Double jeopardy

When the weather forecasts in
Florida are correct and radar maps
confirm the worst scenario is on a track to impact your home or business,
there’s much to be done to prepare — and

While enacting your preparedness plan for
a hurricane, fire, flood or other looming disaster, you can only hope your insurance
agent offers a proven, comprehensive
claims management program providing top-flight services to help you recover, rebuild,
restore and reopen as fast as possible.

“The time you need your agent the most is
not the time to find out he or she is not
equipped to administer your claim,” says
Carmen Kulhanek, claims manager, Gateway Insurance Agency in Fort Lauderdale.

Smart Business recently spoke with
Kulhanek about why having a product that
meets your needs is important, but also how
your agent’s ability to provide value-added
programs and excellent claims service
when the unthinkable happens is crucial.

How does poor claims service impact companies at a pivotal time?

From our standpoint, at the insurance
company or agency level, it certainly
impacts our client retention and the overall
ability to write new business. Clients expect
good customer service, every time, in their
time of need. When this does not happen,
they lose confidence, and their loyalty to the
insurance firm is jeopardized. Proactive
agents always try to anticipate your needs
before you ask for or require assistance.

What signs indicate your agent is providing
high-level claims service?

First, after reporting a claim, you should
expect a follow-up call from your agent to
gather information about the problem.
Second, your agent should be educating you
as to what necessary steps must be taken to
mitigate a loss. Third, and most importantly,
your agent needs to inform you about the
next steps you can expect to follow to avoid
a problem or delay in the claim handling. It
is essential for your claim liaison to meet
and exceed these expectations.

What value-added services should clients
expect from their agency?

From the agent’s perspective, it’s all about
‘going that extra mile.’ Exceptional customer service means going out of your way
for the customer, doing everything possible
to meet his or her needs and making decisions that benefit customers, even if it
comes at a minor expense to the company.
Examples include having claims procedures
in place to follow up with the client and the
insurance company to confirm that everyone is doing what each is expected to do.

Another very important service your
agent should provide is a program to assist
you when you have been served with a
summons. Thorough agents make sure the
insurance company has assigned counsel
and also confirm that a response is filed to
the plaintiff’s attorney within the time
frame allowed. That’s really important
because if a response is not filed in a timely
manner, the insured can be found in

How does the relationship between agent
and carrier trickle down to the insured?

Many clients aren’t aware of the role this
relationship plays in their agent’s ability to
handle a claim. Having a strong, dependable relationship with carriers is crucial and
essential to providing the best claims service. At the agency level, knowing your contacts makes the claims liaison’s job easier
and adds a layer of confidence to the
client/agent dynamic. When you’re shopping for a new agent, it’s important to
request an explanation of these agent/carrier interactions.

How do thorough agents administer restoration work to a successful conclusion?

Once again, it’s all about having good business relationships with the restoration companies. When your agent knows how a particular restoration contractor conducts business, it makes a world of difference in your
time of need. There is a lot to consider when
choosing a restoration contractor. Your
agent should be familiar with a qualified contractor’s portfolio of projects and can help
you steer clear of restoration contractors
who don’t have the experience or the financial clout to complete your project to the
exact specifications in a timely manner.

Why is it important to investigate insurance
agents and look for superior customer service?

When a disaster strikes, you’ve got to
make sure all of your company’s assets are
properly covered. To mitigate the long-term
impact from any claim, your agent must
have trained representatives to anticipate
your needs and offer a 24-hour claim
reporting service — over the phone and on
its Web site — that can instantly jump-start
the claims process and even provide tips on
how to mitigate certain types of losses.
Finally, you should ask your agent about
the agency’s disaster preparedness plan.

CARMEN KULHANEK is claims manager with Gateway Insurance Agency in Fort Lauderdale. Reach her at [email protected]
or (954) 332-1835.

Insurance 365

You just bumped into your insurance
agent at the market and felt uncomfortable you didn’t remember him.

