Category: Insurance

Benefits Of Requiring Additional Insured Coverage Of Subcontractors

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There are several ways for contractors and subcontractors to allocate the risks of damage on job sites to subcontractors. Constructing a contract that requires subcontractors obtain insurance is one of the best risk management strategies. The subcontractor’s coverage should also include the contractor or higher subcontractor as an insured party. With this option, contractors have the same rights as policy holders under commercial general liability policies. Both the hiring contractor and the party purchasing the policy have the same rights and coverage provisions. By requiring this coverage for subcontractors, general contractors are able to prevent paying for the expensive legal fees arising from damages on a job site.

When a subcontractor’s employee is injured on the job, the subcontractor usually tries to sue the higher tier subcontractor or general contractor to cover damages. The hiring party then faces the expenses of court costs, legal fees, damages and lost salary for the injured worker. However, a hiring party that requires all subcontracted parties to have CGL insurance naming them as additional insured parties has protection from such financial burdens. In some cases, the CGL policy is primary to any others. This means that CGL policies naming the hiring contractor as an additional insured party must be the first to pay legal fees and damages.

With these policies, there are no requirements for subcontractors to ask for indemnification for loss claims as a condition for the hiring party’s coverage. There is also no need for determining the faults of each party involved. Having a subcontract that requires subcontractors to provide adequate insurance is enough. The simple requirement of the policy to pay for legal fees is one of the most advantageous aspects of this coverage. Another advantage is that the scope of coverage is broad. Insurance companies must pay for attorneys’ fees whenever there are allegations of a complaint. Although the insurance company may not be required to pay all damages claimed by an injured worker, they have a strong duty of defense.

Bloggers Should Ensure Liability Coverage Is Up to Par

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Over the past several years, millions of people have begun writing weblogs (or “blogs,” as they are more commonly known.) There are as many reasons for blogs as there are blogs. Some people keep them as a journal to let distant friends and relatives know what’s happening in their lives. Others write about subjects that interest them, everything from gardening to NASCAR. Blogs often act as forums for people’s opinions or news reporting. These types of blogs invite controversy; in extreme cases, they may invite lawsuits if a person or organization takes offense at a particular post. If that happens, can the blog’s author count on his insurance coverage to pay for his legal defense and judgments?

Unfortunately, if he has a typical homeowner’s insurance policy, the answer is probably no. This policy pays amounts for which the policyholder (the insured) is legally liable, plus the costs of legal defense, for bodily injury or property damage done to someone else. The policy defines bodily injury as meaning bodily harm, sickness or disease; it defines property damage as injury to, destruction of, or loss of use of physical property. Neither of these definitions includes saying or publishing something that injures another’s reputation or feelings. Consequently, the policy is unlikely to cover a blog post. For example, if Joe writes in his blog that Bob sleeps with a teddy bear, and Bob sues him for invading his privacy, the homeowner’s insurance will not pay for Joe’s legal defense or for any judgment against him, because Bob suffered neither bodily injury nor property damage.

Insurance companies may offer special personal injury coverage that they can add to homeowner’s policies. This coverage pays for the insured’s liability for several offenses, including oral or written publication of material that violates someone’s privacy, and oral or written publication of material that disparages someone’s goods or services. For example, imagine that Joe writes in his blog that the meatloaf at Bob’s Diner tastes like gravy-covered roadkill. Bob suffers an immediate loss of business, and he sues Joe for libel. The court awards Bob $200,000. If Joe has personal injury coverage, his insurance will pay for his lawyers and the $200,000 judgment (or his limit of insurance, whichever is less.)

Another potential source of coverage is a personal umbrella policy. An umbrella provides additional insurance in situations where a loss has used up the amounts of liability insurance under homeowner’s or auto policies. It also covers some liability losses that those policies do not cover, such as personal injury losses. Umbrellas typically carry a deductible of $250 or $500. In the previous example, if Joe does not have personal injury coverage with his homeowner’s policy, but he does have an umbrella, the umbrella will pay for his defense and $199,750 of the judgment ($200,000 minus the $250 deductible.) If he does have the coverage on his homeowner’s policy, and the court awards Bob $1,000,000, the homeowner’s policy will pay until its limits of insurance are used up, and the umbrella will pay the rest.

Blogs are fun and interesting, and they can be informative. However, in a litigious society, it is very possible that something posted in a blog can result in a lawsuit against the writer. Everyone who writes a blog should consider that possibility and think about buying some extra insurance.

