Many tend to neglect the coinsurance provision found in business property insurance.  However, this term is an important factor that determines whether you will receive sufficient compensation for your property damage. Most accidents are likely to be partial losses with the chance of a total loss being low. With that in mind, a policyholder is likely to underinsure the building by purchasing lower coverage limits to save on premiums. The concept of coinsurance is an agreement between policyholders who want to lower their insurance coverage limits to pay less, and insurance companies that want to maintain their insurance coverage limits at a reasonable level.

Coinsurance stipulates that at the time of loss, more than a certain percentage (usually 80%) of its full value should be insured. If this regulation is violated, you will not be able to receive 100% compensation for when a partial loss occurs.

Let’s say that you own a commercial property worth $100,000 and insure it for $40,000 with 80% coinsurance. A fire occurs resulting in a loss of $40,000. Although the loss amount falls within $40,000, you will only receive $20,000. This is because you have failed to meet your coinsurance percentage of 80%. Under the coinsurance provision, the property should have been insured no less than 80 % of full value ($80,000 ). Since only half ($40,000) of the required amount ($80,000) was insured, your insurer will only pay half of your loss ($20,000). This is called Co-Insurance Penalty in insurance terms.

In commercial insurance, the value of a business property is based on its value at the time of loss. Due to this reason, it is important to regularly check if you have sufficient ring your business property. coverage amounts and make the appropriate adjustments to the limits. This will prevent cases of being penalized for partial losses under the coinsurance clause. The coinsurance penalty doesn’t apply to total loss accidents. However, since you will be paid within the insured limit, having the sufficient coverage amount is important.   If reducing your insurance premium is a priority, consider increasing your deductible rather than underinsuring your business property.

Simple answer: it saves you money. A small roof problem can easily turn into a disaster. When it gets to the point of disaster, you usually have other problems than simply replacing the roof. This could affect your business staying open, discourage customers, and even increase your insurance premiums.

What are some major threats to your roof? 

A commercial roof’s lifespan, when properly built, should last up to 40 years. Fully replacing it before its time can be costly. Luckily this is easy to manage! For instance, regular inspections keep you aware of potential issues. If you catch a problem early, it can save a lot of money and headache before it becomes more serious. You should also be inspecting the roof before and after major weather events. Wind, rain or hail damage is unavoidable from a storm, but if you have everything up to date it will save costs on potentially bigger repairs. Here are a few things that you can look out for that will help your roof and business in the long run:

  • Mold/Moss Build-up – tends to grow out of sunlight, and if roots are left too long they can tear up the roof layers
  • Water Pooling – leads to faster deterioration and has the potential to worsen the integrity
  • Dirt & Debris – clogging the drain pipes leads to water build-up
  • Wildlife/Pest Entrance – if there is enough deterioration, wildlife can find a way in leading to sanitation issues and can hurt your business’ image

Prevention Before Disaster

Keeping these threats in mind, you can be more prepared to keep your business running. Small costs here and there to fix issues can be the difference between keeping your doors open and shutting down completely. Take a moment and think about what the worst case scenario would be. It’s shutting down your business so you can spend more money to fully replace your roof, isn’t it? We know it can seem pointless to spend money on small repairs, but it will be worth it! Just a little time and effort keeps your roof up to date. For example, it’s a great idea to take regular pictures, keep drains clean and make sure all cracks are sealed. That doesn’t seem so hard!

Who doesn’t want lower insurance premiums?

That’s right, a nicely maintained roof can even help you save on insurance. One of the first things a carrier will look at is the condition of the roof. For one thing, they see higher wear and tear as a higher risk. If your roof looks like it can blow away in the next storm, they’re not too happy about taking on that risk. However if you continue to improve the appearance and safety of your roof, this can provide discounts and lower premiums. If you’re looking for lower premiums, let us help you with a quote from one of our very knowledgeable agents. 

How have you kept up with roof repair? Leave a comment below to let us know all you’ve done to keep your business covered.

Starting and maintaing a successful restaurant operation is no easy task. It’s no secret that most restaurants do not survive beyond three years. There are a multitude of factors to consider when starting or running a restaurant, such as menu items, interior decorations, marketing, and location. Even with all of those elements perfected, a single mishap can lead to the permenant closure of the business.

A key factor to success is to be ready for emergencies such as fires, food spoilage and liquor-related lawsuits. You can prepare by completing a risk analysis to determine what areas need attention. A carefully thought out risk management plan can decrease the chances of experiencing a devastating claim.

