What Is an Average Business Insurance Coverage Cover?

What does an average business’s insurance coverage cover?

While there is no ‘documented answer’ to this often asked question, there is some information available to formulate an opinion. For instance, based on industry surveys we know that 90% of small business owners are happy with their business insurance coverage. We know there are minimum coverage’s you need to consider when purchasing business insurance. No matter what type of business you operate, business insurance is a wise and prudent investment.

One of the most important components of business insurance is property coverage. Property insurance protects your business property and inventory against loss or damage by accident, theft, or another cause or by another party. Often, your property insurance may be purchased in conjunction with your liability coverage.

Liability protection is the next important component of average business insurance package. Liability insurance protects the company against claims of injury either bodily or physically. This would protect you in the event of an accident at your business or in another location where you or your employees are conducting business. In some cases, a business may also need professional liability coverage. Discuss professional liability with your insurance professional. Medical Malpractice Insurance is an example of professional liability insurance.

Loss of income insurance is another component of business insurance coverage. A fire or another type of catastrophe can cause your business to close temporarily or even relocate to another location to start up until repairs or rebuilding is completed.

Business interruption insurance, also known as business income insurance is designed to help in these types of situations. Business interruption insurance will cover profits lost during this timeframe based on past financial records. It will also cover operating expenses such as electricity, vendor payments, and other costs which may continue even though the business may be closed due to the catastrophe. It can include relocation and start up costs if the business needs to operate out of a temporary location while repairs are being completed.

After these basic components, there are other specialty coverage options available to your specific business situation. Work with your licensed insurance professional to determine what needs to be added to your average business insurance plan to offer the complete protection needed.

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Business Interruption Insurance

What is business interruption insurance?

A fire or another type of catastrophe can cause your business to close temporarily or even relocate to another location to start up until repairs or rebuilding is completed. Business interruption insurance, also known as business income insurance is designed to help in these types of situations.

Business interruption insurance will cover profits lost during this timeframe based on past financial records. It will also cover operating expenses such as electricity, vendor payments, and other costs which may continue even though the business may be closed due to the catastrophe. It can include relocation and start up costs if the business needs to operate out of a temporary location while repairs are being completed.

Business interruption insurance is not sold as a policy by itself. It is added to an existing policy such as a Business Owners Policy. It’s important to review the coverage with your licensed insurance professional thoroughly. You need to make sure the policy limits are sufficient to cover the time necessary for rebuilding or repairing your business in the event of a major catastrophe. In fact, get an estimate from a contractor which will include both repair cost and length of time to rebuild. It often will take more time than you will assume.

Remember the policy premium is based on restoration costs, ease of transition, and other factors. Work with your agent and show that you have a disaster recovery plan in place that can be shared with the insurance carrier. Doing your due diligence will pay off should a claim be necessary on the insurance. It’s possible that penalties may be assessed for underinsuring.

Depending on the policy, the penalty can deduct 20 percent or higher from the claim payment. Here is where your agent, contractor, and other resources can play a big part in eliminating any coinsurance claims from underinsuring your business.

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Business interruption insurance can be the difference maker from a disaster closing your business forever. Talk to your licensed insurance professional and determine if business interruption insurance is right for your business.

 

Purchasing Commercial Business Insurance

What to do, and not to do, when purchasing commercial business insurance.

Purchasing business insurance starts way before you unlock the door the first day of your grand opening. In fact, we’ve put together a list of Do’s and Don’ts to help guide you through the process. Buying the proper insurance and the proper coverage’s is a lot more than just filling out and signing an application. Using the following Do’s and Don’ts list will help in your effort to make the right decisions about your new business insurance and help you simplify the buying process.

DO:

DO comparison shopping as your interviewing the agents. Ask them for their recommendations regarding your specific business. They should be willing to submit these to you for no charge.

DO interview several agents/brokers. Take notes and get a feel for their personality, does it fit with you? As noted above, are they eager and willing to submit recommendations?

DO find an agent or broker with experience and clients in your particular business. For example, if you’re a tow truck company, find an agent or broker who has tow truck operators as insurance clients already. Ask for referrals and get a feel from them. If they don’t have experience in your industry, don’t discount them if they have a good business base of clients.

DO read the policy carefully. Have it looked at by your attorney if you’re unsure of any terminology. Ask questions and make sure your comfortable with the response.

DO make a list of your business property and assets. Give a copy to your agent for his file. Make sure you book your annual review for 8 to 9 months away.

