you're going to love this! - fabian sklar king & liss€¦ · michael h. fabian is the...
TRANSCRIPT
Association of
MICHIGANSMALL BUSINESSSMAL
AMALL
JULY/AUGUST 2014 • VOLUME 10 • NUMBER 6
You're Going to Love This!Make Sure You’re on Course to Financial Success with Pulse, SBAM’s New Member-Only Financial Analysis Tool
INSIDE
● Michigan 50 Companies to Watch: Congratulations SBAM Member Winners
● How To Recruit Leadership Talent from Large Companies
● Great Ideas Change Everything: Michigan Marketing Starts with Branding, Storytelling
Vote “YES”
on Proposal 1
on August 5
14 July/August 2014
Risky BusinessProperty Insurance Considerations for Small Businesses and Best Practices for Securing a Policy of Insurance and Avoiding Financial Disaster After a Natural Disaster
By Michael Fabian
The chaos, uncertainty and financial damage caused
by a fire, windstorm or other natural disaster can be
devastating for small businesses. Time is of the es-
sence since delays in resuming normal operations can
result in a loss of loyal customers to your competition
as they seek to have their needs met elsewhere while you are
responding to the disaster.
Insurance coverage can help a business get back on its
feet in the case of a disaster, replace damaged property and
compensate the business from the loss of income and extra
expenses suffered as a result of the disaster. However, as an
attorney who represents business owners in their insurance
claims after a fire or other disaster, I have found that business
owners sometimes cannot become adequately compensated to
allow the resumption of normal business activities through their
insurance policy, simply because the business owner failed to
obtain adequate insurance coverage. Therefore, for small business
owners, it is critical to both understand how to obtain adequate
insurance and to know what to do in order to collect all of the
benefits that the business may be entitled to receive under the
policy of insurance.
Make Sure Your Insurance Agent Knows Your Business
Spend time with your insurance agent. Keep in mind, you are
buying insurance to prevent a natural disaster from becoming a
financial disaster. A simple phone conversation or a brief meeting
with the insurance agent is generally not sufficient. Your insurance
agent should spend the time to become familiar with the operation
of your business, as well as becoming familiar with the physical
assets owned by the business and its financial structure.
Make Sure You Have Adequate CoverageMost insurance agents have the necessary means to calculate
the proper amount of insurance on a building and its improvements
after performing a detailed inspection and analysis of the premises.
However, when it comes to coverage for equipment and inventory,
that is something you are best equipped to assess, since you have
the best information on the cost of your equipment and the cost
to replace your inventory.
You should also obtain business interruption coverage that
will compensate you for loss of income and the extra expenses
incurred after a loss. Your accountant can help your agent assess
your needs should you experience an interruption of operations
that cut off your cash flow.
Review the PolicyWhen you receive a copy of your insurance policy, read it and
make sure it provides the coverage you thought you were getting
and does not contain any exclusions or conditions that you were
not aware of. Since the law presumes that you have read and fully
understand your policy, if you believe there may be a mistake in
the coverage, let your agent know of the mistake. If you are silent,
you may not have any recourse if the policy does not provide the
coverage you thought you had.
Know What to Do When Disaster StrikesAfter a loss the policy requires you to give the insurer prompt notice
of the loss and to take reasonable steps to prevent further property
damage, such as boarding and securing damaged buildings or removing
water that may result in mold. The expenses incurred in protecting the
property from further damage are covered by the insurance policy so
detailed records of these expenses should be maintained.
F E AT U R E STO RYF O C U S
LISTEN TO AN AUDIO INTERVIEW WITH MICHAEL FABIAN ON SBAM’S “BUSINESS NEXT” PODCAST. Go to michiganbusinessnetwork.com/radio/Business_Next and navigate to the March 12, 2014 program.
Small Business Association of Michigan 15
Preparing the ClaimContrary to popular belief, and the
images promoted by the insurance industry,
it is the duty of the business owner – not
the insurance company – to make sure all
damage claims are properly documented and
valued and all insurance policy conditions
are met. The insurance company uses
professionals to determine its liability for
a loss, therefore, in significant claims, it is
advisable for business owners to engage the
services of an experienced property damage
attorney or a public adjuster to professionally
evaluate and inventory the damaged property
and to meet with the insurance company’s
adjusters to reach an agreement on the
amount of loss. If potential liability issues
may exist concerning the cause of the loss,
the attorney can retain qualified investigators
to determine the cause of loss.
The policyholder must meet all re-
quirements in submitting a claim in a timely
fashion. If a proof of loss is is requested in
a timely manner by an insurer, the failure
to submit a signed and sworn proof of loss
within the time period specified by the insurer
may result in the claim being denied.
Provide Requested RecordsThe insurer may require the policyholder
to provide tax returns, business records and
to submit to an Examination Under Oath
(EUO), which is a pre-suit deposition. The
business owner must provide the requested
information and testimony or risk violating
the contractual obligation to “cooperate” in
the investigation, which also might allow the
insurer to deny liability.
Protect Yourself From Financial DisasterTo be protected from having a natural disaster become a financial
disaster, the business owner should utilize the services of an experienced
insurance agent who will spend the time necessary to make sure the
policy adequately insures the business. If faced with a significant loss, the
business owner should consult with an experienced property damage
attorney to protect their rights, to make sure all policy conditions have
been met, to see that a proper claim investigation has been conducted
and to ensure that a claim has been properly prepared and timely
submitted to the insurance company. These steps are necessary in order
to reach a settlement with the insurance company that provides the
business owner with the full amount of the benefits due under the policy
of insurance that avoids large uncompensated losses and to allow the
business to resume its normal, pre-loss profitable operations. — SBAM
Michael H. Fabian is the founding shareholder
of Farmington Hills-based Fabian, Sklar & King, P.C.,
a nationally recognized leader in fire injury, explosion
and property damage claims. To learn more,
visit www.fabiansklar.com.