Small Business Insurance Jargon

Small Business Insurance Jargon you need to know as a business owner

Buying commercial insurance is something a small business owner has to do once a year. It is not something most business owners think about on a daily basis. When interacting with employees within the industry, there may be an awful lot of small business insurance jargon that is not exactly common knowledge to the general population. Here are ten terms to familiarize yourself with before your next renewal.

Small Business Insurance Jargon

BOP

BOP Stands for Business Owner’s Package or Business Owner’s Policy. A BOP is a package of policies, sold in tandem for businesses in a certain industry or classification code. Because of historical claims records, insurance carriers know the common risks for certain businesses in certain industries and they have created packages of policies specific to that industry.

Experience Mod

The Experience Modification Rating is frequently referred to as the Mod or the Experience Mod. This rating is a formula that includes the businesses Employer’s FEIN by the rating bureau (NCCI or the State Bureau).  The rating compares your loss data to other employers within the same class code of your business. The rating is expressed as a credit or debit on your policy.

Actual Cash Value

The current value of an insured piece of property. This is simply the appraisal value of a piece of property and does not include additional expenses related to a property loss.

Replacement Value

The value of purchasing a new property to replace a lost or damaged property,but it pays for the replacement at today’s value. Depending upon the language in the policy, a replacement value policy may include additional expenses like tear down and removal of debris, bringing the property up to current codes, and construction costs on the new property.

First Party

First Party Insurance Policies are policies that deal with the damages to you and your business. They may include damages like replacing a vehicle after a crash, replacing specialized equipment damaged during a storm, or even hiring a PR Firm to restore the reputation of your business after a data breach.

Third Party

A Third Party Insurance Policy deals with the liability your business faces relating to outside third parties that are damaged by the actions of your business. This may include repairing a broken window caused by the employee of a landscaping company or medical costs for someone slipping on their way to the bathroom in a restaurant.

EPLI

EPLI stands for Employment Practices Liability Insurance. This is an insurance policy that can protect your business when it faces a lawsuit related to hiring and firing of employees. In 2016, the Equal Employment Opportunity Commission, collected more than $482 million for victims of discrimination in private, federal and state and local government workplaces. The reason there is a need for this policy is that a lawsuit does not have to be founded to take up an enormous amount of time for you and your business to prove your innocence. An EPLI Policy can help your business stay afloat when you face one of these claims.

E&O

E&O stands for Errors and Omissions Insurance. It is also called Medical Malpractice in the Medical Profession. This policy protects the insured (you the business owner) against liability for committing an error or omission in performance of professional duties. This may include work done by an engineer or architect on a particular construction project. It may also include the work done by a doctor during surgery. Generally, such policies are designed to cover financial losses rather than liability for bodily injury (BI) and property damage (PD).

Hired and Non-owned Auto

Hired and Non-owned Auto Insurance Coverage is designed for businesses who have employees who use their personal vehicles for business purposes or employees who use rented vehicles. The time that these employees are using the vehicle for business purposes is a time when your business is liable for the damages that are caused to third parties as a result of an accident that is the fault of your employee. It is commonly added as an addition to a commercial auto policy, but if your business does not own any vehicles it can be sold as a stand alone policy.

Inland Marine

An Inland Marine Insurance Policy is a specialized form or property insurance that is often referred to as equipment coverage. The primary distinction between inland marine and other property insurance is the fact that inland marine is designed specifically for property which is likely to be moved or in transit. Landscaping companies that have equipment on a trailer is an example of this risk. Inland Marine may be needed for companies with highly specialized property that requires a unique valuation. A land surveyor who uses specialized surveying equipment may need this policy.

 

Insurance Tips for Lawn Care and Landscaping

There are many aspects to owning a landscaping business. Many aspects that have nothing to do with the actual work itself. Whether a business owner is dealing with finding the right employees, determining the right price to charge their customers or managing the day to day operations; there are always additional responsibilities pulling the business owner in a different direction.  One aspect that frequently gets looked over is purchasing commercial insurance for your landscaping business.  Here are five tips for finding the best insurance, saving money when purchasing coverage and how best to use your policy when a disaster occurs.