Does The CGL Offer Enough Pollution Coverage?

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When the Commercial General Liability policy was formed, the creators did not intend for pollution events to be covered. The effects of these events are very costly, and special policies are required for businesses facing such risks. These special policies are designed by companies that have expertise in pollution events. Routine events are what the CGL form covers. Falls, construction accidents and property damage are some examples of such routine events. Contractors who have accidents that result in irritants, fumes or other harmful substances being released may still receive some coverage from a CGL policy.

It is important for contractors to understand the extent of pollutant coverage. The CGL form extends coverage for pollutants released only on properties not owned, rented or occupied by the general contractor. However, coverage is not extended for personal property. For example, if a contractor accidentally cracks a gas pipeline at a fuel station, coverage may be extended because the contractor does not own, rent or occupy the station. However, if the same contractor knocked over a large oil drum on his own business property, the effects of the incident would not be covered by the policy.

Contractors also have coverage for any pollutants released on a job site that were not provided by them. Consider the previous example. Since the gasoline at the fuel station was brought by a supplier, it was already in the pipelines when the contractor arrived. However, if that same contractor had brought some chemicals to take to the next job site and spilled them while at the station, he would not be covered. Chemicals and pollutants brought by the contractor may only be covered if they were brought for that specific job. If the chemicals were brought for the fuel station job instead of the following one, the spill may be covered. For example, if a contractor is painting inside of a building and others get sick, he is covered. The policy also covers pollution from completed operations. If pipelines carrying damaging chemicals started leaking several months after being installed, the contractor would be covered.

In most construction contracts, the subcontractor’s CGL policy must include the general contractor and project owner as additional insureds. The policy does not include pollution incidents occurring at places that were not owned, rented or occupied by an insured. However, exceptions are made for premises belonging to any entity named as an additional insured. This means that subcontractors would not have pollution coverage on most job sites without naming the general contractor and property owner as additional insureds.

Keep in mind that the CGL’s pollution coverage is not complete. For example, if a contractor brought a front-end loader to a job site and fluid spilled everywhere, the cleanup would not be covered. In addition to this, the policy does not extend coverage for pollutants released in connection with a contractor’s environmental remediation work. It also does not cover such work performed by hired subcontractors. For contractors and subcontractors who do this type of work, a special pollution liability policy is required. It is important for all contractors to discuss their operations with an agent. This will help the agent determine whether current coverage is sufficient. If it is not, an agent will be able to recommend insurance products that close any deficiency gaps. Pollution fines and cleanup expenses are very costly, so it is important to be prepared before an incident happens.

Facebook Follies: Will Your Insurance Help If You Say the Wrong Thing?

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Social networking Web sites, such as MySpace, Facebook and LinkedIn, are growing increasingly popular with young people and adults alike. These sites allow people to reconnect with old friends and colleagues and to make new connections. However, as with most other Web sites, these sites allow the posting of communications that the posters may come to regret. These posts can cause hard feelings and may result in significant financial loss.

In the winter of 2009, a teenager from Oceanside, New York sued Facebook, four of her high school classmates, and their parents for $3 million. The suit accused the four classmates of bullying and humiliating her in a forum on Facebook. They allegedly posted derogatory and false statements about her that were intended to hold her up to “public hatred, ridicule and disgrace.” Whether or not the allegations prove to be true, the teenagers and their parents need legal defense and possibly resources to pay judgments against them. They may look to their homeowner’s insurance policies to cover these costs, but will the policies respond?

A standard policy will probably not cover this. The policy pays amounts for which the policyholder (the insured) is legally liable, plus the costs of legal defense, for bodily injury or property damage done to someone else. The policy defines bodily injury as meaning bodily harm, sickness or disease; it defines property damage as injury to, destruction of, or loss of use of physical property. Neither of these definitions includes saying or publishing something that injures another’s reputation or feelings. Consequently, the policy is unlikely to cover a post on Facebook. The girl from Oceanside did not allege that her classmates hurt her body, made her sick or passed her a disease; she accused them of making her life miserable. The policy does not cover that offense.

Insurance companies may offer special personal injury coverage that can be added to homeowner’s policies. This coverage pays for the insured’s liability for several offenses, including oral or written publication of material that violates someone’s privacy. If any of the Oceanside classmates’ parents have this coverage, their insurance may cover the claims.

