What is a Certificate of Insurance?

When does a Business need a Certificate of Insurance?

A certificate of insurance is a document that is used to provide info about specific insurance coverages. The certificate is issued to one entity and provides information about the insurance coverages another entity has secured. The certificates are usually required as part of a contract between a business, a contractor, and a subcontractor. A certificate of insurance can be offered for General Liability, Business Auto, Umbrella, and Workers Compensation.

Certificate of Insurance

What is Included with a Certificate of Insurance?

The certificate of insurance includes the type of insurance coverage that has been secured, the limits of those policies, and the named insured.  The certificate will also include whether there is an Additional Insured or Waiver of Subrogation associated with any of the policies included in the certificate. It should include detailed information about the company or person who receives the certificate that includes full address, contact name, email address, phone number, and fax number.  When requesting a certificate be sent to another entity, the more information you provide the better.

Who Might need a Certificate of Insurance?

Typically a certificate of insurance is needed when a business hires a general contractor for a job or a contractor hires a subcontractor to perform a specific part of a job. The certificate is provided as proof the business or the general contractor made sure the contractor or subcontractor they are interacting with has coverage in place at the time the work was done. It is important to always ask a contractor for a new certificate every time you work with them. Just because someone had coverage in place in the past does not mean they still have coverage. If a business or a general contractor hires a business who does not have proper coverage in place, the business or general contractor will take on the liability for damages in most instances.

What is a Waiver of Subrogation?

Why Might a Business use a Waiver of Subrogation

The term Subrogation refers to the right of an insurer (insurance carrier) to pursue an insurance loss to the insured (the person or entity being insured) in an attempt to recover funds paid in a claim. Conventional Subrogation refers to a relationship between the insured and insurer as defined in an insurance contract. A Waiver of Subrogation is a provision in a contract where an insured waives the right of their insurance carrier to seek reimbursement or seek compensation for losses from a negligent third party. A Waiver of Subrogation is between two parties where one party agrees to waive subrogation rights against another in the event of a loss. A Waiver of Subrogation can be used on a General Liability, Auto Liability, Umbrella Liability and Workers Compensation.

Waiver of Subrogation

What does it mean to waive your rights?

A waiver of subrogation is issued when one party within an insurance claim wants to relinquish the right of subrogation for damages paid out in a claim. Most of the time a waiver of subrogation is entered into between two businesses or a business and a contractor. When it comes to the workers compensation system the claim goes entirely on the insureds insurance history and will increase the experience modification rating of that business. The waiver is most frequently entered in to in order for one entity to force the other entity to not allow the insurance company of the insured to come after the other party within the insurance claim for damages that were the fault of that business or its employees. It is usually a requirement for a contract and the waiver gives a business the peace of mind they will not be held liable for damages if they are somehow partially responsible for a loss.

How do I obtain a waiver of subrogation?

Most insurance carriers accommodate a waiver of subrogation on most insurance policies. They are most commonly agreed upon with in General Liability, Auto Liability, Umbrella Liability and Workers Compensation Insurance. When engaged in to, the waiver increases the exposure of the insurer which may lead to a higher insurance premium. Before entering into a waiver, it is important to evaluate the probability that employees being injured while on the job. Additionally, it is important to consider whether your employees may be placed in situations where they could be injured themselves offsite due to the negligence of another third party.

Examples of Waiver of Subrogation

Construction Project

When a construction project requires adding on to an existing property. The engineers, architects, and construction company may want a waiver of subrogation for damages caused by the design and construction of the existing property.

Commercial Cleaning Company

A commercial cleaning company may be required to sign a waiver of subrogation in order to enter into a contract with a corporation to clean their property after hours. An example of where this might be necessary is if a cleaning company employee is injured on the property of the corporation they are cleaning, the insurance company of the cleaning company cannot sue the corporation for damages that caused the injury to the employee.

Landlord Tenant Agreements

When a Landlord is renting out a property to a tenant, it may require a two way agreement where both parties give up subrogation rights. The waiver subrogates rights against each other in the event of some kind of loss like damage to the building or fire.

What a Certificate Holder Needs to Know?

Certificates of Insurance are not common for most people in most walks of life. Unless you work in accounting, make purchasing decisions for your company, manage promotional events, or oversee contractors; you have probably never seen a certificate of insurance. A certificate of insurance is a document used to provide information about specific insurance coverages secured by one person within a contract. The certificate verifies insurance coverage has been secured, the types of coverage secured, and the limits of those policies. Also, it will include the insurance carrier, the policy number, the named insured, and the policy effective dates. Now that you know what a certificate of insurance is, here are some tips to remember when you are a certificate holder.

