Blog - Tag: Business Insurance
Why It Is Important to Review Your Business Insurance Annually
One of the keys to managing risks when you first start a business is getting the right insurance to cover your operations, property and potential liabilities.
Unfortunately, many business owners fail to update their policies and just renew them year after year even if the company has grown, expanded operations and facilities, and added new equipment and property. If this is the case, the old coverage would be insufficient.
Business owners should review their policies every year to catch any omissions and make sure they are not underinsured. It is common for smaller businesses to secure a basic business owner’s policy (BOP) and workers’ comp when they first get started. A BOP includes:
- Property insurance for buildings and contents owned by the company.
- Business interruption insurance, which covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business.
- Liability protection, which covers your company’s legal responsibility for the harm it may cause to others. This harm is a result of things that you and your employees do or fail to do in your business operations that may cause bodily injury or property damage due to defective products, faulty installations and errors in services provided.
Outgrowing BOP coverage
As your business expands, you may outgrow the BOP and need additional coverage to manage your risks. Some examples include the following:
- Workers’ comp. While you likely added a workers’ comp policy when you made your first hire, you will need to update it as you add more staff. If you don’t, when your insurer audits you, you may face a hefty bill for additional premium. Be diligent about your policy and inform your insurer as you grow.
- Excess umbrella or liability coverage. You should consider this insurance to cover claims that exceed your BOP’s limit, providing you with an added layer of protection to protect your assets.
- Professional liability insurance. These policies provide coverage for mistakes for any professional services you provide. This used to be mainly for doctors, attorneys and accountants, but as our service sector has expanded it includes services provided by coders and software developers, appraisers, consultants, real estate brokers, graphic designers and home inspectors, among others.
- Auto, non-owned and hired coverage. This protects business owners if an employee has an accident while driving a rental or personal vehicle on the job.
- Employment practices liability insurance. This covers human resources issues related to discrimination, harassment and termination.
- Commercial auto insurance. This coverage protects autos that are not under a personal policy.
- Directors and officers liability coverage. This protects officers and directors in the event they are sued for wrongful acts while on duty.
Depending on the business, some or most of these insurance options may be required for adequate protection. Annual reviews with us are ideal for discussing your options. Make sure these elements are considered:
- If computers, equipment or other types of property have been added, this would be reason to increase policy limits.
- While revenue is an important consideration, it is also important to remember that it is a potential liability.
- A general liability or BOP may be affected if the owner has moved, added or closed locations.
- Hired and non-hired auto insurance is necessary if workers are driving frequently in rented vehicles.
- For specific types of work and services, employers may need additional endorsements for their general liability policies.
- People who are serving new industries or clients may have problems with their professional liability coverage if they have large amounts of high-risk industries or customers.
- If you experience an increase in the number of workers you have, or there is a higher turnover rate, it is important to think about employment practices liability coverage. And as mentioned, your workers’ comp policy should be updated to reflect any staffing changes and that you categorize your workers properly.
What Business Insurance Policies Cover Rioting, Looting
Protests and mass demonstrations that can sometimes descend into rioting and civil unrest are becoming more common not just in the U.S., but all over the world. Businesses can sometimes unwittingly become collateral damage from vandalism and looting.
It doesn’t have to be a retail establishment; office buildings and other commercial properties can also face looting and damage during civil unrest. For business owners whose properties are damaged or destroyed, the ordeal can be both unsettling and stressful as they wrestle with the specifics of filing insurance claims.
Fortunately, you don’t need special insurance policies to cover these events. Your basic commercial property policy and commercial auto (if you have business vehicles that are damaged) will usually suffice.
Here’s a look at what your policies may cover and how to prepare for filing a claim if your business is damaged during rioting or civil unrest.
Property damage
Standard commercial property policies cover damage to a business property caused by fire, explosion, riot or civil commotion, vandalism or malicious mischief. This would include coverage to the structure, as well as any inventory, fixtures and other contents. Business owner’s policies also include this risk.
Damage payouts would be subject to sublimits (specific or blanket) for inventory, fixtures and other items, as well as the policy deductible.
Commercial vehicle damage
For business-owned vehicles to be covered for damage for these types of events, you’ll want to ensure that you have purchased comprehensive coverage, which is an optional, but highly recommended part of your policy.
Comprehensive coverage may cover a vehicle if it is:
- Stolen,
- Damaged, or
- Destroyed.
One of the most common damages to vehicles during riots is broken windshields, which you can usually get covered with an optional glass coverage rider.
Business interruption coverage
Companies that are forced to close as a result of rioting and looting damage may have coverage for business interruption under a business property policy.
Business interruption insurance may cover lost income if a company is unable to operate after its premises were damaged during a riot or social unrest. Coverage may also apply if a business suffers a loss of income because of curfews or if authorities bar access to a property.
Coverage is typically triggered if there is direct physical damage to the premises.
Filing a claim
When filing a claim, read your policy or give us a call to determine how to best present it. It’s important to understand the policy’s limits and deductibles before spending time documenting losses that may not be covered.
If you are going to file a claim, document all damage. Keep receipts for all your inventory and fixtures.
In the event of a claim:
- Take photos of all damage.
- Contact your agent and file a claim immediately.
- Clean up to protect your building, but do not make major repairs until you talk to the insurance company.
- Keep receipts for any remediation work.
If you’re going to file a business interruption insurance claim, you will need:
- Pre-riot financial statements and income tax returns.
- Post-riot business records.
- Copies of current utility bills, employee wage and benefit statements, and other records showing continuing operating expenses.
- Receipts for building materials, a portable generator and other supplies needed for immediate repairs or remediation.
- Paid invoices from contractors, security personnel, media outlets and other service providers.
- Receipts for rental payments, if you move your business to a temporary location.
Note: Many policies require a 72-hour waiting period before a policyholder can begin making a business interruption claim. That’s because the first three days of business shutdown, access constraints or limited hours of operation because of a civil authority action, are often excluded from coverage.
There may also be a limit to the claim period. A standard limit is up to three weeks of losses.