AccidentsMost of us know that each individual state requires that you carry auto liability insurance. In the state of Arizona, you are required to carry at the least 15/30/10. To break it down, what this means is that you have up to $15k (per person) and $30k maximum (per accident) for BI (bodily injury) should you cause injury to someone during an accident for which you are at fault. The $10k is the maximum coverage for PD (property damage) that was caused by you. Although your premiums for this type of coverage are very cheap and may be within your tight budget, there are several things to consider before making a quick, impulsive decision that might end up haunting you for the rest of your life.

The average cost of a vehicle these days is a little over $30k. Sure, you wouldn’t be responsible for the cost of a brand new vehicle if you caused an accident because we all know that the value of a car depreciates immediately after you drive it off of the lot. In fact, the average cost of an accident in which there is ONLY property damage was $9078 in 2011, according the AZ Motor Vehicle Department. You have $10k in coverage, no big deal, it’s just under your limit right? Keep in mind that this is an average figure only! This doesn’t guarantee that any damages caused by you won’t be over $10k. You should also consider that property damage is not just limited to someone else’s vehicle. You can damage a number of things…a lamp post, a yard, or even a house. PD coverage also pays for your legal defense costs if you are sued as a result of these damages and you don’t need to be an expert to guess how much that could run you.

Now it’s time to get serious and address bodily injury. If you have the required state liability limits in the state of Arizona, then you are covered up to $15k (per person) which maxes out at $30k (per accident). We all know that accidents happen and according to the AZ Motor Vehicle Department, the average cost per incident in 2011 in regards to BI was $22,746 and this was just for Non-incapacitating injuries. The average cost per incident for incapacitating injuries jumps to $70,854 and the average cost per incident for accidents that involved fatalities was $1,438,200. I don’t think anyone is in disagreement that 15/30 is definitely not enough BI coverage for anyone.

What can you expect if your insurance coverage comes up short? It’s simple really. If the amount of BI and/or PD exceeds the limits of your coverage, you are at risk of being sued. Depending on the amount in which you are sued for, you can potentially have your wages garnished for the rest of your life. Think for a moment of the victims as well. Not only have you disrupted your own life financially, mentally, and possibly physically, you have also disrupted someone else’s life in the same manner. Think of it in terms of your family and if the tables were turned. It’s not something we are necessarily comfortable thinking about, but what would the implications be if someone caused an accident involving you or your family members and they did not have the coverage to make you whole again? It’s a disturbing scenario.

We choose not to write state limits for any of our clients. It’s something that we feel strongly about and believe it is in the best interest of our clientele to carry liability limits of at least 100/300/100. If you currently have state liability limits, ask yourself “How much am I really saving in the long run?” There is no better time than now to get with your agent or insurance carrier to discuss increasing your auto insurance limits. Be safe, but most importantly, be protected! Call our office for a free quote today at 480-288-5900!

Does your business need umbrella coverage? (Image via FreeFoto)

When it comes to buying the insurance you need to protect your small business, the wide range of options can be confusing and overwhelming.  There are so many different types of policies and different level of coverage that it isn’t always easy to know if you have all the coverage you need, if you are underinsured, or if you have policies that provide coverage for risks you don’t face.  One of the most common questions small business owners ask about the coverage they need is about umbrella coverage and whether or not they need it.

Surprisingly, although it is the type of insurance almost everyone and almost every business should have, it is not as well understood as the other common coverage types like auto, liability, and worker’s comp.  This can have serious, long lasting consequences for business owners of all types.  To understand why Umbrella coverage is so critical to small businesses, you need to first understand what it is and what it does.

Umbrella insurance is a kind of liability coverage.  These policies extend, like an umbrella, over most of your other liability policies like your business auto and your general liability.  If there is a claim that breaches the upper limit of one of your base policies, the Umbrella policy provides coverage over and above that limit.  For example, if you or one of your employees were at fault in an auto accident where your company’s car caused damage in excess of the $50,000 property damage limit on your business auto policy, your company would be responsible for paying every dollar over that limit out of pocket.  The insurance company pays $50,000, you pay the rest.   Now, if your business has a $5M Umbrella policy, the insurance company for your base policy would pay for any damages up to $50,000 and then the Umbrella carrier would pay for any damages from $50,001 to $5M.  To break this down, having that Umbrella policy in place could mean the difference between your company paying nothing and your company being responsible for millions of dollars of damages.