Another potential source of coverage is a personal umbrella policy. An umbrella provides additional insurance in situations where a loss has used up the amounts of liability insurance under homeowner’s or auto policies. It also covers some liability losses that those policies do not cover, such as personal injury losses. Umbrellas typically carry a deductible of $250 or $500. Suppose one of the parents in the Oceanside case does not have personal injury coverage on his homeowner’s policy, but he does have an umbrella. The umbrella will pay for his and his child’s defense and their shares of any judgment, minus the $250 deductible. If he does have the coverage on his homeowner’s policy, this policy will pay until its limits are exhausted, and the umbrella will pay the rest, up to its limit.

The costs of enhanced homeowner’s policies and personal umbrella policies will vary from one insurer to another. Also, the terms of umbrella policies vary among companies. An insurance agent can provide information on coverage options and prices.

Communicating online has become an ordinary part of life today. Web sites like Facebook offer new and exciting ways to meet new people and to stay in touch with people all over the globe. However, they bring with them their own unique risks. Anyone using sites like these should be careful with what they and their children are saying, and they should make sure they have proper insurance backing them up.

Understanding When Additional Insureds Are Covered

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With construction contracts, a general contractor must be added as an additional insured on the subcontractor’s liability insurance policy. Most contracts require liability coverage because there may be claims arising from completed or ongoing work. This also means that the general contractor runs the risk of facing a lawsuit from the flaws in the subcontractor’s work. For this reason, subcontractors need completed operations insurance.

In the past several years, the insurance industry took steps to remove completed operations coverage from the policy forms commonly used for additional insureds. The ISO Form CG 20 10 of 1985 offered coverage for the organization or person listed on it. The named party was covered for liabilities arising from their work or work performed for them by someone else. Materials and equipment were also covered. From the wording on the form, the courts decided that additional insureds were covered for any completed operations. However, ISO revised the form in 1993. ISO had never intended to extend this coverage, so the form was changed to offer coverage only for the named insured’s ongoing projects. At the same time, Form CG 20 37 was introduced. It provided liability coverage for additional insureds helping with the named insured’s operations. However, operations were only covered if they were away from the premises rented or owned by the named insured.

To understand how this works, consider an example scenario. Company A is subcontracted to do electrical work, and Company B is subcontracted to do plumbing work for a new project. Contractors from both companies are working at the general contractor’s work site on the same day. While a plumbing worker from Company B is installing parts in a bathroom, the electrical contractor from Company A accidentally drops a tool on the plumbing worker. The Company B employee is injured, so he sues the general contractor and Company A. Company A’s CGL policy has the CG 20 10 endorsement with the general contractor listed as an additional insured. Since the injury took place during ongoing operations, the policy will cover the general contractor in the lawsuit filed by the injured worker.

However, if an electrical contractor performs work and leaves without intention of returning, it is the general contractor’s responsibility to ensure quality work. If the general contractor accepted it and a fire started because of faulty wiring after the job was done, the building owner could sue the general contractor. Since the electrical contractor’s work was finished and approved, the CG 20 10 endorsement would not apply. In order for the general contractor to be covered, the policy would have to include the CG 30 37 endorsement. No losses would be covered by either endorsement if the general contractor was at fault. To qualify for coverage, an incident must be at least partially another party’s fault.

Since construction is risky business, it is important for all contractors to discuss their insurance questions with an agent. Contractors must fully understand their contractual obligations and what coverage is available to meet their needs. Agents are able to provide information about policy terms, costs and additional insured options. It is crucial to have ample coverage before taking on a project where losses are likely to be incurred.

When It Rains, It Pours: Why You Need a Personal Umbrella Policy

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In recent years, our society has become what some people call “lawsuit happy.” In other words, an increasing number of people are filing lawsuits for everything from emotional injury to property damage-and they’re suing for larger amounts than ever before. If someone were to file a lawsuit against you, you could end up losing hundreds of thousands of dollars or more, even if you won.

While you may have some personal liability coverage through your homeowner’s or auto insurance policy, it’s probably not nearly enough to cover a major lawsuit. Fortunately, you can further protect yourself with what’s known as an umbrella policy. This type of policy offers a higher level of liability coverage and ensures that you and your family will be protected if someone sues you for damages.

