Small Business Insurance

Small business insurance is a type of insurance coverage designed specifically for small businesses. It provides protection against various risks and liabilities that small businesses face, such as property damage, theft, legal liability, and employee injury.

It can also protect against specific risks related to the industry, such as product liability or professional liability. The insurance policy can be customized to meet the unique needs and requirements of a small business, providing financial security in the event of a loss.

Most states on the US only require two types of commercial insurance policies - and only under specific circumstances:

• Workers Compensation: Small businesses with any non-owner employees are required by state law to have workers comp insurance coverage (except Texas).
• Business Auto: If the business owns any vehicles (titled to the business), those cars or trucks must have commercial auto insurance.

Any other policies and coverages are optional for the business to purchase. There is not one small business insurance policy that covers every risk. There are different commercial insurance policies that cover various accidents, damages and lawsuits that could financially devastate a small business without the right protection. Some of the most common risks businesses face are covered in these policies.

Following is a list of the main factors that determine the costs of small business insurance:

• Claims History - Similar to auto insurance, more claims can mean higher costs. If you have claims on your policy, your premium will typically increase.
• Deductibles - Like medical insurance, lower deductibles for small business insurance mean higher premiums. If you raise your deductibles (out-of-pocket costs), your premium will usually decrease.
• Employees - The more people working for your company typically translates into higher insurance costs.
• Experience - A business with more experience can often get lower premiums that newer businesses with less experience.
• Gross Sales - The more revenue you have, the higher your premium can be. So if your small business earns less than $30,000 annually, your premiums may be lower than a larger corporation that earns more than $2,000,000.
• Industry - If you own a white collar business like an accountant, your premiums can be lower than a roofing company, where the potential risks for bodily injury and property damage are higher.
• Location - Your zip code can have a significant impact on your premium. For example, if your business is located in Calistoga, your business insurance costs may be lower than a similar business located in Los Angeles or San Francisco.
• Policy Limits - When you buy a policy, you can decide how much coverage you want, and you typically will pay more for higher limits. For example, a general liability policy with a $1,000,000 limit per claim will cost more than one with a $300,000 limit.

The person injured in an auto accident may be a young child, a wage earner, a surgeon, or a homeless person. The costs of the accident may be relatively small or run into the millions of dollars, depending on the victim and his or her injuries. commercial auto insurance helps protect your business if you hurt a person or damage their property.

What Is Covered - Commercial auto insurance protects your assets in several ways:

• Covered auto liability coverage insures your legal obligations that arise from an accident, including lawsuits and their associated costs. The limits you purchase should be high enough to handle the potentially serious injuries and loss of earnings a victim may sustain.
• Uninsured and underinsured motorists coverages protect you when you are involved in an accident caused by a driver who has no insurance or insurance with relatively low limits. The limits you select for this coverage should be the same as your liability limits.
• Physical damage coverage on vehicles directly protects your assets. Comprehensive, Specific Causes of Loss and Collision are the coverage options available. Deductibles should be as high as you can comfortably absorb to maximize the protection provided relative to the premium cost.
• Medical payments coverage and towing expense costs for private passenger vehicles are other optional coverages to consider

Small business insurance offers coverage for business property and casualty exposures. Wouldn't it be great if you could get most or all of them in just one policy? If you qualify, the Business Owners Policy (BOP) may be exactly what you're looking for.

This single BOP package covers your buildings and business personal property, as well as liability imposed on you because of your premises, operations and products. In addition, it has numerous coverage extensions and optional coverages available.

You don't have any control over the ultimate cost of injuries to a person injured because of your operations, products, or services. The person injured may be a toddler, a contractor, an accountant, or a homemaker. The cost of the injuries may be comparatively minor or run into the millions of dollars, depending on the person and the extent of his or her injuries. This is why you need the right amount of small business insurance.

Commercial general liability insures the bodily injury liability, property damage, and personal and advertising injury liability exposures of a variety of commercial businesses, enterprises, and ventures.

What Is Covered - general liability insurance protects your assets in several ways:

• Liability coverage for bodily injury and property damage insures your legal obligations that arise from an accident. It also includes the costs related to lawsuits and other legal proceedings. The limits of insurance should be sufficient to handle serious injuries and the injured person's loss of earnings.
• Liability coverage for damages due to personal and advertising injury insures your legal obligations that arise from an offense. It also includes the costs related to lawsuits and other legal proceedings. The limits of insurance should be sufficient to handle serious injuries and the injured person's loss of earnings.
• Medical Payments coverage pays the cost of medical care to persons injured on your premises or due to your operations, regardless of fault.

The primary goal of any small business insurance program is to protect the insured's real and business personal property. Tangible property usually represents a significant portion of its total assets, regardless of the size of the business.

Protecting your real and personal property is an important element of your insurance program. No matter the size of your business, a large percentage of your assets and resources are tied directly to your property. A commercial property program can provide the coverage you need if a loss should occur.

