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Archive for April, 2011

Part Time Business Insurance

Thursday, April 21st, 2011

Does my part time business need insurance?

A recent survey showed that up to one in ten households operate some type of home based business from their home. Many of these same small, part time business owners have not put some sort of part time business insurance in place. In fact, many of these part time business owners mistakenly think their personal insurance will protect them.

Home based business owners are at risk for serious financial losses in the event of theft, accident, damage or perceived damage to a client, natural disaster, vehicle accident or other types of loss or damage. Most homeowners policies won’t cover business related losses. If you‚ are operating from home, not only can you be risking business property, but personal property which won’t be covered with a business incident.

One possibility is a business rider added to your homeowners policy. If you are writing or just using a phone and computer for your part time business a rider may be all that is needed. However, if you are manufacturing or perhaps doing some type of repair work in your basement, garage or even den, there is a good chance you need more commercial insurance coverage.  If you hire an employee, you must have workers compensation insurance.

The risk of not having appropriate coverage is formidable. If you have started a small, part time business, contact a licensed commercial insurance professional. Work with them to determine what insurance is needed. Typically, you need some type of general liability insurance coverage, business property insurance, and if you have employees, workers compensation.

Don’t risk all you have worked for up until now by avoiding or neglecting this important component of being a business owner. Your licensed insurance professional will guide you to what coverage is needed today, and more important, how to protect the future as you grow your business.

Upgrade Insurance - Buy Business Insurance

Thursday, April 21st, 2011

Is your insurance growing with your business?

Why do you buy business insurance? Let’s hope it’s not just because the bank, a landlord, or some other entity requires you to have it.

Instead, let’s assume it’s because you know you need to protect the assets and employees of your business as well as yourself in the event of an incident that is or may be claimed to be the fault of someone or something in the business. Let’s assume you realize how necessary it is to protect the property and assets of the business in the event of a disaster such as a fire.

Now, let’s also assume the business is growing gang busters. Even in this economy, it is possible for a business to grow and thrive. One problem we often see in reviewing coverage for new clients is that the risk that was initially covered has been allowed to be exposed again and therefore needs to be upgraded.

Typically, a start up buys business insurance that is affordable, and offers coverage which will protect a start up business. What often may happen is that as the business grows the coverage in place remains stagnant. That can open up or allow exposure to risk to grow as the business does. Let’s look at how that can happen.

Let’s take Tom’s Flower Shop as an example. Initially, when opening the shop, Tom put business liability insurance in place. He also purchased property insurance for the business as well as having worker’s compensation to cover his two part time employees. Overall, Tom did a pretty good job of purchasing business insurance which offered a good value and an affordable premium.

Two years later, let’s look at Tom’s Flower Shop in more detail. Business has exceeded plan both years. Tom started doing some local deliveries and has his employees use his personal car. He’s added a new walk-in cooler and expanded by taking over the space next to him. He’s had to hire four more people and two of his folks have gone to full-time as he also expanded his hours of operation to Saturday and Sundays.

Business is so good he’s added a new computer system, website, and taken a pay increase for himself.

The problem is, he never discussed any of this with his licensed insurance professional. He is unaware the huge risk of using his personal auto and letting employees operate it. He hasn’t increased the liability coverage to cover his growing business. He hasn’t increased the limits on his property insurance and looked at adding business interruption insurance and mechanical breakdown insurance. He needs to look at certain types of disaster insurance as the business continues to grow and risk grows with it.

Don’t risk your business by not updating and improving your coverage as your business grows. You may be risking all that hard work on one incident which would bring financial doom to your business and assets.

Business INS Basics

Wednesday, April 20th, 2011

Don’t forget to cover the the Business INS Basics

When you think of business insurance and all the language surrounding it, remember the basics. All business insurance will essentially cover one of the following; property, liability, people, or income. When you start shopping for insurance and it all seems overwhelming, remember the basics discussed here.

Property: The property used in your business includes the building your business is located which can be owned or leased. Property also includes furnishing, and equipment as well as machinery, tools, computer and phone systems, anything used to conduct business. Vehicles also fall under property. Property policies will protect these assets. Discuss the various aspects and make sure your insurance policies are in place to maximize coverage.

People: The greatest assets of any company are its people. Worker’s compensation protects these employees. Health insurance, life insurance and disability insurance protect the owners, managers and employees. It’s important to remember that worker’s compensation insurance is required in almost every state. Health, life, and disability are benefits which can be offered but aren’t required.

Liability: Business Liability Insurance protects the business from being held liable for injury or error. This includes damage to property as well as to people as well as implied damages. It is important to remember that liability insurance covers the cost of litigation for these claims.

Income: If revenue stops, a business cannot survive a long time. Should a disaster hit, business interruption insurance can provide a stream of revenue while rebuilding or relocating to a temporary or permanent new location.

Use the basics to work with your licensed insurance professional to determine the coverage your business needs. Knowing the basics can help simplify your understanding of how your business insurance will work.

