Business Insurance 101

Insurance is an essential part of running a successful business. Though you don’t have to be an insurance expert, a general understanding of the following business policies and coverages can help identify and fill potential coverage gaps. It can also make you a more informed and better equipped consumer when the time comes to renew your insurance.

Property Insurance

Standard commercial property insurance covers loss or damage to buildings and structures caused by covered perils, such as theft, vandalism and fire. It also covers business property (contents), such as office furnishings, inventory, materials and computers. This coverage can help pay the costs of repairing or replacing property that is damaged or lost due to a covered event.

Since a property loss is likely to force a temporary suspension of operations, businesses should consider adding business interruption (business income) coverage. In the event of a covered loss, business interruption insurance will cover lost revenue and fixed expenses, like rent and utilities, during the suspension of operations. Extra expense coverage is also available to reimburse costs over and above normal operating expenses, like temporary relocation costs.

General Liability Insurance

Every business is vulnerable to claims of harm or damage brought by third parties. Standard commercial general liability insurance protects against liability claims for bodily injury and property damage occurring on the premises or arising out of business operations. Standard policies also cover personal and advertising injury, such as libel, slander and false arrest, and provide limited medical payments coverage for injuries sustained by non-employees.

Professional Liability Insurance

Businesses providing professional services requiring extensive technical knowledge or training must meet minimum standards of professional conduct. However, professional services, like those performed by doctors, lawyers, accountants, architects and engineers, are generally not covered under a standard general liability policy. Professional liability (errors and omissions) insurance is needed to protect against claims that a professional erroneously performed or failed to perform its professional services.

Commercial Automobile Insurance

Many assume that commercial automobile insurance is only necessary if a business owns one or more vehicles. However, if cars, trucks, vans or other vehicles are used or rented for business purposes, or if employees run business errands in their personal cars, commercial automobile insurance, including coverage for hired and non-owned vehicles, is needed to cover bodily injury or property damage resulting from an accident.

Workers Compensation Insurance

Whether a business is required to carry workers’ compensation insurance is typically determined by state law. In Florida, for example, a business in the non-construction industry that employs four or more part-time or full-time employees must obtain workers’ compensation coverage to provide medical and lost wage benefits to employees injured on the job. Even though some states, like Florida, set the premium for workers’ compensation insurance, a business can reduce its rates by maintaining a safe workplace or implementing a qualifying drug-free workplace program.

Flood Insurance

The average commercial flood claim is nearly $90,000, which may explain why approximately 25% of businesses never reopen after a flood. Damage caused by rising flood waters isn’t covered under standard property policies. A separate flood insurance policy is needed to cover direct physical loss to buildings and contents caused by an excess of water on land that normally is dry.

Employment Practices Liability Insurance

In 2014, the Equal Employment Opportunity Commission received 88,778 charges of unlawful discrimination. Unfortunately, employment-related lawsuits are becoming significantly more expensive to defend and resolve. Employment practices liability insurance is needed to protect against claims of discrimination, wrongful termination, harassment and other employment-related issues, like breach of contract.

Umbrella Insurance

An umbrella policy is designed to protect against an unusually high loss by providing coverage over and above other liability insurance policies. In addition to providing excess coverage limits, an umbrella policy can step in after the aggregate limit of an underlying policy is exhausted by the payment of claims. Umbrellas may also cover claims that are not covered by underlying policies.

If you have any questions or would like to learn more about insuring a business, please contact us.

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