Three reasons why your company needs commercial insurance coverage

As a business owner, you need to protect your company with insurance to avoid financial problems that could shut down your commercial operation. We offer commercial insurance coverage for your company in Westchester, NY at ASZ International, Inc.

The following are three reasons why your company needs commercial insurance coverage.

You are required to have some types of coverage by law.

There are many different scenarios where a company could be required to purchase commercial insurance. Commercial insurance is especially important if you have a staff of employees working for you. If you have employees, you may be required by law to purchase workers’ compensation coverage.

Another type of coverage that may be required by law is commercial auto coverage. If you use vehicles for business operations, you should know that personal auto coverage will not cut it. In this case, you need to invest in an auto policy specifically designed to cover commercial vehicle use. 

A lawsuit against your company could put you out of business.

Any company could face a costly liability lawsuit. It’s important to realize how expensive a legal defense is when a company faces a lawsuit. Without commercial coverage to pay your legal costs, your company’s future may quickly be put in jeopardy by a lawsuit. 

Being insured can make you more attractive to customers.

Depending on what industry your company operates in, your customers might want or expect you to be insured. This is especially true if you’re some contractor. 

Being insured can give your customers greater peace of mind and make it easier to find clients to hire you for important projects.

Find a commercial insurance company for your company with our help at ASZ International, Inc. We’ll be happy to help you find the right insurance solution in Westchester, NY today!

Coronavirus and Employment Practices Liability Claims

With the global economy facing potential upheavals from COVID-19, some companies could be forced to lay off employees. These actions will likely trigger employment practices liability insurance (EPLI) claims, especially knowing the commonality of these cases already.

Former employees might quickly jump to conclusions, such as wrongful termination or discrimination, resulting in EPLI litigation. Defending against allegations of this nature could be incredibly costly—even if there’s no legitimate cause found. An EPLI policy would work to cover defense costs and help your company navigate the jittery economy. 

In order to put your business in the best possible position ahead of a decision about a Employment Practices Liability claim, adhere to the following best practices.

Document and report claims immediately. Without ample notice and prompt filing, coverage will likely be denied. There is no downside to filing claims as soon as possible. Doing so ensures that your business will be in the right place when applicability of WC coverage claims are resolved.

Provide comprehensive details surrounding each claim. File each claim with as much detail as possible to ensure thorough review of your coverage and unique scenario by the carrier.

Record each individual claim by line of coverage. Doing so will make it easier to monitor carrier response internally and simultaneously provide your carrier with a simplified way to absorb multiple claims from your business.

Coronavirus and Directors & Officers Claims

One of the largest areas of exposure for public companies (and to some extent, private companies) is securities class actions and/or shareholder derivative claims relating to affirmative acts of mismanagement and/or failure to act/disclose by officers and directors in response to the COVID-19 outbreak.

Another major area of concern relates to liability arising from cyber security and privacy issues, given that many company employees are now working remotely to avoid exposure to COVID-19. The failure to sufficiently protect a company’s network could leave the company vulnerable to cyberattacks, ransom demands, loss of company data, and overall exposure for failing to insure against cyber risks.

Coverage under a D&O policy for the above exposures will vary according to the individual terms and conditions of the policy. Nevertheless, securities class actions and shareholder derivative claims are claims that typically fall within the scope of the insuring agreement under a D&O policy. In assessing the potential for coverage, careful review of several exclusions and other issues is necessary. For example, the language of any bodily injury exclusion should be reviewed for its breadth (e.g., claims “arising from” bodily injury vs. claims “for” bodily injury) as well as any exceptions to that exclusion, such as securities actions.

As is often the case with D&O claims, the language of the conduct exclusion (i.e., dishonest, fraudulent, malicious, and criminal acts) should be reviewed to determine whether its application requires a final adjudication exhausted by appeal or only “in fact” confirmation of such conduct. Moreover, claims also may implicate the professional services exclusion to the extent an employee’s professional services to the company gave rise to the claim, such as legal advice from an in-house counsel, forensic accounting services by the Chief Financial Officer, or otherwise.

As to cyber security and privacy, direct losses caused by a cyber event may need separate cyber insurance. To the extent the cyber event triggers a securities class action, however, there are a number of exclusions (including those discussed above) that may require consideration. For example, the exclusion for war or terrorism should be considered in the event of a cyberattack because there are instances in which cyberattacks are orchestrated by state actors or quasi-state actions and/or terrorist organization criminal enterprises – as opposed to random, “lone wolf” actors.

