IRMI Update—Issue #9
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
January 23, 2001
In This Issue
Colleague,
Our subscriber poll is confirming that the insurance market is firming, but
it isn't in a crisis mode. As of Friday, about 19 percent of the respondents
indicated they've seen a decrease in rates on renewals since December 31. Sixty-five
percent have seen an increase of 50 percent or less, while about 15 percent
experienced an increase in excess of 50 percent. I'll share the comments with
readers in the next issue of IRMI Update. [To see the final vote tally, go to IRMI Update #10, and to read subscriber comments,
refer to the "Your View" column of that issue.]
Earlier this month, we passed an important milestone for IRMI.com: we added
the 100th article to the Expert Commentary section! One of our goals is to assemble
a repository of practical and reliable information you can depend on to help
solve your risk management problems. Thanks to the experts who have contributed
these articles, IRMI.com is fast becoming just that. Our Expert Commentators
receive no monetary compensation, and I encourage you to drop them a note of
thanks when you find their work to be particularly helpful. You'll find both
a postal and e-mail address in their biographies.
Thank you for telling your friends and colleagues about IRMI.com. We especially
appreciate those of you who forward the IRMI Update newsletter to others with
an encouragement to subscribe. Our subscriber base has been growing steadily,
and we appreciate your help!
I hope you enjoy this issue of IRMI Update, and I wish you a great day.
Jack
Jack P. Gibson
President
IRMI
Get Rid of Obsolete Stock and Equipment! Sometimes
manufacturing plants have some overstock that becomes obsolete. It gets stored
in a warehouse somewhere and is carried on the balance sheet as an asset. They
pay insurance premiums, taxes, and waste valuable money housing items they will
never use or sell.
My recommendation is to either have a "garage sale" and sell the obsolete
items or dispose of them. The extra cost to warehouse obsolete items plus the
chance of having a coinsurance penalty imposed because of being underinsured
is too high. It is better to sell it at a loss than to continue to pay for things
you do not use.
A plastics manufacturer in Dallas had a large warehouse half filled with
obsolete or outdated stock. When we were talking about contents valuations,
the manufacturer had not included these items, yet an astute adjuster would
have included them to determine the insured value required by the coinsurance
provision if there had been a major loss. The manufacturer had a garage sale
and made at least some of its money back on the product and reduced its warehouse,
taxable inventory, and insurance costs.
This could apply to obsolete equipment as well.
By: Mary Roth, CPCU, HB
Owner
Staff Training Programs
maryroth@flash.net
Suggest a Risk Tip. Future issues of IRMI Update will include more risk tips from our readers. Send
us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. We'll
acknowledge your contribution as we did for Mary.
We add new Expert Commentary to IRMI.com every week. There are now 102 articles
on IRMI.com, and many more are in production. Below you'll find summaries of
some recent additions with links to the articles.
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Who Wants To Be an
Insured?—It is common for businesses to involve multiple corporate,
partnership, and joint venture entities, and there are a number of subtle
nuances that can effect how insurance coverage applies to these entities.
Care must be taken to identify them and assure that insured status is properly
provided under CGL policies. Learn how in this insightful article.
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The Basics of a Business
Interruption Claim—The principles governing adjustment and adjudication
of a business interruption loss are scattered among numerous decisions by
a variety of courts around the country. This article examines Dictiomatic
v USF&G, a Florida case that brings together virtually all of the principles
applicable to such claims and provides a concise primer on these principles.
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Top 10 Best Employment
Practices for the New New Economy—Given the rapid growth of new
new economy companies, HR issues have tended to take a backseat to other
concerns. This article enumerates the most important employment practices
that these companies should adopt in order to keep on track.
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New Stand-Alone E-Commerce
Liability Insurance Policies—This article provides general observations
regarding the stand-alone e-commerce liability market and what issues you
should consider when reviewing or placing insurance coverage. Several insurer
policy provisions are compared, such as what constitutes professional services,
coverage for patent infringement, mandatory binding arbitration provisions,
contractual liability coverage, blanket additional insured endorsements,
and many others.
Additional Insureds
and Completed Operations—Construction contracts sometimes require
additional insured status that will respond to completed operations claims.
Contractors faced with such obligations often attempt to have additional insured
endorsements added to their policies with older language in the belief that
this provides the required coverage. This article discusses a recent court decision
that should provide reassurance that contractors who do so are complying with
the insurance requirements of their contracts.
Last Chance To Suggest
a Construction Risk Conference Session. If you wish to propose a
workshop or other session for the 21st IRMI Construction Risk Conference (to
be held Oct. 29 to Nov. 1, 2001, in New Orleans) please send us your submission
by February 1.
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