Coverage Types

03Jul 2017

The New York Times featured an article detailing the troubles of a homeowner living on a golf course near Palm Springs, California. Though she has a great view of the greens and fairways, and a landscape that requires no maintenance on her part, she has had her share of headaches due to the location of her lovely home. In fact, not long after she moved in, a golf ball came flying through her kitchen window, nearly grazed her head and then smashed into the glass of her oven door.

This scenario has become increasingly prevalent, especially since golf technology now enables even average golfers to hit the ball great distances. Considering that 70 percent of new courses in the United States also include housing; the course and homeowner clash is becoming a fairly common situation. Many golf course designers are adjusting their plans to make wider fairway corridors, yet problems remain. 

 

Homeowners’ Concerns

The most common concern for homeowners is the threat of a golf ball smashing through a window, hitting their siding or screen porches, and damaging outdoor furniture. In addition, many homeowners gripe that they receive divots in their stucco siding from golf ball damage.

Beyond these concerns, homeowners experience other difficulties. They may be troubled by noise from maintenance equipment, especially during early morning hours. Over-sprayed chemicals on courses can wreak havoc on their plants and flowers. Ponds can attract frogs, toads, birds, snakes and even alligators, not only causing nuisance and noise for nearby homeowners, but also potential danger for pets and small children.

Liability Concerns 

Generally courts rule in favor of golf course owners when dealing with disputes between homeowners and golf courses, as the homeowners assume the risks when moving adjacent to a course. Yet, golf course owners have a duty to exercise ordinary care and to respect their neighbors.

If your course is surrounded by homes, consider moving tees, greens, trees or using nets to prevent golf balls from damaging the property of others. Also, educate your members on proper golf etiquette and instruct them on where it is appropriate to hit the ball, and where it is prohibited.

What’s on the Line?

Beyond that, recognize that your course’s reputation is not solely based on the quality of the golf course, the food served at your clubhouse or the cleanliness of your facilities; the kindness and concern that you show for your neighbors also goes a long way.

15Jun 2017

Technology companies own valuable intangible assets, such as sensitive data, software and intellectual property, which a general liability policy doesn’t account for. General liability provides protection in the event of bodily injury or property damage. Technology insurance coverage is designed to protect against the significant risk of economic loss related to intellectual property, network liability and network and cyber property security. 

A comprehensive risk management plan needs to guard against the unique exposures that technology operations present. Specialized technology insurance is relatively new and the terminology is still evolving as more claims are handled and new exposures are discovered. As a result, the terminology can be confusing and hard to understand. The following terms are some of the most common you will need to know to best understand your technology insurance protections:

  • Cyber liability: A cyber liability policy is a coverage that protects against damage from cyber-attacks, data breaches and other basic risks that result from using electronic communications and data storage. They often cover the cost of recreating damaged or lost data or systems, but do not include the costs that stem from the loss or damage, including legal expenses and data notification costs. Sometimes the term cyber liability is used broadly to describe technology related risks and technology specific insurance in general.
  • Data breach notification laws: These state laws dictate the requirements for notification if an organization were to suffer a data breach that compromised personal data, such as social security numbers and financial and health information. Each state law varies on the time period that individuals need to be notified of the breach and what situations are exempt from the requirement.
  • Cyber property: The intangible property your company owns. This can include websites, data and networks. These intangible assets can all be damaged. To protect your cyber property you may need to broaden the property enhancements on your existing policy. Also, check if you have any coverage that would protect if your company or an employee caused damage to another organization’s cyber property. 
  • Technology E&O: Technology errors & omissions (E&O) coverage protects against claims by a client that suffered a loss due to mistakes by your company. These mistakes must be due to error or oversight in a product such as a software program or web service.
  • Media and intellectual property liability: All content on the Internet is considered to be published, meaning it is subject to copyrights and infringement. Negative content about a person or company can be considered libelous. Take caution when publishing or posting anything to websites, forums or social networking sites.

The exposures and threats of technology business operations will continue to grow as the technology industry does. Kaercher Insurance can help you keep your business protected against these specialized risks.

