Business Insurance FAQs
Being a business owners is hard enough, but understanding your insurance needs can get really complicated. You probably have many questions ranging from "What does a business owners policy cover?" to "What is employment practices liability insurance (EPLI)?". Well, we don't claim to have all of the answers, but we do have some of them.
What types of business do you insure?
At Gilmartin Insurance Agency we have markets for all of the following types of business and many more:
Air Conditioning Contractor
Appliances - Sales & Service
Arts & Crafts Store - Including Classes
Attorney/Lawyer/Legal Research Office
Auto Glass Installation or Repair
Auto Repair Shops
Automotive Parts & Accessories
Beauty Salons - Barber Shops
Bed & Bath Store
Book & Magazine Stores
Bridal Shop - Including Alterations
Builders’ Risk Coverage
Building Equipment - Installation, Erection, Repair
Building Materials Dealer - Not Lumber Yards
Cabinet Work Mfg.
Cable TV Installation
Camera, Photo Equipment, & Precision Instruments
Candy or Confectionery Stores
Carpet, Rug, Furniture, or Upholstery Cleaning
Carpet, Rug & Floor Covering Sales
Carpentry - Framing & Cabinet Work - No Roofing
Carpentry - General Remodeling - Limited Roofing
Carpentry - NOC - General Remodeling
Carpentry - Primarily Inside
Carpentry - Primarily Outside
Carpentry - Shop Only
Ceiling/Wall Panel Installation
Cement / Concrete Finishing
China, Glass & Earthenware
Church/House of Worship
Cleaning Supply Store
Clothing Store - Mens, Ladies & Children
Clubs - Civic, Service or Social
Computer Cable or Coaxial Installation
Computer Consulting Service
Computer Sales & Service
Computer Software Development
Computer Software Sales
Concrete/Plaster Products Mfg.
Court Reporting or Stenography Service
Fence Erection only
Fence Sales & Erection
Floor Covering Stores, Distributors or Installation Including Tile, Stone, Marble, Mosaic or Terrazzo
Formal Wear/Tuxedo Shop
Furniture Store - Including House Furnishings & Installation
Furniture Stripping or Refinishing
Landscaping or Lawn Care
Laundry & Dry Cleaning Operations
Letter Service Shop, Mail Addressing, Mail Packaging
Locks, Safes & Locksmith Equipment
Locksmiths - No Security System Installation
Lessors Risk - Multiple Occupancy & Mercantile with Apartments
Lessors Risk - Service, Mercantile & Offices
Market Research Agency
Medical Information Office
Mini/Self Storage Warehouse
Miniature Golf Courses
Mobile Home Connection/Installation
Motel or Hotel
Motorcycle, ATV & Snowmobile Dealerships
Musical Compact Discs, Records, & Tapes
Office Furniture & Supplies - Retail
Office Furniture & Supplies - Wholesale
Office Machine - Installation, Service or Repair
Office Machines or Appliances - Retail
Office Machines or Appliances - Retail / Repair
Office Machines or Appliances - Wholesale
Office Machines or Appliances – Wholesale / Repair
Optical Goods Mfg.
Optometrist, Optician or Optical Goods Store
Packaging & Mailing Center
Painting, Picture or Frame Stores
Patio & Deck Furniture
Pet Stores Includes Grooming, No Kennels, No Venomous or Dangerous Animals
Photo Finishing Lab
Photographer - Including Studio
Plastic Products Mfg.
Pro-Shop - All Sports
Professional/Trade Association Office
Satellite Dish Installation - No Roof Mounted Installation
Sewing Machine Store Including Repair
Sheet Metal Work outside or shop only
Shoe Repair Shop (Including Shoe Shining)
Sign Painting/Lettering - Inside Buildings
Sign Painting/Lettering - On Buildings
Sign Painting & Erection
Sporting Goods - Retail
Sporting Goods - Wholesale
Stationary or Paper Products Stores
Swimming Pool Installation
Tailor & Dress Making Shop
Telephone Systems Installation - No Pole Work
Textiles Silk Screening
Tile & Ceramic Dealers - No Installation
Title Search Office
Tool & Die Shops
Travel Agency - No Tours
What are the key business insurance terms?
Provides coverage for accounts which are uncollectable because of an insured loss to your records. ERIE’s payment will include expenses to reconstruct records, interest on temporary loans and extra collection expenses.
