Business Interruption Insurance 101: During the Pandemic and Beyond

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More than a year into the COVID-19 pandemic, businesses have gotten used to a “new normal.” But with new waves of the virus surging and wide-spread distribution of a vaccine still to come, small businesses need to know how to manage their risks.

We’ve shared the top questions you need to ask your insurance broker during the worsening pandemic. We also know that one of the biggest questions on business owners’ minds is about business interruption.

If your business has to shut down during the latest wave of the pandemic, do you know if you’re covered by your insurance policy? Even if you have business interruption insurance, you probably are not covered.

Read on to learn what business interruption insurance is, what it covers, and whether the pandemic will have any long-term effect on these policies moving forward.

 

What is business interruption insurance?

Business interruption insurance is a policy that helps businesses recoup income lost when operations are halted due to direct physical loss or damage. While not usually sold as a stand alone coverage, business interruption insurance is often included as an add-on to a comprehensive business owner’s policy or a commercial property insurance policy.

Looking for commercial insurance? Speak with a Cleary Insurance representative to make sure your business’s unique challenges and risks are covered.

What events are covered?

Business interruption insurance applies after covered events that result in physical damage to business property, thereby preventing operations from running as usual. Examples of covered events include:

  • Fire
  • Natural disasters, like tornadoes and hurricanes
  • Wind
  • Lightning
  • Vandalism or damage from riots

However, not all catastrophes are covered by business interruption insurance. Exceptions include:

  • Floods and earthquakes. These are typically covered under a separate policy.
  • Policies have exclusions for losses due to viruses or communicable diseases, as these do not cause direct physical damage.

What types of losses are covered?

Business interruption insurance typically covers the following expenses:

  • Operating expenses, including mortgage, rent, or lease payments
  • Moving to a temporary location & reasonable expenses to keep the business operating
  • Payroll
  • Taxes
  • Loan payments
  • Profits that would have been earned, based on documented pre-loss earnings. If you can’t prove you would have earned that income, you cannot submit a claim against it.
  • Replacing machinery and retraining employees

Please also note that claims are only paid out if the insured business actually sustains a loss as result of the business interruption.

How long does coverage last?

Business interruption insurance coverage lasts until the end of the business interruption period, as specified in your policy. The standard policy limits the restoration period to 30 days, but this can often be extended up to 1 year by endorsement.

How much does business interruption insurance cost?

Business interruption insurance average cost varies based on factors like:

  • Industry
  • Number of employees
  • Amount of coverage
  • Prior claims
  • Location

When calculating the cost for your business, keep in mind that business interruption insurance premiums are tax-deductible.

How much coverage do you need?

We recommend that you choose a coverage limit appropriate for your business, based on factors like how long it would take your business to resume operations following a loss.

Work back from the worst-case scenario – how long would it take you to repair the physical damage, get new equipment, and retrain staff? Keep in mind that if your costs exceed your coverage limit, you will have to pay out of pocket for extra expenses.

At Cleary Insurance, we work with business owners to help them get the right amount of coverage based on their specific business risks, earnings, and projections. If you’re unsure what that looks like for your business, we can help.

Protect Your Business in a Worsening Pandemic: 3 Things You Need to Know

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Over the past year, COVID-19 has totally transformed the way that businesses operate. We’ve weathered the initial storm of uncertainty and ushered in a new normal for risk management. But as the pandemic might continue to evolve in 2021, many small business owners may face high losses and uncertainty about their company’s progress. As a resolution, online businesses could employ solutions that can improve their sales by implementing better marketing strategies. An efficient and well-maintained website (with the help of agencies like https://www.expedition.co/use-cases/enterprise) along with effective marketing techniques could do wonders for a business going through a rough patch. Business owners need to understand what can help their venture and implement it efficiently.

Additionally, SEO services could be a stepping stone to achieving new leads and improving sales. However, these companies might still be unsure of the implications for their insurance policies, which can help them to get out of dire situations inflicted by the pandemic.

You probably have a lot of questions. Are you covered? What happens if you’re not?

