CNR Insurance Blog

Tornadoes Happen Every Year - Are You Prepared?

Tue, 08 May 2012 18:12:47 GMT

You don't have to be directly hit by a tornado in Texas or Oklahoma to experience damage. Taking some time to prepare could save you thousands of dollars and hours of clean-up.

Know What Your Insurance Covers and How Much You Need

In an average year, 800 are reported nationwide, but in April of 2011 alone, 875 tornadoes were reported. Oftentimes, homes and businesses close to a tornado are damaged or destroyed by wind, rain and flying debris. Check with us brent@cnrbrokerage.com to see if your insurance policy covers repair or rebuilding costs.

If you can’t live in your home, see if your policy will pay additional living expenses. We can review your policy for detailed coverage explanations.

Review your insurance policy once a year to make sure you have enough coverage to rebuild based on current construction costs. CNR Insurance recommends you work with an independent building contractor to get a precise estimate, and make sure you chat with us about your business or home’s unique features.

You Can Take Action to Reduce Damage

You can’t make your home or business tornado-proof, but you can take steps that improve the odds of surviving the high winds. Ideally, you may want to call on professionals for the more technical jobs.

Start at the top – your roof. Fix any areas that need repair. If you are planning to replace your roof, select materials that are designed to withstand high winds.
If you are planning to replace your windows, select impact-resistant window systems, which have a much better chance of surviving a major windstorm.
Anchor door frames securely to wall framing. Make certain your doors have at least three hinges and a deadbolt security lock with a bolt at least one inch long.

If a Tornado is Headed Your Way

If you are in a building, move to an underground shelter, an interior room or a hallway on the lowest floor.
Stay away from windows and corners.
If you’re in your car, get out immediately and find safe shelter or lie flat in a ditch. Do not take shelter under an overpass or bridge.
Flying debris causes most injuries and fatalities, so use your arms to protect your head and neck.

Additional Resources

Check out some of these additional resources or let CNR Insurance find the right insurance protection for your home.

Other emergency resources

It’s necessary to get the right insurance protection for you. For more information on your policy or if you’d like to ask about additional coverage contact brent@cnrbrokerage.com or give us a call at 972-248-2415.

Things to Keep in Mind When Buying a Car

Thu, 05 Jan 2012 17:49:10 GMT

Buying a new car is an exciting time - but it can also be stressful. After all, you're trying to get the best deal on price, while also deciding on the make, model and features you need.

We can't really help you become a master negotiator when it comes to buying a car. But we can give you some things to consider when you're looking around the lot - and when you're trying to answer the age-old question of "new, or used?"

Now, the new vs. used argument is pretty well documented - with people usually staunchly in one camp or the other - and you probably already know what side you're on. But read on with an open mind, and you might just come to a different decision the next time you’re on the car lot.

New cars

Ah, that new-car smell. It's a bit of a cliché, but it's one of the things that people love about climbing into a brand-new car. And while they make air fresheners that supposedly give you that same smell for your used car, it just doesn't seem the same, does it? Still, there are other benefits to buying new - and, of course, there are drawbacks as well.

PRO - Choices: When you buy new, you get to choose your color and the exact features you want. From spoilers to sunroofs to leather seats and stereo systems, you can customize your car to best fit you.
PRO - Maintenance: Some manufacturers offer free scheduled maintenance for a set period of time after you buy the car, and you likely won't need a new battery, tires, etc., for several years after your purchase.
PRO - Peace of Mind: Your new car may have a warranty for up to 10 years, and also is covered by "lemon laws" that could allow for a replacement or refund if the car has serious defects.
CON - Cost: Depending on the make and model, buying a new car is almost always more expensive (at least in terms of the purchase price) than a used car.

It's also worth noting that if you purchase a new car in its first model year (meaning it's a new model for the automaker), there won't be many user reviews available, and data on reliability and repairs will be limited. In addition, sometimes newly introduced cars have some kinks that generally are ironed out by the second and third model years. These aren't necessarily serious issues, and the warranty should cover them, but in some instances, you and your car could be headed to the shop more than you'd like.