Read on to learn more about these valuable policies:

Umbrella policies: A liability coverage “extension”

When it comes to lawsuits, the more assets you own, the more you stand to lose. A personal umbrella liability policy can protect you from these potentially devastating losses. These policies act as an extension to the current liability protection you probably have through your homeowner’s or auto insurance policy.

Umbrella policies are typically sold in million dollar increments, and you can obtain a policy once your home and auto insurance policies meet a minimum “attachment point”-typically a liability limit of $250,000 or $500,000.

What does it cover?

Most umbrella policies covers the following:

  • Personal injury, including false arrest, mental anguish, malicious prosecution, libel, slander, defamation of character, wrongful entry or eviction, negligent infliction of emotional distress or invasion of privacy.
  • Bodily injury, such as physical injury or death. In some jurisdictions, this also includes emotional injury.
  • Property damage, including destruction of the property of others, cost of recreation and loss of use. However, it does not cover damages done to your own property.
  • Defense coverage, including groundless, false and fraudulent suits, bail bond costs, loss of earning and other “reasonable” expenses.

Of course, it’s probably easier to understand exactly what an umbrella policy covers by putting it into real-life terms. Here are a few examples of what this type of policy could cover:

  • A deliveryman is hauling your new washing machine into your home when he trips on your door mat, falls and breaks his neck. Your umbrella policy would likely cover the hundreds of thousands of dollars worth of damages.
  • You’re driving down the road when an important corporate CEO steps into the crosswalk in front of your car. He sues you for millions of dollars in medical costs, lost earning and damages. Your umbrella policy can cover you for these damages.
  • Your daughter invites a friend over to play on her swing set. Her friend falls off the slide and suffers from serious injuries. When her parents sue you, your umbrella policy will cover the medical costs.

How much does is it cost?

The price of an umbrella policy depends on how much coverage you want, the number of properties you rent or own and the number of automobiles or watercraft you own. The cost associated with cars and watercraft are much higher than those associated with properties.

Let’s say you are single, you own one home and one car, and you want to purchase a $5 million umbrella policy. You’ll probably pay somewhere between $270 and $550 a year. On the other hand, if you are married with two children, you own two homes, a rental property and three cars, and you want a $10 million umbrella, you’ll probably pay a good deal more-anywhere between $970 or $1,750 a year.

Talk to your insurance agent to discuss whether or not an umbrella policy is right for you. In the long run, by paying a few hundred dollars per year, you could save millions.

Insurance May Not Cover Faulty Work

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When accidents happen on construction sites, the result usually involves property damage. Faulty wires cause fires, which burn the walls. Collisions often put dents in expensive equipment, and paint may be inadvertently sprayed onto nearby cars. If such incidents occur, the contractor must look to his or her general liability policy to compensate for damages. Although the CGL policy covers several types of incidents, not every situation is covered.

In order for a situation to be covered, three requirements must be met. First, there must be a legal obligation for the contractor to pay the damages. The contractor’s tort liability is covered by insurance, so most negligent acts are covered. However, if the contractor fails to complete the work he or she agrees to, there is no coverage.

The second requirement is that the damage must happen out of an occurrence, which the policy defines. In a CGL policy, an occurrence is an accident that includes repeated or continuous exposure to the same harmful conditions. In order to qualify for coverage, the damage must be accidental. The insurance company will decide if the incident was accidental.

The third requirement is that an accident must result in damage to the property. Such damage is defined as a physical injury to the property. This may include loss of use of the damaged property and loss of use of any other accompanying property that the incident affects. Since computer data is not tangible property, it is one of the exclusions in this type of coverage.

Unfortunately, if a contractor is legally liable for a damage claim, the policy may not cover it if the claim is categorized as faulty workmanship. If damage results from work performed by the contractor or a hired subcontractor to “the particular part” of property being fixed, the damage may not be covered. For example, assume a contractor is fixing a wiring system for an old light fixture. If the fixture falls and damages the floor during the process, the fixture itself would not be covered. This is because the fixture was the particular part of property that the contractor was working on. However, the contractor was not working on the floor, so the damaged flooring would be covered.

In some cases “that particular part” may be difficult to define. For example, if a contractor accidentally starts a fire and burns a multi-level roof, only a portion of the roof may be covered. The language in the policy is not clear enough for a definite answer to such a situation, so outcomes may vary. However, one provision in the policy is very clear. It states that coverage does not apply to any particular part that must be repaired because of incorrect work performed by the contractor. In the previous scenario, if the light fixture did not work after the contractor repaired it, the policy would not cover a replacement.