To help you navigate this unprecedented landscape, we’re sharing the top three things business owners need to know right now to protect their business.

 

1. Know That You May Not Be Covered

Don’t assume that your current insurance policy covers all of the possible scenarios that you’re facing today. Some disasters, namely pandemics, are not covered by business interruption insurance. (Learn why this is actually a good thing for policy holders.)

Other types of risks might be newly relevant for your business. Even if there are policies that can cover them, you may not have opted to purchase those policies when they were less likely to affect you. Keep reading for our recommendations on which policies to ask your provider about.

2. Know the Three Levels of Risk Mitigation

Even during the best of times, operating a business means taking on risk. Running a business during a global pandemic comes with even more risk. Your insurance provider’s job is to help you assess those risks and mitigate them.

When assessing risk, think about bucketing them into three categories:

  1. Risks from third parties: Movers, cleaners, meeting planners, and many other vendors all expose your business to risk. Make sure that they have proper insurance, and in many instances, name your company as “additionally insured” on their
  2. Risks that don’t require coverage: You might be surprised to hear an insurance provider tell you not to get a policy, but we believe that businesses should only pay for the coverage they need. Take a closer look at these three policies to see if they’re necessary for your company or not.
  3. Risks that require coverage: This is the bulk of risk inherent in doing business. But think beyond simple liability insurance. Consider other exposures, such as mistakes (errors and omissions) and an umbrella policy to better cover all your liabilities. More on this below.

3. How Can I Get Covered?

Take these questions to your insurance broker and find out if you’re covered. If your current policy doesn’t cover you, they can help you identify the best way to mitigate your risk.

Business Interruption Insurance

If your business needs to shut down at any point during the pandemic, you need to know what is and isn’t covered by your insurance policies.

  • Do you have business interruption insurance?
  • If you do, do you know what is included? Keep in mind that you most likely will not be covered for pandemic-related losses. For a refresher on what is typically covered by these policies, check out our recent blog on business interruption insurance 101.

If you don’t have business interruption insurance, consider getting it. Fires and floods are much more likely to happen than another pandemic, so it’s wise to be prepared for these more commonplace disasters.

General Liability

When you originally set up your general liability policies, your business’s operations likely looked very different than they do today. We recommend taking another look at your business liability insurance to ensure it covers the risks you’re experiencing today. Every business has liability depending on the type of work, number of employees and size of the company. For instance, a small contractor business can have issues like employee on-site injury, employee compensation, third-party property damage, equipment theft and damage, etc. To cover these problems, a company can get contractor insurance to cover such liabilities through page or similar websites.

  • Do your general liability and workers compensation policies cover employees when they’re working from their homes or don’t have a project at the moment?
  • Are you taking on any extra cybersecurity risks when your employees are conducting business online, on their home wifi networks?

Health Claims

The pandemic is first and foremost a health crisis, so your employees’ health should be top of mind. Take a closer look at your health insurance policies and make sure to address the following questions:

  • Do you have short term / long term disability insurance? Does it adequately cover your employees’ welfare? Does it reduce risks and costs for the business?
  • If your employees test positive for COVID-19 and need to take sick leave, is that covered under your current policy?
  • If COVID-related leave is not covered, what sort of risks will you be taking on? What will it cost you? Are you at risk for lawsuits?

Errors and Omissions

Errors and omissions policies are a type of professional liability insurance that protects your business against lawsuits for negligence or mistakes in client work. With employees working from home instead of the office, many of the oversights against mistakes may be harder to administer. It’s best to take the extra step and mitigate this risk.

  • Do you have an errors and omissions policy?
  • Does it cover you when employees are working remotely?
  • What kind of mistakes are covered? What is unique to your business?

Umbrella Policy

Commercial umbrella insurance policies supplement your other liability coverage. If you go over your coverage limit, your umbrella insurance policy will kick in to make up the difference. Having this extra layer of coverage can protect you from large lawsuits or scenarios where multiple claims exhaust your base policy’s limits.

