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Although the health and safety of our community is our number one priority during the COVID-19 outbreak, there are many concerns surrounding the degree and duration of disruptions to business activity and daily life. Mandatory and voluntary quarantines, social distancing to groups of 10 or less, restricted travel, and business closures are increasing measures being taken around the United States. These disruptions primarily affect businesses as they begin to lose inventory, revenue, and profit. From mom and pop shops, to tourism hot spots, concert venues, and restaurants the impact will be felt by all. Not to mention that this rippling affect will then be felt by suppliers, contractors, vendors, and service providers.

For insureds and insurers, once-hypothetical questions surrounding COVID-19 are quickly turning to familiar and regular insurance coverage questions such as the availability, scope and limitations of coverage, number of occurrences, exclusions, along with limits, sub-limits, deductibles and retentions. The claims that come out of COVID-19 will also provoke unique question and present their own set of challenges.

First-Party Business Interruption Coverage

First-party policies covering commercial property insurance provide coverage for business income loss by adding an endorsement to the insured’s property policy. This endorsement is designed to protect the insured for losses of business income it sustains as a result of direct loss, damage, or destruction to insured property by a covered peril. Although many such clauses are in use today, a typical business income insurance clause reads as follows:

“We will pay for the actual loss of business income you sustain due to the necessary suspension of your ‘operations’ during the period of ‘restoration.’ The suspension must be caused by the direct physical loss, damage, or destruction to property. The loss or damage must be caused by or result from a covered cause of loss.”

Physical Loss or Damage Requirement

BI coverage is often part of the commercial property policy a business holds. This form adds coverage, in certain instances, for lost business income, contingent business interruption losses, and losses due to certain action taken by civil authorities.

To obtain coverage resulting from the current COVID-19 crisis, the existence of the virus would need to constitute a Covered Cause of Loss, which results in physical loss of or damage to the covered property. This is unlike a fire, hurricane, or flood, which are common causes of losses that cause visible damage to property. As mentioned earlier, businesses are closing, even though there may be no apparent damage at all. But, if the coronavirus is found within the confines of a workplace or business, this arguably constitutes damage to the property, albeit at a microscopic level that cannot be seen.

Duration of Lost Income Claim

Each policy is unique with different definitions and measurements relevant to the period of restoration. Complications can also arise where an insured opts not to resume business operations. However, business interruption typically includes coverage for repair or replacement of property impacted, in addition to loss of business income through the date the damaged property is repaired or replaced.

Calculation and Adjustment of Accepted Claims

Unfortunately, insureds bear the burden of substantiating claimed BI losses. When a claim is being reported, it’s important for the insured to detail and retain documentation for all business activity, direct or indirect cause of any disruptions, and mitigation efforts. It’s also important to note that insureds should be able to value and substantiate losses by referencing business history, benchmarks, and forecasts.

If you have BI coverage on your policy and find yourself needing to temporarily close your doors, we recommend you file the claim with your insurance company. If you are usure if you have this coverage, I am more than happy to review your policy. At Gulfshore Insurance, we specialize in insurance and risk management for the restaurant industry and can answer any questions you may have.

Olivia Ferencsik, is a Client Advisor at Gulfshore Insurance. Olivia works with a wide range of business clients to deliver strategic risk analysis, guidance, and insurance. Comments and questions are welcome at oferencsik@gulfshoreinsurance.com

 

 

The National Flood Insurance Program (NFIP) recently announced changes effective April 1, 2020. These changes include:

  • Premiums will increase an average of 9.9%.
  • The Reserve Fund Assessment will increase to 18% and the Severe Repetitive Loss premium will increase to 10%.
  • Primary Residence Determination – when the property address and mailing address match, no additional documentation will be required before issuing the policy as the primary residence.
  • Non-Residential Flood-proofing Credit – FEMA has updated the process and outlined documents needed prior to submission.
  • V-Zone Risk Rating Factor Form – FEMA is discontinuing use of this form.