15Jun 2017

According to the Bureau of Labor Statistics nearly 500,000 workers are currently employed in the oil and gas extraction industry in the United States, and that number is on the rise as the world’s demand for energy continues to grow. This increase means more risks for well operators as they struggle to keep up with demand. Fortunately, there are many types of coverages available to those in the oil and gas industry to help mitigate these risks.

What Kinds of Risks Does the Extraction Industry Face?

Risks in the oil and gas industry can be split into three categories: 

  1. Environmental
  2. Equipment and property
  3. Worker health and safety

Environmental risks are the most far-reaching risks faced by the oil and gas industry. Major oil spills, gas emissions and other contaminations are well-documented and are considered to be part of doing business.

Equipment risks include malfunctions and downtime, which lower the profitability of the operation. Preventive and predictive maintenance are key for combating these risks.

Property risks include lost or damaged drills or wells and damage to equipment during transportation. Additionally, fleet risks, such as fuel costs, rollovers and spills, need to be addressed by employers.

Finally, worker health and safety is a big concern because of the dangerous nature of the industry; the fatality rate for oil and gas workers is seven times the national average for all workers. Providing the proper training and safety measures for workers as the industry continues to expand will be important for employers to remain profitable.

What are Your Coverage Options?

There is a host of coverage options available to those in the oil and gas industry. Typical commercial general liability (CGL), protection and indemnity (P&I), marine employer’s liability (MEL) and hull insurance policies are likely not sufficient to cover many of the risks the industry faces:

  1. Environmental Coverage Options

Pollution insurance is a necessary coverage because CGL policies typically exclude pollution events. Under the terms of pollution coverage, the incident that leads to an environmental loss must be “sudden and accidental” and must be detected within a certain timeframe. This coverage generally does not pay for cleanup costs. Specific pollution insurance coverages often cover operators from gradual environmental incidents; coverages include:

  • Pollution legal liability (PLL) or environmental impairment liability (EIL), which are site-specific coverages written on a claims-made basis. Incidents that are gradual in nature and take a long time to discover, such as a small pipeline leak, may trigger a claim. If an operator knows the exact point at which the incident occurred, it is usually not covered under a PLL/EIL policy.
  • Contractors pollution liability (CPL) insurance, which covers oil and gas contractors against claims from third-party bodily injury, property damage, cleanup costs and/or environmental damage due to their work on a worksite.
  • Storage tank liability (STL), which covers damage from leaking storage tanks, whether they are above- or below-ground.
  1. Equipment and Property Coverage Options 
  • Control of well insurance (also may be known as operators extra expense (OEE)), which covers expenses incurred in regaining control of a well after cratering or blowout. Additionally, endorsements may be added to this policy to cover pollution, equipment malfunction (such as casing damage), evacuation costs and damage to the property as a result of the cratering or blowout.
  • Oil lease property (OLP) coverage, which covers a loss or damage to petroleum storage tanks at scheduled locations.
  • Riggers legal liability coverage, which insures oil contractors when handling a worksite’s equipment. For example, this coverage would cover damage to a wellhead during installation by a contractor. A standard CGL policy would not cover such an event.
  • Rig and equipment physical damage coverages, which will protect much of the equipment used on a worksite from theft, breakdown and weather events, such as hurricanes and tornadoes. These coverages are often written with business interruption coverage, which replaces income lost due to a loss of production. Specific types of physical damage coverage include the following:
    • Onshore production property damage
    • Offshore platform and pipeline damage
    • Onshore and offshore construction
    • Drilling rig physical damage
    • Terrorism
    • Marine cargo insurance and hull physical damage
  1. Worker Health and Safety Coverage Options
  • Workers in the oil and gas extraction industry face many more health hazards than the average worker, so it’s important that employers have robust workers’ compensation and return to work programs to keep workers safe and healthy. In addition to these programs, providing worker training and implementing various safety measures will minimize the number of days your employees are away from work.
    • Training should focus on the following oil and gas safety hazards: 
      • Struck-by/caught-in incidents
      • Falls
      • Explosions and fires
      • Confined spaces
      • Ergonomic issues
      • Machine hazards
      • Hot work
    • Training should also focus on the following health hazards:
      • Hydrogen sulfide
      • Silica
      • Noise
      • Diesel particulate matter
      • Hazardous materials
      • Fatigue
      • Extreme temperatures
    • Remember that you must provide the proper personal protection equipment (PPE) for the job.
  • When employing contractors to work at your site, it is important to make sure both parties are fully insured. Carefully scrutinize all contracts and joint operating agreements. If a joint operating agreement requires each party to carry $1 million coverage, agree to split the amount if the claim is in excess of $1 million.
  1. Additional Coverage Options
  • Umbrella liability will cover excess costs over the policy limit associated with a claim. This type of coverage has become more restrictive in the past decade.
  • Professional liability is important for the development of a drilling site, including exploration, well design, testing and decommissioning. This coverage will pay for bodily injury and property damage, along with pollution incidents arising from these professional services.
  • Inland marine coverage covers onshore activities associated with running an operation, including transportation of equipment and other moveable parts. Similarly, ocean marine coverage will pay for damage and losses due to transportation of equipment via sea vessel.

