When you are starting a business, you have to think about many, many things. How you will get customers, refining your product or service, procuring capital, and hiring staff.
On the second tier of to-dos is getting business commercial insurance for your business. If you do not, your business could get stymied before it gets started. For a decent price, you can get all the peace of mind you desire while you build the business.
The essential insurances are liability, workers compensation and commercial auto.
There are three types of liability insurance you will want to consider depending on your operation.
General liability is the most basic insurance you can get. It protects your business if you or an employee are found at fault for causing the following:
• Bodily injury
• Property damage
• Personal or advertising injury
This is also known as CGL (commercial general liability) insurance. It might even be all you need for the business.
This insurance covers you for liability on your products. If someone is injured while using your products, this coverage will protect you up to the policy limits. Following are some of the issues that can arise related to product liability:
• Marketing: This is when the product does not contain proper instructions for usage. It is also when the product label fails to post possible dangers of using the product. A well-known example of this type of defect is the Zicam nasal spray recall. Some users actually lost their sense of taste and smell after using Zicam.
• Manufacturing: The product does not comply with the safety specs. An example of this is the Toyota vehicles recall. This recall occurred because defects in acceleration mechanisms were brought to light.
• Design: This occurs when there is a flaw in the design of the product that renders it dangerous. A recent example of this is drop-side cribs. In some cases, they have caused infant deaths.
Professional liability insurance is sometimes called errors and omissions coverage. It is designed to protect the following professionals:
• Architects and Engineers ( It might be called an A and E policy.)
• Medical professions like doctors and nurses (It is called Medical Malpractice.)
• Home Inspectors
• Web Developers
• Notaries Public
• Technology companies
The insurance covers these and other professionals against negligence that they might be accused of by a client, customer or patient. It also stresses failure to perform and financial loss from the product or service.
The main reason for this type of insurance is that the CGL only covers bodily injury, property damage, and a personal injury or advertising claim. It does not cover what the professional liability policy does.
If you have employees, you will have to purchase workers compensation insurance. If you do not, you will be fined and can be sued by an employee injured on the job.
Workers comp premium is based on payroll. The payroll is estimated at the beginning of the policy term or the prior year payroll is used. At the end of the term, the premium is audited either at the place of business or via a phone audit. If the payroll is less than the policy estimate, you receive money back, if it is more, you have to pay more.
All of the occupations are subject to a class code. The class code has a rate that is multiplied by the payroll slotted to that code. That’s what creates the premium. For example, an office might have office employees slotted as clerical (8810 class code). The rate for them is lower than a plumber, for instance.
If you or your employees drive your own or company vehicles on business, you will want to be insured.
There is a coverage called non-owned auto which will protect you or an employee using your own car for occasional business trips. However, if you have company cars, you will want to fully in sure them.
Other Commercial Coverages
There are several other commercial coverages, riders, and endorsements that pertain to specific businesses or operations. For example:
• Inland marine
• Builders risk
• Contractors equipment
• Fine arts
• Motor truck cargo
• Valuable papers
There is a type of business commercial insurance to cover any situation you have. A good insurance agent can help you sort it all out.