Information Determines Direction

The right commercial insurance coverage is determined by the information.

Trying to determine coverage without the help of a licensed insurance professional is like to defending yourself in superior court. It’s important to talk with your commercial insurance broker often and meet at least annually. Here’s how to simplify and maximize your time and efforts in determining the proper coverage needed for your business. Save time by being prepared. This list of information and documents you want to have available when you meet with your insurance broker:

Address(s) information

  1. Copies of all leases and landlord information
  2. Construction and building types
  3. Square footage / floors
  4. Additional locations where employees may be contracted

Vehicles and types of equipment

  1. Make, models and color
  2. Mileage and title(s)
  3. Vin numbers
  4. Titles and registrations to any trailers and road equipment.
  5. Approved drivers list with drivers license information

The Owners, Officer’s and employee information

  1. Names
  2. Spouses and children
  3. Addresses
  4. Date of birth
  5. Social security numbers

Financial information

  1. Bank records
  2. Cash flow/Profit and Loss statements
  3. Loan documents
  4. Present insurance declaration pages
  5. Attorney and CPA contact information

Having this information ready and available is not only going to save time when meeting your insurance professional, it serves as a great review for your business.

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Retail Business: What Business Insurance Is Right?

What business insurance is right for a retail business?

Any business; retail, specialty, service, restaurant, financial planner, mechanic, doctor, lawyer, or any small business needs to insure the business against risk. The question we often get asked, how much is enough? The right question should be, “What coverage(s) do we need?”

First, if nothing else, you need to have liability coverage in place for your financial security. Many standard liability policies for small business are 1 Million dollars for any one loss and two million dollars in any one year. For most of us, that sounds like a lot of money, but is it really when looking at protecting your business. Consider the ramifications of you or an employee of your company seriously injuring a third party in an accident where fault is determined to be you or your employees’. The case goes to litigation and jury determines the losses to the third party exceed 4 million dollars based on medical costs, lost income, and pain and suffering. That 1 million dollar limit doesn’t look so big anymore. It is often important to ask your commercial insurance broker what is realistic for your industry and area. A commercial umbrella policy is often a cost effective way to increase your liability coverage without breaking the bank.

The second area of coverage needed is property insurance. Property coverage is another area where a discussion with your licensed insurance professional is necessary. It is always recommended to carry the highest coverage affordable. Review the coverage with your insurance agent while considering starting from scratch in the event of a catastrophic loss. It is always wise to have a separate discussion regarding the commercial vehicle insurance your business is carrying.

Finally, does your business need worker’s compensation insurance? Hiring one employee should at least have you as an owner having that discussion. As noted before, take the time to really determine with your commercial insurance broker the proper coverage(s) needed to reduce your risk exposure.

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Business Insurance Deductibles

What should I have as a business insurance deductible?

Generally, the higher the deductible, the lower the premium is on the policy and vice versa. In deciding on a deductible, it pays to weigh the risk and the impact of a loss as well as the premium in your cash flow analysis. While it may make sense for your monthly cash flow to pick the highest deductible and lowest premium, it may be exposing your business to a serious risk.

If your business would be crippled coming up with the money to cover a high deductible in the event of a loss, then it’s probably too high a deductible. This is where the savvy small business owner works with their licensed insurance professional to get the best value and coverage for their business.

Let’s look more closely at policies and deductibles. Your insurance policy will pay a covered loss, minus any deductible written into the policy that it will not pay. A deductible is a fixed amount or a percentage of an insurance claim which is to be paid by the insured.

Deductible amounts can be voluntary, meaning, an insured can choose a higher deductible to help reduce premiums, but there is generally a standard deductible. Insurance companies impose these standard deductions to avoid numerous small claims. An example would be that your damage is estimated at $7500.00 and you have a deductible of $800.00 on this policy.

The check for claim you receive from your insurance company would subtract the deductible, in this case, $800.00 and you would receive a check for $6700.00 to settle the claim.

While deciding on the deductible, another aspect to review is how you as the insured will recoup your loss. A ‘cash value’ basis is a replacement of cost less any depreciation. A replacement cost will repair or replace the insured property at its present cost without depreciation.