  • Do you have an umbrella policy?
  • What is included in the umbrella policy? What is excluded?
  • What is your umbrella limit? Are you carrying the right amount of coverage?

Cleary Insurance is committed to helping small businesses identify, offload, and mitigate risks. If you’d like to speak with a representative, we can help you find exactly the right level of commercial insurance coverage for your business needs during the pandemic and beyond.

Protecting Your Valuable Articles

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It is beginning to look a lot like…

Diamonds, art, and shiny new golf clubs! We hope you had a safe and happy holiday season.  Post-holiday season is a great time to consider coverage for your shiny new ring, a beautiful new piece of artwork, your new DSLR camera, Callaway golf clubs, or Steinway grand piano.  Whatever your loved one gifted you this season, what would you do if an item was lost, stolen, or broken?  Look to your homeowner’s insurance, right?

Yes! BUT you might not get what you expect.  Most standard home policies have a special limit of $1,500 on valuable personal property and do not include coverage if lost or broken. When a stone falls out of your significant other’s ring, or when your new DSLR camera gets broken you may not have adequate coverage.

No need to fear, Cleary is here!

We suggest insuring these items separately to avoid unexpected replacement expenses and a whole bunch of headaches.  Scheduling your valuable items provides coverage for mysterious disappearance and breakage that you cannot find on a standard home insurance policy. The value of your items will be settled on a pre-determined limit so you will know what to expect which helps to ensure a hassle-free claims experience!  Not to mention you will also save your deductible!  Let us help you purchase peace of mind today and give us a call!

Taking Care of Your Mental Health

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2020 has been a long year. COVID has changed our family & social landscape, Old man winter is settling in, days are shorter, nights are longer and this time of year carries its own stresses for many. Mental health and wellness should be a top priority and many people may not realize the signs and maybe uncertain where to get help.
What is mental health?
Your mental well-being includes how you think, act and feel. It also helps you cope with stress, relate to others and make decisions. Mental well-being includes mental health, but goes far beyond treating mental illness. For example, you could go through a period of poor mental health but not necessarily have a diagnosable mental illness. And your mental health can change over time, depending on factors such as your workload, stress, and work-life balance. Therefore, it might be essential to visit your nearest direct primary care facility and consult with a physician about your current mental state. This can help the doctor to diagnose your condition better.
What is mental illness?
Mental illness refers to a variety of conditions that affect your mood or behavior, feelings or thinking. Mental illnesses can occur occasionally, while others are chronic and long-lasting. Common mental illnesses include anxiety, depression, schizophrenia and bipolar disorder. 1 in 5 U.S. adults will experience a mental illness in any given year, and more than 50% will experience mental illness at some point in their life.
Why is mental well-being important?
Mental health is extremely important and doesn’t just affect the mind but can also have effects on your physical well-being, causing weight gain, heart attack, or stroke. Because it’s such a crucial component of your health, it’s important to focus on maintaining or improving your mental health. While it’s not always easy, there are ways to help improve your mental health. Some people may take the assistance of a professional through online therapy in New York City or elsewhere, and some may adopt a few self-care measures to deal with mental health issues. It is essential to take every possible course of action to support the mental wellness of yourself and your family. While some might go down the medicinal or supplement (from https://mykratomclub.com and the likes) path, others could follow meditation and yoga to help with their mental health problems. Here are three simple ways to do so every day:
  1. Express gratitude. Taking five minutes a day to write down the things that you are grateful for has been proven to lower stress levels and can help you change your mindset from negative to positive.
  2. Seek help. . If you suffering from the symptoms of mental illness, be it anxiety or irritability at the slightest inconvenience, then it would be a good idea to seek the help of experts. Talking to a therapist and opting for counselling sessions could be of immense help. However, for that, you might need to look for platforms developed by BetterHelp (you can get a 15% discount upon availing of their services), where patients can meet the most experienced therapists.
  3. Get exercise. You probably hear all the time how beneficial exercise is to your overall health, but it’s true. Exercising can improve brain function, reduce anxiety and improve your self-image.
  4. Get a good night’s sleep. Strive for seven to eight hours of sleep a night to improve your mental health.
If you or someone you know is feeling off, not like yourself/themself or sad please know that you are not alone. There are resources available to you. You should contact your primary care physician for guidance or the National Suicide Prevention Lifeline which is available 24/7/365.
National Suicide Prevention Lifeline at 800-273-8255
website: https://suicidepreventionlifeline.org

Want to lower your tax bill?

