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Suggestions from Trading Assistant Discussion Board
Regarding Insurance
pictureitsold
I've had my B&M store for about 3 years now. For the first year, we could find no insurance carrier who would cover the items brought in to us.
Then my agent found Firemen's Fund would cover us. If I am not mistaken, I think my premium is about $1300 per year. This is in addition to all the other types of insurance I need (slip and fall, workers' comp, etc.)
My agent's name is Mike Jones and he is in Eureka CA and telephone is (707) 444-8035. He's helped lots of TPs find insurance. Good luck!
ez_auction_depot
Check out http://www.healthshareamerica.com/. They offer affordable health, vision,dental and more. The unusual thing about this company is that they DO NOT EXCLUDE pre-existing conditions. I know the owner of this company personally. He started this company because he was unable to get any company to insure his wife who has fibromyalgia (not sure about correct spelling). Although the company is based here in Texas, Mike's plan is available nationwide. If you contact him, be sure to mention that I referred you!
--Maggie
childhoodradio
I've written this elsewhere in the forums, but it's worth repeating here. Be VERY careful about asking your current homeowner's company/agent about add-ons for TA-type businesses. I know of at least two folks who had their homeowners' policies cancelled for merely asking. Once you have been cancelled by a company it will be difficult and expensive to get your home covered elsewhere. Shop around but do it anonymously and get new coverage COMPLETELY SET UP, not just quoted by a broker before pulling the plug on your old policy. Brokers write policies all the time that insurance companies reject. You don't REALLY have insurance util the company approves the policy.
The reasons for insurance and
why you cannot operate without it
By Christopher Spencer
eBay PowerSeller
Certified Education Specialist,
eBay University Instructor
eBay Trading Assistant
Author of "The eBay Entrepreneur: The Definitive Guide to Starting Your Own eBay Trading Assistant Business" (Kaplan Publishing, available September 2006.)
If you are a work-at-home Trading Assistant and don’t handle a lot of expensive items, buying extra insurance may not be necessary. You will
probably already have theft coverage with your homeowner’s policy, and if you
don’t own your own home, you should have a renter’s policy which serves the
same purpose. Be sure to check your coverage now to see if you are on safe
ground. Ask your insurance company if a work-at-home business will be covered.
If you operate a drop-off store, you will need to plan your insurance coverage carefully to make certain you and your clients will be
protected in the event of loss due to theft, fire or acts of God (referred to
as force majeure).
Unless you have very deep pockets, you can get into a lot of financial trouble if you don’t have insurance to cover a loss. Don’t take
excessive risks by running your new business without insurance. If you hire
employees, you will also need to have worker’s compensation insurance to cover
them in the event of an on-the-job injury.
How to locate a great broker and what to ask them
Most insurance companies sell their policies through authorized agents or brokers. Some sell insurance directly by telephone without using brokers. There are so many insurance companies providing all types of business insurance that it may be confusing, so it’s helpful to shop around to learn about the various companies and their offerings.
You can talk to your auto, homeowner’s, or renter’s insurance company and see if they also offer business insurance. You will get
better service (and often a better price) from a company when you have multiple
policies with them. You can also reach out to friends, family, and your Chamber
of Commerce for referrals to a great insurance broker.
Explain to the broker that you will be operating a business where you handle and store items on behalf of others, and that since you will
probably rarely handle cash, most of the liability will concern your equipment
and business records and the clients’ items. Because your insurance rates
will be determined by the amounts of coverage, your location, and the policies of
the insurance company, it is important for you to be classified as the correct
business type. Being a Trading Assistant does not normally involve a lot of
dangerous activities or unusual risks. Insurance companies’ rates will be based
on the severity of the risk they are insuring. You may have to buy separate
coverage for your business’ building if you own it.
Ask the broker if they specialize in insuring businesses, and if they have a variety of carriers to choose from. You may do better working
with a broker who is an independent agent and can shop your policy to more than
one company. And ask the broker to shop your policy only to companies with a
strong financial rating. You want an insurance company that has a solid
financial base and can make prompt payment on claims. You also want to avoid any
companies that may have regulatory actions from a government agency pending.
Ratings
AM Best provides ratings of insurance companies’ abilities to meet their obligations to their policyholders. Below is their rating system.
This is Standard and Poor’s rating system for insurers:
Moody’s is another company that rates insurance companies:
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Aaa (Exceptional Financial Security)
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Aa (Excellent Financial Security)
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A (Good Financial Security)
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Baa (Adequate Financial Security)
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Ba (Questionable Financial Security)
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B (Poor Financial Security)
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Caa (Very Poor Financial Security)
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Ca (Extremely Poor Financial Security)
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C (Lowest Financial Security)
Ask your broker to look at companies with a great or superior rating from one of the above rating companies. Stick to insurance
companies that have a rating from any of the above three ratings firms that
starts with an “A.” Don’t be seduced by the lowest price quote—it may be from a
financially unstable insurance carrier, and you need to be sure that your claim
will be paid and promptly in the event you need to take advantage of your
insurance policy.