Naturally, replacement cost will have a higher premium than cash value. Make sure you understand how your claim will be paid. How have costs and materials increased?

Your commercial insurance broker can work through various scenarios with you to make sure you understand how a loss would be compensated.

If I Hire Out-Of-State Employees

If I hire out of state employees, are they covered by my business insurance?

This issue is extremely complicated and cannot be fully answered with a definitive yes or no in this article. It’s important to have a discussion with your commercial insurance broker prior to hiring an out of state employee. We discuss a variety of topics, but talk to your broker.
Since you have employees, workers compensation insurance is a good place to start.

If your business requires out of state travel and work, it’s important to talk with your licensed agent and carrier. Some policies and carriers have reciprocal coverage. However, some states may require you to secure worker’s compensation coverage in their state. In the event your employee resides and works in that state on a regular basis, you probably need to purchase coverage for that state. Anytime you are sending an employee(s) to work in a state for the first time, we suggest contacting the regulatory agency in that state as well as your agent or broker. If that state doesn’t recognize your coverage, you may be held responsible for all claim costs and penalties.

At the time of this writing, four states do not recognize private coverage for worker’s compensation. Those states are; North Dakota, Ohio, Washington and Wyoming. In the event your sending employees to any of those states, make sure to contact the regulatory agency far in advance to insure coverage is in place.

You may have an employee working in a multiple state area. Determining the correct state of jurisdiction may not be clear or easy. Contact your agent, your carrier, and all state agencies to determine how to insure coverage. Remember, the ultimate responsibility lays with you the employer to be compliant in the worker’s compensation coverage of its employees.

Once you determine the worker’s compensation coverage, determine the liability and property coverage in your package. Make sure there are no exclusions and discuss in detail with your licensed insurance professional the scope of work outside your state. It’s possible you will need different vehicle insurance and coverage if you are providing a vehicle. Are you warehousing product or equipment at the employee’s home or commercial location? Again, your commercial insurance broker is probably licensed or affiliated with carriers in these areas. Make sure you have discussion and understand the coverage as you grow with out of state employees.

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My Business Insurance Keeps Going Up and Up

Like other business owners, you are feeling a squeeze and looking to reduce costs and we are often asked, “How can my businesses save some money without giving up anything?” Whether you own a retail shop, an auto repair shop, or you’re a chiropractor or a dentist, you have insurance on your business and property and like other business owners; you are feeling a squeeze and looking to reduce costs. Unfortunately, while not an easy answer, there are steps a business owner can take to try and reduce their commercial insurance costs. Let’s take at some of these ways to reduce costs.

Typically, general liability rates have been ticking up. That doesn’t stop a smart owner from partnering with a good licensed agent to find ways to save some money. The first step is to examine if you may be able to eliminate double coverage. While we generally advise our clients to get the maximum coverage available, make sure your general liability coverage doesn’t offer product liability coverage while you are carrying a separate policy for product liability coverage.

A business owner’s policy may offer some coverage separate policies don’t like business interruption insurance. Don’t pay for the same coverage twice if possible. A business owner’s policy can often save premium expense by combining both general liability insurance and commercial property insurance. As your business grows, ask your commercial insurance broker to shop carriers.

Ask your agent for safe any safe driving discounts and monitor those employees who are driving company vehicles. Sometimes, one driver with a poor history can cause the rate to go up. Are there multi-policy or multi-product discounts available? Can you save on rates available to associations or organizations which your company is a member? Is it possible to increase deductibles to reduce the premium? A good commercial agent can often point you to different savings opportunities.

If you have employees, you are probably carrying workers compensation insurance. Reducing workers compensation premiums is a separate article in itself, but ask your licensed insurance professional and your carrier how to reduce costs. Work with your commercial broker and determine whether you can raise deductible limits which can lower insurance costs. Set expectations of service with your broker which include an annual review, and not just an annual renewal.

