Hail Damage Photo – McAllen, TX
Take a look at this incredible shot of some hail damage at a Starbucks store that occurred in McAllen Texas last night. This picture came from the National Weather Association.
Windstorm or hail damage is a covered cause of loss on a property insurance policy. Here in California, I can’t imagine ever seeing hail as severe as this, but the picture was incredible enough to share.
–JK
Massive Overnight Fire Destroys Businesses in Cerritos
This morning I woke up and was having my morning coffee and catching up on the news when I read on Twitter that a major fire broke out locally overnight and destroyed a retail strip mall about four miles from my home. I decided to jump in the car to check out the scene of the fire. Here’s a short video I took:
According to the Cerritos-Artesia Patch, flames burned for more than three hours at Cerritos’ Fountain Plaza, destroying businesses in the two-story strip mall. Estimates are the fire caused about $5.5 million in damages.
The blaze broke out at 2 a.m. Sunday, Oct. 23 and burned for more than three hours, according to the Los Angeles County Fire
Cerritos on the map
Department. About 75 firefighters were on scene to battle the massive blaze.
The fire reportedly began at a Chinese restaurant in the building along the back-end of the shopping plaza — then spread to adjoining businesses. The roof of the restaurant eventually caved in as firefighters tried to tame the flames, according to reports from the scene.
Aside from the restaurant, the commercial building also housed at least 10 other businesses, including an ultrasound clinic, a dental practice, and an escrow firm.
Damage to the structure was estimated at $4 million, and roughly $1.5 million worth of contents were also destroyed, a county fire inspector said. The cause of the fire was not yet known.
Lesson Learned
When’s the last time you reviewed your property insurance coverage? Do you have adequate coverage to protect your assets? What about business interruption coverage? Whether you own a commercial building or a business, don’t think that a catastrophic fire won’t ever happen to you! This single fire completely destroyed ten different businesses. Not only are all the contents destroyed from fire and water, but all the businesses will need to be re-built and relocated. It will be quite some time before operations are restored, but the bills won’t stop coming. The salaries, loans, mortgage, and overhead still need to be paid. Don’t get burned before it’s too late.
–JK
Know Your Deductible
Picture this scenario- You own a pizza parlor. It’s late Tuesday evening and business is closed as you are getting your premises fumigated. You have the pest control company at your premises to “bug bomb” the joint. As a passerby walks by your front window, he thinks he sees smoke and frantically calls the fire department. The fire department arrives and see’s “smoke” so they break down your front door and hammer through your front window to access the interior only to find out that the white stuff wasn’t smoke. Rather, a routine pest control measure you’re trying to take to maintain your restaurant.
The end result? You get called to come down to the scene. You have to temporarily board up the front door and windows to keep things safe until the morning; and when the morning arrives, you have a contractor come out to fix everything so that you’re back in order for business.
When it’s all said and done, the contractor gives you an invoice for $2,800. You call your insurance carrier to put a claim in on the loss. In the process, your claims adjuster advises that you carry a $2,500 deductible. “Ahhh man! That means it’s coming out of my pocket!”
Have you ever experienced a similar situation where you find yourself paying out a loss entirely because your deductible was high? Was it burdensome for you to have to pay, or do you wish you had a lower deductible to save some cash?
The reality is people’s preferences are different when it comes to insurance and their deductibles. Some businesses like higher deductibles to save some money on their insurance premium. They may feel anything under their deductible amount wouldn’t be an issue to cover out-of-pocket. Or, they don’t anticipate many losses, so it’s not a big deal. For others, an unexpected loss like this might put them in a financial bind, but they never knew what their deductible was in the first place.
Solution
The story above is a true story. It happened to a client of mine last week. Since he carried a $2,500 deductible on a $2,800 insured loss, we didn’t move forward with the claim. Yes, it was a burden to have to fork out $2,800, but luckily it wasn’t too much for him to handle. However, we did make some changes on the deductible, and it really didn’t impact the premium much at all looking at the big picture:
- Changing the deductible from $2,500 to $1,000 = Additional annual premium of $114
- Changing the deductible from $2,500 to $500 = Additional annual premium of $194
So what’s the moral of this story? For one, know what property insurance deductible you carry, and two, picture yourself in a loss. Can you handle the deductible, or will it put a dent into your savings? Why not play with the different deductible options to see what difference in annual premium you’re looking at. Really, it’s not much in the grand scheme of things. You never know when the fire department might be banging down your front door.