Contact Kaercher Insurance today at (702) 304-7800 to learn more about your oil and gas coverage options.

 

16May 2017

In today’s technologically advanced world, individuals have a unique opportunity to efficiently rent out their home, spare bedroom or other accommodations through Airbnb, an online hospitality company.

For travelers, Airbnb is a convenient platform that provides affordable and flexible alternatives to hotels. For property owners and tenants, the service easily connects various rental units with perspective occupants and makes collecting payments simple and secure. For the average homeowner, properties or spare rooms that are otherwise vacant can easily be transformed into a source of income.

Despite its convenience and the potential for profit, Airbnb is not without its risks for those who decide to list accommodations.

Potential Insurance Gaps 

If you are considering renting your property through Airbnb, your first step should be to contact your insurance broker to review your current homeowners or renters insurance policy. Relying strictly on such policies while hosting guests through Airbnb can lead to significant gaps in coverage and leave you financially vulnerable.

While your homeowners or renters policy may allow you to rent your property to a guest, it is important to keep in mind that each insurer has its own restrictions and requirements. For example, some insurers may require advanced notice of any short-term rental, whereas others might insist that you purchase an endorsement to broaden your coverage.

Standard homeowners and renters insurance policies are designed for personal risks, not commercial use. If you plan to rent out your residence on a regular basis, many insurance companies will consider this commercial use. In many cases, regular Airbnb hosts will need to obtain a commercial insurance policy in order to be properly insured. It should be noted that a growing number of insurance companies now offer home-sharing liability insurance policies that can be purchased on a month-to-month basis.

Even more alarming, your homeowners or renters policy most likely won’t consider damage to your property caused by guests a covered peril. This means you could be left to cover the cost of property damage caused by Airbnb guests.

Issues with Airbnb Provided Protection 

Airbnb does offer its hosts two forms of protection through its host guarantee program and host protection insurance. While hosts may be inclined to rely exclusively on these programs to manage their risks, there are significant gaps related to these offerings.

Host Guarantee

Airbnb backs every one of its bookings with its host guarantee program at no cost. Airbnb claims that this program will reimburse eligible hosts for damages up to $1 million. However, Airbnb readily admits that its host guarantee is not insurance and should not be considered a replacement or stand-in for homeowners or renters insurance.

Moreover, payments through the host guarantee are subject to a lengthy list of terms, conditions and exclusions. Therefore, hosts should be aware of the following issues related to Airbnb’s host guarantee:

  • Hosts must attempt to resolve any issues with the guests involved prior to receiving any compensation. This also means that a host would have to make a claim on his or her own insurance policy before Airbnb would intervene.
  • Any sum collected from a standard policy or a security deposit would be deducted from the host guarantee.
  • The guarantee will only repair or replace covered property that is damaged during the time frame of an online booking.
  • This guarantee does not cover certain items including, but not limited to, cash, collectibles, jewelry, pets, watercrafts or any damage to property that is not considered a covered accommodation.