Used Cars

Don't care about the new-car smell? Looking to save some money on your purchase? Well, a used car might be right for you. There are many advantages to buying used, but you'll want to be a little more careful. After all, it's hard to know exactly how well the previous owner treated the car. But you can limit your risk with a little bit of work.

PRO - Choices: While you won't necessarily get to customize your used car, you likely can find a pretty good fit. There are lots of used cars out there.
PRO - Cost: New cars depreciate quickly after they're purchased. By buying used, you're letting someone else take that financial hit over the first few years of the life of the car.
PRO/CON - Reliability: Buying a used car is less of a gamble than it used to be, particularly with the advent of "certified pre-owned" programs many automakers now offer. However, used cars generally don't carry the same warranties as new cars, even though the original manufacturer's warranty is usually transferable to a second owner.
CON - Maintenance: While a used car theoretically shouldn't need more frequent maintenance than a new car, you'll likely need to replace things like tires, headlights, etc., earlier. And scheduled maintenance probably isn't covered by the automaker.
PRO/CON - History: You'll need to check the car's title history to make sure it hasn't been in a serious accident or salvaged. Ask the dealership to provide this information, usually from Carfax.

Of course, whichever car you purchase, the important thing is that it's a good fit for you. Bear in mind that certain makes and models can result in higher insurance cost for you, so feel free to call us for a free estimate on cost before you buy.

Have fun shopping - and we'll see you on the road!

Is Your Home Energy Efficient?

Wed, 07 Dec 2011 21:05:20 GMT

Drafty windows. Leaky faucets. Dirty air filters.

All are common issues for home maintenance, and they’re not only annoying – they also cost you money in decreased energy efficiency and higher utility bills.

Would you like to save $200 to $400 a year on your energy costs? That’s how much the U.S. Environmental Protection Agency’s Energy Star program estimates that homeowners can save by incorporating technologies to make their homes operate more efficiently.

Of course, helping to protect you and your family is our goal at CNR Insurance, and keeping your home well-maintained usually means your home will be safer as well. Those are goals we all should share. Several of the tips below from the National Association of Home Builders will help you accomplish both.

Do a home-energy audit

Making your home more efficient can seem like an overwhelming task. But “auditing” your energy efficiency is something you can do yourself, and it’s relatively simple. This will show you where your home loses energy, how efficient your heating and cooling systems are, and ways you can decrease your electricity use. Just inspect the areas listed here and note the problems you find.

Where’s the air? Air commonly “leaks” from homes through gaps around baseboards, electrical outlets and windows or doors. Stopping these drafts can save up to 30 percent of your yearly energy costs. Be sure to check your home’s exterior as well, paying particular attention to areas where two different building materials meet. When you find leaks, seal them with caulk or weather stripping.
Don’t wait … insulate! Check to see if the amount of insulation in the ceiling and walls is sufficient. Your attic door should be insulated and close tightly. For walls, make a small hole in a closet or other inconspicuous place and probe into the wall with a screwdriver – the area should be completely filled with insulation.
Do a systems check. Efficient heating and cooling systems can save you frustration as well as money. Make sure ducts and pipes are insulated properly, and have your equipment checked and cleaned by a professional each year. Filters for forced-air furnaces should be replaced as soon as they are dirty, or every 30 to 60 days.
Let there be (efficient) light. Lighting can account for up to 20 percent of your home’s total electricity use, so consider compact fluorescent lamp (CFL) bulbs, which last longer and use far less energy than incandescent bulbs.

The only thing left to do after you complete your audit (and make any necessary changes)? Figuring out how to spend the money you’ll save each year!

Contact Us!

For further questions and assistance, info@cnrbrokerage.com.

Understanding Identity Theft

Thu, 13 Oct 2011 14:38:17 GMT

Your identity belongs to you. Here are some suggestions from CNR Insurance Brokerage to help you protect it.

