Is your primary insurance enough to completely cover you and your assets?
What would happen to your home, business, and family if you were sued for a significant liability charge?
Luckily, an umbrella policy can step in when your other coverage isn’t enough. Umbrella insurance can provide additional coverage if you face costs due to a liability claim.
WHAT IS UMBRELLA COVERAGE?
Umbrella policies are one of the most misunderstood types of insurance, likely because of the comprehensive image of an “umbrella.” Despite the imagery, an umbrella policy is not a “catch-all” policy that will cover you for everything that your primary insurance doesn’t.
A personal umbrella policy provides two types of coverage: liability and defense costs. Umbrella policies can cover what primary insurance excludes and/or additional coverage beyond the limits set in your other insurance.
It covers in a variety of situations if you’re held responsible for bodily injury, property damage, or personal injury. This means that you’re found at fault or negligent for someone else’s injury or damage. Your umbrella coverage can help pay for these liability-related costs.
Umbrella policies can provide excess liability for auto, homeowners, boat, and renters insurance. Typically, one umbrella policy can be applied to all if you already have these policies bundled.
Umbrella policies do not cover physical property damage. This means that damage to your own home or vehicle would not be covered by your umbrella insurance. If someone steals everything in your house or a hailstorm totals your car, umbrella policies will not step in as coverage. Those situations typically fall under specific riders or policies in your homeowners’ or auto coverage.
When you think of umbrella insurance, think of a shield. It can help protect you from tapping into your savings or assets in the case that someone is coming after you for a claim or lawsuit.
So what does personal umbrella insurance cover? What are the common claims that would fall under umbrella coverage?
1. Defense costs
If someone sues you, you typically have to pay lawyer fees and processing expenses. These costs can quickly add up, even totaling hundreds of thousands of dollars for a single trial.
Umbrella coverage can step in to pay these fees as you defend yourself in court.
If you are found at fault, the remainder of umbrella coverage not used for defense costs may then help pay for the associated liability expense you owe.
2. Teen drivers
If you have a teen driver on your auto policy, you’ll likely want additional umbrella coverage. You are required to hold auto liability insurance by law, but it may not always be enough in the case of a serious accident where you (or your teen driver) are found at fault.
Unfortunately, the crash risk is 3x higher for 16-19 year olds, and teens account for about 8-10% of fatal crashes every year. This creates high risk—and high liability. Adding umbrella coverage boosts your auto liability limit to protect against these increased risks.
Plus, a teen driver typically raises your insurance premium. Having an umbrella policy is a great way to get additional coverage at a lower cost than adding that line of liability on your primary auto insurance.
3. Intoxicated party attendee
You host a party at your house. One of your guests drinks too much. He decides to drive home intoxicated. He causes an accident on his way home from your party.
Depending on the state you live in, you could be partially liable for his expenses. A lawyer could claim that you over-served him alcohol, didn’t offer him to stay the night, or didn’t take his keys so he couldn’t drive.
One of the most surprising and expensive liability claims people find themselves in is indirect liability. Umbrella coverage can help protect against this when homeowners’ likely wouldn’t.
4. Dog bites
You take your dog out for a walk, and another dog spooks him. He and the dog get into a fight, and your dog bites that dog. He also bites the other dog’s owner, who is trying to pull the dogs apart.
This would cause bodily injury both to the owner and the dog. If your dog bit first, you could be on the line for medical expenses, lost wages, and even pain and suffering. These may not be covered by homeowners insurance, so umbrella coverage could step in to pay for the costs.
5. Homeowners liability
Umbrella coverage can raise your limit for the liability on your home and property as well. You have a birthday party for your son and his friend falls off the trampoline. You lend your lake house to a friend for the weekend and they get injured. A tree in your yard falls over and crushes your neighbor’s car. You’re liable for all of these sorts of incidents.
These are typically covered under your homeowners liability insurance. However, if the cost is greater than your homeowners insurance limit, umbrella insurance can offer additional coverage.
6. False arrest and slander
Umbrella insurance is there to help you defend yourself in the case of false arrest, imprisonment, defamation, or eviction/malicious prosecution. It can also help pay for you to regain your reputation and fight back in certain cases as well.
Umbrella insurance is typically the only insurance that will cover these kinds of situations.
7. Pain and suffering
If you are found at-fault for some sort of incident, you can also be sued for “pain and suffering.” This is an additional cost outside of the person’s bills and expenses that relates to the psychological stress that resulted as a cause of the incident.
Pain and suffering is one of the costliest liability expenses. It can be hundreds of thousands if not millions of dollars in some cases. Umbrella insurance can help cover these costs, especially since the minimum umbrella limit is $1 million.