Worse yet, he didn’t recognize you.
Considering your policy may be your last
line of defense to continue your business
when the worst happens, shouldn’t you
have more than just cursory knowledge
of this document and the people who
supplied it?

“If your agent simply renews policies
just as before without delving into your
business operations, then opportunities
for losses will be missed at your
expense,” says Jim Reese, Gateway
Insurance Agency in Fort Lauderdale.
“You have to lead your agent until he
knows almost as much about your business as you do.”

Smart Business spoke with Reese
about why business owners cannot be
satisfied with seeing their agent once a
year and how the best agents help business owners build and protect their
dream empire.

What milestones can be jeopardized by
unsatisfactory insurance coverage?

Once you’re up and running, your business goals may include passing it along to
your children, helping employees support
their families, or being well-known and
respected. That’s where insurance comes
in, because properly insured, you don’t
need to build huge cash reserves for
potential losses and can feel safe investing that money to build your business.

What is the most important asset insurance
can protect?

Your most important asset is the
employee base that supports your business. Employee costs soar if you have to
hire new employees after a property loss.
You need to pay your employees while
your building is being reconstructed and
machinery and equipment is being replaced. Have you successfully completed
the simple math exercise with your agent
to ascertain the correct amount of dollars you’ll need to pay your employees?

Also, insurance helps retain employees
by protecting their financial security
through hospitalization, life, long-term
care, workers’ compensation and retirement plans.

Can insurance minimize the impact of
employee fraud?

Most owners can’t watch every detail of
every transaction their employees process. So, you must have controls in place
to protect against an employee or group
of employees acting in collusion to steal
money or products. Consider a case
where an assistant, who never took a
vacation and often worked on weekends,
was fixing the books so no one would discover she was taking money to feed her
gambling habit and to take care of her
sick mother. She said she fully intended
to pay the owner back, but that was after
she had burned down three buildings,
including the accounting and computer
records. Of course, the owner later
learned that he didn’t have the large cash
balance he thought he always carried.
Fortunately, the owner felt very secure
because he had an agent with a close relationship with the adjuster, paying him
$500,000 just three days after the fire.

What other more visible exposures could
jeopardize a business?

Potential loss exposures fall into five
groups, including property, liability, automobile, crime and benefits. If your products or services injure the public, you
shouldn’t have to worry if you will survive. Top lawyers are expensive, and
juries and courts can award astounding
judgments. Insurance responds with the
best lawyers — no matter what the cost
— to keep you from losing sleep during
litigation. The most important part of any
comprehensive insurance program is the
agent who crafted your coverage to mitigate large losses.

How can you be sure your policies fit together when a disaster strikes?

It’s easy to have too much or too little
coverage. Good agents involve themselves in understanding your business
operations and in the myriad policy
details to make sure things like automobile and property schedules are accurate.
Your agent should follow a process to
help you determine what exposures concern you the most — and uncover those
you haven’t yet thought about. Major loss
exposures should be examined so they
can be eliminated or transferred or
reduced to a more manageable level.
Only after a review of other possible
methods to alleviate these issues should
insurance be employed.

You should also consider the relationship your agent has with company
underwriters and claim adjusters. A
good agent/underwriter relationship
means you don’t have to fear what might
happen in the event of a claim: It’s covered, and everybody knows it. Your
agent also should examine any loss histories to prevent claims from recurring
— an effort that can reduce your premiums. This is particularly true with workers’ compensation, where it is not
uncommon to reduce premiums by up to
30 percent.

JIM REESE is with Gateway Insurance Agency in Fort Lauderdale. Reach him at (800) 940-5501 or [email protected].

Jim Reese
Gateway Insurance Agency

Digging deeper

Going underground? When utility and
other underground construction
companies embark upon trenching, tunneling or other projects below the surface, the associated exposures can make
for a dirty job.

