How to secure the proper insurance protection for your business

Courtesy of Jewelers Mutual Insurance Co.

Just as jewelry businesses come in all shapes and sizes, so too must insurance policies: one size never fits all. Whether you are purchasing new coverage or renewing a policy you’ve had for years, you want to make sure that you are getting the right protection for you, your vendors, your customers, and your employees.

So what’s the best way of doing this? The first step is to find an insurance agent who truly understands the risks you face each day. When searching for a company, ask for references from peers. Contact insurance companies and ask hypothetical questions about your coverage options—especially if you’re not sure what to cover and at what levels. Ask the agent to walk through your business and suggest additional ways that you could reduce your risk of loss. Look into all of your options—changing deductible amounts, excluding certain coverages, etc.—and what impact they would have on your premium. Also, find out if the insurance company will reduce your premium if you don’t have claims.

In addition to your policy’s coverage, you should see what other benefits an insurance company will provide. What resources does your carrier offer to help you prevent losses? Will your policy include shipping coverage? (Many times such coverage can help to pay for the policy.) Will you receive dividends when the company experiences a good year? Such questions are key to finding the company and agent that will give you the most value.

What Needs to Be Covered

You should also ask your agent to explain your entire policy, to make sure you understand your risks and how your coverage protects you. Different types of businesses face different risks—and demand different types of coverage. For instance, if you are a jewelry manufacturer, you need a policy that covers:

• Inventory of jewelry stock

• Goods in process, samples, and raw materials

• Shipments

• Tools and equipment

• Patterns, molds, models, dies

• Tenant’s improvements and betterments, from flooring to lighting

• Your building, if you own it

• Property such as furniture, fixtures, and computers

• Liability

• Loss of income when your business is interrupted by loss or damage to real or personal property

• Chemical cleanup caused by accidental spilling of chemicals

A designer who also “micro-manufactures” may need coverage similar to that of a manufacturer, but scaled for a smaller operation. Coverage needs may include:

• Jewelry worn while away from the business

• Travel to stores, shows, and events

• Inventory valuation that includes your time and labor

Retailers have their own insurance needs, including

• Inventory of jewelry stock for sale

• Primary coverage for customers’ property

• Shipment coverage

• Jewelry worn while away from your business

• Accounting expenses to present a claim for property losses

• Expense of hiring a trained security guard if your alarm system fails

• Property of others in the jewelry business

• Building coverage if you own the building

• Tenant’s improvements and betterments, from carpeting to lighting

• Property such as furniture, fixtures, and computers

• Liability

• Loss of income when your business is interrupted by loss or damage to real or personal property

You also must consider your legal responsibility to the following parties when buying or renewing your insurance policy:

• Landlords or mortgagees (your lease may require a specific liability limit)

• Parties to co-signed agreements

• Vendors and others who have provided property on memo or consignment

• Additional lien holders

Make sure, when you meet with your agent, that all of your needs are addressed.

Jewelers Block Policy: Protecting Your Inventory

To protect your inventory (from raw materials to actual merchandise), you need a Jewelers Block policy. (Jewelers Mutual offers both a Jewelers Block policy and, for small and mid-sized operations selling under $500,000, a Jewelers Standard policy.) This will cover losses such as:

• Inventory of jewelry stock for sale, plus findings, raw materials and parts for manufacturing and repair.
• Property of customers not in the jewelry industry that has been entrusted to you.
• Memo goods, meaning the property of others in the jewelry business, that has been entrusted to you.
• Shipments of jewelry (coverage varies by type of insurance).
• Damage to customers’ jewelry that may occur while a jeweler is handling it, or performing bench work.
• Jewelry carried or worn by you or your employees while away from your business.
• Merchandise displayed in shop windows when you are open for business. 

