Most businesses are savvy enough to know they need to carry insurance, but what kind? Unfortunately, it is far too common for business owners to think they are covered against most common types of loss only to find out – too late – that they are not properly protected. If you live along the Texas coast, you understand that you can't just buy homeowners insurance. You have to either buy separate wind and flood policies to augment your homeowners insurance OR buy a comprehensive policy to assure that your assets are covered. Just like hurricane protection for your home, you may need to have several different types of insurance to protect your assets – and often this protection is available for a lot less than you think.
Here is a snapshot of the most common types of business insurance –
• General Liability (GL): Typically provides protection against claims of bodily injury or property damage for which your business may be liable. Note that there are some common exclusions that may need to be covered under other types of policies. GL will NOT cover injuries to your employees. All businesses should carry GL coverage, and in many cases it is required by your landlord, vendors, and clients.
• Professional Liability/Errors & Omissions: Professional Liability or Errors & Omissions (also called E&O) is necessary if you perform a professional service, like a nurse or a CPA. Your GL policy typically will NOT cover you against loss in the event that you or one of your employees makes a mistake that causes someone physical or financial damage – for example, a nurse administering the wrong medicine or a CPA making a costly mistake on a company’s financial statement.
• Commercial property insurance: Your GL policy may not cover all damages to your property (both the building and the contents) in the event of some events – such as a tornado, fire or vandalism.
• Workers’ Compensation (WC): If your employees are injured in the line of work, your GL will not cover the expenses for care or loss of wages. This can either be a true “subscribers policy” or a simple Occupational Accident policy – both of which have benefits and drawbacks, so choose this one wisely and not only on the basis of initial cost.
• Umbrella: Most policies have certain “reasonable” limits or caps to how much they will pay out. An umbrella policy is one that only activates in the event of a catastrophic nature and damages exceed the amount of your policy.
• Commercial auto insurance: Many companies require their employees to utilize their own vehicles for work, yet often don’t check to see if they have the correct automobile insurance coverage. Commercial auto may be required, whether paid for by the company or by the employee.
All of these types of insurance should be discussed with a trusted insurance advisor to determine the level of coverage that you need. Don’t just accept whatever coverage is handed to you, ask questions such as:
• If my employees are injured on the job, how is their medical care paid for? Is there a limit on coverage and if so, what if the care exceeds that cost? What about lost wages – who is responsible?
• If one of my employees makes a mistake and a customer is physically or financially harmed, am I covered?
• If confidential information is stolen or lost from my company, what protections do I have?
• If one of my employees is using their personal vehicle for business use, will I/they be covered in the event of an accident? If so, to what extent (Repair their vehicle? Repair a 3rd party vehicle? Medical coverage? Replace damaged business related equipment or merchandise?)
Your business is often your largest investment in both time and money. Make sure you protect it and yourself with a level of insurance that is both of the proper type and at a coverage level that is appropriate for your industry and size.
Kevin Cobb
Sr. VP – Risk Management
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