Inland marine policies may help for some types of losses that a regular policy does not cover. There are also other types of losses that contractors must pay for upfront. However, it is important to know what to expect before entering the job site, so discuss coverage options with an agent.

Do You Need an Umbrella? Here Are Some Things to Consider

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Standard auto, homeowner’s and boat insurance policies cover liability a person may have for injuries or property damage suffered by someone else. Insurance companies design them to cover accidents for which the insured person may owe tens or even hundreds of thousands of dollars. However, sometimes the person may be responsible for an accident so catastrophic that the damages are $1,000,000 or more. To cover financially devastating events like these, insurance companies offer personal umbrella policies. These policies provide additional protection when an accident uses up the amounts of insurance provided by the other policies. They may also cover some types of losses these other policies do not cover.

There is not a “standard” umbrella policy; each company’s offering will be different. Therefore, it helps to have a checklist of considerations when evaluating a policy.

First, identify those things that could expose you to a catastrophic loss. How many cars do you own? Do you have inexperienced drivers in your household? Household attractions like swimming pools, trampolines, and swing-sets present an exposure to severe losses. Boats, like cars, can cause serious injuries and damage if the operators are inattentive, intoxicated, or inexperienced.

Next, identify other exposures you may have that do not involve potential physical injury or illness or property damage or that might require different coverage. Do you or any members of your family participate in social media Web sites or online discussion forums? Does anyone coach a youth sports team, belong to the governing board of a non-profit organization, write computer code as a hobby, or give music lessons? These activities present different exposures to legal liability.

Review your insurance policies. How much will your auto insurance pay for injuries to one other person? How much will it pay collectively for injuries to more than one? How much will it pay for property damage? How much will your homeowners policy pay for your personal liability for an accident? Does it cover any business activities? Does it cover family members accused of slander, libel, or defamation of character in online postings? Does it cover you for allegedly causing mental anguish to a kid who didn’t get much playing time on a team you coached, or trouble caused by a computer program you wrote? How much will your boat-owners policy pay for your liability for boating accidents? The answers to these questions will tell you where an umbrella policy can help.

For example, if your auto policy will pay up to $250,000 for injuries to one person and $500,000 for injuries to multiple people, an umbrella with a $1,000,000 limit will give you insurance equaling $1,500,000 for injuries to two or more people. If your homeowners policy will pay up to $300,000 for your liability, the same umbrella will afford $1,300,000 if someone gets seriously hurt at your home. The umbrella limit of insurance also applies on top of the limit on the boat policy.

In addition, the umbrella may cover things like volunteer activities, statements made online, and certain business activities that a homeowner’s or auto policy might not cover. Normally, the insurance company will require you to pay a deductible amount (such as $250 or $500) before it will pay for a loss that one of these other policies does not cover.

A professional insurance agent can help you sort out what your current insurance does and does not cover and what additional coverages an umbrella will provide. It is important to compare all the coverages the policies provide and not just their prices. Fortunately, catastrophic accidents are extremely rare, but having an umbrella policy when they happen can make it easier to get through them.

Teens Drinking at Parties = Insurance Issues

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Every spring brings with it the prom and graduation party seasons. Unfortunately, these events often become occasions for teens to drink alcohol. Teens at unsupervised parties risk harming themselves and others when they drink. Parents who host these parties may bear responsibility for what happens there and for injuries or damages occurring after the guests leave. While their liability insurance may cover any financial damages, the circumstances of the accident determine which policy will respond, and this will affect how much coverage the parents have.

Assume that a guest consumes several beers at the party, drives off in his car, and gets into an accident, injuring himself and a passenger. The parents of both injured teens sue the parents who hosted the party, who in turn notify their homeowner’s insurance company. However, the policy’s personal liability coverage does not apply to an insured person’s legal liability for:

  • The occupancy, operation, or use of a motor vehicle by any person
  • The entrustment of a motor vehicle by the insured person to anyone else
  • The insured person’s failure to supervise or negligent supervision of any person using a motor vehicle
  • The actions of a minor involving a motor vehicle.