When there is a limit of insurance for building on the declarations, the building or structure listed and described is covered property. The following is also considered covered building property:

• Additions under construction, alterations, and repairs that other insurance does not cover. The materials, equipment, supplies, and temporary structures that are on or within 100 feet of the premises and used to make the additions, alterations, or repairs are also building.
• Completed additions
• Fixtures. This includes outdoor fixtures.
• Permanently installed machinery and equipment
• Personal property the insured owns and uses to service or maintain the building or premises

When there is a limit of insurance for personal property on the declarations, coverage applies to the following property if it is inside the building or structure at the designated premises. It is also covered if it is outside the building or structure but within 100 feet of the building or premises. Such personal property outside can be either in the open or in or on a vehicle.

• All other personal property the insured owns and uses for business
• Furniture and fixtures
• Labor, materials, or services the insured furnishes or arranges on personal property of others
• Leased personal property the insured has a contractual responsibility to insure
• Machinery and equipment
• Stock
• The insured's interest in any improvements and betterments it made or acquired if the insured is a tenant

Personal property of others is covered when there is a limit of insurance on the declarations but only when:

• It is in the insured's care, custody, or control.
• It is either inside the building or structure at the listed and described premises or outside within100 feet of the building or premises in either the open or in or on a vehicle.
• The insurance company pays for loss or damage to personal property of others for only the account of that property's owner.

Do you own, operate, or manage a business which includes at least one employee? Are you familiar with the laws of regarding workers compensation insurance coverage?

The Workers Compensation and Employers Liability Insurance Policy covers your statutory liability as an employer under workers compensation laws. It pays for medical treatment because of injuries and indemnity payments for employees disabled by work-related accidents. It also provides tort liability coverage for legal actions brought against you for bodily injuries to your employees that fall outside state workers compensation laws.

Professional liability insurance, also known as errors and omissions (E&O), is a type of liability coverage that protects your company against claims that a professional service you provided caused your client to suffer financial harm due to mistakes you made (errors) or because you didn't perform some service (omissions).

Professional liability can cover the legal costs of defending your company in a civil lawsuit and some damages if awarded, even if you haven't made a mistake. Eamp;O coverage is not included in a general liability insurance policy.

Accidents are unpredictable. Some accidents are very small. Others trigger catastrophic events in the lives of the injured parties. Are your policy limits sufficient to protect you if a person you injure must have multiple lifesaving surgeries or requires around the clock care for the rest of her life? If not, your business capital could be required to make up the difference.

Commercial liability umbrella is a stand-alone coverage that contains its own coverage, exclusions, and conditions. It provides excess limits over General Liability, Automobile Liability, Employers Liability, and other underlying liability coverage forms or policies. In addition, and because it is a stand-alone coverage form, it may include coverage that underlying coverage forms or policies do not include or provide.

The law in requires businesses to notify any residents when an unauthorized person accesses unencrypted personal information. Cyber liability insurance helps your business deal with the costs of data breach and recovery by helping to pay for:

1. Security Breach Expense - Loss that is the direct result of a security breach.
2. Extortion Threats - Loss that is the direct result of an extortion threat.
3. Replacement or Restoration of Electronic Data - Loss to stored computer programs or electronic data within a computer system.
4. Business Income and Extra Expense - Loss that is the result of an interruption is covered when it is a direct result of a cyber incident or extortion threat.
5. Public Relations Expense - Loss that is the result of negative publicity is covered when it is a direct result of a cyber incident or security breach.
6. Security Breach Liability - Loss that is the result of a claim which is discovered during the policy period is covered if the insured is legally obligated to pay it and was due to a wrongful act that takes places before the end of the policy period.

Corporate directors and officers (D&O) have a duty to manage the company in their stockholders' best interests. They are bound to use due care and to be diligent in respect of the management and administration of the corporation's affairs and in the use of its property and assets. Accordingly, they are liable for losses or injuries that are caused by their breach or neglect of duty.

Recognizing the need to have competent directors and officers on executive boards, many corporations have put in their by-laws or charters certain resolutions undertaking to indemnify their directors and officers for legal expenses incurred by them in defending suits based on alleged wrongful acts in their capacities as directors and officers. Such indemnification provisions are permitted by most states' laws. Protection varies from state to state. In general, state statutes do not protect directors from claims brought by governmental agencies, or claims alleging violations of securities and exchange laws or other federal laws.

Commercial property coverage forms specifically exclude most types of equipment breakdowns while the Equipment Breakdown Protection Coverage Form Insures only equipment breakdown - which covers loss or damage to your covered property that results when covered equipment breaks down.

This coverage includes inspection service as a part of the basic coverage because you can eliminate most equipment breakdowns with proper maintenance. These inspections also satisfy any obligation you have to conduct required governmental or statutory inspections.