In order to put your business in the best possible position ahead of a decision about a Directors & Officers Liability claim, adhere to the following best practices.

Document and report claims immediately. Without ample notice and prompt filing, coverage will likely be denied. There is no downside to filing claims as soon as possible. Doing so ensures that your business will be in the right place when applicability of WC coverage claims are resolved.

Provide comprehensive details surrounding each claim. File each claim with as much detail as possible to ensure thorough review of your coverage and unique scenario by the carrier.

Record each individual claim by line of coverage. Doing so will make it easier to monitor carrier response internally and simultaneously provide your carrier with a simplified way to absorb multiple claims from your business.

Coronavirus and Workers’ Compensation Claims

At the precipice of the issue for employers and business owners is the liability they may be required to shoulder if essential workers contract the virus on the job, spread it to others or bring it home to their families. Could the business be liable for a workers’ compensation (WC) claim?

The answer is: it depends. The clarification of insurance coverage remains largely undecided as it relates to Workers Compensation. Right now, the answer is almost exclusively at the carrier’s discretion. Application of coverage eventually “may” be decided by state and federal courts, or government intervention.

Workers Compensation coverage is subject to each state’s jurisdiction. Currently, a few states – Kentucky, Washington State, Michigan and Colorado have officially ruled on WC and COVID-19. These states will provide Workers Compensation benefits or wage replacement to healthcare workers and first responders during the time they are quarantined after being exposed to the virus on the job. Washington State Workers Compensation coverage will pay for medical testing, treatment expenses and provide indemnity payments for those who cannot work, while the Kentucky Employers Mutual Insurance Co., said they will pay wage-replacement benefits for first responders or healthcare employees while in quarantine.

For non-healthcare workers and general employees in every other state, Workers Compensation coverage remains a moving target and compensability will be based on the work of each individual class, and ultimately determined by the carrier and individual state. It has to be in the course and scope of employment.

In order to put your business in the best possible position ahead of a decision about a Workers Compensation claim, adhere to the following best practices.

Document and report claims immediately. Without ample notice and prompt filing, coverage will likely be denied. There is no downside to filing claims as soon as possible. Doing so ensures that your business will be in the right place when applicability of WC coverage claims are resolved.

Provide comprehensive details surrounding each claim. File each claim with as much detail as possible to ensure thorough review of your coverage and unique scenario by the carrier.

Record each individual claim by line of coverage. Doing so will make it easier to monitor carrier response internally and simultaneously provide your carrier with a simplified way to absorb multiple claims from your business.

Coronavirus and General Liability Claims

Even though questions pertaining to how the General Liability policy will respond to COVID-19 has been limited, it is still important that it is addressed.

Legal Liability Required
To lead into the CGL’s response to the coronavirus, one key fact must be understood. If there is no legal liability, coverage is not triggered in the CGL and the policy will not respond. Legal liability exists when:

1. The wrongdoer is found guilty of “Negligent Conduct” (meaning they breached a duty owed to the injured party); 

2. The injured party suffers actual damages; and

3. The wrongdoer’s “Negligent conduct” is the proximate cause of the injury or damage.
 
Far more than these triggers are required to ultimately establish legal liability, but such detail is not the focus of this article.

Was There an “Occurrence”?
A second requirement contained within the insuring agreement plays a role in the CGL’s response to any injury supposedly arising from the coronavirus – the injury must qualify as an “occurrence” before the policy responds. The CGL form reads:

b. This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”
 
Within the CGL an occurrence is defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Is contracting a virus an occurrence within the policy form?
To decide if this qualifies as an “occurrence” the question must be asked, is passing along a virus an accident? Maybe, but there are too many variables are involved to provide a definitive answer. As part of the question of an “occurrence,” the injured party has to prove that the virus was contacted at the insured’s premises or arising from its operations. Given the specifics, this might be almost impossible.

For sake of the overall discussion, assume making another person sick qualifies as an “occurrence” in the CGL, and that the person is able to prove that his/her only exposure was at the insured’s locations or a result of the insured’s operations. 

If the insured is legally liable, if there is an occurrence as defined in the CGL and if the exposure can be narrowed down to the insured, the next step is to look for exclusions within the CGL.

