Before You Submit an Insurance Claim

Understanding your business insurance is critical prior to ever submitting a claim.

Your business insurance, also known as your commercial insurance is more expensive as a rule, and much more complicated than your personal insurance.  One mistake we often see business owners make time and time again is not reading or understanding the coverage they have in place.  It’s critical to know the ins and outs (often referred to as exclusions) of how your policies work and what is covered.

Many business owners assume that if the building they own or lease floods, it is covered.  The same is true of a tornado or wind storm.  The fact is it’s very possible none of these may be covered by the current property insurance you have in place.

Many policies will cover rebuilding, but what about debris removal.  In the event of a catastrophe, the debris removal could run into tens of thousands of dollars, even more.  Not understanding your insurance and how it works in the event of a catastrophe can lead to financial ruin for a business.

Another assumption business owners make is not about the insurance, but the down time involved in the event of a disaster.  Especially if other locations may have the similar damage and issues, rebuilding could take months or even a year or more.  Don’t make this costly assumption and overlook business interruption insurance.

Sit down with a contractor and determine how long a renovation or rebuild would take.  You must also consider the time if multiple businesses may also be in need of renovation or repair as a result of an area wide disaster.

Still another assumption by business owners is their equipment will operate without ever breaking down.  Some also mistakenly think this may be covered in their business property insurance.  Mechanical breakdown insurance, sometimes known as boiler and machinery insurance will cover these costly repairs or replacements.  In the event your business uses specialized equipment or often is held to deadlines, this insurance must be considered.

There are many more assumptions made by business owners every day that put their businesses at high levels of risk.  Assuming your general liability coverage may be enough is one.  Often professional liability insurance is needed to supplement that coverage, or perhaps even a commercial umbrella policy which would kick in after other limits are met.  Never assume it won’t happen to you, it can and it will.  No one ever believes it when an event takes place, but they always breathe easier knowing the proper coverage is there when it does.

Take the time to sit down with your licensed insurance professional and review your personal list of assumptions.  Never assume, always know what is in place for your business insurance.

Property Insurance and Natural Disasters

My small business property insurance covers a natural disaster, right?

In today’s small business insurance market, it is possible to get some disaster coverage in your small business property insurance coverage.  However, as a business owner, it is up to you to understand what is covered and what’s not.  In many cases, certain disasters and types of storm damage are not covered.

Your property insurance covers property from the every day risks for things like theft or damage from an accident.  Disaster insurance will cover the immediate loss and impact to your business and property from a specific occurrence like a flood.

As noted above, it is now possible to add coverage to your existing policy for specific disasters like flood, earthquakes, and acts of terrorism.  It is important to review your present coverage and look for any specific exclusion written into your existing business property policy.

Depending on where your business is located and what types of natural disasters may occur will generally help you understand any exclusion in your property coverage and gaps you may need to fill with a separate policy.

Typically, disaster coverage deductibles are a percentage of the loss unlike your business property coverage which will have a set deductible.  Depending on the amount of the loss, that can be a significant number.  Work with your licensed insurance professional to determine what risk exposure your business has, and how to best manage the risk with a combination of business insurance and separate disaster coverage.

Don’t be afraid to ask questions and get a clear understanding of how your coverage will work in the event it is needed.  If you have business interruption insurance or mechanical breakdown, review that coverage and any exclusion as well.

Talking with your licensed insurance professional is important before determining what coverage is necessary and how it works in conjunction with your existing property insurance.  What you are trying to accomplish is a combination of coverage and policies which reduces your risk and doesn’t duplicate coverage.  You want your premium dollars working for you for the maximum coverage.

Restaurant Insurance

Is there business insurance just for restaurants?

Any restaurant operation comes with plenty of headaches.  Don’t let your commercial restaurant insurance be one of them.  Putting a good commercial restaurant insurance policy in place will reduce stress and worry down the road.

Commercial restaurant insurance covers restaurants, bars, doughnut and coffee shops, pubs, bistros, delicatessens, and more.  A good commercial restaurant insurance policy should cover employees, buildings and equipment, loss of income, liquor liability and general liability.

