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8 Reasons Why Insurance is Crucial for Small Business

There are many reasons why a business needs to carry insurance coverage. In its most simple form, insurance protects a business from financial loss due to an unfortunate emergency, accident, or unforeseen event. Now there are many different types of insurance a business may need. Some businesses may need multiple types of coverage, some businesses may be able to get by with a bare bones package of coverages. Partnering with an independent insurance agent is one of the best ways to determine what types of coverage you need and what types of limits are best for your business.

Insurance is Required for a Loan

Banks require a business to carry insurance in order to qualify for a loan. If you think about it lenders want proof of insurance before you buy or build a new facility in order to safe guard all assets. To get access to cash for your business you will need to have certain types of insurance coverage. Without insurance, a business will be forced to fund its own expansion with cash on hand.

Some Forms of Insurance are Required by Law

In most states, Workers Compensation and General Liability Insurance is required by law for most business in most states. Each state has their own rules and regulations that offer some exclusions for some types of coverage. It is important to check with the proper state governing body within the state you operate in to make sure your business is properly insured.

Insurance Protects Against lawsuits

Today’s business environment is a very litigious society. If you stay in business long enough, more than likely your business will be sued in some form or fashion. When a business faces a lawsuit, even if your business wins the suit it can amount to an enormous sum in legal fees. Insurance coverage can reimburse your business for these costs.

Insurance Can Protect Your Employees

A business depends upon their employees to make the business work. Building a healthy workplace culture is crucial to success no matter what industry a business operates in. Insurance can add to the trust a business has with its employees.

Your business depends heavily on the knowledge of one person

If you operate a business that depends upon the talents of one or a few key employees, it is necessary to carry Keyman Insurance. Keyman Insurance is a policy designed to cover the life of a key employee for a monetary value so in the event of an untimely death of such key employee, the loss to the business will be recouped through monetary assistance.

Most Contracts Require Insurance

When it comes to contracts, insurance is required by both parties in order for the contract to be valid. Some examples of scenarios where insurance is required include:

A business rents a facility instead of owning the building outright.
A business borrows money to finance buildings or equipment.
A business enters into a contract where the client specifies that insurance coverage in the event the deal does not go as planned.

A Business Cannot Predict The Future

No matter how much experience a professional has there are unknown occurrences that no one can predict. Regardless of whether the occurrences are a natural disaster, injured employees, lawsuits, or damaged equipment; it is impossible to predict when one of these claims will occur. Insurance coverage can protect your business in the event of an act of god.

Insurance Grants Peace of Mind

Business owners and leaders face an enormous amount of pressure. Insurance allows those leaders the ability to ease some of that pressure because they can rest assured that an insurance policy will help the business become whole again in the event of a serious occurrence.

When does a Business need Hired and Non Owned Auto Insurance?

Hired and Non Owned Auto Insurance is a type of insurance policy that many businesses need and far too many fail to secure. According to the International Risk Management Institute, Hired and Non Owned Auto Insurance is defined as; ‘an auto that is used in connection with the named insured’s business but that is not owned, leased, hired, rented, or borrowed by the named insured’. In layman’s terms this is an insurance policy for a business when an employee of that business uses a vehicle for business purposes that is not owned by that business. This could be an employee driving their personal car for business purposes or it could be an employee driving a rental car while travelling to a conference representing the business. The insurance policy will cover bodily injury and property damage to third parties damaged by an accident that is the fault of your employee. This policy can be purchased as a standalone policy or as an add on to your commercial auto or general liability insurance policies. Here are some things you need to know about this coverage if you own a small business and have employees who use vehicles the business does not own.

You can purchase it as a standalone policy, or you can add it on as a rider to your General Liability Insurance.

What exactly does Hired and Non Owned Auto Insurance Cover?

Hired and Non Owned Auto Insurance covers some damages for cars that employees of your business use but the business does not own those cars. These vehicles include rental vehicles, leased vehicles, and employee personal vehicles. The policy covers specifically the damage caused to third parties, but not always the damage to the vehicle your employee is driving.

Examples of when you need this coverage

You send an employee on an errand to pick up supplies in their own vehicle.
An employee rents a vehicle on a business trip.
You send a limo to the airport to pick up an important client.
An employee runs out to get coffee or pick up lunch for everyone in the office.

