What is a BOP and What Does it Cover?
A Business Owner’s Policy (BOP) is a comprehensive insurance solution tailored for small and medium-sized businesses, bundling major property and liability risks into a single package. This streamlined approach simplifies insurance management and can reduce costs compared to purchasing separate policies, as noted by the Insurance Information Institute (Triple-I). Eligibility for a BOP BOP eligibility is influenced by the nature and size of the business. Typically, businesses that qualify for BOPs have 100 or fewer employees and generate revenues of up to approximately $5 million annually. Certain high-risk industries, such as restaurants, may not be eligible due to their specific operational risks. Coverage Provided by a Standard BOP A standard BOP usually includes the following types of coverage: Limitations and Additional Coverage Needs While BOPs provide broad coverage, they do not cover everything. Notable exclusions include: Additionally, BOPs typically have lower coverage limits compared to standalone policies. Small businesses also face unique risks that might not be included in a standard BOP, such as: Given these limitations, it’s crucial for business owners to assess their specific risks and consider augmenting their BOP with additional coverage to ensure comprehensive protection.
Does New Jersey’s PIP Law Change Allow Injury Victims to Claim Future Medical Costs?
The New Jersey Supreme Court is set to decide if a legislative amendment to the state’s personal injury protection (PIP) law enables accident victims to receive benefits for future medical expenses. This review comes after a trial judge allegedly used an older version of the PIP statute, ignoring the recent changes. Case in Focus: Brehme v. Irwin Linda Brehme was injured in a 2016 car accident in Paramus when Thomas Irwin’s vehicle hit her from behind. She was awarded $225,000 for pain and suffering and $50,000 for lost wages, but her future medical expenses, estimated at $236,000, were denied by the judge. Legal Dispute Gerald Clark, Brehme’s attorney, argues that the judge failed to apply the revised PIP law that allows for compensation of future medical expenses. The 2019 Supreme Court ruling in Haines v. Taft stated that medical bills exceeding PIP coverage could not be claimed at trial, inviting the Legislature to clarify the law. Legislative Amendment Following Haines, the Legislature amended the PIP statute (N.J.S.A. 39:6A-12) to allow the collection of medical bills beyond PIP benefits at trial. However, the trial judge in Brehme’s case did not apply this amendment. Appeal and Controversy Clark has appealed the decision, arguing that accepting the initial judgment does not waive the right to appeal for future medical expenses. The Appellate Division panel ruled against the appeal, citing procedural issues rather than addressing the statute’s application. Moving Forward Clark is optimistic about presenting the case before the New Jersey Supreme Court, seeking justice for Brehme and others in similar situations. Stay tuned as the court reviews this significant issue affecting personal injury claims in New Jersey.
Avoiding Contractor Fraud After Disasters
In 2023, the United States experienced 28 billion-dollar climate catastrophes, and 2024 is already seeing severe weather events. In the aftermath of these disasters, vulnerable homeowners often fall prey to fraudulent contractors. Contractor Fraud Awareness Week The National Insurance Crime Bureau (NICB) aims to combat this issue through its annual Contractor Fraud Awareness Week, observed this year from May 20 to 24. The NICB reports that contractor fraud accounts for about 10% of disaster-related costs each year, amounting to approximately $9.3 billion in 2023. This fraud hampers rebuilding efforts and can lead to higher insurance premiums. Protecting Homeowners David J. Glawe, president and CEO of NICB, emphasizes the significant financial toll contractor fraud takes on Americans. Fraudulent contractors exploit disaster victims by promising affordable renovations, repairs, or construction projects, only to deliver substandard work and deplete homeowners’ savings. Homeowners must be proactive to avoid scams after a disaster. Steps include contacting their insurer to understand their coverage, and seeking licensed, insured, and well-reviewed contractors before scammers strike. Insureds should research contractor credentials, obtain multiple quotes, and watch for red flags indicating potential fraud. Common Contractor Fraud Red Flags The NICB highlights several red flags to watch for: Claims of approval by FEMA or other agencies. Out-of-state contractors appearing after a disaster. Requests for upfront payment to schedule work. Offering unsolicited services. Pressuring to quickly sign electronic documents. If you believe you have encountered or witnessed contractor fraud, report it immediately to the NICB at (800) 835-6422.
