Business insurance: What you need to know about ‘P&C’

By Finbar Garcia LUTCF, FSS, MFA

I pray that 2021 started great and you wrote down all your goals and objectives. Today we are continuing our discussion on business insurance, this time with ‘Property & Casualty’ better known as ‘P&C’.

This part of any business is just as important as your working capital. In fact, it protects your business from complete destruction, closure, and loss of income stream.

Many people spend years building their business and practices to where it is today, from sole proprietors to partnerships and professionals to large corporations.

Property and Casualty Insurance is extremely important, and in some cases, it is required by law. So, let’s take a closer look at the different sections of P&C.

• Public Liability Insurance. This type of coverage indemnifies the insured against financial loss which the insured shall, during the course of the business, become legally liable to pay as compensation for accidental death or bodily injury to any person, other than the insured’s family and employees, or accidental damage to property not owned by the insured. These accidents may be caused by negligent acts of the insured or employees or even by defective walkways, machinery, or equipment. This policy may also cover, but not limited to, works being done at external job sites, fire, and explosion, lifts and hoists, food and drink. All risks would need to be assessed, costed, and underwritten before a policy is issued.
• Workmen’s Compensation. This policy is required by law. It basically covers the employer against any claim from an employee for bodily injury. These would arise from the employer’s personal negligence or failure to take reasonable care in providing a proper and safe work environment (plant and equipment, appliances for the job or safe premises)—in other words, where there is a breach of statutory duty to protect the health, safety, and welfare of employees. These are covered by the Workmen’s Compensation Act and the Compensation for Injury Act, caused by injuries sustained in the course of their employment at the registered office of the employer or external job sites. All risks would need to be assessed, costed, and underwritten individually and work to be done offshore and within the Caribbean, may need special consideration.
• Professional Indemnity. A professional person being classed as Accountant, Lawyer, Doctor, Architect, etc, can be sued for loss or damage arising from breach of professional duty owed to clients is judged by what is expected of a competent person in their profession. The liability arising from professional negligence can be great. The insured will be indemnified against legal liability for damages, costs and expenses, any negligent act, error, or omission with respect to profession duty. While this breach may have occurred several years ago, insurers may limit this retroactive cover.
• Contractors All Risk. This cover may carry a variety of parts like:

1. Material Damage Section. The insured’s items include materials to be used on the job, plant, equipment and machinery against any unforeseen and sudden physical loss or damage.
2. Public Liability Section. The contractor is indemnified against any cost which he is legally liable to pay for accidental death or injury to third parties or to property damage arising out of the performance of the contract.
3. Maintenance Period Section. Many building contracts include a maintenance period to cover the building or construction for a period after the completion of the contract, this is to correct any faults or defects that may appear. This is, in most cases, standard practice.

• Fidelity Guarantee. This policy guarantees the employer, which is the insured, the protection against direct pecuniary loss, like money or goods, caused by the act of fraud or dishonesty of any employee. The fraud must be discovered during the policy period or within six months thereafter or within six months after the employee ceases employment, whichever happens first. All cases must be reported to the police.
• Bonds. Any person awarded a building contract requires protection against the failure of the contractor to complete his obligations to perform the work in the terms and conditions of the contract. These may cover but are not limited to delays, non-performance, and specified penalties. The bond makes the insurer liable to pay the penalties if the contractor fails in his obligation. Some of these are Bid Bond, Performance Bond, and Advance Payment Bond.
• Fire Commercial Policy. This is issued to business concerns and covers commercial property like buildings, stock in trade, furniture, fixtures and fittings, plant, and machinery. Some of the basic perils are fire, lighting, and explosion of gas. There are other special perils such as perils of nature like floods, hurricanes, earthquakes etc. Then there are social perils like riots and strikes, and malicious damage. There are other perils that can be discussed as needed.
• Burglary Insurance. Loss or damage to property by theft involving entry or exit by forcible and violent means; damage to the property due to theft or attempted theft. Most of these are covered on a first-loss basis, whereby an amount is selected as possible loss if anything were to be stolen.

These are just a few of the major policies. So, don’t expose yourself and your business to the perils as you secure your contracts and loans for your business growth and development.

“What you tell yourself every day will either lift you up or tear you down”

—Unknown.

Send questions to myfinancialadvisor2020@gmail.com or call

620-1185.