Business

What is Business Insurance?

Business insurance protects your investment by minimizing financial risks associated with unexpected events such as a death of a partner, an injured employee, a lawsuit, or a natural disaster. 

Business Insurance is a broad name for different coverages available to the business owner to protect against losses and to insure the continuing operation of the business. 

Major Types of Business Insurance

General Liability Insurance 

• A standard insurance policy issued to business organizations to protect them against liability claims for bodily injury and property damage arising out of premises, operations, products, and completed operations; and advertising and personal injury liability.

Commercial Auto Insurance

• Covers cars, trucks, motorcycles, and other road vehicles owned by or operated within a business. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise therefrom. Commercial auto insurance may also offer financial protection against theft of the vehicle and possibly damage to the vehicle, sustained from events other than traffic collisions.

Commercial Property Insurance

• Covers risk of loss to an organization's buildings or personal property. Usually includes buildings, personal property of the insured business or business owner, personal property of others on site and in the insured's possession. Coverage can be provided on an all risk or specific perils basis.

Commercial Umbrella Insurance

• Commercial Umbrella insurance is liability coverage that is in excess of specified other commercial insurance policies and also potentially primary insurance for losses not covered by the other policies. When an insured business is liable to someone, the insured's primary insurance policies pay up to their limits and any additional amount is paid by the umbrella policy (up to the coverage limit of the umbrella policy).

Professional Liability Insurance

• Professional liability insurance (PLI), also called professional indemnity insurance (PII) but more commonly known as errors & omissions (E&O) in the US, is a form of liability insurance that helps protect professional advice and service-providing companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit. Professional liability coverage sometimes also provides for the defense costs, including when legal action turns out to be groundless. 

Business Owner's Package

• A Business Owner's Package (often called a BOP) is an insurance policy that combines protection from all major property and liability risks in one package. It typically combines all the basic coverages required by a business owner into one bundle. It is usually sold at a premium that is less than the total cost of the individual coverages. Business Owners Policies usually target small and medium-sized businesses and typically contain business interruption insurance, which provides reimbursement for up to a year of lost revenue resulting from an insured property loss.

Workers Compensation

• Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence.

Group Health Insurance

• Group health insurance coverage is a policy that is purchased by an employer and is offered to eligible employees of the company (and often to the employees' family members) as a benefit of working for that company. A group health insurance plan is a major part of many employee benefits packages that employers provide for their employees. 

Group Life Insurance

• Group life insurance (also known as wholesale life insurance or institutional life insurance) is term insurance covering a group of people, usually employees of a company, members of a union or association, or members of a pension or superannuation fund. Individual proof of insurability is not normally a consideration in the underwriting. Rather, the underwriter considers the size, turnover, and financial strength of the group.

Group Disability Insurance

• Group Disability Insurance is a type of group insurance that provides regular income replacement payments to an insured member of the group in the event of an eligible disability resulting from illness or injury. Coverage is generally offered in two types: short-term disability (STD) or long-term disability (LTD).

Supplemental Insurance

• Supplemental insurance is extra or additional insurance that you can purchase to help you pay for services and out-of-pocket expenses that your regular insurance does not cover.

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To learn more about the right business insurance for you.

What is a Business Owner's Package Insurance Policy?

A business owner policy packages all required coverage a business owner would need. Often, BOPs will include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance . Based on your company's specific needs, you can alter what is included in a BOP. 

Typically, a business owner will save money by choosing a BOP because the bundle of services often costs less than the total cost of all the individual coverage's.

What's Covered with a Typical BOP Policy?

BOPs typically include: 

1. Property insurance for buildings and contents owned by the company -- there are two different forms, standard and special, which provides more comprehensive coverage.
2. 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.
3. 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.

In most cases, 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.

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To learn more about the right Business Owners' Package Policy for your business.

What is Business Auto Insurance?

Commercial Vehicle Insurance is a policy of physical damage and liability coverages for amounts, situations, and usage not covered by a personal auto policy. Seems obvious, doesn't it? But, seriously, knowing the difference between a personal auto insurance policy and a commercial auto policy (and when you need which) is important business—for your business. This type of business insurance covers a variety of vehicles. You may also have heard of this coverage referred to as commercial auto insurance, commercial car insurance, truck insurance, or fleet insurance.

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To learn more about the right Business Auto Insurance for your business.