Business Meeting with a certificate holder.

Who is the Certificate Holder?

Being a certificate holder means that you are given proof that insurance is in effect. One of the most common examples of a certificate holder is when a business partners with contractors on a project and it is part of the contract for the contractor to carry their own particular coverage. Here are some additional examples of the types of businesses who frequently need to have certificate holders:

  • Food Truck
  • Yoga Instructor
  • Promotional Events
  • Owner/Operator Truck Drivers
  • Lawncare/Landscaping Companies
  • Maintenance/Janitorial Services Companies

What coverage does the Certificate Holder have?

One common misconception about a certificate holder is that they are not covered under the policy mentioned in the certificate. The certificate is just verification that the other party in the transaction has the required coverage. The person, people, or business covered under the policy is provided on the certificate. It may include both the named insured and the additional insured depending upon the specifics of each policy.

Engineering Contractors need to have a certificate holder when entering into a contract.

What Other Parties are Involved with a Certificate of Insurance?

The holder of a certificate of insurance is a third party to the insurance relationship. The insurance carrier and the named insured are the two primary parties involved with the insurance coverage. An additional insured can be added if it is necessary. Partnering with an independent insurance agent is the best way to determine how to best navigate these issues.

What Types of Coverage Frequently Need a Certificate Holder

 General Liability

General Liability Insurance needs to be provided to a ceritificate holder because it is the primary coverage that protects the business or person from third party liabilities for damages. This is essential when hiring contractors, because if a business hires contractors and fails to make sure the contractor has adequate insurance, the business can be liable for damages caused by the contractor.

Business Auto

Business owners who have employees who operate a motor vehicle as part of their job need to secure proper insurance. If the business owns the vehicles being used the policy is commercial auto. If the employee is driving their personal vehicle or a vehicle rented by the business, the correct policy is hired and non owned auto. This may be needed when a business is providing transportation for a special event like a limousine driver for a wedding.

Umbrella Coverage

Umbrella Insurance Coverage is also referred to as Excess Liability Coverage. Umbrella Insurance provides additional liability coverage above the limits of other existing policies. A certificate holder may need umbrella coverage added to the certificate because the contract requires a certain level of insurance limit for the contract to be valid.

Workers Compensation & Employers’ Liability

Workers’ Compensation Insurance is often referred to as the ‘Exclusive Remedy‘. It is called the ‘Exclusive Remedy’ because the coverage provides medical expenses and some lost wages for employees who are injured on the job. Employers benefit from the peace of mind they cannot be sued for injuries to employees who are hurt because of normal business operations. A Certificate Might be requested because the state laws and regulations require contractors to carry workers comp coverage in order to engage in certain types of work or contracts. The certificate proves the certificate holder made sure the contractor was up to date on all necessary coverages.

What is an Additional Insured?

According to the Insurance and Risk Management Institute (IRMI), an Additional Insured is, ‘A person or organization not automatically included as an insured under an insurance policy who is included or added as an insured under the policy at the request of the named insured‘. Now let me try to help you understand what that means in layman’s terms. An additional insured refers to any person who is not the policyholder, but is covered by an insurance policy. This coverage may be limited to a single event (wedding), or it could last the lifetime of the policy (for a contractor who will be working for the business throughout the entire year). First you need to understand the three different entities involved in a certificate of insurance. Those three entities are the additional insured, the certificate holder, and the policy holder. Here is a brief description of each entity and when it is best to add an Additional Insured or use a Waiver of Subrogation.

Additional Insured listed on a certificate of insurance.

Entities to an Insurance Agreement

Policy Holder:

The policy holder of an insurance policy is the person or business whose name is on the policy. It is important to distinguish this person from the name insured. The named insured is the person or business the policy is purchased to cover.

Additional Insured:

An additional insured is a person or organization that is added to an insurance policy and that person or organization enjoys the benefits of being insured under the policy. This coverage is in addition to the person or organization who originally purchased the insurance policy. The additional insured is named on a certificate of insurance. They only have a certificate if you send them a copy.