Small Business Liability Insurance

Tuesday, April 19th, 2011

I’m not required to have small business liability insurance. Why should I spend the money on it?

Way too often we see business owners not putting liability insurance in place for their small business, or, allowing it to lapse. There a variety of reasons, but more often than not, it is to save money and cut costs. In today’s business environment and where lawsuits occur over the temperature of coffee served, operating without liability insurance is like skydiving without a parachute. Trying to defend a claim, legitimate or frivolous, without liability insurance can put a business into bankruptcy from this one event.

Business liability insurance can save the company ruin. In addition, it will allow the owner to maintain much more focus on running the business while the insurance carrier conducts the legal battle.

While this coverage is too expensive not to have due to the risk exposed, there are ways to reduce the premium and get the best value for the coverage. First, make sure to shop around and determine what is covered in each policy. Make sure to look at exclusions. Implement a risk management plan and review with your licensed insurance professional.

Research your industry and determine what coverage is necessary based on average claims and settlements. You may be able to reduce the liability limit and therefore reduce the premium. Take a look at whether you can combine coverage by utilizing a Business Owners Policy. This type of policy offers liability insurance as well as property insurance for your business. You can often add some coverage like business interruption to these policies. A Business Owners Policy is typically less expensive than purchasing policies separately.

There is certainly a cost involved for protecting your business from risk. Business insurance offers the owner peace of mind that the business they are building can withstand a frivolous claim or the cost of litigation. Having the proper small business insurance in place is one of the most important steps a business owner can take in protecting their business and themselves.

General Liability VS. Professional Liability Insurance

Tuesday, April 19th, 2011

One question we are often asked is, “What is the difference between general liability and professional liability insurance.” If I have one of these types of insurance, why would I need the other?

When looking at business insurance, the kinds of risk can be significant. So can the costs associated with these types of risks. Not only are you insuring the risk of your business, its property, and employees, but those who come into contact with your business and employees. Your general liability insurance will cover these risks. Professional liability will cover these risks as well, although much more specific to certain professions and scenarios.

A general liability policy typically insure against claims of bodily or personal injury or property damage. The general liability policy will cover the legal fees and costs associated with the defense, settlements, and property damages.

Professional liability insurance, also known as errors and omissions or E & O insurance covers negligence as it pertains to your professional services provided. Generally, although not always, it is a financial claim versus a physical claim of liability against the business. Typically, there is a professional code of conduct or standards which are used as a measure. Naturally, this is all subject to interpretation and is usually determined through the courts.

With either general or professional liability, one claim can be financially devastating to a business. In these days of numerous and frivolous law suits, it is important to reduce the risk of any business. work with your licensed insurance professional to determine if a professional liability insurance policy is necessary for your business and also for its’ employees who may also work with clients providing services.

What is Errors and Omissions Insurance?

Monday, April 18th, 2011

Errors & Omissions insurance is a form of liability insurance for business. Many professions — including real estate agents, attorneys, architects, consultant, web developers and other professions — should have this specialized liability coverage. Almost any type of transaction is subject to causing, or the perception of causing financial harm to another.

This type of liability insurance will help cover legal expenses and court costs as well as any settlements or judgments brought against you or your company for professional services and advice. Aside from “Errors and Omissions insurance, E & O insurance  is known by several names. In addition to Errors and Omissions, it can be known as Professional Liability Insurance and Malpractice Insurance. It’s important to remember this coverage is not normally included in your general business liability insurance.

Errors and Omissions insurance is unique to every situation and carries a variety of coverage as well as exclusions. In general, it is designed to protect the business from legal costs and damages awarded as a result of being found in error, an omission, or a mistake.

Legal costs associated with many lawsuits can cripple a company, and this coverage protects against that and large awards by the court. E & O Insurance doesn’t cover intentional fraud or illegal activity as well as most punitive awards.

It needs to be noted that lawsuits are not just a result of error, but the allegation of error or negligence. In this day, we live in a suit happy society. Many innocent parties are sued for any variety of reasons, not only a just cause. Professional liability or E & O will help reduce the risk of cost associated with being sued.

When E & O insurance is needed, work with your licensed insurance professional to design the best affordable coverage. Ask questions and make sure you know not only what is covered, but any exclusions in the policy.

What is product liability insurance?

Monday, April 18th, 2011

Product liability insurance covers claims made against the manufacture or sale of a product to the public. This insurance will cover the liability of a manufacturer or seller for injury or losses to a buyer, user, or bystander which is caused by a defect or malfunction of the product. It will often include coverage for a defect or failure of warning and usage. It is important that a business owner understands the potential liability and exposure the product has in going to market.

There are normally three different types of claims a business may face from its product:

The first of these is a design defect. Usually, a claim the design of the product is unsafe. Child safety seats are a recent example which may come to mind.

The second is manufacturing defects. Here, some part of the production resulted in creating an unsafe defect in the product. Dangerous chemical compounds in pressure treated wood are a recent case in point of a faulty production process.

