General Guide to Small Business Insurance

Unfortunately, some small businesses ignore the importance and necessity of insurance until after a major loss has occurred.  A sound insurance plan protects you and your business by shifting the risks and by reducing the uncertainties of your  business.

It is advisable to have one agent who represents numerous companies handle all the insurance needs of your business.  The agent will be familiar with your business situation and be able to recommend alternative plans when purchasing and updating insurance.   Package deals, which combine several overages in one policy, are available to business owners by most insurance companies.  Your insurance plan, however, should be tailored to fit the needs of your business.  A good insurance agent can be very helpful to you in selecting an appropriate insurance plan.

Several major factors that should be considered when choosing an insurance plan include:  identifying the risks, determining the amount of loss that can be suffered from each risk, obtaining coverage for the largest potential loss first, and avoiding duplicate coverage.

 
TYPES OF INSURANCE

There are a variety of coverages available from different  companies, with different premiums and deductibles.  There are, however, four  major types of property/casualty coverage that are considered to be essential for most businesses:   general liability, property, workers' compensation, and automobile.


Liability Insurance
Liability insurance may be one of the most important types of insurance for a business.  It protects your business from financial loss due to bodily injury or property damage caused by negligence of business operations (which may include acts of the owner, acts of the employees on the job, business conditions, or products of the business).  In some cases, businesses may be subject to damage claims even when "reasonable care" was used.  A few examples of liability coverages available include the following:  products and completed operations liability, commercial general liability,   personal injury (which includes libel and slander), professional liability, employment practices liability and pollution liability.


Property Insurance
Property insurance provides protection  from damage to or loss of property.  A few examples of property which can be covered include the following:
Buildings, Contents, Computers and other EDP equipment, Contractors Equipment, Inventories, Tenants Improvements/Betterments.

Perils insured against can be very broad such as a "special" form, which covers "all risks of direct loss" subject to a few standard exclusions.  For a lower premium, the "broad form" covers against listed perils such as: Fire, windstorm, theft,  vandalism, explosion, hail, smoke.

In determining property insurance rates, insurance companies take into consideration several factors concerning the property and building, such as location of the property and building; construction of the building;  and smoke, sprinkler, and burglar alarm systems.  If, for example, an automatic sprinkler system is installed, risk will be reduced, and fire insurance rates lowered.


Workers' Compensation Insurance
Basically, workers' compensation is a state-mandated, no-fault insurance system for workplace injuries and illnesses. By providing workers' comp coverage, employers are shielded from liability lawsuits filed by employees who suffer job-related injuries or illnesses.

In return, workers are assured of coverage for job-related injuries or illnesses—coverage that includes medical expenses, death benefits, partial recovery of lost wages, and vocational rehabilitation.  Workers' compensation insurance is available from the state as well as private insurance companies.


Disability insurance, which covers non-occupational disabilities, should not be confused with workers' compensation insurance, which relates to work-related injury or illness.  However, if the weekly benefit rate for a worker's compensation claim is less than that which would be payable under disability insurance coverage,  disability benefits may be used to pay the difference.


Automobile Insurance
Automobile insurance provides both property and liability coverage for vehicles owned by the business or vehicles used for business purposes.  Several types of property insurance covering the automobile are collision, theft, and glass breakage.  Automobile liability insurance protects the employer from losses resulting from an employee's injuring people or damaging other people's  property.  Non-owned automobile liability insurance is available to the employer for employees driving their own vehicles on company business.  Rates are determined by the type and usage of the vehicle, as well as the driving record of the person driving the vehicle
 

IN CLOSING
Depending on the type of business and situation, other insurance coverages, such as surety insurance, employee health and life insurance, key-person insurance, and credit insurance can add great value and security to the  business.  You should consult your insurance agent regarding these special situations.