Certificate Holder:

The certificate holder is the entity that is provided a certificate of insurance as evidence of the insurance maintained by another entity. In its most simple form, a certificate of insurance is proof of insurance. The certificate holder is holding the certificate of insurance proves a business made sure to check the insurance coverages of contractors they partner with.

Digital picture of a certificate.

When Should Someone Add An Additional Insured?

One of the most common examples of when it is wise to have an additional insured is if someone is a landlord of a commercial building. Landlords commonly require tennants to add the landlord under their insurance policies in order to lease the facility. Another good reason to be add is your business rents a piece of equipment from another business. You may want to add the other business as an additional insured under your insurance policies involving the equipment.

Hiring Employees and Independent Contractors

Hiring employees can be a daunting task for a small business owner. Especially for a startup that is hiring their first employee. The decision to take on employees is a daunting task and should not be taken on lightly. Whether to hire an employee or a 1099 independent contractor depends upon a number of factors including your business, the industry you operate in, and the work that is needed to be done. There are very important legal distinctions between the two types of hires and it is important to get this decision right. Here are several things to consider the next time your business is thinking about hiring.

Hiring an Independent Contractor Electrician.

What are the Differences Between an Employee and a Contractor?

The major difference between an employee and an independent contractor is the level of control the employer has over the worker. When a business hires an employee, they have total control over how, when, and where the employee performs their job. With an independent contractor the employer only has control over the finished product the contractor has been hired to complete. When a business hires a contractor, the business is paying the contractor to perform a specific service for the business on their own time using their own resources. In addition to being on their own time, an independent contractor is responsible for declaring taxes on their own personal income.

When it comes to hiring an employee, the business is responsible for taking care of an enormous amount of paper work. This is especially difficult for startups who are hiring their first employee. Once the first employee is hired, it becomes more easy to deal with the paperwork as you hire more employees.

Employees are a little bit of a safer way to protect your business because when it comes to contractors each state has their own rules and regulations when it comes to interacting with those types of employees. In some states, some types of contractors are considered employees and must be covered by workers compensation insurance. There are other states where this is not the case. Also, if a business is caught interacting with a contractor in a fashion that is meant for an employee there may be fines and other penalties for the business.

Construction business discussing work and hiring an independent contractor.

When Should a Business Consider Hiring an Employee

A business should consider hiring a person as an employee when the work really required the supervision of someone within the business. Hiring an employee is also best when you as the business owner want to control the work hours, the tools used, and the way those tools are used. Employees are better when the work that is required is long-term or ongoing and when the work is essential to your business.

When Should a Business Consider Hiring a Contractor

A business should consider hiring a contractor when the work is not central to the business, the work can be done by a professional who does not need much supervision, or when the work is a short-term project.

Many businesses decide on hiring contractors instead of employees. Do Not Hire Employees Until Your Making a Profit

Employees are much more of a long term decision. If your business depends upon the income of one or a few companies, the loss of one of those customers can have a drastic impact on your business. If one of these customers leave your business shortly after you have added staff, it can be a substantial problem for your business. If your business is not stable and making a sustained profit, it may be a better time to partner with contractors until the business is more stable.

Communicate with all Contractors

The legal definition with a contractor is that the business gives them a task to accomplish, but the business cannot dictate how the employee goes about getting the task accomplished. This does not mean the business should have little to no contact with the contractor. It is important to communicate with the contractor about the actions of the business and the employees they may come in contact with. If the quality of their work is exceptional or not up to par, communicate the thoughts to them on a regular basis. No matter what type of contractor you are using, open lines of communication will make all work much more smooth.

Classify Employees or Contractors Properly

Each state has their own rules and regulations determining how you should classify contractors and employees. Some states have rules where some contractors are considered employees for taxes purposes and within the workers compensation system. It is important to partner with an experienced independent agent and to investigate with the proper governing body yourself. Your independent agent can advise about the proper classification for each individual type of employee, but they can only act upon the information you give them. No one knows your business as well as you do and no one is responsible for the actions of a business more than the owner of that business. Nowhere is this more evident than when it comes to hiring contractors and employees.

How Technology is impacting the Insurance Industry

The Insurance Industry has been Slow to Adapt to Technology

Many people within the insurance industry say the industry has not evolved since the Industrial Revolution. In some ways that is a true statement. With the introduction of several different forms of technology the insurance industry is advancing into the twenty first century. Technology has and will play a large part of the insurance industry for the foreseeable future. The insurance industry has been slow to adapt, but there the best companies are now using technology to gain a competitive advantage in both personal and commercial insurance.