Below is a breakdown of the premium increase by Flood Zone:

Preferred Risk Policies (PRPs) – Premiums will increase 12.5%

Pre-FIRM Subsidized Policies – SFHA Zones (A, A1-30, AE, AH, AO, AR, AR/A, AR/A1-30, AR/AE, AR/AH, AR/AO, V1-30, VE)

  • Primary Residences +7.5%
  • Non-Primary Residences +23.1%
  • Substantially Improved +23.8%
  • Severe Repetitive Loss (SRL) Properties +24%
  • Non-Residential Business +24.2%


Other Subsidized Policies

  • A99 & AR Zones – Premiums will increase 4.2%


Post-FIRM V Zones

  • V Zones +5.6%


Post-FIRM A Zones

  • A1-30 AE +4.1%
  • AH, AHB, AO, AOB +2.7%
  • Unnumbered A Zones +5.1%


X Zones

  • Standard Rated X zones +3.8%
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There are an estimated 200,000 emergency room-treated injuries annually, sustained from the use of playground equipment. Studies from the National Program for Playground Safety (NPPS), have shown that 73% of playground related injuries annually come from public playgrounds. Churches and schools that maintain playground equipment for their child and students provide a valuable form or recreation, but also open themselves to liability from accidents.

After checking out the flashy infographic from the Children’s Safety Network, we should be asking two questions (1) What can we do to make playgrounds safer? and (2) Do we have coverage for an injury or lawsuit?

What do we do about it?

Avoid these problems:

  1. Age Appropriate Equipment – Playgrounds should be built for two age groups, 2-5 and 6-12. A young child, age 4, playing on equipment that was designed for a 10-year-old will find the steps and railings too far apart and will not possess the strength needed to use the equipment appropriately. The NPPS found that 64% of all public playgrounds did not have any safety signs posted to inform users of safety concerns and age appropriateness of equipment. Posting a sign may not prevent an accident or injury, but it may mitigate the damages awarded in a lawsuit.Here is an example of age appropriate equipment:
    Ages 2-5 Ages 6-12
    Areas to crawl Climbing pieces
    Low platforms Horizontal bars
    Ramps with handles Cooperative pieces like tire swings
    Low tables for sand and water Seesaws
    Flexible spring rockers Swings
    Short slides Open space to run
    Open area to manipulate materials Semi-enclosures for fantasy play
  2. Surface Material – Falls constitute the most common cause of injury at all playgrounds. These falls will come in various forms, including off, onto or into equipment. Regardless of the height of the fall, the surface material will have a lot to do with the severity of the injury. The chosen surface material should accommodate the potential fall hazard of the equipment.  Wood chips, sand, pea gravel, shredded tires and rubber mats cushion falls well, but they require different amounts of material based on the height of equipment.  For example, 6 in. of shredded/recycled rubber are required to protect falls of up to 10 ft, however 9-12 in. of wood chips are required to protect falls from the same height. For a full chart of appropriate surface materials and depths, download this excellent 8-page Risk Management summary on Playground Safety from Philadelphia Insurance.
  3. Maintenance – 23% of all playground injuries are equipment-related.  Injuries can come from the smallest wear and tear and from the most open and obvious hazard. If you own and use a playground, a regular, DAILY maintenance plan should be in place.  Not only should the equipment be inspected for things like splinters and sharp corners, but also water damage and paint peeling.The U.S. Consumer Product Safety Commission has a great 2-page checklist for playground maintenance, I recommend you download it for free. If you’re a glutton for punishment and want their whole 57-page Public Playground Safety Handbook, you can download that for free as well.

Do we have coverage for an injury or lawsuit?

General liability insurance policies do pay medical expenses, damages and provide defense for lawsuits from accidents on playgrounds. To ensure your general liability policy provides this protection, you’d have to make sure there are no exclusions for this type of equipment. Generally, if you have a playground on the premises, you will be paying a separate, line-item premium charge for each playground and there will be no exclusions. However, if the insurance company doesn’t know about or charge for playground exposure, they may include an exclusion on the policy. If there is an exclusion on the policy for playgrounds, there would be no coverage or defense in the event of an injury or lawsuit. It is critical that you work with an insurance advisor that has inspected the premises and has structured the General Liability policy to include playground exposure.

For additional information, check out the websites for the National Safety Council and SafeKids.org.

To view our complete risk management library of articles for churches and non-profits, click here.