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There are a number of opportunities to offset prior-year income and capture credits.

 

Areas to look at include:

  1. Retirement plan contributions
  2. Deductions
  3. Penalties
  4. Credits

Retirement plans: Retroactive contributions

Your traditional Individual Retirement Account, or IRA, offers the biggest potential bang for the buck.

The Internal Revenue Service (IRS) allows taxpayers to make deductible prior-year contributions all the way up to the tax-filing deadline.

For tax year 2020, total contributions to all of your traditional and Roth IRAs for taxpayers under age 50 cannot be more than either $6,000, or your total compensation for the year if you earned less than that amount. Those 50 and older can make an additional $1,000 catch-up contribution, for a total of $7,000.1

Your actual tax deduction, however, may be limited if you or your spouse are covered by a retirement plan at work and your income exceeds certain levels.

Eligible taxpayers can also make retroactive contributions to their Roth IRA until April 15. Different phaseout limits apply for Roth contributions.

Because Roth IRAs are funded with after-tax dollars, your contribution will not yield a current-year tax deduction, but it could potentially produce a better investment return since earnings upon retirement can be distributed tax free.

Tax deductions: Roll up your sleeves

Most taxpayers take the standard deduction, a fixed dollar amount set forth by the IRS that reduces the amount of income on which they are taxed.

Why? Because it’s a lot less work. You don’t have to keep track of your expenses, or individually deduct them on IRS Schedule

As a result, many taxpayers who previously itemized deductions may find it more beneficial to claim the standard deduction this year.

Nevertheless, some people may opt-out of a standard deduction because they keep track of their expenses in an organized manner. For example, business owners claiming a tax deduction on vehicle mileage may keep a track of it by using online tools such as MileIQ or similar mileage tracking apps that can track logs and calculate mileage for each trip used for business travel.

Tax penalties

The only thing worse than giving Uncle Sam his due is leaving him a tip.

To avoid a potentially hefty late-filing penalty, you must submit your income tax return on time, regardless of whether or not you can afford to pay.

Indeed, the failure-to-file penalty can be as much as 5 percent of your unpaid taxes for each month or part of a month that your tax return is late, up to 25 percent of your unpaid taxes.

Submitting your tax return electronically ensures greater accuracy than mailing it in since the IRS e-file system flags common errors and kicks back returns for correction.

Tax credits

When it comes to lowering your taxable income, you are your best advocate.

Tax deductions, which reduce the amount of your income subject to tax, are great, but tax credits, which reduce your tax bill dollar for dollar, are even better. So don’t leave any tax credits or deductions for which you are eligible on the table.

Families with dependent children may be eligible to claim a credit of up to $2,000 per qualifying child under the Child Tax Credit.

If you paid for someone to care for your child, spouse, or dependent so you could work or look for a job, you may be able to claim the Child and Dependent Care Credit.

Similarly, those paying for higher education expenses may be able to claim one of two tax credits: the American Opportunity Tax Credit, or the Lifetime Learning Credit. You cannot claim both credits for the same student in the same year.

If you haven’t yet filed your tax return, there’s still much you can potentially do to minimize the amount you may owe.