The third type of claims is based on defective warnings or directions. In this case, the product is not properly labeled or a detailed and bold warning for the user to understand the risks involved. The McDonalds coffee case is a prime example of this type of claim.

Damages awarded in these types of claims are often huge and can include; medical costs,
compensatory damages, impact, and even punitive damages. Product liability claims have put many small businesses out of business.

It is important to remember this coverage is available to sellers as well as manufactures. Don’t make the mistake of assuming because another business produced the product, your business cannot be held liable in the event of an incident.

Spend some time with your licensed insurance professional to determine if this insurance makes sense for your business. Don’t leave it to chance and allow your business to be exposed to this type of large risk.

Natural Disaster Insurance for Business

Thursday, April 14th, 2011

Do in need disaster insurance for my business?

Many business owners — and homeowners for that matter — think that their property insurance is all inclusive and covers anything that could happen. It may, or it may not, depending on the policy specifics and exclusions it has written into it. It’s up to you as a business owner to know where your business coverage and risk lie.

The difference between natural disaster insurance and property insurance is that natural disaster insurance is specific and specialized and covers against immediate events where property insurance covers against a variety of risks including theft and accidental incidents.

That being said, the insurance industry, like many other industries, has evolved and may offer a wide variety of risks included in your property insurance policy for your business.

With some many options available to the business owner, it is important to do a risk assessment for your business. Don’t make the mistake of many and assume your business is covered for a flood only to find out when calling to make a claim it isn’t. Don’t assume the protection isn’t in place and purchase a policy with lots of double coverage as well by failing to read the policy and reviewing questions with your licensed professional.

What needs to be done is getting with your licensed insurance professional, digging into the fine print, and coming up with a reasonable plan to cover risk.

In addition to natural disaster, do you need cover for an act of terrorism? Are you in a geographic area that may warrant such coverage? Flood, tornado, and hurricane the same rationale applies. After Katrina, natural disaster insurance is becoming harder to find and much more expensive. Utilize the expertise of your licensed insurance professional to guide you to minimize the exposure while keeping your coverage affordable.

Don’t Overlook Business Insurance

Wednesday, April 13th, 2011

Business insurance you may overlook can be costly.

Your business is thriving, things are going great. Your CPA is excited, your new employees are excited, and everyone else is excited. Have you let your licensed insurance professional know how well your business is doing?

As your business grows, your business insurance needs change. The business insurance package you put into place is not static any more than the any other changes in your business. There is nothing worse than growing your business, seeing great success, and having one incident cause financial crisis by being under insured, or, worse yet, having no coverage for that event. Let’s look at how to avoid that happening in your business.

When a business first opens, a somewhat standard business insurance package is put into place. Depending on the business, some type of general liability insurance and business property insurance is put into place. Many times, the coverage is adequate, and sometimes lean to help keep premiums down. Now, back to the business noted above, the first key is new employees. As soon as an employee is hired, with rare exception, you are required to have workers compensation insurance. Besides the employee benefit, with workers compensation coverage, the employee cannot sue the business for being injured on the job in most cases. Imagine what could happen if it wasn’t in place!

Again, with the quick example above, business is thriving. It’s probably time to up the coverage limits, perhaps even write new insurance. As your business grows, it may be time to look at business interruption insurance which may also be known as loss of income. It’s quite possible you need equipment breakdown insurance, or now should add some additional disaster insurance such as flood insurance if your area warrants it. Talk with your licensed insurance professional to determine if product liability insurance may be needed. Do you need to add professional liability insurance?

The rewards of growing a business are numerous. Don’t risk it by not growing and evaluating your risk exposure along the way. Make time to speak with your insurance agent at length at least once a year, perhaps more if needed to grow your business while protecting it too.

Common Business Insurance Mistakes

Tuesday, April 5th, 2011

Do not make this common mistake with business insurance:

Business owners are busy people. If their business is growing, it seems like there are never enough hours in day. One common mistake business owners tend to make is forgetting to have their insurance coverage grow with the rest of their business.

Often, a new business start up may opt for a B.O.P (Business Owners Policy) which easily protects against the risk exposure of an initial start up company. It may be that you even raised coverage a bit as things went along. As you probably know, a BOP usually covers liability and property and may have other coverage added on to it. For most start ups and small business, it’s a great way to get coverage value from a lower premium than separate policies.

However, as your business grows, it is possible to outgrow the original coverage you put into place.

For example, are your general liability limits keeping place with your growth in revenue and business assets. How about your property limits? One area that is often missed is the technology growth and expenditures that can easily be missed or under insured. Suppose your business started with you a phone and a computer. Now, you have 2 offices, two phone systems, and a number of computers, faxes, office furnishings and much more. Have you checked to make sure your limits will meet the requirements should you need to replace some or all of this? Has your income grown as a result? Is the liability coverage enough?

Working together with your licensed insurance professional to insure you are protected as you grow your business is important. Make your insurance professional an advisor and keep them appraised. Even if you occasionally call in and talk to a support person, it is your licensed professional who best can advise you on your commercial insurance needs.