Hello! We hope that you will find this blog helpful when navigating the complicated world of insurance. Even though we work in the industry, we understand how overwhelming the never-ending coverage options can be. This blog is our opportunity to connect with you, our customer and become the place where you can get all your insurance questions answered.

Insurance is not a one-size-fits-all
type of product…

Because insurance is not a one-size-fits-all type of product, getting the right coverage for your specific needs, whether as an individual or a family, is our top priority. We believe this value system, along with our ability to shop for the most valuable coverage option, is what sets us apart from your typical insurance company.

Now that the formalities are out of the way, we welcome you to read on and become better equipped to tackle the insurance monster. We have your back.

– Your Hertvik Team

Understanding Joint Ventures

A joint venture is an entity formed by two or more businesses in order to pursue a specific purpose for a specified period of time. While some states require joint ventures to be legally filed, other states recognize any entity that meets the definition. A partnership differs from a joint venture as the former lasts indefinitely and its purpose may change.

A joint venture (or JV) can consist of sole proprietors, corporations, partnerships or, any combination of these entities. Such ventures often bring together two areas of expertise to be applied to a single objective. Therefore, JVs allow the participating entities to capitalize on that combined expertise for a specified time period. JVs may also consist of entities that are, typically, rivals in the same market that may join forces for a commercial activity that they are unable to pursue alone (typically due to size, resources or expertise).

Insurance policies generally do not cover a JV unless its name is shown on the policy. There is no automatic coverage for a business that begins a joint venture during a policy term. For instance, two contractors are interested in bidding on a major project. They decide that it may be beneficial to bid on the project as a single entity. In this case, the joint venture is recognized as a distinct legal entity formed for pursuing the project. Unfortunately, it’s equally common for businesses to fail to recognize that they have formed a JV. The oversight could result in the joint venture suffering a loss that isn’t covered by insurance.

“There is no automatic coverage for a business that begins a joint venture…the oversight could result in the joint venture suffering a loss that isn’t covered by insurance.”

Consider contacting a Hertvik insurance agent to discuss your possible coverage needs which may include general liability, automobile liability and, if the joint venture has employees, workers compensation insurance. It is also important to determine if the joint venture will need insurance to continue after the JV ceases to exist. While JVs can be extremely beneficial to all participants, they also have the potential for legal and operating problems that are unforeseen. JVs often involve complex contracts and non-disclosure agreements. The coverage issues are unique to each joint venture and should be carefully addressed by legal counsel and the insurance agent in cooperation with the joint venture principals.

What to Consider When Preparing for Disaster

No business wants to face an event that could seriously curtail or even shut down operations. Unfortunately, few businesses have plans to deal with such a disaster. It is not unusual for a business to overlook creating disaster plans. Further, companies that do have disaster or continuity plans in place often fail to update their plans on a regular basis. Besides having an updated plan, it is also important to test their plans.

Business decision makers must spend time preparing for the possibility of catastrophe. It could be a natural event, or it could have a human origin. Regardless, an owner, manager or executive must think about the many events that could either temporarily or permanently interrupt their business. In other words, a business must consider what threats exists to their normal, profitable operations. The task may initially appear overwhelming. However, it is just a matter of considering what the business does; where it does it; how it does it; and why it does it; then, examine what could happen to stop any of these things.

Natural interruptions could be caused by wind and rainstorms, flood, snow/ice storms, earthquakes, extended or extreme temperatures, etc. Human events may include fires, break-ins, mobs, sabotage, etc. Typically, a thorough consideration of problems involves identifying the worst possible things that could occur…even when their chance of happening is remote. Remember that a single, unanticipated event could cripple or even terminate a business, so you need to have a plan that contemplates a wide variety of harmful situations.

Consideration must be given to a business’ physical structures and property, machinery/equipment, management, finances, employees, products, stock, finished goods and goods in process, services, communications, transportation, contractual obligations, competition, suppliers, distribution, and so on.

