How Your Liability Insurance Works

It is essential that you know your liability coverage and how it works for your business.

As a business owner, you need to be keenly aware that a minor incident could result in a big legal problem. Today, a spilled cup of coffee or an implied injury from your product can result in a lawsuit.   General liability insurance, property insurance, and worker’s compensation insurance are a must to be in business.  Your liability insurance will protect the assets of your business in the event it is sued for something it was perceived (right or wrong) to have done to injure or cause damage.

General liability insurance covers legal fees and damages in a covered claim and/or lawsuit.  Bodily injury, property damage, personal injury, and general damages are normally covered in this policy.  Punitive damages are usually not covered as they are awarded when it is determined the act was intentional.

In addition, your policy will spell out maximum coverage and limits during the policy period.   It may make sense to purchase a commercial umbrella policy to cover additional risk.  Review the limits and work with your commercial agent to determine what is best for your business.  You can also check with your state department of insurance to check for past cases and outcomes in helping to determine your company’s coverage limits.

General liability coverage can be purchased as part of a business owner’s policy or separately.  A business owner’s policy will package the liability with the property insurance.  Normally, when part of a business owner’s policy, the liability limits are fairly low.  You should review and assess risk with your commercial insurance agent.  Things to keep in mind are your perceived risk, like operating a lot of heavy machinery or have a fleet of vehicles on the road than say a signage business.

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Choosing a Commercial Insurance Agent

You took the plunge and opened a business.  You may be just starting out, or have been in business for awhile.  Now, your hearing about agents, brokers, carriers and agencies and aren’t sure which you should choose for your business.

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.

Commercial 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.

Brokers usually have a full range of coverage for businesses and may have specialists in their firm.  They may also offer services like safety education, safe driving education and the more.

The larger your business is, the more important you should 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.

If you have 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 who specializes in business coverage.

Before deciding whether you will deal with an agent or broker, get as much information to make your decision.  Other or similar businesses can offer insight, as can you trade organization or association.  Your state department of insurance can also be a great resource.

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Church Insurance Is Available

A church or synagogue, like any non-profit or a business, needs to put the proper insurance coverage in place to protect both the assets and members of the church.  In fact, a number of coverage options are available to reduce the various risk exposure faced by the operation of a church or synagogue.

With any church insurance coverage, the basics of property, general liability and worker’s compensation are a must.  Property insurance covers the buildings and equipment as well as other contents and some personal property.  In addition, it may make sense to add plate glass coverage with a rider if needed for stained glass. Special coverage may be needed for antiques and restoration.

Make sure theft and vandalism are also covered in the policy.  General liability will protect the church in the event of a claim of personal injury, or damages.  It would also cover contractual liability for services provided such as room or hall rental, or other service functions performed by clergy or staff.  Make sure to add product liability for food consumption, sales, or even distribution.

Like any business, worker’s compensation must be in place if there are employees.  Check with your state department of insurance for the specific requirements surrounding coverage.

Additional coverage considered would be professional liability to covers teachers and clergy.  Directors and officer’s liability should also be carefully considered.

If daycare is provided, additional coverage may be necessary or packaged with teachers and school insurance.  Fine arts and antiques may have to have separate coverage added or included depending on the carrier.  Boiler and machinery coverage may also make sense, as well as  business interruption coverage.

Work with a licensed insurance professional in determining what coverage options and liability limits need to be in place.  Ask whether a business owner’s package is available and how the options discussed can be included.  You may also explore whether an umbrella policy may make sense for your church.

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Liberty Mutual Commercial Insurance: Responsibility

This video series by Liberty Mutual Commercial Insurance  draws an interesting comparison by making the statement, “When people do the right thing, they call it being responsible. When an insurance company does it…they call it Liberty Mutual.”

The insinuation is that insurance companies aren’t expected to be responsible, or protective of their customers, like an individual would be, and that when they are, it’s out of the norm.

It’s true that an insurance company makes money by evaluating risk, and will examine claims thoroughly before paying them. But it could be argued that by doing this, they’re actually forcing a level of consciousness on their customers that they might not have otherwise.

Knowing that engaging in certain endeavors may result in higher premiums because they involve increased risk is information that a business owner should be glad to have. Even if you’ve painted, or done construction/remodeling for years, you may not have considered some of the risks involved with particular jobs to the same depth as an individual has who is working for an insurance company, and who has the sole purpose of investigating all the things that can go wrong with a line of business.

It may seem like a pain in the neck in the short term, but being covered for a risk–and being able to pay a judgement against you because of insurance coverage, should the need arise–is something that could save your business some day.

Insurance coverage may seem like just another bill to pay, but it’s actually a relationship–one that ultimately serves the best interest of your business.

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Risk management is an art, and our business at is helping you protect your business.