Determining Proper Business Insurance Coverage

How do I determine the proper cover and limits for my business insurance?

Figuring out what coverage to have in place and what limits are needed is a real balancing act. On one hand, proper insurance is necessary to reduce the risk of owning and operating a business. On the other hand, unaffordable and unrealistic premiums are also not in your best interest as a business owner.

If your business is like most small businesses, you probably don’t have a full-time risk manager to answer your business liability insurance or workers’ compensation insurance questions. So where to start?

It may make sense to focus your research on three common types of small business insurance coverage: general liability, property and workers’ compensation insurance. Once you know what questions to ask, it’s much easier to select optimal small-business insurance coverage and business liability insurance rates. It’s also important to understand that business liability insurance rates will vary depending on your business’s needs.

Property and Casualty insurance covers building and property against damage, theft, and other causes such as fire. The contents and furnishing as well as most inventories are covered. It’s important to determine rebuilding costs, restocking costs, and relocation costs if the incident could require it.

Comprehensive general liability insurance coverage protects you in the event of claims of bodily injury or physical injury or damage to property. This includes legal defense and settlements up to the limits of the policy. Check with your industry association and state department of insurance to determine types of claims and what settlements are awarded. In addition, professional liability insurance may be needed.

Again, both industry and the state department of insurance can help in determining the proper limits.

Workman’s compensation limits and minimum coverage are generally determined by your industry and state.

The key is to work with a licensed insurance professional you trust to develop a comprehensive insurance package for your business. Eligible businesses can purchase property insurance packaged together with general business liability insurance coverage in a single policy called a Business Owner’s Policy, or BOP.

Such combined policies are generally available at reasonable small-business rates. Your licensed insurance professional may make this recommendation to you.

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Celebrity Insurance

Last week we spoke of unusual insurance risks to be insured; more specifically weather and pets.  While reading about the NFL strike and resolution, I came across another unusual risk to be insured.  It is Troy Polamalu’s hair.  Troy plays for the Pittsburgh Steelers and is spokesman for a well known shampoo company.   It appears Troy has not cut his hair in over seven years and is extremely thick and long.  This is the reason he was chosen for this particular spokesman position.

 

The shampoo company has reportedly purchased a $1 million dollar insurance policy protecting his locks.  Now this is not the first time Lloyds has written a policy upon a celebrity’s portion of the body.  I have been told the first time was for Betty Grable’s famous legs.  Her photo graced many a WWII aircraft.  Another was for Julie Andrew’s voice, and recently Jennifer Lopez’s famous “booty”.  It has long been a normal practice for dancers, hand and foot models, but this is the first time I have heard of insuring hair.  However, as in all commercial insurance policies, certain conditions must be met.  There can be no off the gridiron hair pulling or take place in activities regarding fire. 

 

Most of us needing commercial insurance have much simpler needs and face average risks.  Therefore the general liability policy offered us needs not to go through rigorous underwriting, pricing and issuance.  Our policies are relatively easy to issue and understand but if you find you need clarification regarding coverage for your business, please consult your agent or one of ours.

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 Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect.  Always check with your chosen professional as to statements made in this blog for your particular situation.

Automobile Garages

Garages are so convenient, safe and help protect most people’s second greatest investment.  However, they can also be the most common culprit for loss.  In my garage, I store many items I do not want in my house, but do not want to get rid of.  For instance, I have paper items, a lawn mower, some power tools, and a small can of gasoline for my lawnmower and a few pesticides for my shrubs.  These are all common items and make excellent fuel for a fire.  And the catalyst may be my own automobile.

 

Garage Liability insurance is the general liability name for commercial facilities dealing with automobiles.  We all take our vehicles into repair shops from time to time, yet we rarely look around their shop to see what is stored there.  However, next to collision, fire is the most common cause of loss for automobiles. 

 

Garage Keepers insurance is the policy for commercial facilities storing vehicles overnight or longer.  There are many commercial facilities to store a vehicle.  Parking garages, service garages, and various storage garages are to name a few.  Insurance companies and agencies often help their clients by taking assessment of facilities and make suggestions to reduce the threat of loss due to fire.  Some of the things we look at are wiring, outlets, well maintained work areas, and storage of flammable items.  We will also make suggestions as to locations of vehicles meaning where and how quickly each can be removed if a fire breaks out.  We will look for fire extinguishers and a sprinkler system.  We wish to help all our commercial clients find ways to reduce both their exposures and Garage Liability and Garage Keepers insurance premiums.  Please talk with your agent or one of ours to help with your particular risks.

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Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect.  Always check with your chosen professional as to statements made in this blog for your particular situation.

General Liability And Completed Operations

Most clients feel insurance policies are confusing in language.  I feel that way about my taxes.  However, this is the reason I employ professionals to file for me.  I understand insurance most of the time, because it makes good business sense.  Occasionally, there is an exception to that rule because the policy may include endorsements that either add or take away coverage.  This is the case of the part under general liability policy called “products and completed operations” for contractors.