One smart and effective way to protect yourself against identity theft is to prevent it. If your identity is stolen, you'll be able to lessen problems by acting quickly, whether you live in Texas or elsewhere.

Start with Good Habits

Print out a copy of this page and store it in a convenient place
Leave your Social Security card at home in a safe place
Shred papers with personal information
Reduce your credit card accounts, and only carry the cards you need
Write checks with a permanent pen, and mail from a secure place
Photocopy both sides of your credit cards and store safely

Watch Your Accounts Closely

Review balances and transactions often by phone or online
Make sure every transaction on your credit card statements is accurate
Take advantage of free credit reports and watch for unusual activity
Sign up with Experian, Transunion, and Equifax and stagger your requests to get a free credit report every four months or sign up for credit watch services which will report directly to you for a fee

Fill Out the FTC Affidavit Quickly

The FTC Theft Affidavit supplies proof that you didn't authorize any accounts opened or debts run up by the identity thief
New accounts need this FTC affidavit form to investigate the fraud and process your claim
Call your existing accounts for instructions on disputing unauthorized charges as other forms may be needed
Keep originals of the affidavit, as well as all supporting materials such as driver's license or police report. Send copies only.
Send quickly - many creditors request that you send the affidavit within two weeks

Keep This Information Handy:

Federal Trade Commission:
1-877-438-4338
www.consumer.gov/idtheft
www.ftc.gov

Social Security Administration
Fraud Line: 1-800-269-0271

Credit Reporting Agencies
Equifax: 1-800-525-6285
www.equifax.com

Experian: 1-888-397-3742
www.experian.com

Transunion: 1-800-680-7289
www.transunion.com

Identity Theft Plan of Action

Call your credit card companies immediately. Explain what happened, and ask where to send a copy of the police report.
Call and report to the police. Make several copies of the police report.
Complete a Federal Trade Commission (FTC) Theft Affidavit and FTC report (see contact information above to request these forms).
Call your bank. They can place an alert on your Driver's License number and Social Security Number, and freeze your account.
Call fraud units of credit report agencies: Experian, Equifax, and Transunion.

Take the time to educate yourself on preventative steps, and please don't hesitate to seek the help of professionals when needed. For more information, contact CNR Insurance today.

Disaster Preparedness, FEMA and More

Fri, 02 Sep 2011 18:40:05 GMT

If the unthinkable happens, CNR Insurance understands that your most valuable assets are more than just items on a balance sheet.

Sites to Check Out
The following sites are additional resources to assist with preparing for and recovering from disaster.

American Red Cross
The American Red Cross not only provides disaster relief nationally, but is part of a global humanitarian network, responding to those in need.
Federal Emergency Management Agency (FEMA)
FEMA is an independent agency of the federal government, which provides preparedness and response and recovery support to the nation.
National Oceanic & Atmospheric Administration (NOAA)
NOAA is a federal agency and the primary source of weather data and warnings for the United States.
U.S. Small Business Administration
The SBA is an independent agency of the federal government that aids, counsels, assists and protects the interests of small business concerns.

Frequently Asked Questions about FEMA

What if I don't have enough (or any) insurance?
You may qualify for grants from FEMA, low-interest loans from the Small Business Administration, or the Farm Service Agency, or you may qualify for tax refunds for items that were not covered by insurance.

How do I get assistance?
Information on tax assistance, grants and loans can be obtained at a Disaster Recovery Center, or by calling FEMA at 1-800-462-9029. After your application is reviewed, the damaged property is inspected to verify the loss, and that will determine the type and extent of assistance that will be provided. Audits are done later to ensure that the aid goes only to those who are eligible and that the funds are used for their intended purposes.

What services are available?
FEMA may be able to provide Disaster Housing for up to 18 months, Low Interest Disaster Loans (from the SBA) to cover uninsured property losses, Disaster Grants to earthquake victims who would be unable to repay a loan, and other services such as crises counseling, unemployment assistance, legal aid, and assistance with income tax implications.