–JK
Clean Up Your Mess!
I wrote insurance coverage for a commercial building earlier this year, property and general liability, only to receive a phone call a couple of months later from the carrier telling me that an inspection was done on the building and for lack of a better term, the premises was an absolute mess. It needed a fix quickly, or coverage was going to be cancelled short-term. The call took me by surprise so I decided to visit the property myself. Here’s what I discovered:
This was borderline hoarding. Storage was disorganized, with random articles stacked in solid piles up to the ceiling in some areas. There were no aisles and inadequate means of getting out from the storage area in the event of an emergency. Combustible material was stacked near an electrical switch, box, and panels, etc.
The loss control recommendation from the carrier: housekeeping. “There is excessive storage of combustible inventory and miscellaneous material throughout parts of the warehouse. Such arrangement of material (with 1 small walking path) could impede safe egress from the structure; The volume of closely packed material increases exposure to a rapidly spreading fire. The material also obstructs access to fire extinguishers and is stacked adjacent to electrical boxes and panels; The heavy fire load may not be controlled by the existing sprinkler system.”
The recommended solutions to this mess?
- The inventory should be rearranged so all electrical boxes/panels have a 3′ radius free of combustible material.
- The inventory should be rearranged to allow access to fire extinguishers.
- The inventory density should be reduced to allow better access to storage areas and improved water distribution for the sprinklers.
- Housekeeping should be improved and then maintained on a regular basis.
This is one of the most extreme examples of a disorderly premises that I have encountered. It doesn’t take an insurance professional to know that this is a severe property and general liability insurance hazard. There is absolutely no way of writing insurance with any carrier if you have a premises in this kind of shape. The risks are just too extreme. I’m not an obsessive compulsive neat freak by any means, but I ask myself if this insured has any bit of concern for protecting their assets? The point here is about risk management and risk reduction, not about making things look pretty at your home or business.
What type of housekeeping do you maintain at your home or business?
–JK
Sunset Beach, CA $10M House Fires
So, yes, this is a blog devoted to business insurance topics, but sometimes events happen close to home that stir interest and are worth writing about. One such event is a major fire that occurred Thursday in Sunset Beach, only a few miles from home down the road on Pacific Coast Highway.
At least three different million dollar beach-front homes were severely damaged or destroyed by an intense fire. More than 80 firefighters responded to the four-alarm blaze shortly before 5 p.m. Thursday afternoon. One of the homes involved actually collapsed from fire damage and two others sustained major damage.
Here’s some raw footage from YouTube user medxproductions:
Firefighters from Newport Beach, Huntington Beach, Fountain Valley and the county fire authority fought the blaze. The cause of the initial fire might have been an overturned barbecue grill, officials said.
The Orange County Fire Authority advised that damage to the four buildings could reach $10 million . That includes damage and contents to the four homes torched by the fire, three of which have been red-tagged and deemed uninhabitable.
One neighbor said “I always imagined that we would have an earthquake or tsunami, but never a fire. It‘s one of those things that you actually don‘t prepare for.” As an insurance agent, these are infamous last words often heard after a major loss. Sadly, many don’t feel like an event of this magnitude will ever happen to them. As a result, they might pass on insurance, or under-insure their belongings and possessions in order to “save money” on premiums.
Regardless, summer is approaching and barbecue season has arrived. Now that the season is here, it’s essential that you’re barbecuing safely. Here are some recommendations provided by the U.S. Fire Administration:
Use Barbecue Grills Safely
- Position the grill well away from siding, deck railings, and out from under eaves and overhanging branches.
- Place the grill a safe distance from lawn games, play areas, and foot traffic.
- Keep children and pets away from the grill area by declaring a 3-foot “kid-free zone” around the grill.
