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Navigating the “Hard” Market

  • By:  Dan Reith  BA(Hons) CAIB
  • Principal Broker
  • Reith & Associates Insurance and Financial Services Limited

The insurance industry is in a phase commonly referred to as a “hard” market. As industry experts closely monitor the market, the state of the insurance industry continues to fluctuate. This can be confusing for business owners trying to forecast future insurance costs while experts try to project whether insurance premiums will rise and by how much.

What is clear is that risk management, loss control and safety continue to be crucial to the success of any business insurance package, regardless of market conditions. Now is a good time to evaluate your business’s risk management plan as a whole to ensure your business can attain favorable pricing regardless of market conditions.

What a Hardening Market Means for Your Business

During times of a soft market, like the past few years, business owners see cost reductions in their organization’s insurance premiums, even without a reduction in their risk. As a result, business owners are often unwilling to spend time and resources on loss control and risk management because they already see their insurance premiums dropping. This reduction in pricing is deceptive, setting businesses up for a shock when the market takes a turn.

It’s important to take advantage of the opportunity to get ahead of the game by proactively addressing losses and risks now. When insurance prices begin to climb, those organizations that have taken the initiative to address losses and mitigate risk will see modest increases in premiums, whereas those that simply rode the market without working to reduce risk will have a harder time placing coverage and won’t be offered as competitive of rates. As a business owner, a 15 per cent increase in cost will still be unpleasant, but a 40 per cent increase in addition to a reduction in coverage could end up affecting your company’s well-being in the short and long term.

Even in the hard market, a business with effective loss control and risk management initiatives will always pay less.

Risk management, loss control and safety continue to be crucial to the success of any business insurance package, regardless of market conditions.

Take Charge of Loss Control

The best approach to control losses is to prevent injury and illness, manage claims effectively and implement cost containment strategies. If you work to reduce risk and prevent loss now, the increase in your premiums later will be minimized. Reith & Associates Insurance and Financial Services Limited’s consultative approach can:

  • Pinpoint your exposures and cost drivers
  • Identify the best loss control solutions to address your unique risks
  • Create a solid business contingency plan to account for disasters and other unpredictable risks
  • Build a company culture focused on safety
  • Manage claims efficiently to keep costs down

Using all the resources available to you from Reith & Associates Insurance and Financial Services Limited, we can help you control costs and ensure your business is protected.

Nikki Johnson No Comments

Contractors – Another Liability Exposure

By:  Dan Reith  BA(Hons) CAIB

        Principal Broker

        Reith & Associates Insurance and Financial Services Limited

As a contractor, you work hard to create a quality product and satisfy customer expectations while building a profitable business. However, no matter how careful you and your employees are during the course of business, mistakes can happen it’s a fact.  In today’s business environment, small disputes with customers over projects can quickly escalate into costly legal disputes.

Almost every contractor carries some form of general liability coverage. While these policies provide much-needed protection for bodily injury and property damage claims that occur as the result of a contractor’s work, they typically don’t account for all forms of negligence.

That’s where errors and omissions (E&O) insurance designed for contractors comes into play. Below, we provide a brief overview of E&O insurance and why it is a critical component to a contractor’s overall risk management program.

Why E&O?

Simply put, general liability policies are not adequate to protect against E&O claims, necessitating additional coverage. In fact, most general liability policies exclude claims related your work, your products and impaired property, creating significant insurance gaps.

Making E&O insurance even more crucial, contractors are particularly vulnerable to claims of negligence following unintentional damage to an insured party, impairment of property, damage to products or similar incidents that can occur without warning during a project. Even simple complaints have the potential to escalate into costly legal disputes.

What’s more, courts often rule against contractors in claims related to errors and omissions and, without the proper protection, general contractors would have to cover the damages out of pocket.

E&O policies can help contractors close gaps in their insurance coverages, providing coverage for claims related to the following:

  • Failing to complete projects according to specifications
  • Negligence in providing professional services
  • Poor, incorrect or incomplete work
  • Errors and oversights

Strong E&O policies can protect you and your business following a claim, helping you cover expenses related to court costs, lawyer fees and settlements. It should be noted that E&O insurance may not extend to your subcontractors, and you should encourage them to secure their own policies.

