Business Insurance

Business Owners Policy

If you own and/or run a smaller business, your insurance needs may be properly handled by a business owner policy or BOP. BOPs are similar to a homeowners policy, offering both property and liability protection. Businesses such as retailers, wholesalers, small contractors, artisan contractors, dry cleaners, restaurants, offices, and convenience stores (including those with gas pumps) are eligible for BOP coverage. All such operations may be insured by a BOP as long as they are not larger than 25,000 square feet in total floor area or have gross annual sales greater than $3,000,000 (per location). More restrictive guidelines typically apply to businesses that include cooking operations.

BOPs protect buildings as well as other features such as additions (completed or being built), indoor and outdoor fixtures, machinery and equipment, landlord furnishings, and maintenance property (such as mowers, snowblowers, ladders, etc). BOPs also cover outdoor furniture, floor coverings, and appliances used for refrigerating, ventilating, cooking, dishwashing, and laundering. The building coverage also applies to materials, equipment, supplies and temporary structures located near the insured premises.

The policy’s protection to business personal property applies whether the property is located inside or immediately outside the covered buildings. Business personal property (such as office equipment, copiers, desks, etc.) includes property you own, lease or control (i.e., borrow or control) as long as the property is used by the business.

Business owners liability coverage provides comprehensive protection for claims or suits made by other parties. Its liability section covers losses involving injury to other persons or damage to property that belongs to others. It also provides limited protection against personal injury (slander or libel), advertising injury, and losses involving an operation’s products or services.

Naturally, there are certain situations that are not covered by a BOP. For instance, there is no coverage for losses involving most vehicles, money and securities, illegal property (contraband), land, water, growing crops or lawns, or watercraft.

A BOP may be supplemented to provide additional protection. Property coverage options include adding insurance for accounts receivable, valuable papers and records, earthquake, spoilage, etc. Liability coverage can be expanded to handle additional business interests, limited vehicle liability, losses related to personnel situations, liquor liability, and injuries to leased employees.

Business Auto

Almost every business may face a loss due to its owning, renting, using, or loading/unloading a vehicle. Most coverage needs can be handled by a business auto policy (BAP) or similar form. BAPs may cover a variety of operations, including trucking, garaging, public and private transport, and businesses with auto exposures that fall outside the other classes. Coverage is flexible. It may be purchased as a separate policy or as part of a package of coverage that may also protect buildings and business property (equipment, furniture, etc.). A BAP generally offers:

• Liability coverage—protection for physical injury to other persons or their property because of an accident related to your covered vehicle including legal defense cost or expense
• Comprehensive coverage—handles loss from any cause except collision. A limited, less expensive option is available. It only protects against a set of specific causes such as fire, lightning, explosion, vandalism, and several others)
• Collision—takes care of damage from crashes with another object or overturn of the vehicle
• Towing and labor costs for disabled vehicles
• Loss of use / Rental vehicle coverage—if you damage a rental car, this option helps to reimburse the rental company for income it loses because the vehicle is out of use. Also, there may be limited coverage for injury or damage that you cause to others while using a rented vehicle anywhere in the world

Business Auto Policy Exclusions

Typically a business auto (or similar form) will not provide coverage for the following:

• Any injury/damage that you expected or intended
• Responsibility for damage you assume under a contract
• Losses that should be handled by a workers’ compensation, disability benefits, or unemployment compensation law
• Bodily injury to an employee caused by a fellow employee
• Damage to property that is in your care, custody, and control
• Any bodily injury or property damage that occurs because of pollution
• Any loss that is related to racing, demolition, or stunts

Other items that are not covered are the same as those found with most types of policies, such as nuclear hazard or any type of war or military action. Racing, wear and tear, freezing, mechanical or electrical breakdown, blowouts, punctures, or other road damage to tires are also excluded.

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Commercial Property

Commercial property policy provides coverage for real and personal property that is used in a business. An “all-risk,” worldwide policy covering business property. Protecting the insured’s real and business personal property must be a primary goal of any commercial insurance program. Regardless of the size of the business, tangible property usually represents a large portion of its total assets. As a result, it should always be reviewed and used for comparison when evaluating any commercial property coverage form.

Directors and Officers

If your business is incorporated, does it have a board of directors and corporate officers?

Do you serve on a board of directors?

If the answer is yes to either question, you could be exposed to lawsuits from shareholders. They may sue you, alleging that you committed acts that reduced the corporation’s value. Lawsuits may also arise out of employee practices, allegations of conflicting interests, and from providing information to the investing public.

Decisions made by directors and officers impact the viability and value of a corporation. The current issues of accounting practices, financial reporting, and the use of corporate assets have resulted in an increase of lawsuits being filed against executive boards. Directors and officers (D&O) coverage should be considered a necessity for corporate entities. D&O coverage supplements the protection provided by general liability policies since the former responds to legal actions filed by shareholders, customers, scorned merger partners, and creditors.

