The Importance of Insurance Coverage for Your Business

Rebuilding or renovating a historic building requires experienced craftsmen as well as hard-to-find materials, such as vintage stone and glass. In addition, any historic renovation project requires a meticulous approach to details.

These factors naturally increase the cost of rebuilding. Thus, your insurance coverage should also include the replacement cost of the building. We also recommend that you get an ordinance and law endorsement.

Replacement Cost

Cost to replace damaged property with like kind and quality without depreciation.

Ordinance and Law

This endorsement is intended to protect the insured from ordinances and laws that require undamaged portions of the building to be torn down and rebuilt. Without this endorsement, the insured would be caught with having only enough coverage to repair the damaged portion of the building and no coverage to tear down the undamaged portion of the building required by ordinance and law.

Flooding occurs in all states and can be caused by different factors, such as hurricanes and winter storms. To ensure that your business is protected from the potential damage caused by flooding, you have the option of getting flood insurance or loss of income and rents coverage.

Flood Insurance

According to Floodsmart.gov, “Flood insurance covers direct physical loss caused by flood. In simple terms, a flood is an excess of water on land that is normally dry. The official definition used by the National Flood Insurance Program is: A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property).”

Loss of Income and Rents

A provision in the insurance policy that allows for recovery of lost income due to a covered claim.

The three most common settlement options are:

• Actual Cash Value (ACV): An ACV is a settlement that is based on the depreciation of a certain damaged property.
• Agreed Value (AV): An AV is a fixed agreement between an insurance company and an insured party.
• Replacement Cost (RC): An RC is essentially the necessary cost to replace damaged property with materials of the same value.

Regardless of what settlement option is stated on your insurance policy, there are provisions that could have an implication on the final settlement. One example of a provision is coinsurance.

Coinsurance

A provision requiring the property is adequately insured. If the property is not insured to the correct value a “coinsurance penalty” will be applied to the claim. Example: At the time of the claim the adjuster determines that the replacement of the building will cost $250,000.The policy declarations state that there is an 80% coinsurance clause. The adjuster takes 80% of the $250,000 and knows the insured needs at least $200,000 of coverage stated on their declarations page to be adequately insured and avoid any coinsurance penalty.

The sale or distribution of alcoholic beverages exposes business owners to liquor liability. Each state has dram shop laws that affect these types of businesses.

Dram Shop Laws

Named after establishments in 18th Century England that sold gin by the spoonful (called a “dram”), these laws are enforced through civil lawsuits, allowing DUI victims or their families to sue alcohol vendors or retailers for monetary damages. Dram shop is a legal term in the United States referring to a place that sells alcohol. This could include a bar, a restaurant, or a liquor store. There are special laws, called Dram shop laws, which impose certain liability for damages on vendors of alcohol. Although they are not considered alcohol establishments, Dram laws can affect anyone who profits from alcohol, such as caterers and vendors at concession stands.” (Source: findlaw.com)

Defined as an addendum to an insurance policy, the purpose of an endorsement is to clarify the parameters of your coverage. For instance, an endorsement may either broaden or restrict the coverage of your liquor business.

Apart from requiring wedding parties to be insured, you should also have yourself included in the coverage. A lot of things could go wrong during wedding receptions, such as being liable for the irresponsible actions of intoxicated individuals. That is why it is important to have rights to the insurance policy.

As a hunting or fishing guide, your line of work has a steady dose of excitement and risk. Accidents can always happen, and you will realize the importance of general liability insurance in the event an unfortunate injury occurs.

Do you have any other questions on top of the ones listed above? Would you like to review your current insurance policy? Get in touch with our team today, and we will be more than happy to help you out. Send us an email at mitch@lodgeandinninsurance.com or call us at (314) 952-3605.