Types of Business Insurance

 

This is an excerpt from the article “Types of Business Insurance”.  For more information, please visit http://www.about.com.

Business insurance is a broad description that can be broken down into a list of nine types of insurance policies and here I will briefly explain the coverage and expand on these as individual topics.  For now, these are general descriptions so that we are talking about the same thing when I use these terms in later articles.

  • Property Insurance

Property insurance insures against loss or damage to the location of the business and its contents.  It can also insure  the property of others in your control when the loss occurs.  Property insurance can be a specific risk. For example,  a fire insurance policy insures only against a fire loss to the location.  A tornado is not a fire and, therefore, that loss would not be covered.  The insured location can be owned, leased, or rented.

  • Casualty Insurance

Some insurers will lump property and casualty insurance together and refer to the coverage as “property and casualty” insurance.  In fact, “packaged” policies of property and casualty are often the best purchase a business owner can make.  However, to have an understanding of the difference between the coverage, I will discuss this as a separate type of insurance.  Casualty insurance insures against loss of damage to the business.

  • Liability Insurance

Liability insurance insures against liability legally imposed upon your business because of the negligence of the business or its employees.  Put another way, it protects your business when the business is sued for negligence.

Business Insurance to Protect Your New Company – Establish an Agent Relationship

 

This is an excerpt from the article “Business Insurance to Protect Your New Company”.  For more information, please visit http://entrepreneurs.about.com/od/beyondstartup/a/bizinsurance.htm.

Establish an Agent Relationship

You’ll want to work with an insurance agent who you are comfortable with and could envision yourself working with for the long-term.  Conversely, be wary of agent who try to load you up with policies.  The agent should view you as a long-term client and should respect that fact that you’re in the early stages of operations.  Do a lot of comparison shopping among insurance agencies, and look for opportunities to bundle your plans together with one agent.  Some agents will offer you a discount on multiple policies, but it is fine to use several agents if the numbers make more sense.

Join an Association

A strong professional association will have the buying power to offer you better insurance rates and options in the form of group coverage than you would get with an individual policy.  National Federation of Independent Business (NFIB) is a popular U.S. organization organization for entrepreneurs that offer business insurance benefits.

Watch Your Claims

Just like your personal car insurance, business insurance rates can jump dramatically if you make claims early in the relationship.  If your claim is small, pay it yourself, and use your insurance policy as a fallback option for costlier items.

Business Insurance to Protect Your New Company – Consider Liability Insurance

 

This is an excerpt from the article “Business Insurance to Protect Your New Company”. For more information, please visit http://entrepreneurs.about.com/od/beyondstartup/a/bizinsurance.htm.

Consider Liability Insurance

This type of coverage may not be familiar to you.  About.com’s small business expert Darrell Zahorsky, in his article Protecting Your Assets With Business Liability Insurance, explains that most small businesses are partnerships or sole proprietorships.  Even if you are incorporated, there are still instances where you can be held personally liable for the actions of your business.

There are a few types of business liability insurance.  General liability insurance covers claims related to a customer or other persons who injure themselves while at your office.  No matter how safe you keep your office, there is always a risk of being sued, and general liability insurance is crucial to all businesses.  Depending on the nature of your business, you may need more coverage.

Zahorsky suggests you look into errors and omissions coverage, also known as professional liability coverage, as well as product liability coverage, which, in addition to general liability insurance, round out the three kinds of liability coverage most critical for businesses.  Errors and omissions coverage is designed to protect professionals from financial loss associated with negligence such as if a client alleges you gave him bad professional advice or botched a job.

There are various forms of liability insurance coverage, depending on your field of work, as well as policies that cover unique circumstances.  Doctors and lawyers usually carry a type of professional liability coverage called malpractice insurance.  Product liability offers coverage to companies that make or sell a product whose use results in a consumer being injured.  The amount of coverage you seek here should be proportionate to the potential risk of your product.

If you’re hiring employees, then you are likely to have to cover workers’ compensation coverage and possibly even a health insurance plan.  Requirements for these two types of coverage differ by state.

Business Insurance to Protect Your New Company – Review Your Coverage Needs

 

This is an excerpt from the article “Business Insurance to Protect Your New Company”. For more information, please visithttp://entrepreneurs.about.com/od/beyondstartup/a/bizinsurance.htm

As you contemplate the prospect of your fledgling business taking off and becoming successful, keep in mind one of the downsides to operating a business: Risk. This is where insurance comes in. Similar to the way you protect your car and home with insurance, you also must protect your business’s assets in the event of a natural disaster, legal liability or any other any other risk you can’t afford to cover.