DON’T:

DON’T purchase a policy that is significantly lower than other quotes. A policy that comes in far less (more than 10%) is lacking something. Share it with your attorney and look for exclusions.

DON’T underinsure your business to get a reduced premium. Chances are great a loss will devastate your business. A lack of coverage could be the financial ruin of your company.

DON’T sign with an agent only willing to offer one package. Customization is important in every business insurance policy.

DON’T accept a policy that doesn’t cover all your needs and risk exposure.

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Purchasing Commercial Auto Insurance

Purchasing commercial auto insurance is much different than purchasing personal auto insurance.

Many business owners are often misinformed about certain specifics involved with purchasing commercial auto insurance. It is important to review vehicle ownership and use of both business owned and personal vehicles that may be used for business.

Failure to understand how commercial auto insurance works can be costly and expensive if an accident occurs and you’re left uncovered. The definition of “business use of a personal vehicle” may vary between insurance carriers. Whether you’re an independent contractor or a sole proprietor, discuss coverage with your insurance professional, and be sure that you’re completely transparent about how your vehicle is used. Even if your auto policy offers coverage, it probably makes sense to raise your liability coverage. A knowledgeable insurance professional will be key to determining what coverage is needed.

If multiple vehicles are owned or leased by a business, it may be necessary to purchase fleet insurance. Depending on the type of company, the number of vehicles differs for qualification for a fleet insurance policy. Remember that trailers and equipment may also qualify as part of the fleet policy. Qualifying for fleet insurance generally reduces the per vehicle cost for coverage. However, there are plenty of reasonable commercial auto policies available for businesses which don’t qualify for fleet coverage.

Many variables play into the cost of commercial auto insurance. Makes, models, features, as well as purpose and driving records all factor into determining the premium. In fact, one poor driving record can increase the premium or even have coverage denied. As your business grows, it is important to screen driving records as part of the hiring process. Business location and mileage estimates will also factor in to determining the premium.

Vehicles traveling longer distances will be charged higher premiums. Care should be taken into choosing vehicles and vehicle replacement. High end cars are expensive to insure due to high cost replacement parts. Mid-size sedans often have lower premiums; often trucks and vans do, as well.

As a rule, the more specialized or equipment, the higher the premium will run. It’s important to review upcoming purchases with your insurance professional first, so you don’t get a shock down the road with a jump in insurance costs. Use your agent as a resource to help guide you through purchasing and adding vehicles without huge spikes in your insurance costs.

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Need further guidance or want to price shop? Call us today at 1-877-907-5267, or click ‘Get a Quote’ above to start the process of a quick, free, competitive quote on commercial auto insurance or other business insurance needs.

Business Owner’s Policy

My agent suggested a Business Owner’s Policy. What is that?

A Business Owner’s Policy or BOP may be a good starting point for your new or small business. A Business Owner’s Policy can cover many of the risks associated with a business while keeping the premium you pay in balance with a small business.

For many businesses, insuring the building(s), inventory and equipment, and legal liability may cover most of their business insurance needs. A BOP may be just the policy to do the trick.

As a rule, the BOP will cover the following:

Liability insurance covering lawsuits arising from accidents (as when someone trips and falls on your business’s property) or when you sell a product that damages the customer’s property or you are accused of offenses such as slander, copyright or invasion of privacy.

Property insurance covering buildings, equipment and inventory as well as furnishings.

Business interruption insurance covering losses that cause you to close or reduce production for a time. This includes relocation for a time while the business is being rebuilt or rehabbed. Business interruption insurance can provide money to offset lost profits or to pay continuing expenses typically for up to a year for insured losses.

It’s also important to know what is not covered in a BOP, or what exclusions are typically found. Boiler and equipment insurance is generally not included, nor is commercial fleet insurance. Some disaster and debris removal are generally not included.

It’s best to sit down with a licensed insurance professional and explore the options and benefits of a Business Owner’s Policy. The great thing about BOP’s is that often, additional coverage options are available and can be used to customize your business coverage.

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Choosing the Right Insurance Professional

Choosing the right insurance professional for your business is an important part of your business insurance planning.

Whether you have owned a business or multiple businesses for some time, or you’re just starting out, insurance planning is an important part of your business strategy. Finding the right licensed insurance professional to fit your plan is important. Starting out, or out growing your present provider, the fit is truly important as you strategically plan ahead.

