Part-Time Business Insurance

Statistics show that approximately 10% of households operate a home-based business; businesses such as desktop publishing, car repair, consulting, or tailoring.

And so we hear this question from time to time: Does my part time business need insurance?

It is not an uncommon assumption that such businesses are covered by the homeowners insurance. This is actually not the case. And the assumption often puts part-time business owners at risk for serious financial damage in cases which involve accidents, clients who believe they have been damaged due to one service or another of the business, errors and omissions, or damage to a computer, website, or loss due to bad weather.

Indeed most homeowners insurance policies will not cover business-related losses. Frequently, a business rider can be added to the homeowners policy, and in some cases, simple businesses will need nothing more than that.

But if you are doing repair work or any sort of manufacturing, you are likely to need more commercial coverage than a rider. A general liability insurance policy, and/or business property insurance.

Additionally, if you have even one employee, you will need workers comp insurance.

And going without is perilous to your pocketbook as well as your home, property, or more!

Protect your home, your business, and your security by talking to your licensed insurance professional in order to determine just what coverages you need.

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Event Insurance

When we think about insurance for an event, we usually think of concert promoters, circuses, carnival owners, or NASCAR. But really, almost any business holds an event from time to time which would necessitate event insurance.

We clearly remember a time many years ago when we banded together with several other small and micro businesses in town to organize a “river cleanup.” The river in town was noticeably full of debris including soda cans, tires, and even a set of china dishes! Almost everyone in town was excited about the prospect of getting together for such a thing.

We had the date picked, and the food providers ready to feed the volunteers when we suddenly realized that the prospect of injury in such an endeavor was likely.

It was fortunate that we had that epiphany because, sure enough, we had a man cut
himself on a bottle on the bed of the river within the first hour, and his emergency room visit was covered.

Other things that event insurance may cover include liability for liquor use, weather or other risks such as parking mishaps, and monetary loss incurred due to cancellation of an event where tickets had been sold.

As always, you should contact your licensed insurance professional to help guide you through the purchase.

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Deductibles Explained

When paying a claim, your insurance policy will pay the covered loss minus your deductible which you chose and has been written into the policy. You are responsible for the deductible.

An insurance deductible is the fixed amount, or sometimes a percentage of an insurance claim which is what the insured person has to pay before the insurance kicks in.

So In other words, if you have a policy with a $1,000 deductible, and you file a claim for $30,000, you have to pay $1,000 before the insurance company issues a check for the other $29,000.

Deductibles were created, in large part, in order to keep people from filing large numbers of small claims, which cause more work on the insurance and claims end than revenue generated, while covering large claims, which is why most people have insurance to begin with.

You are generally going to be able to choose what deductible amount you are comfortable with above a standard deductible which the insurance company has set. This gives you some control over the cost of your policy. Generally speaking, the higher the deductible, the lower the premium is on the policy and vice versa.

In order to find which deductible is going to work for you, you will have to weigh the risk and projected impact of a loss against the cost of the premium in your cash flow analysis.

It is important to note that it might sound sensible, after analyzing your monthly cash flow, to choose the highest deductible in order to get the lowest premium. That may be dangerous.

If in order to scrape the amount of the deductible in the event of a loss, you would cripple your business, then you should probably choose a lower deductible and free up enough money monthly in order to pay the higher premium.

Another important piece of information which should go into the decision is how you, the insured, will recoup your loss. If your insurance policy is written to give you “replacement cost,” that will cover replacement or repair of the insured property at what it worth at the time of the repair or replacement. If it is a “cash value” coverage, it will replace covered property at what that property cost you, less depreciation.

Replacement cost will, of course, have a higher premium than cash value will have.

As always, we advise people to work with their licensed insurance professional in order to make the wisest decision and get the best coverage for their business without sacrificing value.

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The Basics of Errors & Omissions

Errors & omissions insurance, a type of business liability insurance, is frequently called E&O , professional liability insurance, or malpractice insurance.

E&O insurance is not generally included in general business liability insurance, so you will want to seek it out if your business is one that might need it.

Lawyers, architects, web developers, real estate agents — anyone whose work might cause financial harm to another business or person via a mistake or something left out — would want to look into E&O.

