NEWSLETTERS: Attention to Detail

By Anthony Tellers, Bowermaster and Associates Regional Vice President

When it comes to insurance policies, the little things can make a difference. Attention to detail, the accurate interpretation and definition of terms, and the proper addition of endorsements all have major roles in determining if coverage is correct. Insurance brokers can guide you in understanding some of these fundamentals. Your own insurance knowledge of some of these "little things" can keep you adequately covered and add profit to your bottom line. A business insurance policy is serious business and even though much of the language is standard, there is plenty of room for misinterpretation and misunderstandings.

In General Liability policies, the amount of premium you pay is determined by the area of your premises, the payroll of your workers, or the gross receipts from the sale of your product or service. Some "little things" to remember:

• The definition of area does not include courts or mezzanine types of floor openings nor does it include floors where 50% or more of the area is used for storage of air conditioning equipment, heating units, or power plants. If your policy premium is based upon area, deduct the above from the total square foot amount.
• The definition of payroll does not include amounts paid to any clerical office employees, outside salespersons, or draftsmen. You do not need to report these categories of payroll when calculating General Liability premiums. Additionally, if an employee works overtime and gets an increased rate of pay for doing so, this extra pay is not included in payroll calculations.
• The definition of gross sales does not include sales taxes which are collected and submitted to a government agency nor does it include freight charges if freight is calculated as a separate item on customer invoices. You can deduct these items from any gross sales figures.

Also consider the Named Insured section of your policy. Is the name spelled correctly? Is the address accurate? Outside of a few exceptions, the name listed on the policy is the only entity that has insurance. The policy doesn’t insure any additional business you may own, entity you may have created, nor any joint venture in which you may participate unless you specifically name these on the policy and/ or a premium charge is made for the exposure. You may conduct another business similar in nature or even conduct it on the same premises and use the same equipment but unless it is listed in the policy it would not automatically be covered. A "little thing" like spelling the name right or adding every DBA can make the difference in whether or not a claim is covered. Your insurance company will not be accommodating when you tell them a DBA you forgot to add to the policy is being sued for $1 million.

Extra attention to the details will not only save some money but also line up your coverage correctly. Review these items carefully at your next insurance review meeting.