Review Your Coverage Needs

The specific coverage and amount that you need will vary, depending on the type of business you’re running. If you are renting office space, check with the landlord or leasing company about what insurance coverage is included with your rental agreement. You may need to purchase business property insurance. This type of policy usually covers the structure of your building and the contents of your office.

In the early stages of your business, you may find there is a lot of crossover between your personal belongings and business property. For example, you may be using your family car to go on sales calls, meet with investors, etc. In that case you should make sure your personal auto coverage is sufficient. After all, if you get in an accident, you’ll need a replacement car to continue running the business. If you have company cars, then they’ll need to be insured, too.

How to Prepare a Business Insurance Budget – Tips

 

This is an excerpt from the article “How to Prepare a Business Insurance Budget”. For more info, please visit http://businessinsure.about.com/od/insuringyourbusiness/ht/budgetins.htm.

Tips:

1. Have the business plan written down before meeting with any insurance representative.  Do not create the plan at the initial meeting.  That is how your business ends up with coverage it does not need.

2. How much should the budget be?  It is impossible to generalize.  As a general rule, consider 20 – 30% of predicted gross sales as the baseline budget.  This is too low for construction and manufacturing and too high for home-based consulting.  Ask colleagues their experience.

3. Remember that premiums are tax deductible.

4. Do not go into business without being able to purchase must have insurance.  I know of a nice guy whose brother-in-law fell through off of a roof.  The nice guy had no workers’ compensation coverage, liability insurance, or any other way to feed the now crippled brother-in-law after the accident.

5. You can be sued individually, regardless of corporate format, and business insurance.

The Businessowners Policy- Major Coverage in One Package: Types of Coverages

 

This is an excerpt from the article “The Businessowners Policy – Major Coverage in One Package”.  For more info, please visit http://businessinsure.about.com/od/propertyinsurance/a/The-Businessowners-Policy-Major-Coverage-In-One-Package.htm.

The Businessowner Policy may differ from insurer to insurer, and policy to policy, but generally consists of a package of the following coverages:

  • Property Coverage – The Businessowner Policy will provide property coverage for building, structures, and improvements owned by the business or in the control of the business as long as the property is identified on the policy (in the policy declarations).  This means if your business leases its location, the location can be named and covered under the policy.  There are some selections to be made with this coverage.  Will you insure for actual cash value or replacement value?  Also, while the BOP is often standardized, definitions of what is covered and what is not may be written in such a way as to confuse the typical policy holder.  So, make sure your Businessowner policy property coverage is fully understood.
  • Liability Coverage – The Businessowner Policy will provide liability coverage for damage that you are legally obligated for as a result of “bodily injury”,  “property damage”, or “advertising injury” to others.  There are entire books written about liability coverage and the courts are filled with disputes about liability coverage.  So, again, confer with your insurance professional regarding what the particular BOP you are considering actually covers.  Two critical components of the BOP liability coverage are medical payments and defense reimbursement.  Medical payments coverage is a low amount “no fault” coverage providing medical expenses to third-parties for bodily injury on the business premises.  Defense costs coverage provides an attorney and litigation cost reimbursement.  Both coverages can eliminate nuisance claims at the business.
  • Contents Coverage – The Businessowner Policy will provide contents coverage for the “contents” of your company’s structures.  Things like the furniture, equipment, leased goods, and other contents.  But, there are no exclusions that are pretty important like money and bullion.  The typical BOP will not cover the loss of money, stocks, or gold as contents.
  • Business Income – The Businessowner Policy will provide business income coverage for income and extra expenses incurred after a disaster.  This can keep your business functioning in the event of a catastrophic loss.
  • Other coverages – One of the reasons the BOP can be so important top the small business is the whole host of miscellaneous coverages provided in the policy.  This is especially true for those Businessowners Policies tailored to particular businesses.  A good, market-leading insurer’s BOP usually includes a number of nuisance coverages covering very serious risks faced by small businesses.  For example, forgery, counterfeit money loss coverage, glass breakage, and a number of other coverages (that you probably did not even consider as a risk).

While the Businessowners Policy is pretty extensive, it does not provide all of the coverage needed by a company.  For example, workers’ compensation coverage and commercial auto coverage are two examples of must have coverages not provided by the Businessowners policy.

How to Prepare a Business Insurance Budget – Start With Must Have Insurance

 

This is an excerpt from the article “How to Prepare a Business Insurance Budget”.  For more info, please visit http://businessinsure.about.com/od/insuringyourbusiness/ht/budgetins.htm.

Start With Must Have Insurance – Certain insurance you must have or you cannot do business.  Start with your budget with the premiums for this must have insurance.

