Oil Prophets

Winter 2015

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27 Oil Prophets LEGAL CORNER underground and aboveground related petroleum spills. However, with third party lawsuits and large spills, VLJQL¿FDQWH[SRVXUHVDUHVWLOO present for your businesses, and you should take the time to sit down with your insurance consultants and see what, if any, coverages above the Trust Fund limits you should have. Other retail store exposures such as customers being injured or killed in a robbery. Most risks in this category, while they take various forms, are again insurable, largely through general liability policies, but they also are on the short list of exposures that FDQEHVLJQL¿FDQW All of this information is simply background. The idea is how do I protect against those risks and, therefore, protect my assets in the process. I will leave the insurance issues alone as time and space do not permit the appropriate discussion on insuring these risks beyond what I've touched on above, but the premise of the article is segregating or separating those risks. I am a strong advocate of doing just that. How is that done? If you are a distributor of petroleum products and also operate at the retail level, and let's add in our example that you also have transport trucks and haul your own fuel, I feel strongly that you should have each of those operations in separate corporate entities. Many of you do just that. Many of you have your transports in a separate entity but have your wholesale and retail businesses in one entity. The reason for segregating them is obvious. For most of you your "wealth" is in your real estate. If you have a catastrophic wreck with a transport where people are killed or maimed, you want to limit the potential recovery to whatever applicable insurance is in place and then in the worst case, the assets in that entity owning/operating the transport. If you have one entity for everything, then your real estate interests become exposed to your trucking risks. Consequently, I would always incorporate a separate entity in which I put my trucks including transports, bobtails and otherwise, that operate through that entity. The same analysis applies to retail operations. They should be segregated where if you have a catastrophic event (dram shop, UREEHU\VKRRWLQJWKHRQO\DVVHWV exposed are the assets owned by the corporation that owns that retail operation. The same analysis suggests that you should separate the wholesale side of your business as well. The simple premise is that you're trying to minimize particular assets that are exposed to particular liabilities. If you have one corporate entity for everything, then every asset owned by that corporation is exposed to every risk in every aspect of the operation. The cost of setting up separate corporations is minimal and is certainly not a reason not to do so. With a separate legal entity, you create the requirement of having WR¿OHDWD[UHWXUQIRUWKDWHQWLW\ Having to do that is again at relatively minimal expense and is certainly not a reason not to do so. Don't wait to build in these protections. You should have these discussions with your attorney and/or CPA. 4. 6.8% Percentage of convenience stores selling motor fuels in 1971. $1,511 Average monthly per-store income from car washes. 3.7% Increase in average per store ATM revenue from 2012 to 2013. 77% Consumers who say gas prices are having a strong impact on their feelings about the economy. Fast Facts All About Convenience...

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