For more information on specific elements of Airbnb’s host guarantee program, hosts can review its terms and conditions in full here.

Host Protection Insurance 

In addition to its host guarantee program, Airbnb offers coverage to its patrons through its host protection insurance. Airbnb indicates that the program provides primary liability coverage for up to $1 million per occurrence in the event of third-party claims of bodily injury or property damage. Despite Airbnb’s claims, hosts should be wary of relying solely on this insurance program for a number of reasons:

  • Intentional acts that aren’t the result of an accident are not covered under this policy. In addition, Airbnb’s home protection insurance does not cover what it refers to as property issues, which can include things like mold, asbestos and bedbugs.
  • Neither Airbnb’s home protection insurance nor its fine print is readily available for review. What’s more, the policy is subject to limitations, conditions and exclusions. Together, this means that specifics around coverages are vague, and Airbnb hosts may not know what’s protected.
  • The personal property of any guest is generally not covered. Additionally, any theft or damage caused by a guest may not be covered either.

With Airbnb’s host protection insurance, it’s best to assume that you aren’t equipped with the proper coverage. For full protection, it is likely that you will need to speak with an insurance professional to better understand the policy adjustments you will need in order to be fully covered.

Considerations for Condo Owners and Renters 

While Airbnb opens its services to condo owners and renters, multi-unit buildings often have restrictive bylaws, homeowner association rules or lease terms that could impact one’s ability to host guests through Airbnb.

In many instances, commercial activities like renting out accommodations—even for short period of time—are forbidden by lease or condo board policies. In some cases, hosts will need to contact their landlord or condo board before subletting or renting out any accommodations. Failure to do this can result in eviction or other forms of legal action.

Even if you are allowed to rent out your condo or apartment through Airbnb, hosts should be aware that doing so can cause tension with neighbors. There’s the potential that your guests may not be respectful to property in common areas, act inappropriately or noisily, or make other tenants feel uncomfortable.

Local Laws and Considerations

In response to the rising popularity of Airbnb, many states, cities and towns are moving to regulate short-term property rentals through their municipal codes or zoning regulations. In some cases, home rental services like Airbnb could be prohibited altogether.

If you break these local regulations, purposely or otherwise, you could face thousands of dollars in fines. What’s more, Airbnb says alignment with laws and regulations is the responsibility of those renting out accommodations. Accordingly, it is imperative to review local laws and regulations before you commit to using Airbnb to rent out accommodations. 

The Bottom Line

While Airbnb offers a unique and potentially profitable service to users, it’s not without its faults. Before you decide to try it for yourself, be sure to consider all of the risks.

Again, you’ll want to minimize potential financial fallout by purchasing the appropriate insurance coverage. To discuss your options further, contact Kaercher Insurance today.

16May 2017

As if learning that an employee was involved in an accident on company time isn’t alarming enough, what happens when you find out the at-fault driver doesn’t have coverage or is underinsured? While most states require drivers to maintain auto insurance, according to recent study by the Insurance Research Council (IRC), one in eight motorists remain uninsured.

The IRC study indicates that the magnitude of the uninsured motorist problem varies widely from state to state. Uninsured motorist (UM) and underinsured motorist (UIM) are coverage options added to your commercial auto policy for transferring risk in such unfortunate circumstances.

Coverage Overview

In the event a driver or passengers are injured due to the negligence of an uninsured or underinsured driver, you may seek compensation for injuries and damages through the UM and UIM portions of your policy:

  • Uninsured motorist coverage is used when the at-fault driver can’t pay due to lack of insurance.
  • Underinsured motorist coverage is used when the driver’s liability limits are lower than the costs of the accident.

The coverage typically has two components, but it varies from state to state: 

  • Coverage for bodily injury provides insurance for medical bills, funeral expenses, lost wages, pain and suffering, disfigurement and permanent or partial disability.
  • Coverage for property damage provides insurance for auto repairs, total loss, rental car and damage to personal items carried in the vehicle.

