Tag Archive for: apex insurance

Insurance Requirements for Mergers and Acquisitions

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Mergers and acquisitions (M&A) are transactions in which two companies combine their operations or one company acquires another. M&A deals are complex and involve a variety of legal, financial, and operational considerations. One crucial aspect of any M&A transaction is insurance coverage. Insurance provides protection against various risks and liabilities that may arise during and after the transaction.

In this blog post, we will explore the insurance requirements for M&A deals. We will discuss the different types of insurance that may be required, the importance of conducting due diligence on the insurance coverage of the target company, and the post-closing considerations that must be taken into account. By understanding these insurance requirements, buyers and sellers can better manage their risks and ensure a smoother M&A process.

Types of Insurance for M&A Deals

There are several types of insurance that may be required for M&A deals, depending on the specific circumstances of the transaction. These include:

General liability insurance: 

This type of insurance provides coverage for third-party claims related to bodily injury, property damage, or advertising injury. In an M&A context, general liability insurance can protect the buyer from potential claims arising from the target company’s past operations.

Directors and officers (D&O) liability insurance:

 D&O insurance provides coverage for claims against the directors and officers of a company, such as breach of fiduciary duty, mismanagement, or securities fraud. In an M&A deal, D&O insurance can protect the directors and officers of the target company from personal liability.

Property insurance: 

This type of insurance provides coverage for physical assets, such as buildings, equipment, and inventory. In an M&A context, property insurance can protect the buyer from losses due to damage or destruction of the target company’s assets.

Cyber insurance: 

Cyber insurance provides coverage for losses related to data breaches, cyberattacks, and other cyber risks. In an M&A deal, cyber insurance can protect the buyer from potential liabilities arising from the target company’s data breaches or other cyber incidents.

The importance of due diligence in M&A transactions

Due diligence is a critical step in any M&A transaction, and it is especially important when it comes to insurance coverage. Conducting due diligence on the insurance coverage of the target company can help buyers identify potential risks and liabilities, and ensure that they have appropriate insurance coverage in place to protect themselves.

Key steps to assess the insurance coverage of the target company

To assess the insurance coverage of the target company, buyers should take several key steps. First, they should review the target company’s insurance policies to understand what types of coverage are in place, the limits of coverage, and any exclusions or limitations. Buyers should also review the target company’s claims history to identify any past or pending claims that may affect their liability. Additionally, buyers should review the target company’s risk management procedures to assess the effectiveness of their risk management practices.

Risks of inadequate insurance coverage

The potential risks of inadequate insurance coverage can be significant. If the target company does not have appropriate insurance coverage in place, the buyer may be exposed to significant liabilities and financial losses. For example, if the target company has a history of product liability claims and does not have sufficient product liability insurance, the buyer may be liable for any future claims that arise after the acquisition.

Negotiating insurance provisions in the M&A agreement

To mitigate these risks, it is important for buyers to negotiate appropriate insurance provisions in the M&A agreement. These provisions should address the types of insurance coverage required, the minimum limits of coverage, and any exclusions or limitations. Buyers should also consider including representations and warranties related to the target company’s insurance coverage, as well as indemnification provisions to protect themselves in the event of any uninsured losses or liabilities.

Protecting oneself through due diligence and insurance provisions

Overall, conducting due diligence on the insurance coverage of the target company is a critical step in any M&A transaction. By carefully reviewing the target company’s insurance policies, claims history, and risk management procedures, buyers can identify potential risks and liabilities and negotiate appropriate insurance provisions to protect themselves.

Updating Policies and Notifying Insurers

Once an M&A transaction is completed, it is crucial to ensure that the parties involved have appropriate insurance coverage in place. This involves updating insurance policies and notifying insurers of any changes.

To begin, it is important to update the policies and ensure that the newly formed entity or the acquiring company is listed as the named insured. This helps ensure that the entity has the necessary coverage and is protected in the event of any claims. It is also necessary to review the coverage limits and ensure that they are adequate for the newly formed entity or the acquiring company. In some cases, it may be necessary to increase the limits to ensure that the entity is fully protected.

Consequences of Failing to Address Post-Closing Insurance Considerations

Failing to address post-closing insurance considerations can have significant consequences. For instance, if policies are not updated and a claim is made, the insurer may deny coverage, leaving the newly formed entity or the acquiring company exposed to significant financial losses.

In addition, failing to address these considerations can also lead to regulatory and legal issues. For example, if the newly formed entity or the acquiring company is not properly insured, they may be in violation of state or federal regulations, which can result in fines and other penalties. Therefore, it is critical for the parties involved in the M&A transaction to work with their insurance brokers and legal counsel to ensure that all post-closing insurance considerations are addressed comprehensively and in a timely manner.

Undergoing a Mergers & Acquisitions Transaction?

Consider protecting your company against these risks with Apex. You run a business with complexity, we provide custom solutions to meet your insurance needs.

Your business changes regularly, and so should your understanding of your insurance coverage. 

Learn more about who we work with here or contact us for more information on how we can protect your business against the risks of an M&A transaction. 

Liability Insurance 101: A Comprehensive Overview 

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Liability insurance provides protection to individuals and businesses against claims of negligence, injury, or damage caused to others. It is designed to cover the costs of legal defense and damages in the event that the insured is found legally responsible for causing harm to someone else.

There are a few different types of liability insurance, including general liability, professional liability, product liability, cyber liability, and employment practices liability insurance. Without liability insurance,  one claim or lawsuit can wipe out your whole business.

So, to make sure you’re protected, let’s dive into the world of liability insurance and explore everything you need to know. We’ll cover what it does and doesn’t cover, how much it costs, and where you can find liability insurance in San Diego.