Maritime Risks on the Rise Despite Record Low in Lost Ships
In 2023, the number of completely lost large shipping vessels reached a record low of just 26, as reported by Allianz Commercial. This marks a significant decline, with a 33% reduction in lost ships year-on-year and a 70% decrease over the past decade. Allianz classifies a large vessel as a ship exceeding 100 gross tons. Decrease in Overall Shipping Incidents Overall shipping casualties or incidents decreased by approximately 3% in 2023, with machinery damage or failure constituting more than half of all global events. Breakdown of Ship Losses by Type Cargo ships represented the majority of total losses, comprising 60% of the ships lost in 2023. Fishing vessels followed, with four total losses, and tug boats accounted for three losses. Sinkings were the leading cause of ship losses, making up half of the total, followed by wrecked/stranded vessels and fires/explosions. Challenges in the Global Shipping Industry Despite the decrease in lost ships, the global shipping industry faced significant challenges in 2023. Rising piracy, droughts affecting the Panama Canal, and ongoing conflicts in Ukraine and Gaza endangered shipping vessels and their crews. Captain Rahul Khanna, global head of marine risk consulting for Allianz Commercial, highlighted the impact of climate change on shipping, emphasizing the disruption caused by the Panama Canal drought and the urgent need for the industry to decarbonize. These conditions necessitate the development of alternative shipping routes, which can lead to longer transit times and increased shipping costs. Impact on Supply Chains Businesses importing from China and Southeast Asia are experiencing delays as cargo vessels reroute around the Cape of Good Hope to avoid conflict in the Red Sea. As of April 2024, shipping volume around the Cape of Good Hope has surged by 193%. Khanna noted in Allianz’s Safety and Shipping Review 2024 that recent disruptions, including extreme weather, climate incidents, container ship fires, groundings, the pandemic, and geopolitical conflicts, have severely tested the resilience of global supply chains. These events have exposed vulnerabilities and highlighted the need for robust strategies to mitigate such disruptions.
Business interruption claims trends to watch as 2024 nears
Natural disasters continue to be the leading driver of business interruption claims, Allianz reports. Extreme weather events, fires and explosions, geopolitical risks, ransomware attacks and COVID-19 have all tested global supply chains in recent years. This is reflected in the results of the Allianz Risk Barometer, an annual survey, which asks businesses to nominate their top risk concerns for the year ahead. In 2023, cyber incidents and business interruption rank as the biggest company worries for the second year in succession. Levels of interruption increased dramatically following the pandemic, as shortages and transportation delays exacerbated the business impact of natural catastrophes, fires, and machinery and equipment breakdowns, leading to shortages of materials and spare parts and longer times to complete repairs. However, many of these supply chain pressures have eased in 2023. Business activity is now closer to normal than it was a year ago, and this is starting to filter through to business interruption claims activity. Extreme weather dominates recent claims However, not all business interruption loss activity has eased. The top causes of business interruption claims remain consistent, with the most frequent and expensive damage arising from natural catastrophe and fire and explosion activity with natural catastrophe-driven loss activity rising. When looking at the costliest business interruption events for large corporations over the past two years, the top 20 are primarily natural catastrophes. Hailstorms in France, and heavy rain and flooding in Slovenia and Italy, as well as in Australia and Germany, have all caused large business interruption claims during this period. As did damage caused by Hurricanes Ian and Fiona, several winter storms in the U.S. in 2022, and storms Dudley and Eunice in Europe. With a trend towards increased volatility in natural catastrophes, companies need to consider and plan for the impact from a broader range of extreme events. Extreme weather events are less predictable and harder to prepare for than hurricanes and European winter storms, for example, which are forecast well in advance. Hailstorms, tornadoes and flash floods are usually sudden localized events that can cause substantial amounts of property damage, and in turn business interruption, in a short period of time. Hailstorms have resulted in several surprisingly large business interruption claims. Many structures are not designed for extreme hail events, and we have seen extensive damage caused to commercial property roofs during recent hail events, with some large areas destroyed. What really makes a difference to the extent of business interruption is the advance preparation of a robust business continuity plan. And not just theoretical. Business continuity plans must be tested solutions that are updated regularly. CBI claims peak While not at their record level of two years ago, contingent business interruption (CBI) claims remain challenging as the impact of natural catastrophes, fires and political violence can ripple through global supply chains in specialist concentrated industries like auto manufacturing and semiconductors. In 2021, a record number of CBI and service interruption claims were filed, as global supply chains were disrupted by storms, fires and the pandemic. Several large CBI losses were generated by Winter Storm Uri in the U.S. in February 2021, which caused cascading effects on companies and services reliant upon power, including water, transport, and medical services, with the so-called ‘Big Freeze’ particularly impacting the state of Texas. Less than a month later, a fire at a semiconductor plant in Japan added to the growing global shortage of microprocessors, hitting production in the automotive and electronics industries. The automotive sector was again hit with supply chain problems from the conflict in Ukraine, as the country is an important supplier of parts. While the level of CBI claims from two years ago appears to have peaked, natural catastrophes continue to disrupt supply chains. The flooding in Slovenia and neighboring countries in August 2023 impacted many factories in the region, including several tier-one car part manufacturers. The resulting disruption to automotive supply