When should I apply?
FEMA encourages earthquake victims to apply for aid as soon as possible. The deadline for most individual assistance programs is 60 days following the Presidents major disaster declaration.

What assistance is available from the SBA?
The SBA has a Disaster Loan program that helps homeowners, renters, businesses of all sizes, and nonprofit organizations fund rebuilding after a disaster. The loans generally have low interest rates and long repayment terms to make SBA recovery more affordable.

What if I need more information?
More information is available by visiting FEMA's website at www.fema.gov, and by visiting the SBA website at www.sba.gov. Additionally, you can also contact the IRS about tax relief by calling 1-800-829-1040, or visiting www.irs.gov.

For more advice on protecting things that matter to you most through car insurance, home insurance and more, contact us today www.cnrbrokerage.com

Home Insurance Deductibles

Mon, 02 May 2011 21:05:11 GMT

PROPERTY INSURANCE DEDUCTIBLE VERSUS PREMIUM

SAVING PREMIUM HAS EVERYTHING TO DO WITH SELECTING THE ADEQUATE DEDUCTIBLE TO MEET THE INVESTORS OUT-OF-POCKET THRESHOLD. SELECTING A HIGHER DEDUCTIBLE TO SAVE ANNUAL PREMIUM MAY NOT MAKE SENSE TO ALL PROPERTY INVESTORS. SELECTING THE PROPER BALANCE BETWEEN PREMIUM AND DEDUCTIBLE HAS EVERYTHING TO DO WITH THE INVESTOR’S ABILITY TO COVER A LARGER PORTION OF COVERED CLAIMS. THINK OF IT THIS WAY: IF AN INVESTOR HAS THE CASH TO PAY A HIGHER AMOUNT FOR A LOSS, THEN THE INSURANCE COMPANY WILL OFFER LOWER PREMIUMS. HOWEVER, IF THE INVESTOR IS TIGHT ON AVAILABLE CASH, THEN IT WOULD NOT BE PRUDENT TO SET A HIGH DEDUCTIBLE IN ORDER TO SAVE $125 PER YEAR (AS AN EXAMPLE). IF A $5,000 DEDUCTIBLE WOULD CREATE A FINANCIAL HARDSHIP FOR THE INVESTOR TO SAVE $125 ANNUALLY ON THE PREMIUM, THEN THE INVESTOR SHOULD CONSIDER LOWERING THE DEDUCTIBLE TO MEET HIS/HERS FINANCIAL THRESHOLD RATHER THAN TRYING TO SAVE PREMIUM.

AN INVESTOR THAT OWNS SEVERAL PROPERTIES, 10 OR MORE PROPERTIES, SHOULD BE THE ONE CONSIDERING A HIGHER DEDUCTIBLE TO SAVE PREMIUM. LET’S CONSIDER A PROPERTY INVESTOR WHO OWNS 10 PROPERTIES CARRYING A $2,500 DEDUCTIBLE ON EACH PROPERTY WHO ALSO HAS THE ABILITY TO PAY $5,000 WITHOUT CREATING A FINANCIAL HARDSHIP. SAVING $125 PER PROPERTY WOULD RETURN A SAVINGS OF $1,250 PER YEAR. AFTER 4 CLAIM-FREE YEARS THE INVESTOR WOULD HAVE SAVED ENOUGH MONEY TO COVER 1 CLAIM ON 1 PROPERTY. THAT’S LIKE A FREE CLAIM PER 4 YEARS.

LOWER DEDUCTIBLES ALLOW THE ABILITY TO PAYOUT AS YOU GO. AN INVESTOR IS TRADING A LOWER OUT-OF-POCKET EXPENSE WHEN COVERAGE IS NEEDED FOR A HIGHER PREMIUM, “PAY AS YOU GO”. CONVERSELY, AN INVESTOR THAT ACCEPTS HIGHER DEDUCTIBLES IS SAYING HE/SHE IS WILLING TO INCREASE OUT-OF-POCKET EXPENSE IN EXCHANGE FOR SAVING PREMIUM OR “PAY AS YOU NEED”.