Different Types of Liability Insurance

There are several types of liability insurance, including general liability insurance, professional liability insurance, and product liability insurance. Let’s take a look. 

General Liability Insurance

General liability insurance protects businesses against claims of bodily injury, property damage, and personal injury such as libel or slander. Additionally, this insurance can be purchased as a standalone policy or as part of a business owner’s policy (BOP).

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, protects professionals and their businesses against claims of negligence or failure to perform professional duties. This type of insurance is typically purchased by professionals such as doctors, lawyers, architects, engineers, and consultants. 

Product Liability Insurance

Product liability insurance protects businesses that manufacture or distribute products against claims of injury or damage caused by their products.  It can be purchased as a standalone policy or as part of a general liability insurance policy.

Cyber Liability Insurance

Cyber liability insurance protects businesses against claims arising from data breaches, cyber-attacks, and other cyber-related incidents.. It can also cover the costs of notifying customers of a data breach, providing credit monitoring services, and restoring data.

Employment Practices Liability Insurance

Employment practices liability insurance protects businesses against claims of wrongful termination, discrimination, harassment, and other employment-related issues. 

Why is Liability Insurance Important?

Liability insurance is important for individuals and businesses because it protects them from the financial burden of legal costs and damages that can arise from lawsuits.

Without liability insurance, individuals and businesses could face devastating financial consequences from a single claim or lawsuit. Legal costs associated with defending against a liability claim can quickly add up, and damages awarded to the plaintiff can be significant.

By having liability insurance, individuals and businesses can focus on their core operations and have peace of mind knowing that they are protected in case of an unexpected event.

What Does Liability Insurance Cover?

Liability insurance can provide coverage for a range of risks, depending on the specific policy and type of coverage. Some common types of coverage include:

  • Bodily injury: Bodily injury coverage helps pay for medical expenses, lost wages, and other costs associated with injuries to a third party. 
  • Property damage: Property damage coverage helps pay for repairs or replacement of damaged property.
  • Personal injury such as libel or slander: Personal injury coverage helps pay for damages resulting from non-physical harm, such as emotional distress or reputational damage. 

In addition to these types of coverage, liability insurance policies may also include other types of coverage depending on the needs of the policyholder.

What Does Liability Insurance Not Cover?

While liability insurance can provide coverage for many types of risks, there are also some situations and damages that are typically excluded from coverage. Here are a few examples of what liability insurance may not cover:

Intentional Acts: Liability insurance typically does not cover damages resulting from intentional acts, such as assault or battery.

Property Damage or Injuries to the Insured: Liability insurance is designed to cover damages to third parties. It generally does not provide coverage for damages to the insured person or their property.

Contractual Obligations: Liability insurance does not cover damages resulting from breach of contract or failure to fulfill a contractual obligation.

Environmental Damage: Liability insurance may not cover damages resulting from pollution or environmental damage, which may require a separate type of coverage.

Cost of Liability Insurance

The cost of liability insurance varies depending on the type of coverage needed, the level of risk involved, history of past claims, and the location and size of the business. 

When selecting liability insurance, you need  to carefully consider the coverage limits and exclusions of the policy. It is also recommended to work with an experienced insurance agent who can help identify risks and tailor an insurance policy to meet your business’s  needs.

Where Can I Find Liability Insurance in San Diego?

Apex was founded to fill the service and consultative gap left by agency consolidations in the insurance marketplace. These consolidations have left customers who are used to a boutique service approach with no personal connection to their team.

Apex brings the high-touch service proposition back to San Diego businesses and beyond.

At Apex Risk & Insurance Services, we use the Apex Proven Process to learn about your business, strategize to assemble the right program for you, and use our deep industry and market knowledge to leverage the best pricing and coverage. 

This leaves small business owners with more time to do what they do best: Run their business knowing that their company and employees are protected.
Check out our commercial insurance policies, then, read on to learn what makes us different.

How Much Insurance Does My Business Need?

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One of the most important decisions you’ll make for your business is how much insurance coverage you need. Insurance protects your business from a wide range of risks, including property damage, liability claims, and employee injuries. But figuring out exactly how much insurance to buy can be challenging. 

Watch the video below as Peter Katkov, the founder of Apex Risk and Insurance Services, dives into all the details:

Let’s go through the key factors to consider when deciding how much insurance coverage your business needs.

Business Insurance: Key Factors to Consider

Determining insurance coverage for your business can be a daunting task. Knowing several key factors will make the process more manageable.

Industry-specific Risks: 

The amount of insurance coverage you need will depend on the specific risks associated within your industry. For example, a construction company will need more liability coverage than a marketing firm, while a tech startup may require more cybersecurity insurance than a retail store.

Size of your Business: 

Consider the size of your business when determining how much insurance coverage you need. Generally, the larger your business, the more insurance coverage you’ll need to protect against potential risks.

Business Assets:

Consider the value of your business assets when determining how much insurance coverage you need. This includes your physical assets such as equipment, inventory, and property, as well as intangible assets like intellectual property.

Revenue and Profits:

Revenue and profits impact your insurance needs. Generally, the more revenue and profits your business generates, the more insurance coverage you’ll need to protect against potential losses.

Legal Requirements: 

Legal requirements for insurance coverage vary depending on your industry and location. Some states and industries have specific insurance requirements, such as workers’ compensation insurance for employees.

Potential risks and losses: 

Factor in the potential risks and losses your business could face when deciding how much insurance coverage to purchase. For example, if your business operates in a high-risk area prone to natural disasters or theft, you will need more coverage to protect against these risks.

