2022 Insurance PRO TIP #10: Starting a business? Already own a business? Here are some professional tips when considering your company's insurance needs.
Every business is different. Whether you're opening a retail sales shop, providing contracting or construction services, or opening a firm that focuses on legal or accounting advice, the business insurance you need will always vary. In general, here are some basic insurance policies that you will either need or should consider before putting that "open for business" sign up!
1. Property Insurance: This is basically a two-part need. If you own your own building, that you're business operates out of, you will want to insure the building. If you have a mortgage, this will be mandatory. There is also Business Personal Property (BPP) insurance. This would be coverage geared towards some or all major perils that would cover office equipment, furniture and inventory.
2. General Liability Insurance: This is a very broad term and could be very confusing for most start-up business owners who thinks this is a "catch all" for liability coverage. The coverage provided serves the overall title (General). This would be coverage for slip-and-falls or any other mishap to customers, vendors or any other third party that would get injured on your business premises due to negligence. Other issues can be endorsed or excluded, but in GENERAL, this is it. General Liability can also be written for any business that does work remotely given the class code for that business.
3. Other types of Liability Insurance:
a. Employee Practices Liability Insurance (EPLI): Covers owners against employee lawsuits of mistreatment, harassment, or abuse in the workplace.
b. Errors and Omissions (aka Professional Liability) Insurance (E&O): Covers owners and employees of a business that provided professional advice and, in turn, who may be sued for giving "bad advice" or "failure to perform a service that has a negative financial impact to a customer".
c. Directors and Officers Liability (D&O): Protects all parties on a board of directors who makes decisions about either a business, a non-profit, or another entity. This coverage would protect wrongful decisions made by the board if their decisions result in personal, civil or federal litigation.
HINT HINT: General Liability does NOT cover these issues.
4. Business Vehicle (Auto) Insurance: This coverage may not be applicable if a business does not own one or more vehicles. For businesses that have fleets of vehicles to either work remotely or that focuses on shipping, this coverage is a must. Long hauling or shipping businesses need to consider state filings in the territories they intend to travel and each state has it's own different set of rules regarding liability coverage amounts. Small business can also consider "hired non-owned auto" coverage that would cover an employee's personally owned vehicle, or a vehicle a business rents, in the event of a mishap while on business travel.
HINT HINT: General Liability does NOT cover Business Auto liability.
5. Worker's Compensation: Coverage that employers purchase to cover their employees if they are injured on the job. Minimum employee numbers dictate whether or not a state mandates a business to carry Work Comp coverage. In the state of Mississippi, the minimum employee count is FIVE (5); In California, the minimum is ONE (1). While employee numbers in states demand a business owner carries this coverage, business owners can voluntarily purchase this coverage before mandatory employee numbers are met for added protection.
HINT HINT: General Liability does NOT cover employee injury.
These are very broad and generalized examples. Coastal Select Insurance agents are recognized EXPERTS in all facets of commercial, business and contractor insurance needs and can specifically evaluate your business situation for customized solutions. Our carrier relationships and decades of experience makes us a one-stop shop for the professional counseling and advice every business owner needs. Whether you're starting up or need an independent review of you current policies, give us a call today!!
Fun Fact: More and more people are operating their businesses out of their home nowadays. Don't assume that your homeowner's policy will cover some or all of the items mentioned above. If this applies to you, speak to your homeowner's agent today to find out what is really covered and what's not. Then call a business insurance professional!