Human Brain, Technology, Artificial Intelligence

Types of Technology Impacting the Insurance Industry

Wearables

Wearables have evolved far beyond wristwatches and clip-on GPS trackers. Some companies are adding smart vests and even boot inserts to monitor employees. What businesses are monitoring include heart rate, body temperature, and even the sweat rate. This helps businesses prevent employees from suffering from heat stroke or hypothermia. Motion sensors are being used to detect when a worker has fallen or in some instances when an employee has not moved for a period of time. These wearable technologies can alert supervisors or nearby colleagues of a potential danger.

Drone Technology

Insurance companies are using drones in a number of ways. One of the best ways carriers are using drones is to speed up the claims process in the aftermath of a natural disaster. Carriers will send an underwriter to an area and inspect multiple damaged properties with the drone saving an enormous amount of time in the claims process. In some instances, the underwriter can begin to process a claim even before the owner of the property is allowed back in to the area. In the future, many within the industry think the industry could use drones to view a property periodically throughout the year to record the condition of a property prior to a claim. Like most things with technology and the insurance industry, this will create new types of risks and privacy issues.

Autonomous Vehicles

Autonomous vehicles bring many different issues to the insurance industry. As autonomous vehicles work now, the insurance is held by the owner of the car. In the future, as autonomous vehicles move into other areas of the economy, the insurance industry will have to develop ways to deal with new types of risks. When a company like Uber or Lyft begin offering rides in unmanned vehicles, the liability insurance required will  change. When a company like Amazon begins using unmanned vehicles for deliveries; the insurance industry, along with the states and federal government, will have to adjust how the liability involved in these vehicles develops.

Computer Technology

How is Technology Impacting the Insurance Industry

Underwriting and Claims are quicker and more efficient

Insurance is a very specific product to sell. The price for one business is dramatically different than another business for a number of reasons. Insurance agents need a lot of information about a business before they can offer a quote on premium. There are a number of reasons for this and it is a frustration for both agents, underwriters, and business owners looking for coverage. Technology is helping to streamline this process.

Technology adoption is helping to better identify fraud and other crimes

There are numerous ways insurance companies are using technology to improve the insurance process for all policyholders. No where is that more evident than when it comes to policing fraud. Wearables and smart home devices are helping insurance companies determine when someone is committing arson or when someone is lying about a crime. A good example of how technology is being used to cover up a crime is in Arkansas in 2015, man was suspected of murder. Using the Amazon Echo and the smart water heater, prosecutors found that a large amount of water was used in the early hours of the morning on the night of the murder. The prosecutors used this as circumstantial evidence to show the man was covering up the crime.

Technology

Technology Requires New Types of Coverage

Cyber Insurance 

Cyber insurance is a necessary coverage for most business need in 2019. There are three types of policies that businesses may need. Cyber Liability and Data Breach Coverage are the two policies most businesses need and they are almost exclusively sold in tandem. The additional coverage some businesses need related to cyber insurance is Technology Errors and Omissions.

Data Breach Insurance deals with the first party damages to you and your business. Cyber liability deals with the third party liability a business faces to other people damaged by a data breach. Technology Errors and Omissions deals with businesses that provide or sell technology services and products. Thus far, carriers have had trouble understanding the risk factors related to cyber. For most policies, the carriers have years of historical loss information to determine the probability of claims. Most businesses have been operating over the internet for less than 10 years and a majority of that time they did not carry cyber insurance. Because of this lack of data, most insurance carriers either do not have a strong appetite for this coverage or they keep premium relatively high.

 

9 Winter Driving Safety Tips

Tips for how to make Winter Driving safe for you and your employees

Safe driving begins long before a driver gets behind the wheel of a car. This is true in Winter as well as any other time of year. It is especially important when it comes to the Winter Driving Season. The Winter Driving Season is especially dangerous because of the conditions presented out on the roads and the presence of ice. Preparing for these risky conditions occurs before, during, and after getting behind the wheel.  Here are nine Winter Driving Tips to help you, your family, and your employees safe out on the roads for the rest of this Winter.

Winter Driving on Snow and Ice

Before Winter Driving

Prepare your car

Safety when it comes to Winter Driving begins long before a person gets behind the wheel. Preparing your car in the Fall before the weather turns bad is a good idea to prepare for a saving Winter Driving Season.