chains reportedly hit production at a number of car plants and parts manufacturers. CBI claims are still among the industry’s top concerns. They are always challenging for insurers because it is never easy to get a clear picture of the whole exposure, and claims can be slow to develop. Political violence on the rise Businesses and their supply chains face considerable geopolitical risks with war in Ukraine, ongoing tensions between the U.S. and China over Taiwan and more recently with conflict in the Middle East. So far, these events have only had limited impact on supply chains and shipping routes but could become more relevant for business interruption going forward. Inflation, political instability and climate change activism have also contributed to rising civil unrest in many parts of the world. According to analyst Verisk Maplecroft, political risk at the start of 2023 was at a five-year high, with some 100 countries considered at high or extreme risk of civil unrest. ESG concerns and ‘green clauses’ Environmental, social, and governance (ESG) concerns are increasingly featuring in property claims, with implications for the cost and extent of business interruption. Large corporate clients are increasingly concerned about their environmental impact when rebuilding damaged property. It is encouraging that more companies are concerned about ESG in the context of claims and are interested in alternative solutions. However, sustainable options can also have implications for business interruption and insurance coverage. For example, sustainable options — such as shipping spare parts via a lower carbon-intensive form of transport, rather than air freight — can result in a longer period of business interruption or lead to extra expenses. Commercial property insurance traditionally pays out on a like-for-like replacement basis, although “green reinstatement clauses” are now being included in some policies that give insureds more flexibility around more sustainable options. We are seeing more requests from insureds to accommodate ESG requirements in claims, yet this is not always well covered by the wording in standard property policies. We are introducing green clauses that enable insureds to integrate sustainable characteristics into a rebuild, but these are not widespread and do not always cover other areas of ESG,
Banks more hesitant to lend in areas with inaccurate flood maps
The federal maps are static and only periodically updated by the Federal Emergency Management Agency. Climate change poses many problems for society as a whole, and for commercial real estate (CRE). Properties can face flooding or wildfires or heavy damage from winds. A building can be cut off from everything else. All the time while increasingly cut off new business lines in states that have been particularly hard hit by disasters. At a time when insurance can’t be counted on as the rescue of last resort, lenders must consider the risk they could take on. The Federal Reserve Bank of New York emphasized this point in a recent blog post. NY, NJ adopt laws requiring flood risk disclosure for homebuyers, tenants Both New York and New Jersey have adopted laws requiring the sellers of residential properties to tell buyers, and landlords to tell tenants, about known flood risks. In the wake of several incidents of unprecedented rainfall and disastrous flooding, both New York and New Jersey have adopted laws requiring the sellers of residential properties to tell buyers, and landlords to tell tenants, about known flood risks. The New Jersey law also requires disclosures in commercial transactions. A New York enactment also eliminates the commonly-used ability of sellers to avoid making property disclosures (not only about flood risk) by taking $500 off the purchase price.
10 Tips To Lower Your Homeowners Insurance
When purchasing a first home, people often are overwhelmed by unexpected costs. In addition to the mortgage, there are many other expenses to consider such as property taxes, homeowners association fees, repairs, and homeowners insurance. For homeowners insurance, however, there are some things you can do to reduce your premium. Whether you’re a new homebuyer or you simply want to find out how you can decrease insurance costs for your current home, consider discussing these tips with your personal insurance advisor to reduce your homeowners insurance premium without compromising coverage. Increase Your Deductible. A deductible is the amount you pay toward a loss before your insurance company starts paying for a claim. In most cases, the higher your deductible, the lower your premium. Bundle Your Insurance Policies. Bundling your insurance policies with one provider could save you on total premium costs. Check with your insurance advisor or call your current insurance company to see if discounts apply to your needs. Avoid Small Claims. If you handle small or minor damages yourself without making a claim, you may avoid higher premiums in the future. Know the Difference Between Your Home and Property. When deciding the amount of homeowners insurance to buy, remember you only need coverage for the house itself, not the property it sits on. Reinforce Your Home. Some home improvements that minimize the risk of damage to your home, such as reinforcing the roof, adding storm shutters, and wind-mitigation improvements, can lower your premiums. Avoid Unnecessary Coverage. Get with a personal lines advisor to discuss those areas where you may be able to cut back and those where you should retain your current coverage in the event of loss. Remove Unnecessary or Unsafe Structures. If you have an old shed or dilapidated garage on your property, remove it mitigate risk and possibly save on insurance costs. Enhance Home Security. Most companies offer discounts if you improve your home security with devices such burglar alarms, smoke detectors, and sprinkler systems. Before buying a system, however, find our if your insurance company offers a discount and what the requirements are. Good Credit. Establishing and maintaining good credit can help improve insurance costs. If you’ve had your homeowners insurance for a while and your credit has improved, speak to your personal insurance advisor about reevaluating your policy. Pay Annually. Just like many other services, instead of paying monthly with added processing fees, pay on an annual basis, which saves you money in the long run. Working with an experienced personal insurance advisor not only can ensure you secure the right coverage for your needs but also can save you money on your overall insurance premiums.