Shopping the best rates
Your insurance broker, just like a real estate broker, is paid by incentives (commissions), and he or she will want you to be a customer for a very long time. It is in their interest to sell you good insurance and offer you coverage that will protect you both personally and in business; not just sell you cut-rate insurance.
The price of your insurance depends upon a variety of factors which must be considered, including:
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Your deductible (the amount you have to pay on each claim
before your insurance company kicks in and starts paying)
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The number of policies that you have with the insurance
company
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The insurance company’s financial strength (rating)
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The amounts and types of coverage
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Your location
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The type of building and its construction
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Your security system
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Your claims history
Insurance is really designed to cover you in a catastrophic situation. If you break a client’s $50 lamp, you are going to pay for it out of
your own pocket; not file a claim against your insurance. Most likely the
deductible would be higher than the value of that item and the insurance
company wouldn’t pay anyway. You will want your insurance to cover something
big, like a runaway truck smashing into your store, a tornado moving the
building to a new zip code or an earthquake leveling the shop—this is what
insurance is for.
You will find that the rate you pay will drop substantially as your deductible goes up. I suggest you go for a high deductible, such as
$1,000 (or more if possible). You want your business insurance to be very
affordable and in the event of a loss, you want your deductible to be the
largest amount of money you can reasonably expect to be able to pay out of your
own pocket without putting a strain on your finances. Ask your broker to give
you a variety of quotes based on different deductible amounts so that you can
compare the rates and see what makes sense for you.
Types of coverage and what they insure
If you cannot find a single insurance company to handle all your insurance needs, be sure to read each of your policies carefully to make
certain you do not duplicate coverage.
Your insurance should cover both people and property. Here is a list of the different types of insurance and what they cover:
General Liability
Bodily Injury:
This covers your liability when someone else is injured at your business
location. Examples would be slip and fall injuries or injury as a result of a
box falling on someone.
Property
Damage: For damage claims to the property of others, such as damage caused by
force majeure. If something happens to your clients’ items while in your
custody, you will be covered.
Personal Injury:
Coverage for things such as libel, slander, false arrest or wrongful entry. These
situations will probably not occur in your type of business, but this coverage
is often automatically included in General Liability.
Advertising Injury:
This covers your legal liability for damage to others caused by your wrongful advertising
of your business’ goods and services. In the unlikely event that you
misrepresent yourself, such as making exaggerated claims about prices you can
obtain on eBay, you will be able to get legal defense from your insurance
company.
Commercial Automobile Protection
Liability:
This will cover you in the event you or an employee are sued as a result of an auto
accident while using a vehicle in connection with your business, such as when picking
up items from a client’s home or running errands.
Collision:
Pays for physical damage caused to your business’ vehicle as a result of an
automobile accident.
Comprehensive:
Covers damage to your business’ vehicle as a result of fire, theft or glass breakage.
Rental:
Reimbursement: Special coverage to pay for a rental vehicle for a specific
length of time while your vehicle is disabled due to a covered loss (such as
while it is being repaired as a result of an auto accident).
Business Property Protection:
Protects your building and its contents in the event of physical damage or loss.
Umbrella Excess Liability Coverage
An “umbrella” policy will provide very high limits in excess of your other coverage.
Individuals with a high net worth should invest in this type of additional
coverage to protect their primary residence and assets in the event of a major
lawsuit or personal injury claim arising out of the business’ activities.
Worker’s Compensation Insurance
This coverage is legally required in most states and covers employees and their medical expenses in the
event of an on-the-job injury. The rate you pay is normally a percentage of
your estimated payroll. Some business insurance packages will also include
worker’s compensation insurance.
Be sure to discuss all of the above coverage options with your insurance
broker. Don’t skimp on insurance—you will want to be sure you have sufficient
coverage to meet the conditions of your business activities. To help take the
bite out of the insurance bill, virtually any insurance company will give you a
payment plan if requested, so that your payments are spread out in monthly
payments.
But you also don’t want to be over-insured, paying for policy limits which
are far beyond what you will need. Because the average eBay listing duration is
seven days, you won’t have a lot of items lying around, and therefore in
general your exposure for other people’s property will be limited, unless you
get behind on your listings or have very expensive items in your care.
You will want to get a policy in place before starting your property renovations
so that you have protection right away while you are getting ready to open your
doors.
Frame a copy of your insurance policy and hang it in the lobby of your business
along with your business licenses. Clients will appreciate knowing and that
you are an insured business.
Bonding
Bonding is not insurance but is a related subject, and buyers on eBay prefer to purchase from bonded merchants.
A bond on an eBay listing is a guarantee of the seller’s performance.
Bonding provides buyers with financial protection in connection with the
transaction in the event a dispute arises.