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Keep Your Broker Updated

Business is booming and life is good right now. You’re hiring more employees, updating equipment and thinking about expansion. Everyone is excited from your family, your employees and your suppliers. Have you included your commercial insurance broker with all the updates?

The business insurance package you put into place is not static any more than the any other changes in your business. As your business grows, your business insurance needs change. There is nothing worse than growing your business, seeing great success, and having one incident cause financial crisis by being under insured, or, worse yet, have no coverage for that event. Let’s look at how to avoid that happening in your business.

When a business first opens, a somewhat standard business insurance package is put into place. Depending on the business, some type of general liability insurance and business property insurance is put into place. Many times, the coverage is adequate, and sometimes lean to help keep premiums down. Now, back to the business noted above, the first key is new employees. As soon as an employee is hired, with rare exception, you are required to have workers compensation insurance. Besides the employee benefit, with workers compensation coverage, the employee cannot sue the business for being injured on the job in most cases. Imagine what could happen if it wasn’t in place!

In the example above, business is growing and expanding. It may be time to increase the coverage limits, perhaps even write new insurance. As your business grows, it may be time to look at business interruption insurance which may also be known as loss of income. It’s quite possible you need mechanical breakdown insurance, or now should add some additional disaster insurance such as flood insurance if your area warrants it. Talk with your commercial insurance broker to determine if product liability insurance may be needed. Do you need to add professional liability insurance? Cyber liability insurance? Product liability insurance?

Growing a business can lead to big rewards. Don’t risk it by not evaluating your risk exposure along the way. Make time to speak with your insurance agent at length at least once a year, perhaps more if needed to grow your business while protecting it too.

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Insurance: Do I Need It?

As a new business owner, do I really need business insurance?

This question comes up often for us. The question is really this, “Why do I really need business insurance, especially as a start up company?” I mean really, isn’t that the real statement behind our title? Don’t you really want to ask that same question yourself? What follows is a list of real scenarios documented with carriers across the country. Reading through, we hope you have that “A-HA” moment regarding your business. Let’s take a look at these real incidents which impacted businesses across the country;

  • One of your employees is interviewed by a publication without your knowledge. In the interview, your employee refers to a competitor as, “A sleaze ball who gouges his customers every chance he gets.” That competitor immediately sues you and your business.
  • You walk into your office the day after your grand opening and discover the back door wide open and all your computers and phones and furnishings are gone.
  • Your toaster oven you set up in your community area overheats and causes your newly leased office space and entire building to burn down.
  • You meet prospective clients for lunch, one has to leave and you volunteerto give the other a ride home. Driving back to their office, you run a stop sign and get hit by another vehicle in which everyone involved gets seriously injured.
  • A customer walks into your store, slips on a just mopped floor and breaks their ankle.
  • A month into your retail shop being opened, vendors start calling demanding payment on bad checks. You discover your bookkeeper made deposits to her account and has now disappeared.

These and hundreds of other real life stories affect both new and existing businesses every single day. One small incident, without coverage in place can financially ruin a company. Insurance allows you to control the results of the unexpected. Don’t let an unexpected event result in financial ruin.

Product Liability and Your Business

Product liability insurance, what is it and do need it for my business?

Product liability insurance will protect a business from claims related to the manufacture or sale of a product, food, or medicine or other type of good to the general public. It covers both the manufacturer’s and sellers liability for losses or injuries to the user, a bystander, or buyer caused by a defective product, malfunctioning product, or defect in the design or even failure to warn.

Understanding how the potential liability of a product could affect the business as a result of a claim and the types of potential claims faced by a business. First off, there could be manufacturing or production flaws in the product. No matter how diligent or rigid a process, mistakes happen. This could even be a component in making the product which originally was presumed safe but then has complications and issues in the future.

Asbestos is one that quickly comes to mind. Second, there could be a defective design. Children’s car seats are an example of this type of defect. The third type of defect could be a labeling or usage directions flaw. The McDonald’s hot coffee lawsuit is a recent example of this type. All too often distributors and retailers fail to secure this coverage. The logic is that, since they did not “manufacture” anything, the coverage is not necessary.