What is not covered under a Hired and Non Owned Auto Insurance Policy?

A Hired and Non Owned Auto Insurance Policy does not pay for physical damage to your employees vehicle. That damage would be covered by the employees personal auto insurance policy. It also will not pay for the repair of a rental vehicle that is damaged by in an accident that is caused by your employee. It does not cover accidents that occur during a commute to work, unless the employee is using a vehicle rented by the business. Another scenario that is not covered by a Hired and Non Owned Auto Insurance Policy is when an employee is running a personal errand during work hours, but they are not doing business operations.

What are the differences between Hired and Non Owned Vehicles

Hired Vehicles refer to car services like a taxi or limousine and rented vehicles your employees use for business purposes. Non Owned Vehicles refer to vehicles that are used by your employees that are not owned by the business. The most common example of this is an employee using their personal car for business related travel.

Business Owners Policy

3 Reasons why Small Businesses Need a Business Owners Policy (BOP)

A Business Owners Policy, typically includes three types of insurance. Those three types of insurance include Property, Business Interruption, and liability protection. There are additional coverages your business can purchase to tailor the policy to fit your business’s specific needs. Two common additions include inland marine and data breach coverage. No matter the size or scope of your business, a BOP is almost always the best way to properly insure your business. Here are 3 reasons you should consider a BOP.

BOP

A BOP will ensure no gaps in coverage

Because with a Business Owners Policy, you bundle several products together, your business is less likely to have a claim not be covered because of a gap in coverage. A gap in coverage occurs when you purchase two products from different carriers and each carrier has an exclusion to their policy. If both policies have an inclusion for the loss, it may cause the loss to not be covered at all. Even if the loss is covered it can slow down the response time for the claim because the insurance carriers have to determine who is ultimately responsible for the claim. When you purchase a BOP, it will speed up the amount of time to process a claim and do the best job of preventing a gap in coverage.

A BOP will make insurance more affordable

Keeping expenses as low as possible is extremely important for the long-term success of any business. A Business Owners Policy allows you to keep the price of premium lower because insurance companies are more likely to dig deeper for credits and discounts when they know they are quoting multiple policies through your business.

A BOP can be modified to fit your needs

Business Owners Policies are designed with a specific industry in mind. Insurance carriers have loads of data about claims in each particular industry and with that data they know with a high probability which coverages each industry is most likely to need. This data can help a business owner to know what types of insurance they need and what types they can do without. If your business is an exception to the rule, your insurance agent can help you fine tune your specific package to meet the unique needs of your business. This is something not offered from most traditional insurance policies.

Why Your Business Clients Need Loss Of Income Coverage

Does my business have enough insurance coverage? This is a question frequently posed to insurance agents during the quoting process. Like many things in life, the answer to this question is, it depends. It depends on a lot of things that are unique to you as a business owner and the industry you operate in. Once you think you have enough coverage for your business it is important to ask your insurance agent if you need business loss of income insurance coverage.

Most insurance agents deal with a slippery slope of juggling the difference between getting their clients the absolute best coverage and finding them the best rate on premium. Dealing with this slippery slope is what ultimately determines success or failure among insurance agents. The best way as a business owner to help your agent get you what you want is to be open and honest with them about what are your priorities. These insurance agents interact with a lot of people from many different walks of life. One client they may be helping is a farmer while the next client is a financial consultant. The risks that these businesses face are dramatically different. some business owners may value getting the quoting process finished so they can get back to their work. Another business owner may want the minimum amount of coverage and they do not mind if it takes a week for them to save 10%. Most businesses are somewhere in the middle, but it is important to tell the agent what you value early in the process.

Most businesses start their insurance coverage with general liability and workers compensation coverage. This is because these two policies are required by law for most businesses in most states. Many business owners attempt to scrape by with the bare minimum amount of coverage and they do this in an attempt to save money on premium. This can save money on the front end (when a business pays insurance premium), but it can come at a great cost to the business when a disaster strikes. This is when business loss of income insurance coverage can benefit your business immensely.

