Flood Insurance Not Enough Coverage for Hurricane Sandy

Hurricane Sandy has left a devastating toll on millions of property owners and potentially thousands of small and medium sized businesses. Conservative estimates have calculated insured losses to exceed $30 billion with many having to wait weeks or even months before they will receive compensation or reimbursement for their loss of property, equipment and or damage to other forms of assets. For those businesses especially in the coastal regions and near large bodies of water who were smart enough to purchase flood insurance, they are in a much better financial and mental position than those who elected to decline this coverage.

However, purchasing flood insurance will only cover the cost of repairing or replacing damaged building(s), property, equipment and stock. But what if a business is in an area where mass destruction and flooding will take weeks or even months to clear up. How will these businesses survive with no income and expenses that still have to be paid?

A natural catastrophic event is a perfect example as to why Business Interruption Insurance should be purchased. This form of coverage can usually be added onto a business insurance policy otherwise known as a CGL-Commercial General Insurance for a relatively small cost varying between 5-10% of the annual premium. Business Interruption insurance provides coverage when an insurable loss forces a business to shut down their operations. It will compensate the business owner for the loss of net profits and will cover ALL necessary expenses until the business is ready to open again. The amount of coverage depends on the limits chosen by the insured. For example, a takeout pizzeria that generates $20,000 a month should consider a minimum business interruption limit of $80,000 (4 months coverage). Other forms of BI coverage includes extra expense which will cover the cost of relocating and operating out of a temporary location until the primary location is ready to open again. Note that offering these limits will require the business to provide substantiated proof in the form of financial statements.

It has been the busiest week of the year at our company with hundreds of callers inquiring about purchasing flood, earthquake and other forms of natural disaster coverage. Take out a few moments to review your policy for this coverage and if required, contact your broker and have them discuss the different options. A few hundred dollars towards upgrading your coverage can potentially save your business tens of hundreds of thousands while keeping your brand operational even through the worst possible scenarios.

Insurance Guarantees More Attractive In Romania

Insurance guarantees have emerged as an alternative to letters of guarantee issued by banks. There are two basically types of guarantee instruments that can be used in Romania:

1. Unconditionally guarantees (issued in the form of "bank guarantees letters" issued by banks)

2. Conditional guarantees (issued by insurance companies)

Financial problems, and particularly the lack of liquidity, arising from the financial crisis which affected Romania from 2008 until in the present, forced companies from Romania to switch to insurance guarantees offered by insurance companies to the detriment of banking products such as letters of guarantee. Thus, the government decision with nr. 834/2009 mention that the guarantees issued by insurers are expressly accepted forms of guarantee by public institutes to participate in awarding the public auctions. However, nearly four years after the implementation of the new legal provisions, warranty insurance market is underdeveloped in this area.

By providing guarantees, insurer undertakes to pay compensation if the beneficiary is insured and it shows faults that can not fulfill its obligations under the contract of work / service. Most contracting authorities require companies participating in the auction bank guarantees, although the guarantees issued by insurers are expressly incorporated into the category of eligible collaterals. Companies that participate in auctions organised in Romania must know that contracting authorities do not have the right to choose or to impose what kind of guarantee is needed.

The insurer covers risks arising from failure or improper performance of the contractual obligations assumed by the Insured under contract with the beneficiary.

There are four types of collateral as it follows:

- Providing tender guarantee (Bid Bond). According to statistics in Romania, this type of insurance is the most used from the guarantee insurances. This is because this type of insurance is required in the vast majority of auctions organised for various types of projects.

- Performance guarantee insurance contract (PERFORMANCE BOND)

- Providing Guarantee for advance return (ADVANCE PAYMENT BOND)

- Provide warranty period maintenance / maintenance (MAINTENANCE BOND). Regarding the fact that in Romania the infrastructure is quite poorly developed and there are many building sites to improve it, more and more companies, especially construction companies realized lots of infrastructure projects. Many of those projects deteriorated in a short period of time after completion of works. Therefore it was decided that one of the main condition for receiving a construction work will be the presenting of a performance bond insurance.

Depending on the type of collateral required, the Insured may be:

- Bidder - Guarantee Clause of the tender offer. The term Provider means any economic operator who has submitted the tender following the announcement / invitation to tender (manufacturer, supplier, contractor, contractor, provider). or

- Contractor - for other types of collateral.

The term Contractor refers to the tenderer which has become, under the law, a party to a public contract or framework agreement (builder, contractor, subcontractor, supplier, contractor, provider).

The Insurance product guarantees offered covers the performance of contractual obligations for public and private construction projects.

Bid Bond - Guarantee Clause of the tender offer

By this clause, the Insured and the Insurer mainly in the alternative is firmly committed to ensuring Employer obligations arising from the tender offer.

Advance Payment Bond - guarantees the return clause advance

Mainly insured and insurer, in the alternative, for damages Beneficiary guarantees, if the insured is guilty of failure or improper performance of obligations under the Contract relating to the use and return of the advance, up to the amount insured.