General Liability (GL) insurance, sometimes called small business liability insurance or commercial liability insurance, provides insurance coverage for your business against claims made by others including bodily injury, damage to property, or personal injury.

If someone comes to your place of business and is injured, a general liability policy could cover their medical costs. If someone else’s property is damaged and you are found to be responsible, the repair or replacement cost could be covered. And if someone’s reputation is damaged by something you or an employee said or wrote about them, the associated costs could be covered.

Why do I need General Liability Insurance?

As a small business owner, you may be legally responsible if another person gets hurt or if their property is damaged while at your business or because of something you did. Make sure your business is properly protected against risks.

You should consider general liability insurance coverage if you or your employees:

Interact with clients face to face

If you visit a client’s place of work, or clients visit yours, there is always the possibility someone could get hurt and require medical treatment.

Have access to customer’s property

If a customer’s property is damaged at your location or at a job site, general liability insurance could cover the cost to repair or replace it.

Use advertising to market your company

If you promote your company and accidentally use wording that is under copyright or trademark, general liability insurance could cover you if a claim occurs.

Use third-party locations for business related activities

If someone (other than you or an employee) is injured on a job site where you are responsible, general liability insurance could cover their medical costs.

Require coverage in order to be considered for a project

If you propose or bid on certain contracts, liability insurance could be a condition of the contract award.

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To Learn More about General Liability Insurance

What Is Commercial Property Insurance?

Commercial property insurance is used to cover any commercial property. Commercial property insurance protects commercial property from such perils as fire, theft, and natural disaster. A variety of businesses, including manufacturers, retailers, service-oriented businesses, and not-for-profit organizations carry commercial property insurance. It is generally bundled together with other forms of insurance, such as commercial general liability insurance.

KEY TAKEAWAYS

• Commercial property insurance is insurance used to cover property and equipment from the risk of disasters.
• Different types of properties and equipment are considered for commercial property insurance.
• Several factors, such as location and occupancy, are considered while determining the cost of commercial property insurance.

Understanding Commercial Property Insurance

Commercial property insurance can be a major expense for businesses that use equipment worth millions or billions of dollars, such as railroads and manufacturers. This insurance essentially provides the same kind of protection as property insurance for consumers. However, businesses can usually deduct the cost of commercial property insurance premiums as expenses. Commercial property insurance generally does not cover losses arising from tenants using the building.

When determining how much a company should pay for commercial property insurance, the value of a business' assets, including the building, is the primary factor. Before meeting with an agent to discuss coverage, a company should take an inventory of their physical assets located at their property. This information will help determine what exactly would be the replacement value and the level of coverage the business should get.

With an increase in the number of natural disasters, weather conditions in the area where the building is located have also become an important factor in determining the cost of commercial property insurance. Commercial insurance rates are generally higher for properties located in the vicinity or inside geographies with significant risk of weather-related catastrophes. For example, rates are higher for properties located near regions prone to wildfires in California.

Factors Considered in a Commercial Property Insurance

• Location: Buildings in cities or towns with excellent fire protection typically cost less to insure than buildings outside a city or in areas with limited fire protection.
• Construction: Buildings made of potentially combustible materials will have higher premiums, while those made of fire-resistant materials could earn a discount. Additions to an existing structure might affect a fire rating, so it's a good idea to talk to an agent or insurance company before remodeling. Internal structural elements can also change a fire rating. Using wood partitions, floors, and stairways in an otherwise fire-resistant building will likely nullify any rate reduction. Fire-resistant interior walls, floors, and doors can help maintain a good fire rating.
• Occupancy: A building's use also affects its fire rating. An office building will likely rate better than a restaurant or auto repair shop. In a building with multiple tenants, one hazardous occupant will negatively affect the fire rating of the entire building. If a business is in a building with a more hazardous tenant, premiums will be higher.
• Fire and theft protection: How far are the nearest fire hydrant and fire station? Does the business have a fire alarm and sprinkler system? How about a security system?

Property to Consider for Commercial Property Insurance

Some particular places on your property to consider insuring include:

• The building that houses your business, including if it is owned or rented
• All office equipment, including computers, phone systems, and furniture, whether they're owned or leased
• Accounting records and essential company documents
• Manufacturing or processing equipment
• Inventory kept in stock
• Fence and landscaping
• Signs and satellite dishes

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To Learn More about Commercial Property Insurance

 

What Is Errors and Omissions Insurance (E&O)?

