FAQ about Business Insurance

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What does a business owners policy cover?

Insurance companies offer policies that combine protection from all major property and liability risks in one package. The most commonly purchased policy by small and mid-sized businesses is the business owners policy (BOP). Larger companies many opt to purchase a commercial package policy.

BOPs generally include the following provisions:

• Standard or Special Property Insurance coverage for buildings and contents owned by the company.
• Business Interruption Insurance, in order to cover the loss of income resulting from a fire or other outstanding event that disrupts the efficient operation of the business. In addition, this coverage can also serve to cover the costs associated with operating out of a temporary location.
• Liability Protection, which covers your company's legal responsibilities for harm caused to others. Such harms may be associated with bodily injury or property damage due to defective products, faulty installations and errors in services provided by your company.

Your business will require separate insurance policies to cover professional services, company vehicles, and your employees.

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Is Business Interruption Insurance necessary?

Business interruption insurance serves as a very important safe guard to a company's survival. Unfortunately, many small business owners overlook the importance of establishing a safety net in the event their business becomes victim to a fire or other disaster. Such would cause the primary business location to become unusable. Business interruption insurance coverage is added to a property insurance policy or can be included in a package policy. Extra Expense Insurance reimburses your company for expenses that your company incurs during the restoration period. In some cases, extra expenses insurance can be a good substitute for business interruption insurance.

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Is workers compensation insurance really necessary?

It is the legal responsibility of employers to make the workplace safe for employees. Although precautions are taken, accidents still happen.

In most states, businesses are required to buy workers compensation insurance. This is to protect the employers from lawsuits resulting from workplace accidents and to provide medical care and compensation for lost income to employees hurt in workplace accidents. Workers compensation insurance covers workers injured on the job, whether they're hurt on the workplace premises or elsewhere, or in auto accidents while on business. It also covers work-related illnesses.

Workers compensation provides payments to injured workers, without regard to who was at fault in the accident, for time lost from work and for medical and rehabilitiation services. It also provides death benefits to surviving spouses and dependents.

Each state has different laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services and how the system is administered.

Workers compensation insurance must be purchased as a separate policy. Although in-home business and business owners policies (BOPs) are sold as package policies, they don't include coverage for workers' injuries.

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How important is commercial auto insurance?

Autos used, or owned for business purposes require the same coverage as a personal automobile. The decision to purchase a commercial auto insurance policy will be dependent on the type of driving required. Commercial auto policies are very similar to personal auto policies. Your insurance agent can provide you with the differences and your options.

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What to consider when looking into purchasing business insurance?

The main types of insurance that the business owner should consider are:

• Personal sickness, accident or permanent disability
• Liability for products, services, faulty workmanship
• Damage to customers and their property (public risk)
• Workers' compensation (compulsory)
• Property damage caused by fire, smoke, accident, storm and tempest
• Loss from theft, burglary, fraud and loss of cash
• Business interruption or consequential loss
• Electronic equipment
• Motor vehicle third party (compulsory)
• Motor vehicle third party property
• Credit insurance
• Life insurance

There may be additional areas of insurance which your adviser, insurer, broker or agent can tailor to meet your specific circumstances.

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Kidnap and Ransom Insurance

Although it tends to vary with the policy, most kidnap and ransom policies cover some expenses incurred when dealing with kidnappers and their demands.

Kidnap and Ransom insurance is now available as part of a comprehensive business insurance package, or as a stand-alone policy for individuals. Some insurance companies offer this coverage as a part of their homeowners insurance policy.

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