- Put out several long-handled grilling tools to give the chef plenty of clearance from heat and flames when cooking food.
- Periodically remove grease or fat buildup in trays below grill so it cannot be ignited by a hot grill.
- Use only outdoors! If used indoors, or in any enclosed spaces, such as tents, barbecue grills pose both a fire hazard and the risk of exposing occupants to carbon monoxide.
Charcoal Grills
- Purchase the proper starter fluid and store out of reach of children and away from heat sources.
- Never add charcoal starter fluid when coals or kindling have already been ignited, and never use any flammable or combustible liquid other than charcoal starter fluid to get the fire going.
Propane Grills
- Check the propane cylinder hose for leaks before using it for the first time each year. A light soap and water solution applied to the hose will reveal escaping propane quickly by releasing bubbles.
- If you determined your grill has a gas leak by smell or the soapy bubble test and there is no flame:
- Turn off the propane tank and grill.
- If the leak stops, get the grill serviced by a professional before using it again.
- If the leak does not stop, call the fire department.
- If you smell gas while cooking, immediately get away from the grill and call the fire department. Do not attempt to move the grill.
- All propane cylinders manufactured after April 2002 must have overfill protection devices (OPD). OPDs shut off the flow of propane before capacity is reached, limiting the potential for release of propane gas if the cylinder heats up. OPDs are easily identified by their triangular-shaped hand wheel.
- Use only equipment bearing the mark of an independent testing laboratory. Follow the manufacturers’ instructions on how to set up the grill and maintain it.
- Never store propane cylinders in buildings or garages. If you store a gas grill inside during the winter, disconnect the cylinder and leave it outside.
Commercial Insurance or personal insurance, fires are a reality for all and should not be taken lightly. They don’t discriminate on who they target. Learn from events like these that this can happen to anyone. Be certain your property insurance policies are up to date with the coverages you need to protect your livelihood.
–JK
Amazing Raw Video Footage of Flooding In Australia
Check out this intense raw footage from of heavy flooding in Toowoomba, Australia on Monday. A true lesson on the power of Mother Nature:
Floods are not covered by a homeowners or commercial property insurance policy. Rather, they must be covered on a separate policy. Homeowners and commercial property insurance covers damage to your property if caused by other perils, such as a fire or a tree falling, but water damage that results from flooding is not included in homeowners coverage.
What Is Flood Insurance?
Flood insurance provides protection from flooding which your home or business may experience. Flood insurance is a national program that’s backed by the federal government, which means you’ll pay the same price regardless of who sells you a flood insurance policy.
Purchasing flood insurance is fairly simple and may be required by your mortgage company if you live in an area that has a higher risk of flooding. In most cases, if you’re required to have flood insurance, the amount of coverage you should have should match the cost to rebuild your home or building.
What Types of Flooding Does Flood Insurance Cover?
Flood insurance covers flooding or rising waters due to sources such as rivers overflowing from melting snow, ocean surge driven by a hurricane, and failed dams or levees. If any of these situations could apply to your home or business, you may want to consider purchasing flood insurance if it’s not already required.
How to Find Out If You’re at Risk
The National Flood Insurance Program offers a flood risk profile to determine if your house is in a high-risk flood area. The site also offers helpful information and tools that include how much a flood could actually cost you, types of flood insurance policies, and how to prepare for and recover from a flood.
Where to Buy Flood Insurance
If you determine you need flood insurance, you may be able to purchase it from your insurance agent. If your agent doesn’t sell flood insurance, you can find coverage through the NFIP.
Note that when it comes to your auto insurance, flood is covered as long as you carry comprehensive physical damage on your vehicle and you have no special exclusions on your policy.
–JK
Snow Causes Metrodome Roof Collapse
Early on Sunday morning [12/12/10] in Minneapolis, MN, the Metrodome‘s (home of the Minnesota Vikings) roof collapsed following heavy snowfall over the weekend.
The roof is held up by hot air and a cable system which was unable to support the nearly 17 inches of snow Minneapolis received. The snowfall was the largest since a 1991 blizzard. It came a day before the Vikings were supposed to host the New York Giants. This is the second time the dome has collapsed. In April 1983, about a year after the Metrodome opened, heavy snow caused a similar cave-in.