Managing Your Construction Risks for Better Outcomes, Higher Profits
Our deep construction industry experience working with general contractors, construction managers, subcontractors and specialty trade contractors throughout New England, combined with our market access and ability to negotiate the best insurance program structure and pricing, enables NorthStar Insurance Services to help our clients gain control over their total cost of risk. As your partner, we will look at the exposures you face with a fresh perspective and convey to you each option available to help determine the best solutions for transferring your risk. We will also help you with your safety programs to mitigate losses and reduce the cost of your insurance program. General Liability Property/Inland Marine Automobile/Fleet Workers’ Compensation Employers Liability Umbrella/Excess Liability Builders’ Risk Equipment Floaters Pollution Liability Professional Liability/Errors & Omission Liability Directors & Officers Liability Employment Practices Liability Surety Bonds
Lyft and Uber fly to Hawaii to build their own captive insurers
Ride-sharing giants Lyft Inc. and Uber Technologies Inc. seem to have found the same solution for dealing with the risks of managing millions of drivers on the road: Creating their own insurers in Hawaii. On Friday, Lyft told potential investors in its initial public offering about its insurance unit, Pacific Valley Insurance Co. Hawaiian public records show another captive company called Aleka Insurance Inc., whose directors include Uber executive Gus Fuldner and former chief legal officer Salle Yoo. Hawaii pitches itself to the captive industry Captives are a large but murky part of the insurance world. Hawaii pitches itself to the captive industry on its website, boasting about low taxes and corporate-friendly laws. Lyft has tapped Marsh & McLennan Cos. to help manage Pacific Valley, while Aon Plc oversees Aleka, the filings show. Lyft, which had about $810 million in insurance reserves, uses its unit to help bear the cost of auto incidents. Even though it also turns to outside insurers for some coverage, that subsidiary introduces volatility. Hoping to eke out more cost savings Higher costs from insurance claims dragged down a measure of Lyft’s profitability during the first few months of 2018. Lyft says it’s investing in its insurance program to help eke out more cost savings. An Uber spokesman declined to comment. Ride-sharing companies have caught the eye of other insurers. Travelers Cos. helps Lyft handle auto claim services and Allstate Corp. said last year that it partners with Uber to provide commercial auto insurance in some states.
Safety tips for driving in the snow
The Northeast’s first snowfall of the season spawned school closures, dangerous driving conditions and hundreds of flight delays or cancelations. Heading into the coldest months of the year, prepare for more hazardous winter weather events with safety tips for driving in the snow, detailed in a top story below. In other winter-related news this week, a new study indicates 50% of American shoppers will buy online this holiday season. Learn how to fend off cybercriminals with digital tips for secure holiday shopping in another top story included below in this week’s newsletter. he Northeast was hit with its first snowfall of the season this week, creating a messy commute for residents as some parts of the region accumulated up to 12 inches of snow. Travel advisories in New York urged residents and commuters to take public transportation whenever possible and avoid driving due to dangerous road conditions. It doesn’t take a blizzard to create hazardous driving conditions. According to the National Highway Traffic Safety Administration (NHTSA), winter weather conditions are responsible for 17% of all vehicle crashes annually. And every year, AAA attends to approximately 32 million stranded motorists across the country. Any amount of snow or ice conditions demand careful driving practices and special preparation steps for your vehicle ahead of inclement winter weather activity. To prepare motorists, AAA assembled a list of winter-weather reminders, detailing several critical safety tips for driving in the snow and other icy conditions, detailed in the slideshow above. Before the storm AAA also offers a few winter driving preparedness tips to consider ahead of any inclement weather activity this season: Avoid driving while you’re fatigued. Getting the proper amount of rest before taking on winter weather tasks reduces driving risks. Never warm up a vehicle in an enclosed area, such as a garage, nor leave a running vehicle unattended. Make certain your tires are properly inflated and have adequate tread. Have the battery checked by a professional to ensure it is strong enough to face cold weather. It is highly advised that motorists prepare a winter emergency kit to stow in the trunk of their vehicle. AAA says emergency kit items should include a de-icer, shovel, ice scraper, warning flare or reflector triangle, flashlight with fresh batteries, first aid kit, jumper cables and sand or kitty litter (for traction). It’s also a good idea to pack a blanket, extra gloves, jacket, scarf, and for safety, a hat so you can be seen if you have to get out of your vehicle.