ANOTHER POINT OF ACCEPTING HIGHER DEDUCTIBLES IS SOLELY AS A PREVENTIVE MEASURE. IF THE AVERAGE CLAIM IS $5,000 OR LESS, IT DOES NOT MAKE SENSE TO FILE THE CLAIM. THE COVERED LOSS NEEDS TO BE SIGNIFICANTLY HIGHER THAN THE DEDUCTIBLE TO CONSIDER REPORTING THE CLAIM. SAVVY INVESTORS KNOW THAT A REPORTED LOSS, REGARDLESS OF THE PAYOUT, IS RECORDED IN THE INSURANCE INDUSTRY DATABASE FOR FUTURE REFERENCE WHEN APPLYING FOR ADDITIONAL POLICIES. INVESTORS WITH 2 OR MORE CLAIMS IN A 3 YEAR PERIOD ON ANY OWNED PROPERTY FACE THE RISK OF NOT BEING ABLE TO OBTAIN AFFORDABLE COVERAGE, HENCE, A HIGHER DEDUCTIBLE PREVENTS FILING CLAIMS WHICH COULD COST THE INVESTOR SIGNIFICANTLY HIGHER PREMIUMS.

NEW INVESTORS NEED TO REVIEW THEIR FINANCES FOR PROPER MIX OF PREMIUM VERSUS DEDUCIBLE. CASH FLOW IS ESSENTIAL FOR OPERATING A PROFITABLE BUSINESS. REDUCING EXPENSES TO INCREASE CASH FLOW, ESPECIALLY IN TOUGH ECONOMIC TIMES, ONLY MAKES PRUDENT BUSINESS SENSE. HOWEVER, IT DOES NOT MAKE SENSE IF THE INVESTOR DOES NOT HAVE INCREASED CASH FLOW SUFFICIENT TO COVER THE FINANCIAL BURDEN CREATED BY HIGHER DEDUCTIBLES. REVIEWING THESE POINTS WITH YOUR INSURANCE AGENT IS ESSENTIAL IN ESTABLISHING A PROFITABLE AND SUSTAINABLE BUSINESS PRACTICE.

Appreciation Happy Hour for Real Estate Professionals

Thu, 07 Apr 2011 15:44:00 GMT

CNR Insurance Appreciation Happy Hour has joined with AMP for weekly real estate professional networking opportunities at multiple locations in DFW. Join us tonight at Sambucas 360 in Plano.

click for more info http://www.ampnetworking.com/

Like it on our Facebook page

Connect with Brent Coleman and dialogue on LinkedIn

Landlord protection insurance and tenant retention

Thu, 17 Mar 2011 03:50:24 GMT

Improving Tenant Retention – Lowering Tenant Turn Over

Property owners, landlords and property managers are constantly faced with two dilemmas when it comes to tenants, effective acquisition and low cost retention. Once a property owner, landlord or property manager acquires a tenant, a few actions and expenditures will help insure the tenant will stay in the property for an extended period of time while remaining content with their decision to stay in the property. The following are three areas of concern which will address both issues when it comes to tenant retention.

1. Capital Improvements
The number one reason tenants leave a property is the property owner, landlord or property manager has not demonstrated pride of ownership. When an owner replaces a dilapidated fence, or professionally repairs plumbing concerns, or replaces old worn carpeting, the owner is giving the tenant a feeling of pride towards the tenant’s decision to live in the property. Most people take pride in showing off their house to their friends and family. When items in the house are broken, not working properly or in general disrepair, the tenant is embarrassed inviting friends and family for gatherings. Small, frequent investments towards an investment property can keep a tenant content for a long period of time creating a positive ROI.