Errors and omissions insurance (E&O) is a type of professional liability insurance that protects companies, their workers, and other professionals against claims of inadequate work or negligent actions.

KEY TAKEAWAYS

• Errors and omissions insurance is a form of professional liability insurance.
• E&O insurance protects companies and professionals against claims of inadequate work or negligent actions made by clients.
• Anyone who provides a service requires E&O insurance including financial services, insurance agents, doctors, lawyers, and wedding planners.

Errors and Omissions Insurance

Understanding Errors and Omissions Insurance (E&O)

Errors and omissions insurance is a form of liability insurance. It protects companies against the full costs of a claim made by a client against a professional who provides advice or a service such as a consultant, financial advisor, insurance agent, or lawyer.

Errors and omissions insurance often covers both court costs and any settlements up to the amount specified by the insurance contract. This kind of liability insurance is generally required for professional advice-giving or service-providing businesses. Without E&O insurance, a company can be held liable for up to millions in damages plus the fees associated with a legal team. E&O insurance helps mitigate or eliminate these potential liabilities.

For example, a client may sue an advisor or broker after an investment goes sour, even if the risks were well-known and within the guidelines established by the client. Even if a court or arbitration panel decides in favor of a broker or investment advisor, the legal fees can be very high, which is why E&O insurance is important.

The benefits E&O insurance gives companies or individuals vary greatly depending on the policy and issuing insurance company. E&O insurance may or may not cover temporary employees, claims stemming from work done before the policy was in force, or claims in various jurisdictions. These policies do not cover criminal prosecution and certain liabilities that may arise in civil court not listed in the policy.

Special Considerations

Insurance brokers, insurance dealers, realtors, registered investment advisors, financial planners, and other financial professionals can obtain E&O insurance.1 Regulatory bodies, such as insurance regulators, the Financial Industry Regulatory Authority (FINRA), or even a company's investors will often require E&O insurance.2

E&O insurance is also applicable to businesses outside the financial industry including nonprofits, general maintenance companies and contractors, and engineering firms. Any other company or professional who provides a service, such as wedding planners and printers, also needs E&O insurance. Doctors, dentists, and other medical professionals also take out E&O insurance called malpractice insurance.

The cost of a policy depends on a number of factors including the kind of business covered, its location, and any previous claims that have been paid out in the past. A person or company with numerous litigation problems has a higher underwriting risk and is likely to find E&O insurance more expensive or less favorable in its terms as a result. On average, E&O insurance can run around $500 - $1,000 per employee, per year.3

A well-written contract and consistent communication during the transaction help mitigate claims.

Example of Errors and Omissions Insurance

Let's say a company that hosts servers used by third parties for data purposes is breached by hackers who gain access to proprietary information and client data. The companies affected by the hack then sue the server-hosting company for damages for inadequate security. The server-hosting company has an E&O insurance policy and reviews it to see what the policy does and does not cover. To the company's benefit, its errors and omissions policy is robust and covers such situations. The insurance company pays for the legal expenses involved in the court case against multiple companies. It also pays for any monetary damages rendered by the courts or settled in arbitration.

Having errors and omissions coverage helps the company avoid a substantial financial hit—even bankruptcy—depending on the company's finances. If you or your employees are in the business of providing professional advice or other professional services, E&O insurance could be worth your consideration.

Who Needs Errors and Omissions Insurance (E&O)?

Professionals working in financial industries such as insurance, investments, real estate, and accounting will benefit from E&O insurance to cover them in the event of a mistake or omission made on behalf of a client, which can be costly. Many regulatory bodies mandate employees in these professions to obtain E&O coverage through their employer or independently.

Why Is Errors and Omissions Insurance Important?

A client can sue a financial professional if they incur a loss due to an error or omission made during an application process, consultation, or investment decision. E&O insurance covers legal fees and any damages awarded to the client if they are owed.

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To Learn More about E&O Insurance

Professional Liability Insurance

What Is Professional Liability Insurance?

Professional liability insurance (PLI) is insurance that protects professionals such as accountants, lawyers, and physicians against negligence and other claims initiated by their clients. Professionals who have expertise in a specific area require this type of insurance because general liability insurance policies do not offer protection against claims arising out of business or professional practices such as negligence, malpractice, or misrepresentation.