Are There Any Exclusions?
Review the exclusions in the unendorsed CGL and only one exclusion could possibly negate coverage for spreading the coronavirus to members of the public, exclusion 2.a. Expected or Intended Injury. For example, if the insured requires an employee to continue working or come to work who is known to be infected, spreading the virus should be expected (even if not intended). No coverage due to the exclusion.

If, however, the expected or intended injury exclusion does not apply, there do not appear to be any other exclusions applicable to the spreading of the coronavirus. Although some enterprising claims person would surely try to use the pollution exclusion.

This leaves us with the impression that the CGL may provide coverage for infecting a third in certain circumstances. But this is not necessarily true.

A Common (Ubiquitous) Exclusionary Endorsement
Even if an incident leading to bodily injury from coronavirus clears all the required hurdles (the insured is legally liable, the incident qualifies as an occurrence, the injured party can prove the exposure is the from the insured’s actions, and the claim is not hindered by the expected or intended injury exclusion), there is still one roadblock – an exclusion common to most CGL policies – the CG 21 32 05 09 – Communicable Disease Exclusion.

Undoubtedly the question to be answered is, does a virus qualify as a disease? In a “roundabout” way, yes. It’s not the virus that causes harm, it’s the disease that results from the virus. The immune system destroys some viruses before they can cause any harm, but some viruses overpower the immune system and lead to sickness (disease).
When the CG 21 32 is attached, there is no coverage for the transmission of the coronavirus and the resulting sickness (disease).

How is the CGL Going to Respond to the Coronavirus?
Without overstating the reality, it seems rather unlikely that a CGL policy will ever pay a claim arising from the coronavirus. The facts may negate any possibility that the insured is legally liable for spreading the virus/disease. And even if the insured is legally liable, does spreading a virus actually qualify as an occurrence as defined in the policy? If these two insuring agreement conditions aren’t met, there is no need to go any further into the coverage form because there is no coverage.

In order to put your business in the best possible position ahead of a decision about a CGL claim, adhere to the following best practices.

Document and report claims immediately. Without ample notice and prompt filing, coverage will likely be denied. There is no downside to filing claims as soon as possible. Doing so ensures that your business will be in the right place when applicability of CGL coverage claims are resolved.

Provide comprehensive details surrounding each claim. File each claim with as much detail as possible to ensure thorough review of your coverage and unique scenario by the carrier.

Record each individual claim by line of coverage. Doing so will make it easier to monitor carrier response internally and simultaneously provide your carrier with a simplified way to absorb multiple claims from your business.

Coronavirus and Business Interruption Claims

COVID-19, better known as the Coronavirus, originated in Wuhan, China. According to the Centers for Disease Control (CDC), the Coronavirus is thought to be transmitted person-to-person through “respiratory droplets produced when an infected person coughs or sneezes … these droplets can land in the mouths or noses of people … or possibly be inhaled into the lungs.”

Major operations have slowed or even ceased operations, travel is at a bare minimum, and supply chains are severely disrupted in many industries. In reality, the ultimate global economic impact of this virus will remain unknown for many months after the danger and fear have passed.

ASZ continues to receive calls and emails nearly every day regarding the insurance implications of this virus, and the most common question relates to business income, specifically: “Is there business income coverage if a governmental authority (civil authority) requires businesses to close?”

Before business income responds there must be damage to property leading to the cessation of a business. This requirement applies to business income dependent property losses (supply chain) and civil authority losses covered by business income policies. Additionally, there is a specific property exclusion applicable to viruses that may (generally will) apply. This is true of “standard” business income forms; there may be some proprietary forms that respond, but these are rare.

In response to the Coronavirus, and because many, if not all policies contain a virus exclusion, the Insurance Services Office (ISO) created two business income endorsements as a specific response to the Coronavirus:

  • Business Interruption: Limited Coverage For Certain Civil Authority Orders Relating To Coronavirus ─ Edition February, 2020; and
  • Business Interruption: Limited Coverage For Certain Civil Authority Orders Relating To Coronavirus (Including Orders Restricting Some Modes Of Public Transportation) ─ Edition February, 2020

Coverage provided by both endorsements:

  • Begins immediately upon suspension of the insured’s operations (there is no waiting period).
  • Extends for the time period specified in the schedule.
  • Is provided on an annual aggregate basis limited to the amount stated in the Schedule.

