, if a client is injured in your home while on business, your homeowner’s policy may not cover his or her injury.

Vehicle use

If you use your vehicle for business, you face additional exposures. As your business grows, you may need a separate auto policy. In the meantime, covering your vehicle for infrequent business use may be as simple as notifying your auto carrier, who will charge a small additional premium to protect you when you drive on business.

And more …

These are just a few of the problems you can face when you have a home-based business. There are many more.

For example, if you offer professional services such as tax preparation, you probably need errors and omissions coverage.

If you groom pets, you may need risk coverage for a client’s animal who bites your neighbor. If you resell products online, you may need coverage for liability arising from the performance of these products.

Never assume your current homeowner’s policy will provide coverage for all the risks your business generates. If you have a home-based business or are considering starting one, discuss insurance options with your advisor.

Be Safe, Not Sorry with Separate Motorcycle Coverage

Riding motorcycles is an American tradition. Whether you choose a dirt bike or a street bike that requires liability insurance, you must still consider the cost of replacing it if it’s damaged or stolen. A separate motorcycle policy offers greater flexibility in coverage limits and can provide bike owners with peace of mind.

Many insurance companies offer stand-alone motorcycle insurance policies with broad coverage. For example, most bike riders buy bike-related accessories – gloves, saddlebags, jackets or even a sidecar. A personal auto policy was not designed with motorcycles in mind, so the bike rider wouldn’t be covered for accessory losses under their auto policy, but they would be with a stand-alone motorcycle policy.

Insurance policies have terms defined for risks that are applicable in the event of a loss. Typical motorcycle losses include “off road” events, and these are best defined under a motorcycle policy.

When deciding whether to purchase stand-alone coverage for an off-road vehicle or a motorcycle, consider an important exclusion found in standard auto policies: The auto policy won’t cover any vehicle that has fewer than four wheels or is designed for off-road use.

Also, there is no liability coverage under your homeowner’s policy if your motorcycle or dirt bike must be registered to be ridden legally. And be aware that families have significant liability exposure arising out of children’s use of dirt bikes or motorcycles.

You’re always safer purchasing a separate motorcycle or recreational vehicle policy rather than risking an uninsured loss. Coverage is inexpensive and easy to obtain.

Here’s One Way to Insure Your Retirement

An insured retirement is one that guarantees you income and protection during your golden years.

But how do you achieve that?

The U.S. is facing a potential retirement crisis as 79 million baby boomers enter or near retirement; in the future, this number is likely to increase.

Retirement is expensive

At the same time, retirement is becoming more expensive due to an increase in life expectancy as well as inflation and rising health care costs.

A number of insured retirement solutions exist to help: annuities, long-term care insurance, reverse mortgages, and of course, life insurance. These solutions can help ensure guaranteed lifetime income and protect your wealth during your retirement.

Life insurance has important benefits

Often investors will focus on the first three of these insured retirement solutions, but life insurance can also play an important role in a retirement portfolio.

It can provide a stream of income for a family to live on for a period of time. That stream of income can pay off debts and loans, providing surviving family members with the chance to move on comfortably. It can keep families in their homes. It can even fund a child’s college education or keep a family business in the family.

But there’s one catch: You need to own life insurance to obtain these benefits. According to the industry research group LIMRA, too many Americans do not have adequate life insurance protection. In fact, 30% of U.S. households have no life insurance at all.

Life insurance isn’t right for everyone, of course, but that’s why it’s a good idea to consult an expert before jumping into it.

Your advisor can help you decide whether life insurance is an appropriate investment for you based on your individual financial circumstances and goals and, if it is, help you choose whom to purchase from and how much to purchase.

Should You Consider a Switch to Medicare Advantage?

Most of us over 65 are familiar with Parts A and B of Medicare, but how much do you know about Medicare C, also called Medicare Advantage?

Medicare C plans are regulated by the government and run by private insurers. They offer coverage comparable to Medicare A (hospitalization) and B (doctors’ bills, medical tests and some screening procedures) and may include prescription drug coverage.

There are a number of Medicare C plans available, with differing premiums, copays and out-of-pocket limits. Some cost about the same as standard Medicare, while other plans have higher premiums.

But does a Medicare C plan make sense for you? It depends on your individual circumstances.
Here are some factors you may want to consider:

  • If you have standard Medicare, you don’t have a cap on out-of-pocket expenses. If these are mounting up, Medicare Advantage plans have a maximum cap of $6,700 a year, and many are much lower.
  • If your prescription costs are high but you don’t want to pay extra for the optional prescription coverage under standard Medicare, most Medicare C plans include this coverage. But consider this carefully: You may not be able to justify a higher-premium C plan just to obtain drug coverage.
  • Nursing home care and dental and vision care (not covered by standard Medicare) are covered by some Medicare C plans.
  • You have a better selection of providers with standard Medicare; Medicare C is not as widely accepted.

Wellness Counters Lifestyle-Related Illnesses

Fact: More than 30% of American adults are now obese. By 2030, unless something changes, this will rise to almost 45%.

Fact: Right now obesity is responsible for more than 25% of health care costs in America.

Fact: Approximately 58.5 million U.S. adults now smoke and are at increased risk of developing any of 30 different diseases.

Fact: Smoking-related deaths total 424,000 annually, and more than $172 billion has been spent on healthcare costs related to smoking.

No wonder more and more employers are establishing employee wellness programs and preventive care is incorporated into the mandate of the Patient Protection and Affordable Care Act (ACA).

The assumption is that an emphasis on wellness is likely the only way to stop the epidemic of lifestyle-related illnesses that are killing us. According to an October 2012 article in U.S. News, wellness is going mainstream.

“How Healthcare Is Changing – For the Better” makes the point that both the health insurance industry and Medicare now are “paying doctors and hospitals based on how successfully they treat patients and keep them out of the hospital.”

Already there are community health teams in Vermont that are transforming healthcare delivery, initiatives such as the Cleveland Clinic’s Heart Care at Home program, and hospitals that are focused on educating and listening to patients.

Medicare also has imposed financial penalties on hospitals when some patients are readmitted within 30 days, hoping to reverse trends like those of heart failure patients, one in four of whom is readmitted within 30 days of discharge.

You may find that your healthcare providers are faster in responding to your inquiries, and someday you may even have a personal health coach to keep you on the path to wellness.

It’s all part of a wellness revolution, which, if it succeeds, may make obesity and smoking deaths things of the past.