Here is video footage of the collapse:
Is collapse a covered peril on a commercial property insurance policy?
Under the Special Property coverage form, collapse is specifically excluded from coverage. However, limited coverage is provided under the “Additional Coverages” section on the form, so you actually get some coverage back. (Carefully note that coverage for collapse may not be included in some named perils policies). Talk to your insurance agent about this…..you’re not expected to know what this all means, but you must understand! Otherwise, you may have gaps in coverage that you are unaware of.
For reference, the link below is the ADDITIONAL COVERAGES section on the special property coverage form which specifies what coverages apply for losses due to collapse.
Special Property Coverage Form: Section A.5.a “Collapse”
Every carrier and/or policy may have corresponding endorsements or exclusions, so be sure to contact your insurance agent if you have questions or concerns about your own coverage. Or, feel free to contact me anytime to discuss.
–JK
Tustin, CA Commercial Office Building Burns In Massive Fire
Not far from our office in Torrance, about 35 miles east in the city of Tustin, two firefighters were injured while battling a massive fire in a 50,000-square-foot commercial building on Tuesday.
The fire erupted inside the Maxim Healthcare building which is ironically the company I used to work for almost four years ago before I transitioned into the insurance world.
“All of a sudden, the glass just burst out of the first floor window, and flames immediately started coming out,” said a Maxim Healthcare employee. Firefighters had difficulties dealing with the massive 6-alarm fire. There were people inside the building at the time the fire was reported, however everybody got out okay.
The building was filled with years of important medical files and records. “All of our records were in there, either on the computer or on paper, so they’re up in flames,” said one Maxim employee. The flames were so intense that at one point, firefighters had to back out of the structure, and smoke could be seen for miles. About 100 firefighters responded, but an official cause of the fire has not been determined.
Here are pictures taken from the scene:
Large local fires like these always hit closer to home and make people realize it could happen to anyone, anytime. What if this happened to your building, your business, your office? Are you prepared?
7 tips for fire preparedness planning:*
- Establish an Evacuation Plan: Be sure everyone can get out quickly in an emergency. Designate primary and secondary evacuation routes and exits. Make sure these routes are clearly marked, well-lit, wide enough, and clear at all times. Train your employees in evacuation procedures and practice at least annually.
- Keep an updated list of telephone numbers, including emergency personnel, hospital, public health, utilities,insurance agent, and disaster relief agencies. Include contact names and telephone numbers for customers, suppliers, and distributors. Keep a copy off site
- Protect vital records critical to your business (e.g., financial statements, account information, blueprints, product lists, etc.) Select a safe that has been tested and listed by Underwriters Laboratories UL rates safes for resistance to fire and heat, as well as resistance to burglary tools and torches. Or, keep copies offsite if possible.
- Back up all critical electronic data and programs at least daily. Backing up these valuable assets can help a business recover from a data loss or hardware failure and get back online quickly.
- Secure backup copies of critical data and programs in a physical location separate from your premises to protect against damage from theft, fire, water and other physical hazards.
- Review your current property insurance policy with your insurance agent. Be sure that you understand the coverages (e.g., buildings, personal property, personal property of others, business income, etc.), deductibles, and limits of insurance. You will need to buy separate policies for flood or earthquake damage as they are excluded perils on property insurance policies.
- Keep insurance information and contact names and numbers in a safe place. This will expedite the claim process in the event of a loss.
*Other or additional measures may be required. Talk to a risk management professional
Never think it can’t happen to you! Be prepared.
–JK
Commercial Property Insurance – What Insurance Carriers Review Before Writing Coverage
Commercial property insurance is a “first party” coverage designed to protect the assets of a building owner. In simple terms, commercial property insurance protects buildings and contents for losses such as fire, smoke, vandalism, sprinkler leakage, collapse, theft, etc.
If you are a commercial building owner applying for commercial property insurance, carriers look at various physical characteristics of your building when underwriting. They use the “COPE” method which is an acronym that stands for four property risk characteristics:
- Construction (e.g., frame, brick, masonry, etc.)