The following are additional coverage considerations:

  • For UM/UIM to pay, it must be established that the other driver was at fault. Comparative negligence allows for more than one person to be at fault for an accident. As a result, your company can reduce the settlement of your uninsured/underinsured motorist claim by the percentage of fault attributable to you.
  • UM coverage pays losses up to the coverage limits from an accident caused by a hit-and-run driver, but be sure to report the accident promptly.
  • Commercial excess liability policies typically exclude UM/UIM coverage.

Coverage Limits

A risk management best practice for UM/UIM is to set the limits equal to your commercial auto bodily injury and property damage limits. Since UM and UIM coverage protects you, adequate limits are critical. Please contact us to learn about all the limit options available.

Knowledgeable and Trustworthy

Kaercher Insurance understands state automobile policy coverage requirements and will work with you to ensure you have the right coverages and limits in place that minimize your uninsured or underinsured exposures on the road. Contact us at (702) 304-7800 to learn more.

 

16May 2017

Flooding is a risk to any business, whether you are inland or near the coastline. In fact, in the past five years all 50 states have experienced floods, and at least one in four businesses that shuts down from a natural disaster never reopens. According to the U.S. government, the average commercial flood claim in the past five years has been around $89,000, and the average property damage due to flooding adds up to more than $3.5 billion annually.

Floods have many causes and can occur anywhere in the country, but here are some of the most common events that lead to flooding:

  • Storm surges in hurricane-prone areas
  • Flash flooding, caused by periods of intense rainfall
  • Mudslides, caused by long, heavy rain periods on a hill or mountainside
  • Snowmelt, caused by the still-frozen ground unable to absorb excess water
  • Ice jams, which are formed when an ice chunk flowing in a river or stream blocks, dams or narrows passageways, causing overflow
  • Urban development, such as new construction and/or ground paving, which alters the topography by not allowing the land to drain properly

A general policy will not cover flood damage, and this type of insurance is only available through the National Flood Insurance Program (NFIP). The NFIP will cover all the types of floods discussed above, including mudslides, though it is important to note that it does not cover landslides even if they are caused by heavy rain. To make sure you get a fair price, every commercial flood agent answers to this government agency; therefore, flood insurance is backed by the government but sold through private insurers.

There are plenty of misunderstandings about flood insurance. At Kaercher Insurance, we have compiled some information about the NFIP and its coverage to help you understand its benefits.

NFIP Coverage: Who Should Buy It? 

There are two main flood hazard level standards and several sub-categories that the NFIP uses to categorize a company’s risk for flooding and to determine premiums.

  • Moderate-to-low-risk buildings, which are in zones B, C and X. These areas are outside of the one percent annual chance floodplain, areas of less than one percent annual chance of sheet-flow flooding where average depths are less than one foot, areas of less than one percent annual chance stream flooding where the contributing drainage area is less than one square mile or areas protected by levees.
  • High-risk buildings, which are in zones A and V.
    • Zone A buildings are within a certain floodplain distance from a river, lake or stream.
    • Zone V buildings are within a certain distance from the coast and exposed to natural disasters associated with the ocean.

For a complete list of sub-categories and to map out which zone your business falls in, visit www.floodsmart.gov, the official website of the NFIP.

If your commercial property is in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, then you are required to purchase a flood insurance policy. However, the NFIP reports that one-third of all annual claims paid are for policies in low-risk communities. Because new land development can increase flood risk by changing natural runoff patterns, it is a good idea to purchase flood insurance even if you are not near a large body of water.

Associated Costs

Flood insurance premiums are based on several factors, which could raise or lower the amount your company would have to pay. These factors include the following:

  • Building’s age, height and occupancy
  • Your company’s location within the building
  • The location of the lowest floor in relation to the elevation requirement on the flood map (only applicable to newer buildings)
  • The deductible you choose and the amount of building and contents coverage

If you are located in a low-risk area, you are eligible for the Preferred Risk Policy, which would cover your building as well as its contents for just a few hundred dollars a year. Even though federal disaster assistance is available to flood victims, it is usually in the form of a loan that must be paid back with interest. For example, if you received a $50,000 federal loan at 4 percent interest, your monthly payment would be around $240; however, by comparison, a $100,000 flood insurance premium could cost your company less than $100 per month.