Sample Claim

To further understand the benefits of E&O insurance consider the following example. A window and doors contractor was hired by a developer to install all of the windows on a new apartment complex. While most of the work was completed to specification, the contractor incorrectly measured some of the windows. Accordingly, the windows in many of the units did not lock properly. The windows in these units had to be removed and reinstalled.

With E&O coverage, the contractor would not have to pay for those expenses out of pocket. What’s more, had the client sued the contractor over this work, the contractor’s E&O insurance would have covered awarded damages and defense costs within the limit of the policy.

Securing the Policy That’s Right for You

As a contractor, there are a variety of insurance products to consider. To ensure you are accounting for all of your unique risks—and to secure a policy that is tailored to meet your specific business needs—it’s important to work with a qualified insurance broker.

Contact Reith & Associates Insurance and Financial Services Limited today to learn more.

Nikki Johnson No Comments

Contractors & Pollution Liability – The Risk Is Real

By:  Dan Reith  BA(Hons) CAIB

        Principal Broker

        Reith & Associates Insurance and Financial Services Limited

Contractors, no matter what industry they work in, face environmental risks stemming from operations on a daily basis. For most contractors, a single pollution incident or loss can seriously damage their operations, balance sheet and even reputation. Making matters worse, pollution incidents can be sudden or occur gradually over time. The reality, however, is most contractors do not appreciate the reality of the risk and chose not to protect themselves or their customers.

While many contractors assume that environmental claims will be covered under their commercial general liability (CGL) policy, the unfortunate reality is the most CGLs contain pollution exclusions that leave contractors uninsured in the event of a pollution incident.

The solution: contractors pollution liability (CPL) insurance to ensure they have the right coverage in place to remain secure and profitable.

CPL Coverage Basics

CPL policies provide contractor-based insurance for third-party coverage for bodily injury, property damage, defence, and cleanup as a result of sudden and gradual pollution incidents arising from contracting operations performed by or on behalf of the contractor. CPL insurance is intended to provide coverage to all types of contracting operations, including contractors who are involved in building construction and environmental firms that remediate polluted sites.

CPL policies are offered on either a claims-made or occurrence basis. What’s more, CPL policies are non-standard, meaning each policy is different and can be modified to cover the various needs of the contractor purchasing the policy. Policies can be offered on a project or blanket program basis.

In some instances, CPL policies can also be used to cover losses from civil fines, penalties and punitive damages.

Covered Pollution Incidents

Contractors should keep in mind that CPL insurance policies differ in regard to the types of pollution incidents that are covered. Two important considerations when evaluating CPL insurance policies are:

  • Whether or not the policy will respond to gradual releases of pollutants, as opposed to sudden and accidental releases; and
  • The types of substances that are considered “pollutants” under the terms of the policy.

Generally, policies that cover both gradual and sudden releases of pollutants provide contractors with a broader scope of coverage. In addition, policies that provide a broad definition of pollutants are considered superior to those that contain a narrow definition. Accordingly, it is important that contractors work with their broker to find a CPL policy that is tailored to their needs.

CGL Pollution Exclusions

A primary reason why contractors obtain a CPL policy is due to the various pollution exclusions contained in most CGL policies. The pollution exclusions found in most CGL policies take one of two forms, either “absolute” or “total.”

CGL policies with an absolute pollution exclusion remove coverage for most pollution events that would occur in the course of an insured’s business operations. However, despite its name, an absolute pollution exclusion may preserve coverage for certain incidental pollution damages, products and completed operations liability, and certain off-premises work.

However, more commonly, CGL policies include a more restrictive “total pollution exclusion.” This type of exclusion effectively removes coverage for any event the insurer characterizes as a pollution incident.

Contractual Requirements

Contractual requirements serve as another motivating factor that lead many contractors to obtain a CPL policy. In many instances, project owners and general contractors will require contractors to obtain pollution insurance that meets certain, predetermined standards. From this perspective, having a CPL insurance policy in place can serve as an upfront sales tool during the bidding process that enables contractors to qualify for opportunities when such coverage is required.

Finding the Right Policy

Regardless of specialty, all contractors should be mindful of the pollution risks associated with their work. A CPL insurance policy can provide much-needed security in the event of a pollution incident, even in the most unlikely of circumstances.