Corporate directors must take steps to determine whether D&O coverage exists. If D&O coverage is in place, boards should also determine the amount of coverage available for handling defense costs. Any amounts paid for legal costs are subtracted from the overall policy limits and are not a separate coverage. Criminal acts are not covered by D&O insurance. However, the cost of providing a legal defense until criminality is determined may be covered. In the past it was common for a director facing a lawsuit to have any related expenses handled by a corporation’s operating funds. Today such agreements have little value, especially for operations facing bankruptcy or those that cease operation.

The increase in shareholder lawsuits has created a much tighter market, the application is typically completed by one or two key executives. Both the applicant board and the insurance carrier rely upon the accuracy of the information provided by the persons completing the application. A problem arises because of how an insurer relies on the information. Typically, the insurer treats the information given by one or two persons as though it were received by all of the persons on the board. Insurers often either deny coverage or deny claims when there is evidence that the information is inaccurate. In other words, fraud or errors caused by an individual officer or director could eliminate coverage for all other directors and officers.

When coverage is not available or if it is denied, a director or officer may face the financial nightmare of having to handle his or her own legal expenses and costs of an award. Therefore, it is very important to take care that a D&O policy provides the anticipated protection. It is also important that a board takes steps to oversee the application process and to make sure that the provided information is accurate. Another step may to look for D&O coverage that offers separate coverage to directors and officers so innocent parties do not have their protection stripped away due to the deliberate, false actions of others.

Employment Practices Liability

Hiring and firing practices have become legal minefields that have spurred the development of employment practices liability insurance (EPLI). It is important that a business has clear policies that are applied consistently to each employee and that directly relate to their job. Do you know what type of decisions could trigger a claim? For example, is it legal to terminate:

• A driver with a bad driving record?
• An employee who is rude to your customers?
• An employee who swears at customers?

Don’t think that the answer is simply “yes.” A business’ action may depend upon circumstances such as whether an employee’s duties involve driving a company vehicle or directly involves customers and if the company can prove that such behavior fails to meet the applicable job standards.

One key issue is having access to legal counsel that has expertise in this special area of the law. Another key issue is documenting the essential job functions and establishing measurable standards for each position. Use of regular performance reviews and applying the standards equally to each employee is a smart employment practice. The best defense against employment practice claims is to know the law in your state and then having policies and procedures that meet or exceed its legal standards.

The U.S. Department of Labor offers a Small Business Handbook from their Website at http://www.dol.gov. The U.S. Equal Employment Opportunity Commission also offers numerous publications addressing different employment laws from their website at http://www.eeoc.gov. Contacting us regarding employment practices liability insurance is another avenue to explore.

Policies and premiums for this type of coverage vary tremendously among insurers. Many companies offering the coverage also offer assistance in writing policy and procedure manuals and other ways to reduce the potential for claims involving sexual harassment, wrongful termination, or discrimination. No business is immune from these claims.

General Liability

Commercial general liability (CGL) policy is extremely broad in nature. It insures the bodily injury liability and property damage liability exposures of a variety of commercial businesses, enterprises, and ventures. The broad nature of these forms eliminates having to select and group individual or specific hazards, with the resulting potential gaps in coverage.

These policies can be offered on either an occurrence or a claims-made basis, as a monoline policy or combined with one or more other lines of insurance to form a commercial package policy. The basic exposures of the named insured covered by the CGL coverage forms include:

• Ownership, maintenance, or use of the premises
• Operations conducted or performed on or off the premises
• Written contracts and agreements
• Products manufactured, sold, or distributed
• Completed operations
• Personal injury
• Advertising injury
• Medical payments on the premises or at job sites, without regard to fault

Each of these coverages is subject to certain policy definitions, exclusions, and limitations.

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Nonprofit Organizations

Like a business or a homeowner, a nonprofit organization needs to protect its property from loss in a fire, by theft, or from many other hazards. Nonprofits can be lawsuit targets as well. Without insurance, a lawsuit could prove financially devastating. Whether a human services, arts, educational, civic, or other type of nonprofit, your organization should be protected by liability insurance to cover defense costs and damages.

Some insurers specialize in coverage for nonprofits and may be able to best meet the insurance needs of your organization. An Internet search will guide you to several national nonprofit insurance groups.

Property Insurance

There are many aspects to property insurance. If your organization owns real estate, you will want to insure the property. If it rents or leases its premises, you may want coverage for tenant’s improvements and betterments. These are fixtures, alterations, installations, or additions that you have put into the space that cannot legally be removed from the landlord’s premises.

Depending on the particulars of your activity, you may want to add other coverages, such as theft and burglary, employee dishonesty, or electronic data loss.

Liability Insurance

Nonprofits have no immunity from lawsuits. Clients, volunteers, vendors, donors, or visitors may sue if they are accidentally injured on your premises or while on business for the organization. Someone may sue claiming libel or slander. Employees may sue claiming discrimination or sexual harassment. Liability insurance covers these risks.