ACTUAL CASH VALUE
Loss settlement is based on the replacement cost of an item at the time of the loss, less depreciation.
ADVERTISING INJURY LIABILITY
Provides coverage for your liability arising from personal injury, violation of the right of privacy, infringement of copyright, title or slogan occurring as a result of your advertising activities.
AGGREGATE LIMIT OF LIABILITY
The maximum amount of insurance ERIE will pay for a series of losses in a given year.
This endorsement suspends and replaces the coinsurance clause if the insured carries a limit of insurance equal to or greater than the agreed value. The replacement requirement is an agreement to cover any loss in the same proportion as the limit bears to the stated agreed value. For example, if the agreed value of an item is $250,000 and the limit is $250,000, then a loss is covered at 100%.
An annual examination of your financial books and records as they relate to this insurance to determine proper premium for the exposures.
AUTOMATIC ANNUAL ADJUSTMENT
To help assure you of an adequate amount of insurance for your buildings, ERIE will make an automatic annual adjustment to your building amount to reflect change in construction costs.
BAILEE’S CUSTOMER INSURANCE
Inland marine coverage that protects you from claims by your customers for damage to or destruction of customer property in the care, custody, or control from a peril insured against.
BASIC CAUSE OF LOSS
This coverage protects your building(s) and personal property or contents from loss caused by basic perils subject to certain exclusions. The basic perils include fire, lightning, explosion, windstorm or hail, smoke, aircraft and vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action.
A rating system that indicates the operating condition of insurance companies developed and published annually by the A.M. Best Company.
BLANKET CONTRACTUAL LIABILITY
Protects you for liability assumed under "insured contracts" relating to your business whether they be oral or written, expressed or implied.
This coverage insures all property at a single amount. This eliminates having individual limits for each separate building or location.
BODILY INJURY LIABILITY
Provides coverage for your liability arising from physical harm, sickness, disease or death sustained by others. It includes care and loss of services and death at any time resulting from bodily injury.
BOILER AND MACHINERY COVERAGE
Provides coverage for claims arising from the operation of boilers and machinery. May cover loss suffered by the boilers and machinery or include damage done to other property and business interruption losses.
BRAND AND LABEL CLAUSE
This endorsement will reimburse you for costs when damage occurs to your property and it must be stamped as salvage or voided, or when your labels must be removed from the property items due to damage.
BROAD CAUSE OF LOSS
This coverage protects your building(s) and personal property or contents from loss caused by the broad form perils subject to certain exclusions. The broad form perils include fire, lightning, explosion, windstorm or hail, smoke, aircraft and vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action, breakage of glass, falling objects, weight of snow, ice, or sleet, water damage, and collapse.
This coverage insures the value of a building which is in the process of being built. The structure, materials, equipment and supplies kept within 100 feet are all covered under this policy. This coverage will be written on a comprehensive perils basis. Coverage limits are determined by the estimated completed value of the insured building.
Provides coverage for:
- the value of the undamaged part of the building caused by enforcement of any ordinance or law regulating the construction or repair of buildings that require the demolition of parts of the undamaged building; or regulates the construction or repair of the building, etc.
- the increased cost of construction to repair, replace, or construct the building caused by enforcement of any ordinance or law regulating the construction, use or repair of buildings.
Building described on the declarations page and including coverage for anything permanently attached, building equipment and fixtures for the premises, glass, personal property you have for service and maintenance of the buildings (i.e., fire extinguishing equipment, floor coverings, flag poles and outdoor lights).
BUSINESS PERSONAL PROPERTY AND PERSONAL PROPERTY OF OTHERS
Provides coverage for your property, other than buildings, that pertains to your business or institution. If you do not own the building, coverage is included for your use, interest in, improvements you have made to the building, and glass in your care custody and control for which you are responsible. It also protects, within these limits, personal property of others which is in your care, custody or control.
Provides coverage for loss caused by check forgery or alteration of checks issued by you or to you.
Requires you to carry a specified percentage of the building and/or business personal property actual cash value. Failure to carry the required percentage can result in a penalty.
COMMERCIAL GENERAL LIABILITY (CGL)
Protects business organizations against liability claims for bodily injury, property damage and personal and advertising injury arising out of your premises operations, products and completed operations, and independent contractors.