What is must have insurance? Here are examples:

  • Workers Compensation if you have employees
  • Professional Liability Insurance if mandated by your profession.
  • Commercial Auto Insurance if your business will use vehicles

Establish the must have insurance budget first.  New business owners are often shocked by this expense.

Budget for insurance necessary by contract – Next, determine what insurance is necessary to comply with contracts.  Your lease will require property insurance naming the landlord.  Clients will require employees to be bonded and insured.  Public contracts will have large insurance requirements.

Insure your most important asset: You and Your People – Health insurance may not be a mandate in your state.  Life insurance is not a mandate.  But, consider some level of health, life and disability insurance for your employees and for yourself.  Section 125 Plans and High Deductible Plans are an excellent, inexpensive, option for employers.

Insure the second most important asset: Customers – After making sure you can do business legally and provide some protection for you and your employees, budget to protect your customers with liability insurance.  You will want to insure against damage to your customers or their property with liability insurance.  Selling, manufacturing or distributing products will require product liability insurance.

Insure Continually – Next, insure for the continuity of the business.  Consider:

  • Life and Disability for key partners and employees.
  • Business Interruption to provide income in case of a disruption.

Budget for Risk Management and Reduction – In a perfect world, I would put this at the top of the list.  However, most businesses have nothing left over for risk reduction.

At a minimum consider the use of a written safety policy.  If possible, consider the use of a third-party safety service to do this for your business.

Managing and reducing risk lowers premiums.  Include risk management from the start of the business and you will be able to follow the reduction of premium expenses over time.

The Businessowners Policy- Major Coverage in One Package

 

This is an excerpt from the article “The Businessowners Policy- Major Coverage in One Package”.  For more info, visit http://businessinsure.about.com/od/propertyinsurance/a/The-Businessowners-Policy-Major-Coverage-In-One-Package.htm.

The business owner faces many risks.  Insurance for the business must balance affordability with the ability to control as much risk as possible.

Larger businesses and those that have been in existence for many years have a track record and experience to know what particular categories of risk need greater coverage than others.  Often, those companies will have a dedicated team of risk managers and safety experts who, working with insurance brokers, custom design a business insurance program for the company tailored to the needs of the business.

And that is great for the large company.  What about the small business?  Small businesses make up 97% of all employer firms and employ over half of the United States workforce according to the Small Business Administration.  This is a huge market for insurers.  There must be special business insurance products for the little guy, right?

There is.  The Business Owners Policy (BOP) is a business insurance product sold by nearly every commercial business insurer.  Sometimes it may be sold by different marketing names; however, the clauses and coverages in the BOP are usually standardized ISO clauses and coverages and similar from one company to the next.  As always, confer with your insurance professional regarding any company’s specific product.  It is essentially a one-stop business insurance policy for the medium to small businesses.  It is a “package policy.”  While there are other “package” policies available in the market, the Businessowner Policy is perhaps the most common.

How to Prepare a Business Insurance Budget – Prepare a Business Plan

 

This is an excerpt from the article “How to Prepare a Business Insurance Budget”.  For more info, please visit http://businessinsure.about.com/od/insuringyourbusiness/ht/budgetins.htm.

Prepare a Business Plan – Without a business plan, you cannot predict what insurance you will need and what it will cost.  Start with a statement of what your business will do.  Build on that statement and plan ahead three years.

You must address at minimum:

  • How many employees?
  • Will it use vehicles?
  • What is projected gross?
  • What is projected net?
  • Will it own or lease space?
  • Will the public or visitors enter the premises?
  • Will employees enter clients premises?
  • What corporate format will the business have?

The plan does not have to be 100% accurate.  But, you must have thought it out.

Guide For Employer to Reduce Vehicle Crashes – Young Drivers

 

The 16 – 20 year-old population represents a significant high-way safety problem.  Traffic crashes are the leading cause of fatalities for teens.  Historically, this group is the age group that has the lowest seat belt use rate and is the most likely to engage in risky driving behaviors that include: speeding, driving while alcohol or drug impaired and when drowsy.  It is important for employers with young workers to actively promote safe driving practices.

We have learned much about teen driver safety during the past decade.  There are proven, specific safety benefits from a variety of best practices that are commonly referred to as “graduated driver licensing” or GDL.  GDL practices have resulted  in substantial reductions in crashes, injuries and fatalities for novice teenage drivers.

Under Federal law, 16-year-old workers are prohibited from driving as part of their job, and 17-year-olds may drive for work only under strictly limited circumstances.  Some state laws may be more restrictive than Federal laws.  For more information on child labor laws visit, http://www.youthrules.dol.gov or http://www.cdc.gov/niosh/topics/youth/.