Customer contracts and requirements: 

If your business works with clients or customers, you may need to meet certain insurance requirements outlined in your contracts. For example, a client may require that you have a certain level of liability insurance before they will work with you.

Employee Safety and Wellbeing: 

Your employees’ safety and wellbeing should always be considered when deciding on insurance coverage. Adequate workers’ compensation insurance can provide protection for your employees in case of injury or illness on the job.

Business Growth and Changes:

As your business grows and changes over time, so will your insurance needs . It’s important to regularly review your insurance coverage to ensure that it’s keeping up with your business’s evolving needs.

Risk Management Strategies: 

While insurance provides valuable protection for your business, it’s also important to implement risk management strategies to prevent losses from occurring in the first place. This includes safety protocols, training employees, and regularly reviewing and updating your policies and procedures.

Once you’ve considered these factors, you can work with an insurance agent to determine the appropriate level of coverage for your business. It’s best to err on the side of caution and purchase more coverage than you think you’ll need, as it can provide added protection against unforeseen events that would otherwise cripple your business.

Types of Insurance To Consider

When it comes to protecting your business, it’s crucial to understand the different types of insurance coverage available. While the specific types and amount of coverage you need will depend on the unique risks and needs of your business, here are some common types of insurance coverage to consider:

Liability insurance:

Liability insurance provides coverage for damages that your business may be held liable for, such as bodily injury or property damage caused by your products, services, or employees. This type of insurance can also cover legal fees and court costs if your business is sued.

Property insurance: 

Property insurance provides coverage for damage to your business’s property, such as your building, equipment, inventory, and other assets. This type of insurance can also cover losses due to events like theft, fire, or natural disasters.

Workers’ compensation insurance: 

Workers’ compensation insurance provides coverage for employees who are injured or become ill as a result of their job. This type of insurance can cover medical expenses, lost wages, and rehabilitation costs for employees who are injured on the job.

Business interruption insurance:

Business interruption insurance provides coverage for lost income and expenses if your business is forced to temporarily shut down due to a covered event, such as a fire or natural disaster.

Cyber liability insurance:

Cyber insurance, also called cyber security or cyber liability insurance, covers businesses against losses resulting from data breaches. This form of insurance primarily applies to businesses that run secure networks as part of their daily operations.

Read on to learn more about cyber insurance.

Professional liability insurance:

Professional liability insurance provides coverage for damages resulting from professional errors or negligence, such as mistakes made by doctors, lawyers, or other professionals.

Where Can I Find Commercial Insurance in San Diego?

Apex was founded to fill the service and consultative gap left by agency consolidations in the insurance marketplace. These consolidations have left customers who are used to a boutique service approach with no personal connection to their team.

Apex brings the high-touch service proposition back to San Diego businesses and beyond.

At Apex Risk & Insurance Services, we use the Apex Proven Process to learn about your business, strategize to assemble the right program for you, and use our deep industry and market knowledge to leverage the best pricing and coverage. 

This leaves small business owners with more time to do what they do best: Run their business knowing that their company and employees are protected.
Check out our commercial insurance policies, then, read on to learn what makes us different.

Why Southern California Businesses Need Commercial Insurance: Common Risks and Coverage Options

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As a business owner in Southern California, you are likely aware of the potential risks that come with operating your business. From fires and floods to liability claims and lawsuits, the potential risks you face can be daunting and threatening to the stability of your business. Fortunately, you can safeguard your business with commercial insurance coverage. 

Let’s take a look at some common risks businesses face and how commercial insurance can help.

What is a Commercial Insurance Policy? 

A commercial insurance policy covers the business, its employees, and its owners. Commercial insurance protects businesses from losses that may occur as a result of normal business functions.  

Since there are a variety of situations that businesses and owners need to protect themselves from, there are multiple different types of commercial insurance. These forms of business insurance are often split into general liability, property, executive protection, and employment protection. 

Risks Businesses Face and How Commercial Insurance Can Help

Businesses face many different risks on a daily basis, from the potential of a lawsuit to a natural disaster wiping out a storefront. The key to protecting a business from these risks is commercial insurance.

Let’s discuss some risks associated with running a business and how commercial insurance can help.

Natural Disasters

One of the biggest risks that businesses in Southern California face is natural disasters. Earthquakes, floods, and wildfires are all common occurrences in the area, and all of them can cause serious damage to businesses. In addition to physical damage, businesses may also be liable for financial losses caused by the disaster. Commercial insurance can provide coverage for both the physical and financial losses caused by natural disasters.

Liability Claims

Another risk businesses face is liability claims. Whether it’s an employee who is injured on the job or a customer who slips and falls on your property, businesses in Southern California can be held liable for damages. 

Commercial insurance can provide coverage for these types of claims, as well as for other types of liability, such as property damage, bodily injury, and errors and omissions. It can also provide coverage for business interruption, cyber liability, and workers’ compensation. Depending on the individual business’s needs, additional coverage can be added, such as product liability, professional liability, and employment practices liability insurance.

Property Damage

Businesses need commercial insurance to protect their physical assets, such as buildings, equipment, and inventory, from losses due to fire, theft, vandalism, or natural disasters.

Protecting physical assets is one of the most important reasons why businesses need commercial insurance. Businesses invest a significant amount of money in their equipment, buildings, and inventory, and any damage or loss to these assets can result in significant financial losses.