In the list below, we will go over risk management strategies for restaurants.

1. Follow Safety and Health Codes

Regulations and codes may vary from city to city, so verify with your local health department first. Make sure to be familiar with the codes so you are prepared for possible inspections.

Most common areas to consider are:

  • Health inspections – Passing health inspections is crucial to staying open for business.
  • Safety equipment – Equipment can include the AES (Automatic Extinguishing System), portable extinguishing system, wet floor signs, etc.
  • Food storage – Codes may lay out how certain types of food must be stored. Be sure to know what they necessitate.
  • Employee cleanliness – Simple acts such as washing hands and covering mouths while sneezing go a long way to maintain proper hygiene
  • Cleaning supplies – Codes may outline which cleaners can be used on various surfaces. They may also note how often they must be cleaned.

Creating a safe and clean environment for your employees and customers will help avoid being charged with violations, or worse, sued.

2. Equipment maintenance

Being stuck with a broken piece of equipment when it really matters can be frustrating. Non-functioning equipment could also potentially lead to lost business or more serious problems, like fires.

Check the following equipment regularly:

  • Kitchen exhaust hoods – Regular maintance and cleaning of the exhaust hood can reduce grease build-up. Reducing grease build-up may increase the hood’s efficiency and reduce the chances of a fire spreading beyond the kitchen area.
  • Refrigeration equipment – Properly operating refrigerators are important to minimizing food spoilage, which can lead to downtime for the business. Additionally, it can lead to foodborne illnesses which can result in costly lawsuits.
  • Cooking equipment – A malfunctioning fryer or griddle can be a fire hazard and lead to customer or employee injury.

You can also protect equipment with commercial property coverage. If you equipment is stolen or damaged from a fire, commercial property insurance can pay to replace or fix the piece of equipment.

3. Premises maintenance

Injury can be caused by poor maintenance of the facility. Take these steps to reduce the chances of a customer or employee getting hurt:

  • Keep floors clean and dry – Spilt fluids can pose a slipping hazard which can cause serious injury to customers or employees. Taking steps to make sure floors are clean and dry will reduce slip and fall incidents.
  • Keep kitchens clean – A kitchen free of clutter will minimize chances for employee injury or possible kitchen fires. Make sure knives and other utensils are properly stored to minimize possible injury. Clean ovens and grills may reduce chances of fires, so check these regularly.

If an employee is injured while on the job, workers compensation insurance can pay for medical expenses and more.

On the other hand, if a customer is injured while at your restaurant, the commercial general liability insurance can pay for legal costs arising from lawsuits in addition to medical bills.

4. Leverage Technology

Modern technology gives provides us with convenience and security. However, operating them presents new exposures to risks. For example, a restaurant’s POS (point-of-sales) device may be a source of risk for customer information theft. Take these steps to minimize cyber related crimes:

  • Protected Wi-Fi network – Offering public wireless interenet access is a great way to get customers into your establishment. However, this can be a security weak point. You can keep your network safe from criminals by offering Wi-Fi access to paying customers only.
  • Anti-virus protection – Firewalls and anti-virus software can help prevent malware or viruses from attacking business computer systems.

Cyber risks can also be met with cyber liability insurance. Cyber liability insurance can pay for notifications to victims, legal costs related to lawsuits, and more.

5. Train Employees

Employees can be a restaurant business’ largest expense and is critical to the business’ success. Therefore, you want to make certain that they are operating at their best while keeping them safe. Employees also can help avoid potential problems quickly with proper training. These areas to focus on include:

  • Food handling procedure – Hold regular training sessions going over proper food handling procedures.
  • Customer service procedure – Problem resolution is important to keeping patrons satisified. Employees should be trained to handle complaints in addition to if and when the problem needs to be escalated to a manager.
  • Alcohol serving procedure – If alcohol is served on your premises, having alcohol serving training in place is important because your business may be responsible for intoxicated customers. Take steps to train employees on identifying intoxication, refusing service and handling intoxicated customers. Use available resources, such as TIPS, to set-up procedures for your alcohol-serving business.
  • Safety procedure – Create and share steps taken in the event of an emergency, such as a robbery, fire injury.

A properly trained employee will increase customer satisfaction and safety and reduce chances of litigation.

Restaurant Insurance

Taking precaution by setting up risk management techniques can still result in unexpected events. As a result, business insurance is an important piece of the restaurant risk management plan. Insuring your restaurant business with a tailored insurance policy can cover a customer’s food sickness incident  or an employee’s slip and fall.

You can learn more about restaurant insurance here.