The restaurant insurance policy needs to provide coverage for a variety of risks.  The policy should cover employment practices liability, valet liability and liquor liability.  There are a number of coverage options with varying limits and deductibles.  Talk to your licensed insurance professional to review what is available.  It is important to insure if alcohol is served that liquor liability is included.  This insurance will protect the business if a customer gets intoxicated and causes damage or injury to themselves or others.  Keep your agent informed of any training conducted by your staff in relation to liquor service or food service as they may warrant a potential discount on certain coverage.  Review with your agent if product liability insurance should also be considered.  Your state department of insurance as well as your restaurant association can be a great resource.

Along with these unique coverage options, your restaurant insurance should cover workers compensation, property, and general liability insurance.  Other specialty coverage that is available includes plate glass and signage.  If you have fine art displayed, there is coverage available as well as parking lot and valet insurance.  The commercial restaurant insurance policy should also cover food-borne illness.  Business income insurance is also an option to be considered by a restaurant owner.

The restaurant business is a complex business.  Make sure you discuss the distinct aspects of your business with your licensed insurance professional so they can help you determine the appropriate coverage.

The Facts: Liability Insurance

I’m confused about my liability insurance, doesn’t it cover everything?

As a rule of thumb, a general liability policy will go a long way in reducing the risk exposure of your business. General liability insurance is needed by any prudent business owner working with customers and the general public.  This insurance is put in place to protect the company in the event someone claims they were injured or their property damaged due to the fault of your business.  General liability insurance will generally cover bodily injury, property damage, personal injury and even advertising injury. This usually includes claims of copyright infringement, slander, and defamation of character.  Often it will also cover claims of invasion of privacy.

Because of this coverage, it is easy to see why most business owners believe a general liability policy is the only insurance needed for liability protection.  However, let’s look at what is not covered in most general liability policies.  Claims of professional negligence and failure to perform the duties standard to your profession are not covered by general liability insurance.  In other words, if a client or customer claims the work you performed caused them pain and suffering, this would not be covered by your general liability insurance policy.

Mistakes happen; sometimes expectations are muddled, no matter what, you as the business owner may find yourself wrapped up in a serious lawsuit brought by a client unhappy with your business.

Lawsuits of this type have crippled or actually closed many businesses.  For many professional services such as accountants, lawyers, realtors, and medical practices, the liability exposure to errors and omissions can be far greater than general liability risks.  For many businesses, professional liability insurance is an important piece of the total business insurance package.

Professional liability insurance will cover legal costs and any settlement or award up to the limit of the policy. This allows the business to focus on business and not just on litigation which may be taking place.

Speak with your licensed insurance professional and determine if professional liability insurance needs to be part of business insurance package.  Take the time to understand the different liability risks associated with your business and general business risks and design the right coverage to reduce those risks.  Your state department of insurance can also be a valuable resource in understanding professional liability insurance.

Insurance Planning

People I know keep talking about insurance planning, do I need to do it?

Insurance planning is a critical but often overlooked part of strategic business planning and especially, new business planning.  There are a number of steps to take to insure you get the most coverage for your premium dollar.

Here are a key areas to look at and sources of information to help you in your insurance planning:

Contact your state department of insurance.  They have information available on types of insurances, requirements specific to certain businesses, and numerous other resources.

Contact any industry associations.  They too may be able to provide resources and may even have group purchasing plans available.  They also may have information on types of insurance coverage and recommended limits.

Try to assess the risks your particular small business may be exposed to in the daily operation of the business.  Risk elements to be considered are location.  Try and find out the crime rates and vandalism rates.  The type of building structure your business is located in.  What is the distance for fire and ambulance to travel? Police?  What is the layout of the business structure?  Stairs, elevators, equipment lay out?  As you can begin to see, the various elements of risk determine what a premium will be and coverage limits the carrier is willing to give your business.

If your business has or will have employees, what risks may they face in the operation of the business?  Here again, the state department of insurance can provide a great deal of information.

