Four All-star Insurance Coverages for July 4th

by Cody Ward
July 2, 2015

Risk is as American as apple pie, and insuring risk is as American as, well, Benjamin Franklin (one of the earliest proponents of mutual insurance). So it should come as little surprise this holiday weekend that whatever your neighbors are grilling, renting, setting fire to, or launching into the sky, there’s an insurance coverage available to protect them (and you) from harm and loss. Here are EvoSure‘s top four.

1) BBQ (Business) Interruption Insurance

As a fellow Austin, Texas firm, we at EvoSure applaud our friends at Watkins Insurance for drawing attention to a recent incident at Franklin BBQ, one of Austin’s meat mainstays. When a vehicle drove into the restaurant, Watkins blogger Amanda Sasser said the accident left her wondering, “do my clients have enough business income coverage? …If (the now James Beard Award-winning) Franklin BBQ hadn’t been able to patch the hole so quickly, what could have happened? They wouldn’t have been able to make any money that day, but the meat was already prepared. Will the BBQ be good to sell later?”

From Ribfests to food trucks to brick and mortar BBQ establishments like Franklin, protecting the potential lost income when the unforeseen happens to your grilled meats is critical. Watkins recommends this video on business income coverage to better understand this protection.

2) Fireworks Liability

“Fireworks” is a fun and abbreviated way of saying “explosive pyrotechnic devices” (doesn’t quite have the same ring, does it?). Fireworks had their place in the first celebration of Independence Day in 1777 and at President George Washington’s inauguration. According to Wikipedia, the Walt Disney Company is the largest consumer of fireworks in the world.

According to Bloomberg “Some 17 million pounds of fireworks are shot off by professionals in July,” which is an awful lot of firepower. So it is hardly shocking that most underwriters cringe when they see the word “fireworks” on a submission. But there are some who seek this sparkly business. Combined Specialties International (underwritten by Lloyd’s) are fireworks coverage experts, as their website describes: “Combined Insurance Specialties is a family-owned business with over 25 years of experience with pyrotechnics and explosives insurance… We are shooters and members of four pyrotechnic organizations.” This article from Claims Management magazine does a great job explaining the areas of concern when providing coverage for fireworks displays.

3) Corn on the Cob (Product) Recall

That annual town Fourth of July fair will be a lot less fun (and more unpleasantly memorable) if contaminated corn or spoiled burger meat are served. Carriers like Zurich and ACE have done extensive research on the long-lasting financial and reputational impact of product recalls and supply chain disruptions.

According to EvoSure member Kevin Frain of Peachtree Special Risk Brokers, “Product recall coverage can be easy to forget in a company’s insurance portfolio, but the financial effects on a company’s bottom line after a recall is issued can be devastating.” Meats, produce, and other foods enjoyed at a BBQ are prone to contamination. Not only should the manufacturers and distributors ensure that they are adequately insured, but restaurants, catering companies, and food trucks should speak to their agents and underwriters to be sure they are protected from losses caused by contaminated foods.

Back to the manufacturers, Frain says, “Thousands of product recalls are issued every year ranging from food/beverage products to automotive components to children’s toys. If a company produces or distributes a product, product recall insurance via an endorsement or separate policy can provide adequate coverage for their unique exposures.”

4) Vacation Home Rental Coverage

Many families who are second/vacation homeowners subsidize their income by renting out their properties. Holiday weekends like the 4th of July are high traffic times for renting vacation homes. In the high net worth home space, some of the add-ons or “toys” that make vacation rentals stand out can also be the biggest and costliest risks, such as homes with swimming pools or lake/river/ocean access, jet skis, and other exposures. According to Guy Huntley, VP and Regional Underwriting Executive for ACE Private Client Risk, “Homeowners insurance contracts can be very specific about whether there is coverage for certain events that fall outside the scope of everyday living. Generally, the more expensive the policy is (and the more specialized the insurance company) the broader the coverage and better the protection.”

Rental experts who utilize sites like HomeAway.com also caution, the typical homeowner’s policy “does not cover vacation rental as an approved use.” For some, like this family in Calgary, Canada, that can result in nightmarish costs.

Huntley’s advice to providers is two-fold: “If you have a client who is thinking of renting out their home, particularly over a holiday, the second thing you should do is speak with the insurance company to see if there is coverage for vandalism, damage, theft, and adequate liability cover should a renter be injured or killed.  The first thing you should do is try and talk them out of it.”

If hosting or facilitating Fourth of July festivities are part of your plan for your business or home, EvoSure recommends speaking to your insurance agent or underwriter about tailoring the right coverages to protect you from harm long after the firework dust has settled. For help finding the best markets for your commercial coverage needs, try EvoSure’s Market Finder search today.

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