 

The policy completed operations part intended coverage for property damage caused by the sub-contractors work but not for the contractor’s work.  However, in an effort to clarify intention, endorsements were added to define “your work”.  It has been my experience within the industry, when there are definitions added to a policy, coverage for those items are limited.  Because of the intent enormous claims began to arise, and insurance companies became compelled to define this coverage even further.  Two endorsements were made available:  Exclusion – Damage to Work Performed By Subcontractors on Your Behalf or Exclusion – Damage to Work By Subcontractors On Your Behalf – Designated Sites or Operations.  The latter is scheduled and not used frequently.  As you can imagine, these are confusing as to intent within the policy and many are still awaiting courthouse decisions.  If you have questions regarding your General Liability policy and Products and Completed Operations portion of your policy, please contact your agent or one of ours. 

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Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect.  Always check with your chosen professional as to statements made in this blog for your particular situation.

Cyber Liability

There is a new risk in town.

 

And its’ name is Cyber Liability.  It goes along with identity theft of which we spoke a few days ago.  However, this is found in businesses.  The greatest threat is to smaller business operations. Cyber liability is when one breaches private information digitally. Not all commercial insurance policies cover this type of risk.  Most exclude coverage.  Cyber claims are generally before there is a specific loss, and mostly discovered by a third party reporting the breach to the company charged with the protection of private information.  Once the breach has been discovered is when costs began to incur, not necessarily when a client has suffered an actual loss.  We must ask how this happened.  What information has been compromised?  And how does this affect the client?  Are there any state or federal laws that must be considered?  Do we need to notify the client?  What remedies do we have available and at what cost? In addition, we must concentrate on stopping the breach and resolving that issue.

Will the General Liability policy have coverage for this?  Probably not.  General Liability coverage is designed to pay a third party after loss is suffered.  There may be some coverage under Professional Liability if not excluded.  Most technology and telecommunications companies have some coverage, but main street type, small business are not always covered.  Please contact your agent or one of ours to find out if you are protected.

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Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect.  Always check with your chosen professional as to statements made in this blog for your particular situation.

Intentional Act vs. Deliberate Act Exclusion

What is the intentional act exclusion?

 

Often I hear terms mentioned in my class regarding insurance coverage being excluded due to intentional acts.  For the most part, intentional acts within an insurance terminology and definitions has been changed to read “deliberate acts”.  This wording took much of the subjectivity out of the insurance policy, and was meant to define the true intention of insurance which was to cover weather related loss and accidental loss.

While raising my children, I always told them, for every action there is a consequence, and for every consequence, there is a responsibility.  It is no different in insurance.  However, there are difficulties in determining distinction between intentional and deliberate.  For example:  two small boys are learning to play catch in the front yard, and one overthrows the ball accidentally, and the other runs to catch the ball.  He does not see nor realizes he is about to trample the newly bloomed flowers of his neighbor. Is his action intentional?  Is it deliberate?  The consequence is the same.  So is he responsible and should the insurance policy pay for damages?  In this case, yes.  But the answer may not be the same for your situation.  Please call one of our agents to discuss some of the insurable risks your business may face.  We will be happy to find an insurance policy to protect you.

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Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect.  Always check with your chosen professional as to statements made in this blog for your particular situation.

 

Does General Liability Insurance Cover Everything?

Isn’t all my liability covered in my general liability policy?

For many businesses, 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.

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.

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.

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Talk to 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.

Types of Business Insurance: Liability

In previous posts, we’ve examined the basic categories of business insurance, and explored the more detailed types of property insurance. Now, we’ll talk a little about Liability insurance and the different ways it can protect your individual business.

Liability insurance will cover losses and damages to third parties as a result of a claim against your business. For example, if a suit is brought against your business for personal injuries or property damages, the cost of defending and resolution would be covered by your business’s Liability insurance. Normally, General Liability will cover you and your business for most common risks, such as a customer or vendor being hurt on your premises.

Other types of specialty liability insurance include:

Errors and Omissions

Also known as “E & O Insurance” , this type of liability insurance covers unintentional mistakes or failures which result in an injury to another party–but the error must be unintentional and not malicious. For example, if a realtor misdates a form or fills it out wrong causing an injury. Another example may be an insurance agent who files an application late.

Malpractice/Professional Liability

This type of insurance will cover an injury to a third party when it is found that performance falls below the level of professional standard in a particular industry or profession. Malpractice insurance will pay defense costs and judgments, and is available to doctors, dentists, accountants, architects and other professionals.

Commercial Auto

Commercial Auto insurance covers cars, trucks, vans and trailers used by your business. The coverage will reimburse damage to your vehicles (subject to a deductible) and also cover your drivers should they cause damage to another party.

Directors’ and Officers Liability

Often known as D&O,  this coverage is generally purchased by non-profit and corporations to cover its directors and officers against lawsuits brought against the company.

Workers Compensation

Workers Compensation insurance covers you and your business for on the job injuries to your employees. Most states require businesses with employees to carry Workers Compensation insurance; familiarize yourself with your area’s requirements and standards. This policy also generally protects against having a negligence suit brought against your company as a result of an on-the-job injury.

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Careful review of your business and industry by a licensed commercial insurance agent will help you in what choices are right for your business. Click ‘Get a Quote’ above to get connected with our team, or call 1-877-907-5267 to speak with one of our specialists to get a quick, free, competitive quote for your business today.