Protection from loss arising out of any accidental cause other than those perils or causes specifically excluded. This is in contrast to other policies which name the peril or perils insured against.
CONTINGENT BUSINESS INTERRUPTION INSURANCE
Provides coverage for the loss of income sustained due to the interruption of business, resulting directly from loss or damage to buildings, business personal property of dependent properties from an insured peril and of loss caused by damage to your suppliers, customers, or other specified sources of materials or income. An example of this would be loss of business to small stores in a shopping center if the major store is closed due to an insured peril.
Liability assumed under an "insured contract" or agreement over and above that liability which may be imposed by law.
Provides coverage for loss from acceptance of counterfeit money.
Pays up to 5% of the total coverage amounts for your buildings and business personal property, plus $5,000 for clean up after a loss.
This clause gives you one deductible to pay per occurrence, regardless of the number of buildings or contents that were damaged.
Provides coverage, without limit, for costs incurred by Erie Insurance for investigation and defense of claims against you.
Provides coverage for demolishing and removing undamaged portions of your building required by local building codes.
Decrease in the value of property over a period of time due to wear and tear and obsolescence. Insurance depreciation has little or no relationship to accounting depreciation.
DIFFERENCE IN CONDITIONS
This coverage provides protection against direct loss or damage to your real and personal property as a result of specified perils such as earthquake, flood, burglary, transit, etc. It does not replace a property policy, but merely extends the perils which are insured. This policy can be custom designed to fit your own unique exposures. High deductibles are usually written individually for each specified peril insured against.
Provides coverage for damage caused by earth movement, whether by earthquake, landslide, volcanic eruption, and rising or shifting of land.
The date on which an insurance binder or policy goes into effect and from which time protection is provided.
EMPLOYEE BENEFITS LIABILITY
Provides an employer coverage for liability arising out of errors or omissions in the administration of an employee benefit program, i.e., failure to advise employees of benefit programs. This does not cover fiduciary liability as a result of ERISA compliance.
Provides coverage for loss of money, securities or business personal property by dishonest or fraudulent acts of your employees.
EMPLOYEES AS INSUREDS
Provides coverage for individual employees as insureds under general liability coverage.
Provides necessary protection in the event you negligently cause a work-related employee injury, which is not covered by the workers compensation system.
A form of inland marine insurance applying to equipment.
EXPERIENCE MODIFICATION FACTOR
Factor developed by measuring the differences between the insured’s actual past experience and the expected experience of the class. This factor may be either a debit or credit. When applied to the manual workers compensation premium, the experience modification produces a premium that is more representative of the actual loss experience of a risk.
EXTERIOR SIGNS, LIGHTS, AND CLOCKS
Provides coverage for damage to your exterior signs, lights and clocks.
Coverage for the necessary extra expenses to avoid and/or minimize the interruption of business and continue your business activities despite damage to or destruction of existing facilities. Coverage can be combined with business interruption insurance.
An inland marine coverage that insures works of art on an "all risk" and a "valued" basis.
FIRE DEPARTMENT SERVICE CHARGE
Pays the fire department service charge incurred as a result of an insured loss.
FIRE EXTINGUISHER RECHARGE
Pays the expense you incur to recharge portable fire extinguishers after they are used to fight a fire.
FIRE LEGAL LIABILITY
Provides coverage for you as a tenant of a building if you are responsible for damage to the building you rent or occupy. The damage must be caused by a peril specified in the underlying policy.
A fleet is five or more powered vehicles of common ownership, or under long-term lease agreements, insured for liability coverages and any five vehicles insured for physical damage coverages.
Provides coverage for damage caused by flood, high tides or waves or rising waters due to a storm, that results in damage to your building or business personal property.
GARAGE LIABILITY INSURANCE
Provides coverage for the legal liability of automobile dealers, garages, repair shops and service stations for claims of bodily injury and property damage arising out of garage related operations.
GLASS AND LETTERING
Pays for damage to glass which is part of the described building that you own or for which the lease holds you responsible. Coverage is provided for all risks of loss except scratching. Replacement will be made with safety glazing materials if original was of this type or if required by building ordinance.
HIRED AUTO COVERAGE
Protects you against claims for bodily injury and property damage that are caused by autos that you do not own, but which you use in your business. Hired auto does not include any auto which is leased, hired, borrowed or rented from one of your employees.
