• Business Insurance Potholes


Potholes are bound to occur in your business in one way shape or form, but how you respond to them and prepare for them is another conversation. At Kingsgate, we understand this can have an impact on your business and our team is here to help educate you and navigate through them.

All insurance policies/contract start with a base form, like the Commercial Property or Business Owners form as examples. These serve as the launching point for policy structure but how these policies are modified can have significant impact on how your claim ultimately unfolds. Below are a few key potholes to understand.

  • Ordinance or Law – Ever heard the phrase “like kind and quality”? That is a phrase used by insurance professionals all too often. The meaning behind that phrase is your insurer has an obligation to return your property to what it was at the time of loss. Same construction type, square footage, finishes, etc. Well, what if your building was constructed 50 years ago and the ordinances or codes that govern its construction have changed significantly. What if setback rules have changed and the footprint must be modified or you need to add more parking and green space? Maybe your type of business is required to have a water based fire sprinkler system now. If these features weren’t present before, your insurance might not provide coverage but you’ll be required to comply.
  • Covered Property – What is considered part of the building? Some policies do not provide coverage for things like the building’s foundation, footings or underground pipes and flue. In addition, things like the costs of excavation, back filling and filling could be excluded as well.
  • Water – How water enters your facility can determine whether you have insurance protection or not. If a pipe inside the property were to burst spilling water throughout your interior, most likely you will be protected. What if the source of the water or wastewater came back into the facilities through a clogged drain or worse, rapid accumulation of rain water rolled into the facility submerging valuable equipment or materials, without specific modifications to your insurance contract these damages may not be covered by your insurance.

All insurance policies/contracts starts with a base form, like Commercial Auto forms for example. These serve as the launching point for policy structure but how these policies are modified can have a significant impact on how your claim ultimately unfolds. Below are a few key potholes to understand.

· Hired Autos – Any “auto” a named insured leases, hires, rents or borrows used in connection with your business. Examples could include rental cars, leased cars, or trucks hired to deliver your company’s goods.

It is important to understand that general liability helps to cover costs that result from claims against your business. As it excludes damage to your business property (these types of claims are covered by commercial property insurance), mistakes made in your business’s professional services (these types of claims are covered by professional liability insurance) and work-related injuries or illnesses (these types of claims are covered by a workers’ compensation insurance policy).

When looking at an Employment Practices Liability policy, it is important to understand that there is not a standard for EPLI, meaning that the policies vary greatly in coverage so you will want to be sure to study each policy carefully or review it with your insurance broker. Some will not cover wrongful termination of an implied contract, wrongful demotion, or failure to grant tenure claims. Others will not cover independent contractors even though they do have the ability to sue your company. We strongly recommend looking over your EPLI policy and giving us a call today. We would be happy to answer all your questions and recommend the best policy for your situation.

The next step is easy, call 515-576-4321

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