When looked at from this perspective, it is clear why many businesses must have an Umbrella policy in place to protect the viability of the business.  In order to determine if your business needs this type of coverage, here are some things to consider.

If your business requires you or any employee to operate a motor vehicle as part of doing business, you must have an umbrella policy over your business auto policy.  Car accidents can lead to incredibly expensive liability lawsuits and even minor accidents can result in medical bills that exceed your business auto policy limits.  Don’t take the risk; if your business has auto coverage, you need an umbrella policy.

If your business has assets, you need umbrella coverage.  It doesn’t take much these days for someone to file a lawsuit and even if you win, the cost of defending yourself can wipe out your available cash and even your businesses assets.  If you lose, the situation can quickly compromise your entire business.  Umbrella coverage protects you from the high costs associated with getting sued.

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Liquor

Does your business need Liquor Liability Coverage? (Image via AjDele Photography on Flickr)

Liquor liability coverage is a unique type of insurance that is only needed when a business has some involvement with alcohol.  While it is extremely important that those businesses that need liquor liability coverage have it in place, many who need it don’t have it.  Some business owners forgo coverage because of the expense, but in many cases, businesses do not have coverage because they don’t know they need it, think it is already provided as part of another policy, or don’t understand the implications of not having it.

What is Liquor Liability Coverage?

This is a type of insurance purchased by businesses that offers protection from loss or damage resulting from the actions of a customer that is intoxicated.  It covers property damage and liability claims for injuries to others and for self-inflicted injuries by the drunken customer.  It can be sold as add-on coverage to a commercial general liability policy or as a separate policy all together.

One of the most common misconceptions that open business owners to huge losses is that they are not responsible for the actions of their customers including those who are intoxicated.  Unfortunately, this is not the case.  Another common misconception is that this type of liability is covered under a general liability policy.  Most business liability insurance policies specifically exclude any liability resulting from this kind of loss.

Who Needs It?

Any business that is involved in the manufacture, sale, or service of alcohol or who assists in the purchase or use of alcohol generally needs this kind of coverage.  If there is a possibility that a customer, client, or patron could become intoxicated using alcohol that a business made it possible for them to obtain, that business needs this kind of coverage.  Courts have ruled time and again that purveyors of alcohol can be held liable for the actions of their intoxicated customers which means the only way to protect the business is to have the right coverage.

What Does it Cover?

A Liquor Liability policy will generally offer the following types of coverage:

  • Liability – This coverage protects the business from losses resulting from a lawsuit filed by someone injured by the intoxicated customer.  A common example is a lawsuit resulting from a drunk driving accident.  This also covers lawsuits filed by the customer for injuries or damage they caused to themselves while they were intoxicated.
  • Property – This covers property damage caused by the intoxicated customer.
  • Assault and Battery – This covers your liability to injuries and damages caused by intoxicated patrons fighting.

What to Look for in a Policy?

When purchasing this type of coverage, make sure it includes the following:

  • Defense Costs – Make sure the policy you purchase doesn’t exclude this or decrease your limit to cover legal defense costs.
  • Employees – Make sure the policy does not exclude employees.
  • Mental Damages – Make sure that mental damages like mental anguish and stress are included in your policy.

Businesses that are involved in the creation, sale, and distribution of liquor and alcohol need to take steps to protect themselves from liability claims resulting from intoxicated patrons.  Purchasing a liquor liability policy is one of the best steps a business can take to secure this kind of protection.

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Small Business

Is your small business adequately insured? image via aboutTime on Flickr

One of the unfortunate realities of our world is that the threat of a lawsuit is around every corner and inherent with every employee you hire, customer you serve, or client you sign.  No matter how small your business is, what products you sell, or services you offer, there is some part of your business that is leaving you exposed to a lawsuit that could bankrupt both you and the company.