CPL insurance is not only good for business, but it also provides peace of mind in industries that are full of surprises and risks. Reith & Associates is available to work with your organization to find the CPL coverage that is right for you.

Nikki Johnson No Comments

Crime Prevention Tips During COVID-19 Shutdown – Making your business less of a target

If it isn’t bad enough, that the Covid-19 pandemic has caused many small businesses to close their doors, our local police services report of a significant spike in calls for break and enters, property theft and vandalism to business properties. 
If your business has been forced to close, here are some key crime prevention steps you can take to be less of a target:

  • Remove all valuables from storefront displays to reduce smash-and-grab thefts
  • Remove all valuables such as cash from the till and leave it open. Place the empty cash tray in plain view on the counter to signal there’s no money in the till
  • Remove signage from front windows so police can see the inside unobstructed during patrols
  • Remove any items of value away from window displays, place in the back of the store so they are not visible 
  • Consider installing an alarm monitoring system. If you already have one, ensure the contact list is up-to-date, responders are aware of their duties and process should they get a call, and it is activated when the building is not occupied
  • Consider installing a surveillance camera system that can be monitored online by owner/management
  • Clearly post signage on the door/window to indicate that the premises are monitored by an alarm company; that no money is kept on the premises and contact information for police and the business owner in case a member of the public sees damage to the property or suspicious activity
  • If the premises are closed for an extended period of time clean all glass surfaces and create a tracking log of when cleaning was completed. This may help investigators with suspect fingerprints in the event of a break-in
  • Consider applying a laminate on all windows and glass doors to prevent the glass from being broken from blunt force thereby preventing entry during attempted break-in
  • Install latch guards on doors to protect against prying including on secondary doors such as employee and loading entrances
  • Keep some lighting on inside for surveillance opportunities during the evening
  • Ensure all doors are properly secured and regularly check all exterior lighting is functioning
  • Remove material around the exterior of the property that may be used to gain entry
  • Check on your business daily, both in and out, at different times each day and report any suspicious activity to your local police as soon as possible 
  • Prevent and reduce the opportunity for crime to occur.  Be a good business neighbour, when checking on your property, check on neighbours’ property too
  • For more info http://www.stps.on.ca/crime-prevention-tips-for-business-owners/

Taking these steps will make your business less of a target and will ensure you meet the requirements of your insurance policy.  Our team is available to assist with any questions or concerns you may have about your coverage during a shut-down. We welcome your call or email inquiry. Stay safe, stay healthy.

Nikki Johnson No Comments

Your Insurance and the Covid-19 Pandemic

By:  Dan Reith BA(Hons) CAIB
President/Principal Broker
Reith & Associates Insurance and Financial Services Limited

We are in the midst of an unprecedented situation in Canada and around the world.  COVID-19 is impacting all segments of our economy creating challenges never, before experienced.  Let us help you better understand the reality of your insurance and the Covid-19 pandemic.

Personal Insurance

There is no coverage under any personal insurance, home, auto or critical illness, that provides protection or indemnification against any financial loss as a result of a viral pandemic–Covid-19. 

Business Insurance

There is no coverage, under the standard commercial property policy, for any loss or cessation of business income as a result of a temporary business shutdown and/or closure caused by a viral pandemic. Simply because a viral pandemic is not an insured peril.  A property and liability policy insures the physical premises and therefore the insured peril must damage the premise preventing the business from operating. Pandemics do not negatively impact the premise.  It is important to understand that:

  1. Not all standard commercial insurance policies carry business interruption or income replacement.
  2. Policies that do carry business interruption, have a standard language in the contract that requires a “trigger” being an insured peril to cause damage to the premises of the business and/or a contributing or recipient property, in order to render the premises unusable and therefore the business unable to generate revenue.  This causes the policy to respond and the quantifiable loss is insured and replaced in accordance with the settlement option of the policy.  In the case of a viral pandemic, Covid-19, there is no damage to the business premise, by an insured peril, therefore, there is no physical reason for the business to cease operations or stop generating revenue and therefore, the coverage is not triggered.
  3. Where a policy contains business interruption, it typically carries an extension that provides for cases where a business is shut down by what is termed “civil authority”—an order, by a government body, not to access a property.  Again, however, the trigger is a physical loss to the premise and/or adjoining or neighbouring premise by an insured peril. In the case of Covid-19, the government order to close one’s business is effectively an arbitrary decision based on public health policy, not the cause of a real physical loss or damage to the business premises making it unsafe to access or occupy. Thus, the civil authority extension does not apply.