Choose a licensed insurance professional you are comfortable with and is willing to work with you.  Whether you pick and agent or broker, take the time to interview them.  Make sure they are willing to meet with you periodically either in person or over the phone. Industry experience is nice, but look for a solid knowledge of business principles.  Check references, ask questions, find someone you are comfortable making a trusted advisor to your business.

Utilizing these steps will help you as a business owner understand the risks involved in owning and operating a business.  Risk management is often not talked about until a business reaches a certain size.  Many businesses don’t reach that level because of not understanding what risk management is and how it could affect the growth and financial security of your business.

Once you have chosen your licensed professional, engage them to help you develop a risk management strategy and review that strategy at least annually.

Insurance for Garage and Auto Repair

Business insurance basics for a garage and repair shop.

Like other industries, car dealers have run into trouble in the recent economic times. Many mechanics have opted to open their own repair shops as a result. Like any business, auto repair businesses and the mechanics that own them need to get the proper insurance in place. Whether a home garage, or a leased or owned location, if you’re working on someone’s car, you must protect yourself with insurance coverage.

Every type of business has several basic needs, and then some specialty insurance coverage to consider for the mechanic. Let’s review these insurance coverage options.

The first piece of insurance a business needs to consider is property insurance, including auto repair shops. Property insurance will cover the building structure and furnishings as well as some equipment. Additional options that should be discussed include employee’s tools, debris removal and pollutant clean up, computer equipment, and equipment breakdown or boiler and machinery insurance.

General liability is the second piece of putting together an auto repair business insurance package. No matter how diligent you are, everyday you are at risk of being sued. Court costs and legal fees, damage awards, and time spent can financially ruin a business.

A general liability insurance policy will cover costs and protect the assets of the business. Garage keepers insurance also needs to be discussed where you are keeping customers vehicles for a period of time. Product liability insurance is another option that needs serious consideration. If you are towing vehicles, tow truck insurance will cover liability and damage claims in transit to the repair shop as well as bodily injury and property damage.

If the auto repair business has employees, then as a rule, workers compensation is required. While every state varies in specific standards, we recommend having workers compensation in place from the first employee hire. In addition, it may make sense to explore crime insurance and employment practices insurance as well.

Never assume your auto repair business is adequately insured. Talk to a licensed insurance professional who understands the needs of your business. Together you can design a plan to meet both risk and the budget.

Reducing Workers Comp Premiums

How can I reduce my worker’s compensation premiums?

Safety has become a key focus in business and industry and on average, worker’s compensation claims have been on the decline.  However, some industries still continue to have more claims and costs affecting their worker’s compensation premiums.

It may be time to begin a risk management in your business if you are paying worker’s compensation premiums.  In the beginning, utilize the risk management staff at your carrier, the company that writes the workers compensation.  As you grow and get larger, it may make sense to assign this to staff and eventually, even hire someone to perform this function.  Implement safety procedures which make you a better risk for the carrier.

Here are some additional ways to see if your carrier will work with you to reduce your premium:

Start a program to allow workers to get back into the work place faster. Establish  a step program which would allow for limited capacity which would gradually increase. Remember that rising rates are a result of benefits paid.  The earlier an employee can get back to work, the better for everyone.

Check on how your payroll is reported.  Overtime and bonuses may not have to be factored in to payroll costs which help determine your premium.

Has your company had claims, is it a particular department or group? Investigate and address these as part of your risk management program and make sure to advise your carrier.

Check your job classification codes, sometimes they may be classified wrong and

raise rates.

Keep your agent and carrier informed of any changes to the workplace.

It’s imperative to review your worker’s compensation annually.  Don’t be afraid to challenge increases and work to get your carrier on board.  By working with your agent and carrier, they will get to know you and your business which will result an understanding of how to keep costs in line.

How and When to File a Claim

How and when should I file a claim against my small business insurance?

While every day a business is exposed to serious risk such as fire, crime, accidents, injury and property damage, it’s not every day you need to file a claim.  In most instances, you may go years without every having to file one.  If all of a sudden you do, are you and your employees prepared and know what to do?

