Business Liability Insurance Coverage

Do I Have The Right Business Insurance For My Company?

Which of these scenarios is more frightening?

1. You learn that you're not insured for a liability after a claim against you, or
2. You never learn that you have more coverage than you need, so you always pay higher business liability insurance rates than you need to.

As someone responsible for selecting your firm's umbrella liability insurance and other business insurance, neither of these are acceptable scenarios. And if you're like many companies, you may be living with one of these scenarios right now. But you don't have to. Choosing the right business insurance and business liability insurance rates is as easy as asking the right questions and providing your insurance agent with enough information.

Unless you have a risk manager on staff to assist with umbrella liability insurance or workers' compensation insurance questions (an advantage few small businesses can afford), you may wish to concentrate your research on three basic types of coverage of small business insurance: Property insurance, General Liability insurance and Workers' Compensation insurance.

Property Insurance

Property insurance protects business property and inventory against physical loss or damage by theft, accident or other means - even if that property is removed from your place of business when it is lost or damaged. Property coverage is usually very straightforward and may be packaged with General Liability insurance in a BOP (Business Owner's Policy) at very reasonable rates.

Business Liability Insurance

Two common types of liability insurance – Comprehensive General Liability and Professional Liability- each protect your business from different types of claims that may be brought against you.

Comprehensive General Liability Insurance

Comprehensive general Liability insurance is usually limited to claims of bodily injury or other physical injury or damage to property. Often, General Liability insurance is offered in a package with Property coverage to protect against accidents on your premises or at other locations where you normally conduct business.

If you provide professional services such as accounting, computer consulting, or medical care, Professional Liability insurance is a critical coverage. Professional Liability (sometimes called Errors and Omissions coverage) protects your business against claims of alleged negligent acts, errors or omissions in the performance of your professional services. This is important because Professional Liability claims can be extremely large as compared to General Liability claims.

Workers' Compensation Insurance

Workers' Compensation insurance is a type of business insurance that employers carry to provide medical and disability coverage for employees who suffer job-related injuries or illnesses. Most states require businesses to carry Workers' Compensation. Workers' Compensation insurance premiums are based on your company's services and payroll. In many states, owners, officers and partners of a company can exclude themselves from Workers' Compensation insurance, thereby saving on premiums. Employer's Liability insurance, (typically offered as part of a Worker's Compensation policy) protects companies against workers' claims that an illness or accident was caused by unsafe working conditions. If you're not sure, ask your agent to make sure you have Employers' Liability insurance.

How do you know which coverage's you need and how much you should be paying for them? While requirements vary by state, you should probably assume you will need Workers' Compensation insurance for all employees. While premiums are usually based on payroll, it still pays to investigate several insurance providers to see what premiums they quote you and what limits they include; premiums may also vary depending on the Employer's Liability coverage included in the package.

Business Owner's Policies (BOP)

Many businesses find that by combining their Property and General Liability coverage into a BOP, they can get adequate coverage at lower rates than they would get from two separate policies. If the BOP comes with limits that are lower than your potential liabilities, you may consider Umbrella coverage. For a single additional premium, Umbrella policies cover the difference between the limits of a policy and the awarded claim for General Liability, Hired & Non-Owned Auto Liability and Employer's Liability; they do not, however, apply to Professional Liability claims.

Working With Agencies

Although you may get the lowest bids for different coverages from different agents, there are often advantages to purchasing all your business insurance from one agency or brokerage, whether online or offline. For one thing, your agent or broker will know the details of each of your policies and can make sure there are no gaps -- and no expensive redundancies in coverage. Plus, when it comes time to renew or update coverage, you'll only have to provide the data one time to make sure all coverages are updated appropriately.