So you have decided to do some research on business insurance (also known as commercial insurance). It’s probably safe to say your business is your biggest investment, correct? Well, I commend you for doing your research. My goal is for this article to be a useful starting point for you so you know what your insurance agent/broker is talking about and presenting to you. Surely, they will explain it to you as well, but this way you’ll already be somewhat informed. And there is much more to business insurance than what I will explain below.
First thing you’ll want to inquire about is your general liability. Now, I’m not going to spend a lot of time on this, not because it’s not important, because it is VERY important, but because it can vary from business to business. The most important thing to make sure your general liability includes is your “Products/Completed Operations”. If it says “EXCLUDED” and your agent/broker doesn’t explain why they excluded it, it’s a red flag to get a proposal from another agent. The proposal from the other agent will probably be a little higher, but at the end of the day, it’s probably the coverage you’re looking for. Surely you want your “Products/Completed Operations” Included. Another item I would include is “Hired and Non-Owned Autos”. If you have an employee(s) using their personal auto(s) to run errands for the business, like going to the post office or the store, every once in awhile this is coverage you don’t want to go without. It might cost you an additional $150 annually, but it will be well worth it when and if you need it.
Moving onto property coverage. And you’re thinking, I rent/lease, so I don’t have to insure any property. Well, what about your computers, desks, inventory, and all that decorative art (yes, your nicely framed degree) you have in your office? This is called “Business Personal Property”. Also known as BPP. Why do they say business “personal” property? They just do. Make sure your BPP is covered at Replacement Cost. You could insure it at Actual Cash Value, but it’s probably not that much more to insure at RC. Also make sure the deductible is reasonable. I would go with $500 or $1,000. If you do own the building make sure your agent uses a replacement cost estimator for the value of your building (search Marshall Swift Beck for more info.). It wouldn’t hurt to ask your agent for a copy of it just to make sure he/she has all the specs. The estimate should also include debris removal, which can get very expensive. “Business Income” also falls under property. Not a bad idea to get a quote for this as well. If something does happen, like a fire, “Business Income” helps sustain the business while you rebuild/relocate. Some policies will even cover salaries for key employees. The last thing you want is to lose your best sales manager to a competitor while you rebuild.
Workers Compensation, some states require it and others do not. I highly recommend WC. Some agents will sell you on these “accident policies”. Probably tell you how they cover the employee. That is nice. I’m all for covering the employee, but what about the employer? As the employer, you need to make sure that policy protects you from a possible lawsuit from that injured employee.
As I said earlier, there is much more to business insurance, but hopefully this will get you started. Ask your agent a lot of questions. Make him work for that policy. Be loyal to your agent and they will be loyal to you!