Business loss of income insurance coverage is an addition to a commercial property policy. For most small businesses, it can be added for as little as a few hundred dollars. This coverage kicks in when a covered loss causes the business to lose income because of a slow down or close of business while the property is repaired. A fire is a common time when this coverage is needed. When a fire occurs at a businesses location there more than likely will be a time when the business is not able to be open for business. During this time there are still bills coming in that the business is responsible for. There are also still customers who may be expecting products and services to be delivered or performed.

From the perspective of an insurance agent, this can be difficult to explain to a business owner. This is especially true when the business owners is in a hurry during the quoting process. On the contrary, the lack of this coverage can also be one of the most difficult conversations to have with a business owner after a fire has occurred. Many times it is not until this time that a business owner understands it may not have been the best idea to rush through the insurance quoting process.

When selling a business loss of income insurance coverage policy, it is important for the insurance agent to notify their client that business loss of income insurance coverage only kicks in if the loss was a covered loss. This means if a loss was not covered by one of the insured’s other policies, it will not initiate the business loss of income policy. This is where it is especially important as a business owner to not rush through the quoting process and it is equally important to not skimp on coverage. It is within your right to only purchase General Liability and Workers Compensation coverage, but that does not mean it is usually the best business decision. Even if you are a business owner who is comfortable with a healthy amount of risk and you are cash strapped, it is usually a better decision to find a way to pinch pennies in some aspect of your business other than the insurance coverage. This is where it is especially important to partner with an independent insurance agent, to be thorough when you are quoting the policies and and consider adding a business loss of income insurance policy.

Boo – Halloween is coming!!!

What kinds of risk does the Halloween Season cause your small business to face?

My Insurance Question - Happy Halloween

For some people, Halloween Season is their favorite time of the year and their favorite holiday. For some businesses it offers an opportunity for them to get a larger than normal amount of business. With these opportunities for additional business come additional risks to your business. Here are three tips for how to protect your business during the Halloween Season.

Halloween

Seasonal Halloween Businesses

There are many businesses that pop up for a short amount of time to help people celebrate the Halloween Season. Corn Mazes, Pumpkin Patches and Haunted Houses are all businesses that pop up, but may be a part of another business like a farm. If you decide one year to host a corn maze and you do not inform your insurance agent, you may be opening up yourself or your farm business to an enormous amount of risk. Speaking long and honestly with your insurance agent can help limit these risks.

Speak long and honestly with your Independent Insurance Agent

It is always a good idea to speak long and honestly with your insurance agent when you are purchasing commercial insurance. If you do not take the proper time to tell them about all of the tasks your employees do and do not partake in, your agent is left to guess how risky your business is. The insurance agent is in the business of analyzing risk, so it is in their best interest to always assume more risk. This can cost you considerably in additional premium if you are not classified properly. It can also cause a claim to not be covered if you are partaking in an activity that is not covered by your general liability policy or any other policy you may or may not have.

Special Events Coverage

If your business is hosting an event related to the Halloween Season, you can buy special event insurance just for that event. This can go for any event you have with your employees. If you are having third aprties who are not employees at the event, you can be opened up to third party liability. This can be the case even if you are only going to have employees and their families attending the event. You need to protect your business from any injuries that may occur at the event. You should consider whether or not to offer alcohol based upon the risks you are comfortable with.

Happy Halloween from the friendly ghosts.

The Halloween Season can bring about additional opportunities for your business to generate revenue. Depending upon how you plan to target this market may or may not cause additional risk for your customer. In many cases it is a good idea to run the ideas by your insurance agent to make sure you are covered by your insurance policies. If you are not covered they should be able to help you determine how much risk you are comfortable taking on. These conversations should be able to help you determine what risks you face and if the additional revenue you gain is worth that risk.

4 Big Misconceptions about Commercial Liability Insurance

General Liability Insurance covers your employees

General Liability Insurance only covers your businesses liability to third parties. Third parties do not cover your employees. Bodily injury claims that involve your employees would involve a workers compensation policy.

Insurance rates solely depend on a businesses claims history

There are many factors that go into what your business pays for commercial insurance and the businesses claims history is one of those factors. The size of your business, the industry you operate in, the class code within your industry, the years in business, how many employees you have, the revenue of your business and where your business is located also go in to what a carrier uses to determine a rate on premium.