KEY TAKEAWAYS

• Professional liability insurance is used in businesses to protect against claims of negligence.
• Professionals such as accountants and doctors use this insurance to protect themselves against client claims of negligence or malpractice.
• Professional liability insurance is also referred to as medical malpractice insurance or errors and omissions insurance, depending on the professional.

How Professional Liability Insurance Works

Depending on the profession, professional liability insurance may have different names, such as medical malpractice insurance for the medical profession, and errors & omissions insurance for real estate agents. Professional liability insurance is a specialty coverage that is not provided under homeowners' endorsements, in-home business policies, or business-owners' policies. It only covers claims made during the policy period.

Professional liability insurance policies are usually arranged on a claims-made basis, which means coverage is good only for claims made during the policy period. Typical professional liability policies will indemnify the insured against loss arising from any claim or claims made during the policy period by reason of any covered error, omission or negligent act committed in the conduct of the insured's professional business during the policy period. Incidents occurring before the coverage was activated may not be covered, although some policies may include a retroactive date.

What Professional Liability Insurance Does Not Include

Coverage does not include criminal prosecution, nor all forms of legal liability under civil law, only those listed in the policy. Cyber liability, covering data breach and other technology issues, may not necessarily be included in core policies. However, insurance that covers data security and other technology security-related issues is available as a separate policy.

Professional Liability Policy Wording

Some professional liability policies are worded more tightly than others. While a number of policy wordings are designed to satisfy a stated minimum approved wording, which makes them easier to compare, others differ dramatically in the coverages they provide. For example, breach of duty may be included if the incident occurred and was reported by the policyholder to the insurer during the policy period.

Wordings with major legal differences can be confusingly similar to non-lawyers. For instance, coverage for "negligent act, error or omission" indemnifies the policyholder against loss/circumstances incurred only as a result of any professional error or omission, or negligent act (i.e., the modifier "negligent" does not apply to all three categories, though any non-legal reader might assume that it did). Meanwhile, a "negligent act, negligent error or negligent omission" clause is a much more restrictive policy, which would deny coverage in a lawsuit alleging a non-negligent error or omission.

Example of Professional Liability Insurance

Medical malpractice insurance is a common example of a type of professional liability insurance. Medical professionals do their work under the not inconsiderable threat of facing lawsuits for alleged medical malpractice, which is defined as an act or omission by a medical provider in which they provide treatment that falls below the standard of care, resulting in injury to or the death of the patient. While most medical malpractice cases are treated as civil torts in the United States, medical malpractice insurance can offset the cost of such lawsuits to providers. 

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To Learn More about Professional Liability Insurance

What is Workers Compensation Insurance?

Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence.

Additional Information about Workers' Comp Insurance

While plans differ among jurisdictions, provision can be made for weekly payments in place of wages (functioning in this case as a form of disability insurance), compensation for economic loss (past and future), reimbursement or payment of medical and like expenses (functioning in this case as a form of health insurance), and benefits payable to the dependents of workers killed during employment (functioning in this case as a form of life insurance).

General damages for pain and suffering, and punitive damages for employer negligence, are generally not available in workers' compensation plans, and negligence is generally not an issue in the case.

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To learn more about the right workers compensation insurance for your needs.

Business Umbrella Policy

Business umbrella insurance gives you extra coverage to help pay for costs that exceed certain liability policy limits. Without this type of business insurance coverage, you’d have to pay out of pocket for liability claims that cost more than your coverage limits. This can include:

• Legal costs
• Medical bills
• Damage to other people’s property
• Judgments and settlements

How Does Business Umbrella Insurance Work?

 A business umbrella policy extends the limits of some of your primary liability insurance policies, such as general liability insurance and business auto insurance.

Our business umbrella insurance are flexible. It can extend the liability coverage of policies you may have with other insurance companies. So, if you have a general liability insurance policy from another insurer, we can help extend that policy. Let’s say one of your employees gets into a car accident while making a delivery to a customer. The property damage and bodily injury costs exceed your business’ commercial auto liability limits. If you don’t have a commercial umbrella policy, you’d have to pay the amount that exceeds your policy limit, putting your business at financial risk. That’s why it’s important to have umbrella coverage.

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To Learn More about Business Umbrella Policy

What are Group Benefits?