If you’re active in your community, you want extra liability coverage. Someone that you serve through a charitable or religious organization can come after you for negligence or inappropriate behavior. Although some charitable organizations will help pay for this, the individual can still come after you directly.
Note: Make sure all organizations you work with have some form of insurance.
Umbrella insurance can help protect you and your assets from unexpected liability expenses including bodily injury, personal injury, loss of wages, pain and suffering, and defense costs.
Best yet, you can typically get a significant amount of umbrella coverage at a low cost. A typical $1,000,000 umbrella policy for two adult drivers with a personal home insurance policy averages only $300 per year.
by Adam Serfas
THE FOOD SAFETY MODERNIZATION ACT, THE LARGEST REFORM OF FOOD SAFETY LAWS IN MORE THAN 70 YEARS, HAS SOME SPECIFIC STANDARDS BREWERS SHOULD TAKE NOTE OF. DIDN’T READ THE ENTIRE 900+ PAGE DOCUMENT? WELL, HERE’S WHAT BREWERS NEED TO KNOW:
Higher brewing cleaning standardsNow, not only is it important to keep everything from the floors to the rafters squeaky clean, it’s also important to be able to point to your specific sanitation measures.
Brewers are now being treated as and held to the same standards as food manufacturers and food processors. This means many brewers are now looking to their colleagues in the food industry for tips on cleaning and sanitization measures.
Environmental cleaningBreweries have always maintained high standards when it comes to the cleanliness of brewing tanks and lines. Something that hasn’t been of much concern in the past, or something inspectors focus on is the cleanliness of the brewing environment as a whole. Now, not only is it important to keep everything from the floors to the rafters squeaky clean, it’s also important to be able to point to your specific sanitation measures.
Brewery-specific concernsThere are also a number of concerns brewers should consider that are specific to their unique brewing space.
· Brewers who also serve food need to have specific additional measures in place to guarantee the safety of food served.
· Breweries that bottle their product should have procedures in place to safeguard against glass shards finding their way into the product.
· Breweries that brew different types of product should ensure these do not have the opportunity to cross-contaminate. For example, breweries that brew both sour and non-sour beers should have measures to ensure the wild yeast and bacteria used in these sour brews doesn’t find its way into non-sour batches.
What this means for youIf this is the first time you’re hearing of these increased regulations, it’s important you act now. Don’t get too overwhelmed though; luckily, your colleagues in the food manufacturing and processing industry have had to meet these standards for quite a while now and have some tips you can pick up.
One of the easiest and most effective ways to increase quality assurance in a facility is to implement color coding. To guarantee the safety of a brewing environment, many brewers designate a color for cleaning tools that come in direct contact with the product (tanks, lines) and a different color for things that do not come in contact with the product (floors, walls, etc).
Apply the same concept to the cleaning of outside areas. In this scenario, any cleaning tools that clean outside areas (parking lots, loading docks, etc.) should not be used anywhere near the production line as these environments can introduce new allergens and contaminants. A simple two-color color coding plan keeps cleaning safe and organized.
Depending on your brewery’s unique setup, you may want to implement additional colors. For example, brewers that bottle beer often have a color designated for tools used in glass cleanup, and those that serve food or brew multiple beer types in one location tend to have larger color coding plans to account for these different points of contact that should be kept separate.
If there is one take away, remember that the key to keeping inspectors happy and preventing potential noncompliance penalties is to plan, plan, plan — we said it three times so you know it’s important.
In the planning process, consider the lifetime of your brewing process from the gathering of your ingredients to the moment your product is delivered to the store, bar or restaurant where it is served. During this journey what potential risks are there to your product’s safety? What measures allow for traceability in the event of contamination? When in doubt, consult an expert in color coded cleaning who can guide you through this process and work with you to develop a successful plan for your facility.
John Holl puts together a great article here about the new one-way kegs, a fantastic way to focus on distribution, and not think about your kegs are located. READ ON
John Holl is the Senior Editor of Craft Beer & Brewing Magazine®.
(You already knew that!)
Source: Concannon Miller
Happy New Year to you and yours. Truly excited about what's to come in 2019. With that, I'm hoping your business thrives and here are some additional tips to provide you with some extra cash flow.
Clearly you know, brewing beer requires a significant investment in equipment and supplies, but there are some great tax benefits brewers can receive for some of these purchases.
There are other tax advantages just for manufacturing products – including beer! – in the United States and for selling your products in multiple states. Growing your sales beyond your state border could save you money – a real win-win for both business growth and cash flow!