Many businesses cannot afford insurance

There are many ways to save on commercial insurance. If price is important to your business than express that to your agent. They can negotiate on your behalf for better rates, deeper discounts or larger credits on premium. If you have well-documented safety programs in place than express that to your agent as well and they can use it to get a better rate. Another way to save on premium is to choose the pay as you go method for some coverages. This can allow your business to get coverage in place with a significantly less up-front cost.

If I have Workers’ Compensation Coverage my employees cannot sue my for anything

Workers’ Compensation Coverage can protect your business from injuries that occur as a part of normal business operations. Employees can sue your business for any reason at any time and it can cost your business a large amount to defend. The accusations do not have to be founded to rack up a lot of legal defense costs. Also, if your business does not have the proper safety precautions in place or if it is found that the injury resulted because of carelessness of the business or its leadership can cause you to be liable for damages.

Insurance is all-encompassing

In most states, workers compensation and general liability insurance are required by law. They are the bare minimum coverage that a business needs to legally be in business, but they are not enough coverage to adequately protect most businesses. For this reason, it is important to partner with an experienced independent insurance agent. They can negotiate with the carriers to get your business better coverage at rock-bottom prices.

Small Business Insurance

It’s human nature for a business owner to wonder how much and which types of small business insurance coverage their business actually needs. To be successful, a business has to be comfortable with some amount of risk. Taking the first step to open a business is a risk. With that simple fact, one would have to assume a small business owner is comfortable with some amount of risk. Now how much and what types of risk the business owner is willing to take are completely unique to the industry the business operates in and the personal philosophy of the business owner.

Coffee shops need Small Business Insurance. Find out the latest information at https://www.myinsurancequestion.com/

Here are 5 insurance policies every business should secure.

General Liability

General Liability insurance protects an organization from damage to third parties who are not associated with the business. Third parties may include customers, the general public, vendors or anyone that could potentially be damaged by the actions of your business.

Workers Compensation

Workers’ compensation insurance is similar to general liability except it deals only with your employees. Workers comp is the ‘exclusive remedy’ for injuries that occur to employees as a part of normal business operations. This policy provides medical coverage and some lost wages for injured workers who are hurt as a result of normal business operations. Employers benefit from the policy by not having to worry about being sued for injuries that occur as a normal part of business operations.

Business Interruption

Business Interruption Insurance will protect a business in the event it is forced to be closed for an extended period because of another covered loss. The covered loss is an important part of this coverage. If you are the victim of a hurricane or a flood and you do not have coverage for that loss, the business interruption coverage will not kick in. This is typically included as a part of a business owner’s policy (BOP).

Employment Practices Liability Insurance (EPLI)

EPLI coverage is a type of insurance coverage specifically designed to protect your business from lawsuits relating to the employment process. Over the past decade employment lawsuits have increased significantly. If you stay in business long enough, chances are you will face an employment related legal issue. Your business can face one of these lawsuits even if the employees of that business have not done anything wrong. It can also cost an enormous amount of time and money for a business even if the business is found to be innocent. An EPLI Policy can protect a business in just this case.

Commercial Auto or Hired and Non-Owned Auto

Driving risks are one of the most difficult parts of insuring a business. When driving a vehicle is involved in the work of a business, the frequency and severity of claims tend to rise dramatically. Of course if your business owns vehicles and employees drive those vehicles as a part of their work, the business needs a commercial auto policy. A business does not have to own a vehicle to face liability around employees injured while driving any vehicle. If you have employees who use rental cars while they are travelling on business purposes than the business is liable for any accidents they are involved in while they are travelling. This is because the purpose of the employee being where they are is because of the business function. If you have employees who use their personal car for business purposes, the business is liable for any damage caused in an accident that occurs. The employees personal auto insurance policy will cover the damage to their car, but the business will need additional coverage because the liability to other people involved in the accident rests with the business. These instances can be covered by a Hired and Non-Owned Auto Policy, which can be added to most standard business owner’s packages (BOP’s).

20 Quotes for small business owners about Risk.

20 Quotes Small Business Owners can use to access risk.

JFK quote about risk.