Cyber Liability

Cyber liability insurance provides businesses with protection from losses due to data breaches, cyber-attacks, and other online risks. In today’s digital age, businesses are increasingly reliant on technology to store sensitive information and conduct day-to-day operations. However, this also exposes them to the risk of cyber-attacks, data breaches, and other online risks. Cyber liability insurance is an important type of commercial insurance that provides businesses with protection from financial losses due to these types of incidents.

A data breach occurs when sensitive information, such as personal or financial data, is exposed or stolen from a company’s computer system. Cyber-attacks, on the other hand, involve a deliberate attempt to disrupt or damage a computer system, such as through the use of malware or ransomware.

Employment Practices Liability

Employment practices liability insurance (EPLI) is an important type of commercial insurance that protects employers from legal liabilities arising from mistakes or negligence in how they manage their employees. This includes claims of discrimination, wrongful termination, harassment, and other types of employment-related issues.

In today’s increasingly litigious society, the risk of employment-related lawsuits is higher than ever, and the costs of defending against such claims can be significant. EPLI can help to mitigate these risks by providing coverage for legal fees, settlements, and judgments.

In addition to financial protection, EPLI can also provide valuable resources to help businesses manage their employees and prevent employment-related issues from occurring. For example, some EPLI policies may offer access to legal and human resources experts who can provide advice and guidance on best practices for hiring, firing, and managing employees.

Professional Liability

Professional liability insurance, also known as errors and omissions (E&O) insurance, helps businesses cover the cost of defending claims of negligence or errors in the performance of their professional services. This type of insurance is particularly important for businesses that provide advice or services to clients, such as lawyers, accountants, architects, and consultants.

Professional liability claims can arise from a range of situations, including missed deadlines, incorrect advice, and breach of contract. These claims can be costly to defend against, and even if a business is not found liable, the legal fees and reputational damage can be significant.

Professional liability insurance can provide coverage for legal fees, settlements, and judgments, as well as expert resources to help businesses mitigate their risks and improve their professional practices. This type of insurance can also help businesses maintain the trust and confidence of their clients by demonstrating their commitment to quality and accountability.

Workers’ Compensation

Workers’ compensation insurance provides businesses with financial protection in the event of employee injuries or illnesses that occur on the job. This type of insurance is required by law in most states, and failure to carry workers’ compensation insurance can result in significant fines and legal penalties.

Workers’ compensation insurance provides coverage for medical expenses, lost wages, and other costs associated with on-the-job injuries or illnesses. It can also provide coverage for legal fees and settlements in the event of a lawsuit resulting from a workplace injury or illness.

In addition to protecting businesses from financial losses and legal liabilities, workers’ compensation insurance can also help to promote a safe and healthy workplace. By providing employees with the resources and support they need to recover from workplace injuries or illnesses, businesses can demonstrate their commitment to employee well-being and foster a positive work environment.

In Summary

In addition to protecting a business from the risks discussed above, commercial insurance can also provide peace of mind to business owners. With the right coverage in place, business owners can focus on running their business without having to worry about the financial consequences of unforeseen events.

When selecting a commercial insurance policy, it’s important to work with an experienced insurance agent who understands the unique risks faced by businesses in Southern California. A knowledgeable agent can help businesses identify the coverage options that will best protect their business.

Any Questions?

Whatever you determine your company’s risks are, it’s helpful to talk with a team of experts that can guide you in the right direction. At Apex Risk & Insurance Services, we want you to know and understand your options. We prioritize transparency and provide custom solutions to meet your insurance needs.If you have any questions about commercial property insurance, feel free to contact our team today.

5 Common Mistakes Businesses Make When Choosing Commercial Insurance

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Commercial insurance is a vital tool for protecting businesses against a wide range of risks. However, choosing the right insurance coverage can be a daunting task, especially for those who are not familiar with the complexities of the insurance industry. In this blog post, we’ll take a look at five common mistakes businesses make when selecting commercial insurance and offer some advice on how to avoid them.

1. Failing to Assess Risks Adequately

One of the most common mistakes businesses make when selecting commercial insurance is failing to assess their risks adequately. Every business is unique, and each has its own set of risks. For example, a construction company will have different risks than a restaurant or a retail store. It’s essential to conduct a thorough risk assessment to identify the specific risks your business faces. This will help you choose the right insurance coverage to protect your business against those risks.

2. Choosing Coverage Based Solely on Price

Another mistake businesses make when selecting commercial insurance is choosing coverage based solely on price. While price is an important factor, it should not be the only consideration. Cheaper policies may not provide adequate coverage, leaving your business vulnerable to financial losses if something goes wrong. Make sure to compare different policies and choose one that provides the coverage you need at a price you can afford.

3. Not Reading the Policy Carefully

Insurance policies can be complex, and it’s essential to read them carefully before signing up. Unfortunately, many businesses fail to do so and end up with coverage that doesn’t meet their needs. It’s essential to understand what the policy covers and what it doesn’t. Make sure to ask your insurance provider to explain any terms or conditions you don’t understand.

4. Not Considering the Reputation of the Insurance Provider

The reputation of the insurance provider is another important factor to consider when selecting commercial insurance. Make sure to choose an insurance provider with a good reputation and a track record of paying claims promptly. You can research insurance providers online or ask for recommendations from other business owners.

5. Not Reviewing Coverage Regularly

Finally, many businesses make the mistake of not reviewing their insurance coverage regularly. Your business may change over time, and your insurance needs may change as well. Make sure to review your coverage regularly and make adjustments as necessary. This will ensure that you always have the coverage you need to protect your business against risks.

Other Factors to Business Owners Should Consider When Choosing Commercial Insurance

In addition to the five common mistakes discussed above, there are several other factors that business owners should consider when choosing commercial insurance. For example, the appropriate amount of coverage and deductible are important considerations. Additionally, businesses need to determine the type of coverage they need and understand the exclusions and limitations of their policy. 