John Keller, CRM ARM CIC AAI is Client Advisor & Risk Manager at Gulfshore Insurance specializing in non-profit and religious organizations. John works with a wide range of business clients to deliver strategic risk analysis and guidance. Comments and questions are welcome at jkeller@gulfshoreinsurance.com

Youth trips, summer camps, staff trainings or service projects, it doesn’t matter what the purpose, churches have a big exposure when members and volunteers pack up and hit the road. The Church is not immune to tragedy when it comes to automobile accidents.  Whether it’s seven killed in a van accident while on the way to Disneyworld, 13 killed in a church bus, or the now famous case of mistaken identity after a Christian school van crashed killing 5, the church must consider its liability and how to control its risk to automobile exposure.  So, what are the primary four things churches need to know in order to manage that risk?

  • Driver Selection – All organizations, religious or not, should have formal criteria for who will be allowed to drive on “company” business. Larger vehicles like school and transport buses may require a driver maintain a CDL, but private passenger vehicles and even 15-passenger vans do not require a special license. Having formal criteria for who can drive will help mitigate vicarious liability and punitive damages.  Driver selection criteria or sometimes called “MVR criteria” include things like age of the driver, years of driving experience, and points and violations on an MVR report.  Your ideal driver will have 10+ years of driving experience and no violations.  Having a written list of your driver selection criteria will help the church obtain the best insurance rates possible.

Click here for a sample Driver Selection Criteria document

  • 15-Passenger Vans – No special license is required to drive a 15-passenger van, but that is precisely why they are so dangerous. They have a different center of gravity, handle differently from cars or minivans, and when packed with people, can have a lot of distractions. Many insurance companies simply will not insure these types of vans, or if they do, they will require that the back seat be removed thereby turning it into a 12-passenger van. Churches that own or rent vans of this size can help themselves with a couple of steps… (1) remove the back seat, or limit occupancy to 12 or less and (2) train, road test, and dedicate a specific driver that has experience with driving larger vehicles.

 

  • Hired and Non-Owned Vehicles (HNO) – Just because the church owns no vehicles doesn’t mean it has no risk. In fact, the risk of staff and volunteers driving their own vehicles or renting vehicles for church business is one of the most overlooked exposures churches have. When anyone is driving on church business, the church is at risk for that person’s actions. There is a special insurance coverage called Hired and Non-Owned Auto Liability that is designed to protect the church in case someone gets in an accident while driving on church business. This coverage would be in excess of the driver’s personal insurance.  Below are some recommendations for churches looking to manage their HNO exposure:
  1. Limit who is allowed to drive on church business and run those drivers through Driver Selection Criteria.
  2. Require drivers carry personal insurance limits of at least $100,000 and obtain proof of their personal insurance.
  3. Require drivers sign a Vehicle Use Agreement which includes the church’s expectations for safe driving practices.

Click here for a sample Personal Vehicle Use Agreement

Click here for a sample Company Owned Vehicle Use Agreement

 

  • Third Party Transport – Whenever possible, hiring a third-party transport company is recommended for longer trips. The transport company should provide not only proof of commercial insurance but also Additional Insured (AI) status and Waiver of Subrogation (WOS) on their commercial insurance policy. The AI and WOS features should be agreed to on the contract or service order they provide.  AI and WOS effectively transfer any risk the church may have for the trip to the transport company.  The church may still get pulled into a lawsuit but will obtain defense and coverage on the transport company’s insurance policy.  Sometimes it pays to outsource.

 

To view our complete risk management library of articles for churches and non-profits, click here.

John Keller, CRM ARM CIC AAI is Client Advisor & Risk Manager at Gulfshore Insurance specializing in non-profit and religious organizations. John works with a wide range of business clients to deliver strategic risk analysis and guidance. Comments and questions are welcome at jkeller@gulfshoreinsurance.com

The Occupational Safety and Health Administration released guidance to help employers prepare their workplaces for an outbreak of COVID-19 — along with a reminder that any incidents of employees contracting the novel coronavirus at work are recordable illnesses, subject to the same rules and failure-to-record fines as other workplace injuries and illnesses.

While OSHA specifically exempts employers from recording incidents of employees contracting common colds and the flu in the workplace, COVID-19 is not exempt, the agency noted on a newly added website providing OSHA guidance for preventing occupational exposure to the rapidly spreading virus.

The guidance, while not a standard or regulation, outlines safety standards that employers whose workers are at high risk of contracting COVID-19 should implement to remain in compliance with the Occupational Safety and Health Act’s general duty clause.

The report also advises employers to develop an infectious disease preparedness and response plan, implement basic infection prevention measures and develop policies for the identification and isolation of ill individuals.