Legal costs associated with many lawsuits can cripple or even kill a company, and E&O insurance is meant to protect against that and large awards by the court.

Anyone can bring a lawsuit at any time against anyone in America. There is no “pretrial” procedure where the plaintiff has to prove that there is sufficient evidence to continue with a suit. And proving that you were not negligent can still cost immense amounts of money. Errors & omissions insurance will also cover you in such a situation.

Errors & omissions insurance covers court costs, judgements, settlements, and other legal expenses which are incurred by you and your business for any faulty advice or professional services your company may provide.

As we are fond of reminding you, each business — each situation — is different, and we urge you to discuss this with your licensed insurance professional to see how best to protect yourself. Ask questions and make sure you know not only what is covered, but any exclusions in the policy.

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Insuring Commercial Rental Vehicles

When you or one of your employees travel on business, it is very common for the traveler to rent a vehicle for the time spent in any one place. You may not know if you should pay extra at the car rental agency for the physical damage or loss damage waiver.

In order to answer this, we need to consider exactly who will be renting the vehicle so that we may determine if there is coverage under the commercial vehicle insurance policy.

In other words, will the rental be in the name of the traveling employee or the owner’s business name?  This is what will determine physical damage transference in the event of an accident.

There is, however, more information one needs in order to assess the need to purchase the rental agency’s insurance policy.  If an accident occurs, then obviously, the rental agency suffers loss of revenue from that vehicle, and we need to consider whether the your commercial policy will pay that loss as well as paying for damages.

We also need to look at the rental car company’s ability to assess “diminished value” loss to the client.

Many years ago, rental companies kept a vehicle in rental service.  But these days, most put “program vehicles” up for sale before they reach a specified mileage.  Once the vehicle has had repairs for an accident, the vehicle suffers a “diminished” value.

Please talk with your licensed insurance professional if you rent vehicles for your business.

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More Insurances You Want to Consider

We have gone over some of the important coverages a small businessperson might overlook, and which could make the difference as to whether a business survives a loss or can continue to run.

Let’s look at a few more you might want to discuss with your licensed insurance professional so the two of you can weigh the risks and benefits of them.

Glass Insurance
Glass insurance is a policy, usually in the form of a rider, that will pay for plate glass storefronts and broken store windows which may be excluded in other policies.

Ordinance or Law Insurance
This type of insurance, covers losses when a replacement of your building may not satisfy town or city regulations which may have been enacted after your building was established or if your property is grandfathered. This comes into play when, for example, your building is 100 years old and was built before today’s environmental standards were even thought of.

Crime Insurance
Crime insurance is the type of insurance which is meant to cover losses which are incurred by robbery, burglary, and other types of theft of money, property and/or securities whether that theft is committed by outsiders or by your employees.

Fidelity Bonds
A fidelity bond is a type of insurance protection which indemnifies against theft or damage to property by another person during work hours. Fidelity bonds are frequently address the losses of your employees and their losses.

Again, you will want to ask your licensed insurance professional to tell you about any other coverages of which you might want to avail yourself.

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Business Owner’s Insurance: Keeping It Simple

I am a firm believer in living life by the principle of K.I.S.S.

For the uninitiated, the acronym means “Keep It Simple, Silly.” Well, actually, the second “S” can be any of a lot of things, but we’re keeping this polite.

The idea is, the simpler you make solutions, the less complications you will be met with if those solutions go south.

That being the case, let’s look at business insurance in its simplest forms.

General Liability Insurance:
General liability insurance protects you against damages, injuries, or other risks of liabilities which may be imposed by lawsuits which are sustained at your place of business by a third party.

Workers Compensation Insurance:
Workers Comp insurance is the form of insurance which provides medical benefits and wage replacement to your employees who are injured on the job. Some states also require that businesses provide additional coverage as well. Your licensed insurance professional can help you to determine what coverage is mandatory and what is prudent for you.