2. Keep Property Clean
This goes along with the first area of concern. Few people want to live in a dirty, unkept property. Another way to put this is called the property’s curb appeal. When we are out looking for houses to purchase, Realtors state “Curb Appeal” is the property’s “First Impression”. If the property has uncut yard, trash throughout the yard, prior tenant’s belongings inside the property, dirty windows, fingerprints on walls/doors throughout the property, and baseboards used as dust collection ledges, prospective tenants will pass in favor the property owner who tends to those items and presents a clean house.

3. Hold Tenant Accountable
Property owners that want to be the “nice guy” to their tenants are doing no favors to themselves or the tenant. By treating tenants as adults, property owners are demonstrating to the tenant both parties are held accountable to each other. If the tenant is late with the rent payment without prior notification, the property owner should show no remorse and enforce penalties described in the lease contract, i.e. late fees, eviction processing, etc. The “nice guy” property owner, who allows the tenants to constantly pay rent late without consequences, will find it difficult month after month to keep their financial obligations current.

In today’s real estate market, with an abundance of low priced real estate, more and more individuals are entering the investment property arena. With no prior experience in dealing with tenant’s, first time landlords who do not start out initially with the correct attitude towards their tenants, will find it more difficult to change course in time. Like with any long term endeavor, if we start with poor habits we will continue the same poor habits while complaining about the hardships our poor habits created.

Real estate investor Insurance, Do I need it?

Thu, 03 Mar 2011 20:56:00 GMT

Property Insurance Explained for Property Investors Are you a real estate investor?

Do you own and manage rental properties? Are you concerned about increasing cash flow on your rental properties? Would like to know how to save premium without sacrificing coverage? Here is a comparison of policy types and the trades off of each type, coverage versus premium. As an investor, your primary concern is maximizing cash flow on each owned and/or managed property. Investors typically view insurance as the necessary evil required by the mortgage company and which premiums are collected year after year and rarely, if ever, file claims. However, investors who feel the lowest premium is the best insurance find that come claim time, they are not getting what they feel they paid for. That feeling comes from a false sense of insurance security.

The lowest premium is not always the best policy. Property insurance for investment property is written on Dwelling Property (DP) insurance forms. They are standardized across the country and insurance carriers to make selling, knowing and purchasing easier for all involved. DP policy forms for residential SFR are quoted and issued under two types, DP-1 and DP-3. The following is a brief explanation of the differences between the two policy forms. DP-1 is a Basic Form named peril policy. Named peril means the insurance company will list in the insuring agreement what specific losses are covered. If a loss is not listed then it is NOT covered, hence the term Basic Form. The typical named perils are: fire and lighting; sudden and accidental smoke damage; windstorm, hurricane and hail; explosion; aircraft and vehicles; Riot and civil commotion; and vandalism and malicious mischief. That’s it. If the property experiences any other type of loss then the insurance company is not required to pay a claim.

DP-1 policy forms do not include liability. This is the protection against slip and falls and bodily injury to someone NOT related the insured or living in the property. This is the portion of insurance that protects your assets from claims against you personally for acts of wrong doing. For usage with rental properties, the coverage is typically thought of as protection when the tenant or someone invited by the tenant is hurt due to poor maintenance of the property. Liability can either be added by endorsement for a premium (usually higher than liability within a DP-3) or, if your homeowners’ insurer offers, liability can be extended from your primary residence to cover a rental property.

Most carriers have strict limitations on how many properties liability can be extended to. Personal umbrellas do not cover claims on investment property if underlying liability does not exist on the property at the time of loss. DP-3 policy forms are Broad Form named peril policies. The named peril definition expands to include the following perils, in addition to the perils listed under DP-1: theft; sudden and accidental discharge of hot water or steam; falling objects; collapse; freezing; and loss of use. The most concerning to investors is Loss of Use coverage. This affords the insured/property owner actual sustained loss of rents for a maximum of one year.