Recovering from disaster depends upon many factors. Regardless the reason for a business suffering a serious interruption, the goal must focus on resuming normal operations as quickly as possible. Getting back into business often depends upon insurance, but other arrangements may be necessary and even be more important. Consider plans that include the following:

  • Arranging use of another location to run the business
  • Having duplicates of key business records (kept at another location)
  • Arranging other sources of product supplies if a key supplier’s business is interrupted
  • Having access to substitute production machinery
  • Buying and maintaining generators/alternate sources of light and power

When considering how to deal with events that could threaten your business, the biggest disaster could be the failure to create a viable disaster recovery plan. Contact us if you have any questions, or if you would like to consider disaster recovery coverage for your business.

Commercial Lines

Mike McAvinue – Vice President of Commercial Lines

The insurance industry is constantly undergoing changes that are likely to impact business owners.  At Hertvik Insurance, we monitor these changes so we can help our clients navigate them with confidence.  The most significant changes we see today revolve around pricing, new technology, and some emerging lines of business.

Property-Casualty pricing remains favorable overall with modest increases averaging 3.5% in Q1 2019, according to The Council of Insurance Agents & Brokers. Commercial Property, General Liability, Inland Marine, and Umbrella lines should remain competitive through 2020.

While overall pricing is favorable, profitability in Commercial Auto remains a significant challenge for many insurers. Distracted driving and the increased cost of vehicle repairs are making this line of business increasingly unprofitable.  A minor fender-bender ten years ago resulted in a repair bill of $600 for a new bumper; today that same fender-bender can easily cost $4,000 because of the electronics and sensors now found in many bumper systems.  As a result, we expect commercial auto rate increases to continue while some carriers also pullback in terms of their appetite or demand higher deductibles. Businesses with a history of auto-related losses will bear the brunt of these actions.

Technology heavily influences the insurance industry, and continually developing technological advancements will ultimately benefit insureds by improving carrier efficiency and rate accuracy. Developments including predictive analytics, artificial intelligence, the Internet of Things (IoT), and telematics are just a few heavy influencers.  We’ll dive deeper into these areas in an upcoming issue.   

Beyond rate and tech trends, we see a significant uptick in demand for some specific areas of coverage. Cyber Liability, Employment Practices, and Directors and Officers coverage have dominated many of our conversations in 2019. As the demand for these coverage options increases, more carriers have begun offering them, resulting in better pricing and more choices.

Overall, industry pundits foresee continued pricing stability in commercial lines.  AM Best, a credit rating agency tasked with predicting the future health of the insurance market, has a stable market outlook for commercial lines in 2019. 

For more information, please reach out to your Hertvik Insurance Group representative.    

Hertvik Insurance
800.467.3254 – www.hertvik.com

A commercial property insurance policy covers most direct losses to a business’s structures, equipment, and related property. However, what happens when weather conditions turn mean and cause indirect damage by knocking out utility services? The property could be harmed by heat-induced transformer breakdowns. This form of power interruption affecting compressors, motors, and switches, at a business could result in food spoilage or damage to climate-sensitive property. Equipment damage may also occur due to an accidental, sudden loss of power. Power surges may harm expensive equipment. Commercial property policies often exclude coverage for loss that involves the failure of utility services. Therefore, a business is vulnerable to utility failure or interruption of any type that occurs away from its business location.

Fortunately, optional coverage is available to protect against utility service-related losses, and a business only needs to buy the type of coverage it needs, such as services for water, telephone/communications (either including or not including landlines), gas, and electric power. Commercial insureds also have the option to protect different classes of property, what business locations to insure, type of property (the firm’s property and property that belongs to others, such as customers), and the sources (perils) of loss covered.

Such coverage forms usually define the utility services; perhaps using language similar to the following:

  • Water Supply Services are the pumping stations and water mains that supply the covered premises.
  • Communication Supply Services refers to telephone, radio, microwave, or television services that are included as covered property, but coverage is not limited to only that property. The only specifically excluded communication property is a satellite. Overhead transmission lines may be included or excluded, depending on how the schedule is completed.
  • Power Supply Services means five specific types of property used to supply electricity, steam, or gas to the scheduled property. The types of property are generating plants, switching stations, substations, transformers, and transmission lines. The transmission lines may be included or excluded, depending on how the schedule is completed.

