As a local business owner, commercial insurance coverage can help protect your assets, income, and any properties associated with the business against losses. At Pete Beckman Insurance, it's our goal to educate and empower our commercial clients to create customized solutions that fit their business needs. Check out our frequently asked questions to learn more about your coverage options.
What Does a Business Owners Policy Cover?
Business owners can work with their insurance agent to find policies that combine protection from all major property and liability risks in one package, or the business can purchase coverage according to their needs. One package available to small and mid-sized businesses is the business owners policy (BOP). Package policies are created for businesses that generally face the same kind and degree of risk. Larger companies might purchase a commercial package policy or customize their policies to meet the special risks they face. It's important to note that 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.
BOPs do include the following:
- Property insurance for buildings and contents owned by the company. There are two different forms, standard and special, which provide more comprehensive coverage.
- 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.
- 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.
Do I Need Professional Liability Insurance?
Professionals are expected to have extensive technical knowledge or training in their particular area of expertise. They are also expected to perform the services for which they were hired, according to the standards of conduct in their profession. If they fail to use the degree of skill expected of them, they can be held responsible in a court of law for any harm they cause to another person or business. In cases such as this, professional liability insurance, which is also known as errors and omissions insurance, can protect the business against negligence claims. As a specialty insurance coverage, professionals that operate their own business need professional liability insurance in addition to an in-home business or business owners policy (BOPs) to protect them against financial losses from such lawsuits filed against them by their clients.
Do I Need a Commercial Auto Insurance Policy?
As a business owner, you need the same kinds of insurance coverages for the car you use in your business as you do for a car used for personal travel: liability, collision and comprehensive, medical payments (known as personal injury protection in some states), and coverage for uninsured motorists. In fact, many business people use the same vehicle for both business and pleasure. If the vehicle is owned by the business, make sure the name of the business appears on the policy as the "principal insured" rather than your name. This will avoid possible confusion if you need to file a claim or a claim is filed against you.
Whether you need to buy a business auto insurance policy will depend on your driving requirements. Your agent may ask you for details about how you use vehicles in your business, who will be driving them, and whether any employees are likely to be driving their own cars for your business. While the major coverages are the same, a business auto policy differs from a personal auto policy in many technical respects. Ask your agent to explain all the differences and options.
If you have a personal umbrella liability policy, there's generally an exclusion for business-related liability. Make sure you have sufficient auto liability coverage or buy commercial umbrella liability!
Do I Need Business Interruption Insurance?
Business interruption insurance can be as vital to the survival of your business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and windstorms, but too many small business owners fail to think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable. Business interruption coverage is not sold separately. It is added to a property insurance policy or included in a package policy.
A business that has to close down while the premises are being repaired may lose out to competitors. A quick resumption of business after a disaster is essential. The following are important details to consider for business interruption insurance:
- Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the profits you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
- Make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people anticipate to get the business back on track. There is generally a 48-hour waiting period before business interruption coverage kicks in.
- The price of the policy is related to the risk of a fire or other disaster damaging your premises. All other things being equal, the price would probably be higher for a restaurant than a real estate agency, for example, because of the greater risk of fire. Also, a real estate agency can more easily operate out of another location.
Extra Expense Insurance
Extra expense insurance reimburses your company for a reasonable sum of money that it spends, over and above normal operating expenses, to avoid having to shut down during the restoration period. Usually, extra expenses will be paid if they help to decrease business interruption costs. In some instances, extra expense insurance alone may provide sufficient coverage, without the purchase of business interruption insurance.
How Do I Insure my Home Business?
If you're running a business from your home, you may not have enough insurance to protect your business equipment. A typical homeowners policy provides only $2,500 coverage for business equipment, which is usually not enough to cover all of your business property. You may also need coverage for liability and lost income. Insurance companies differ considerably in the types of business operations they will cover under the various options they offer.
Regardless of the type of policy you choose, if you're a professional working out of your home, you probably need professional liability insurance. Some types of in-home businesses, such as those that make or sell food products or sell home-made personal care products, may need special policies.
To insure your business, you have three basic choices, depending on the nature of your business and the insurance company you buy it from.
- Homeowners Liability Policy Endorsement: You can also buy a homeowners liability endorsement. You need liability coverage in case clients or delivery people get hurt on your premises. They may trip and fall down your front steps, for example, and sue you for failure to keep the steps in a safe condition. The homeowners liability endorsement is typically available only to businesses that have few business-related visitors, such as writers. But some insurers will provide this kind of endorsement to piano teachers, for example, depending on the number of students.
- In-Home Business Policy/Program: An in-home business policy provides more comprehensive coverage for business equipment and liability than a homeowners policy endorsement. These policies, which may also be called in-home business endorsements, vary significantly depending on the insurer.
In addition to protection for your business property, most policies reimburse you for the loss of important papers and records, accounts receivable, and off-site business property. Some will pay for the income you lose (business interruption) in the event your home is so badly damaged by a fire or other disaster that it can't be used for a while, they'll also pay for the extra expense of operating out of a temporary location.
Some in-home business policies allow a certain number of full-time employees, generally up to three. In-home business policies generally include broader liability insurance for higher amounts of coverage. They may offer protection against lawsuits for injuries caused by the products or services you offer, for example. Ask your agent for more info.
In-home business policies are available from homeowners insurance companies and specialty insurers that sell stand-alone in-home business policies. This means that you don't have to purchase your homeowners insurance from them.
- Business Owners Policy (BOP): Created specifically for small-to-mid-size businesses, this policy is an excellent solution if your home-based business operates in more than one location. A BOP, like the in-home business policy, covers business property and equipment, loss of income, extra expense, and liability. However, these coverages are on a much broader scale than the in-home business policy. A BOP doesn't include workers compensation or health or disability insurance. If you have employees, you'll need separate policies for these coverages.
At Pete Beckman Insurance, we care about your business and will work hard to help you find a solution catered to your budget and business needs. As an independent agency, we have access to many regional and national insurance providers and can help you find great coverage at a competitive rate. If you own a business in the Quad Cities region and have questions about your commercial insurance coverage, give us a call today at 563-359-0690 or request a quote online.