Property Casualty Insurance
As a business owner, you know the importance of protecting your business from financial loss. Some risks may be acceptable, but many are not. Insurance to cover those risks is a business expense worth considering.
You want to be assured that you have coverage for your current exposures. You may have moved to a larger location, added employees, or expanded business lines that are not insured under your existing policies.
Property casualty insurance can be purchased as monoline policies that cover a single line of insurance or package policies that combine several types of coverage into one policy form. Package policies or business owner's policies bundle property and liability coverage into one policy. They also can be tailored to fit the specific needs of a business owner and industry.
Coverage Types
Whether you are thinking of buying multiple monoline policies or a package policy, consider the following lines of insurance.
Property. Protecting against fire, theft, and other perils, property insurance should cover your place of business at the level needed to replace or rebuild the property. There are many types and levels of coverage along with limitations or exclusions. Consulting with an independent insurance professional may be of value, particularly when determining replacement cost, actual cash value, agreed amount, and functional replacement cost.
Casualty. This is liability insurance that protects your assets in case you or your employees are negligent and cause bodily injury or property damage to someone else. It covers the cost of lawsuits from accidents on your property that cause bodily injury and claims involving libel, slander, and false advertising. Most policies pay the cost of damages and your defense, which includes attorney fees and other expenses. Also consider an excess or umbrella policy that provides limits of liability above the limits in your primary policy.
Business interruption. This insurance covers lost business income during the time your business is not operational. This means net income (net profit or loss before income taxes) that would have been earned. It also covers normal operating expenses incurred such as taxes, utilities, and payroll.
Commercial auto. You should carry this coverage for any vehicle owned by your business. You also may need non-owned automobile coverage if you or your employees use personal vehicles on company business. A non-owned automobile policy will cover the business's liability for any claims that may result from such usage.
Workers compensation. The requirements for workers compensation are dictated by state law and cover workers against job-related accidents or diseases. It pays medical bills, disability income benefits, and death benefits to dependents of an employee whose death is work related.
Employment practices liability. This insurance provides coverage if an employee sues the company for wrongful termination, job discrimination, or any other claim involving employment practices.
Professional liability. This insurance covers you for negligent acts that occur in providing professional services.
Directors and officers. If you have a sitting board of directors, those individuals will look to the company to provide them with coverage should they be sued for their actions on behalf of the company.
Key persons. This type of policy should be considered if you or any other individual in the company is critical to the operation of the business. It may be required by banks when obtaining loans and can be used to provide continuity during a period of ownership transition.
Home office coverage. If you or any of your employees have a home office, update the respective homeowner's policy to include coverage for office equipment and business liability as it is generally not included in a standard policy.
Cyber risk. This is a new area of exposure and, depending on your business and the activities you engage in, you may wish to inquire about this coverage.
Basic commercial property forms protect a business against causes of loss such as fire and extended coverage such as lightning, windstorm or hail, smoke, vandalism, and sprinkler leakage. A broad commercial property form often adds breakage of glass, damage from falling objects, and water damage resulting from a broken water system.
An “all risk” policy includes basic and broad form coverage and other perils. Some coverage is specifically excluded such as earthquake, war, and nuclear accidents. Endorsements can be included to add coverage as needed.
When evaluating your insurance needs, it's always advantageous to work with an insurance professional who can assess coverage needs and identify insurance carriers for each policy selected.
Mary Stark-Hood, JD, CFP, is president of the Hood Group, Inc., and serves as a consultant to the CCIM Foundation. Contact her at maryshood@comcast.net.
This article is sponsored by the CCIM Foundation @ www.ccimef.org.