What Gets Covered 

There are two types of commercial building flood insurance coverage, and you can opt to buy one or both.

  • Commercial Contents covers inventory, merchandise, machinery and any other contents your business has up to $500,000.
  • Commercial Building covers your company’s building and contents up to $500,000 each. If your company does not own the building, NFIP will cover up to 10 percent of improvements you made to the space.

In addition to these two types of building coverage, the NFIP will also cover debris removal during the cleanup process. Also, if your business takes steps to protect against or prevent flood damage, you may be eligible for lower rates. For more information on how to protect against the risk of flood damage to your business, go to www.fema.gov/information-property-owners.

If you have further questions about flood insurance coverage and its provisions, Kaercher Insurance is here to help. Call (702) 304-7800 to find out how you can extend your coverage to keep your business safe and running–no matter what happens.

24Apr 2017

Taking the time to understand the language and symbols on your commercial automobile insurance policy may seem like trying to learn a new language, but it is important to fully understand your policy so you know how you’re protected. Here are a few general guidelines that are helpful when deciphering your policy:

  • Each symbol represents the type of vehicle protected by the applicable liability or physical damage limit.
  • The symbol may apply to the type of vehicle covered or the vehicle’s ownership status.
  • The various terms within your policy have specific definitions that you should become familiar with.
  • The symbols are different on coverage for liability as compared to physical damage coverage.

Liability Coverage Auto Symbols 

  • 1 = Broadest symbol; covers any “auto.” (ANY AUTO)
  • 2 = Covers any “auto” owned by the insured, including those attained after the policy begins. It also applies to trailers used with owned vehicles. (OWNED AUTOS ONLY)
  • 3 = Covers only private passenger “autos” owned by the insured. (OWNED PRIVATE PASSENGER AUTOS ONLY)
  • 4 = Covers all “autos,” other than private passenger vehicles owned by the insured. This includes vehicles that are attained after the policy begins and also applies to trailers used by an owned vehicle. (OWNED AUTOS OTHER THAN PRIVATE PASSENGER AUTOS ONLY)
  • 5 = Applies to “autos” owned by the insured that are garaged or licensed in no-fault benefit law states. (OWNED AUTOS SUBJECT TO NO-FAULT)
  • 6 = Applies to “autos” that are garaged or licensed in states where uninsured motorist coverage is required. (OWNED AUTOS SUBJECT TO A COMPULSORY UNINSURED MOTORIST LAW)
  • 7 = Covers only the “autos” and trailers listed on the policy. (SPECIFICALLY DESCRIBED AUTOS)
  • 8 = Covers “autos” that the insured leases, hires, rents or borrows for their own use. It does not cover “autos” that are leased, hired, rented or borrowed for employee or family member usage. (HIRED AUTOS ONLY)
  • 9 = Covers “autos” that the insured does not own, lease, hire, rent or borrow, but are used for business purposes. These “autos” may be owned by employees or family members, but must be used for the insured’s business or personal matters. (NON-OWNED AUTOS ONLY)

Physical Damage Coverage Automobile Symbols

  • 1 = Covers “autos” owned by the insured, including those attained after the policy begins. (OWNED AUTOS ONLY)
  • 2 = Covers only private passenger “autos” that are owned by the insured. (OWNED PRIVATE PASSENGER AUTOS ONLY)
  • 3 = Covers all “autos” (other than private passenger vehicles owned by the insured. (OWNED AUTOS OTHER THAN PRIVATE PASSENGER AUTOS ONLY)
  • 4 = Applies to “autos” that are listed on the policy. This also covers trailers used with a listed vehicle. (SPECIFICALLY DESCRIBED AUTOS)
  • 5 = Covers “autos” that the insured leases, hires, rents or borrows for his/her own use. This does not cover “autos” leased, hired, rented or borrowed for use by an employee or family member. (HIRED AUTOS ONLY).