By taking advantage of tax-favored retirement tools, filing an accurate return, and educating yourself on available deductions and credits, you might just save enough to pay off your credit card debt or catch a flight somewhere warm

Preventing Frozen Pipes for Business

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Cold temperatures can reach areas of your facility that you seldom visit or cannot see, such as:

  • Crawl spaces
  • Closets
  • Enclosed spaces (e.g., attics, lofts, roof spaces)
  • Warehouses
  • Isolated storage areas

Strategies to Help Prevent Frozen Pipes

Some prevention strategies to consider:

  • Properly insulate and/or provide approved heat tracing for water-filled pipes located in exterior walls or unheated spaces.
  • Drain any piping that is not required during the winter months.
  • Maintain a minimum temperature of 40° F (4.4° C) in building areas with processes susceptible to freezing, wet-pipe sprinkler systems, fire pump houses and dry-pipe valve enclosures.
  • Ensure that anti-freeze sprinkler systems have sufficient concentration (appropriate specific gravity readings) of antifreeze to withstand freezing weather.
  • Inspect dry systems to help ensure air settings are correct, air maintenance systems are in good operating condition, and any pipe closets are well insulated. If any heat tape or heating systems are being used, ensure that they are UL-listed for this specific purpose and are in good operating condition. Dry-pipe sprinkler systems low points and auxiliary drains should be opened and drained of any water or condensation.
  • Any branch lines on wet sprinkler systems exposed or subject to extreme cold weather should be insulated and heat traced. Electric heat tracing products should be UL-listed for this specific purpose.
  • Fire pump test headers should be checked to ensure they have been properly drained.
  • Fire pump and dry-pipe sprinkler system equipment rooms should be checked routinely to ensure the heaters are in good operating condition.
  • The use of low temperature supervision can help to ensure rooms are being properly heated.

 

https://www.travelers.com/resources/facilities-management/preventing-frozen-pipes-for-businesses

Client Spotlight: GreenRoots

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GreenRoots
COVID19 Response in Chelsea and East Boston

As an environmental justice organization serving some of MA’s most vulnerable residents, GreenRoots has trumpeted for years that our neighborhoods would be hit first and worst by a disaster. However, we anticipated that the crisis would be climate-related, not the COVID19 pandemic that is ravaging our communities.

Chelsea and East Boston continue to be the hardest-hit communities in MA. In the first pandemic wave, Chelsea’s infection rate was 6x higher than Massachusetts’ rate and higher than the hardest hit boroughs in New York City. Our neighbors fell ill and were dying to a devastating degree. Now, in the newest surge, Chelsea continues to have a consistently high infection rate. East Boston is identified as the hardest hit Boston community, with rates equaling or surpassing those in Chelsea. We are just seeing the beginning of the long-term impacts, both health and economic, of COVID19 in both these communities.

GreenRoots responded to the crisis swiftly and decisively, and continues to play a leadership role in the pandemic response for all of our neighborhoods on both sides of the Chelsea Creek.
Building systems to address community needs was a key initial focus of GreenRoots. On March 11th, GreenRoots coordinated a call of numerous Chelsea stakeholders to plan a coordinated response for the COVID-19 pandemic. This initial call turned into Chelsea’s Pandemic response team, with over 75 stakeholders, 10 working groups, with over 65 days of daily calls. GreenRoots was also instrumental in developing and implementing the East Boston Mutual Aid Network. Both in Chelsea and East Boston, these two systems provided the backbones for community-led responses. In addition, GreenRoots’ coordinated effort around public health (including a letter to Governor Baker with 47 community signatories) led to increased testing and National Guard support for food distribution.

GreenRoots was a founding partner of the One Chelsea Fund, a cash assistance program facilitated through the United Way in collaboration with the City of Chelsea, The Neighborhood Developers and La Colaborativa.  Together, we raised more than $1.3 million for distribution to Chelsea residents. To learn more about the fund, check out a One Chelsea Fund Video. GreenRoots distributed approximately 1,700 checks ($425,000 in total) to residents. We are now launching phase II of the fund which will be directed to address anti-displacement efforts in Chelsea. In East Boston, our staff collaborated with Centro Presente which distributed $155,000 to local residents; and weekly boxes of food to food insecure families.

In addition to the aforementioned activities, GreenRoots helped with food distribution, diaper donations, funds for funerals, distributing PPE and multi-lingual message and much more.
To learn more, visit www.greenrootschelsea.org.