Injury risks, hidden pollution issues,
equipment damage, railroad protective liability and negligent entrustment are all
areas that require a collaborative effort
between an underground contractor and
its insurance agent.

“An agent has to act as your trusted adviser,” says Carl Grunwald, vice president of
construction accounts, Gateway Insurance. “It’s a partnership; a good agent is
going to experience any loss or gain with
you, as a partner.”

Smart Business talked to Grunwald
about underground construction safety
risks and exposures and how a proactive
approach by an insurance provider can
help companies get safely underground.

How are companies dropping the ball around
trenching safety?

The biggest area for concern is that a lot
of underground contractors aren’t implementing formal trenching safety procedures. They’ve got to provide their workers
with some sort of shoring or collapse protection, unless the hole in the ground is five
feet or less or in solid rock. If a hole is 20
feet deep or less, they need to dig a slope,
basically creating about a 45-degree angle
for the people to crawl out of if a collapse
happens. In the most extreme conditions, a
trench shield or other type of OSHA-approved device should be used. In every
circumstance, it makes good business
sense to have some sort of trenching safety program.

From the agent’s side, it should be able to
provide diligence in OSHA training, competent-person certification, and education
and expertise in equipment. It should not
only be able to provide insurance but be
able to send out a full array of job-site safety inspectors and controls and even help
certify devices as OSHA-approved.

How does job-site pollution create exposure,
and how is it mitigated?

The moment you arrive at a site, you have
vicarious liability. A pollution claim could
be caused by a spill from a company vehicle or piece of equipment or from an existing situation. For example, a contractor
could go into a job to put in water lines and
discover an old asbestos plant used to sit
on that vacant piece of property. So there
are multiple phases.

Most policies have an absolute exclusion
for pollution. The only way to mitigate pollution liability for an earthmover, underground contractor or site-preparation contractor is to buy coverage for multiple
facets. First, third-party coverage for bodily injury and property damage is required.
Second, contractors need coverage to protect themselves from any cleanup costs.
Third, and in the most extreme cases, they
need protection for moving any contaminated soil to an EPA-approved site. A good
agent won’t let you go into earthmoving or
underground utility projects without the
appropriate coverage, and it’s very affordable. If it’s included by endorsement, you
might not even see the cost.

What endorsements protect valuable underground equipment?

A backhoe, a directional drill, a jack and
bore, a front-end loader — most inland
marine policies have an exclusion for damage or loss to this equipment while being
used underground. If the agent is a good
agent and understands what you’re doing,
he won’t just sell you an inland marine coverage form; he’ll sell you an inland marine
coverage form that deletes the exclusion
for damage or loss of your equipment
while being used underground. Again, the
cost is zero — free — but that comes from
a good agent knowing the language, reading the policy and providing the appropriate protection.

What defines negligent entrustment, and
how can this risk be avoided?

There are generally five points used to
determine negligent entrustment. First, did
you entrust the vehicle to a person who is
incompetent, inexperienced or reckless in
his or her past? Second, did you have
knowledge of that person’s condition?
Third, by giving that person the use of your
vehicle, you become liable because you
entrusted him or her. Fourth, did that
entrustment create a risk to somebody else
whom you had a duty to defend? And finally, is the accident or incident that occurred
on the backside of all of this the cause, or
the proximate cause, of the harm to the
injured person or the damaged property? If
you meet all these elements, there is negligent entrustment.

Companies should be looking for an
agent who provides education, consultation and partnership in identifying who is
an acceptable driver, what is acceptable
training and what policies should be adopted to mitigate exposure to negligent

CARL GRUNWALD is vice president of construction accounts
with Gateway Insurance in Fort Lauderdale, Fla. Reach him at
(954) 735-5500 or [email protected].

A common concern

Many gravitate to the carefree
lifestyle of condominium living, and
some people go the extra mile by volunteering to serve on their condo association’s board of directors. But when the
worst happens — a fire, hurricane or accident — board members can find themselves in a less than carefree situation.

