Posts Tagged ‘umbrella of liability’

3 Types Of Insurance You Need For Your Import/Export Business

You’ll need insurance for many aspects of your import/export business, from your employees to your cargo.

Here’s the lowdown on the specific types of insurance to protect your business.

Insuring Your Employees

Once you hire employees, you’ll need to think about caring for them. Workers’ compensation insurance laws vary among states; check with your insurance agent for details in your area. Workers’ comp covers you for any illness or injury your employees might incur on the job. If your employees work in your home office and get injured there, your homeowners’ insurance may refuse to pay on the grounds that it’s actually a workers’ comp case. Check with your insurance agent regarding what you need, then make an informed decision.

Export Credit Risk Insurance

Thanks to the Export-Import Bank of the United States, you can purchase several types of export credit risk insurance designed specifically for the newbie exporter and small- to mid-sized enterprises. These policies protect you in the event that your foreign buyer decides not to pay you for either commercial or political reasons. The Ex-Im Bank (and the United States) hope policies such as these will encourage both you and your financial institution to take on higher-risk foreign markets.

Your menu options at Ex-Im are the following:

Small-Business Policy: This multibuyer policy requires that you insure all your export credit sales with Ex-Im; it’s designed to free you from the “first-loss” deductible of most commercial policies. To take advantage, you must have an export credit sales volume of less than $5 million in the past three years before application, your company must qualify as a small business under the Small Business Administration’s definition of the term and you must have been in business at least one year with a positive net worth. How do you find out if you qualify? Call the SBA’s Office of Size Standards at (800) 827-5722, or check its website.

Umbrella Policy: This policy boasts the same coverage and eligibility as the small-business policy above, but it allows you as an export management company or export trading company to act as an adminis­trator or intermediary between Ex-Im and your clients.

Short-Term Single-Buyer Policy: This one, which covers a single or repetitive sale, is for the exporter who doesn’t want to insure everything with Ex-Im. A special reduced premium is offered to small businesses.

Cargo Insurance

When it comes to cargo insurance, to mangle a well-known advertising maxim, “Don’t let your merchandise leave home without it.” The cost of the insurance usually runs about 1 percent of the insured value, although this varies with the type of goods and method of shipping.

What do you get for your money? Peace of mind, for one thing, as with all insurance. And, in the event of a cargo misadventure, your insurance coverage should include enough to repay you for not only lost or damaged products but for your extra time and trouble and those lost profits. You’ll want to purchase all-risk insurance, which covers your cargo against everything except man’s inhumanity to man — war, strikes, riots and civil commotion — and inherent vice in the cargo. What is vice, you ask? It refers to any sort of plague or pestilence that might attack your cargo, such as boll weevils in those gorgeous cotton blankets or E. coli on your Texas steaks.

You might also want to consider general average insurance. This protects you in the event of someone else’s cargo loss. Say the ship carrying your containers runs afoul of stormy weather. The captain decides to jettison a portion of the cargo to save the rest, and they dump somebody else’s stuff into the briny deep. Fine, you say. Not quite. According to maritime law, even though your merchandise has made it to port safe and sound, you can’t take possession until you’ve paid for your share of the loss.

Let’s look at another scenario. Say the other party in your transaction has purchased insurance — for example, the exporter who’s shipping to you CIF (cost, insurance and freight) but you’ve got a funny feeling that their coverage isn’t too reliable. Not to worry. You can purchase a contingent policy, which is about half the price of regular insurance and will serve as backup insurance in the event of a catastrophe.

As a newbie trader, your best bet will be to purchase insurance through your freight forwarder, who has a blanket policy, or directly from the air carrier. As you grow, you may wish to purchase a blanket policy of your own, which will cover you for everything you ship over the course of a year.

Avoiding Insurance Claims

Out on the high seas, your cargo may be subjected to rough and stormy weather. On the docks, it can be equally buffeted about by tough longshoremen. What can you do to help ensure your cargo doesn’t become a marine insurance claim?

1. Pack with dock loading and unloading procedures in mind.

Your cargo may be slung around (or skewered) by anything from a forklift to a sling or net, and then, if it survives that, left outdoors to rot. Often, cargo is “stored” on port decks or out on airplane cargo tarmacs, without any covering. If you’re unfamiliar with overseas port operations and don’t have the right packaging, you can lose cargo.