You often hear the terms agents and brokers interchanged. Let’s take a look at each and explain the difference.

An agent will represent an insurance company as an intermediary. They may be captive, meaning they represent just one insurance company, or an independent, representing a number of insurance companies. In broad terms, the agent’s liability to the customer is administrative in scope. For a small business, just a few employees, a couple of vehicles, and in a standard or low risk business segment, its fine to use an agent. This is an agent’s bread and butter and service will be key.

Insurance brokers work as independents with a broad scope of products to offer. Brokers hold a different license which often indicates a higher level of education and certifications than those of an agent. Brokers in most cases have a higher standard of accountability to the customer. They have a duty to analyze and determine the scope of coverage required by your business. Often, a broker will charge administrative fees or higher premiums to help pay this increased level of expertise. As your business grows, it may make sense to consider using a broker. If you have a large number of employees, a large number of vehicles and drivers on the road, or work in a high risk business segment, it probably makes sense to use a broker. Comprehensive planning and multiple locations or interstate business would warrant consideration of a broker.

Whether choosing an agent or broker, make it clear to them you have expectations from them. You expect either an agent or a broker to be accessible and return phone calls promptly, within 24 hours. Get recommendations and interview several before arriving at a decision.

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Home-Based Day Care Center and Insurance

Does a home based day care center need business insurance?

The economy is tough right now. Many two income families have found cut backs and job lay offs having a serious impact on their financial situation. As a result, many women (yes, this is a woman-dominated industry) have started a day care in their home.

They’ve done this for a variety of reasons but essentially it is to supplement earnings and reduce their expenses. A huge mistake made by many of these new entrepreneurs is assuming their homeowners insurance will cover any risks from the day care.

In states where day care businesses must be licensed, proof of insurance is generally required for the license. However, some states don’t require licensing, and others have a size requirement which allow many day care businesses to operate unlicensed.

Anyone operating a daycare business is exposing themselves to huge risk. An accident, no matter its unintentional, exposes you to great loss. If you are found guilty or negligent, you can be held personally responsible for all legal fees and judgments. Settling this type of judgment can put a huge burden on you, your business, and your family. In fact, it could cost the day care operator everything, including the family home and savings.

Many companies provide daycare (sometimes called child care) insurance. The biggest component is the Liability aspect of the coverage. This Liability coverage will protect your business even in the vent you are found negligent and responsible for damages or loss. Liability insurance will cover legal fees and defense costs as well as any settlements or awards up to the policy limit.

Many daycare policies offer an abuse and sexual molestation as optional coverage. The reality of today’s world makes this coverage option worth taking a hard look at.

The most important recommendation we can make if you operate a daycare in your home or elsewhere to review coverage and risk exposure with a licensed insurance professional. Don’t make the mistake of assuming your homeowner’s policy will cover you.

Don’t expose yourself, the family home, and peace of mind by ignoring the fact that you are running a business which needs its own insurance coverage.

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Required Benefits for Employees

What benefits am I required to provide my employees?

Up until March of 2010, employers weren’t required to offer health insurance or other benefits. Generally, as a rule, by 2014 employers with over 50 employees will have to offer health insurance to its employees. In most states, employers have to have workers compensation insurance. A few states require that employers provide disability insurance. Check with your state department of insurance and your licensed insurance professional regarding your state and business.

Employee benefits which include health insurance, life insurance, dental insurance, short and long term disability, retirement programs and paid vacation and sick time are offered voluntarily by the employer. Employee benefits differ from workers compensation as they are elective, both by the company, and those who may or may not participate. Employee benefits are offered as part of the employee compensation package.

Typically, the company may (or not) share in the cost of these insurance products and may sometimes offer them in a cafeteria style, or elective participation for some or all of the benefit insurance being offered. Some companies also offer additional benefits such as cancer insurance, vision insurance, and pre-paid legal services to name a few. Retirement plans such as a 401K, Simple IRA, or other types of retirement plans may be offered as well. Retirement plans if offered are required to meet strict guidelines set by both the IRS and ERISA (Employee Retirement Income Security Act of 1974).

Often, these plans can be offered through the agent providing the employee benefits package.

Employee benefits are designed to help your company compete for and attract good, talented employees. Even in this tough economy, a good employee benefits plan can be the deciding difference whether a top job candidate chooses your company or your competition. It’s up to you to work with your licensed insurance professional in developing an employee benefits package that makes fiscal and practical sense for both employer and employee.