Four types of equipment you may own or operate can be covered:

• Mechanical and Electrical Equipment
• Production Machinery
• Pressure or Vacuum Equipment
• Diagnostic Equipment

The current level of workplace morale, the state of the economy, and legislation such as the Americans with Disabilities Act and the Family Medical Leave Act have all led to a marked increase in employment-related practices claims and lawsuits. Because these legislative and other legal changes have provided significant incentives for employees to file employment-related claims, employers such as you should be more aware of your susceptibility to such actions.

Employment-Related Practices Liability Coverage provides broad insurance protection from employment-related practices claims and lawsuits that are brought against your company, managers and directors and officers. It covers such things as age and gender discrimination, sexual harassment, wrongful discipline and termination and negligent decisions involving hiring, promotion, and compensation. It also applies to breach of employment contract, employment-related emotional distress, and mental anguish, invasion of privacy, libel, and slander.

Most theft losses are comparatively small, fall under the deductible, are excluded, or are uninsured. However, larger ones can put a company out of business as quickly as an uninsured fire. small business insurance - specifically business personal property coverage forms and policies written on an All Risks or Special Causes of Loss basis usually cover theft of property and merchandise by outside parties.

However, they usually exclude losses due to employee dishonesty, theft of money and securities, computer fraud, safe burglary, extortion, and related criminal acts. This is why every business needs a sound program of crime coverages for employee theft and other types of criminal and fraudulent activities.

Types Of Coverage - The ISO Commercial Crime Coverage Form offer seven types of protection:

• Computer and Funds Transfer Fraud pays for loss or damage to money, securities, and other property fraudulently transferred using a computer from your premises or a financial institution's premises to an unauthorized person or premises. It also covers loss of funds as a direct result of fraudulent instruction to a financial institution telling it to transfer, pay, or deliver funds from your transfer account.
• Employee Theft covers loss or damage to money, securities, and other property that one or more of your employees causes.
• Forgery or Alteration covers loss caused when someone other than an employee forges or alters a negotiable instrument such as a check.
• Inside the Premises–Robbery or Safe Burglary of Other Property pays for loss or damage to property other than money and securities inside the premises. However, this is subject to the conditions that either you or an employee must be robbed or the safe burglarized.
• Inside the Premises–Theft of Money and Securities pays for theft, disappearance, and destruction of money and securities from inside your premises or a financial institution premises. However, it does not cover theft of merchandise or stock.
• Money Orders and Counterfeit Money pays for loss as a direct result of you or your employees accepting fraudulent money orders or counterfeit money in good faith and in exchange for merchandise, money, or services.
• Outside the Premises pays for loss of money or securities outside the premises, in the care of a messenger or armored car service, or as a direct result of theft, disappearance, or destruction. It also pays for loss or damage to property other than money and securities as a direct result of robbery outside the premises that is in the care of a messenger or armored car service.

The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Small businesses can be sued for a variety of reasons, and each presents its own unique risks and challenges. However, with the appropriate insurance coverage, many of these challenges can be mitigated. Here are some common reasons small businesses might be sued, along with how insurance can protect them:

1. Personal Injury: A customer or other third party may sue a small business if they get hurt on the premises, claiming that the business was negligent in maintaining a safe environment. General Liability Insurance can protect against this. This type of insurance policy typically covers bodily injuries and property damage caused by your business operations or on your business premises. If a lawsuit is filed, the insurance company can help pay for legal defense costs, any settlements, and judgments.

2. Product Liability: If a business sells a product that causes harm or injury, they can be sued for damages. Product Liability Insurance is designed to cover these types of claims. This insurance can cover legal fees and any awarded damages related to the product that caused harm, whether it's due to product design, manufacturing defect, or failure to provide adequate warnings or instructions.

3. Breach of Contract: Small businesses can be sued by clients or other businesses for not fulfilling the terms of a contract. Professional Liability Insurance, also known as Errors and Omissions (E&O) Insurance, can provide protection in these cases. This insurance helps cover defense costs and damages related to failure to deliver services as promised.

4. Employment Practices: Claims for wrongful termination, discrimination, harassment, or other employment-related issues are common sources of lawsuits against businesses. Employment Practices Liability Insurance (EPLI) can help to cover the costs associated with these types of lawsuits. This insurance can cover legal defense costs, settlements, and judgments related to employment practices claims.

5. Intellectual Property Infringement: If a business is accused of infringing on another's trademark, copyright, or patent, they could face a lawsuit. Intellectual Property Insurance can cover the cost of defending against these claims and any associated judgments or settlements. Some policies can even help with the costs of enforcing your own intellectual property rights.

Remember, the specifics of what is covered will depend on the individual policy and provider. Always read the terms carefully and consult with an insurance professional to ensure you understand what protection your business has. Having the right insurance can provide peace of mind and significant financial protection in the event of a lawsuit.