HOLD HARMLESS AGREEMENTS
A contract under which legal liability of one party for damages is assumed by the other party to the contract.
HOST LIQUOR LIABILITY
Provides coverage for your liability arising out of the serving or giving of alcoholic beverages at functions incidental to your business. It does not provide coverage if you are in the business of manufacturing, selling, distributing or serving alcoholic beverages.
IMPROVEMENTS AND BETTERMENTS
Additions or changes made by a lessee or tenant at his/her own expense which improves or betters the rented property. The additional values of this property should be considered in determining limits of liability for your business personal property.
Provides coverage for your liability arising from injury caused by the rendering or failing to render medical care on your behalf. Coverage is not provided if the professional service is the insured’s business (i.e., paramedical, nurse, etc.)
Provides coverage for loss of your income from business interruption, minus any charges and expenses which do not continue, caused by damage to your buildings or business personal property and personal property of others. It also covers the extra cost of continuing your operations after a loss at your own location or another location, and the cost to minimize the interruption of your business if you cannot continue your operations.
Loss resulting from an intermediate step after a loss, and not caused directly and immediately by the perils.
Insurance for property that is not confined to a described location. The perils insured against, the terms and the conditions of the policy are usually broader than other property coverage forms.
INNKEEPERS’ LEGAL LIABILITY
The legal liability of hotel and motel operators for the safekeeping of the property of guests. Innkeepers’ Legal Liability coverage insures against this liability imposed by law, usually with a limit of $1,000 per guest and an appropriate aggregate limit.
Usually written to cover anything that will be installed into a construction project. This includes fixtures, machinery, equipment, furnishings, carpeting, etc. while awaiting installation, during installation and while in transit.
An interest by the insured person in the value of the subject of insurance, including any legal or financial relationship. Insurable interest usually results from property rights, contract rights, and potential legal liability.
Provides coverage for the replacement of keys and locks, if the keys are lost or stolen during a robbery or burglary.
A clause that acts to keep the coverage up to date with respect to those areas which have been revised to the advantage of the insured at no additional premium cost.
LOSS ADJUSTMENT EXPENSE
Provides limited coverage for expenses involved in the preparation of data, inventories and appraisals after an insured loss.
A service that seeks to reduce the possibility that a loss will occur and/or reduce the severity of those that do occur.
Proportionate relationship of incurred losses to earned premium expressed as a percentage.
MARKET VALUE CLAUSE
A provision that recognizes the established selling value of the destroyed or damaged stock as of the date of loss as the actual cash value, and to adjust the loss accordingly.
MECHANICAL AND ELECTRICAL BREAKDOWN
Provides coverage for business owned electrical, mechanical or pressure equipment damaged by a defined accident. Equipment includes, but is not limited to, heating and cooling systems, transformers, distribution panels, motors, pumps, compressors, computers, telephone systems and diagnostic equipment.
Provides coverage for reimbursement to a third party for medical or funeral expenses, without regard to your liability, as a result of bodily injury or death sustained by accident under the conditions specified in the policy.
MONEY AND SECURITIES
Provides coverage for loss caused by an insured peril to money and securities which are on your premises or within a bank.
MOTOR TRUCK CARGO LIABILITY
Covers your legal liability for loss or damage of property of others while in your care, custody, or control for transportation, subject to certain exclusions. Can also be used by owners who ship their own goods on their owned vehicles to cover direct damage to their property in due course of transit.
Any person, firm, or corporation, or any of its members specifically designated by name as insured(s) in the policy, as distinguished from others who, although unnamed, are protected by the policy definition.
Coverage is provided for the perils listed in the policy jacket.
NEWLY ACQUIRED OR CONSTRUCTED PROPERTY
Provides coverage for newly acquired or constructed property for 90 days after acquisition or the start of construction. Pays up to 50% of your building coverage limit, not to exceed $500,000, for damage to newly acquired buildings or newly constructed additions, buildings and structures. Pays up to 25% of your business personal property coverage limit, not to exceed $250,000, for damage to your newly acquired business personal property. Pays up to one month’s actual business loss, not to exceed $250,000, for your loss of income due to damage to your newly acquired buildings and/or business personal property, and new additions, buildings and structures.