Here are 7 reasons every business needs to protect itself with the proper types of insurance.

1.     It Only Takes One

It only takes one accident, one broken contract, or one disgruntled worker to put your entire business at risk.  If your company is sued fornegligence, even winning can easily put you out of business because of the amount of money it will cost to mount your defense.

2.    Things Happen

If you own property where customers come to do business, you are open to a personal injury liability claim every minute of every day.  People fall and accidents happen but if they happen on your business premises and you don’t have insurance, you will have to pay for medical bills, lost wages, pain and suffering, and other expenses out of your own pocket.

3.   Your Corporate Shield May be Flimsier Than You Think

Many small business owners believe they have protected their personal assets from any business liability claims or judgments by using a “corporate shield”.  However, there are circumstances where that protection doesn’t stand up in court and without business insurance, you could literally lose everything you own.

4.     Exclusions Apply

If you have a general liability policy, any employment liability claims may be excluded from that policy.  If you have a commercial liability policy, property loss may be excluded.  If you are a home-based business owner with homeowner’s insurance, it is unlikely that your business assets are covered under that policy.

5.   Losses are Often Out of Your Control

If you walked in tomorrow to find your office had been robbed and every computer was gone, would you be able to replace them today and get back to business?  Losses from theft, natural disaster, and other accidents could bankrupt your business if you don’t have insurance to help replace what is lost.

6.     Accidents Happen

You may be thinking that your auto insurance policy that covers your personal auto will cover you if you are driving your car on company business.  This may or may not be true. If it isn’t true and you are in an accident where you’re at fault, you could find yourself paying for someone else’s pain and suffering out of your own pocket for the rest of your life.

7.   Other People’s Insurance Isn’t Enough

Let’s pretend you have a storefront on Main Street in your town and another person causes an accident which ends with a car coming through the front window and destroying your merchandise.  Their auto policy, if they have one, might cover the damage to the shop and for replacement products, but it may not cover or have enough coverage to compensate you for the income you lost in the four months the shop had to be closed for repairs.

Don’t wait until something happens or procrastinate at least doing something while you figure out whether or not you can afford to purchase the insurance your business needs.  The question you need to focus on is how can you afford not to insure your business.
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Business Insurance

Is your business properly insured?

Whether you are a new business owner just starting out or an established entrepreneur looking to hire your first employee, it is important to understand what insurance coverage you need to protect your business.  However, wading through the all the available information to decide what policies and coverages are right for you can easily end with you being over or under insured.

Insurance for businesses comes in many different forms. What you need often depends on several factors including what type of business you are in, whether or not you have employees, and what state you live in.  Many business owners believe that the way the structured their business, as a corporation or LLC, provides them with the protection they need and eliminates the need for business insurance.  This simply isn’t true.  Company structure can protect your personal assets but they do not provide protection for the business itself.

The first step in deciding what kind of insurance you need for your business is to understand the different types of business insurance and the protection each kind offers.  According to the Small Business Association, these are the different kinds of insurance small business owners may need to fully protect their business.

1.    General Liability Insurance

This type of coverage offers broad protection against most legal actions resulting from negligence claims, accidents, or injuries.

2.     Product Liability Insurance

This type of coverage is important for businesses that manufacture, distribute, or sell products including both wholesale and retail sales.  It protects against legal actions resulting from injuries caused by product defect.

3.     Professional Liability Insurance

Similar to product liability insurance, this type of coverage protects businesses that provide services to customers.  It covers things like malpractice, errors and omissions, and negligence that results in harm to your client.  Depending on your profession, the state you live in may require that you carry this kind of insurance.

4.     Commercial Property Insurance

This kind of coverage protects the property and assets that belong to the company against loss or theft.  While it covers real property like buildings and office equipment, it may also cover things like loss of income and business interruption.