If your business is concerned about its vulnerability to power-related loss, be sure to check with your Hertvik Insurance Group professional about this valuable coverage option.

Hertvik Insurance
800.467.3254 – www.hertvik.com

How to Decide if Flood Insurance Makes Sense for You

Do you need flood insurance?

If you own property that could be damaged or destroyed by water, then you should seriously consider buying flood insurance.

Is A Flood Loss, Likely?
The chances of your business, home, or personal property being damaged by a flood depend primarily upon where you live. It also depends on other factors, such as:
• how much of a flood warning you receive
• the level of flood precautions you take (such as moving personal property from lower levels to higher levels), and
• the precautions that are taken by your community (such as the use of flood controls in construction standards, storm sewer planning, or sandbagging threatened areas).
Floods are related to weather conditions and tend to affect wide geographical areas. This makes flood losses more likely than a loss from fire or windstorm. Many people have been misinformed to believe that flood insurance is only needed if you live in a flood-prone area.

You Live in a Flood Zone
If you hear the term “flood zone,” you may think that it refers to locations that are particularly vulnerable to flooding. Wherever you live in the USA, you live in a flood zone. While your area may have a lower chance of flooding than a coastal area or a location situated near a body of water, your area could still experience flooding. Think in terms of the backed-up storm sewers you may have seen in your community with the rainy spring we’ve had this year. Our area experienced several deluges or flooding due to heavy rain this year.

Why Worry When Disaster Coverage Is Available?
Are you thinking that, after a flood, your loss may be handled by the government declaring a disaster area? If so, you’re still taking a couple of large risks. First, your flooded locale may not be deemed a disaster area. Second, being designated as a disaster area is not a bargain. Disaster area status only gives citizens access to government disaster loans. If you qualify for assistance, you have replaced insurance protection with an obligation to pay off a large, long-term loan. Is it worthwhile to gamble on an opportunity to pick up more debt? You’ll find flood insurance to be a less expensive and much more valuable alternative.

Don’t Be “All Wet.”
You don’t have to leave yourself unprotected. Your Hertvik Insurance Group professional can help you with detailed information on the National Flood Insurance Program. You can also ask for help in getting the coverage you need in the face of a flood.

Hertvik Insurance
800.467.3254 – www.hertvik.com

Understanding Umbrella Policies

The average driver will be involved in more than three accidents in their lifetime. In a world where people are more likely to seek legal action, and medical expenses are increasing, you need to make sure that you have the proper coverage at the time of those accidents. The best way to do that is through an umbrella policy. An umbrella policy provides additional liability insurance over your underlying liability policies such as an auto or homeowner’s policy. There are many misconceptions about umbrella policies.

Misconception #1: Umbrella policies are too expensive. The average homeowner with two cars and two drivers pays less than $250 a year for a $1 Million umbrella policy.

Misconception #2: I have enough coverage now. Most auto and homeowners policies provide $500,000 or less in liability coverage. When another party is injured, you could be responsible for their medical bills, lost income, pain and suffering, and legal bills. Those costs can quickly exceed the limits on your average homeowners and auto policy. Without an umbrella policy, you will be held personally responsible for those damages.

Misconception #3: I don’t have significant assets to protect. While this might be a reason for some people not to purchase an umbrella policy, if you plan on developing additional assets in the future, you might still need an umbrella policy. In many court cases, the liable party might be forced to pay the injured party from future earnings. By purchasing an umbrella policy, you are protecting the assets you have now and your ability to earn in the future.

Misconception #4: I am a great driver, and if I am in an accident, the other party will be at fault, and they will pay. Unfortunately, most people carry low limits on their auto insurance. If you are hit by one of these low limit drivers, your umbrella policy can cover you if you add uninsured/underinsured motorists coverage. This protects you from drivers who either have no insurance or insurance with insufficient limits. There are a lot of drivers in Ohio who only carry the $25,000 required by the state.

