Disaster can be man-made or caused by the unruly hand of Mother Nature. If your business is going to survive the unexpected, insurance is one way to help protect it against loss and get back on your feet.
However, not all insurance is the same, and one policy doesn't cover everything, agents and insurers say. Sometimes, policy add-ons better protect a business, given the risks of geography, the weather and even the industry a business is in.
Do you know the risks to your company and how to protect it?
1. True or false: When the next Snowpocalypse hits and dumps 3 feet of snow, general liability insurance will cover you using your company truck to make a few extra bucks by plowing out the neighbors.
2. Which two industries — Central Pennsylvania has a growing number of them — present a larger challenge than others to the insurance industry on risk assessment?
A. Trucking and manufacturing
B. Biodiesel and farming
C. Solar and nanotechnology
D. Software development and warehousing
3. How often should you review your insurance policies with your broker?
C. After a fire guts the factory and warehouse
D. Any time anything changes with the business
4. True or false: We're a unique company, and what works for others in our industry isn't the best way for us to insure ourselves.
5. True or false: Other companies can mandate the insurance you buy.
6. Which one of these isn't covered by flood insurance?
A. Loss of your business's building
B. Sewage backup into your business
C. Damage to the water heater
D. Debris cleanup
7. True or false: Damages to your property or business equipment from any source of electricity are covered under your commercial insurance.
8. Which one of these is not a type of insurance?
A. Equipment breakdown
B. Equipment floater
C. Electronic data and processing
1. False. Many general liability insurances have snowplowing exceptions, according to Keller-Brown Insurance Services in Shrewsbury, York County. That means that, although snowplowing might be a new revenue stream for your company, if you damage something, you could be liable. Depending on what you hit, your snowplowing could cost more than you hoped to gain.
2. C. Solar and nanotechnology. The insurance industry is having a difficult time gauging the risks associated with nanotechnology, the emerging science of manipulating chemicals at the atomic level to produce better products in everything from sports gear to food, said Jim Shannon, underwriting manager for Ephrata-based Windsor-Mount Joy Mutual Insurance Co. Likewise, the risks in the growing solar power industry are difficult to gauge because there isn't enough information on losses, he said.
3. B and D (yes, this was a trick question). As a general rule, businesses should review their insurance policies annually. Your broker is likely to suggest a more frequent time period depending on your risk. It's best for business owners to review their policies any time they make a change to the business, including geographic moves, market and product shifts, staff growth and plant expansions, Shannon said.
4. False. Uniqueness is a value in entrepreneurism, but "benchmarking" is a good way for companies to gauge their insurance needs, said Patrick Amice, vice president and client executive for RCM&D Inc. in Silver Spring Township, Cumberland County. It helps businesses get a sense of risks in an industry, what insurance other companies use to protect against disasters, and what amounts might be acceptable to cover losses and keep the business going, he said.
5. True. If you've won a contract with a larger company or even the government, it can mandate that you carry specific types of insurance to protect against property loss, casualties and other unforeseen events, Amice said. It can require you to have specific coverage amounts. "That's what forces a lot of companies, as they grow up and build and gain more contracts, to get more insurance," he said.
6. B. Sewer backups. Flood insurance covers your buildings and attached equipment servicing the building, such as a furnace or water heater, but only if the ground water itself damages the building, said Michael Harter, business insurance and claims executive for McConkey Insurance & Benefits in Springettsbury Township, York County. So if flooding causes sewage backups, that wouldn't be covered. Neither would it cover damage to loose possessions stored in a building. It would, however, cover cleanup after a flood.
7. False. General liability insurance covers damage from lightning strikes to property that directly causes the loss of equipment, but it does not cover losses from power surges or other electrical difficulties in the power grid.
8. D. Subrogation is when insurance companies recover restitution from a guilty party in an arson that damaged covered properties. Equipment breakdown, equipment floaters, and electronic data and processing policies are add-on insurances, Harter said. Equipment breakdown covers large machines in industrial businesses, such as manufacturing equipment damaged in an electrical event. Equipment floater policies protect mobile equipment, such as large construction equipment that would be damaged on a job site by flooding. Electronic data and processing covers business electronics such as computers, servers and phone systems damaged by events. <