It can be difficult to determine exactly what types of business insurance you and your company needs, especially if you are not working with an agent. If you own a business, chances are you have purchased some form of business insurance in the last 12 months. However, if you are not certain as to the extent of your coverage, or if you think you might be underinsured, it may be time to take another look at your policies. Depending on your company’s structure, size, and types of products and/or services, your business insurance needs may be well beyond the basics. Understanding the different types of business insurance that can combine to make a comprehensive business insurance package is the first step toward protecting your business and your employees.
The following information will help you determine which kinds of business insurance coverage may be helpful to your business.
General Liability Insurance: Put simply, general liability insurance exists to cover claims filed against a business for something it did – or neglected to do – which resulted in harm to a person or an entity, or to property. These policies will cover damages for which it is determined that the business is liable, up to but not exceeding a predetermined amount for each occurrence. Some insurers also include in their policies a maximum amount that may be paid during any policy period. Because insurance caps vary with each policy, a reputable insurance agent is a business owner’s best resource when it comes to determining the appropriate coverage for each individual state and situation. An agent may also advise business owners to make allowances for high insurer payouts in states that have a history of awarding large settlements to claimants.
Excess general liability insurance, or “umbrella” insurance, is designed to raise the insurance ceiling, so to speak. These policies are purchased to cover any expenses or liabilities over and above those covered by a general liability policy. For example, if a business with $1 million in general liability coverage is sued for $2 million, the insurer would provide the $1 million covered by the general liability policy, and the business owner would be responsible for the remainder. However, an excess general liability insurance policy picks up where the first policy left off, thereby relieving the business of the burden of payment for the additional amount. Excess general liability policies are important for businesses with certain risk factors, including contracting businesses, construction companies, restaurant owners, and retail establishments – basically businesses that have a high rate of direct contact with consumers, or with the general public, as they are more likely to be sued. Excess general liability policies can be purchased in varying amounts. Some businesses choose to carry several umbrella policies, to expand their coverage even further and provide additional protection.
Business Property Insurance covers properties owned by the business, as well as all materials, supplies, manufactured goods, electronics, and other items within the business location. Businesses operating out of leased locations will not need to insure the building itself, but should insure everything contained within it. Business property insurance protects in case of theft, fire damage, and other occurrences that result in damage to the material properties of a business.
Business Interruption Insurance builds on the coverage offered by business property insurance. In the event of the total loss of business operating space due to fire, storm damage, or other catastrophe, this insurance replaces monies lost due to cessation of business operations, and may cover the expenses associated with procuring and transferring operations to a temporary location.
Worker’s Compensation Insurance is required by law in most states for any business with employees on payroll. Depending on your situation, you may be exempt from these laws if you have no employees on payroll, or if you employ subcontractors (those paid via IRS Form 1099 and not by Form W-2). Worker’s compensation insurance covers any injuries that occur while the injured is on the job. This includes injuries which happen at off-site locations, so long as the injured party was “on the clock” at the time. While physically intense jobs, such as those in construction fields, present the most need for complete worker’s compensation coverage, these are not the only types of business where worker’s compensation claims are filed. Business owners will not have as much leeway in choosing coverage for this type of insurance. In most cases, the amounts to be covered per employee are determined by state legislation.
Disability Insurance is designed to replace 40 to 60 percent of a claimant’s gross income in the event of an injury. Some states may require employers to carry disability insurance for their employees, while others mandate only worker’s compensation insurance. If your business is in a field with a high rate of injury, you may want to consider purchasing a disability policy for your employees. If you employ subcontractors, you may consider requiring them to carry their own disability policies. Types of disability insurance coverage include income replacement insurance, gainful occupation coverage, and own-occupation coverage. Income replacement coverage, which provides the above-stated 40-60% of the claimant’s gross income unless the claimant commences working in any capacity, is considered standard coverage.
Own-occupation disability coverage is a step up, and useful for sole proprietorships and businesses with only a few employees. This coverage provides payment if the claimant is prevented, whether by injury or sickness, from performing the duties of their specified occupation. Additionally, the coverage will continue even if the claimant begins working in another capacity. Gainful occupation plans provide the least amount of coverage, as they cover only those claimants who cannot, because of injury or sickness, perform any duties for which they are reasonably qualified. In essence, this type of plan leaves the definition of “reasonably qualified” up to the insurance company, and provides very little recourse for the injured party. If you choose to purchase a gainful occupation coverage plan for yourself and your employees, you may consider encouraging employees to invest in an own-occupation plan on their own, or offer one to which employees can contribute.
Commercial auto and truck insurance policies provide your business and your drivers with an extra degree of protection in the case of an accident. Structurally, commercial policies are not all that different from personal auto insurance policies. They may include liability, collision, comprehensive, and medical or personal injury coverage, and uninsured motorist coverage. Any vehicles registered to a company will be required to be covered under a commercial auto insurance policy – in the same way that vehicles registered to an individual are (in most states) required to be insured by that individual. Vehicles leased in the name of the business can also be covered under a commercial auto insurance policy. Commercial liability coverage will cover employees operating company vehicles, but not employees operating their own vehicles. If your employees frequently use their own vehicles while on the job, business owners may consider requiring them to carry a higher amount of liability and collision coverage in their personal auto insurance policies. A knowledgeable business insurance specialist can help you determine whether a commercial auto and truck insurance policy is right for you and your company.
Inland Marine Insurance is designed to cover goods in transit. Manufacturing companies, contractors, and other companies which frequently transport large numbers of products or materials, or which transport expensive products or materials, may consider purchasing an inland marine policy. This type of coverage can be a valuable addition to the business insurance portfolios of even very small businesses, as it not only protects goods in motion, but also warehoused goods (goods in a fixed location which is considered an instrument of transportation), and goods which are often in transit from one fixed location to another. Examples of products that may qualify for coverage under an inland marine policy include laptops for traveling salespeople or surveyors; blueprints, art, or photographs, which are of substantial value to the business; construction equipment or materials; and manufactured products being transported to retail locations. If your business is involved in international importing or exporting, you may consider also adding ocean marine insurance to your business insurance portfolio.
Bonds are a type of insurance that can be purchased on a per-project or per-employee basis. Bonds are common in construction fields, but can also be useful to other businesses. They offer a surety between a business and its client, or between a business and its employees. There are several types of bonds, which include bid bonds, payment and performance bonds, contract bonds, subcontractor bonds, maintenance bonds, supply bonds, employee liability bonds, and forgery bonds.
Bid bonds state that a business will enter into a contractual agreement with a client should the bid for services be accepted.
Payment and performance bonds ensure that a contracted service will be performed to the specifications set out in the contract, and are usually required to be presented with proof of general liability insurance at the commencement of a contract.
Contract bonds, also known as “labor and material payment bonds,” protect employees or subcontractors from nonpayment by the general contractor or business owner.
Subcontractor bonds guarantee the performance of a subcontractor, and their adherence to the specifications of the employer or general contractor.
Maintenance bonds are issued when a client requires maintenance or a warrantee on a product or service performed past the standard warrantee period. Supply bonds protect expensive, custom, or hard-to-find materials or products from loss or damage.
Employee liability bonds (also known as fidelity bonds) and forgery bonds protect an employer in the event of employee dishonesty, and can often be combined into a single employee surety bond. Businesses that deal with large amounts of cash or valuable property may consider requiring employees to carry these types of bonds.
No matter what your business insurance needs, Insurancequoteonline.com can help. Our insurance professionals are here to help you find the best coverage at the best rates, and can tailor a business insurance package to the individual needs of your business. For more information, click for a free quote, or call 516.294.1072 to speak to an insurance specialist today.
|