Before you get surprised, put together a plan.  Work with your licensed insurance professional to develop a plan in the event an incident takes place and you need to file a claim.  Planning ahead should be part of your internal risk management program.  Not only you, but your employees need to understand what to do in case of different events which may occur.  Develop written report forms to be available in the event an incident takes place.  Set up a quarterly ‘drill’ using different scenarios and work with your employees in the proper steps to take.

Prior to ever needing to file a claim, we suggest video taping your business location, equipment, and any storage areas and vehicles.  You should update this annually and keep several copies as well as giving one to your insurance agent.  At some point, you may even consider video monitors with 24-7 capability.  In the event a claim is going to be made, use a digital camera to record the claim.  Have these cameras available and charged for your staff.

In the event you do need to file a claim, do it in a very timely fashion.  Again, use your licensed insurance professional to detail specifics depending on the type of claim you will need to file.

Make sure your agent’s and carrier’s contact information is posted and available.  Whether an agent or broker, they will walk you through the claim process.  in some cases regarding injury or accident, you may want to inform your business’s legal counsel as well.

You purchase business insurance to protect you and your business.  Know what steps to take in the event a situation arise where you need to utilize that protection.

Has Your Insurance Changed with Your Business?

This economy has been very tough the past few years. Business owners are facing lower revenues, higher costs, and cutting back of employees and services. Still, some businesses have thrived in spite of these dire economic times.

No matter how your business is evolving, it’s important to make sure your business insurance is evolving with it. If it’s not, that can be a really bad thing. Your business can be paying premiums on coverage it no longer needs, or worse, your business may not have coverage in place for other risks now faced by the business.

We’ve stressed often, you should sit down with your licensed insurance professional at least annually. For some companies, it may even be quarterly. Sit down and review the changes happening in your business. Don’t let pride stand in the way. Honesty is always the best policy when dealing with your business insurance partner.

During this review, make sure to update employees hired or eliminated. Review any changes to hours or operation or services provided. Make sure to inform your agent of any plans on relocation or adding new space. It’s imperative to review new equipment purchases or equipment sales. Any changes to your business model, including new types of clients or areas are important pieces of information to share with your licensed insurance professional.

If your business is thriving, it may be time to look at increasing your business insurance. Make sure to ask about whether your liability limits are high enough. Should you be considering a commercial umbrella policy? Is it time for Professional liability insurance for your business and staff?

The ultimate responsibility of protection lies with the business owner. You alone know the specifics of your business. Use your licensed agent as a resource and guide to protect your business to fullest.

Do Different Types of Businesses Use the Same Insurance?

A retail shop, an auto repair shop, and engineering firm all need business insurance, but each package should be developed individually to best protect each business. While some coverage types will be similar, like property insurance, each policy will be written differently depending on the specific situation of the business.

To start, each business will need a small business liability insurance policy. In the past, we’ve discussed in detail small business liability. A quick summary is that a liability policy will cover injuries caused to a third party. Depending on the business, the size, the assets, and corporate structure will determine the type(s) of liability policy for that business.

For example, a doctor will carry malpractice insurance like an engineer or architect, but the limits may (or may not) be higher.  The architect and engineer may carry errors and omissions insurance where the doctor’s office may not.  The retail shop may carry product liability insurance and the auto repair shop may have towing liability. Work with your licensed agent to determine the specific liability your business needs.

Each business should carry a Property and Casualty policy to insure for losses against real or personal property. It might make sense to look at a business owner’s policy depending on the size and assets of the business. A business owner’s policy combines coverage for less than purchasing two separate policies.

In every situation, a business owner, whether a medical professional, an accountant, an architect, or a retail shop, should examine everything that is of value and put together your insurance quotes based on that information. In addition to a licensed insurance professional, don’t be afraid to seek guidance and input from your banker, your accountant, your trade association and others who have an understanding of your industry segment. You also must consider the revenue stream and how an interruption due to a loss would impact your business. Business interruption insurance is available to cover loss revenue.