At times, there may not be an applicable symbol for the type of coverage provided. In those instances, a special symbol is used and added to the policy by way of an endorsement. The endorsement will contain a complete description and explanation of the symbol’s meaning, and the symbol will also appear with the applicable coverages on the policy.

It is imperative that you understand these symbols to ensure that you are properly covered. Consult Kaercher Insurance today to learn more automobile insurance policy symbols, their meanings and how this applies to your coverage.

24Apr 2017

While every business is unique, there are universal exposures that all businesses face. In addition to insuring your specific risks, you need to consider coverage that will protect you from common exposures generated by everyday business operations. For larger organizations, the diversity of risk combined with the increased probability of higher claim frequency means the use of a variety of insurance policies is often more effective. However, for smaller organizations that face similar risks on a reduced scale, a combination of such policies may be a better option. Many carriers have developed special combination policies to address the unique needs of management teams in small- to medium-sized businesses.

Management liability is a hybrid policy that combines several coverages essential to standard business operations that are normally sold individually. Policies commonly include:

  • Directors and Officers Liability: Covers losses caused by a director or officer’s alleged mismanagement or improper conduct.
  • Employment Practices Liability: Covers losses resulting from employment practices disputes, such as claims filed for discrimination, sexual harassment and wrongful termination. 
  • Fiduciary Liability: Covers losses resulting from mismanagement of employee benefit and pension plans.
  • Professional Liability (also Errors and Omissions): Covers losses resulting from negligent acts, omissions or errors.
  • Crime Insurance: Covers losses resulting from employee or outsider criminal activity such as theft, fraud, forgery and employee dishonesty.

Benefits of a Combined Policy

Management liability policies can offer a level of protection not available through individual coverages. The combined nature of the policies allow for fewer gaps and broader coverage definitions. Because smaller organizations statistically have fewer of these types of claims, it may also come at a reduced cost when compared with buying all of the included coverages individually. While the exposures will always be there, smaller businesses are unlikely to need every form of coverage every year. Combined policies share coverage between exposures to reduce premium costs.

Coverage Comparison is Essential

There is no single standard policy for management liability insurance, making coverage comparison essential. At Kaercher Insurance we have the resources and expertise to analyze your unique needs to help you choose the policy that best fits your business. Don’t just think you have the right coverage. Contact us today to be sure you’re operating with the protection you need.

24Apr 2017

Taking the time to understand your insurance policies is well worth the effort. An insurance policy is a complex contract that often contains provisions that assigns certain responsibilities to the policyholder, such as a coinsurance clause. Often misunderstood, Kaercher Insurance has gathered the basics on coinsurance to help eliminate any potential confusion.

Calculating Coinsurance

In the simplest terms, the coinsurance provision in a property policy requires the policyholder to carry a limit of insurance equal to a specified percentage of the value of the property to receive full payment at the time of a loss. For example, a building with a value of $1,000,000 and a policy with an 80 percent coinsurance clause must be insured for at least $800,000 to avoid a coinsurance penalty at time of loss. 

Here’s where it gets a bit more complicated; if there is a claim, the formula to determine the recovery is based on the property’s replacement value at the time of loss. If the replacement amount is less than the coinsurance percentage, a penalty is applied, reducing the claim payment. For example, a policyholder has $600,000 of property insurance and a fire causes $200,000 in damages. The claim is calculated by dividing the amount of insurance purchased ($600,000) by the value at time of loss ($800,000). This factor (75 percent) is multiplied by the amount of the loss ($200,000 x .75 = $150,000). In this example, the policyholder would receive $150,000 (less any deductible) for a $200,000 claim.

What Policies Include a Coinsurance Clause?

Property insurance policies typically include a coinsurance clause. Building, business personal property and inland marine policies all contain the coinsurance clause mentioned above. Some policies require 100 percent of the value to be insured.

What can you do to mitigate a coinsurance clause? The coinsurance clause included in the policy language can be “suspended” for the term of the policy by adding an agreed amount endorsement. This is a provision where the insurer and the insured agree that the amount of insurance is adequate and the coinsurance clause will not apply to a loss.