5.     Home Based Business Insurance

This type of coverage is specific to businesses run out of your home which are not covered by most homeowner’s policies.  You may be able to cover your home-based business with a few riders on your homeowner’s policy but you may have to purchase other business specific policies as well.

6.     Workers Compensation Insurance

This kind of coverage provides protection for your employees in the event they are injured on the job.  If you have employees, all states require that you carry this kind of coverage.

7.     Unemployment Insurance

This type of coverage is assessed in the form of a tax and is required by all states if you have employees.  It provides funds for the payment of unemployment benefits in the event one of your employees is let go and qualifies for benefits.

8.    Disability Insurance

This type of coverage provides employees with a portion of their pay if they suffer a qualified disability.  It is required for companies with employees in some states.

Now that you understand what each kind of coverage protects, you need to assess the businesses’ potential exposure for loss.  This exposure will help guide the types and amounts of coverage you need to safeguard your business.

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Are you adequately insured?

Every time you get behind the wheel, you run the risk of colliding with one of the millions of drivers that don’t have car insurance.  According to the Insurance Research Council one in seven U.S. drivers is on the road without insurance despite the fact that almost every state requires drivers to carry a minimum level of coverage.  The best way to protect yourself from these uninsured drivers is to make sure you have the right amount of insurance.

But how much insurance do you really need?

 

In order to answer that question, you need to understand what the different types of coverage are and how they protect you.

Liability coverage is usually the first listed on your policy and covers losses incurred by other people because of your negligence.  Your liability limits are listed as three numbers separated by slashes like 100/300/100. The first two numbers are your bodily injury liability coverage limits.  Bodily Injury Liability pays for the medical expenses of others who are injured in an accident that is determined to be your fault.  The first number is the limit for a single person’s medical expenses, a 100 indicates that the maximum the insurance company will pay for one person’s medical expenses is $100,000.  The second number is the total amount the insurance company will pay for all medical expenses for the occupants of the other car, so a 500 would mean $500,000.    This type of coverage will pay for the losses of the person or people you hit but will not cover anyone in your car.  The third number is the total amount the insurance company will pay for property damage for one accident meaning a 50 would provide $50,000 of property damage pay outs.  Most states require all drivers to carry a minimum amount of liability coverage.

The remaining types of coverage included in your policy protect you from losses.

The first is Personal Injury Protection coverage which is also called Medical Payments.  This covers medical expenses for you and anyone in your car resulting from an accident.

Next is Uninsured/Underinsured Motorist coverage which pays for your pain, suffering, and other damages if you are injured as the result of an uninsured driver’s negligence.

The other two common types of coverage are Collision and Comprehensive.  Both cover the cost of repairs to your vehicle.  Collision pays for damage resulting from an accident and comprehensive covers damage caused outside of an accident.  Most leaseholders and auto finance companies require that cars financed through are protected with collision and comprehensive coverage.

The first step in determining how much insurance you need is to decide which of the standard coverages you need.  The next step is to determine how much of each coverage you need.  The best starting point is to review your state’s minimum requirement, unless you live in New Hampshire, which is the only state that doesn’t have a minimum requirement.

Here in Arizona, drivers are required to have Liability coverage with limits of 15/30/10 and are not required to carry uninsured motorist coverage according to the Arizona Department of Transportation. For most drivers, this amount of coverage is not enough to provide the protection they need.  First, the limits are very low compared to the cost of medical care and the value of automobiles.  This means that if you are at fault in an accident and the medical bills of the people in the other car exceed $30,000, you will be responsible for paying for everything over and above that amount.  Second, the state minimum only provides protection for other drivers, which means you will be responsible for your own medical expenses and all car repairs.  Additionally, with a liability only policy, you will have no recourse to recover damages if someone without insurance injures you in an accident.  Third, purchasing only the state minimum won’t pay for damages or loss if someone steals your car or a tree falls on your car.

Once you know the minimum coverage required by the state, the final piece of the puzzle is to decide what you need over and above that minimum.  This will be determined by what assets you have to protect.  Add up the value of your assets including your house, car, investments, retirement accounts, bank accounts, and property and then choose policy limits that exceed that value.