Working with an insurance broker or agent can also help businesses navigate the complexities of the insurance industry and find the right coverage at the right price. By carefully considering these factors, business owners can ensure they have the protection they need to succeed in today’s ever-changing business environment.

In Summary

In conclusion, selecting the right commercial insurance coverage can be a daunting task, but avoiding these common mistakes can help you make an informed decision. Always assess your risks, compare policies, read the policy carefully, choose a reputable insurance provider, and review your coverage regularly. With these tips in mind, you can protect your business against a wide range of risks and ensure your long-term success.

Where Can I Find Commercial Insurance in San Diego?

Apex was founded to fill the service and consultative gap left by agency consolidations in the insurance marketplace. These consolidations have left customers who are used to a boutique service approach with no personal connection to their team.

Apex brings the high-touch service proposition back to San Diego businesses and beyond.

At Apex Risk & Insurance Services, we use the Apex Proven Process to learn about your business, strategize to assemble the right program for you, and use our deep industry and market knowledge to leverage the best pricing and coverage. 

This leaves small business owners with more time to do what they do best: Run their business knowing that their company and employees are protected.

Check out our commercial insurance policies, then, read on to learn what makes us different.

What Does Commercial Property Insurance Cover?

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Business owners who own their buildings or equipment need commercial property insurance to mitigate disaster. It ensures your business will still be standing even if equipment breaks down or your building suffers serious damage.

In this article, we’ll look at what commercial property insurance covers, what it doesn’t, the 3 most common types of commercial insurance, and how you can pick the right plan to protect your business from disaster.

First, What Does Commercial Property Insurance Cover?

Commercial property insurance covers a variety of risks that come with owning physical assets.

If your building is damaged by fire, vandalism, burst pipes, explosions, or anything that may cause serious damage outside of your control, then you should be covered. As with any insurance plan, some are more comprehensive than others, so make sure your building is covered by the threats that are most prevalent in your environment.

Commercial property insurance covers assets inside and outside of the building as well. Specialty equipment, even if it needs to be used at off-site locations, is often covered under this plan. Inventory is insured as well through a variety of circumstances. With plans that offer inland marine and cargo transit insurance, your inventory is protected while it’s in the process of traveling to and from you.

Lastly, commercial property insurance can come with business income coverage. If you can’t operate because you’re rebuilding, or you’re waiting for new equipment to be delivered, you’re going to be missing out on a lot of income. The right plan helps you get through that rough period and ensures key employees don’t need to be fired.

What is not covered by Commercial Property Insurance?

As mentioned earlier, not all policies are created equally. While some plans do offer coverage for the incidents we are about to mention, it is common for many providers not to.

These include:

  • General Wear and Tear: Damage to property that occurs naturally over time.
  • Lack of Maintenance: Damage to property that occurs from a lack of care. Mold, rust, insect infestations, and rot are a few examples of this type of damage.
  • Earthquakes: Damage to property from an earthquake. Insurance companies in California may offer earthquake coverage as an add-on, or you will have to purchase it independently.
  • Flood Damage: Damage to property from a flood. Most policies include water damage but consider a flood outside of that scope. In coastal areas where flood damage is prevalent, you may have to purchase separate insurance.
  • Pollution: The cost of cleanup for indirect spills, discharge, leakage, and the release of pollutants is often not included in the plan.

It’s vital when choosing commercial property insurance that you’re aware of what is covered and what’s not. Talking to a team of experts can help relieve the burden and simplify the process.

What are the 3 most common types of Commercial Property Insurance?

Under the commercial property insurance umbrella there are three common types of protection offered. 

Direct Damage insurance protects your buildings, equipment, and inventory against physical damage. This also includes loss of income that occurred from physical damage to property.

Inland Marine insurance is popular amongst businesses that transfer equipment and inventory often. It covers property that is damaged during transportation.

Criminal Activity insurance protects your place of business from theft. This may include employees or customers stealing inventory and cash, forgery, or a cyber attack through an on-site computer.

Who Pays for Commercial Property Insurance?

If you’re renting out equipment or a building for your business, then it can get complicated on who pays for the commercial property insurance.

The property owner is ultimately responsible for arranging insurance since they are the ones at risk of a financial loss if damage occurs. Once the insurance is arranged by the property owner, the cost will often be transferred to the tenant.

However, if you make tenant improvements to the building that aren’t covered by the property owner’s insurance then you may need to take out coverage on your own for those improvements.

How to Choose a Commercial Property Insurance Plan

When choosing a commercial property insurance plan, it’s crucial you’re aware of the threats to your business. Some industries might be more prone to criminal activity, while others only have to worry about direct damage. Maybe the location of your business opens it up to earthquake damage, or you’re headquartered on the coast and need flood insurance added on.

Whatever you determine your company’s risks are, it’s helpful to talk with a team of experts that can guide you in the right direction. At Apex Risk & Insurance Services, we want you to know and understand your options. We prioritize transparency and provide custom solutions to meet your insurance needs.If you have any questions about commercial property insurance, feel free to contact us today.

Risk Management in the Cannabis Industry

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There aren’t a lot of resources available for cannabis business owners to protect themselves. Traditional insurance companies and banks have been hesitant to get involved due to fear of being penalized by the federal government and that the industry is a newborn to the global marketplace.

Even with legal issues aside, there are still no standardized and widely accepted risk management tools for the industry. This prevents insurers from being able to properly gauge the amount of coverage they should provide. And if any industry needs insurance and risk management, it’s cannabis. 