- Occupancy (how the building is being used)
- Protection (e.g., quality of the responding fire department, adequacy of water pressure and water supply in the community, the presence or absence of smoke alarms, burglar alarms, etc.)
- Exposure (risks of loss posed by neighboring property or the surrounding area, taking into consideration what is located near the property, such as an office building, a subdivision, or a fireworks factory).
Construction type is a major component in property pricing. If construction type is incorrectly identified, the premium pricing will either be too high or too low.
Occupancy is very important to an underwriter because it helps determine the combustibility of a particular building. Each time the occupancy of a building changes, it presents a different underwriting situation and will need to be re-evaluated by an underwriter. Also, common hazards such as the plumbing, heating, roofing, and electrical systems are important factors. Underwriters will want to know when these were last updated or inspected if over 30 years of age.
In addition to evaluating the actual building and contents to be insured, insurance carriers will look at the exposures and occupancies surrounding the building to be insured. An acceptable risk may be affected by the proximity or conditions of exposing properties.
Finally, public fire protection is a key underwriting consideration, as it is the most essential element in controlling a fire once it has started and gained headway.
The pictures below are an example of a commercial building which insurance carriers desire to insure. It is well maintained, has a low-risk tenant, in a nice industrial area, with low-risk neighboring businesses (i.e. – no dynamite manufacturers next door or anything comparable).
When possible, I prefer to visit buildings first hand before sending to insurance carriers for quotes. This way, I know the exposures when discussing with underwriters.
–JK
Three Tornadoes Tear Across Northern Arizona. Are You Prepared?
From Yahoo News:
BELLEMONT, Ariz. – Two tornadoes touched down in northern Arizona early Wednesday (10/6), derailing 28 cars of a parked freight train, blowing semis off the highway and smashing out the windows of dozens of homes. A third touched down later, but there were no immediate reports of damage or injuries.
Associated Press
Fifteen homes were so badly damaged that they were uninhabitable and the estimated 30 people who lived in them were evacuated. About 30 RVs were damaged at a business in Bellemont that sells the vehicles and runs a campground for RVs.
No serious injuries or deaths were reported.
Tornadoes Happen Every Year. Are You Prepared?
In an average year, 800 tornadoes are reported nationwide. Oftentimes, homes and businesses close to a tornado are damaged or destroyed by wind, rain and flying debris. Property Insurance covers repairs or rebuilding costs for windstorm or hail perils. Be sure to review your policy for detailed coverage explanations.
Take Action to Reduce Damage
You can’t make your home or business tornado-proof, but you can take steps that improve the odds of surviving the high winds. You may want to call on professionals for the more technical jobs.
- Start at the top—your roof. Fix any areas that need repair. If you are planning to replace your roof, select materials that are designed to withstand high wind.
- If you are planning to replace your windows, select impact-resistant window systems, which have a much better chance of surviving a major windstorm.
- Anchor door frames securely to wall framing. Make certain your doors have at least three hinges and a deadbolt security lock with a bolt at least one inch long.
If a Tornado is Headed Your Way
- If you are in a building, move to an underground shelter, or interior room or hallway on the lowest floor.
- Stay away from windows and corners.
- If you’re in your car, get out immediately and find safe shelter or lie flat in a ditch. Do not take shelter under an overpass or bridge.
- Flying debris causes most injuries and fatalities, so use your arms to protect your head and neck.
Resources and information courtesy of Safeco Insurance
–JK
About Me
I grew up in Fullerton, CA and graduated from Servite High School in Anaheim. I have my Bachelors degree from Loyola Marymount University in Los Angeles. I currently live in Tustin, CA.
Please contact me if you need help with any of the following lines of insurance for your business:
-Businessowners
-Property
-Commercial General Liability
-Product Liability
-Workers Compensation
-Group Medical
-Commercial Auto
-Umbrella/Excess Liability
-Errors & Omissions/ Professional Liability
-Employment Practices Liability
-Directors & Officers
-Life & Disability Insurance
Jimmy Kinmartin, CPCU 