My company uses buySAFE bonding on every transaction. buySAFE requires the seller to pass through a comprehensive business inspection to
make certain that the seller has ability to perform all commitments made in
connection with eBay transactions. The bonding gives buyers a very high level
of confidence that the seller will ship within the time frame promised in
the listing, and that the order will arrive as it was shown and described
on eBay. The seller pays a 1% bonding fee on every listing that he or she
creates on eBay at the time that the item actually sells—there is no fee if
the merchandise does not sell.
Bonding your listings will encourage business from buyers, and buyers will pay more for a bonded listing because they know they can
request repayment from the bonding company in the event of a dispute or problem
with the order. Bonding is not insurance because you, as the seller, will have
to repay any monies paid by the bonding company if they pay a valid claim—that
is, a claim where you have been determined to be at fault in your performance
or representation of the item you listed on eBay.
Bonding is very, very good for your business and I strongly encourage you to offer it on your eBay listings. Because I complete all my eBay
transactions as promised, I have never had to pay a claim on my bond, but the
bonding has definitely created more business and higher bids for our
company. We receive many positive emails from buyers who thank us for bonding the
listings, and we also see comments in our feedback profile from buyers who have
included appreciation for our bonding in their feedback comments.
Response to detailed article on insurance by Christopher Spencer
on eBay Trading Assistant Discussion Board
ez_auction_depot
Chris, I was an independent insurance agent for 18 years. I sold my agency last September and decided to open a B & M drop-off store in November. I am now a full-time TA and enjoying every minute. After reviewing your chapter on insurance in general, I have a few comments:
Bodily Injury: This covers your liability when someone else is injured at your business location. Examples would be slip and fall injuries or injury as a result of a box falling on someone. You should probably add that BI covers your liability (on and off premises) for claims resulting from
negligent acts for which you can be held legally
liable. All GL policies will exclude bodily injuries to you and your employees. Coverage for your employees should be provided by a worker's comp policy.
Property Damage: For damage claims to the property of others, such as damage caused by force majeure. If something happens to your clients’ items while in your custody, you will be
covered. Some policies will exclude property of others in your care, custody or
control. You will need to ask your agent if your policy has a 'care, custody and control' exclusion.
Two other common GL coverages included in most GL policies are 'Fire Damage Legal Liability' and 'Medical Payments to Others'. (I can provide you with more details on this if you wish to incorporate in your book.)
Liability: This will cover you in the event you or an employee are sued as a result of an auto accident while using a vehicle in connection with your business, such as when picking up items from a client’s home or running errands.
The basic auto liability coverage applies to operation of OWNED autos. The coverage you just described is 'Non-Owned Auto Liability' coverage. If you have employees using THEIR autos in course of your business, you will need to have NOAL endorsed on your policy.
Comprehensive: Covers damage to your business’ vehicle as a result of fire, theft or glass breakage. Comprehensive covers more than just fire, theft or glass breakage. It also covers vandalism/malicious mischief, flood and more. In fact, most companies now refer to this coverage as 'Other than Collision' as it just about covers anything else that happens to your vehicle that is not considered collision. Some companies will offer 'Specified Cause of Loss' instead of 'comprehensive'. SCL is limited to the basic (other than collision) perils - fire, theft, vandalism/malichief, flood, etc.
Protects your building and its contents in the event of physical damage or loss. You should also add that coverage for customer's property can be insured by having your agent add 'Bailee's coverage' to your policy. Also, if you are leasing retail space in a building you do not own and have made modifications which are attached to the building such as flooring, plumbing, walls, etc., you should have your agent consider the value of these 'improvements and betterments' when determining your contents value.
The differences between GL insurance and a bond are an insurance policy is a two-party contract (You and the Insurance Company) and provide coverage for damages caused by your negligent act which you are held to be legally liable (and not otherwise excluded). A bond is a three-party contract (You, the Surety Company, and the Obligee). It guarantees fidelity or faithful performance. Also, if an insurance company pays a claim on your behalf, they will absorb the loss. If a bonding company pays a claim on your behalf, YOU will be expected to reimburse them. That is why the underwriting on most bonds is similar to applying for a line of credit at your bank.
Most agents for 'direct-writer' insurance companies (Allstate, State Farm, Farmers, etc.) are limited on the types of commercial businesses they can insure and have very little (if any) flexiability. For this reason, it is best to deal with an independent insurance agent. You can find one in your area by checking:
www.iiaa.org or www.trustedchoice.com. Those TA's who have a home-based operation should review their homeowners policy with their insurance agent as all HO policies have limitations for business operations. RLI Insurance Company offers a comprehensive business policy for home-based businesses for very reasonable premiums and is available nationwide
http://www.rlicorp.com/Products/IBP/default.asp.
I hope this information is of use to you. I will be at eBay Live! in Las Vegas and will plan to visit with many other TA's.
--Maggie
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