In this article, we’ll look at what risks to be aware of in the cannabis industry, what’s being done to mitigate risks at a policy level, and how insurance companies are finally playing a part in protecting cannabis business owners.

Risks in the Cannabis Industry

The production and sale of cannabis is a complex process that has plenty of risk from the moment a seed is planted to the point of sale. Awareness of the inherent risks throughout all facets of your business will help you put proper protections in place and be prepared for potential disasters. 

Employee Theft

Sadly, employee theft is common for a lot of cannabis business owners.

First and foremost is that the cannabis industry is largely cash-based. Because of its federally illegal status, most banks refuse to work with cannabis companies in any capacity, forcing businesses to only operate in cash and lots of it. It’s far easier and even more tempting, for employees to steal cash since it’s more probable to go undetected when compared to businesses that can operate with cashless payments. 

The nature of the inventory also invites itself to all kinds of theft. Due to how expensive and in-demand cannabis products are, they are at an increased risk of being stolen. 

Lastly, the high turnover rate of the industry presents a problem.  A report by the cannabis data company Headset found that 55% of cannabis retail workers left within 12 months. It’s difficult to establish trust or perform proper background checks when the turnover rate is so high. 

Product Tampering 

From seed to customer consumption, cannabis production requires an extensive supply chain that’s exposed to many different factors. One of these factors is an increased risk of product tampering, which exposes your company to serious liability. 

Contamination or unauthorized additions could happen at any point during the production process. A tampered product could lead to serious legal and financial repercussions if it harmed a customer or made them ill. Having the right insurance to protect yourself and your business from a financial catastrophe is more important than ever.

Another potential issue with product tampering is what happens after you sell the product. After-sale product tampering for black market sales is still prevalent, and even though it’s out of your hands, your company could still be held liable. 

Adhering to Regulations

The cannabis industry is developing fast, and it’s easy to get overwhelmed by all the changing laws that come with it.

Compliance regulations change frequently and vary from state to state. The regulations are across all areas of the industry; cultivation, processing and manufacturing, distribution and sales, testing, and even advertising. If a business is found to be out of compliance with state laws in any of these categories, it could face hefty fines, and potentially be put out of business.

Unfortunately, many small cannabis businesses are not prepared with a compliance plan and don’t monitor the constantly changing regulations. It’s vital to do so in order to avoid damaging fines. 

What’s Being Done to Mitigate Risk?

A variety of bills are currently being proposed to reduce the risk for cannabis companies. Insurance companies, including Apex, are also offering to insure cannabis companies from the risk they encounter in their day-to-day operations. 

Clarifying Law Around Insurance Marijuana (CLAIM) Act

The CLAIM Act is a proposed bill that would allow insurance companies to do business with cannabis businesses without fear of federal prosecution. The intent of this act is to reduce the amount of risk cannabis business owners face.

The act would also protect employees working for insurance companies that are engaging in business with a cannabis company. It’s been passed in the house but continues to be voted down in the Senate. 

Secure and Fair Enforcement Banking (SAFE) Act 

The SAFE Act is a proposed bill that would give cannabis companies access to banking services and prohibit penalization for insurance companies working in the industry. Without the possibility of federal prosecution, banks could finally provide cannabis owners with financial safety nets to mitigate risk.

Unfortunately, like the CLAIM Act, this bill has passed the house but recently failed to pass the senate for the third time in late 2022. If either of the bills listed passed, cannabis companies would gain access to a wide range of services to protect themselves. This could also lead to more trust from the investor community, allowing them more financial leeway. 

Insurance Companies Entering the Market

The good news is that some insurance companies are finally insuring certain cannabis companies in legal states. Insurance is a vital risk management tool that helps protect against a variety of potential losses and liabilities. Common insurance coverage for a cannabis company could include product liability, general liability, property insurance, equipment breakdown, loss of income, and much more. 

Interested in Insurance for Your Cannabis Company?

If you’d like to learn more about cannabis company insurance, or what we offer at Apex, contact us today. We love getting to know our clients and how their business works to get them the best pricing and coverage.

What to Expect from Cyber Insurance in 2023

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The cyber insurance industry has been facing challenges in recent years due to rising rates, mass cyber-attacks, and stricter policy terms. However, trends at the end of 2022 suggest that there may be positive developments on the horizon for both policyholders and insurance providers. 

This article will explore the current state of cyber insurance, the stabilization of rates, advanced underwriting techniques for 2023, government involvement in the industry, and how to choose the best policy for your needs in the upcoming year.

Current State of Cyber Insurance 

According to a report from Fortune Business Insights, the global cyber insurance market is expected to grow from 12.83 billion in 2022, to 63.62 billion by 2029. More and more businesses are opting for cyber insurance every year as they become more reliant on data to operate, and as cyber attackers become more sophisticated in their attacks. 

A 2022 report from the National Association of Insurance Commissioners (NAIC) claimed that data breaches were up 68% in 2021 when compared to the previous year. And that’s not just in certain industries. Companies from all sectors are experiencing an increase in ransomware and supply chain attacks. 

These increased attacks led to a 79% increase in premiums in the first half of 2022. Insurers are now thoroughly examining a company’s cybersecurity with far more detail and taking extra precautions to reduce losses. 

Some of these precautions include:

  • Tightened Policy Terms: Cyber coverage used to often be included with commercial property and casualty policies, now many insurers have opted to offer cyber coverage separately.
  • Lower Coverage Limits: Insurers are reexamining their coverage limits
  • Documentation may be required: Some companies require documentation to evaluate a client’s cyber program before giving coverage

To read more about recent changes in cyber insurance check out our blog here.