Here are five MORE great tax tips for brewers:
· Section 179 Depreciation for Equipment Purchases: You may be able to immediately write-off in the year of acquisition up to $500,000 of the cost of equipment purchases. This tax benefit has expired at times in recent years but Congress in December made it permanent, which allows for greater tax planning.
· Bonus Depreciation for Equipment Purchases: This is for new equipment only (Section 179 can be for new or used), but it can add up to big savings. Bonus Depreciation allows you to write-off 50% of the asset cost in the first year, and then you can depreciate the other 50% over seven years. In 2018, the first year write-off amount drops to 40% and then to 30% in 2019, after which the benefit expires if Congress doesn’t again extend it. An extra tip: If you’re a new brewer, you may not want to take the Section 179 or Bonus Depreciation if you anticipate your income increasing over the next seven years. Important Update: The Tax Cuts and Jobs Act greatly enhanced equipment depreciation options.
· R&E Tax Credit: The Research and Experimentation Tax Credit is a very good tax incentive, especially for start-ups. The end result doesn’t even have to produce a new product (though who doesn’t love to try a new beer?!?), but you may get a tax credit for qualified expenses, including wages for qualified services, supplies used in R&E activities and up to 65% of contract services. A study must be conducted for R&E Tax Credits, so there should be a tax/benefit analysis to determine if the tax savings will exceed the cost of the study. Like Section 179 Depreciation, this benefit was recently made permanent, allowing for greater tax planning. If you’re a Pennsylvania-based brewer, the state also offers R&E Tax Credits in addition to the federal benefit. An extra tip: This is great for new companies – you can carry over the R&E Tax Credit if you don’t have income in that year.
· Domestic Production Activities Deduction (DPAD): Made in the U.S.A. is a great mantra, and for brewers, it’s an easy one – where else are you going to brew your beer? Well, did you know you may get a tax deduction just for producing products in the United States? The Domestic Production Activities Deduction allows businesses to take deductions on the production of property you manufacture, produce, grow or extract in whole or in significant part in the United States. The deduction is calculated on 9% of qualified production income, but that amount cannot be more than 50% of W-2 wages. A typical example is on $100,000 of qualified net income, your company could get a $9,000 deduction. Important Update: The Tax Cuts and Jobs Act eliminated DPAD.
· Corporate Net Income Tax Nexus: If you’re a C-Corporation and your state has high corporate net income tax, you could see some significant tax savings by expanding your sales into other states. Your blended tax rate may be lower. Every state's nexus rules are different, but most allocate on three criteria: sales, payroll and fixed assets within the state. The more inroads the greater chance you may have nexus in the state – having sales representatives, taking orders, signing contracts, storing inventory and renting facilities can all help in qualifying for tax reporting in states. A few states – Ohio and Washington, for example – don’t even have corporate income taxes, but base their tax on gross receipts. If you’re an S Corporation, there also is great variation with state rates. Your tax preparer can help you determine if tax filings would be required in different states.
Cheers and Best Wishes in 2019!
Kyle C. Rheiner, CIC
Strickler Insurance Agency Inc
How to winterproof your workplace to avoid insurance claims against your business during the winter months.
Be safe this season! (and always!)
As the end of 2018 is approaching, I wanted to get you thinking about some tax tips that we feel are important for your business. These tips are provided by our friends over at Concannon Miller and we believe you'll get at least one takeway from the information below.
And with that... here's what they have to say: The craft beer industry is booming. And while consumer demand for craft beer is high, that demand alone probably won’t be enough to make or keep your business successful.
You need to take all the opportunities available to you to save on expenses. And luckily for brewers, there are many tax opportunities you can qualify for.
Taking advantage of all available tax benefits won’t only save you on taxes. It also may allow you to decrease the amount of costly loans you have to take out and free cash flow for increased reinvestment opportunities.
If you’re in Pennsylvania, the state recently renewed a tax credit especially for brewers. If you’re not in Pennsylvania, read on – most of the tax tips are relevant to people in any state. A note for startups: While you won’t need tax tips for the early years when you may have net operating losses, you can use those losses for reductions when you do turn a profit.
Now onto our Top 10 Tax Tips for Brewers:
1) Pennsylvania Malt Beverage Tax Credit: The recently renewed state Malt Beverage Tax Credit allows Pennsylvania brewers a credit of up to $200,000 annually on any capital expenditures that expand brewery operations. Brewers can now invest in their facilities and use the credit to offset payment of state excise tax on barrels produced. The credit is effective July 1, 2017 and can be carried forward if it exceeds the current year tax liability.
2) Research and Development Tax Credits: If you’re working on a new beer recipe or product – and which brewer isn’t? – that routine activity could qualify you for the R&D Tax Credit. The credit is intended to promote technological innovation in U.S. companies, which includes improving or developing new products or processes.