Before buying insurance, it’s a good idea to consider the particular loss exposures you have and buy a policy that addresses them. If, for example, your organization is made up mostly of volunteers and has no paid staff, your best choice could be a policy that covers only volunteers.

Business Auto Insurance

Vehicles owned by a nonprofit organization will need to be insured with a business auto policy.

Anyone driving a personal auto on business for a nonprofit organization will have coverage under their personal auto liability policy. If the personal policy has low limits, however, they could quickly be exhausted by an accident with serious injuries. An injured party might then sue the nonprofit group. You should discuss with us whether the organization is adequately protected.

Workers’ Compensation Insurance

States have varying rules about when an employer must provide workers’ compensation insurance. If you have three or more employees, you should check with your state department of workers’ compensation to see if you are required to provide workers’ comp insurance.

Effective technology

Technology is great, but only if it provides a true benefit to you. We have integrated our technology into how we do business in order to provide a unique experience, unparalled customer service, and ultimate convenience.

For example, in just a couple of clicks you can:

• Connect to a video conference with one of our staff members
• See what’s on our screen when talking on the phone so that we are both looking at the same document to avoid confusion
• View all of your insurance documents on-line
• Communicate securely with our staff
• Watch videos on insurance topics
• Integrate with your Outlook calendar

Professional Liability

Professionals, such as doctors, lawyers and accountants, have long been held highly accountable for the consequences of their decisions. While such professions are still the “Big Three,” there are a growing number of other occupations that represent an exposure to liability loss that needs special protection, including pharmacists, architects, engineers, opticians, beauticians, insurance agents, consultants, and many others.

In most instances, a type of coverage called a commercial general liability policy will protect a business against the damage or injury their actions may cause to others. However, this type policy is designed to handle routine, fairly generic, and low-risk activities. Examples are customers who cut their hands on a sharp edge of an office’s reception desk or a customer who is hurt when she collides with a clerk who is stocking a shelf. Much more is at stake with professional activities.

Umbrella

In case of the average (smaller) business, the commercial umbrella liability policy is a newer insurance coverage option.

Not very long ago, the coverage was considered to be only needed by very large business entities. Today, a different set of circumstances exists. Liability claims and court decisions involving millions of dollars are no longer uncommon; any business can be found legally responsible for this type of judgment.

A commercial umbrella liability policy, increasingly referred to as an excess policy, can provide an additional layer of insurance protection to handle major losses.

The coverage form is still not standardized, varying greatly among companies and some jurisdictions may create unique coverage issues. Punitive damages are an example. Some states only permit responsible parties to pay punitive damages; others allow them to be paid by insurers.

Another area of difference is that no policy covers everything; every policy has exclusions.

A business owner may consider an accident that does not involve a fatality to be one that can readily be handled by regular coverage. The reality is that such an accident may result in substantial medical care, lost income, and other expenses.

Can your business afford a payment that exceeds a million dollars? Think of accidents involving vehicles that, today, are much safer than 5 or 10 years ago. That means that accidental deaths are less likely while the chance of severe head injury has increased. Severe head trauma can send a claim’s cost soaring. It may take up to seven years to determine the ultimate extent of injury. Recovery is often slow and sporadic. These elements combine to make regular insurance coverage insufficient.

A business may have auto liability coverage but insurance limits of more than $500,000 is rare. This is because insurers are reluctant to offer higher coverage at an affordable price. When the insurance coverage provided by a business auto policy is not enough to meet the amount of a loss, the business is responsible for the difference.

An umbrella liability policy could be the difference between bankruptcy and an on-going business venture. The umbrella policy would take over where the business auto policy stopped, providing defense coverage and additional limits to pay large judgments.

There are no standard umbrella liability policy forms; each company has their own variation. Each form offers different options that can help tailor coverage to specific business needs. One thing to remember is that an umbrella liability policy will not cover everything; there are exclusions in this form as in any other contract of insurance. However it still represents an excellent method to help shield a business from catastrophic claims. Contact us to discuss securing this valuable form of liability coverage. It could help preserve your business.

Workers’ Compensation

On-the-job injuries or resultant illnesses can be costly. Not having proper coverage against these expenses means you could be taking a big financial risk. You can cover the cost of medical expenses and disability payments with Workers’ Compensation insurance. Our access to multiple workers’ compensation markets and commitment to quality service enable us to offer our clients competitive pricing with excellent customer service.

Workers’ Compensation insurance policies actually provide two types of protection. One covers the cost of medical expenses and disability payments if employees are injured or exposed to illness-causing substances while on the job. The other provides businesses with liability protection in case they are sued for damages arising from employment-related accidents or diseases.

Typically, Workers’ Compensation will pay for:

• Medical benefits for job-related injury or disease
• Disability income benefits, including compensation for lost wages
• Rehabilitation benefits to help an injured worker return to productive work

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