Get the answers to your Lawn Care and Landscaping Insurance Questions at My Insurance Question.com

Partner with an independent agent

Independent insurance agents are unique in that they can quote you policies from many different carriers and not just one or a select few.  The appetites of the carriers change from year to year for certain coverages and especially for different industries.  Some years, your premium may go up simply because the carrier has experienced a lot of losses in your industry of the last year or couple of years. As a result they raise the prices for that classification code.  Another carrier may not have experienced the same losses and may be more hungry to quote your policy.  An independent insurance agent has the ability to force carriers to compete for your business.  In the end this helps you get better coverage at rock bottom prices.

Make sure you are in the right class code

The Lawn Care and Landscaping Industry is an industry that has numerous general liability classification codes. If you do not give enough information to your agent, they are forced to guess exactly how much risk your business takes on. It is in their best interest to always assume more risk. Assuming more risk protects the insurance agency, but may cost your business more in unnecessary premium. These mistakes usually get fixed in the end of term audit, but even when corrected you still have tied up cash in unnecessary premium throughout the year.

What coverages can I do without?

Once you have taken care of finding a good agency to partner with and you have taken the time to make sure you are classified properly, it is important to ask your agent what coverage’s does your business absolutely need and what coverage’s your business may be able to do without.  At this point it is important to remember the agent works for you.  If you are honest with the agent about how much risk you are willing to take, they should be able to give you the proper information to cover your business as you prefer.  It is important to remember that insurance agents not only interact with business owners when they are selling coverage, but also when the worst of the worst has occurred.  The agent may be offering you an extra coverage because they have interacted with a business owner in the past who had a claim occur at their business where they were not covered. Those are never easy conversations to have.  Depending upon the size and severity of the disaster having the right coverage may be the difference between your business closing the doors for a week and never opening again.

Ask for available credits and debits

The best way to find the best price on coverage is to tell your insurance agent what you value in the buying process.  Insurance agents talk with many different people from many different walks of life.  One customer may want to get through the insurance buying process as fast as possible so they can get back to running their business.  Another business owner may not mind if it takes a day and a half of their time in order to save an additional five percent.  Let the agent know early and often what you value.

What do you do when your business has a claim?

It is common for a business owner to think bad things will not happen to their business, but the most successful businesses are those who have a plan in place for when things go wrong.  Part of that plan should be having the proper insurance policy in place.  When an occurrence eventually takes place, there are several steps you as a business owner can take to speed up the process of getting your claim paid and get your business back up to normal operation.

When you do have to make an insurance claim it is important to inform both your carrier and your agency.  Do not be upset if your agency informs you to contact your carrier.  It is the job of the carrier to process the claim, not the agency.  At the same time, it is equally important to keep your agency in the loop.  In the unfortunate case the carrier is not living up to their end of the bargain, the agency can contact them on your behalf.  If you have injured workers, make sure they are going to medical facilities that are properly prepared to process the workers’ compensation system within your state.  Your carrier can help you find the proper facilities.  This can drastically limit the severity of a claim and it can allow your injured worker to get the best care quickly.  The better care they get can result in the getting back on the job quicker and with the least amount of doctors’ visits possible.  Keeping the injured worker on your side is important.  If this process runs smoothly it will make your employee happy and motivated to return to work.  It will also help your insurance carrier by limiting the amount of the claim.  THis will prevent too much damage from being done to your businesses experience modification rating.  The Experience Mod is one of the main ways carriers determine how much they will charge you for premium.

Do not be alarmed if a claim stays open for a period of time after your business has gotten over the claim.  Insurance agents do this in order to not have to open a second claim.  A second claim will also impact your experience modification rating.  The carrier does this because an injured worker may return to work and reinjure themselves.   Sometimes this can happen weeks or even months after the injured worker has returned to work.  If this causes your business to file a second claim it can have a damaging effect on your rating resulting in a higher rate on premium.