May the Coverage Be With You!

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One of the toughest parts of commercial insurance is identifying all of the exposures a business might have. I met with a new client yesterday, Darth Vader, who is the Operations Manager for a business called The Empire. It sounds like they have several operations, including security, as well as logistics, and project management. I collected some information and am trying to put together a submission for my underwriter.

Something unique about this business: they don’t really have a “building” right now. They thought that meant they didn’t really need insurance, but that couldn’t be more wrong! They still have multiple exposures, including a large fleet of vehicles. I’m waiting on a list, but my understanding is there are at least two Star Destroyers, several shuttles, dozens of TIE Fighters, as well as an effective driver management program. I will have to check for the right class codes and cost news to provide my underwriter.

I also understand that The Empire has a top-secret building project going on in the Alderaan system. I wasn’t able to get a lot of information from Mr. Vader, but the good news is, ISO confirms this is not a coastal location. It doesn’t have the best public protection class – being in a galaxy far, far away – but the construction is new and non-combustible, so it should be easy to write a Builder’s Risk with a fair rate. I mean, what’s going to happen? Someone will come along and blow it up? Just to be sure, I should ask about adding vandalism as a covered cause of loss.

When completed, the new structure is going to be… 121,736,000 square feet. That seems a little high; I’ll have to double-check with Mr. Vader. But assuming that’s correct, the completed ITV is going to be about $15,217,000,000; my carrier will probably need reinsurance. Hopefully, The Empire is willing to take on a high deductible and complies with Loss Control’s recommendation to seal off the thermal exhaust port.

I imagine a structure that size will have some businesses operating within, so The Empire will have some Lessor’s Risk exposure. Restaurants, salons, shopping, recreation – I’ll need a complete list with the occupancy and rents. My best markets will require all tenants to have their own insurance, name The Empire as additional insured, and waive their rights to recover. There may be an opportunity for me to write these other businesses when they get up and running – I’ll have to follow up after the building is fully operational.

I’m also interested in looking at The Empire’s Workers’ Compensation coverage. I’m wondering about workplace safety, the hiring and training process, and if they are paying a fair wage and offering benefits. I’ll also need an employee count, in case of a catastrophic loss, though I can’t imagine terrorism is a huge concern with such a remote location.

I also asked Mr. Vader to complete an EPLI (Employment Practices Liability Insurance) application. I noticed he left blank the answer on how management deals with insubordination. I’ll have to follow up on that as well.

With a huge fleet of very large vehicles, and no real property at this time, I want to make sure we address inland marine coverage for any equipment they might have. I’ve double-checked the scheduled property floater, and there’s no specific exclusion for firearms. I saw a lot of droids, too. I’m wondering how they value those, on replacement cost or actual cash value? How do they keep track of these droids and where they are stored?

One other item I forgot to cover with Mr. Vader is cyber coverage. I have to assume an operation of this size keeps some of its data on the cloud somewhere. The Empire would need coverage should that information be downloaded by a skilled hacker and used against them.

I’ve been in commercial insurance for a long time, and I’ve worked with a lot of businesses, but this one is definitely unique. They have a lot of exposures I have not seen before, and to be honest, I’m a little concerned.

I find the lack of coverage disturbing.

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