Kaercher Insurance understands coinsurance provisions and can help you review your policies to ensure your coverage meets your expectations. Contact us today at (702) 304-7800 to learn more.

24Apr 2017

A Controlled Insurance Program (CIP), also known as a “wrap-up” or Owner-Controlled Insurance Program (OCIP), enables a construction company owner or contractor to protect his or her business and various other contractors involved in a construction project under one policy. Typically, CIP policies cover workers’ compensation, commercial general liability, excess liability, design errors and omissions, and builder’s risk insurance.

These programs are fairly straightforward; the owner—lead contractor—purchases insurance for all contractors and subcontractors involved in a construction project. Then, all participants will reduce their price by eliminating their insurance costs in exchange for the coverage provided by the owner. Through this process, the owner strives to save money by purchasing insurance for the entire project to avoid paying for contractor markups on insurance costs. Also, by having a single insurance carrier for the project, the risk of claims is less prominent and claim resolution tends to be less expensive.

CIP coverage is outlined in a document known as an OCIP manual, which describes the bid-deduct process, claims management and safety requirements for the project. This document remains a large part of the bid solicitation process and eventually becomes part of the contract documents.

Who is Included in a CIP Policy? 

The following parties are covered under a CIP policy:

  • The sponsor of the policy (i.e., the general contractor)
  • Contractors, subcontractors and others involved in the construction project. There may be limits on coverage for subcontractors with contract values over a certain amount.
  • Architects and engineers are included as insureds but are not covered for professional liability.

Benefits and Uses of a CIP Policy

CIP policies have a number of benefits:

  • Lowers insurance costs by lumping coverage into one policy.
  • Eliminates contractor markup on insurance costs.
  • Increases coverage limits. Coverage may also be broader than that obtained by contractors and subcontractors.
  • The OCIP administrator takes full responsibility for handling claims and safety initiatives, which may increase loss control objectives of all parties involved.
  • Allows for coordinated medical treatment for injuries.
  • The insured controlling the project is in charge of all claim handling procedures, which may allow them to avoid public scrutiny and spotlight.
  • With a CIP in place, it is not necessary to obtain certificates of insurance from contractors involved in a specific project.
  • CIP provides investigation for work-related accidents and injuries, and defenses against claims. This decreases the investigation’s legal costs.
  • Coverage brings all participants together as co-defendants in construction defect claims.
  • Coverage does not negate from the participants’ other coverage for non-CIP projects.

Disadvantages of a CIP Policy 

You should also be aware of the disadvantages of CIP policies: 

  • CIP coverage may not be sufficient to replace an existing insurance policy for contractors and subcontractors.
  • Owners become responsible for the bid-deduct process, which will require more time and resources.
  • Owners may be exposed to a premium increase if labor costs and loss experiences exceed their estimates. However, owners can benefit if claims are less than anticipated through premium rebates.
  • It may be more difficult to manage contractor and subcontractor performances concerning insurance-related claims.
  • It may be more difficult for owners to enforce obligations to repair work before disputes are resolved.
  • Obtaining an OCIP policy may discourage bidders if they are unfamiliar with the coverage, are worried about unfair credit calculations for insurance costs, are nervous about uncompensated overhead and are concerned with a loss of mark-up costs.
  • OCIP deductions may exceed actual insurance costs for contractors and subcontractors.
  • Contractors and subcontractors must have their broker or attorney review the CIP policy thoroughly to avoid gaps in coverage.
  • The OCIP deduction process may be applied to a single progress payment, which can reduce cash flow. This also affects change orders, as the owner generally requests that the contractor provides additive change orders with insurance costs included. If additive changes are significant, the OCIP deduction process for change orders may drag on.
  • Since an OCIP policy serves as total coverage, contractors and subcontractors cannot profit from insurance-related administrative cost markups.

Your construction projects are important, as are your business relationships. Let Kaercher Insurance help you obtain a CIP policy for all your project needs today.