Small Business Insurance

It’s human nature for a business owner to wonder how much and which types of small business insurance coverage their business actually needs. To be successful, a business has to be comfortable with some amount of risk. Taking the first step to open a business is a risk.  With that simple fact, one would have to assume a small business owner is comfortable with some amount of risk.  Now how much and what types of risk the business owner is willing to take are completely unique to the industry the business operates in and the personal philosophy of the business owner.

Coffee shops need Small Business Insurance. Find out the latest information at https://www.myinsurancequestion.com/

Here are 5 insurance policies every business should secure.

General liability

General Liability insurance protects an organization from damage to third parties who are not associated with the business. Third parties may include customers, the general public, vendors or anyone that could potentially be damaged by the actions of your business.

Workers compensation

Workers’ compensation insurance is similar to general liability except it deals only with your employees.  Workers comp is the ‘exclusive remedy’ for injuries that occur to employees as a part of normal business operations. This policy provides medical coverage and some lost wages for injured workers who are hurt as a result of normal business operations.  Employers benefit from the policy by not having to worry about being sued for injuries that occur as a normal part of business operations.

Business interruption

Business Interruption Insurance will protect a business in the event it is forced to be closed for an extended period because of another covered loss. The covered loss is an important part of this coverage. If you are the victim of a hurricane or a flood and you do not have coverage for that loss, the business interruption coverage will not kick in. This is typically included as a part of a business owner’s policy (BOP).

Employment practices liability insurance (EPLI)

EPLI coverage is a type of insurance coverage specifically designed to protect your business from lawsuits relating to the employment process. Over the past decade employment lawsuits have increased significantly. If you stay in business long enough, chances are you will face an employment related legal issue. Your business can face one of these lawsuits even if the employees of that business have not done anything wrong. It can also cost an enormous amount of time and money for a business even if the business is found to be innocent.  An EPLI Policy can protect a business in just this case.

Commercial auto or hired and non-owned auto

Driving risks are one of the most difficult parts of insuring a business. When driving a vehicle is involved in the work of a business, the frequency and severity of claims tend to rise dramatically.  Of course if your business owns vehicles and employees drive those vehicles as a part of their work, the business needs a commercial auto policy.  A business does not have to own a vehicle to face liability around employees injured while driving any vehicle.  If you have employees who use rental cars while they are travelling on business purposes than the business is liable for any accidents they are involved in while they are travelling.  This is because the purpose of the employee being where they are is because of the business function.  If you have employees who use their personal car for business purposes, the business is liable for any damage caused in an accident that occurs.  The employees personal auto insurance policy will cover the damage to their car, but the business will need additional coverage because the liability to other people  involved in the accident rests with the business.  These instances can be covered by a Hired and Non-Owned Auto Policy, which can be added to most standard business owner’s packages (BOP’s).

20 terms you need to know when purchasing or renewing commercial insurance

For many business owners, purchasing insurance is a foreign concept. Like many industries there are terms only the insiders know and they frequently use when discussing the policies. Here is a list of 20 terms that will give you a leg up the next time you are purchasing or renewing your commercial insurance policy.

 20 commercial insurance terms to be aware of the next time you look to buy small business insurance.

Insurer –  a person or company that underwrites an insurance risk; the party in an insurance contract undertaking the risk to pay compensation.

Insured –  a person or organization covered by an insurance policy.

Peril –   the possibility that you will be hurt or killed or that something unpleasant or bad will happen.  exposure to the risk of being injured, destroyed, or lost.

Premium –   An amount to be paid for an insurance policy. It is an amount paid periodically to the insurer by the insured for covering their risk.

Deductible –  A deductible is the amount you have to pay out-of-pocket before the insurance company will cover your remaining costs. 

1st person liability –  First person liability is for damage that is done to you or your business. A good example of this would be a commercial property insurance policy. This policy covers the damages to you and your property. It does not cover the damage to another persons’ property or if they are hurt on your property.

3rd person liability –  Third person liability is liability that you or your business has to other third parties. Third parties can include customers, vendors, other businesses or anyone who may be harm by the actions of you or your business.