Rate Stabilization

Rates in the cyber insurance industry have soared in the past few years. While we can’t guarantee when and how rates will change, there are optimistic trends happening at the start of 2023. 

Rate hikes are currently decreasing across the cyber insurance market because of a few factors. 

The first is better cybersecurity practices from companies following an increase in cyberattacks. Some of these practices, and ones that are wise to follow for any business owner, include:

  • Password management tools that ensure employees are using strong passwords
  • Two-Factor Authentication 
  • Updated software and firewalls
  • Training employees on security threats
  • Data encryption 

The other reason for rates beginning to stabilize is the increase of insurance companies joining the cyber insurance market. This is creating a more competitive environment and lowering the rate of premiums as there’s a larger supply of insurance options. 

With increased cybersecurity and competition, you can expect businesses in 2023 to have insurance rates relative to the cybersecurity measures they have in place.  

Advanced Underwriting 

In previous years, we’ve seen cyber insurance companies underwrite with a traditional “outside-in” approach. Meaning they primarily focus on the external threats of cyberattacks and then view the security measures the company has in place.

This approach is changing fast. It’s quickly becoming the standard for insurance companies to evaluate potential cyber insurance policyholders with “inside-out” underwriting. This is a more comprehensive and effective approach that looks deeply at an organization’s ability to manage and mitigate risks. 

An inside-out approach looks at your business like a cyber-attacker would, and primarily focuses on your network security, data protection, employee training, and incident response plans. This provides more objective and transparent data within the underwriting process to give a more accurate evaluation. 

Government Intervention

Unfortunately, there have been a few high-profile, national cyber attacks in recent years. This has forced policymakers to pay special attention to cybersecurity for businesses across all industries, especially ones that deal with critical infrastructure. 

In March 2022, the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA) was signed into law. Under this law, all companies in critical-infrastructure sectors will need to report incidents within 24-72 hours depending on the incident. It will be vital for businesses to be organized with their cybersecurity so they can report any issues in a timely manner. 

The Federal Trade Commission, Food and Drug Administration, Department of Transportation, Department of Energy, and Cybersecurity and Infrastructure Security Agency are all currently working on additional regulations for cybersecurity, and it’s possible some of these will come into effect in 2023 as cyberattacks continue to evolve.

How Should I Choose a Policy for 2023?

The first, and most important thing, when choosing a cyber insurance policy is to determine what your company’s needs are. 

Reimbursable expenses that insurance companies typically provide include: 

  • Investigations into the cause of the breach
  • Business losses arising from a breach
  • Privacy protection and breach notification 
  • Lawsuits and extortion

It’s important to figure out what expenses you want to be covered in your insurance plan before moving on. If you’re still unsure what exactly your business may need, talking to an experienced insurance team can help guide you through the process. 

After you know what your company needs, it’s time to ask questions about the policy itself. These include:

  • Take a look at the plan’s deductibles, just like you would any other insurance
  • Understand if the policy is stand-alone or add on
  • Ask if the policy covers accidental actions, as a lot of data breaches can be accidentally caused by employees.
  • Ask if the policy covers third-party service providers

All these questions are a great start to seeing what type of coverage you need. If you want a more detailed look at choosing cyber insurance, take a look at our blog here.

Have More Questions About Cyber Insurance in 2023?

Apex Risk & Insurance Services was specifically founded to fill the service and consultative gap left by agency consolidations in the insurance marketplace. These consolidations have left customers who are used to a boutique service approach with no personal connection to their team.

Apex brings the high-touch service proposition back to the San Diego business community and beyond. If you have any questions about cyber insurance in the new year, contact us today.

How Much Excess Liability Insurance Do Manufacturers Need? 

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Having adequate liability insurance is crucial in the manufacturing industry. However, sometimes general liability insurance might not be enough to keep your business protected. Enter excess liability insurance.

Excess liability insurance is coverage provided for significant unexpected events that can have potentially catastrophic results on your business, ranging from auto accidents to product liability claims.

Excess liability insurance provides just that – excess coverage limits in addition to the underlying liability policy. This additional coverage can be the difference in protecting your business from bankruptcy. 

Read on to learn what excess liability insurance covers, who needs it, and how to know how much coverage you need.

What Does Excess Liability Insurance Cover?

An excess liability insurance policy, also known as excess liability coverage, provides financial protection and higher policy limits if a claim is made that exceeds the limit of an underlying liability policy. 

In simple terms, excess liability insurance provides additional coverage on top of your existing policy.

For example, let’s say you have a $1 million general liability insurance policy and face a $1.75 million claim. You and your business would have to cover the $750,000 that exceeds your general liability limits.

However, if you had an excess liability policy of $1 million on top of your general liability insurance, your excess liability coverage would cover that $750,000 loss. This would keep you financially protected. 

Who Needs Excess Liability Insurance?

Excess liability insurance protects your business from significant losses and reduces the chance that a lawsuit could bankrupt your business. 

Many business owners choose to have excess liability coverage because they face substantial risks, such as:

  • A high degree of foot traffic
  • The handling or transportation of hazardous materials
  • The personal injury claims that could be leveled against construction, manufacturing, or similar businesses

Why Do Many Manufacturers Opt for Excess Liability Insurance?

Many manufacturers use excess liability insurance as a cost-effective way to increase the limits on their underlying coverage since they may face higher risks than other industries. 

These policies boost coverage on general liability insurance and can help to ensure protection in the event of a claim.

How Much Excess Liability Do Manufacturers Need?

