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Charles Meyer Insurance Agency Blog

All You Ever Wanted to Know About Insurance

A primer on Business Insurance Coverage

What’s the ideal insurance coverage for your small business? We’ll help you get the solution that’s ideal for you.

If you're a small business owner, your business is your lifeblood and deserves all the protection it can get. You need to look further than mandatory workers' compensation and general liability to make sure you are covered for every possible scenario, and avoid skimping on optional coverage.

There’s a myriad of choices and some may be right for one company but not really a fit for your business. So how can you know what’s right for you? Start by meeting with us. In the meantime, here’s an overview of some of the types of policies you should consider. 

General liability

General liability insurance is often your first step in insurance. It protects you from a variety of claims, including bodily injury, property damage and personal injury. General liability coverage is typically combined with a business owners policy (BOP), which includes property and liability coverage.

Workers' compensation

Like general liability, a workers' compensation insurance policy generally comes with the territory of owning a business. Workers' comp covers medical expenses, a portion of lost wages, rehabilitation and death benefits should an employee get injured or become ill on the job.

Regulations vary from state to state, and employees are required to follow them.

Auto and home insurance riders

Do you use your personal car and/or home for business purposes? If so, your regular insurance policy for these assets may not fully protect you.

If you don't own a separate commercial vehicle, you should consider getting hired and non-owned auto liability insurance. This covers any claims against your business for incidents that occur while you or your employees are driving your car during a workday. With that policy, It’s important to have enough coverage to avoid having your business assets and income at risk after a serious accident. $1 million in liability and auto coverage is common as most cases will not exceed $1 million in damages.

Additionally, homeowners insurance is not designed to provide business coverage, when you or your employees are working from home. If that’s the case, we recommend you contact us about adding endorsements or riders to your insurance policy to cover your business activities. 

Business interruption insurance

Fires, floods, building collapse, theft – any of these situations could make you have to temporarily shut down your business and consequently lose income.

Anytime you have a loss of income as a small business, a couple of months could put you out of business. Business interruption insurance will compensate you for some or all of the money you lose from not being fully operational. Again, this is something you should check with us to see if your company needs this type of insurance coverage.

Credit insurance

If your business sells goods or services on credit, you open yourself up to the risk that the buyer won't come through with the money. Credit insurance provides coverage for a variety of losses related to bad debt situations. Depending on your policy, credit insurance may cover all or part of your accounts receivable and help with your customer credit management or debt collection.

Cyberinsurance

Did you know that more than 40% of U.S. companies have experienced a data breach in the last year? And more than 25% of those companies didn't have a data breach response plan or team in place. These days, it makes sense to look into cyberinsurance to protect sensitive employee, client and financial information in the event of a data breach.

If your business has a website, you really should look at getting this coverage. Cybercriminals are focused on small businesses for the simple reason that they know network security is much less sophisticated. It's easier to get in and get the information. When you have cyber coverage, you're getting the best practices to keep a cyber breach from happening, and that value alone is important.

Employment practices liability

Employers are required by law to have certain types of insurance to cover their employees, but what about protection for your business if an employee sues? If a disgruntled worker take you to court for an issue like wrongful termination or sexual harassment, you could lose a significant amount of money, even if you're not guilty. Employment practices liability insurance (EPLI) ensures that your business won't go bankrupt defending itself if an employee files a claim.

Errors and omissions insurance

Most small business owners don't think it will ever happen to them, but lawsuits can and do frequently occur when business disputes need to be settled. Errors and omissions (E&O) insurance, also known as professional liability insurance, protects your business and reputation in the event that a client or customer files a lawsuit.

This is most important for service-based businesses and fills in some of the gaps in general liability coverage. Some states require such insurance for certain professions, such as medical doctors, but in fact, professional liability insurance should be a key consideration for any business owner.

Professional liability insurance protects you and your employees if you're sued for errors or negligence. Even if you've done nothing wrong, the costs to defend against a lawsuit can be significant for a small business, and insurance provides for both legal representation and payment of any judgment made against you.

Product recall

As a business owner, you have a certain responsibility to the people who purchase your products. Whether you’re a vendor, distributor or a manufacturer, if your product causes injury or illness when it is used correctly, you can be held legally and financially responsible for those damages.

While product liability itself is often covered within a general liability policy, you're not covered if you need to undergo the expensive, time-consuming and potentially reputation-damaging process of a recall. To help you with this, product recall insurance may be available as a rider to your general liability policy.

Product recall insurance can cover the cost of recalling products, including getting them off the shelves, destroying them, and running a PR or advertising campaign to rebuild public trust.

Inland marine

Don't let the name fool you – this coverage has nothing to do with water. Inland marine insurance covers products, materials and equipment when transported over land – e.g., via truck or train – or while temporarily warehoused by a third party. Collisions and cargo theft are the two most common reported losses under inland marine insurance.

For most businesses, your coverage under your BOP or commercial package policy (CPP) will be enough. However, if your business frequently ships high-value products like computers, construction equipment or medical equipment over land, inland marine insurance might be necessary.

Disaster insurance

If you live in an area that's at high risk for floods, tornadoes, earthquakes or any other type of natural disaster, you should absolutely have insurance for it.

If you think these coverages are too expensive, you should probably reconsider. When the insurance premiums are high, it means the covered event is likely to occur and losses are likely to be catastrophic.

You should also look into storing videos of your office space, financial records and other important files in the cloud rather than relying on a physical space to avoid the records being destroyed. Pre-disaster videos of your space will help your insurance claim move more smoothly. 

Key person insurance

Key person insurance is exactly what it sounds like – life insurance on a person whose absence or loss would mean the failure of the company.

Key person insurance works by a company purchasing a life insurance policy on its key employee(s) and paying the premiums on that policy. If the key person dies unexpectedly, the company will receive the insurance payoff to keep the company afloat in the aftermath of the death or to cover costs involved in closing the business down.

Business overhead expense

Business overhead expense insurance is similar to key person insurance in that it protects a critical member of your company – the business owner.

In small businesses where the owner is likely responsible for much of the day-to-day operations, an extended absence can have a catastrophic effect on the balance sheet. Business overhead expense insurance is a basic disability policy that covers business expenses such as rent, salaries and utilities if the owner becomes unable to work due to illness or injury.

So does your company really need all these policies?

Every company has different insurance needs, depending on the industry, location and nature of the business. All the policies we’ve listed here may or may not be right for your business. The smart move is to consult with us frequently so we can assess your risks and ensure that your business is getting all the protection it needs.

It’s our job to help assure you’ve got the ideal coverage to make sure something unexpected doesn't get in the way of your path to success.