However, manufacturers are not the only ones subject to product liability exposure, retailers and wholesalers are often brought into a lawsuit for alleged negligence by the consumer. Most states follow the “stream of commerce” model of liability. This means that if your company participated in placing the product into the “stream of commerce,” it can be held liable for damages to the end user.

One common outcome of any of these types of liability cases have resulted in extremely large awards and settlements. It is important to understand how a lawsuit of this magnitude could affect your business and you as the owner. In addition, all too often, the seller of these products fails to insure against liability, thinking the manufacture will shoulder the responsibility. If the product in question is imported from China or another foreign company, the seller in the USA becomes an easier party to target and potentially collect from then a foreign entity.

It’s important to study other cases and review who is named in these types of suits. An attorney representing an injured party will sue any entity involved from manufacture through end use.

Sit down with your licensed insurance professional and determine if product liability insurance is needed for your business. Ask tough and relevant questions to your commercial broker regarding the risk your business faces as it related to product liability. If your agent is recommending this coverage, take that recommendation seriously. Check with your state department of insurance as well for any recommendations and historical data.

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Business Insurance Should Be Simple

Any new entrepreneur considering starting a business needs to look at business insurance. Commercial business insurance covers a broad spectrum of protection that includes your property, you and your employees, and your liability. It’s normal to have questions regarding the type of coverage your business requires. The ultimate goal is to make sure you are never under-insured or exposed in the event of an incident or disaster while not having double coverage or unnecessary insurance.

Business property insurance will cover losses to your building, and the property inside of it. Computers and phone systems, furniture, finished goods, as well as carpeting, lighting fixtures and supplies will be covered. There are two options, either actual cash value, which is purchase price less depreciation, or the replacement cost of the item. Discuss these differences in more detail with your agent to determine what is best in your situation.

Almost all businesses are required to have workers compensation insurance. This covers the employee from lost wages while protecting the business against being sued by the employee. More specific information is available from the insurance department of your state government and your commercial insurance agent.

General business liability insurance must also be in place to protect the business and the owner against lawsuits. A general liability policy will cover most situations that may arise. There are specific types of liability coverage for risks not covered within the general liability policy. An example would be realtor liability insurance which is a separate coverage generally taken out by real estate brokers and agents. Ask your commercial insurance agent what else you should be looking at for specialized coverage.

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Company Growth and Business Insurance

Don’t let the growth of your company allow for unnecessary and dangerous risk.

Business owners are busy people. As their business is growing, it seems like there are never enough hours in day. One easy mistake business owners do is forgetting to have their insurance coverage grow with the rest of their business.

A new business can often opt for a B.O.P (Business Owners Policy) which easily protects against the risk exposure of an initial start up company. It’s a common and very practical solution for many types of start up businesses. For a period of time, even an existing business can find a B.O.P. a great solution. As time passed, it may be that you even raised coverage a bit as things went along. A BOP usually covers liability and property and may have other coverage added on to it. For most start ups and small business, it’s a great way to get coverage value from a lower premium than separate policies.

However, as your business grows, it is possible to out grow the original coverage you put into place. For example, are your liability limits keeping place with your growth in revenue and business assets. How about your property limits? Are you or your employees driving more? Is the company paying for vehicles or leases? Are you providing vehicles to employees? One area that is often missed is the technology growth and expenditures that can easily be missed or under insured. Suppose your business started with you a phone and a computer.

Now, you have two offices, two phone systems, and a number of computers, faxes, office furnishings and much more. Have you checked to make sure your limits will meet the requirements should you need to replace some or all of this? Has your income grown as a result? Is the liability coverage enough? Have you gotten a recent estimate from a contractor to make sure you have enough insurance to replace your current work space? Did you skimp on coverage or gamble in the early years you wouldn’t need certain coverage like business interruption insurance? Have you looked at your worker’s compensation insurance? Don’t let the assets of your business out grow the coverage in place. It only takes one major incident to financially cripple an under-insured business.

Treat your commercial insurance broker as advisor. Work along with them and keep them apprised of changes as they happen. Make sure your meeting with them at least annually to review and upgrade your policies as needed.

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