There are certain exceptions, to the norm, where certain industries can purchase secondary pandemic coverage; but this is restricted to niche industry classes such as healthcare and food processing because in these limited classes the loss can be isolated and quantified.  In the broad sense, as we are encountering today, such business interruption losses are not isolated, limited or controllable with reasonable certainty; therefore, not quantifiable.

Here are some common Q & A’s we have been fielding:

I pay my premiums monthly, what happens if I don’t have the money to pay my premium.

If your income, business and/or personal, is compromised in any way, and there is a likelihood you will not be able to make your premium payment call us immediately!  Generally speaking; most insurers are waiving NSF charges and not cancelling policies for non-payment in the first month.  Beyond that, insurers are willing to review and negotiate on a case by case basis.  Be proactive we are here to a find a solution that works best for you. Note, that while your insurer may be waiving NSF fees, that does not mean your bank is.  That is a conversation you need to have with your bank. 

What happens to my coverage if my business is shut down?

There is no change in coverage during the government mandated shut down.  That said, you must continue to maintain any warranty’s and or requirements your policy may have, i.e. alarms activated when building not occupied, heating on during heating season, building attended at least once every 72 hours.  Contact us so we can review your specific requirements to ensure compliance, we don’t want any surprises should you have a claim during this period of uncertainty.

Can I reduce coverage during shutdown?

Ultimately, you can make a change to coverage at any time.  In practical terms, any changes made need reflect the actual circumstances of your operational changes during the pandemic.  It is best to speak directly with your insurance provider to review operations to best determine what is right for you.

I/we are not working, currently laid off, what can we do to reduce our insurance costs?

That depends on your personal circumstances, needs and expectations in the event of a loss.  Call us, we will review your current coverage and find a solution to bring down your premium as best we can without placing you in jeopardy.  Note, changing insurance companies for a lower premium will STILL cause an early policy cancellation penalty if we make the change before renewal.  Insurance companies, at present, are not waiving early cancellation penalties, rather working with policyholders to make premium payment manageable.    

 I am laid off, I can get a job doing food delivery, am I insured?

No, if your current policy provides coverage for you to drive to and from work you are NOT insured to be a delivery service.  If you do this, call our office, to learn what the additional premium cost will be, it may not make sense.  If you do not, and you are in an accident while in the course of delivering food and/or other goods your insurer can deny the claim, both the repair/replacement of your car and/or liability if you are sued for injury to a third party.*

*some statutory coverage may apply speak to your broker for full details.   

To assist our customers and to keep our business going, we are now offering delivery service.  Are we insured?

Offering delivery is a great way to respond to customer demand; for some a great business decision, however, if you are using vehicles NOT insured as delivery vehicles, then there may not be coverage if a claim is filed as a result of a loss from delivering goods to a customer.  If your employees are using their personal vehicles to deliver to customers there is NO coverage for them unless their vehicle is rated, and a premium is paid for delivery purpose.  Speak to us before you make this operational change and/or offer a new delivery service to your customers; and do not require your employees to use their personal vehicles.  Reduce your liability exposure, partner with a professional delivery service instead.          

Will insurance companies honour claims during this period?

All insurers claim departments remain ready to respond.  Their claims representatives will be working in accordance with current protocols for personal and community safety and that may mean a delay in the settlement process, but it is business at usual at the present time.

We trust this information will assist to help you work through the current pandemic.  If you have any questions, or concerns about coverage during this uncertain period, we are here for you, we want to provide the right solutions for where you are today.  Let’s work through this together.  That is what we are here for. 

We look forward to hearing from you.

Nikki Johnson No Comments

The 10 Most Common Life Insurance Myths

Life insurance. Just the term itself can put people on edge. People might think they are wasting time and money if they sign up for life insurance when they don’t consider it necessary.

However, you should purchase life insurance because it will be essential sometime in the future. Life insurance protects your loved ones in case something happens to you by designating beneficiaries who will collect financial benefits upon your death.