The R&D Tax Credit is one of the most lucrative tax benefits available to manufacturers because it’s a dollar-for-dollar reduction in your taxes, unlike many benefits that are only deductions. The credit can be used to pay for wages, supplies and contract services connected to the research. For Pennsylvania brewers, there’s also a state R&D Tax Credit.
3) Domestic Production Activities Deduction: DPAD – for short – applies to manufacturers including breweries. To qualify, a business must pay W-2 wages and be profitable. The deduction amounts to approximately 9% of qualified production activities income. It’s important to separate sales of beer and related merchandise as only activity related to the production of beer can be deducted. For example, if your income from beer production activities in a given year is $100,000, then your DPAD deduction would amount to $9,000. Important Update: The Tax Cuts and Jobs Act eliminated DPAD. Please check out this page for news on Tax Reform changes
4) FICA Tip Credit: Taprooms or brewpubs with tipped employees may qualify for a credit on certain payroll taxes paid on those tips. Essentially, if you have employees that receive wages and tips in excess of the minimum wage, you can recapture a portion of the FICA taxes that were reported and paid. The calculation is somewhat complicated, but if you have tipped employees, there is a good chance you qualify for this credit.
5) Pennsylvania Sales Tax Exemption on Fixed Assets: Equipment, machinery, parts and supplies used directly in the manufacturing process are exempt from state sales tax. That’s a 6% savings right off the top on qualifying purchases. If you’ve paid sales tax on previous brewing equipment and supplies, it might be worth reviewing your records to see if you could recoup that tax.
6) Work Opportunity Tax Credit: This federal tax credit is available to employers who hire and retain individuals from certain targets groups including veterans, food stamp recipients and the long-term unemployed. The credit can vary depending on the specific target group, wages paid to and hours worked by the individuals. Generally, the credit is equal to 25%-40% of first-year wages paid to the employee.
7) Nexus: If you’re a C Corporation and your state has a high corporate net income tax rate, you could see some significant tax savings by expanding your sales into other states – your blended tax rate may actually be lower. Pennsylvania in particular has a very high corporate net income tax rate – the nation’s second highest at 9.99%.
Each state has their own rules as to when you have to file a tax return in their state, but it may not be all that bad to file in other states because it could lower your overall tax liability. Nexus does not create double taxation. There is an allocation – by state – of the sales, payroll, and fixed assets, so you won’t have double taxation, but as noted, some states, such as Pennsylvania, tax at a very high rate.
8) Bonus Depreciation: Are you planning to buy any new equipment soon? Then the next two tax tips are especially for you.
Bonus Depreciation allows 50% of the cost of new fixed assets purchased during the years 2016 to 2017 to be written off in the first year that they are placed in service. This is reduced to 40% in 2018 and 30% in 2019. Planning is key for Bonus Depreciation because you may want to purchase equipment, furniture or fixtures in 2016 or 2017 in order to take advantage of the 50% bonus in those years.
9) Section 179 Depreciation: Section 179 is a depreciation method that allows you to accelerate write-offs by immediately deducting the full price of business equipment purchased in a given year. The deduction is available for new and used equipment purchases and is subject to both federal and state limitations. The deduction is particularly effective in years when you turn a profit as the deduction is limited to your business income annually.
For example, if you purchase a fermenter for $25,000 it would typically be depreciated over a 5-year period. Using Section 179 Depreciation, you can immediately expense the entire $25,000 on both your federal and state tax returns in the current year. Important Update: The Tax Cuts and Jobs Act greatly enhanced equipment depreciation options. Check out this article for the new limits
10) Cost Segregation Study: If you own the real estate where your brewery or brew pub is located, this is a tip you should strongly consider. Normally, commercial buildings are depreciated over a 39‐year period; however, components of the building may be able to be depreciated over a much shorter period of time. For example, the building’s electrical system that runs your business equipment can be depreciated over a 7‐year period, instead of over 39 years.
It is common practice to have a cost segregation study performed by qualified professionals to break out the building into much shorter life elements, or personal property, which would be depreciated over 5 or 7 years. An analysis would have to be done to determine whether the expense of a cost segregation study would be less than the tax savings, but in many cases, the cost pays for itself with the tax savings generated from the increased depreciation.
Inclusions in payroll for Workers Compensation insurance:
Exclusions in payroll for Workers Compensation insurance:
I hope this helps you have a good understanding of what to include and what not to include in reporting payroll to the WC insurance company. Since payroll is used (directly and indirectly) as a factor in determining everything from premium, the Experience Modification Rate (EMR), deductible levels and aggregates, Min/Max on retrospective plans, and tracking ratios like frequency rate, it’s critical that payroll is understood and submitted correctly.