“There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction.” JFK John Fitzgerald Kennedy

“Take calculated risks. That is quite different from being rash.” — General George Patton

“Biggest profits mean gravest risks.” Chinese Proverb

“The best we can do is size up the chances, calculate the risks involved, estimate our ability to deal with them, and then make our plans with confidence.” Henry Ford

“Security is mostly a superstition. Life is either a daring adventure or nothing.” — Helen Keller

“If things seem under control, you are just not going fast enough.” — Mario Andretti

“Yes, risk-taking is inherently failure-prone. Otherwise, it would be called ‘sure-thing-taking.'” — Jim McMahon

“You’ll always miss 100% of the shots you don’t take.” — Wayne Gretzky

“Danger can never be overcome without taking risks.” — Latin Proverb

“I’ll play it first, and tell you what it is later.” — Miles Davis

“Whenever you see a successful business, someone once made a courageous decision.” — Peter Drucker

“Business people need to understand the psychology of risk more than the mathematics of risk.” Paul Gibbons,

“Opportunity and risk come in pairs” Bangambiki Habyarimana, The Great Pearl of Wisdom

MLK was a man who was not afraid to take on risk.

“The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.” — Dr. Martin Luther King, Jr.

“Leadership is the art of getting someone else to do something you want done because he wants to do it.” – Dwight Eisenhower

“You don’t close a sale, you open a relationship if you want to build a long-term, successful enterprise.” ~Patricia Fripp

“Most people think “selling” is the same as “talking”. But the most effective salespeople know that listening is the most important part of their job.” ~Roy Bartell

Albert Einstein

“Life is like riding a bicycle. To keep your balance, you must keep moving.” ~Albert Einstein

“Leaders become great, not because of their power, but because of their ability to empower others.” -John Maxwell

“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” – Charles Darwin

3 Factors Affecting Your General Liability Insurance Rate.

Many business owner’s and managers frequently wonder what goes in to their General Liability Insurance Rate for their small business. Many compare their costs with fellow business owners or friends and family who run other businesses. Depending upon your industry, this may cause some shock when they find out how much more they pay than other businesses in different industries. Every state and every insurance company determines their own way to determine your businesses General Liability Insurance Rate. There is not one set in stone way to determine how much to charge for coverage. There are three main factors that weigh heavily on what you pay for General Liability Coverage: The size, the class code and the loss history of your business.

Find tips to positively impact your general liability insurance rates at My Insurance Question.com

The size of your business

For most businesses this is the physical dimensions of your property times a number determined by your classification code. The condition and age of your property mean a lot for this rate as well. Underwriters will examine the age and complexity of the construction. Whether the building is up to code means a lot to the insurer. Generally, newer construction lowers your rate, while older construction tends to raise your businesses General Liability Insurance Rate.

Class Code

General Liability Insurance Class Codes are determined by the activities your business partakes in. In order for this to be accurate, it is important to be honest with your agent about everything your business does and does not do on a daily basis. You can understand the differences in risk from a accounting office compared to a rooking business. Even small differences in a business can have an effect on your class code.

Take for instance commercial versus residential cleaning businesses. Commercial cleaning businesses typically have employees who drive to one location, clean the building and go home. A residential cleaning business typically has employees who are going to more than one residence throughout the day. These employees are driving to and from each residence. While driving between locations, the business is liable for any accidents that occur. This elevates the risk for covering this business and will in turn cost more. This is why it is very important for you to speak long and honestly with your agent in order to be placed in the proper class code.

Loss History

The final factor that impacts your general liability insurance rate is your businesses loss history. This depends upon the industry and the operations of your business. For some industries, it is common to have many small accidents. A restaurant is be a good example of a business that might have a lot of small occurrences. This is because the frequency and amount of customers coming in and out of the restaurant. Slips, trips and falls are common in these industries. If your business tends to have a larger amount or more severe incidents during a recent year, it may cause your rate on premium to go up. Another thing to consider if you have had some claims in the recent past is what type of formal safety program does your business have in place. If you have a well documented safety program in place, your agent may be able to explain some incidents as freak occurrences and not a sign of an underlying problem that makes your business more of a risk.

There are several other factors that go in to what you pay for your General Liability Insurance Rate, but the size of your business, your class code and your loss history are the main factors that determine what you pay. Staying on top of these three factors can go a long way towards preventing your business from paying too much for General Liability Insurance.