Check under the hood

When you have an oil change during the Fall and Winter, it is important to have the mechanic looking under the hood to check to make sure your car is prepared for the Temperatures the car is facing. It is important to ask them double check the levels of your cars antifreeze, the hoses, the heater, the defroster, windshield wipers, the washer fluid, the lights, and the battery.

Stock a Winter Weather Survival Kit

Stocking your car with a Winter Weather Survival Kit is a great idea to prepare yourself for the unfortunate event that you are stuck in your car for an extended period of time. What is included in the kit depends upon how extreme the weather is where you live. No matter where you live the kit should include: blankets, gloves, socks and a hat. Also included should be an ice scraper, a flashlight, jumper cables, water, snacks and road flares or reflective warning triangles. Additionally, you should consider adding kitty lidder or a bag of sand to help with traction, tire chains, hand warmers, and duct tape because every situation runs a tad bit smoother with duct tape.

During Winter Driving

Slow Down

When behind the wheel, it is important to slow down and increase space when driving. Many people make the mistake of thinking a four wheel drive vehicle allows them to drive faster at a normal speed during Winter Conditions. This is a mistake far too many drivers make in Winter. The only way to safely drive on ice is to take your time and give yourself plenty of room between other vehicles.

Dont panic

If you do start to slip on ice while driving, it is best to let your foot off of the excelerator in order to slow down as opposed to slamming on the brakes. Remember to steer in the direction you want to go. Steering may be more important than braking in some conditions.

Be conscious of the three main types of distractions

There are three types of distracted driving:  Cognitive, Manual, and Visual. A cognitive distraction deals with a drivers cognitive ability to pay attention to the task of driving. A manual distraction is anything that causes a driver to take one or both hands off of the steering wheel. Finally, a visual distraction is anything visually appealing that takes the drivers view away from the task of driving the car.

After Winter Driving

After an accident, contact the carrier quickly

It is important to contact your insurance carrier quickly after an accident. First and foremost, you need to take care of the health and well-being of anyone involved in an accident. Once everyones safety is accounted for it is important to give the insurance carrier a call. It is important to realize that this part of the insurance process is the responsibility of the carrier and not the insurance agent. It is a good idea to keep the agency in the loop, but do not be surprised and do not become upset when they direct you to call the carrier. This is how the insurance process works.

Take photos

If you have a mobile device with the ability to take and save pictures, it is important to take pictures of your damaged vehicle and of any other vehicles involved in the accident.

Keep Receipts

Damages may be reimbursed for repairs to your car, but the insurance carrier is going to require receipts for anything you purchase related to the repair of your vehicle. This is why it is important to call the insurance carrier quickly. The carrier can guide you through the insurance claims process and help prevent any unnecessary spending on your part.

 

5 Things to Know When Insurance Shopping

Insurance Shopping is a wise thing for a business owner to do if not every year, at least every few years. It is not wise to switch carriers frequently based on a slight drop in premium, but it is wise to look around in an attempt to make sure your carrier is competitive with the marketplace. Here are five things to keep in mind when looking in to insurance shopping.

Digital Graphics implementing how a business goes about insurance shopping.

Understand the Value of an Independent Agent

An independent insurance agent is valuable to a small business owner because they are not attached to any one insurance carrier. The fact that they are independent allows the agent to give business leaders advice about each policy and each carrier. They can show you which policy offers the lowest premium and they can give you additional information about each carrier. Margins within the insurance industry are very small. When one insurance carrier is offering a similar policy for a significantly lower premium, there is usually a reason for the premium being lower and that reason is rarely because it offers more coverage or the carrier provides better service of that policy. An independent insurance agent can tell you what to expect when partnering with each individual insurance carrier.

Bundle Policies

Bundling policies is a good idea for a small business for a number of reasons. First and foremost, bundling all coverages with one insurance carrier in a BOP prevents there being gaps in coverage. A gap in coverage occurs when two policies that deal with a claim have exclusions pertaining to the particular claim. Bundling policies with one carrier allows the agent to make sure these gaps do not exist and your business is properly covered.

Do Not Prioritize Price

Price should be one of a number of factors to consider when deciding which policy and which carrier to go with. Margins in the insurance industry are very tight. When a business owner bases their decision primarily on price, they are taking the risk of purchasing an inferior coverage. When a claim occurs, the business should be prepared for less coverage when they decide to go with a significantly cheaper policy.