Example, a property earns $1,000 month in rent and sustains a covered named peril loss forcing the tenant to move away from the property, the property owner/insured is entitled to $1,000 for every month the property is undergoing renovation until rented. The coverage is actual sustained up to policy limits for no more that 12 months. If this example takes 8 moths before the property is rented, the property owner is entitled to $8,000 loss of rent reimbursement. This is not offered in DP-1 policy forms. DP-3 policy forms DO include liability. Typically, insurers will include $100,000 for no additional premium with maximum liability limits of $500,000 for nominal premium increases. Liability plus loss of use/rents are the two biggest protections for an investor for the following reasons. Liability is the least expensive coverage in relation to dollar limits. Typical limit increase to $500,000 creates less than $70 per year increased premium.

Loss of Use/Rents is actual money-out-of-pocket the property owner loses while the property is being reconstructed.

Best options to save money, insurance premiums using the above information:

raise deductibles to the investors maximum out-of-pocket amount without causing hardship; do not increase liability beyond the standard amount included in the base policy (DP-3) and list the property insurance on an umbrella policy; make sure the agent inputs property characteristics correctly (builder’s grade, economy grade, standard grade) to keep the replacement cost at lowest acceptable value; keep the property in good working condition/maintenance.

As a real estate investor, the primary concern is cash flow of each property owned and managed. Consider saving $85 per year per each 10 owned properties: Annual Increased Cash Flow $850! All without sacrificing coverage and protection.

Business Liability Insurance DO I need it?

Tue, 01 Mar 2011 20:55:00 GMT

Professional Liability is not General Liability What is Professional Liability Insurance? Why it is not covered in a General Liability insurance policy? Why do Property Managers, Lawyers, Real Estate Agents, Architects and Travel Agents need Professional Liability insurance? Most service professionals are not aware of the financial hardship they create when the wrong terminology is interjected into a contract or an error in scheduling travel arrangements creates a costly delay.

These are brief examples of occurrences that are typically covered under Professional Liability. Professional Liability is insurance against contractual financial hardship, also known as Errors & omissions insurance (E&O).

These policies offer coverage for professional service providers who inadvertently omit something or state something in a contract that causes financial hardship for one of the named contractual parties. As long as the party who created the hardship did not commit the infraction intentionally, a typical Professional Liability/Errors & Omissions insurance policy wills payout up to the policy limits.

Usual policy limits are $1MM per claim with an annual aggregate payout of $2MM meaning that an insured can have 2 $1MM claims within one year and have sufficient coverage. General Liability is coverage for a business or commercial operation protecting it against bodily injury and property damage inflicted to others by an employee or representative of the business. The best correlation is liking General Liability to Auto Liability. Auto liability insurance, required by states, pays for medical expenses and property of others, you caused and damaged, while legally operating your vehicle. This is the same principle of commercial general liability.

General Liability, like auto liability, does not cover ANY type of financial hardship inflicted to others. An important detail to look for in your Professional Liability policy, whether you are currently covered or you are shopping for your first policy, is how defense costs are paid in the event of a claim. Insurance companies offer two options: included within policy limit or paid outside of policy limits. Usually, policies with defense costs outside of the policy limits are issued from more preferred carriers for more preferred risks. When defense costs are included inside the policy limits, the policy is typically geared towards higher risks from less than preferred carriers.

Example: an architect designs an office building; begins working with a general contractor; the general contractor has time limit triggers in his contract with the project owner; due to an unforeseen design flaw/material conflict the general contractor cannot meet his contractual timeline; this costs the general contractor lost revenue of $650,000; the general contractor files a claim against the architect for lost revenue (financial hardship); the architect’s Professional Liability Insurance company begins his defense; the policy limits are $1MM per claim with a $2MM aggregate; the policy states defense costs are within the limits allowing $350,000 for defense costs ($1MM less $650,000 damages = $350,000 remaining amount for legal defense); option 2, if defense costs are outside of limits, the architect would have a full $1MM to cover claims regardless of defense costs.

Professional Liability is what every service professional hopes never is never claimed against. It means the professional did not perform his/her due diligence in crafting an effective contract. However, service providers, without PL coverage, are leaving themselves open for a possible large claim which could end the business they worked so hard to establish.