Buildings and Property Insurance:
Building insurance is also called commercial building insurance or property and casualty insurance. This coverage which protects financial risks due to damage to or loss of a physical structure that the insured owns or leases. There are some losses which are not automatically covered by this type of insurance. Flood damage, for example, is usually not covered automatically. So if you lived in a flood zone, you would want to work with your licensed insurance professional in order to ensure that your potential flood losses are insured.
Commercial Vehicle Insurance
A commercial auto insurance policy covers business vehicles and their drivers. If your circumstances dictate it, your auto coverage can be combined with property and casualty insurance in your business owner’s policy. It is important to note that it is a fact that many business owners assume a variety of risks by using their cars and assuming a personal auto policy will cover any risk.
There are numerous kinds of additional insurance which are available to business.  Again, it is a fine idea to have a thorough and frank discussion with your licensed business insurance professional in order to make the best decisions about the options which are available for your business.

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Sometimes Overlooked Insurances

Don’t Fall Through the Cracks

Let’s take a look at some of the types of insurances which fall under the category of property insurance but are sometimes not considered by the small business owner. Of course, the urgency of having these coverages varies depending on where your business is located and what the realistic risks are in your region.

Builder’s Risk
Builder’s risk insurance is the insurance which covers your property while it is still under construction. For instance, let’s say you are having a multi-story mixed use building which is going to have shops on the bottom few floors and apartments above them. Now let’s say a sudden and violent wind storm hits and your building suffers damage from it. Your builder’s risk insurance will cover the losses incurred in your building before it is occupied.

Tenants Insurance
Tenants insurance, sometimes called “renters’ insurance,” is often required if your business is leasing space to other businesses or residents. Normally, a commercial lease will require coverage up to a certain limit to cover damages which you make in renovations as well as for  negligence by your employees which results in damage to the building.

Business Interruption Insurance

Business interruption insurance protects from loss of income and expenses in the event of property damage or loss. This kind of insurance will pay wages as well as operating expenses for the duration of any shutdown and rebuilding of the business.

Debris Removal
While your property insurance will cover replacement of the loss, it does not always cover the cleanup which is associated with rebuilding your property. Debris removal insurance will cover the costs associated with removing debris after a fire, storm, or flood.
In order to avoid missing out on a coverage you may later need, it is a wise businessperson who consults with his or her licensed insurance professional.

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The Difference Between Actual Cash Value and Replacement Cost

You may have noticed already that commercial property insurance has different coverage options. While you might be familiar with these two terms from your homeowners insurance, let us go over it just to be sure it’s clear.

When you are insuring your building, your business property, or a combination of the two, you will see that you have the choice between “actual cash value” and “replacement cost.”
Today, we are going to talk about those two options and what their differences are so that you might be better able to decide which one you should opt for.

Replacement Cost
Replacement cost is a coverage that will pay you enough money to replace your belongings with “like kind or quality” up to the limit of the policy you have. This should not be confused with guaranteed replacement of your items; instead it’s LIKE kind or quality. So if you lost a leather jacket in a fire, the policy is not going to replace it with a floor length mink coat. It is going to give you money to buy a similar leather jacket.
Actual Cash Value (ACV)
Actual cash value, on the other hand, is the amount of money that the item was worth, minus depreciation for the wear and tear it has suffered since you’ve had it.

Choosing Between the Two
As you can probably imagine, actual cash value has lower premiums than replacement cost, and that difference can be huge.
You will not be shocked to read this next passage: Make an appointment with your licensed insurance professional and discuss the risk and the various scenarios. And whichever option you decide to go with, review the exclusions with our insurance professional.

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Renters Insurance for Business

Many, if not most, businesses lease space in a retail or office building. While those leases may go on for 100 years or more, there is still someone who is usually not the owner of the business who owns the building or space.

Business renters insurance covers that rented space as well as the products or contents of that space.

Business renters insurance is very similar to the insurance you might have if you rented a house or apartment in which to live. The biggest difference is the kind of losses a business might suffer verses those a resident might suffer as well as the items covered.

A business renters insurance would cover things such as office equipment, business supplies, merchandise are covered as contents of a business. Additionally, general liability, protection from lawsuits for personal injury on your premises are covered. It is entirely possible that product liability claims are covered. Make sure you ask your professional insurance professional if you are covered.

In fact, it is essential that you know what is not covered in your insurance policies. Such things as earthquakes and floods are frequently not covered in business renters insurance, and they need to be insurance under specialized policies.

As we so frequently remind you, it is crucial that you discuss the particular risk and liability coverage needed with your licensed insurance professional, and ask him or her to evaluate your business to see what, if any, coverages you are overlooking.

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