Performance Bond - Clause guarantee of good execution of the contract

Mainly insured and insurer, in the alternative, for damages Beneficiary guarantees the maximum amount insured if the insured is guilty of failure or improper performance of obligations under the contract of work / service and the beneficiary finds some weaknesses, shortcomings, defects in the works.

Maintenance Bond - Guarantee Clause during maintenance / maintenance

Mainly insured and insurer, in the alternative, for damages Beneficiary guarantees, if the insured is guilty of failure or improper performance of obligations under the Agreement on technical maintenance and address any deficiencies receiver, warranty of the work for which it is liable under the contract execution.

The Insurance guarantees are issued under a contract between the insurance company, contractor-insured (person who needs insurance) and the beneficiary (the person who will receive insurance if the insured fails to honor its obligations under contracts or provision of services).

Evacuation and Repatriation Insurance: In Case You Have To Leave

When living abroad, the social and political climate in the country isn't always stable. Whether it is due to political unrest, natural disasters or other unexpected issues involving personal safety, people sometimes need to be evacuated quickly. This interruption of daily life has several effects that can cause trouble for expatriates who are not covered by international insurance. This coverage includes a host of expenses and circumstances for organizations and their employees. The issues covered by evacuation and repatriation insurance will make the situation less stressful for those affected by it.

Expulsion 

In countries where political unrest creates an unsafe situation for foreigners, some employees living abroad may be asked to leave their posts. Unrest and danger are both cause for voluntary and mandatory flight from operations. Groups and individuals may be seen as an unwanted presence or even as potential casualties should they remain. Organizations may need to evacuate quickly, and emergency evacuation insurance provides protection for those expelled or advised to leave due to military or political events. Coverage includes the cost of transportation to the nearest safe place and confiscation of certain property items. Property is also typically covered under this international insurance policy.

Salary 

When unforeseen events cause an organization's employees and representatives to be removed from an unsafe location, eligible individuals' salaries can be continued under special international commercial insurance plans. When they are displaced, they may be able to continue their work in another location or may be suspended from operations until it is safe to reclaim their positions. This is often in place for up to a year, depending on the circumstances of the abandonment of the post and duration of the dangers.

Return 

Abandoning operations can be a stressful situation for everyone involved. Even more stressful is the cost and reality of return when authorities have given the all-clear to an organization. Special policies for international insurance not only cover emergency evacuation, but also the costs to return and re-establish operations after abandonment for safety reasons in the host country. Organizations must be able to present assurance that their presence in the former location is safe before making claims and returning to the country in question.

For organizations operating overseas, keeping their employees safe is a priority. Although their locations abroad may seem safe at the time they station people on assignment, the climate can sometimes change quickly. Those covered by international insurance policies for evacuation and salary continuation can regroup and move forward more quickly.

Business Interruption Insurance - Things Every Business Needs to Know

Any business, small, medium or large is susceptible to damages from events like natural calamities, or man-made disasters. They may be forced to shut down their business due to lack of sufficient financial support. During these situations, they need to have a backing that covers for the loss of income. Business interruption insurance is one such solution to cover up for lost income.

In this article, we will discuss about the importance of business interruption insurance and why every business should be prepared for the unpredicted.

Business interruption insurance should be a crucial part of every business owner's plan. Business interruption insurance acts as a supporting system for your business when it is closed down due to unexpected events such as natural disasters, accidents or any unforeseen risks.

Business interruption insurance provides sufficient coverage when your business is not in action and will help you pay the ongoing expenses. In this way, you will get some time in rebuilding your business. Small businesses who do not purchase this insurance would suffer closure soon because the expenditure for revival is beyond their financial capacity.

Can be an add-on to any policy 

This insurance is generally not sold as a separate policy; you need to buy it in addition to your existing liability insurance or any other insurance policy. It comes as a rider, or additional benefit with others like property insurance. This add-on policy to your excising policy will help you have liquid cash in hand, even when your business is not operating.

Coverage offered by the policy 

If your business is unable to function as a result of damages to the business premises and loss of revenue, this insurance would be helpful. Further, there can be interruptions because of a general economic downturn. In all the cases, as there is no transaction, there is loss to the business. However, you have to bear the essential cost. Under these situations, business interruption insurance will cover your business continuity operation expenses like the electricity bills, staff wages and rent, repairs of damaged equipment, etc.

Every business should consider business interruption insurance 

Whether, it is small or a large business, it is very much essential for every business to be covered under business interruption insurance for a secured and risk-free business. In business, losses are not predictable. During these difficult situations, this coverage will help you in rebuilding your business premises and also your self-confidence.

It is advised to buy this insurance through an insurance brokerage firm for better deals. But selecting an insurance brokerage or insurance adviser for your business may, however, be tedious, but you need to figure out the best brokerage firm that can offer you better deals. You can do this by researching on the Internet.

And before buying business interruption insurance policy, you need to discuss with the brokerage firm the things that are included and excluded in your policy. Choose a brokerage firm that will offer most of the things at a minimal cost compared to other brokerages and that promises to protect your business at times of adversity.