Business Insurance Center
Business Insurance Q & As
Business insurance covers an array of risks that threaten a company. A commercial insurance policy should be tailored to fit the specific risks a business faces during the course of its operations. Having a clear and concise risk assessment completed on your business will help you encompass all necessary coverage in your business insurance plan.
What Business Insurance Covers
Depending on the type of business insurance policy you select, it will include some or all of the following:
- Property insurance-Property insurance covers damage to the building that houses your business, as well to as items inside, such as furniture and inventory. Commercial insurance coverage will base on the replacement of the building or your inventory. This coverage does incur a deductible.
- Commercial General Liability Insurance- This generally commercial insurance covers 4 types of damages: property damage or bodily injuries you created in the course of you business, advertising injury as well as personal injury such as slander and libel. This can range from a customer who slips and falls on your premise to a company newsletter misquoting someone and you being accused of slander. The liability portion could also pay for defending a lawsuit for a covered claim.
- Product liability insurance-You might want this form of coverage if you make a product that could conceivably harm someone. For instance, if you have a catering business and the food makes someone sick or if you created a cream for razor bumps which caused someone to break out in a rash. This part of commercial insurance coverage will help you with any suits or settlements.
- Errors and omissions insurance-This section of business insurance covers is particularly important to service-based businesses, offering protection should you make a mistake or neglect to do something that causes a customer or client some harm. A good example is doctor's medical malpractice insurance, which practicing physicians are required to carry or an insurance agent.
- Business Interruption insurance-This business insurance cover usually has three components: 1. Business income which covers you in the event you lose income as a result of damage that temporarily shut down of your business from such things as a fire, flood or hurricane, 2. Extra expense coverage covers you if you have to relocate you business to another location. Things such as rent, set up, equipment lease, etc., 3. Ordinary Payroll coverage helps you continue paying employees even though your business is not longer operating due to a covered loss. This prevents employees finding other jobs and you having to retrain all new employees. With the increase in natural disaster earthquakes, this important coverage helps business stay float while being rebuilt.
- Automobile insurance-If you have any commercial cars or trucks and use them in the course of your business, this commercial insurance covers you for collision, comprehensive and liability on your auto accidents.
- Crime- This can include such acts as burglary, armed robbery and theft by customers or employees. It is reported that some retail organizations employ under cover shoppers to check on the practices of employees as one of the tools to try to try to minimize employee theft. Many stores also employ a variety of security personnel, alarms, tags and other devices intended to thwart theft. This commercial insurance coverage provides reimbursement for acts of burglary or theft including employee theft.
Commercial Insurance Coverage Exclusions
Commercial insurance coverage is not designed to cover every risk. There are some common things business liability insurance will not cover. The following is a common list:
- Professional Liability- This is liability arising out of your profession. For example, if you are an accountant and you make an error that cost your client several thousand dollars, your general business insurance would not cover this. You will specifically need professional liability insurance. This includes recommendations, opinion, or solutions in the course of your business.
- Employee Injury- Injury that is incurred by any employee is not covered by general business insurance. Check with you state on particular concerning workers compensation insurance.
- Punitive Damages- Any award of punitive damage from a lawsuit is not covered under general business insurance.
- Intentional Acts- Any intention acts that causes damage or that you are found liable for would not be covered under commercial insurance coverage.
- Your Work- This refers to "workmanship" and exclusion. General Business Insurance does not pay for items that should be covered under a company warranty.
- Auto Related Claims- Do not thinks general business liability insurance is a substitute for auto liability coverage. It is not! Any auto related claims would not be covered unless you have commercial auto insurance.
Make sure you read the exclusions to your business insurance coverage carefully so you can take the appropriate steps to prevent losses that are not covered by an insurance policy.
Business Insurance Coverage and Your Business Property
You need to be certain that any business insurance that covers your property and inventory can adequately replace what you own. Decide whether to base the coverage on replacement cost (cost to replace or repair the property) or actual value (replacement less any depreciation to reflect the actual value of the property before it was lost). Replacement cost for your property as well as your inventory may cost a little more, but will give you the peace of mind that your building and items will be replaced in full by the business insurance policy.
If you are looking for a quote on commercial liability coverage that will give you the specific coverage you need for your business risk, then you need to shop a number of quotes to find the right plan. Make sure you know how to assess the risk that your business faces, and get commercial insurance that meets your needs.