“The main cog in condominium association insurance is property,” says Richard A.
Foote, account executive, Gateway
Insurance Agency in Fort Lauderdale, Fla.
“But association officers and volunteers
also are exposed to lawsuits and should be
protected with specific insurances.”

Smart Business recently spoke with
Foote about how condominium associations can best determine their insurance
needs while implementing certain cost
control strategies.

How has the condo insurance market evolved
over the last several years?

With all of the hurricanes blowing
through here, a lot of the big companies
that write property all over the country
pulled out of Florida. That’s why the state
of Florida was basically forced to develop
its own insurance company called Citizens
Property Insurance Corp. Most condominium associations were at the mercy of the
state and pretty much had to go with
Citizens. But because we didn’t have any
hurricanes last year — and at the time of
this article, we have had no hurricanes this
year — there are some viable new companies creeping back into the market. We still
can’t insure a 30-year-old condo that’s right
on the beach with any company but
Citizens, but a condo located inland that is
less than five years old — all of a sudden
we have some alternatives.

What types of condo insurance does the state

Section 718.111 (11) of the Florida
statutes says that for all insurance policies
issued or renewed after Jan. 1, 2004, the
condominium association is responsible to
insure all portions of the condominium
property located outside the units.
Additionally, it must insure condominium property located inside the units as such
was initially installed, or replacements
thereof of like kind and quality and in
accordance with original plans and specifications, if those are available. The association must insure all portions of the condominium property for which the declaration
of condominium requires coverage by the

How is the insured value determined?

An appraisal by a licensed professional
should be completed every 18 months to
ensure the property is insured to its value.
An appraisal demonstrates due diligence on
the part of the board members and gives the
board members peace of mind knowing
that the property is accurately insured.
Additionally, an appraisal prevents underinsuring, which puts the property at risk for
having funds to rebuild in the event of a catastrophic loss, and overinsuring, which
results in paying extra insurance premiums.

What are the common types of condo association policies?

First, the association wants to protect all
the common areas with property insurance
and general liability — the pool, the cat walks, the elevators, etc. We call it the ‘four
walls out.’ Second, directors and officers
liability insurance protects the association
officers or volunteers if they get sued.
Third, crime coverage protects the association if its officers commit dishonest acts.
Finally, policies for flood coverage and
workers’ compensation should be in place.

An umbrella policy is designed to kick in
when the general liability and the directors
and officers liability limits are exhausted.
Most condo associations carry $10 million
or $15 million of additional liability coverage in an umbrella policy.

What are the individual unit owners responsible to insure?

Unit owners must insure all floor, wall
and ceiling coverings. Coverage must
include electrical fixtures and appliances;
air conditioning and heating equipment;
water heaters and water filters; built-in
cabinets and countertops; window treatments — including curtains, drapes, blinds,
hardware — and similar window treatments that are within the unit boundaries
and serve only that unit. Owners also must
carry coverage for air conditioner compressors servicing only a specific unit,
whether located within or outside the unit.

What cost controls can help mitigate premiums?

Condominium coverage is pretty cut and
dried, so we make sure the associations
take steps to mitigate their premium. The
main step is windstorm mitigation. This
basically is a way for the association to
reduce the property insurance on its building based on how the building was constructed. An inspector goes through the
property with a four-page document that
answers all of the insurance company’s
questions as to how the roof is attached and
how the building will hold up in a wind-storm. With a well constructed building the
wind mitigation credit will be larger than a
much older building with poor construction.

RICHARD A. FOOTE is an account executive with Gateway
Insurance Agency in Fort Lauderdale. Reach him at (954) 332-1849 or [email protected].

Extreme insurance

The assault on our homes and property
from natural and manmade sources
appears to be without end. Extreme risks demand extreme measures, and
Florida’s insurance industry has responded
with several packaged products to properly protect you, your family and your substantial assets.