Analyze your limits

As your facility and equipment age, it is wise to speak with your agent about what exactly is the value of those pieces of equipment. If a piece of equipment is crucial to or business being able to operate, replacing that equipment quickly is important to the ongoing operation of the business. If this is not the case, it might be better to lower the limits of a policy. This is especially important when it comes to old vehicles or old equipment. If the business owns a vehicle that has a value that is similar to what the deductible might be, it might be better for the business to just deal without the vehicle or purchase a new vehicle. No matter what the situation is for your business, it is worthwhile to discuss lowering your limits with your insurance agent from time to time.

Consider an Umbrella Policy

An Umbrella Insurance Policy is designed to sit on top of all existing insurance policies when the limits of those policies have been exhausted. The coverage provides an additional layer of security to businesses that are at risk for being sued for damages to other people’s property or injuries caused to others in an accident. Many times adding an umbrella policy is a more cost effective way to add additional coverage to your policies.

10 Types of Liability Insurance Every Small Business Should Consider

Liability Insurance is the Bedrock of a Small Businesses Shield of Protection

Liability Insurance is a way businesses can go about protecting itself from liabilities the business faces that are beyond the funds the business has on hand to cover. General Liability is required by law for most businesses in most states, but this is usually not the only type of liability insurance coverage a business should secure. Partnering with an experienced insurance professional with whom you trust is the first step to properly protecting a small business. This professional can help advise a business owner just what types of risks they face and just what types of insurance policies they should secure. Here are 10 types of liability insurance coverage every small business owner should consider securing.

Small Business Liability Insurance Coverage

General Liability Insurance Coverage

General Liability Insurance is required by law in most states and protects a business from lawsuits, bodily injury, property damage, personal injury and completed work. Two components are included in general liability insurance. Those two components are public and product liability. Public liability protects a business from third-parties filing suit against a business. The suit can be for something as simple as the third party slipped and fell in your store. No matter how trivial the suit is, it can amount to an enormous legal bill to protect the reputation of a business. Product liability protects a business for products or completed work. When a business makes or sells a product, the business is responsible for what happens with those products. It is important to remember product liability does not provide coverage for claims of defective or faulty design alone unless that defect causes injury or damage.

Professional Liability Insurance

Professional Liability Insurance Coverage is also frequently referred to as Errors and Omissions, E&O, or Medical Malpractice. Professional Liability covers a business for financial losses suffered by third-parties due to professional advice given by the insured. The types of professionals who need this type of coverage include: Accountants, Attorneys, Real Estate Brokers, Consultants, Physicians, Architects, and Engineers. A Professional Liability Insurance Policy does not cover bodily injury or property damage, these claims are usually covered by a general liability policy.

Cyber Liability Insurance Coverage

Cyber Liability Insurance is a type of liability that protects a business from the liability the business faces to third parties for a data breach that occurs within the organization. Cyber Liability Insurance covers the costs associated with the liability of a claim or suit related to a data breach, but it does not cover the first party damages to the business.

Dram Shop Liability Insurance

Dram Shop Insurance Coverage applies to businesses that sell and serve alcohol. A Dram Shop Liability Insurance covers a business for personal injury caused by an intoxicated customer. Dram Shop Liability grew from laws passed dealing with the actions of intoxicated patrons who were served when the business knew the patron was severely intoxicated. According to Vernet v. Serrano-Torres, 566 F.3d 254 (1st Cir. P.R. 2009), it was held that the theory of dram-shop liability has been described as one where a bar or tavern may be liable for the wrongful or injurious actions of a patron, if it served alcohol to that patron after it knew, or should have known, that the patron was already intoxicated.

Directors and Officers Liability Insurance is a type of liability insurance that is paid out to the officers and directors of a company or organization, as reimbursement for losses or advancement for defense costs in the event an insured faces a lawsuit as a result of alleged wrongful acts in the officers or directors capacity as a leader of the organization. Directors and Officers of a corporation or a non-profit may be liable for damages if they damage the organization in breach of their legal duty, if they mix personal and business assets, or if they fail to disclose any and all conflicts of interest.

Employer Liability Insurance Coverage

Employer Liability Insurance is an extremely important part of every businesses workers compensation insurance. Workers’ compensation pays a workers medical costs and some lost wages if they are hurt while on the job. If an employee feels their workers compensation benefit has not provided them enough, they can sue a business for damages. Some of those damages and the legal fees associated with those suits are covered under an employer liability insurance policy.