Term life insurance is generally the simplest and cheapest form—you buy coverage for a specific time period, and it can usually be renewed, but premiums will increase based on age and health factors. All other types of life insurance are permanent, but there are a few varieties—whole life, universal life and variable life. Each type is slightly different, making each one ideal for certain types of people.

The ten myths listed below are some of the largest misconceptions individuals have regarding the necessity of life insurance.  Read on to learn why life insurance is important to purchase.

Myth 1:  I just simply don’t see the need for life insurance.

No one is immune to having to pay back his or her financial obligations after death. If you have a vehicle to pay off, or credit card or student loan debt that has accumulated, life insurance is a very beneficial option for you. If you die unexpectedly, no one waves a magic wand and makes those responsibilities disappear—you have to make the preparations to take care of them, or your family members will be stuck with the bills.

Myth 2:  I’m young. Why would I start spending my money on life insurance now?

Being young also usually means you’re more active and probably putting yourself at risk more often than the older generation by travelling, clubbing, hiking, boating, driving longer distances and staying out later. Your body may be younger and less likely to break down on you, but your high-risk activities put you in the same boat as older, less healthy people.

Myth 3: I’m a stay-at-home parent.

There isn’t a need to replace my income, since there isn’t an income to replace. If you’re a stay-at-home parent and you pass away, your spouse may not be able to afford childcare for your kids. Or, if there is no partner in the picture, your relatives or friends might not be able to take care of your children in a way that allows them to attend the same school, with the same parenting style you used, etc. Also, when the time comes for college, you will want your children to have the option of affording the education they desire.

Not having an income and staying at home means you are saving money you would be spending from a spouse’s income (or from any other source of income) on childcare and even on tending to your home. When you’re gone, those things still need to be covered, and life insurance can do that for you.

Myth 4: My kids are all adults and my house has been paid off, so what do I need life insurance for?

Everyone has daily living expenses. Just because the home is paid off doesn’t mean there aren’t other financial obligations for which your spouse would be responsible, such as owning multiple cars, a boat, an RV or another large purchase you both made later on in your lives.

Also, consider this: If your spouse outlives you by 10, 20 or even 30 years, he or she might not be able to afford to stay in an assisted living centre when he or she can no longer take care of him- or herself. You need to ensure that your spouse continues living with the same financial security he or she has with you now. You don’t want your spouse to fear having to take care of daily expenses with only half the income.

Myth 5: I’m a smoker. Insurance companies won’t even consider me.

Being a smoker doesn’t mean you can’t get coverage. Your premium will be a bit higher than the premium for someone who doesn’t smoke, but it is more affordable than you may think.

Myth 6: Even if I quit smoking, I’ll always be considered a smoker to insurance companies and be stuck paying a higher premium.

Most insurance companies consider you a non-smoker if you’ve stayed away from cigarettes for at least a year. Even if the first six months were an accident because your spouse hid your cigarette packs, you can most likely get your premium lowered after a year.

Myth 7: Life insurance seems too good to be true.

It can seem that way, but it’s not. Life insurance isn’t like one of those free vacation spam emails—it’s the real deal. As long as you keep paying the premium, you’re covered, whether that is until your kids move out or until your home is paid off.

Myth 8: It is too much of a hassle to obtain life insurance.

Finding life insurance isn’t as hard as you think. Getting a life insurance quote is quick and painless. All you need to do is provide basic information about yourself, including your height, weight, age and gender. Once you have a quote, you can choose the right coverage for you.

Myth 9: I get life insurance through my job.

Why would I need more? The life insurance you get through your job might not be adequate coverage. You should compare your family’s living expenses with your coverage to see if it’s sufficient to cover all of your family’s needs. You should be thinking about future responsibilities as well, like being able to pay for your children’s education after you’re gone.

Also keep in mind, like all good things, your employer-paid coverage ends when the coverage limit is met—which is the maximum amount your employer will pay out upon your death. Most experts suggest obtaining coverage five to eight times your yearly salary. If you are only covered for half of that amount, what will your family do when their living expenses exceed that amount?

Myth 10: My mortgage lender provides me with coverage. Isn’t that enough for me?

Your mortgage isn’t the only expense your spouse or children will have to take care of if you pass away—there are cars, college education, food, medical expenses, funeral costs—the list goes on. Life insurance can cover those for you.

By: Dan Reith BA(Hons) CAIB
President/Principal