When determining how much additional coverage manufacturers need, professionals may consider several factors. These factors can include:

  • whether a firm has experience with prior large losses
  • what is typical for their industry 
  • whether anything has changed in their business that might affect their risk exposure

​​As an industry, manufacturers tend to buy higher excess casualty limits than other industries. Each business has different needs and there is no one-size-fits-all answer to how much coverage a business needs. 

However, working with a broker and considering these factors can help you make an informed decision about your coverage to ensure you and your business are protected. 

Other Important Policies for Manufacturers

While general liability insurance covers many common risks, it does not provide complete protection. For example, manufacturers should also consider: 

General Liability Insurance

General liability insurance can help to protect a manufacturing company’s income and assets against everyday risks.

For example, general liability insurance can help cover:

  • Medical payments if another person or party is injured on your commercial property.*
  • Property damage if your business or employees cause damage to another person’s property.
  • Advertising injuries if your business is sued for copyright infringement in your advertisement.
  • Bodily injury claims if someone is injured at the site of business.
  • Reputational harm if you face a lawsuit for libel, malicious prosecution, slander, privacy, or wrongful eviction.

Workers’ Compensation Insurance

Workers’ compensation is built on an exchange between employers and employees. In the case of a work-related injury or illness, employees are entitled to effective medical treatment coverage while in return, employers are protected from legal action resulting from those injuries.

A workers’ compensation insurance policy provides:

  • Coverage for the costs of medical treatment, and
  • Lost time or indemnity benefits

Business Owner’s Policy

A BOP bundles general liability insurance with commercial property insurance. This bundle is often at a lower rate than if the policies were purchased separately.

Commercial Umbrella Insurance

Similar to excess liability insurance, this policy boosts coverage on a manufacturer’s general liability, employer’s liability, or commercial auto insurance policy once the limit is reached.

Any Questions?

Apex brings the high-touch service proposition back to San Diego businesses and beyond.

At Apex Risk & Insurance Services, we want you to know and understand your options. We prioritize transparency and provide custom solutions to meet your insurance needs. Then, read on to learn more about the difference between professional liability insurance and errors and omissions (E&O) insurance.

Why Commercial Property Insurance Premiums are on the Rise

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If you’re a real estate investor or owner, you may have noticed a significant increase in insurance costs compared to previous years. In fact, Quarter 3 of 2022 marked the 20th consecutive quarter of increased commercial property insurance premiums, according to the Council of Insurance Agents and Brokers (CIAB).

The average premium increase across all account sizes was 8.1% in Q3 2022, up from 7.1% in the second quarter.

In this article, we will discuss why these premiums are increasing and how commercial property owners can prepare. Let’s get started.

Why Are Commercial Property Insurance Premiums Rising?

According to CIAB, commercial property saw premiums rise an average 11.2% in Q3 compared to 8.3% in Q2. This increase was driven by inflation and a rise in natural catastrophes. 

Let’s discuss.

How Inflation Affects Commercial Property Insurance

95% of insurance brokers agreed inflation was influencing market trends in the third quarter, especially in commercial property. Why? Inflation increased factors such as construction costs. These factors lead to increased property valuations.

How a Rise in Natural Catastrophes Affect Commercial Property Insurance

More than half of respondents reported an increase in commercial property claims in Q3, possibly driven by catastrophes. Floods were up in Q3, with 31% of respondents reporting an increase. 

What Commercial Property Owners Need to Know and How to Prepare

Inflation and Valuation Concerns

Rising inflation rates in the United States may leave many property owners underinsured or without adequate coverage. 

During standard periods of inflation, the rate of inflation increases approximately between 2% and 3% per year. However, the U.S. is currently experiencing an overall higher rate of inflation, especially in industries such as construction. 

In fact, construction material costs are up 20% according to the General Contractors of America. 

Inflation drives the prices of goods and services up, such as the cost of:

  • Goods/Materials
  • Production
  • Labor
  • Resourcing

Additionally, supply disruption, and construction labor shortages, may also result in an increase in these prices. Real estate owners should be aware of these increases and how they affect the value of their property.

Commercial Property Owners Should Insure Property for the Accurate Value

Inflation may cause insurance premiums to increase. As a result, this increase may cause commercial property owners to be hesitant to invest in the right policy and instead opt for minimal coverage. However, many companies recommend that building owners insure their property  for at least 100% of their accurate value, if not more. 

Commercial property owners should be adjusting their policy to compensate for how much their home and renovations are worth. With inflation generating increased real estate values, unfortunately, property owners have more to lose.

Standard Commercial Insurance Coverage vs. Additional Policies

Insurers may require coverage for some natural disasters – such as flooding, earthquakes, and volcanic eruptions –  to be separate policies.  If your business is located in an area prone to these events, be sure to note if they are covered in your commercial insurance plan or if you need to purchase a separate policy. 

For more information about natural disasters and commercial insurance, check out our blog, here.

What Owners Should Do Now

Owners should become familiar with their current policies prior to or early in the financing process to avoid any surprises. With rates rising in the current inflationary environment, it’s important to make sure one has the right relationships in place. These relationships can help real estate owners and investors find innovative solutions to help reduce the cost of their insurance while ensuring they maintain adequate coverage.

According to Forbes, “Insurance specialists can look through one’s policies to see if there is any extraneous coverage and provide active risk management to implement different loss control strategies to potentially limit the severity or reduce the impact of a claim.”

Any Questions?

For more information, contact us today or check out our policies. 

Apex Risk is dedicated to providing clear explanations and guidance that addresses real problems that may arise for your business in your unique industry. Learn who we are and why we do what we do, here.