 Claims-made policy –  A policy written on a claims-made basis means that if the insurance is in place when the claim is made, but not when the occurrence took place than the insurer responsible for the claim is the insurer when the claim is made. This is common for professionals like a lawyer or an engineer. In these professions a claim is frequently filed months if not years after the occurrence takes place. At that time the insured may have coverage with a different company and there may be some discrepancy between who is responsible for the claim.

Occurrence based Policy –  A policy written on an occurrence basis means that the insurer responsible for the claim is the insurer who was in place when the occurrence took place. If an engineer works on a house and there is a problem with the house years later than the insurer responsible for the occurrence is the insurer that was in place when the occurrence took place.

 Endorsement –  an endorsement is a document attached to an insurance policy that amends the policy in some way. An endorsement may add, remove or alter the scope of coverage under the policy.

Negligence –  Negligence in relation to insurance means a person or business did not demonstrate appropriate amounts of care or responsibility for a particular situation. The failure to take appropriate precautions can cause you to be considered liable for the damage.  This can also be referred to as the failure to use a degree of care considered reasonable under a given set of circumstances. Liability policies are designed to cover claims of negligence.

Named Insured –  Any person, business or organization who is specifically named as an insured on an insurance policy. This is different from entities who although unnamed may fall within the policy definition of an insured.

Ordinance or Law Coverage –  Coverage for loss caused by the enforcement of an ordinance or law regulating construction and repair of a damaged property. Older structures that are damaged may need to be upgraded in regards to electrical, plumbing, venting, etc. A typical commercial property insurance policy does not pay for these additional cost. This policy is an endorsement on top of your commercial insurance policy and will cover the additional costs needed to bring the new building up to date.

A 'Hammer Clause' is a provision within an insurance policy that gives the insurer the right to settle for an undisclosed amount and if the insured does not agree to the settlement than they take on some or all of the risk. Hammer Clause –  A ‘Hammer Clause‘ is a provision within an insurance policy that gives the insurer the right to settle for an undisclosed amount and if the insured does not agree to the settlement than they take on some or all of the risk. In some cases, the insured takes on all of the risk, but in many cases it is 70/30 or 50/50.

The Assigned Risk Provider (Also known as the pool or the state fund) –  The assigned risk provider applies to workers’ compensation coverage. It is the provider of last resort within each state for businesses who cannot obtain coverage on the open market. The business may not be able to obtain coverage for a number of reasons. Typically, it is because of the small size of the company or because of their loss history. The Assigned Risk Provider offers coverage at a higher rate and typically once you are in the pool you must stay in the pool for 2-3 years.

Business Owners’ Package (BOP) –  A business owner’s policy, commonly referred to as a BOP, combines several lines of coverage built into one policy. They are often better suited for small business owners because they offer targeted coverage options designed for specific types of businesses within certain industries. They are usually less expensive then purchasing coverage separately because the business is purchasing multiple policies for liability, property, commercial auto, etc. 

Find out if you as an Artisan Contractors need workers compensation insurance coverage at myinsurancequestion.comArtisan Contractor –   This term refers to businesses in several different industries. It includes many occupations that involve skilled work with tools at the customer’s premises. Carpenters, plumbers, electricians, roofers and tree surgeons are some professions that would be included in this group of businesses. Also included are diverse other skilled service providers, such as interior decorators, piano tuners and exterminators.

Loss History –  Loss history is a documented history of damages or losses connected with a given asset. It is a way for the insurance carrier to determine the amount of claims your business has against an insurance policy.  They use it to determine how much premium to charge or if they are willing to take on the risk altogether. 

Inland Marine Insurance – Inland Marine Insurance is property insurance for property that is likely to be in transit over land.  Many inland marine coverage forms provide coverage without regard to the location of the covered property; these are sometimes called “floater” policies. As a group, inland marine coverage forms are generally broader than property coverage forms.

Find out if your business truly needs commercial umbrella coverage at myinsurancequestion.comUmbrella Coverage –  The umbrella policy serves three purposes: it provides excess limits when the limits of underlying liability policies are exhausted by the payment of claims; it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims; and it provides protection against some claims not covered by the underlying policies, subject to the assumption by the named insured of a self-insured retention (SIR).