Sharknado isn’t covered by my business insurance…so what is?

Business insurance is a set of insurance policies designed to protect a business from losses that could happen during the day-to-day business practice. So unless you live by a beach with daily sharknados, it’s a risk that will not likely be covered by your insurance. Every business is different and has their own distinctive set of risks, so coverage may vary from company to company. That said, there are basic insurance coverages to be aware of, some that are required, some that are needed and some that may just be a good idea.

First, how does business insurance work?

When you place your business coverage with an insurance company, the insurance company is agreeing to share the risk with your company in exchange for money (aka the annual or monthly premiums you pay to the insurance company).

If your business suffers a loss (say there is a water leak that damages part of your business building), the following would happen:

  • You file a claim with your insurance for the business loss (the water damage to your building);
  • An insurance company adjuster will assess the damage to your business and process your claim;
  • You will pay a pre-set deductible amount for the loss, meaning you pay a certain amount out-of-pocket for a business loss before your insurance coverage picks up the tab;
  • Once your deductible is paid, your insurance company will pay for the financial loss up to the policy limit.

So, what is covered by business insurance?

Business insurance can cover the following policies and more, based on your company’s specific needs, you can change what is included in your business insurance package:

General liability insurance: protects your business from alleged bodily injury or property damage to a third-party (another person) that was caused by you, your employees, or business products or services. Classic example is a slip-and-fall on your property, the person who falls turns around and sues you because it happened at your business establishment and therefore you are liable; this insurance helps you fight claims such as these.
Business Interruption aka Business Income insurance: protects against loss of business income due to a disaster while your business is rebuilding.
Commercial vehicle insurance: protects your commercial vehicles and drivers for collision, property damage, liability, property damage, and personal injury.
Property insurance: protects against loss and damage to your commercial or business property due to certain causes, such as vandalism, fires, storm, etc.
Professional Liability aka Malpractice insurance aka Errors and Omissions insurance: protects professionals against liability claims for failure to or improperly performed services that lead to another person’s loss or injury
Product liability insurance: protects against faulty products as well as damage, illness, injury or death that occurred from using a faulty product.
Workers compensation: protects your employees if they become ill or injured while on the job.
Key person insurance: protects a business’ loss of income due to the head of the business or other key person becoming disabled or passing away.
protects your business from Internet-use and online communications risks.
Records retention policies: protects your company from loss of financial records and important data.

What Coverages are Legally Required?

Laws vary state by state so it is best to determine state laws for where your business is located in order to figure out which insurance coverages are legally required. However, the following business insurance coverages are required by many states.

Workers compensation insurance: If your company has employees, it’s highly likely that you are legally required to carry workers’ compensation insurance.
Unemployment insurance: If your business has employees, your state may require you to pay unemployment insurance taxes; you should check with your state’s work board.
Disability insurance: Several states require businesses to have partial wage replacement coverage for employees who qualify for non-work related injury or illness.
Property insurance: protects against loss and damage to your commercial or business property due to certain causes, such as vandalism, fires, storm, etc.
Professional liability insurance: Many states require specific professionals, such as doctors, lawyers, architects, etc., to carry professional liability insurance.

What Coverages are Actually Needed?

The essential coverages your business actually needs are: general liability, commercial property, business interruption, product liability, and if required, professional liability.

What Coverages Might be a Good Idea?

Here are some other coverages that are good to ask about and see if they are specific risks for your business:

Increased Cost of Construction aka Building Ordinance coverage: If a disaster hits and you must rebuild part of your business property, oftentimes there can be additional costs in order to rebuild according to the most recent building ordinance codes; this coverage helps cover some of those costs.
Equipment Breakdown aka Boiler and Machinery coverage: Covers the expensive physical and financial damages that can result from a company’s equipment breakdown; be careful, be sure to review the covered causes because many policies can exclude risks that are actually relevant and you want to be sure you are covered correctly.
Electronic Data coverage: If your company’s data has been destroyed or corrupted from a covered loss, then this policy will help pay to replace or restore the electronic data.

Want to know what business insurance package would work best for your company? 
Give us a call at elpe and let us help you walk through it. Call at 1-800-685-7176

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