Group benefits are insurance that covers a group of people who are usually the members of societies, employees of a common employer, or professionals in a common group. 

Group coverage helps reduce premium costs because it reduces the insurance carrier's risk by creating a pool of people to insure who are together for reasons other than obtaining insurance. Group benefits can also be a powerful incentive to keep and attract great employees.

Builders Risk Coverage Form

What Is a Builders Risk Coverage Form?

A builders risk coverage form is an insurance policy that covers residential and commercial structures while they are under construction or being remodeled or renovated. The policy appears on a reporting or completed value form, as there is no standard form or contract to fill out. A builders risk coverage form is also called a builders risk policy.

KEY TAKEAWAYS

• A builders risk coverage form is an insurance policy that covers property while it is under construction or being renovated.
• There is no standard form for the policy so it appears on a reporting or completed value form.
• A builders risk coverage form provides protection against losses on the building, equipment, and supplies, but not to accidents on the job, the land, scaffolding, and theft.
• The policy does not cover war, nuclear hazards, extreme weather, or government seizure.
• In most cases, and it is recommended, that the name of the insured is the owner of the property as opposed to the contractor.

Understanding a Builders Risk Coverage Form

A builders risk coverage form will include hazards to the building structure, machinery, equipment, and materials and supplies, but it is unlikely to cover injuries or accidents on the job site. Covered building components include foundations, fixtures, machinery, equipment used to service the building, building materials and supplies, and debris removal in the event of a loss.

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To Learn More about Builters Risk

Business Interruption Insurance

What Is Business Interruption Insurance?

Business interruption insurance is insurance coverage that replaces business income lost in a disaster. The event could be, for example, a fire or a natural disaster. Business interruption insurance is not sold as a separate policy but is either added to a property/casualty policy or included in a comprehensive package policy as an add-on or rider.

KEY TAKEAWAYS

• Business interruption insurance is insurance coverage that replaces income lost in the event that business is halted due to direct physical loss or damage, such as might be caused by a fire or a natural disaster.
• This type of insurance also covers operating expenses, a move to a temporary location if necessary, payroll, taxes, and loan payments.
• In rare cases, business interruption insurance can apply if a civil authority shuts down a business due to physical damage to a nearby business, resulting in a loss for a firm.
• Standard business interruption insurance does not reimburse policy holders if the business is closed due to a pandemic. Even some all-risk insurance plans have specific exclusions for losses due to viruses or bacteria.

Understanding Business Interruption Insurance

Business interruption insurance premiums (or at least the additional cost of the rider) are tax-deductible as ordinary business expenses. This type of policy pays out only if the cause of the business income loss is covered in the underlying property/casualty policy. The amount payable is usually based on the past financial records of the business.

Business interruption insurance coverage lasts until the end of the business interruption period, as determined by the insurance policy. According to the Insurance Information Institute, the standard policy is 30 days, but using an endorsement can extend it to 360 days.1 Most business interruption insurance policies define this period as the date that the covered peril began until the date that the damaged property is physically repaired and returned to the same condition that existed prior to the disaster. There may also be a waiting period.

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Cyber and Privacy Insurance

What Is Cyber and Privacy Insurance?

A cyber and privacy insurance coverage policy may provide companies with protection from losses resulting from a data breach or the loss of electronically-stored confidential information.

Cyber and privacy insurance policies are designed to protect a company from the activities of hackers and other individuals or groups who may gain access to company-stored personal identifying information (PII).

KEY TAKEAWAYS

• Cyber and privacy insurance policies protect companies from hackers and other individuals or groups who may gain access to company-stored personal identifying information.
• A cyber and privacy insurance coverage policy may protect companies from losses that result from data breaches or confidential data loss.
• Purchasing cyber and privacy insurance coverage can help a business recover from the financial and regulatory burdens that security breaches can create.

Understanding Cyber and Privacy Insurance

The use of computers and the Internet has become an integral component of business operations over recent decades. Many businesses rely on the Internet to reach customers and to deliver services to clients.

Frequently, this activity requires the transfer of confidential and private information from the client to the company and vice versa. Information may include credit card details, Social Security numbers, health records, and contact information.

Businesses are at risk of attack if they collect and store purchase information, maintain records of Social Security numbers, or have credentialing or educational data. This type of information is most prone to identity theft attacks.

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