Because of this, the homeowner’s policy will not cover the parents’ liability or defense costs. Their personal auto insurance policy may cover them, however. The policy’s liability insurance covers the individuals named on the policy and household residents who are their relatives for their liability for bodily injury from an accident arising out of the use of any auto. Therefore, even though the parents were not actually operating the vehicle involved in the accident, their policy will cover their liability. In addition, the auto policy that applies to the car involved in the accident (the guest’s insurance, or, more likely, his parents’) will also cover the hosts’ liability for the passenger’s injuries. The hosts’ policy will step in if the owners’ policy either does not apply or pays out its maximum limit of insurance.

Now assume that the guest consumes the beer, but a sober guest gives him a ride home. Rather than go straight to bed, the young man goes for a swim in his parents’ pool and drowns. His parents sue the hosts, alleging that his judgement was impaired because the hosts allowed him to drink. In this situation, the homeowner’s policy should pay for the the hosts’ liability and legal defense. Because this accident did not involve a motor vehicle, and no other policy provisions that would remove coverage apply, the policy will cover this claim.

While one policy or the other may apply to a liquor liability claim, there could be significant differences between the amounts of coverage the two policies provide. Most homeowner’s policies provide personal liability coverage of at least $100,000 for each occurrence; many provide limits of $300,000 or $500,000. Auto policies may provide much less coverage. Most states have laws setting the minimum amounts of liability coverage that an auto policy may provide, but those limits are relatively small. For example, New York law requires minimum limits of $25,000 for injuries to one person and $50,000 for injuries to two or more people (higher amounts apply for death claims.) Should a young person become seriously injured or killed, the damages claimed could well exceed these amounts. Parents should consider buying as much liability insurance as they can afford; they should also think about buying an umbrella policy, which pays for damages that surpass the amounts payable under homeowner’s and auto policies.

Of course, the best course of action is to properly supervise parties, so that everyone has a good time and lives to have another one someday.

Understanding the Basics of Small Business Liability Insurance

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To protect a small business from potential lawsuits, liability insurance is necessary. Policies vary greatly, and they cover different classifications of risks for varying costs. Before shopping for a policy, it is important to know a little more about liability insurance. The following paragraphs provide a quick overview.

  1. Liability insurance is available in many different forms. Commercial general liability, which is also called CGL, is a very broad insurance product. It covers claims from accidents, injuries or negligence when the business is at fault. Small businesses may face a wide array of damage charges. Personal injuries, property damage, libel and slander are just a few examples. Product liability insurance covers legal fees for litigation involving a faulty product. It also covers any personal or property damage charges caused by the defective product. Professional liability coverage pays for damages caused by services. It is also called errors and omissions coverage. This is for companies that market a service instead of a product. For example, professionals in medical clinics must have medical malpractice coverage. There are other types of insurance designed for specialty businesses. For example, there are special policies for companies involved only in Internet sales. The nature of the business determines what type of coverage is necessary.
  2. The type of business may influence premium amounts. Insurers classify businesses in several different categories. These classifications play a key role in determining annual premiums. Every business has a certain degree of risk, and some types face many more risks than others. For example, a company that washes windows on skyscrapers would be a riskier business than a tax preparation company. To get a better idea of what to charge, most insurers research the number of claims made by similar businesses. The North American Industry Classification System is commonly used. To find out what kind of risk classification a particular business falls under, discuss the matter with an agent. The size of a business’ payroll and the amount of sales made also contribute to premium amounts.
  3. Liability insurance does not cover everything. General liability coverage does not offer benefits for employees’ work-related injuries and illnesses. Workers’ compensation coverage usually provides benefits for such expenses. Liability coverage does not cover intentional acts or damages sustained from those acts. Employee fights, criminal activity and fraudulent behavior are some examples of intentional acts.
  4. Liability insurance may be a requirement. Several states require some professions to carry liability coverage. If a business uses a vehicle or lets employees drive it, auto liability coverage is also important. Although most states have a specific standard for minimum auto liability coverage, the amounts vary from state to state. It is important to discuss these numbers with an agent. In the event of a claim, liability insurance provides coverage for defense costs, litigation claims and other legal fees.
  5. It is possible to decrease risks. If business owners document certain safety measures taken to reduce or eliminate risks, insurance companies may classify the company as low risk. Smoke alarms, fire alarms, sprinkler systems and multiple fire extinguishers help lower risks. It is also beneficial to train employees in various safety practices. Be sure to make equipment readily available. When vehicles are used for business purposes, make sure they are maintained properly.