“Considering the exposure to hurricanes
and so many legislative changes, a lot of
insurance carriers simply pulled out of
Florida,” says Marla Intoppa, AAI, personal
lines sales manager, Gateway Insurance,
Fort Lauderdale, Fla. “Two new packages
aimed at the high-net-worth market have
been a savior for people who otherwise
have been underinsured or forced to go to
alternative excess and surplus lines carriers.”

Smart Business recently spoke with Intoppa about certain unique insurance
exposures and some policies that should
be considered by high-net-worth individuals.

Are beach homes covered for storm surge?

Homeowners with beach property often
carry homeowners and windstorm insurance but don’t carry flood insurance. They
don’t understand that storm surge is actually a flood event, and floods are specifically excluded by homeowners insurance.
Those who do purchase a basic flood policy may still be grossly exposed. The national flood program only provides up to
$250,000 of coverage on the dwelling and
up to $100,000 on the contents. Meanwhile,
the typical homeowners policy in Florida is
written for approximately $400,000. That’s
a substantial gap. It’s very important to buy
an excess flood policy to avoid this potentially huge exposure that is not covered
under your other policies.

Does an umbrella policy cover lawsuits
brought by domestic workers?

An umbrella policy covers events like car
accidents where you are sued for a $1 million and your underlying policy limits are
only $250,000 and $500,000. Most standard
umbrella policies are for third-party claims
and exclude coverage for domestic employees. Nannies, housekeepers and
drivers can present significant exposure
because people often terminate employees
for the wrong reasons or say inappropriate
things in their presence. Employer
Practices Liability Insurance (EPLI) is very
important because domestic workers on
your premises are employees, but they are
not covered through any workers’ compensation or for labor reasons. Insurance
packages designed by AIG and Pure offer
EPLI coverage for people who have
domestic employees on their premises,
and it’s very out of the ordinary.

How should families best insure their teen

Florida insurance writers use credit and
prior insurance as a stability factor. Florida
law also makes parents legally responsible
for everything our teens do until they are
no longer dependants of the household. If
they get in a serious car accident and injure
other people, the family is exposed to their
liability. When parents place a 16-year-old
on his or her own policy, he or she doesn’t
have the stability factors, so it is very
expensive. In the long run, it’s better to list
the teen on the family’s policy because the
parents can stay in control of the policy to make sure it doesn’t lapse, and the coverage limits will be higher. It’s usually less
expensive because they may qualify for the
family’s multicar discounts, and the teenager’s risk is spread out over the entire policy.
Additionally, there’s a smaller chance of
having some type of uncovered claim.

Is there any difference between Citizens and
a standard insurance carrier?

The main differences are the coverage
and response time. Citizens was designed
for homeowners who can’t go anywhere
else for coverage because their homes are
older with more exposure or are not well
protected. Citizens doesn’t include theft
away from premises coverage and loss-ofuse protection is limited to just 10 percent
of the coverage.

The biggest difference is service. A perfect example of this occurred as Hurricane
Katrina headed for New Orleans. AIG had a
client with a large fine arts and jewelry
schedule, and the owners were not home.
They actually sent in, by helicopter,
Blackwater Security Company to guard the
house, and movers were dispatched to
remove the artwork until the security systems were restored. They subsequently
sold a lot of policies to neighbors who were
impressed by the security personnel who
were dressed in black and carrying rifles.

Will a homeowner’s policy pay for jewelry if
a house is burglarized?

Standard homeowner policies are limited
to between $1,000 and $5,000 of theft coverage for jewelry. If you’re burglarized,
that’s the maximum the insurance company will pay out unless you schedule the
items. When jewelry is scheduled there is
no deductible and coverage is broadened
to include mysterious disappearance and
other losses. The coverage is worldwide. It
only takes a phone call to schedule these
items and it’s definitely worth it.

MARLA INTOPPA, AAI, is personal lines sales manager,
Gateway Insurance Agency in Fort Lauderdale, Fla. Reach her at
[email protected] or (561) 253-1627.