Both endorsements:

  • Provide limited coverage when/if there is a suspension of operations due to closure or quarantine at the insured location ordered by a civil authority attempting to avoid or limit the spread of infection by a Coronavirus.
  • Extend dependent property coverage (contingent business income) for named locations, if the policy includes dependent property coverage, when there is an interruption in the insured’s business due to closure or quarantine to avoid or limit the spread of infection by a Coronavirus ordered by a civil authority at the dependent property.
  • Apply to income loss suffered by insureds operating from a vehicle or mobile equipment, if the policy is endorsed to recognize such vehicle-based operation.

Lastly, both endorsements specifically exclude:

  • Intentional action by any person, group, organization or sovereign state to introduce or spread the virus;
  • Costs to clean, disinfect, dispose of or replace any property;
  • Costs to disinfect or dispose of any bodily fluids or waste materials;
  • Costs of testing for or monitoring the presence or absence of the virus;
  • Loss or expense due to fear of contagion, e.g., when customers, tenants or vendors avoid a part of the insured’s premises not under quarantine;
  • Loss or expense related to absence of infected workers or those suspected of being infected; and
  • Any fines or penalties.

Even BI policies with a pandemic endorsement(s) are being reviewed by carriers at this time due to other exclusions in those policies that may prohibit coverage for COVID-19. The mandated closure of businesses has not yet altered the coverage position set forth by these policies.

In order to put your business in the best possible position ahead of a decision about a BI claim, adhere to the following best practices.

Document and report claims immediately. Without ample notice and prompt filing, coverage will likely be denied. There is no downside to filing claims as soon as possible. Doing so ensures that your business will be in the right place when applicability of BI coverage claims are resolved.

Provide comprehensive details surrounding each claim. File each claim with as much detail as possible to ensure thorough review of your coverage and unique scenario by the carrier.

Record each individual claim by line of coverage. Doing so will make it easier to monitor carrier response internally and simultaneously provide your carrier with a simplified way to absorb multiple claims from your business.

Must-Have Commercial Insurance Types Every Small Business Owner Needs

From the very first day you start a business in Westchester, NY, as an entrepreneur, you expose yourself to certain risks. Because your business is exposed to risks, it’s crucial to have the right insurance in place even before you hire your first employee – one catastrophic event or lawsuit could have a devastating effect on your business and finances. It could be enough to wipe out a business before it even has a chance to hit the ground running. 

The good news is that there is a wide range of commercial insurance policies available to protect yourself and your new business from danger! Here are some must-have insurance types that a small business should have in place from the beginning. 

Property Insurance 

Whether you own your own space or lease from others, protecting your property is paramount in the event of losses due to theft, storm damage, or fires. While a standard property insurance policy will protect you from basic losses, natural destruction events such as earthquakes and floods will require separate policies. If your business is located in an area prone to these issues, check with ASZ Internationa, Inc. for information about a separate policy. 

Professional Liability Insurance

Professional liability insurance, or as it is also called, “errors and omissions” insurance will cover your new business against claims of negligence due to failure to perform or simple mistakes. Your policy will be custom-tailored to meet the concerns of your specific industry. 

Workers’ Compensation Insurance 

Once you’ve hired your first employee, you’ll need to add workers’ compensation insurance to your business’s insurance policy. Workers’ compensation insurance covers the disability, medical treatment, and death benefits for employees in the event they are injured or die as a result of their work with your business. Even low-risk employees can suffer from carpal tunnel syndrome or suffer from a slip-and-fall accident that results in a claim. 

Product Liability Insurance

Product liability insurance protection is crucial if your new business manufactures products or provides products for sale on the general market. You can take every measure possible to ensure your products are safe yet still find your business named in a lawsuit due to claims of damage caused by one of your products.  

Home-Based Businesses 

Many entrepreneurs begin their small businesses under their own roof. Still, your homeowner’s policy doesn’t cover your home-based business and protect your inventory and equipment the way a commercial property insurance policy does.  

Small Business Insurance 

If you have the right insurance in place, you can avoid a significant financial loss due to a catastrophic event, claim, or lawsuit. Call ASZ International, Inc. in Westchester, NY today to find out what insurance is advised for your industry or type of business.