Provides liability coverage for up to 90 days for any organization you acquire or form, other than a partnership or joint venture. In order for coverage to apply, you must own the organization or have a majority interest in it.
Provides coverage for your liability arising out of the use of any non-owned aircraft chartered with crew by you. This includes liability arising out of operations performed for you by independent contractors.
An automobile which is neither an owned automobile nor a hired automobile. This coverage usually applies to vehicles owned by employees and used for company business.
NON-OWNED AND HIRED AUTO LIABILITY
Provides coverage for your liability for personal injury and property damage claims arising from the use of hired and non
Provides coverage for your liability arising out of the use of non-owned watercraft which measure less than 50 feet in length.
An impairment of health caused by exposure to conditions arising out of or in the course of one’s employment. This is distinguishable from impairment of health caused by accident. State workers compensation laws vary as to coverage for occupational disease.
This covers property other than stock for loss or damage due to an insured peril when that property is temporarily at a location which you do not own, operate or lease.
Other States Insurance provides temporary workers compensation and employers liability coverage for your new operations performed in states other than Nevada, North Dakota, Ohio, Washington and Wyoming, if you begin work after the effective date of the policy.
This covers property such as fences, radio and television antennas, unattached signs, trees, shrubs and plants, when damaged by an insured peril.
Pays up to an additional 25% of the coverage amount for your business personal property for loss during a peak season. Additional limits are available by endorsement.
PERSONAL ARTICLES AND PROPERTY OF OTHERS
Provides coverage for loss to personal articles you and/or your employees own. Coverage is also provided for the personal property of others in your care, custody, or control.
PERSONAL INJURY LIABILITY
Provides coverage for your liability due to libel, slander, false arrest, false imprisonment, wrongful detention, malicious prosecution, invasion of privacy, or defamation of character subject to certain exclusions.
The period of duration of the policy.
The geographic area in which the property loss must occur for coverage to apply. For liability protection, the loss must occur within the coverages territory defined in the policy which can include limited worldwide coverage in specific situations.
POLLUTANTS CLEAN-UP AND REMOVAL
Provides coverage up to $10,000 for the cost of removing pollutants from land or water on the insured premises if their release, discharge or dispersal was caused by an insured peril.
PRODUCTS AND COMPLETED OPERATIONS LIABILITY
Provides coverage for your liability for claims arising out of products you have manufactured or sold and operations or work you have completed.
Protects the professional person against liability arising out of damages based upon alleged or actual professional errors and/or omissions.
PROPERTY DAMAGE LIABILITY
Provides coverage for your liability for damage to the property of others. This coverage also applies to the loss of use of property.
PROPERTY IN DANGER
Pays for loss to business personal property which you have moved to protect from damage. Coverage will apply for a 30
First party insurance which provides coverage for your property damaged or destroyed by an insured peril as contrasted to liability insurance which covers your legal liability to others.
PROPERTY OF OTHERS
This coverage provides protection in the event the property of others, which is in your "care, custody, or control," is damaged by a covered peril.
An insurance company formed by persons combined into a group to insure each other, to obtain protection at relatively low cost and to obtain relatively broad coverage.
An unincorporated insuring institution in which every subscriber is both a policyholder and insurer of all other subscribers. An unincorporated mutual.
RENTAL VALUE INSURANCE
Reimburses you as the owner occupant of a building or unit for the expense of renting another location should your property become unusable as a result of damage by an insured peril.
The amount that would be required to replace items lost, due to an insured peril, with payment equal to today’s purchase price of those items with no deduction for depreciation.
A policy designed for use when values of your property fluctuate during the policy term. An adequate limit of liability should be set to avoid severe premium fluctuations. The insured reports the values actually on hand on a given day of each month. At the end of the year or policy term, these reported values are averaged, and the premium adjusted accordingly.
The practice of analyzing all exposures to risk or loss and taking steps to minimize those potential or real losses to levels acceptable to the organization.
SELLING PRICE CLAUSE
This endorsement would pay for loss or damage of your stock at the standard selling price, in the event of an insured peril. This insures merchandise for profits you would have realized had the peril not occurred.
Covers the peril of ground subsidence resulting from a sinkhole.
SPECIAL FORM CAUSE OF LOSS
This coverage protects your personal property or contents from loss caused by any direct peril, except those specifically excluded in the policy.