Insurance a la carte

Restaurant owners are normally exhausted after a grueling day of pleasing customers and soothing employees. But instead of sleeping, some owners
lie awake worrying about the liabilities and
exposures involved in the food industry.

“Most restaurant owners think they have
all the coverage they need to protect
against losses,” says Darren Wu, vice president and account executive at Gateway
Insurance. “But today’s insurance market
is like going to a sit-down restaurant and
ordering off the menu; you order what you
want and only get what you order.”

Smart Business spoke with Wu about
how to best protect a thriving restaurant
from losses due to equipment, employment
practices and business interruptions.

What current insurance issues are challenging restaurant owners?

The biggest issue today is finding a package policy that offers comprehensive ‘all-risk’ coverages.

Most business owners think they have
adequate coverage to insure against all
losses. In past years, most insurance companies offered comprehensive policies that
covered most perils that a small to medium-size business might face. Many coverages were automatic and included in the
policy. Things are very different in today’s
world of commerical insurance.

Buying insurance for today’s business
owner is very much like ordering à la carte
from a restaurant menu. Many coverages
that previously were included in package
policies now must be specifically requested. Three notable coverages that may not
be included in some business policies are
windstorm (hurricane), product liabiity,
and business interruption and extra
expense coverages.

What insurance coverages are crucial for
every restaurant?

First and foremost, all businesses should
purchase comprehensive general liability
insurance to cover claims for bodily injury
and property damage that occur either on
premises or wherever the business may go.

Included in this must be products liability
insurance in case a patron becomes sick
from food served by the restaurant.

All businesses also need property insurance to cover both business and personal
property (contents, stock, equipment, furniture, fixtures), as well coverage for real
property if the restaurant either owns or is
required to cover the building, as well as
coverage for improvements made to the
real property.

Additionally, all business owners should
consider business interruption and extra
expense coverages to handle the financial
burdens of a business after a covered loss to
the premises.

In most cases, state law will require workers’ compensation insurance for employees
who may be injured on the job.

Restaurants that serve alcohol should
always carry liquor liability insurance and
— whenever possible — should consider
crime coverage to guard against theft by

Restaurants with owned vehicles and/or
restaurants whose employees drive their
own cars for work purposes must carry
insurance in this area as well.

Lastly, it’s smart to take out an excess liability (umbrella) policy along with sufficient health, life and disability insurance to
protect owners, their families and/or partners.

What additional restaurant insurance products are often underutilized?

The most common ‘unique coverage’ for
a restaurant owner would include equipment breakdown coverage and spoilage
coverage in the event of a power loss. This
should include coverage whether there is a
direct physical loss to the premises or loss
of power due to an off-premises cause.

Employment practices liability insurance
(EPLI) is always a smart idea, especially
for restaurants. Most insurance companies
do not include these coverages in their typical package policies.

How does employment practices liability
insurance apply to restaurants?

These policies typically cover sexual
harassment, discrimination, wrongful termination, breach of employment contracts,
negligent evaluation, failure to employ or
promote, wrongful discipline, deprivation
of career opportunity and wrongful infliction of emotional distress.

These claims are typically never covered
in other business policies. Unfortunately,
they are becoming increasingly common
and the cost to defend them, without insurance, is incredibly expensive.

How can agents maximize coverage and
value for restaurant owners?

We as agents have to work as a team with
our clients to ensure that limits and coverages are sufficient to cover the insured for
catastrophic claims while recognizing that
it may be cost-prohibitive to insure each
and every peril. That means designing a
cost-effective program that neither under-or over-insures a business.

The most important thing is that the
agent sits with the owner and understands
the operation, and where and how sales
are generated. A truly professional agent
will never merely photocopy existing policies and offer a bid on those coverages.

DARREN WU is vice president and account executive at Gateway
Insurance. Reach him at [email protected] or (561)