What is a Liquor Tax Bond?
Alcohol and liquor tax bonds guarantee payment of taxes or fees imposed by state or local law for the sale, manufacture or warehousing of liquor and other alcoholic beverages. The type of surety bond is a financial guarantee that protects the obligee, which in this case is the government entity that requires the bond, from falsified records of sale, or an inability to pay requisite taxes on previous sales.
These bonds are also referred to as Alcohol Ordinance Tax Bonds, Beverage Tax Bond, Brewer’s Bond, Distilled Spirits License Bond, Liquor License Bond, Malt Beverage License Bond, and Wine Bond
How Do Surety Bonds Work?
Surety bonds are required to protect the public. They guarantee obligations will be fulfilled, whether it’s a contract bond guaranteeing a public construction project will be completed, or a license bond guaranteeing a beverage manufacturer will abide by the laws. These specific examples are a small overview of the hundreds of surety bonds out there, but they all have one thing in common; they protect the public, not you.
Your Surety Bond is a Form of Credit
You might wonder “how does paying for a surety bond guarantee anything or protect the public?”, and that’s a great question! When a surety company provides you with a surety bond, which you learned is a guarantee; they are vouching that you will follow the bond terms. If the bond guarantee is not fulfilled and damages are caused, a claim can be filed.
Next, let’s make a distinction between surety bonds and insurance, each of which has distinct and differing purposes.
Surety Bonds vs Insurance
A surety bond is a contract involving three parties: the person or entity performing the service (principal), the person or entity for whom the service is performed (obligee) and the entity that guarantees the principal will perform as agreed (surety). In the event of a loss or failure to perform, the surety bond pays the obligee, not the principal.
Surety bonds work more like credit than insurance. Insurance is an agreement between two parties where the entity paying the premium receives the benefit in the event of a loss. See the difference?
An exclusion is a policy provision that eliminates coverage for some type of risk. Exclusions narrow the scope of coverage provided by the insuring agreement. In many insurance policies, the insuring agreement is very broad. Insurers utilize exclusions to carve away coverage for risks they are unwilling to insure.
Reasons to Exclude RisksExclusions serve various purposes. Most apply to risks that fall into one of the following categories.
Policy forms are not cast in stone. Most are revised periodically. ISO updates it's commercial auto, general liability and commercial property forms every few years. Insurers often follow, incorporating the changes ISO has made into their proprietary forms. A common outcome of the form revision process is the addition or modification of policy exclusions.
Many of the changes made to policy exclusions are a response to recent court decisions. ISO and insurers draft policy forms with the intention of limiting coverage to certain risks. A court may determine that the policy covers a risk that the drafter assumed was excluded. ISO or the insurer may then add or modify an exclusion to remove coverage for that risk.
An obvious place to look for policy exclusions is in the section entitled exclusions. Some policies contain both exclusions and limitations. A limitation is a partial exclusion. It narrows the scope of coverage for an insured risk. For instance, property policies often restrict coverage for valuable items like furs and jewelry to a specified (low) limit.
A policy that provides more than one type of coverage may contain multiple lists of exclusions. A separate list applies to each type of coverage. For example, a typical commercial auto policy contains two sets of exclusions, one under Liability Coverage and the other under Physical Damage Coverage.
Some policies that provide multiple coverages include only one set of exclusions. Each exclusion applies to all coverages. Other policies contain separate exclusions for each type of coverage and common exclusions that apply to all coverages.
A policy may contain exclusions that are not located in the exclusions section. Here are some places where they often appear.
One of the most common places to find policy exclusions is the definitions section. Definitions attach specific meanings to words so that they can narrow the scope of coverage. For example, many policies define a coverage territory, which limits coverage to events that take place in specified countries. This definition serves as an exclusion since events that occur outside the specified countries are not covered. Policies that do not specify a coverage territory generally cover events that occur anywhere in the world.
Exclusions can also be found in the policy section. For example, the ISO commercial auto policy contains a provision that limits coverage to accidents that occur in the coverage territory. This provision appears in the general conditions section, not the definitions.
Many insurers add exclusions to policies by attaching endorsements to preprinted forms. An endorsement may add a new exclusion or modify an existing one.
The insuring agreement is the backbone of a policy. It typically contains broad statements describing the coverage provided. Even the insuring agreement can contain exclusions. For instance, the insuring agreement in the standard general liability policy specifically excludes bodily injury or property damage that was known to certain insured parties before the policy began.
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