STOCK REPORTING FORM
This form allows you to have a variable amount of coverage from one month to the next, depending on the actual cash value of your stock and contents. At the end of the year, you will receive a refund or pay additional premium based on your average amount of coverage over the length of the policy.
STOP GAP ENDORSEMENT
A workers compensation endorsement providing employers liability coverage for protection in the event you negligently cause a work-related employee injury, which is not covered by the workers compensation system. This endorsement is available in the monopolistic fund states.
Provides coverage for loss to business personal property caused by specified perils while being transported.
Coverage which permits the accident victim to make a claim against his or her own insurance company for damages caused by an uninsured motorist.
Coverage which permits the accident victim to make a claim against his or her own insurance company for damages when the negligent party’s auto liability limits are exhausted or are not sufficient to pay the full amount of the damage.
VALUABLE PAPERS AND RECORDS
Provides coverage for the extra expense of reproducing your valuable papers, records and computerized data when damaged by a covered peril.
A policy which provides that a stipulated amount will be paid in the event of a total loss.
The voluntary compensation endorsement enables an employer to extend the benefits provided by the Workers Compensation Act to those of his or her employees who may not be entitled to such benefits under the terms of the act.
VOLUNTARY PROPERTY DAMAGE LIABILITY
Expands property damage coverage to include claims arising out of damage to the property of others which is in your care, custody or control, including the property on which you are working.
WAIVER OF SUBROGATION
This endorsement waives the right of ERIE to place claim for recovery against a third party, after reimbursing or having made prior payment to your firm for that loss. This waiver protects your relationships with important clients or trade partners.
Workers compensation insurance provides coverage for injury or disease sustained by your employees arising in the course and scope of their employment, regardless of negligence on your part.
day period.owned automobiles in your business.
NEWLY ACQUIRED ORGANIZATIONS
INCIDENTAL MEDICAL MALPRACTICE
What does a business owners policy cover?
Insurance companies selling business insurance offer policies that combine protection from all major property and liability risks in one package. (They also sell coverages separately.) One package purchased by small and mid-sized businesses is the businessowners policy (BOP). Package policies are created for businesses that generally face the same kind and degree of risk. Larger companies might purchase a commercial package policy or customize their policies to meet the special risks they face.
- Property insurance for buildings and contents owned by the company -- there are two different forms, standard and special, which provides more comprehensive coverage.
- Business interruption insurance, which covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business. It can also include the extra expense of operating out of a temporary location.
- Liability protection, which covers your company's legal responsibility for the harm it may cause to others. This harm is a result of things that you and your employees do or fail to do in your business operations that may cause bodily injury or property damage due to defective products, faulty installations and errors in services provided.
BOPs do NOT cover professional liability, auto insurance, worker’s compensation or health and disability insurance. You'll need separate insurance policies to cover professional services, vehicles and your employees.
Do I need workers compensation insurance?
Employers have a legal responsibility to their employees to make the workplace safe. However, accidents happen even when every reasonable safety measure has been taken. To protect employers from lawsuits resulting from workplace accidents and to provide medical care and compensation for lost income to employees hurt in workplace accidents, in almost every state, businesses are required to buy workers compensation insurance. Workers compensation insurance covers workers injured on the job, whether they're hurt on the workplace premises or elsewhere, or in auto accidents while on business. It also covers work-related illnesses.
Workers compensation provides payments to injured workers, without regard to who was at fault in the accident, for time lost from work and for medical and rehabilitation services. It also provides death benefits to surviving spouses and dependents.
Each state has different laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services and how the system is administered. For example, in most states there are regulations that cover whether the worker or employer can choose the doctor who treats the injuries and how disputes about benefits are resolved.
Workers compensation insurance must be bought as a separate policy. Although in-home business and businessowners policies (BOPs) are sold as package policies, they don't include coverage for workers' injuries.
Do I need a commercial auto insurance policy?
As a businessowner, you need the same kinds of insurance coverages for the car you use in your business as you do for a car used for personal travel -- liability, collision and comprehensive, medical payments (known as personal injury protection in some states) and coverage for uninsured motorists. In fact, many business people use the same vehicle for both business and pleasure. If the vehicle is owned by the business, make sure the name of the business appears on the policy as the "principal insured" rather than your name. This will avoid possible confusion in the event that you need to file a claim or a claim is filed against you.