Businessowners Policy: Protecting Everything Else

You undoubtedly have more invested in your business than your inventory. A businessowners policy provides business property and commercial liability coverage. The policy generally provides property coverage for:

• Buildings
• Business personal property such as furniture, fixtures, computers, and tenant improvements
• Your non-jewelry inventory for sale
• Loss of business income when your business is interrupted by loss or damage to real or personal property caused by certain perils, excluding theft
• Equipment breakdown
• Appraisal equipment/master stones
• Employee theft
• Cleanup costs caused by accidental spilling of chemicals used in the normal course of jewelry operations (includes cost to repair or replace covered property, cleanup of chemical spills, and loss of income)
• Bodily injury and property damage (e.g., a customer slips and falls)
• Medical payments (e.g., initial medical attention for a customer following a slip and fall)
• Products and completed work
• Piercing liability (above the neck)
• Tenant legal liability

Businessowner policies can also include loss-of-income coverage for a period until the jewelry business can get back on its feet following a covered loss that had shut down or impeded operations. Together with a Jewelers Block or Jewelers Standard policy, the businessowners policy rounds out your basic protection plan.

Commercial Umbrella Liability Coverage

Even though you work hard to keep your employees and customers safe, Commercial Umbrella Liability can be a crucial component of your insurance coverage. Generally speaking, this added liability coverage is one of the best values for the dollar in insurance. It is designed to protect the policyholder from extraordinary liability exposures that would exceed the coverage limits of the liability protection provided by a Businessowner’s Policy. It helps protect you against claims related to:

• Bodily injury
• Property damage
• Personal injury
• Advertising injury
• Loss amounts that exceed your underlying coverage limits

Employment Practices Liability Insurance

Associates can become almost like family (sometimes they are your family), but that doesn’t mean you won’t face a lawsuit brought by a current or former employee or even an applicant you didn’t hire. Employment Practices Liability Insurance protects you against claims related to:

• Wrongful refusal to employ a qualified applicant
• Wrongful failure to promote; wrongful deprivation of career opportunity; or employment related misrepresentation
• Wrongful demotion, evaluation, reassignment or discipline
• Wrongful termination, including retaliatory or constructive discharge
• Unlawful work-related harassment, coercion, discrimination or humiliation as a consequence of race, color, creed, national origin, marital status, medical condition, gender, age, physical appearance, physical and/or mental impairments, pregnancy, sexual orientation or sexual preference or any other protected class or characteristic established by any applicable federal, state or local statute
• Slander, defamation or libel through oral or written publication, or violation or invasion of a right of privacy

Jewelry Appraisal Liability Insurance

Mistakes happen. Even if you’re a seasoned professional, you should consider jewelry appraisal liability coverage. For example, Jewelers Mutual’s coverage:

• Pays all sums that you are legally obligated to pay as damages or defense costs because of any errors or omissions made when performing written jewelry appraisals
• applies if the error or omission occurs within the coverage territory and during the policy period, and results in monetary damages
• extends to appraisers listed on the Covered Appraisers Schedule for appraisals they conduct for your insured business

Data Breach and Cyber-Related Protection

Have you sent an email today? Accepted payment via credit card? Your daily business operations require you to handle a lot of electronic data. And while computers are a part of everyday life, all this data can put your business at risk. Make sure you’re covered in the event of fraud, data loss or data theft. Currently 46 states have legislation requiring notifications which apply to businesses of all sizes, and a “we’re sorry” letter may not be enough to prevent a public relations nightmare.

Prepare for disasters

One of the keys to being properly insured is to make sure you are prepared for any type of catastrophe. Here are a few tips:

• Maintain accurate and up-to-date inventory records.

• Complete a business continuity plan to assess how your business functions and what you will need to keep your business operating after a disaster.

• Consider your risks and plan for them accordingly.

• In the event of a natural disaster, use the resources available to you, such as the American Red Cross and the Federal Emergency Management Agency.

No one expects a fire, hurricane, flood, theft, lawsuit, or any other type of loss. But planning for these catastrophes can mean the difference between success and bankruptcy. And with the proper insurance coverage, you’ll know your business is protected.

MJSA exclusively endorses Jewelers Mutual Insurance Group’s commercial and personal jewelry insurance products. To learn more about Jewelers Mutual’s coverages and to find an experienced insurance agent in your area, contact Jewelers Mutual at 1-800-558-6411 or visit the company’s website.