As a consumer of insurance, business or personal, do you Really know what is and is not included within your policy that sits on your shelf or in your filing cabinet? Even the smallest homeowners policy contains approximately 20 pages of forms, endorsements, general conditions, causes of loss, and those pesky exclusions. If you own a business that 20 pages can turn into a huge binder full of all of the above and per line of coverage. It is the job of your agent to review (with you) and summarize for you what generally is and is not included within these pages. Just because you purchased and reviewed a policy 2 or 3 renewals prior, do not assume that it exists in the same format as initially presented. An easy example of this on the commercial side would be the following:
You have been a commercial tenant inside your landlord’s building for 10 years. The relationship between you and your landlord has been very good. You either have a written or verbal agreement saying that the landlord is responsible for insuring the building. As a tenant, your responsibility is to insure your business personal property, and to provide public or general liability for the premises that you occupy. Everything goes well for your business over the span of the ten years. Your business grows and within your leased space, you expand and make interior improvements. In fact over the course of the 10 years, you vastly improve the office area including custom cabinetry. Along with the office improvements, you update the plant space; which includes installing electrical system that feeds your 40,000 square feet. The electrical is complete with a practical and elaborate Bus Bar system. You also update the HVAC to accommodate the climate controlled Server Room. The facility is perfect for your operation, a very up to date and efficient business indeed. The $250,000 spent on these projects over the years was a great investment.
One night disaster strikes. A fire starts somewhere in the kitchen area and quickly spreads throughout your office and plant. By the time the fire department puts the fire out, it is almost a total loss. This is undoubtedly a terrible event for which many business’s may not recover. In your case you feel confident that you can pick up the pieces. You meet in the week after the fire with the landlord and mutually decide that he will rebuild for your business. The landlord has the building insured relatively well, you have all of your contents including machinery appropriately insured. Your agent also reminds you that your loss of income during the time of restoration is covered. Your first meeting with your agent and carrier claim representative is going well. Your accountant is able to provide a solid account of your personal property which adds up to almost a 700,000. As the adjuster eyeballs the claim he notices your personal property list includes the Bus Bar System, HVAC upgrades, and expensive office upgrades. Problem is this. In your property policy the definition of business personal property does not include alterations to the building. Any of these projects that you completed costing over $250,000 are not covered! Your policy specifically excludes this. What you needed to cover this property is called Building Improvements and betterments. Depending on your carrier, the policy would need to be endorsed or at the very least added to the value of your property…both which are not. So rather than paying for just your $5,000 property deductible, you are in fact responsible for an additional $250,000. Needless to say, this is not good news.
Has your agent reviewed your property coverage and determined if you need Improvements and Betterment to be added?
Joe Buick, CIC, CRM | vice president
Kapnick Insurance Group | simplifying insurance
333 Industrial Dr. | Adrian, MI 49221 | www.kapnick.com
D 517.266.6574 | F 517.263.6658 | P 888.263.4656 x1170