Interested in more information, contact your Hertvk Insurance Group professional for an umbrella proposal.

Hertvik Insurance
800.467.3254 – www.hertvik.com

Into the World and Out of the House

Marylyn Jackson, Senior Account Manager

High school students everywhere are celebrating graduation and will soon be preparing to leave for college and begin an exciting new chapter in their lives. As parents, we stress and worry about keeping our kids safe while giving them this newfound freedom. With all this change happening, it can be easy to overlook your changing insurance needs. Now is a great time to review your coverage. Consider the following if you have a recent graduate.

Location of Vehicle: If your child is not taking a vehicle to school with them, and the school is more than 100 miles away, they might qualify for a discount.

Grades: Full-time students attending college may continue to be eligible for good student discounts.

Driver Status: Even if your child will not be taking a vehicle with them, do NOT remove him/her as a driver on your policy. By leaving them on your policy they are covered when they return home on breaks or borrow a friend’s car at school. They also retain coverage if they are hit by a car while walking, bicycling or even as a passenger in another vehicle.

Personal Property: While the college student is away at school, a small amount of personal property will typically extend from your homeowners or renters’ policy. It’s a good idea to check how much property coverage will extend and make sure that it is enough to cover the student’s property at school.

Personal Property Off Campus: It is not uncommon for a student to rent a house or apartment off campus. In this instance, it is not unusual for a property manager to require proof of insurance. We can provide the landlord with a form indicating that coverage will extend from the parent’s policy.

Some property managers ask to be listed as an additional interest on a policy. Property managers have no shared interest in the personal property being insured and, as a result, most carriers do not allow them to be listed on the policy. However, some carriers have begun providing an option to include property managers to receive notification in the event the policy cancels while providing them no shared interest or coverage.

As your children grow and new life events occur, please keep us in the loop. Feel free to contact us at Hertvik Insurance; we look forward to hearing from you!

Hertvik Insurance
800.467.3254 – www.hertvik.com

The Importance of Regular Policy Updates

MariLou Franczkowski, VP Personal Insurance

As your life changes, your insurance policies should change with it. When there is a change in your life that needs to be reflected in your insurance policy, give us a call us to discuss it. If you don’t, you could be missing out on discounts and even end up having a claim denied due to not having the right coverage.

You could be missing out on discounts…due to not having the right coverage.”

Here are some real-life examples where not calling us to discuss the changes in your life could have negative consequences:

Recently finished your basement? We should talk. A finished basement typically requires an increase in the water back-up limit. An unendorsed homeowners’ policy will likely be insufficient to repair and replace a finished basement in the event of a sump-pump failure. As a rule of thumb, give us a call anytime you upgrade the interior of your home.

Suppose you had a new roof put on your home last summer. Did you know that many insurance companies give discounts for a new roof? When you make substantial changes to your home, you might end up missing out on the discounts that come with it. It’s not always about buying additional coverage; some changes can create added savings.

These are just a few examples of what could happen if you don’t talk to us about the changes that are happening in your life. Other changes such as marriage, divorce, the purchase of expensive personal property, installation of a home alarm system, a newly licensed driver, buying or selling a car, and adding a pool or hot tub are just a few other examples.

We’re here to help you protect what you’ve worked so hard to build. Reach out to us as your life changes so we can help provide you with the protection you need!

I’m pretty confident that if you asked anyone who has ever owned a rental property you would get an overwhelming response that it’s not as lucrative or easy as they thought it would be. In fact, owning a rental property can be a major pain, and end up costing you a ton of money!

I certainly don’t mean to be a “Debbie Downer”, and I know that if it’s done right it can be lucrative, but from an insurance agent’s perspective, I don’t see a lot of people doing it right.

So you’re probably thinking, “Well Chris, you are an insurance agent. What do you know about real estate or rental properties? Why should I take advice from you?”

I’m not a real estate agent, and I don’t own a rental property. However, several of my friends/family/clients/co-workers own rentals, and because I insure a bunch of their properties, I’ve had a first hand account of the process, and I’ve learned what to do, and what not to do.

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