Product Liability Insurance

Product Liability Insurance Coverage protects a business from lawsuits that result from injuries, illnesses, or property damage linked to a product made by a business. These damages include manufacturing error, faulty design, malfunctions, and even misuse. This applies to manufactured products no matter if they are simple or complex.

Umbrella Liability Insurance Coverage

An Umbrella Insurance Policy is a type of coverage that sits on top of other existing policies. When there is a covered loss and the limits of that policy are met, the Umbrella Policy kicks in to cover additional costs up to the limits of the Umbrella Policy. They key part of this policy to understand is that the claim causing the loss has to be a covered loss. An Umbrella Insurance Policy does not cover additional losses that are not covered. The policy only kicks in when the limits of an existing policy are met.

Employment Practices Liability Insurance

Employment Practices Liability Insurance (EPLI) can protect a business in the event the business faces a lawsuits related to hiring, employing, and terminating employees. EPLI can protect a business when someone files a claim due to misconduct or violation of labor laws. These lawsuits could include claims of employee discrimination, wrongful termination, discrimination (age, racial, gender), breach of contract, sexual harrassment, or emotional distress.

Business Owner’s Policy (BOP)

Businesses can package all of the necessary liability policies in to a Business Owner’s Policy (BOP). A BOP includes several different policies.  They are usually designed for a specific industry because a carriers uses historical claims data to know which types of claims are common for businesses within a particular industry. BOP’s can be altered to meet the needs of a business and the level of risk a business owner is willing to take and most times carriers will offer a discount for buying multiple policies in one package.

8 Reasons Why Insurance is Crucial for Small Business

There are many reasons why a business needs to carry insurance coverage. In its most simple form, insurance protects a business from financial loss due to an unfortunate emergency, accident, or unforeseen event. Now there are many different types of insurance a business may need. Some businesses may need multiple types of coverage, some businesses may be able to get by with a bare bones package of coverages. Partnering with an independent insurance agent is one of the best ways to determine what types of coverage you need and what types of limits are best for your business.

Insurance is Required for a Loan

Banks require a business to carry insurance in order to qualify for a loan. If you think about it lenders want proof of insurance before you buy or build a new facility in order to safe guard all assets. To get access to cash for your business you will need to have certain types of insurance coverage. Without insurance, a business will be forced to fund its own expansion with cash on hand.

Some Forms of Insurance are Required by Law

In most states, Workers Compensation and General Liability Insurance is required by law for most business in most states. Each state has their own rules and regulations that offer some exclusions for some types of coverage. It is important to check with the proper state governing body within the state you operate in to make sure your business is properly insured.

Insurance Protects Against lawsuits

Today’s business environment is a very litigious society. If you stay in business long enough, more than likely your business will be sued in some form or fashion. When a business faces a lawsuit, even if your business wins the suit it can amount to an enormous sum in legal fees. Insurance coverage can reimburse your business for these costs.

Insurance Can Protect Your Employees

A business depends upon their employees to make the business work.  Building a healthy workplace culture is crucial to success no matter what industry a business operates in. Insurance can add to the trust a business has with its employees.

Your business depends heavily on the knowledge of one person

If you operate a business that depends upon the talents of one or a few key employees, it is necessary to carry Keyman Insurance. Keyman Insurance is a policy designed to cover the life of a key employee for a monetary value so in the event of an untimely death of such key employee, the loss to the business will be recouped through monetary assistance.

Most Contracts Require Insurance

When it comes to contracts, insurance is required by both parties in order for the contract to be valid. Some examples of scenarios where insurance is required include:

  • A business rents a facility instead of owning the building outright.
  • A business borrows money to finance buildings or equipment.
  • A business enters into a contract where the client specifies that insurance coverage in the event the deal does not go as planned.

A Business Cannot Predict The Future

No matter how much experience a professional has there are unknown occurrences that no one can predict. Regardless of whether the occurrences are a natural disaster, injured employees, lawsuits, or damaged equipment; it is impossible to predict when one of these claims will occur. Insurance coverage can protect your business in the event of an act of god.

Insurance Grants Peace of Mind

Business owners and leaders face an enormous amount of pressure. Insurance allows those leaders the ability to ease some of that pressure because they can rest assured that an insurance policy will help the business become whole again in the event of a serious occurrence.