2. Pack to expect Mother Nature’s worst.

Container loads can shift during heavy seas and storms. Someone else’s cargo can smash into yours — or vice versa. A sea voyage may be good for a human’s health, but it can be murder on merchandise. Think heat and humidity, salt air (which is incredibly corrosive), rain and sea spray. When any or all of this gets into your containers, you can end up with rust, blistering, mold, mildew and moisture damage.

3. Pack to expect human nature’s worst.

Some people just can’t resist somebody else’s goods. Theft can be a problem, especially when containers are left on the docks for a long time. With all these potential disasters in mind, pack smart. Use adequate packaging materials; make sure your merchandise is cushioned against blows. Waterproof everything possible. Have package exteriors shrink-wrapped. Use waterproof lining on interiors. Coat exposed metal parts on machinery, for example, with grease or some other rust arrester. Use heavy strapping and seals. Discourage theft by eliminating trademarks or content descriptions on container exteriors.


Source: Entrepreneur

5 Business Insurance Gaps To Patch Before Disaster Strikes

From a family-owned winery to a growing startup in Silicon Valley, it can be difficult enough for a company to keep up with the daily demands of running a business, let alone remember to update their insurance.

As a result, businesses tend to overlook certain areas of insurance coverage. The beginning of the year is a great time to review your policy and ensure your business is protected. As those policies are reviewed, here are five things for business owners to consider:

1. Business Income Coverage

Should something happen to your business, you may think you’ll close up shop for only a week or two. Unfortunately, business owners tend to overlook or underinsure for this type of protection. While property insurance covers the physical damage to a structure, business income coverage covers the additional costs caused by a business interruption. The coverage is designed to be applicable for all businesses, in order to put a business back in similar financial position prior to the incident.

For example, consider natural disasters, such as wildfires or severe winter storms. Monterey County witnessed this last summer with the devastating Soberanes fire, cited as the most expensive wildfire in United States history. Powerful winter storms have flooded the region already this winter while heavy snow hit the Sierra Nevada and triggered an avalanche just west of Lake Tahoe. And that’s just the short list.

When damage occurs from these instances, reconstruction or repairs can take much longer than expected due to stretched resources. Your business needs to be covered for that loss of time and lack of income. Consider permit acquisition, municipal building inspections, and supply and contractor availability. This must all be considered, when insuring for loss of income.

2. Building And Ordinance Coverage

Business owners who own and operate older buildings, this one is for you. While it’s easy to underinsure or disregard this coverage, it’s a good idea to reconsider. Depending on the age of your building, municipal building codes can require extensive updates to an entire building even if only a portion is damaged. For the best protection, and to avoid additional out-of-pocket expenses to rebuild, you should add the cost of updating the entire building when you purchase insurance.

3. Umbrella Coverage

Business owners should consider umbrella liability coverage to add an extra layer of protection. The umbrella of liability is essentially a safety net in the event of a large claim and when your existing policies require extra limits to cover the unforeseen costs. Usually for only a fraction of the cost of the package or auto policy, you can extend their liability coverage dramatically by adding this. The coverage provides extra protection, and can be tailored to the needs of different business types.

4. Business Name Change Or Reorganization

When a business undergoes a name change, rebrand or reorganization, it’s important to update the insurance policy to reflect those changes. For example, what if your company transitioned into a limited-liability corporation? Insurance updates will ensure that entity is included for liability coverage and that any checks issued to cover damages are made out to the correct entity. Otherwise, there could be a significant delay in your benefit provisions.

5. Review Your Policy Ahead Of Each Renewal

A best practice for business owners is to review and renew their insurance policy 90 days prior to the start of the next term. Companies should have an established process in place, and maintain a strong relationship with their insurance agent to ensure their policies are updated. The agent should understand the nuances of what makes your business tick and what you need to protect it.

As with any type of insurance, business insurance is there to protect your business for the unexpected. Work with an agent who knows your community and industry, someone who emphasizes personalized, local-decision making and expertise. By doing this, you can have the confidence to take on the challenges of your daily business and hopefully — with more peace of mind.


Source: North Bay Business Journals