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Insurance Terms In Your Business Insurance Policy

It’s important to understand the terms in your business insurance policy.

Many business owners make the mistake of assuming they know what their business insurance policies cover. The terminology used in a commercial insurance policy can be daunting and hard to understand. It’s important you as a business owner understand the terms of your business insurance policies.

Here are some business insurance terms and their definitions:

Actuary: A specialist in the mathematics of insurance who calculates rates, reserves, dividends and other statistics.

ACV or Actual cash value: Cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence. For example, an office desk that is 8 years old will not be replaced at today’s price because of depreciating for 8 years.

Additional insured: A person or entity added to a policy for coverage. The coverage may be temporary or more permanent in nature.

Adjuster: Is charged with determining the extent of loss and whether the loss is covered under the existing policy. There are three types of adjusters you may deal with. The first is an employee adjuster, the second and independent, and last is a public adjuster.

Aggregate Limit: Usually refers to liability insurance and indicates the amount of coverage that the insured has under the contract for a specific period of time, usually the contract period, no matter how many separate accidents might occur.

Binder: Written acknowledgement that insurance applied for is in force, whether or not the premium had been paid or the policy issued.

Coinsurance: This is a requirement to insure a minimum amount of an asset’s value. If the insured fails to purchase the required amount, they become a co-insurer of any loss.

Endorsement: An endorsement, sometimes called a rider, is a written document attached to the policy for a specific modification of the insurance policy. An endorsement can be added when the policy is written, or later during the term of the policy.

Exclusion: This is a provision in the insurance policy which eliminates coverage of certain losses.

Named Perils Insurance: An insurance policy which covers only defined perils or causes of loss. This is the opposite of an All-Risk policy, which covers all perils except those specifically excluded.

Occurrence: An event which triggers a claim to be filed for coverage under the policy. An occurrence is often equated to ‘accident’ but any number of incidents can be called an occurrence.

Replacement cost: This is the method for calculating the replacement value of a loss without a deduction for depreciation of the asset.

Obviously, these are just a few of the many terms in a commercial insurance policy. If you run across any term or something you don’t understand, ask your agent or broker. Don’t make an assumption only to find out too late a claim is not covered when you thought it was.

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Engineer Insurance

An engineer is involved in most new projects today. Engineers play a critical role in design and functionality of the projects they work on. Included in the design and building of the project is safety, materials, and financial projections and recommendations. Through completion of the project, many, many hands and contractors may be involved which may ultimately effect the outcome of the project.

As an engineer involved in such a project, you risk being drawn into any disputes that may arise if something or someone goes awry. Every engineering firm and the principles of the company need to understand the insurance risks assumed and how to protect against that risk.

Engineering firms are like any number of businesses and require the same types of insurances to cover the basic risks as well as some specialized coverage. When it comes to basic business insurance, an engineering firm needs general liability insurance, property insurance, commercial vehicle insurance, and worker’s compensation insurance in place.

General liability insurance will cover your firm in the event you are sued for claims of damages to property or bodily injury by a client, subcontractor, or a third party. General liability will cover legal expenses, settlements, and medical expense awarded.

Property insurance will cover both owned and leased office space, storage and other types of property owned by the firm. This insurance will cover office furnishing and equipment in the event of a fire or accident. Property coverage may also cover property damage caused by you or your employees at a client site as well. Commercial vehicle insurance or fleet insurance falls under this broad category as well.

Worker’s compensation is required by most states should you have employees. While requirements vary by state somewhat, this coverage will protect your employees should they be injured on the job by providing medical expenses and income replacement. In return, the employer is often protected against being sued by the employee for this injury.

Specialized coverage, starting with professional liability insurance is a must for the engineer. Professional liability insurance, or, errors and omissions insurance will protect you and your firm in the event a client files a claim of professional negligence or your firm being the cause of a financial loss. Up to policy limits, professional liability insurance will pay legal defenses and any awards.

This policy not only helps keep your firm financially solvent in the event of a large claim, but also allows you to continue working and generating revenue instead of spending countless days and months out of the field. Along with professional liability, an engineering firm may also wish to consider an excess liability insurance or umbrella insurance. This coverage would begin when your policy limits of the liability coverage already in place.

Sit down with a licensed insurance professional and review your engineering firm’s insurance coverage. Ask questions and don’t assume your current insurance will cover any claims made against your or your firm.

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