Whether you need to buy a business auto insurance policy will depend on the kind of driving you do. A good insurance agent will ask you many details about how you use vehicles in your business, who will be driving them and whether employees, if you have them, are likely to be driving their own cars for your business.
While the major coverages are the same, a business auto policy differs from a personal auto policy in many technical respects. Ask your insurance agent to explain all the differences and options.
If you have a personal umbrella liability policy, there's generally an exclusion for business-related liability. Make sure you have sufficient auto liability coverage.
Do I need professional liability insurance?
Professionals that operate their own businesses need professional liability insurance in addition to an in-home business or businessowners policy. This protects them against financial losses from lawsuits filed against them by their clients.
Professionals are expected to have extensive technical knowledge or training in their particular area of expertise. They are also expected to perform the services for which they were hired, according to the standards of conduct in their profession. If they fail to use the degree of skill expected of them, they can be held responsible in a court of law for any harm they cause to another person or business. When liability is limited to acts of negligence, professional liability insurance may be called "errors and omissions" liability.
Professional liability insurance is a specialty coverage. Professional liability coverage is not provided under homeowners endorsements, in-home business policies or businessowners policies (BOPs).
What is employment practices liability insurance (EPLI)?
EPLI covers businesses against claims by workers that their legal rights as employees of the company have been violated. The number of lawsuits filed by employees against their employers has been rising. While most suits are filed against large corporations, no company is immune to such lawsuits. Recognizing that smaller companies now need this kind of protection, some insurers provide this coverage as an endorsement to their Businessowners Policy (BOP). An endorsement changes the terms and conditions of the policy. Other companies offer EPLI as a stand-alone coverage.
EPLI provides protection against many kinds of employee lawsuits, including claims of:
- Sexual harassment
- Wrongful termination
- Breach of employment contract
- Negligent evaluation
- Failure to employ or promote
- Wrongful discipline
- Deprivation of career opportunity
- Wrongful infliction of emotional distress
- Mismanagement of employee benefit plans
The cost of EPLI coverage depends on your type of business, the number of employees you have and various risk factors such as whether your company has been sued over employment practices in the past. The policies will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements. The policy covers legal costs, whether your company wins or loses the suit. Policies also typically do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies such as workers compensation are excluded from EPLI policies.
To prevent employee lawsuits, educate your managers and employees so that you minimize problems in the first place:
- Create effective hiring and screening programs to avoid discrimination in hiring.
- Post corporate policies throughout the workplace and place them in employee handbooks so policies are clear to everyone.
- Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor. Make sure supervisors know where the company stands on what behaviors are not permissible.
- Document everything that occurs and the steps your company is taking to prevent and solve employee disputes.
How can I save money on my business insurance?
There are a number of ways to save money on your business insurance. We have provided a few general tips, but the best way to save is to call us for a policy review. We will look at your business and current policy to determine how we can best save you money.
- Shop around.
Prices vary from company to company, so it pays to shop around. Get the names of companies or brokers who specialize in your type of business. Call several so that you can compare prices and get a feel for the types of services they would provide. It's also important to pick a company that is financially stable. Check the financial health of insurers with rating companies such as A.M. Best and Standard & Poor’s and consult consumer magazines.
- Choose a higher deductible.
Deductibles represent the amount of money you pay before your insurance policy kicks in. The higher the deductible, the less you will pay for the policy.
- Buy a package policy.
It can sometimes be cheaper to purchase a package policy, such as a Business Owners Policy (BOP), rather than individual coverages. A package policy provides standard coverages and limits of liability that are appropriate for typical small-to-medium-sized businesses.
- Work closely with your agent or broker.
Your insurance professional can provide invaluable advice to help protect your business from unexpected disasters. But you need to keep him or her informed about any major changes in your business. This includes major purchases, expansions or changes in hiring or the nature of your operation. Also, get your agent's advice in terms of disaster planning. Ask what you can do to both reduce risks like fire or work-related accidents, as well as the procedures that should be in place in case your business does suffer a major catastrophe.
Having the right coverage and a well thought out disaster plan can save you money in the long run. It may even save your business from going under.
- Ask about ways to prevent losses.
You may be able to reduce your premium for certain coverages by following your insurer's recommendations. These can include workplace safety, disaster preparation, and human resource intervention.